Full text of Federal Reserve Bulletin : March 1917
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FEDERAL RESERVE BULLETIN ISSUED BY THE FEDERAL RESERVE BOARD AT WASHINGTON MARCH, 1917 WASHINGTON GOVERNMENT FEINTING OFFICE 1917 FEDERAL RESERVE BOARD. EX OFfriCIO MEMBER8. WILUAM G MOADOO, Secretary of the Treasury, Chairman. JOHN SKELTON WILLIAMS, Comptroller of (he Currency. W. P. 6 . HARDING, Governor. PAUL M. WARBURG, Vice Governor. FRBDBRIO A. DELANO. ADOLPH G. MILLER. CHARLES S. HAMLIN. H. PARKER WILLIS, Secretary. SHERMAN ALLEN, Assistant Secretary and Fiscal Agent. M. 0. ELLIOTT, Counsel. SUBSCRIPTION PRICE OF BULLETIN. The Federal Reserve Bulletin is distributed without charge to member banks of the system and to the officers and directors of Federal Reserve Banks. In sending the Bulletin to others the Board feels that a subscription should be required. It has accordingly fixed a subscription price of $2 per annum. Single copies 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 directors may have it sent to not less than ten names at a subscription price of $1 per year. in TABLE OF CONTENTS. Page. Review of the month Loans on United States bonds or notes : Letter from a Texas banker on operation of the Federal Reserve Act Statements for the press: Message of Gov. Harding to North Carolina business men, bankers, etc Compilation of national bank returns by 'the Comptroller of the Currency Clearing and collection operations at Boston Regulations under which national banks may act as insurance and real estate agents Fiduciary powers granted New national bank charters Commercial failures in January Experience with Reserve Bank agency at Memphis Operation of clearing plan Synopsis of annual report of the Comptroller of the Currency Bank agency at Paris, France Gold settlement fund Amendments to Federal Reserve Act: Comparative Senate and House bills Senate and House reports * Informal rulings of the Federal Reserve Board Law department Business conditions throughout the Federal Reserve districts Discount operations of Federal Reserve Banks Acceptances '. : Resources and liabilities of Federal Reserve Banks Federal Reserve note account of Federal Reserve Banks and agents Gold imports and exports Earnings on investments of Federal Reserve Banks Discount rates in effect Charts: Net deposit liabilities, reserves held in vault and with Federal Reserve Banks Gold holdings of Treasury, national banks. Federal Reserve Banks, and Federal Reserve agents Statement showing condition of four leading European banks of issue IV 153 158 159 159 161 162 164 167 167 167 168 171 172 175 175 :. 177 188 193 195 202 220 222 226 228 229 230 231 232 233 234 FEDERAL RESERVE BULLETIN VOL. MARCH 1, 1917. 3 REVIEW OF THE MONTH. Further discussion and development of pending legislation amendatory of Amendatory ^ n e Federal Reserve Act has Legislation. received substantial attention during the month of February. Gov. Harding attended several sessions of the Senate Banking and Currency Committee prior to the action of that committee in reporting the amendatory measure, and set forth fully the views entertained by the Federal Reserve Board with respect to necessary changes in the Act. Elsewhere in this issue are printed in comparative form the House and Senate drafts of the amendatory measure with, the substantial facts regarding each as set forth in the committee reports. The pressure of business always characteristic of a short session of Congress, and very urgent international affairs that have occupied the attention of all branches of the Government have naturally retarded the progress of these amendments. It will be noted that in the House of Representatives there have been inserted a number of provisions additional to those suggested by the Board, notable among them one relating to the method of organizing branches of Federal Reserve Banks and of establishing foreign connections for such banks. Sundry changes have also been made in the Senate draft of the bill. In view of the congestion of business it will probably be impossible to secure action upon these amendments by the present Congress. In general the attitude of the public with respect to the amendments, so far as they have received serious discussion, has been favorable, and those mindful of our present economic conditions and the impending vast financial prob- i No. 3 lems, both domestic and foreign, realize the great importance of seeing these amendments enacted into law without any delay. The country's stock of gold has increased by $43,138,000 through net imNet Gold ports between January 13 and Imports. February 16, 1917, total gold imports for this period amounting to $60,766,000 and total gold exports to $17,628,000. The net gain in the country's stock of gold through net imports since August 1, 1914, is shown in the following table: Gold imports and exports of the United States from August 1, 19U, to February 16, 1917. [In thousands of dollars, i.e., 000's omitted.] Excess of Imports, j Exports. imports over exports. Total 104,972 31,426 155.793 30,057 -81,719 420.529 529,952 82,410 il,273,420 ! 323,398 Aug. 1 to Dec. 31,1914 Jan. 1 to Dec. 31,1915 Jan. 1 to Dec. 31,1916 Jan. 1 to Feb. 16,1917 951,172 23,253 451,955 685,745 ! 112,467 a Excess of exports over imports. Larger offerings of commercial and bankers' bills at favorable rates Operations of account mainly for the conReserve Banks. siderable increase in investment operations of the Federal Reserve Banks during the month of February. Between February 2 and February 23 total investments held by the Federal Reserve Banks increased from $169,680,000 to $209,474,000, or 23.5 per cent. Of the total increase, over 77 per cent is represented by the increase in the amount of purchased acceptances held in the banks' portfolios. Other classes of investments except United States bonds and notes show moderate gains 153 154 FEDERAL BESEEVE BULLETIN. during the same period, the increase in discounted paper on hand being due chiefly to the larger amount of member banks7 collateral notes held by the Federal Reserve Banks at the later date. The following table shows the holdings of bills for each Federal Reserve Bank, and the holdings of other investments for all the banks on February 2 and 23: Feb. 2, 1917. Feb. 23, 1917. Increase. Boston $12,709,000 §15,718,000 New York | 27,072,000 35,450,000 Philadelphia I 11,845,000 15,434,000 Cleveland j 6.832,000 12,447,000 Richmond ; 8,023,000 10.391,000 Atlanta, including New Orleans | branch ! 5,708,000 5,663,000 Chicago 8,239,000 11,887,000 St. Louis 5,521,000 9,002,000 ! 9,407,000 Minneapolis 7,484,000 3,342,000 5,459,000 Kansas City. Dallas 2,469,000 3,658,000 San Francisco. 8,575,000 9,716,000 S3,009,0C0 8,378,000 3,589,000 5,615,000 2,368,000 Total bills !l07,819,000 144,232,000 Total municipal warrants 12,664,000 17,124,000 Total United States bonds and notes 49,197,000 48,118,000 36,413,000 4,460,000 a 1,079,000 Total investments on hand. 169,680,000 209,474,000 39,794,000 a 45,000 3,648,000 3,481,000 1,923,000 2,117,000 1,189,000 1,141,000 a Decrease. As the result of larger investment operations during the month under review Reserve the reserve position of the Conditions. greater banks in the principal eastern cities is less favorable than at the end of January. Thus the reserve percentage of the 60 banks forming the New York Clearing House Association—as indicated by the ratio of their total reserves to their net demand deposits—declined from 25 on January 27 to 22.9 on February 10, and February 17. Similarly the reserve percentage of all trust companies in Greater New York, as computed by the State banking department, declined during the same period from 27.5 to 25.3. The reserve ratio for the State banks in Greater New York, representing, however, a relatively small proportion of the greater city's banking resources, increased during the same period from 26.1 to 29.3 per cent. The average excess reserves of the 41 national banks and trust companies constituting the MARCH 1, 1917. Philadelphia Clearing House Association, from $44,406,000 for the week ending January 20, and $48,543,000 for the week ending January 27, declined steadily during the remainder of the period, reaching the low level at $29,910,000 for the week ending February 17. Like figures for the associated 10 national banks and the Old Colony Trust Co., of Boston, all members of the. Federal Reserve System, show an increase of excess reserves from $35,938,000 for the week ending January 27 to $38,697,000 for the week ending February 3 and a drop to $23,649,000 for the week ending February 10. The report for the week ending February 17 shows an increase in the total excess reserves of these banks to $26,110,000. Pursuant to its policy of conservatism in the investments of Federal Reserve Banks announced in the last issue of the Bulletin, the Board has advised the reserve banks that it believes in adherence to a policy of distinct moderation in connection with the purchase of warrants. Such investments should be encouraged during periods of great ease of money and when rediscounts from member banks and offers of bankers7 acceptances are not expected to be heavy. At a moment, however, when indications are that requirements for commercial credit may be heavy and when Federal Reserve Banks must be prepared to meet heavy demands upon them by their member banks, the Board thinks that it is inadvisable to invest the funds of Federal reserve banks in warrants. There have recently been in various parts of the country slight "flurries," Withdrawals by d i r e c t i y t h e outgrowth of anxForeign Deposiety with respect to the internaitors. tional situation, or of special local conditions. In various eastern districts there were at times considerable withdrawals of deposits from banks in industrial centers where a large foreign population was concentrated. The situation was promptly met by the Federal Reserve Banks in every case where aid was asked for, and the Department of State relieved the underlying anxiety of foreign MARCH 1,1017. FEDERAL RESERVE BULLETIN. depositors by giving to the press on February 8 the following statement: It having been reported to him that there is anxiety in some quarters on the part of persons residing in this country who are the subjects of foreign states lest their bank deposits or other property should be seized in the event of war between the United States and a foreign nation, the President authorizes the statement that all such fears are entirely unfounded. The Government of the United States will in no circumstances take advantage of a state of war to take possession of property to which international understandings and the recognized law of the land give it no just claim or title. It will scrupulously respect all private rights alike of its own citizens and of tie subjects of foreign states. In Seattle, Wash., three small State institutions closed their doors Janua r y 1 8 3 0 a n d 3 1 a s t h e r e s u l t of > ' a temporary "flurry" which subjected them to a stress they were not prepared to meet. There was temporary fear that the situation in Seattle might become more serious through the spreading of anxiety concerning the condition of the local banks. Such fears were promptly set at rest through the action of the Federal Reserve Bank of San Francisco in dispatching a member of its staff to Seattle and in letting it be known that an abundant supply of gold, credit, or notes was available and that the entire resources of the Federal Reserve Bank were at the disposal of the member banks for the purpose of converting their eligible assets into means of immediate payment. Events in Seattle have tended to strengthen the demands of bankers in the Pacific Northwest for the establishment of a branch of the Federal Reserve Bank of San Francisco which should be more immediately within their reach than the parent office itself can under existing conditions be. Subsequent reports from practically all Federal Reserve districts indicate that such sudden anxiety as may have been aroused by the development of unexpected international conditions has been in very large measure allayed. There appears to be no general or widespread apprehension in any part of the country. 155 The Federal Reserve Banks to-day possess a note-issuing capacity estimated Reserve Banks' Note-Issue Power. in round numbers at about $1,000,000,000. They hold reserve money to the extent of $512,000,000. Their necessary reserve holdings against deposits are, roughly speaking, $237,000,000. They have thus $275,000,000 of free gold which can be used as a 40 per cent reserve against notes, thereby permitting an issue of $687,500,000. In addition to this they hold to-day over $112,000,000 of free commercial paper available as collateral for the issuance of Federal Reserve notes over and above the paper now pledged to protect outstanding notes. By withdrawing from Federal Reserve Agents an equal amount of the gold held by the latter and putting this paper in the place of it, they would, after deducting the reserves required by law to be held against notes already outstanding, be able to issue fully $168,000,000 more. Inasmuch as there would still remain a sum in gold amounting to nearly $191,000,000 in the hands of Federal Reserve Agents, a considerable portion of which could be released and used under favorable conditions as a basis for notes, there may safely be added another $250,000,000 to the sum of $687,500,000 and $168,000,000 already enumerated, thus raising the potential issue power of the banks to fully one thousand million dollars. Figures such as these have little meaning in and of themselves, but it may be noted by way of comparison that during the year 1914, when the modified Aldrich-Vreeland law was called into active operation, the issue of notes to the banks was less than $400,000,000 for the country as a whole, while additional issues of clearing-house certificates were less than $150,000,000. In round numbers we may say that notes available to-day are double in amount the total of emergency issues called for at any single time in the past. The Federal Reserve Board, recognizing the importance that is being curFacilitating Note rently attached to the question Distribution. of note issue, has arranged to make full use of the provisions of the Federal Reserve Act which facilitate their 156 FEDERAL KESEBVE BULLETIN. issue. The original Aldrich-Vreeland law made provision for the printing and holding in stock of some $500,000,000 of what was called emergency currency. This was an outgrowth of previous experience which had emphasized the difficulty of getting bank notes under the older system with the speed that was required in times of emergency, some three weeks or more being necessary for the printing and seasoning of the new circulation before it could be issued. Therefore, when the Federal Reserve Board was first organized, it directed the printing of $500,000,000 of notes. Later this amount was increased to some $700,000,000 because of the large demand for these notes in exchange for gold. Very recently it has been decided to raise the total note issue to $900,000,000, this sum, of course, being in addition to the notes now outstanding. The Bureau of Engraving and Printing at Washington is working at full speed upon the new currency, so as to keep well abreast of any conceivable demand that maybe made. There is to-day in the vaults at Washington and in the hands of Federal Reserve Agents and Federal Reserve Banks an accumulated supply of not less than $450,000,000 in notes. It has also been found in times past that a serious difficulty lay in the time required to transmit notes from Washington. Delays were inevitable, due to the necessity of sending the notes under guard or with special precaution for their safety, or due to the limitations placed by the forwarding companies upon the transmission of large consignments of notes. For many reasons, therefore, it has been properly felt that every center of note issue should have its reserve stock readily available at near-by points and in abundant supply. This was intended by the framers of the Federal Reserve Act, who foresaw this necessity, and therefore provided that the notes to be printed might be stored in the subtreasuries or mints nearest the reserve banks at which they were to be issued, but until recently it has been deemed wise to keep the great bulk of this supply in Washington. MARCH 1, 1917. During the past month the Federal Reserve Board has given careful attenForeign Exchange tion to communications reProblems. ceived from various firms and corporations engaged in trade with some of the smaller European countries, particularly with Spain and Sweden. The facts in the exchange situation as affecting these countries appear to be that notwithstanding a heavy balance of trade in favor of the United States, exchange quotations were very decidedly against this country, the dollar possessing a smaller purchasing power over local currency than for many years past. Investigation has shown that in some countries a distinct attempt to discourage the importation of gold is evidently being made. An unfavorable rate for the purchase of gold at official establishments is fixed, while in other cases it would appear that transportation and insurance companies had been requested not to facilitate the movement of gold toward the countries in question. A similar situation apparently has grown up in certain South American countries, and at sundry points in the Orient. It would seem to be attributable partly to the desire of the Governments of the countries affected to avoid the stimulation of exports, the maintenance of a rate of exchange unfavorable to foreign buyers being intended to withhold from them encouragement to make further purchases. The situation is also in part the result of the dependence of these countries upon markets other than their own, so that their exchange relationships with the United States can not be studied individually, but only in the light of their general trade position. While the Federal Reserve Board has been ready to do all that properly lay within its power to relieve American traders engaged in business with these countries by holding out the facilities of the Federal Reserve Banks as holders of "earmarked" gold, thus enabling foreign banking institutions to receive and hold at Federal Reserve Banks in this country such payments in gold as they might be willing to accept, it has not seen any way by which it could with success bring about the FEDEEAL KESERVE BULLETIN". MARCH 1,1917. 157 establishment of better or more favorable quo- appears to have been made. This is the case, tations, and has so advised those who have pre- for instance, in some portions of New England. sented the matter to it. The unfavorable con- Retention of the open-account system and the dition affecting foreign trade with the countries plan of borrowing on single-name notes seems referred to, is part of the general and anomalous to be a phase of the conditions produced by situation in international business which pre- abundance of funds and lack of necessity for vails throughout the world to-day* rediscounting. Elsewhere progressive firms are While it is true that in some directions the introducing the use of the trade acceptance, revariations in foreign exchange are extremely gardless of their own immediate necessities and injurious to the consumer, it is also the case habituating their customers to this form of setthat in other directions these fluctuations tlement. While there has not been a noticeable temporarily favor him. Thus, for example, increase in the volume of trade acceptances in connection with olive oil, an important coming to the Federal Reserve Banks, this fact article of importation from southern Europe, does not indicate that no progress in the matter it is interesting to note that the importations is being made, but merely that acceptance of olive oil from Italy amounted, in the years paper is readily discounted and held by both 1914, 1915, and 1916, to $5,552,098, $6,089,646, member and nonmember banks as a desirable and $6,730,646, respectively, while from Spain element in their portfolios. In bringing about we imported during the same years $370,053, this condition effective work has been done by $487,081, and $1,343,660. We imported in various trade associations, but there has ap1915 about ten times as much olive oil from peared of late some tendency to misconception Italy as we did from Spain, and in 1916 about of the true function of the trade acceptance, four times as much. Thus, while the unfa- some persons being inclined to represent it as a vorable quotations of exchange on Spain un- means of settling or adjusting accounts that had doubtedly affect American buyers of oil inju- proved, or were likely to prove, "slow." In riously, it is also true that the fact that the some of the literature that has been circulated lira has fallen from 19.3 cents to 14.6 cents ; with regard to bankers' acceptances, a similar from June, 1914, to December, 1916—that is, ! suggestion has been made. The Board feels 25 per cent—as against a rise of the Spanish | that too much emphasis can scarcely be placed exchange for the same period from 18.6 cents | upon the fact that the trade acceptance, in to 20.9 cents—that is, 11 per cent—would | order to be successful, must be regarded as redound to the benefit of the consumer in a I representative of the more active and liquid I of the commercial accounts of the country, much larger degree. The past month has seen steady progress in I and at no time should be taken as representthe interest generally felt with ing renewal obligations or accounts of long Trade Acceptance » , ° -, , standing. Its principal purpose is that of Situation reference to trade acceptances, substituting a written obligation for an open many new inquiries being re- account whose goodness is unmistakable, ceived both by the Board and the Federal Re- thereby rendering the account available as aserve Banks with reference to the proper form basis for discount. The presence of an element of acceptance to be employed by prospective of undesirable paper among the trade acceptusers, and reports concerning the more general ances of the country could not help giving application of acceptances being received from to the trade acceptance a character entirely time to time. In some parts of the country different from that originally contemplated or where money has been very abundant during from that which is possessed by it in European the past year or more, it is reported that little countries. progress in introducing the trade acceptance 82341—17 2 158 FEDERAL KESEKVE BULLETIN. Bound Copies of the 1916 Bulletin. A very small number of bound copies of the Federal Reserve Bulletin for 1916 are available for sale at $5 per copy. Except for the numbers contained in these bound volumes, the supply of the January, 1916, number of the Bulletin is exhausted. Checks should be made payable to the Federal Reserve Board, and orders will be filled by mail. State Banks Admitted. The Commonwealth Trust Co., of Boston, Mass., and the Bank of Montclair, Montclair* N. J., were admitted to the Federal Reserve System during the month of February, the number of State institutions which have now joined the system being 40. Loans on United States Bonds or Notes. That Federal Reserve Banks may be fully advised as to the methods by which they may make advances to member banks for the purpose of enabling them or their customers to carry or trade in bonds or notes of the United States, the Governor of the Federal Reserve Board sent out on February 16 the following letter: The Board deems it advisable that the Federal Reserve Banks should understand clearly what they may and may not do in the way of rediscounts or loans based upon United States Government bonds or notes. For your information, therefore, a memorandum which has been prepared by counsel and which has been approved by the Board is sent to you herewith, as follows: Section 13 of the Federal Reserve Act provides two methods whereby Federal Reserve Banks may make advances to their member banks for the purpose of enabling them or their customers to carry or trade in bonds or notes of the United States. Paragraph 2 of section 13 provides that upon the indorsement of a member bank a Federal Reserve Bank may discount notes, drafts, and bills of exchange arising out of actual commercial transactions, which may or may not be se- MAIICH 1, 1917. cured by staple agricultural products or other goods, wares, or merchandise. The law then states that "such definition" of eligible paper shall not include notes, drafts, or bills of exchange drawn for the purpose of " carrying or trading in stocks, bonds, or other investment securities except bonds and notes of the Government of the United States." This is equivalent to an affirmative declaration that a Federal Reserve Bank may discount a note, draft, or bill of exchange indorsed by a member bank which is issued or drawn for the purpose of carrying or trading in bonds or notes of the United States. This clause, however, does not permit of the discount for a member bank of one of its own bills pa}rable, since the requirement that the note or bill must be indorsed by a member bank precludes the possibility of applying this provision to the discount of anything but customers' paper. The amendment to section 13, approved September 7, 1916, provides, on the other hand, that a Federal Reserve Bank may make advances to its member banks on their promissory notes for a period not exceeding 15 days, provided such notes are secured by certain specified classes of paper or " by a deposit or pledge of bonds or notes of the United States." It is evident, therefore, that a member bank may borrow directly from its Federal Reserve Bank on the security of Government obligations, but not for a period longer than 15 days. Under the provisions of section 14, subsection (b), Federal Reserve Banks are authorized " to buy and sell at home and abroad bonds and notes of the United States," and under authority of this section member banks owning Government obligations may properly sell them to any Federal Reserve Bank desiring to make the purchase. SUMMARY. I. Any member bank which has loaned money to any of its customers for the purpose of carrying or trading in bonds or notes of the United States, may rediscount with its Federal Reserve Bank the bill or note of its customer, provided, such bill -or note (a) Has a maturity at the time of discount of not more than 90 days, exclusive of days of grace; and (&) Has the indorsement of the member bank. Such bill or note, however, need not necessarily be secured and need not be drawn for a commercial purpose other than for the purpose of carrying or trading in notes or bonds of the United States. FEDERAL RESERVE BULLETIN. MARCH 1,1917. II. Any member bank which lias itselt purchased obligations of the United States may procure advances from its Federal Reserve Bank, for not exceeding 15 days, on its own promissory note, provided such note is secured by a deposit or pledge of bonds or notes of the United States. III. Any member bank owning bonds or notes of the United States may, under authority of section 14, subsection (b), sell such bonds or notes to any Federal Reserve Bank desiring to make the purchase. FEBRUARY 16, 1917. A Texas Banker's Letter. The following letter, received by the governor of the Federal Reserve Bank of Dallas and by him forwarded to the Federal Reserve Board, is given as showing the kind of interest taken by a country banker in Texas in the Federal Reserve Act and its operation: " I have tried to keep in touch with the purposes and objects of the Federal Reserve Act as well as a busy man could who was not charged with the administration of any part of it. There is no question in my mind but that the system will eventually prove to be one of the very best bank acts in the world, after it has been seasoned and amended by years of experience. "In view of the fact that the present is an epoch-making period in the history of our country (and particularly so in a financial way) I am deeply interested both as a banker and citizen in making use of every instrument at command for fortifying ourselves against the coming evil day. ""It occurs to me that just at this time the thing of most pressing importance is the getting under the control of the Federal Reserve Banks as large a percentage as possible of all the gold in the United States where it can be advantageously used to protect the Government as well as the business interests of the country in an economic way. The recent amendments to the Federal Reserve Act as recommended by the Federal Reserve Board would materially aid in accomplishing this. 4 'Another thing which, in my judgment, w^ould help to place the country, and particularly Texas, on a sounder, safer basis, m a business way, would be the liberal use of both trade and bankers' acceptances in domestic and foreign 159 transactions. Notwithstanding the information industriously circulated by the Federal Reserve Banks, very few country merchants and country bankers have ever given the matter, so far as I am able to judge, any serious thought or tried to make use of them, and but few of the wholesalers, jobbers, grain dealers, oil mills, lumbermen, and manufacturers in the State have made general use of either. If they were in general use I believe a broad market for such bills would soon develop and if country bankers could buy prime bills for, thirty, sixty, and ninety days7 maturity from their correspondents in Texas or from brokers in. the principal Texas cities, a lot of these short maturities would be taken by country banks at any rate in advance of the usual 2 per cent on balances. In this way a lot of us fellows could loan much closer and at the same time always have paper that could be quickly rediscounted with our Federal Reserve Bank if some emergency should arise. I understand, of course, that these bills can be bought at this time in New York, but I want to see Texas business men make use of all the good things going and Texas finance herself in so far as is possible.7' Statements for the Press. The following message has been sent by Hon. W. P. G. Harding, Governor of the Federal Reserve Board, to the North Carolina State convention of commercial secretaries, farm demonstrators, bankers, and other business men, held at Gastonia, February 5-8, in lieu of an address which Mr. Harding was to have delivered at a meeting held at noon February 6: " I t was with keen regret that I felt obliged to telegraph you this morning that I could not go to Gastonia to-night in order to be present at the most interesting occasion in your city tomorrow. I had looked forward with much pleasure to the privilege of meeting and addressing the merchants, farmers, and bankers of the Carolmas, and was particularly anxious to avail myself of the opportunity of pointing out to them the very great value, especially in times like the present, of the Federal Reserve System, which has enabled the country to withstand without the slightest financial tremor all of the shocks and sensations that it has experienced during the past two years, many of which would doubtless, under old conditions, have been followed by serious consequences. Our prepared- 160 FEDERAL RESERVE BULLETIN. ness from a military and naval standpoint is now engrossing the attention of Congress and of the Nation, but I wish you would inform the audience which I expected to address that, from a financial standpoint, the country is already fully prepared and is ready to meet any contingency that is likely to arise, so that there need be no uneasiness whatsoever on that score. "I. had desired particularly to say a few words to the farmers by way of urging them not to become nervous or alarmed because of any threatened temporary interference with ocean transportation. I wished to point out to them that while in these fateful times, when it is beyond human power to forecast even the immediate future, we should remember that after all the only real wealth comes from the soil. selling at $100 a bale and more. The College of Agriculture of the University of Kansas pointed out at the time these prices were effective that while cotton had advanced in price it advanced merely in terms of gold, and it made an interesting comparison as to its price in terms of other commodities. It estimated the purchasing power of cotton in an ordinary year, and on the basis of $100 per bale, and it demonstrated statistically that even at $100 per bale the southern cotton planter who had not planted in a manner to provide for his necessities in the way of foodstuffs was in a sorry plight, for a bale of cotton will buy, in an average year, with cotton at from $50 to $60 per bale— 89 bushels of potatoes, at 70 cents. 750 pounds of lard, at 8 cents. 22 barrels of flour, at $4.50. 375 pounds of bacon, at 16 cents. 6 tons of hay, at $10. 30 pairs of shoes, at $2. 720 yards of cotton cloth. 100 bushels of corn, at 60 cents. CALL FOR LARGE CROPS. "A character in Greek mythology is Antseus, of whom it is said that he could not be overcome in wrestling, for whenever he was brought to his knees he received renewed strength from his mother, Earth, and was enabled thereby to arise in his might and overcome his adversary. Throughout the world millions of men have been withdrawn from their ordinary avocations and arc devoting themselves entirely to military duties. It seems to me it is clearly the duty of the farmers of the United States, in the planting season fast approaching, to prepare for the largest crops of all kinds that it is possible to produce. No farmer should devote himself to a single crop alone, but he should diversify, with the idea of growing as far as possible on his own land everything necessary for the sustenance of his family and of his domestic animals. Three years have elapsed since our fertilizers have contained an adequate supply of potash, and under present conditions it is hardly probable that an excessive supply of the South/s greatest staple crop, cotton, can be produced. Virginia, North and South Carolina, Georgia, and Alabama are now great cotton-manufacturing States, and their annual consumption of raw cotton approaches that of England and is greater than that of New England and Canada combined. If the farmers of the South will practice diversification they need have no fear as to the price of cotton, for any condition which will make exports of cotton impossible will likewise render impracticable exports of foodstuffs. It follows, therefore, that if the price of cotton should decline, the price of cereals, grain, and hay, will decline also. A few weeks aw cotton was MARCH 1, 1917. and this year, at $100 a bale, it will buy 44 bushels of potatoes, at $2.25. 555 pounds of lard, at 18 cents. 10 barrels of flour, at $10. 333 pounds of bacon, at 30 cents. 5 tons of hay, at $20. 20 pairs of shoes, at $5. 666 yards of cotton cloth. 83 bushels of com, at $1.20. DIVERSIFICATION. 1 ' The subject of nutrition has been reduced to a science, and the importance of a well-balanced diet is now well understood. Some foods are rich in nitrates, others in carbohydrates, and others in proteins. No family can keep itself healthy ii it lives entirely on meat or entirely on potatoes, or entirely on peas, or altogether on eggs and milk. A scientific combination of these foods is essential for the best results. So likewise with farming. No State can prosper if its farmers devote their energies to the cultivation of a single crop, be it cotton or be it grain or hay, and to obtain the best results diversification is necessary. The farmer should be impressed with the necessity of rotation of crops in order that their soil may not be impoverished, and if they plant several products they are not affected by the price of any one of them. It is not possible to advise a farmer intelligently as to the amount of cotton he should plant. In some cases live acres to the plow would seem best, and there may be other instances where eight or ten acres to the plow MARCH 1, 1017 FI-iPKRAL RESERVE BULLETIN. 161 greater than the present aggregate resources of all national banks in the central i^eserye cities of New York, Chicago, and St. Louis, which aggregate $3,946,000,000. The following are the principal changes shown in the condition of national banks December 27, 1916, as compared with the previous call of November 17, 1916, and the corresponding call a year ago. Resources, 15,333 million dollars, a decrease of 1S6 million as compared with November 17, 1916; and as compared with December 31, 1915, an increase of 1,865 million dollars. Loans and discounts, 8,340 million dollars, a decrease from November 17, 1916, of 5 million and an increase over December 31, 1915, FEBRUARY 6, 1917. of 982 million. Cash on hand and due from Federal Reserve Banks, $1,493,443,000, an increase over NovemSTATEMENT BY THE OFFICE OF THE COMPTROL- ber 17, 1916, of $55,928,000, and over December 31, 1915, of $281,579,000. LER OF THE CURRENCY. Due from banks and bankers other than The compilation of national bank returns as Federal Reserve Banks, December 27, 1916, of December 27, 1916, just completed, show $1,844,702,000, a decrease from November 17, total resources of 15,333 million dollars, a 1916, of $174,064,000, and an increase over reduction of 186 million dollars from the call December 31, 1915, of $311,389,000. of November 17, 1916, but this decline is Securities other than United States bonds, wholly due to a shrinkage in the resources of 1,725 million dollars, an increase over Novemthe national banks in the central reserve and ber 17, 1916, of 15 million, and over December other reserve cities, for the country banks show 31, 1915, of 350 million. an aggregate growth in resources as compared Deposits, December 27, 1916, $12,264,662,with the November call of $79,(300,000, their 000, a decrease from November 17, 1916, of resources December 27, 1916, being greater $223,227,000, but an increase from December than on any previous call. 31, 1915, of $1,884,971,000. The resources of the country banks on As compared with the November 17, 1916, December 27,1916, amounted to approximately statement, time deposits increased December 7 billion dollars, showing that the country 27, 1916, 38 million, while balances due to banks now hold more than the total resources banks and bankers decreased 87 million, and of all the national banks, including the vast demand deposits shrunk 174 million. Of the accumulations in all the reserve and central 1,884 million dollars increase shown since Dereserve cities, plus the country banks, as late cember 31,1915, 437 million were time deposits, as the year 1904. 924 million demand deposits, and 523 millions Since May 1, 1916, the country banks have in amounts due banks and bankers. increased their resources 759 million dollars, Surplus and profits December 27, 1916, 1,106 or 12 per cent. In the same period the re- million, an increase since November 17, 1916, soxirccs of national banks in the central reserve of 16 million, and since December 31, 1915, of cities declined 77 million dollars, or 2 per cent, | 87 million. and the resources of the national banks in other ! The amount of acceptances based on imports reserve cities increased 455 million dollars, or and exports was 100 million dollars December 11 per cent. 27, 1917, an increase since November 17, 1916, These figures indicate that the tendency, of $2,111,000. noted for some time past, toward a wider difCash letters of credit, 35 million, an increase fusion of the banking resources of the country since November 17, 1916, of $3,637,000. continues. Bills payable and rediscounts, December 27, The figures show that there has been added 1916, 89 million, an increase since November to the resources of the national banks since 17, 1916, of 16 million, but a reduction since January 13, 1914, $4,037,000,000, an amount December 31, 1915, of 8 million. may be planted; but in no case, particularly in times like the present, should the farmer entrust all his eggs to one basket and risk his solvency upon a single crop. " I n my opinion, the greatest service that the farmers of the South can render their section, their country, and the world in general is to coax from the soil during the year 1917 as great an abundance as possible of crops of all kinds. "Please say to the members of the Chamber of Commerce of Gastonia, and to the bankers of your city, that I highly appreciate their kind invitation, and express to them again my deep regret at being obliged, at the last moment, to forego the pleasure of meeting them.'7 162 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. Changes in resources between calls by States I Reserve district were accustomed to the pracand reserve cities: Between the calls of Novem- | tice of direct sending of checks and the coverber 17, 1916, and December 27, 1916, the | ing of same by remittance upon receipt. When national banks in New York City reduced their resources 200 million dollars, in Chicago 15 j the foreign department of the Boston Clearing million, and in St. Louis 5 million. The reduc- House Association was established, a considtion for the same period in Boston was 15 mil- erable percentage of the country banks were lion, Philadelphia 22 million, and San Francisco making a charge when remitting, but by dili7 million. gent and persistent efforts these exchange The largest increase for reserve cities was charges were gradually eliminated in the case shown at Louisville, 5 million. Des Moines and Salt Lake City increased about 4 million of most banks, so that in July, 1916, there each. The increases in other reserve cities were in New England 632 banks outside of were for smaller amounts. the Boston Clearing House, 391 of which were Among the country banks Pennsylvania leads national banks and 241 State banks and trust with an increase of 20 million, followed by Iowa with 12 million and Illinois with 10 million. companies, and of these all remitted at par The country banks in Ohio and New Jersey to the Boston Clearing House except 54 naincreased about 8 million dollars each, Kansas tional banks and 35 State banks and trust 7 million; Connecticut, West Virginia, and companies. Florida about 5 million each; Virginia, KenRESERVE COLLECTION PLAN. tucky, and California about 4 million each, and Louisiana, Indiana, and Wisconsin 3 million The check collection plan which the Federal each. Reserve Bank proposed to put into operation The States in which the banks showed a decline between the two calls were New York July 15, 1916, was in most respects so simi10 million dollars, Texas 8 million, Georgia 7 lar to that in successful operation in the million, and Oklahoma and North Dakota Boston Clearing House that negotiations about 3 million each. were entered upon with the Clearing House FEBRUARY 9, 1917. Association looking to taking over the operations of their foreign department. The Boston Clearing House Association has from the Clearing and Collection at Boston. first shown the greatest courtesy and interest Clearing and collection at Boston, because in cooperating with the Federal Reserve Bank, of conditions more favorable than those in and an agreement was entered into by which, other Federal Reserve districts, has been of upon the date of the beginning of check collecmore than ordinary interest as a record of tion operations in the Reserve Bank, the Bosprogress. The Boston Clearing House was ton Clearing House should discontinue the optaken over by the Federal Reserve Bank on eration of its foreign department, the Federal July 15, 1916. The cost of collection for the Reserve Bank agreeing to take over the staff last month was 0.0065 cent per item. There of the Boston Clearing House and to assume the follows a report prepared by Alfred L. Aiken, lease of the rooms occupied by it, with the regovernor of the Boston bank, for the Federal sult that, so far as the relations with the banks Reserve Board, which summarizes the clearing in this district outside of Boston were concerned, there was no break in the already existand collection operations: ing methods, except in some minor details, and In 1898 the Boston Clearing House Association organized its so-called foreign department, the Federal Reserve Bank was immediately and practically ever since that time the mem- provided with suitable rooms for the carrying bers of the Boston Clearing House Association on of its check collection operations and with have been collecting checks drawn upon all the a thoroughly trained staff. Upon the beginning of the check collection New England banks through that agency, with the result that all the banks in this Federal operations through the Federal Reserve Bank, MAECH 1,1917. 163 FEDERAL RESERVE BULLETIN". 54 national banks that had previously declined previously handled by the Boston Clearing to remit at par automatically went on the par House Association, as is shown by the following list, and within a few days after that date all table. In this table the figures from July 15, the nonmember banks and trust companies had 1916, to August 31, 1916, are not included, as also agreed to remit to the Federal Reserve they were not analyzed by months, and covered Bank at Boston at par upon receipt for checks a period of about six and a half weeks: sent them drawn upon themselves. The nonClearings and collections. par banks in some of the larger centers were [000 omitted from all figures.] advised that if they preferred such an arrangement, the Federal Reserve Bank would make New Checks on Checks onoutside England arrangements to present checks drawn upon Boston. Boston. them at their respective counters for payment in cash, but they all agreed to remit and forego Amount. Number. Amount. their exchange charges. The result has been 755 1916 $65,592 $67,668 that practically ever since the opening of our Sept.,1916 822 86,701 Oct.. 76,593 813 103,417 Nov., 1916 75,921 check collection department the Federal Re- D e c , 1916 102,851 864 78,962 94,411 885 82,347 Jan., 1917 serve Bank of Boston has been able to collect at par checks drawn upon all banks both memChecks on other districts. ber and nonmember within this Federal Reserve district. Sent by Federal Sent direct. Total. Reserve Banks. CHANGES IN PRACTICE. No. Amount. No. Amount. No. Amount. It had been the practice of the Boston Clear41 14 §27,712 27 S18.705 $9,007 1916.... ing House Association to make a charge based Sept., 1916 19 56 12,378 35,898 37 23,520 Oct., 27 13,015 60 35,643 33 22,628 1916.... on the volume in dollars of business handled. Nov., 1916 36 14,438 75 37,306 39 22,868 Dec, 32 13,790 73 33,715 41 19,925 The change from the per thousand basis to the Jan., 1917 per item basis caused some criticism at first, but in most instances the change has been The steady increase in the volume of New looked upon favorably and is considered a England items handled by this bank, and also more equitable basis of distribution of the ex- in the volume of collections upon New England pense than the old basis upon the volume in points outside of Boston handled by the forthousands of dollars. eign department of the Boston Clearing House Soon after the Federal Reserve Bank of Association during the preceding year in. the Boston took over the foreign department of months corresponding to those for which the the Boston Clearing House, the Boston Clearing figures are given in the foregoing table, are House Association changed its rules, and put worthy of note, as shown hereunder. upon the discretionary list all points in this foreign department Federal Reserve district that could be collected New Englandthechecks collected through theAssociation. of Boston Clearing House at par through the Federal Reserve Bank of $35,900,578 Boston, with the result that ever since that September, 1915 39,749,785 date a considerable volume of checks that were October, 1915 November, 1915 40,548,772 previously collected through various collection December, 1915 39,000,679 centers outside of New England have come to January, 1916 40, 303,292 New England banks, and have been collected COOPERATION OF BANKS. by them through the Federal Reserve Bank. The volume of collections through the Fed- The difficulties that we have encountered eral Reserve Bank has shown a marked and have not been many, as most of the banks in steady increase as compared with the volume this district, both member and nonmember, 164 FEDERAL EESERVE BULLETIN. have been disposed to cooperate with us in every way possible, though we should not have received the increasing volume of business had not the banks availing themselves of our facilities been satisfied that this method of collection was more economical and satisfactory for them than any other method, and the increasing volume is the best evidence of the growing favor of the method that we are cany ing on. The principal obstacle that we have to contend with arises from the fact that while we receive for collection practically all the checks drawn upon member banks in this district that circulate out of the immediate neighborhood of the bank, these banks find it difficult to provide an offset, because of the fact that nonmember banks in other districts have not been willing to remit for their checks at par to the Federal Reserve Banks in their district. When it is possible to collect all checks, both member and nonmember, through the Federal Reserve Banks, I look for a very rapid increase in the volume that will come through this Federal Reserve Bank. The handling cost of our business is approximately 0.9 cent per item, although with the exception of one month it has been slightly less than this amount. We are confident that with our increasing volume it is a question of a comparatively short time when we shall be able to reduce the per item charge. MEMBERSHIP 1ST CLEARING HOUSE. Upon the opening of the Federal Reserve Banks in November, 1914, the Federal Reserve Bank of Boston was admitted to limited membership in the Clearing House Association, and immediately thereafter the Boston Clearing House Association agreed to settle daily balances at the clearing house by checks upon the Federal Reserve Bank, which was easily done because of the fact that all the clearing house members were members of the Federal Reserve System. Further than this, at the present time all of the operations of the Boston Clearing House are carried on on the premises and by the staff of the Federal Reserve Bank. The necessity of handling large amounts of money MARCH 1, 1917. in the settlement of balances has been entirely done away with, and the cost of cit}^ clearings has been greatly reduced. Our local situation is apparently giving satisfaction to all the banks that are parties to it, and for this satisfactory state of affairs, the Federal Reserve Bank of Boston is greatly indebted to the interest and hearty cooperation of the Boston Clearing House Association. FEBRUARY 20, 1917. Banks as Insurance Agents. Regulations under which national banks may act as insurance agents and as brokers or agents in making or procuring loans on real estate under the amendment covering such action passed by Congress in 1916 have been issued from the office of the Comptroller of the Currency. They are given below for the information of Federal Reserve and member banks: To all National Banks: An amendment to the Federal Reserve Act approved September 7, 1916, provides: "That in addition to the powers now vested by law in national-banking associations organized under the laws of the United States, any such association located and doing business in any place, the population of which does not exceed five thousand inhabitants, as shown by the last preceding decennial census, may, under such rules and regulations as may be prescribed by the Comptroller of the Currency, act as the agent for any fire, life, or other insurance company authorized by the authorities of the State in which said bank is located to do business in said State, j by soliciting and selling insurance and collecting pre! miums on policies issued by such company; and may receive for services so rendered such fees or commissions as may be agreed upon between the said association and the insurance company for which it may act as agent; and may also act as the broker or agent for others in making or procuring loans on real estate located within one hundred miles of the place in which said bank may be located, receiving for such services a reasonable fee or commission: Provided, hovjever, That no such bank shall in any case guarantee either the principal or interest of any such loans or assume or guarantee the payment of any premium on insurance policies issued through its agency by its principal: And provided further, That the bank shall not guarantee the truth of any statement made by an assured in filing his application for insurance." All national banks acting or proposing to act under the provisions of the foregoing law are requested to observe strictly the following regulations: MARCH 1,1917. FEDERAL RESERVE BULLETIN. WHERE A NATIONAL BANK ACTS AS INSURANCE AGENT. 165 bank to act as its agent, setting forth that the bank does not guarantee the payment of any premium on insurance policies issued through its agency by its principal, and stating that the bank is not to be held responsible for the truth of any statement made by an assured in filing his application for insurance. (d) Copies of all reports made by the agent bank to each insurance company which it represents. 4. The bank will be required to keep a record as to each company for which it acts as agent, showing: For fire insurance: The amount of each policy, the rate and premium, date of commencement, term, and date of expiration, as well as a description of property insured, with name of assured, and to whom loss is payable. As to life insurance: Amount and date of policy, with premium, and a statement as to under what form the insurance is written, giving also name of assured and beneficiary. As to any and all other forms of insurance: The fullest possible particulars as to amounts, dates, rates, premiums, and what is insured by the policy, and of collection of all premiums collected for account of the company, refunds made, the proportion of premium credited to the profits of the bank under its agreement with the company, the proportion due the company, the amounts and dates of all remittances made to the insurance company on account of premiums collected, and the balance, if any, due from the bank to the insurance company. 5. The bank will be required to carry on its general ledger an account which will, at all times, show the amount due to insurance companies for which it is acting as agent, on account of premiums collected but not remitted, and this liability must be shown in reports of condition and in the published statements of the bank under the heading "Other liabilities—on account of insurance premiums collected and not remitted," unless specifically provided for in the report. 6. The bank should also keep such records as may be required by each insurance company in the manner and under the forms prescribed by the various companies; all of which should be available for inspection by the examiner on request. 7. The agent bank must not assume any responsibility or liability for either the adjustment, settlement, or payment of losses under any policy issued by or through its agency. 8. The records of all profits derived from the insurance agency should be carried in a separate account on the books of the bank, and the records should be so kept as to enable the examiner readily to trace to the source all items of profit derived in this connection. It will be seen from the above that in order to avail itself of the provisions of this act relative to acting as agent for an insurance company: (a) The bank must be located in a place the population of which does not exceed 5,000 as shown by the las* preceding decennial census. (b) The insurance company for which the bank acts as agent must have been authorized by the authorities of the State in which the bank is located to do business in that State. (c) The activities of the bank as such agent must be restricted to the soliciting and selling of insurance and the collection of premiums on policies issued by the insurance company. (d) The bank may receive for services so rendered such lawful fees or commissions as may be agreed upon between the bank and the insurance company for which it may act as agent. (e) The bank is prohibited from assuming or guaranteeing the payment of any premium on insurance policies issued, through its agency, by its principal. (/) The bank is prohibited from guaranteeing the truth of any statement made by an assured in filing his application for insurance. (g) The powers conferred are to be exercised under such regulations as may be prescribed by the Comptroller of the Currency. In pursuance of the foregoing amendment the following regulations are hereby prescribed for national banks which may undertake to act as agents for insurance companies: 1. Each contract of agency must be formally accepted by the board of directors of the agent bank by a resolution spread upon the minutes in the following form: "Be it resolved that the contract of agency entered into on 191.. between the insurance company and the national bank of , by president (or vice president) and cashier, a copy of which is on file in this bank, is hereby ratified and approved." 2. A certified copy of such resolution, attested by the president or vice president and by the cashier and by a majority of the directors of the bank, must be forwarded to this office on forms to be furnished by this office. 3. There should be on file in the bank, available for inspection by the examiner, the following documents: (a) An authoritative statement showing the population of the town according to the last preceding decennial census. (b) A proper certificate from the authorities of the State WHERE A NATIONAL BANK ACTS AS BROKER OR AGENT IN in which the bank is located showing as to each insurance MAKING OR PROCURING LOANS ON REAL ESTATE. company for which the bank is acting as agent that such In order to avail itself of this privilege: company has received authority from the said State to (a) The bank must be located in a place the population transact business in that State. (c) A proper certificate or other writing of each insur- of which does not exceed 5,000 as shown by the last preance company for which the bank acts authorizing the ceding decennial census. 82341—17 3 166 FEDERAL RESERVE BULLETIN. (6) The real estate by which the loans negotiated are secured must be located within 100 miles of the place in which the negotiating bank is located. (c) The bank may receive for such services a reasonable fee or commission. (d) The bank shall in no case guarantee either the principal or interest of any such loans. (e) The powers conferred are to be exercised under such regulations as may be prescribed by the Comptroller of the Currency. The following regulations are prescribed for national banks which may undertake to act as agents or brokers in making or procuring loans on real estate. 1. A bank intending to avail itself of this provision of the law must adopt by its board of directors a resolution in the following form: "Be it resolved, That the officers of the National Bank of — are hereby authorized and empowered on behalf of this bank, as broker or agent, to accept from customers of this bank deposits of funds to be invested for account of said customers, in loans secured by real estate, and to procure, as broker or agent, for customers of this bank loans which shall be secured by real estate, under the provisions of the act approved September 7, 1916: Provided, That the investment of such funds as stated, and all such procuring of loans or lending of funds for clients shall be undertaken only under written instructions from the customer for whom this bank, through its officers, may act as broker or agent," such written instructions in each case to be first delivered to an officer of this bank. Such instructions shall, in all cases, state clearly that the bank in acting as broker or agent in no way guarantees payment of either the principal or interest of any loan so negotiated." 2. A certified copy of such resolution, attested by the president or vice president and cashier and by a majority of the directors of the bank, must be forwarded to this office, on forms to be furnished by this office. 3. No bank shall charge more than one commission or brokerage on the making of any loan; that is to say, if it shall charge a brokerage or commission to the party borrowing the money, it shall not charge a brokerage or commissjon to the party for whom money is so loaned, and vice versa. 4. Each bank acting under this provision of law will be required to keep a record showing as to each loan negotiated by the bank— (a) The name and address of the principal for whom the bank is acting, (6) Date of written instructions from the principal, (c) Name and address of maker of note, (d) Date of note, (e) Date of maturity of note, (/) Brief description of property securing note, showing location and distance from place in which bank is located, (g) Character of improvements, etc., (h) Name and address of party to whom note was trans, f erred or delivered by the bank, MARCH 1, 1917. (i) Date of such transfer or delivery, (j) Amount of principal of note, (£) Kate of interest or discount, (I) Rate of commission or brokerage charged by bank for acting as broker or agent, and (m) Amount of such commission or brokerage, and whether said commission was paid by borrower of the money or by the party for whom it was loaned. 5. A book should be kept showing the date on which each mortgage or deed of trust negotiated by the bank has been admitted to record, the court in which the same is recorded, and the recordation fees paid in each case. 6. The records of all profits derived from acting as broker or agent in negotiating loans on real estate should be carried in a separate account on the books of the bank, and the records should be so kept as to enable the examiner readily to trace to the source all items of profit derived in this connection. 7. Deposits of money received by the bank as broker or agent to be invested in loans secured by real estate as prescribed by law, must be treated as trust funds and kept separate and apart from the other assets of the bank. Such funds must in no case be permitted to pass from the possession of the bank until the loan for which they are to be paid out is formally accepted by or in behalf of the party for whose account negotiated; 8. No bank shall advance or use its own funds in connection with real estate loans negotiated as broker or agent. 9. No loans secured by real estate, which the bank has negotiated as broker or agent, should become a part of the assets of the bank even temporarily, unless such loans conform to the provisions of section 24 of the Federal Reserve Act, as amended. 10. There should be available in the bank for inspection by the national-bank examiner— (a) An authoritative statement showing the population of the town according to the last preceding decennial census. (6) All records pertaining to the negotiation of real estate loans as broker or agent. National banks acting as broker for the placing of loans should prepare blank forms of application to be executed by applicants for loans. These applications should show— (a) Location of property. (6) Acreage. (c) Assessed valuation. (d) Estimated present value. (e) Brief descriptions of buildings thereon and estimated I value of them. (/) Whether buildings are insured, and, if so, for what amounts and in what companies. (g) Whether property is already encumbered, and, if so, for what amount. (h) If property is farm property applicant should state whether or not the dwelling is provided with sanitary arrangements approved by the local board of health, and, if not. what, sanitary arrangements there are. 167 FEDERAL RESERVE BULLETIN. .MARCH 3,1917. At the foot of this application should be printed below the signature of the applicant a statement to the effect that "The statements in the foregoing application have been submitted to this bank by the applicant for the loan, but this bank does not undertake to guarantee the correctness of any of the statements made by the applicant." If any applicant for a loan makes statements in hie application which any officers of the bank .before whom the application may come may have reason to think are not correct, the attention of the applicant should be called to the possible discrepancy. Fiduciary Powers, Banks. New charters issued to With capital of , Increase of capital approved for With new capital of 13 $575,000 25 3,030,000 Aggregate number of new charters and banks increasing capital._.-. 38 With aggregate of new capital authorized 3,605,000 Number of banks liquidating (other than those consolidating with other national banks) Capital of same .bank Number of banks reducing capital Reduction of capital. 5 557,500 2 The applications of the following banks for Total number of banks going into liquidapermission to act under section 11-k of the tion or reducing capital (other than those 7 consolidating with other national banks). Federal Reserve Act have been approved since Aggregate capital reduction the issue of the February Bulletin: 213,000 770,500 The foregoing statement shows the aggregate of increased capital for the period of the banks embraced in statement was 3,605,000 Registrar of stocks and bonds: Against this there was a reduction of capital Mechanics and Metals.National Bank, New York City. owing to liquidations (other than for conDISTRICT NO. 3. solidation with other national banks) and reductions of capital of. .->, 770,500 Trustee, executor, administrator, and registrar of stocks and bonds: Net increase 2,834,500 National State Bank. Camden, N. J. Second National Bank, Wilkes-Barre, Pa. DISTRICT No. 2. DISTRICT No. 9. Trustee, executor, administrator, and registrar of stocks and bonds: First National Bank, Arlington, S. Dak. Minnehaha National Bank, Sioux Falls, S. Dak. DISTRICT NO. 10. Trustee, executor, administrator, and registrar of stocks and bonds: First National Bank, Ord, Nebr. DISTRICT NO. 12. Registrar of stocks and bonds: First National Bank, Marshfield, Oreg. New National Bank Charters. The Comptroller of the Currency reports the following increases and reductions in the number of national* banks and the capital of national banks during the period from January 20, 1917, to February 23, 1917, inclusive: Commercial Failures in January, Business reverses in the United States during January were more numerous and involved a larger indebtedness than in December, 1916, yet the increase in both respects was less than in nearly a decade. Commercial defaults last month, as reported to R. G. Dun & Co., numbered 1,540, with liabilities of $18,283,120, against 1,252 for §16,745,274 in December, 2,009 last year for $25,863,286, and 2,848 for $49,640,575 in January, 1915, the maximum point on record. The number of January failures was the smallest far the period since 1910, while the sum of money owed was the smallest of any year back to 1909. Separation of statistics hy Federal Reserve districts discloses fewer insolvencies than last year in every instance, with the single exception of the tenth district where there was a ; slight increase. Numerically, the improve-- 168 FEDERAL RESERVE. BULLETIN. ment was especially marked in the eleventh, eighth, fifth, and third districts, while the liabilities, apart from the'first and third districts, were smaller in every case, and notably so in the fifth, ninth, eleventh, sixth, and second districts. The number of commercial failures and liabilities in each district for the month of January, this year and last, are compared below: Jan., 1917. Districts. Jan., 1916. hNumber. Liabilities. ! Number. Liabilities. I 176 82,201,296 241 4,446,073 77 1,702,861 129 990,378 104 549,458 161 1,486,533 No.l No. 2 No. 3 No. 4 No. 5 No. 6 No. 7 No. 8 No. 9 No. 10 No.U No. 12 . . . 181 68 54 73 58 213 United States 1,540 2,954,773 1,422,831 447,077 310,284 498,256 •1*, 273,300 18,283,120 191 329 120 163 171 186 209 141 66 75 129 81,645,500 8,810,900 988,240 1,442,950 1,427,400 2,490,200 2,966,600 1,475,000 988,400 350,900 1,292,696 1,984,500 2,009 25,863,286 i Experience with a Reserve Bank Agency. During the past summer the Federal Reserve Bank of St. Louis established an office at Memphis, Tenn., for the purpose of better meeting the convenience of the member banks of district No. 8 during the crop-moving season. The following report of the experience with the office at Memphis, prepared by Chairman Wm. McC. Martin, sets forth the details with regard to the operation of the Memphis office, and furnishes the essential forms which were found necessary there. This experience is likely to prove of distinct help should an office of the same character be established by some other Federal Eeserve Bank in the future. Mr. Martin reviews the Memphis experience as follows: POLICY DURING COTTON MOVEMENT. In the cotton movement period during the first year of this bank's existence, it did everything in its power to enable member banks to avail themselves of the rediscount privileges when they were needed. We made especial efforts to help out those banks that had to MARCH 1,1917. bear the burden of the cotton movement. We were of considerable assistance to some banks in Arkansas and Mississippi, but the Memphis banks, while getting some aid from us through rediscounts, did not exercise their full privileges. During the months of September, October, and November, 1915, Memphis member banks rediscounted considerable paper with us, but practically none of it was secured by cotton collateral. The reason of this was that the board of directors of this bank did not feel that it was sound banking to rediscount a cotton loan and allow the warehouse receipts to remain in the hands of the borrowing bank. The Memphis banks advised us that this was the custom of the New York and Boston banks. We, of course, thoroughly understood that it was impracticable for a bank to rediscount a loan secured by cotton warehouse receipts and send the receipts out of the locality, making it difficult to allow substitutions. We, therefore, suggested that when one bank rediscounted with us a loan secured by cotton warehouse receipts, it turn over the receipts to another designated member bank, which would hold them under a trust agreement with us and permit the necessary substitutions. This method was objected to on the ground that the banks were all competitors, and no bank cared to have a competitor, through holding cotton warehouse receipts, get information in regard to its customers. The same objection was made to having a State bank or trust company hold the collateral. This bank felt that, while it was not necessary for the cotton warehouse receipt collateral to be in its hands in St. Louis, it should be either in its possession or in the possession of some properly constituted agent who would hold the collateral on its behalf. Those banks in Arkansas and Mississippi that we helped with their cotton loans during 1915 agreed to an arrangement whereby the cotton collateral was held in those localities where there were two or more member banks, by another member bank and in those localities where there was only one member bank by some State institution in the same town that MARCH 1,1917. the Federal Reserve Bank found satisfactory. Such an arrangement, however, was not satisfactory in Memphis. This was also the situation at the beginning of the cotton movement in 1916. Our board of directors insisted that the borrowing bank should not retain custod}^ of the collateral to loans rediscounted by it, and the Memphis bankers did not consider it wise for them to hold each other's cotton receipts. MEMPHIS AGENCY PLAN. However, the Memphis banks were anxious to use the rediscount facilities of this bank, and as the Federal Reserve Bank always wishes to be of help to member banks when they desire it, a plan was worked out which was satisfactory to both the Memphis banks and this bank. We sent one of our own men from this office to open an agency at Memphis at the request of, and for the purpose of aiding, member banks in handling the cotton situation. On September 25, 1916, Mr. T. C. Tupper, deputy Federal Reserve Agent and manager of our credit department, went to Memphis and rented an office and the necessary safe deposit space. Only a small office was needed with room for two desks, and this was found on the fourteenth floor of the Central-State Bank Building. Two large boxes in one of the conveniently-located safe deposit vaults were all the other equipment necessary. On October 11, 1916, Mr. W. H. Glasgow, assistant to the Federal Reserve Agent, relieved Mr. Tupper and remained in charge of the office until it was closed on January 20, 1917. CONTRACT COVERING SAFE DEPOSIT BOXES. Such safe deposit boxes as were needed were rented in the name of the Federal Reserve Bank of St. Louis, and instructions given by the bank to the effect that access was to be allowed to our representative only when accompanied by one of certain designated persons representing the bonding company which was on our employee's bond. The boxes were to be both opened and closed in the presence of these two persons. 169 FEDERAL RESERVE BULLETIN. REPRESENTATIVE OF THE BONDING COMPANY. So many substitutions of cotton warehouse receipts were necessary that it was found convenient to have the bonding company designate a man to represent it, who occupied one of the desks in our Memphis office and gave his entire time to this business. While this man was entirely subject to the orders of the bonding company, this bank paid his salary. METHOD OF OBTAINING REDISCOUNTS. When a bank desired to rediscount paper with the Federal Reserve Bank of St. Louis, it called up our representative, who promptly went to the bank. The bank then told him that it wanted to rediscount, say, $100,000 of paper secured by cotton warehouse receipts, and frequently discussed with him the basis on which the collateral would be acceptable. He, of course, had received instructions from this bank as to the amount per bale at which we would accept the cotton as collateral. Being on the ground, he knew the general standing of the factors and buyers and the character of cotton they handled as a rule. The bank then sent over to our Memphis office warehouse receipts covering the cotton proposed to be pledged. There they were counted, and our representative delivered a receipt to the bank in the following form: No. 101. MEMPHIS, TENN., [Date.] Received of the National Bank of Prosperity Memphis Terminal Corporation Warehouse Receipts for 1,538 bales of cotton pledged as security for loan to John Doe & Co. for One Hundred Thousand Dollars. Substitution of receipts for cotton of like value to be made on order of above-named bank. Receipts to be surrendered on payment of loan and delivery of this receipt to undersigned. FEDERAL RESERVE BANK OF ST. LOUIS. By . The bank then filled out a regular application for a rediscount with the Federal Reserve Bank of St. Louis, properly indorsed the note, and attached to it the above-described receipt signed by bur representative, and forwarded the loan to this bank for consideration. If 170 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. the loan was accepted, its proceeds were receipts held by you as collateral on paper made by them credited to the Memphis bank, and the col- and rediscounted with you by us. This authorization to remain in force and effect until lateral was in the hands of our representative you are advised by us in writing to the contrary, and in such shape that substitutions could be easily j receipts of acknowledgment from you of such advice. Yours, truly, made. If for any reason the note should be j NATIONAL BANK, declined, it was returned to the bank and the i By , Cashier. bank in turn presented the receipt attached to j our representative, who took up the receipt j MODE OF MAKING SUBSTITUTIONS. and redelivered the collateral. j i By the above plan the cotton buyer was saved RECEIPTS FOR COLLATERAL. the necessity of going to the bank that originally In order that this bank might be fully ad-i granted the loan each time that he wanted to vised at the close of each day's business, our make a substitution. Instead, he went straight representative wrote a letter covering the to our office in Memphis. Our representative and the representative ot the bonding company receipts for collateral he had issued during the then accompanied the representative of the day. The form of this letter was as follows: borrower to the safe-deposit vaults. There, MEMPHIS, TENN., . in the presence of all three, the substitutions of [Date.] i new receipts for those desired occurred and the FEDERAL RESERVE BANK, j proper entries made. This system worked . St. Louis, Mo. GENTLEMEN : I have to-day issued the following receipts smoothly and satisfactorily, and both the to the National Bank of Prosperity: member banks and the Federal Reserve Bank Receipt No. 101, for 1,538 bales, $100,000, loan John were fully protected. Doe & Co.; As above stated, this agency was opened on Receipt No. 102, for 100 bales, $6,000, loan Smith & Co. ; Receipt No. 103, for 215 bales, $15,000, loan John Jones.; September 25, 1916, and closed on January 20, Receipt No. 104, for 700 bales, $42,000, loan Brown & 1917. During that period of time we redisCo.—2,553 bales, securing $163,000. counted loans for the Memphis banks amountYours, truly, ing to $1,782,450. This, however, is not the full measure of help we have given the Memphis SUBSTITUTIONS. banks, since on closing the office, through this As the loan had originally been made by the agency, we succeeded in having the Memphis member bank to a cotton buyer or a factor, and banks agree to allow each other to hold cotton the latter had turned the collateral over to the collateral. Since the closing of this office on bank, which in turn had turned it over to us, January 20 to February 15, 1917, we have in order to be fully protected in any substitu- rediscounted paper for the Memphis banks tions that we allowed, each of the banks re- amounting to $383,920, making a total of discounting with us gave us the following rediscounts from September 25, 1916, to date authority: of $2,146,370. MEMPHIS, TENN., = . — In some accounts the substitutions were [Date.] FEDERAL RESERVE BANK, much more active than in others. The most St. Louis, Mo. active account had pledged in the custody of GENTLEMEN: In order to facilitate the substitution of our representative a daily average of 1,429.2 warehouse receipts held hy our representative in Memphis, Tenn., securing loans rediscounted by us with the Federal bales of cotton. The number of substitutions Reserve Bank of St. Louis, and in.order to relieve the in this account for the period from October 16, owner .of such receipts, desiring to make substitutions, 1916, to January 20, 1917, was 11,021 bales; from presenting same to us, we direct that you accept such that is, the number of bales substituted was receipts bearing the name of the Memphis Terminal Cor7.7 times the average cotton on hand daily as poration, issued or purported to be issued by it, when collateral to its loans. Perhaps it will make tendered to you by any of our customers in substitution of 171 FEDERAL RESERVE BULLETIN. MARCH 1,1917. this clearer to say that though during the above period 11,021 bales passed through the hands of our representative, the collateral at any one time to the loans was 1,429.2 bales on the average. The number of substitutions ranged from this down. The least active account had in it a daily average of 278 bales, and during the period from October 26, 1916, to January 20, 1917, there were only 17 changes of collateral. Up to January 20, 1917, when we closed the Memphis office, there had been deposited as collateral 22,369 bales of cotton. From October 16, 1916, the date we commenced keeping a record of the number of substitutions, to January 20, 1917, there had been 40,041 substitutions. EARNINGS. For the period from the opening of the office on September 25, 1916, to the time it was closed on January 20, 1917, the statement of the earnings and expenses of the Memphis agency is as follows: System by the cotton interests, the banks, and the public in general. Confidence created by the existence of the system was the basis of unafraid business activity. (4) As for the results accomplished, the following quotation is given from a letter written by one of the large cotton factors and commission merchants in Memphis to our representative just before the Memphis agency was closed: u We think that the Federal Reserve Banks have saved the* day for the South this year. Under the old monetary system we think it would have been an impossibility to maintain prices of cotton like has been done this fall. Under the old system we think the rates of interest would have been very high, and prices could not have been maintained." Operation of the Clearing Plan. The following table shows briefly the clearing operations of the Federal Reserve system Discount earned $7, 574.42 for the monthly period ending February 15, Expenses (including salary of our representative for the time he was in Memphis) 1, 710.00 1917, with comparative figures for each of the six preceding months: Net earnings : 5, 864.42 CONCLUSIONS. (1) Through this agency established at Memphis the Federal Reserve Bank of St. Louis was able to take care of all of the needs of the Memphis banks and to give them as quick service as they desired. (2) At no time during the existence of this agency did any need of member banks arise which could have been handled more satisfactorily than through this agency had a branch bank been established there instead. Offerings put in the mail at night reached us the next morning, were passed on, and the proceeds put to the credit of the bank rediscounting generally before noon. We were in daily intimate contact with not only our member banks, but knew the entire situation as it existed in their territory. (3) Our representative found the keenest interest manifested in the Federal Eeserve Operation of the Federal Reserve interdistrict clearing system, January 16 to February 15, 1917. Average numj ber of items handled daily. Bank. Boston New York Philadelphia Cleveland. Richmond Atlanta... Chicago St. Louis Minneapolis Kansas Citv Dallas I San Francisco .. Average amount of daily clearing. 35,234 811,153,187 41,342 26,702,153 i 30,416 16,171,405 15,239 7,598,641 15,756 7,613,435 11,956 3,734,742 j 19J761 • 12,717,528 6,553,987 ! 10,329 5,310,106 ! 11,980 6,590,800 ! 11,387 4,539,320 ! 11,710 ,j 5,311 | 1,502,724 Total, Jan. 16 to Feb. 15,1917.. Dec. 16,1916, to Jan. 15, 1917 Nov. 16, 1916, to Dec. 15,1916 Oct. 16 to Nov. 15, 1916. Sept. 16 to Oct. 15,1916. Aug. 16 to Sept. 15,1916. July 16 to Aug. 15, 1916. Member banks in the district. 402 625 632 752 521 389 1,045 468 715 943 . 618 520 Nonmember banks from which checks are collected at par. 242 310 235 488 286 411 1,413 87? 1,100 1,405 219 1,105 220,421 1110,188,028 7,630 241,933 |l21,8l4,589 7,622 8,130 236,038 227,489 204,891 177,397 133,113 7,627 7,623 7,618 7,618 8,065 8,059 7,459 7,449 7,032 il25,603,732 115,061,224 97,666,107 78,559,704 59,301,696 172 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. Synopsis of Report of the Comptroller of the banks increasing their capital was 453 and the new capital authorized, $43,227,200. Currency. The following is a condensed synopsis or summary of some of the main features of the Annual Report of the Comptroller of the Currency (vol. 1—202 pp.) for the 12 months ending October 31, 1916, which, in accordance with section 333 of the Revised Statutes, was submitted to Congress on February 5. The synopsis was prepared and given out from the Comptroller's office. Unusual Combination of Great Business Activity and Easy Money: With the greatest prosperity and business activity the country has ever known, requiring the use of many hundreds of millions of additional accommodations from banks, says the report, the business men of the country have at the same time enjoyed the most favorable interest rates ever seen. Figures showing the decentralization of banking capital and the wholesome effects of the operations of the Federal Reserve System in all sections are given. The national banks are described as " the backbone and substance of the Federal Reserve System," and it is shown that on November 17, 1916, of the 7,614 members of the Federal Reserve System, 7,577 were national banks and that of $15,980,000,000 of resources, the resources of national bank members amounted to $15,513,000,000. Deposits in National Banks Increasing Faster than in State Institutions: In the 10 years preceding the inauguration of the Fedreal Reserve System the deposits in State banks and trust companies had shown a greater ratio of increase than the deposits in national banks, but from June, 1913, to June, 1916, the deposits of the national banks increased 33J per cent, while the deposits in State banks and trust companies increased only about 29 per cent. National Bank Resources Double in 10 Years: The resources of the national banks have doubled in 10 years, growing from 7,670 million dollars in April, 1906, to 15,520 million on November 17, 1916. The resources of the national banks on November 17, 1916, exceeded the total resources of all reporting State banks, savings banks, private banks, and loan and trust companies throughout the country at the time of the beginning of the Federal Reserve System two years ago. National Banks Increase in Numbers as well as in Capital and Resources: From the opening of the Reserve Banks November 16, 1914, to November 15, 1916, the Comptroller of the Currency issued charters to 264 new national banks with an aggregate capital of §16,109,500, and during the same period 189 national banks increased their capital by $27,117,700. The aggregate of new charters issued and Since the opening of the Reserve System, excluding banks consolidating with other national banks, the number of new banks chartered plus the number of existing national banks which increased their capital exceeds by 257 the number of national banks going into liquidation or reducing their capital, and the capital of the newly chartered banks plus the increased capital of existing banks exceeds by $26,514,200 the capital of all national banks which have gone into liquidation or reduced their capital during this period, other than those consolidating with other national banks. There were on hand on October 31, 1916, 46 additional applications for the organization of national banks approved by the Comptroller of the Currency, and 87 for new charters under consideration. "These facts," the comptroller eays, "furnish a conclusive reply to suggestions which have been occasionally made that there has been any general tendency toward the withdrawal of banks from the National Banking System." Wider Diffusion of Banking Wealth: The 100 largest national banks are now shown to be scattered through 22 different States and in 33 cities representing every section of the country, and not concentrated in a few centers as heretofore. Reduction in Number and Liabilities of Banks Failing, Since the Opening of Federal Reserve System: In the fiscal year ending June 30,1916, the first comptlee fiscal year under the new system there Were 15 national bank failures with aggregate liabilities of only $3,838,415, as compared with 19 failures with $39,952,000 liabilities for the year ending June 30, 1914, the last fiscal year preceding the opening of the new system—ten times.as large as for the past year. Unprecedented Growth in National Bank Resources: For the twelve months from November 10, 1915, to November 17, 1916, as shown by their sworn statements, the resources of the national banks increased $2,326,000,000 the greatest increase ever shown in a similar period. Increases in Twenty-Year Period: Tables presented illustrate the growth of national bank deposits at five-year intervals since 1896, and show that the deposits November 17, 1916, were 12,489 million dollars, as compared with 6,031 million dollars in November, 1906, and only 2,029 million dollars in October, 1896. The deposits of the national banks to-day are therefore six times as great as they were only twenty years ago. Reserves: The surplus or excess reserves held by the national banks November 17, 1916, amounted to 1,016 million dollars, this excess exceeding the total of all reserves held as late as September, 1901. Geographical Location of Excess Reserves: Reports of November 17, 1916, show, says the Comptroller, that the greatest excess of reserves are now held MARCH 1,1917. FEDEBAL EESERVE BULLETIN. in those sections of the country which before the institution of the Federal Reserve System were generally regarded as the borrowing sections. He points out that the Southern States held 127 per cent more reserve than they were re- j quired by law to hold; the Western States 158 per cent more; Pacific States 127 per cent more than their requirements, while reserves held in the Eastern States were 41 per cent more than necessary, and the Middle States 67 per cent more, and the New England States 59 per cent more than required. 173 To limit investment in bank building. To authorize United States Treasurer to sell bonds securing circulation 30 days after a bank goes into liquidation. Riggs National Bank Charter, Etc.: The Riggs National Bank controversy is briefly summed up and a synopsis of the decision of the Supreme Court of the District of Columbia upholding the comptroller's right to all the information and reports of every sort demanded of the bank is included in the report. Cash Reserves and Balances in the Reserve Banks: State Bank and Trust Company Statistics: The banks had cash in their own vaults and in reserve The report also contains the usual statistical tables as to banks amounting to $1,437,515,000, as compared with State banks, loan and trust companies, and savings banks, $1,212,960,000 in November, 1915, and $925,553,000 on both mutual and joint stock, for the past fiscal year, and October 31, 1914. for a period of years. "Acceptances" Aiding Foreign Trade: The aggregate resources of loan and trust companies inFigures are given showing the growth of "acceptances" creased from $5,873,000,000 June, 1915, to $7,028,000,000 by national banks, based on imports and exports. They June 30, 1916. increased from $13,077,000 September, 1915, to $76,608,000 Banking Power of the United States: September, 1916. The banking power of the United States as expressed Gigantic Growth in Resources of all Reporting Banks and by the input of capital, surplus and profits, deposits, and Trust Companies in One Year: circulation of all banks, amounted on June 30, 1916, to Tables presented show an increase in resources in all $29,353,000,000, an increase over the previous year of banks, National and State, including trust companies, from $3,956,000,000, or 15.57 per cent. June 23, 1915, to June 30, 1916, of 4,710 million dollars. Money in all Reporting Banks: • Between June 30, 1916, and November 17, 1916, the naThe cash in national, State, savings, private banks, tional bank resources increased an additional $1,593,337,and loan and trust companies plus the cash held by the 000, so that the resources of all reporting banks between Federal Reserve Banks on June 30, 1916, was reported at June and November, 1916, assuming that the State banks 81,911,717,000, being an increase over June, 1915, of (whose reports are received only once a year) were the $141,856,000, or 8 per cent. These cash holdings have, same on November 17 that they were on June 30, have of course, been greatly increased since July 1 by large increased to $34,489,531,000. importations of foreign gold. Increase in Total Resources of ail Banks since 1908: The total resources of all reporting banks in the United Foreign Securities held by National Banks: The report shows that the amount of foreign government States June 30, 1916, are given at $32,896,000,000 as comand other foreign securities owned by national banks on pared with $19,583,000,000 in 1908. The number of bankDecember 27, 1916, was $321,993,000. The reports reing institutions in the same period increased from 21,346 ceived from national banks in 100 cities, including all to 27,525. Reserve cities and all cities with a population of 75,000 Abatement of Usury: or more, show that the national banks in these cities (exThe Comptroller shows there has been a material reduc. clusive of about 10 per cent of them still to be heard from) tion in the excessive rates charged by national bankg were lending on December 27, 1916, to merchants and throughout the country. In September, 1915, 1,022 na- other borrowers in foreign countries, on direct loans, the tional banks admitted average rates of 10 per cent or more, sum of S136,669,000. This makes the total investments of our national banks on while on November 17, 1916, the total number of such the date mentioned (as far as reported) in foreign Governbanks had been reduced to 558. ment and other foreign securities and loans placed in forLegislation Recommended: eign countries by national banks in the cities indicated, The Comptroller repeats all of his recommendations for $458,662,000, and is equal to 42.82 percent of the capital amendments to the national bank act as contained in the of the national banks, 21.22 per cent of their capital, last annual report, and adds several additional ones as surplus, and undivided profits, or 2.96 per cent of their follows: total resources, as reported November 17, 1916. To provide a penalty for making false financial stateOf the money loaned by national banks in foreign counments for the purpose of obtaining credit from national tries, $100,000,000 was loaned by the national banks of New York City, and about 828,000,000 by the national banks. To provide punishment for breaking and entering a na- banks in Chicago, St. Louis, San Francisco, Philadelphia, and Boston. tional bank for the purpose of theft or robbery. 82341—17 4 174 FEDERAL EESEEVE BULLETIN. The report also shows that the national banks held on November 17, 1916, $297,236,000 of foreign securities, representing 17.38 per cent of the $1,709,956,000 total securities held by them at that time other than United States Government bonds. Salaries of Bank Officers and Employees. In September, 1916, there were 66,394 officers and employees of national banks, their average salary being $110 per month. In March, 1916, the national banks with capital of $50,000 or less, which paid salaries to their presidents, paid their presidents on an average $l,008'per annum. National banks with capital of $5,000,000 or more were paying an average of $44,400 per annum to their presidents. The comptroller recommends that the national banks consider furnishing their clerks and other employees receiving small salaries life insurance policies equal to their salaries for one year, so that in the event of death the families of the employees may at least be temporarily provided for. MARCH 1, 1917. Financially Prepared. "From present indications it is probable that we will be required to finance not only our own enterprises, our preparations to make ourselves a formidable and therefore a respected power, and the commerce which is unfolding for us on this hemisphere, but also the endless complications and demands of readjustment and reestablishment that will follow the close of the great war. "To meet these enormous drafts and strains on our resources, the most tremendous requirements and the widest opportunity that any nation in the world's history has ever faced, we are now strong and ready. Six Billion Increase in 16 Months. "We have gained in a year and four months, from June 23, 1915, to November 17, 1916, over $6,000,000,000 in the resources of our banks, counting all banks. This means that we have added to the resources of*our banks in this brief space of time an amount exceeding by a billion dollars the entire resources, as recently reported, of those citadels of financial strength, the Bank of England and the Bank of France combined. As a further comparison the Currency Issued and Redeemed through Comptroller's increase for this period also represents an amount twice Office. as great as the total resources of the Reichsbank of GerDuring the year ending October 31, 1916, the comptrol- many, plus the resources of the Bank of Italy, according ler's office received for cancellation $411,950,890 of national to their latest reports. bank currency, and shipped to the national banks new national bank notes amounting to $356,300,750. The stock Fortified by Federal Reserve and Federal Farm Loan Acts: "We have now the Federal Reserve System, which we of national bank notes in the custody of the Comptroller of the Currency November 1,1916, amounted to $413,977,860. believe assures us against panics andf ears such as have in the past, at intervals, disturbed our commerce and Revenue Derived by Government from Operations of paralyzed our industries. The Rural Credits, or Federal Farm Loan System, will aid in securing permanent comComptroller's Office. The report shows that the net revenue derived by the mercial strength and safety based on the sure foundations Government through the operations of the comptroller's of prosperous and thriving communities of farmers, held office for the past fiscal year arising primarily from the | to the soil by ties of ownership and encouraged and aided taxation on bond-secured circulation] after the payment | to secure constantly increasing results per man, per acre, | and per day. of all expenses, amounted to $3,258,435.10. j "In reviewing our banking and fiscal situations we seem Our International Position. ! now to be intrenched financially almost as firmly as it is The report concludes with a reference to this country's j possible for any human government to be. We are well financial preparedness and its readiness to encounter and prepared for preparedness, and ready and able to provide deal with all financial, domestic, and international prob- for whatever increases of Army and Navy the Congress lems, as follows: may think to be necessary. "Since the beginning of the European war, a little over two years ago, our country has passed swiftly and defi- A Leading English Newspaper on America's Financial Supremacy: nitely from the ranks of the debtor countries and has be"Our preponderating power in world finance is fast come the most potential of the creditor nations. Pracbeing recognized in all countries. As an illustration of tically the whole world is in debt to us and steadily the opinions now held abroad as to this country, it may increasing its obligations. not be amiss to quote in conclusion the following extract "Our financial condition in relation to other peoples from an editorial entitled 'American banks and the future/ and the world at large becomes stronger from week to week which appeared recently in one of the leading English and from month to month. As the figures show so con- newspapers, the Manchester Guardian: clusively, our wealth is piling up with wonderful rapidity; " 'European financiers in general would be well advised but to do our proper work in the world and to protect and to face the fact that the war has radically transformed the enlarge our own interests we may before long need every relations between the United States and Europe. The dollar of these resources, gigantic and inexhaustible as American Comptroller of Currency in his latest report indithey now seem to be. cates how greatly American banks have developed in 1,1917. recent years. Their resources on November 17, amounted to 3,104 million pounds. They have grown by 800 millions since 1913 and doubled since 1906. "'The Federal Reserve Act and other legislation under Mr. Wilson's auspices have given them, for the first time in their history, a really sound organization. The United States has wiped out, or by the end of this war will have wiped out, most of its debt to foreign investors. It will have a currency of unimpeachable soundness, fortified by a gold reserve of unprecedented magnitude. "'The American bankers will have acquired the experience they have hitherto lacked in the international money market. And all this strengthened financial fabric will rest upon an economic fabric which the war will have much expanded. It can hardly be doubted that under these circumstances New York will enter the lists for the financial leadership of the world.'" Bank Agency at Paris, France. The following statement was issued by the Federal Reserve Board on February 28: Pursuant to the policy already made known in connection with the Bank of England on December 26, 1916, at which time it was stated that the Board had had under consideration the advisability of authorizing Federal Reserve Banks to establish correspondents or agencies in Europe, the Federal Reserve Board has announced that it has passed a resolution approving the application of the Federal Reserve Bank of New York for authority to establish an agency with the Bank of France, of Paris, France. This action is taken under the provisions of section 14, paragraph (e) of the Federal Reserve Act, which authorizes any Federal Reserve Bank, with the consent of the Federal Reserve Board, to "open and maintain banking accounts in foreign countries, appoint correspondents, and establish agencies in such countries wheresoever it may deem best for the purpose of purchasing, selling, and collect-, ing bills of exchange, and to buy and sell, with or without its indorsement, through such correspondents or agencies, bills of exchange arising out of actual commercial transactions * * * and to open and maintain banking accounts for such foreign correspondents or agencies." 175 FEDERAL RESERVE BULLETIN. Other Federal Reserve Banks may participate in the agency relationship with the Bank of France, when established, upon the same terms and conditions that will govern the Federal Reserve Bank of New York, if they so desire. GOLD-SETTLEMENT FUND. There has been continued growth and activity in the gold-settlement fund during February, a record clearing having been made on February 8, when the amount of the weekly settlement was $287,677,000. There has been more than ordinary activity in transfers and payments for banks. The figures given below cover the period from January 26 to February 23, inclusive, during which period obligations were settled amounting to SI, 117,505,000, with changes in ownership of only 1.90 per cent. The greatest relative increase in gold holdings in the fund by settlements and transfers has been by the banks of Boston and San Francisco, but New York and Chicago have also made considerable gains. In order to save space in the Federal Reserve Bulletin, there is given this month a consolidation of the figures which have heretofore been printed covering the transactions of each week: Amount of clearings and transfers, Federal Reserve from Jan. 26, 1917, to Feb. 23, 1917. Banks, [000 omitted.] Total clearings. Settlement of— Feb. 1,1917... Feb. 8,1917... Feb. 15,1917.. Feb. 23, 1917.. §265,436 287,677 268,137 268,714 Total Previously reported for 1917. 1,089,964 1,051,104 Total since Jan. 1,1917 Total transfers Jan. 1,1917, to date Total for 1916, including transfers Total for 1915, including transfers 2.141,068 ' 54,643 5,633,966 1,052,649 Total clearings and transfers, May 20,1915, to Feb. 23,1917. 8,882,326 T Balances. s I S12,924 15,474 12,121 13,391 i i I I S3,100 4,200 12,662 7,579 53,910 : 67,126 | 27,541 27,102 121,036 54,643 176 FEDERAL RESERVE BULLETIN". M A R C H 1, 1917. Changes in ownership of gold. [000 omitted.] To Jan. 25,1917. Balance to credit, Jan. 25, Balance Decrease. Increase. 1917, plus Feb. 23, Decrease. Increase. Decrease. Increase. net de1917. posits of gold since that date. Federal Reserve Bank of— Boston.... New Y o r k . . . . Philadelphia Cleveland.... Richmond Atlanta Chicago.... St. Louis.. Minneapolis Kansas City Dallas... San Francisco Total changes from May 20, 1915, to Feb. 23,1917.2 From Jan. 26, 1917, to 1Feb. 23, 1917, inclusive. 8308,103 . . 806 .... Total 308,909 $18,802 311,032 $17,825 50,897 53,768 69,247 14,667 10,855 $3,812 27,682 25,352 26,460 27,695 21,415 16,826 4,589 4,422 22,182 5,197 28,934 32,694 9,348 1,802 12.668 *""7,"546* 6,316 4,457 7,316 1,859 48,627 27,234.5 27,357.5 7,659.5 35', 616 11,158.5 3,499 2,534 8,409 39,074 $6,793 2,871 "$360," 232* 308,909 213,310 21,305 213,310 21,305 $25,595 65,435 28,790 23,106 22,957 2,954 5,122 5,457 48,750 32,117 44,949 1,108 775 3,760 123 5,875 305,232 305,232 1 Changes in ownership of gold during period Jan. 26,1917, to Feb. 23,1917, equal 1.90 per cent of obligations settled. 2 Total changes in ownership of gold equal 3.43 per cent of total obligations settled. Gold settlement fund—Summary of transactions from Jan. 26, 1917, to Feb. 23, 1917, inclusive. [000 omitted.] Gold. Balance Jan. 25, 1917. Federal Reserve Bank of— Boston .New York Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. §15,032 50,897 15,117 ^5,552 17,965 2,912 33,504 3,468 6,316 27,054.5 10,628.5 4,904 Total 213,350 Withdrawn. Deposited. Debit. ;4,000 £7,600 1,000 200 200 500 6,300 500 §550 3,650 2,010 1, 730 6,380 120 i 220 i 3,350 I 16,390 Weekly settlements from Jan. 26,1917, to Feb. 23,1917. Transfers. 300 750 16,350 Credit. 85,062 12,100 3,505 2,500 107 500 3,600 2,440 2,850 1,739 2,700 27,541 1,000 40 6,200 500 i Total debits. Total net credits. Total credits. 892.029 292', 957 154,297 71,519 63,718 37,100 145,362 90,098 24,749 62,402 26,484 29,249 16,372 10,086 6,711 4,039 426 3,837 10,666 615 1,315 3,379 . 528 5,936 $17,825 53,768 10,855 26,460 16,826 5,197 32,694 1,802 4,457 27,357.5 7,659.5 8,409 53,910 1,089,964 jl, 089,964 53,910 213,310 S4,641 11,715 10,523 426 2,515 2,995 12,606 4,561 734 906 2,288 2,639" 27,541 Total net debits. Feb. 23, balance in fund at close of busi- §90,298 294,586 158,109 67,906 65,807 36,258 147,302 94,044 24,168 59,929 28,244 23,313 I Federal Reserve Agents' Fund—Summary of transactions, Jan. 26, 1917, to Feb. 23, 1917, inclusive. [000 omitted.] Balance to credit Jan. 25, Federal Reserve Agent at— Withdrawn. Deposited. 1917. Philadelphia Richmond Atlanta Chicago St. Louis Minneapolis I ! I : ' $12,280 12,900 13,850 7,010 6,510 3,250 SI,150 2.900 '900 100 580 $1,000 500 6,300 500 Balance Feb. 23, 1917. Federal Reserve Agent at— $12,130 Kansas City.., 10,000 Dallas 13,450 San Francisco. 13,210 Total... 6,430 3,250 Balance to credit Jan. 25, Withdrawn. Deposited. 1917. Balance Feb. 23, 1917. $13,960 10,130 14,120 $700 800 580 1,840 $13,380 9,330 15,380 94,010 7,710 10,260 96,560 $120 I 177 FEDERAL RESERVE BULLETIN. MARCH 1,1917. PROPOSED AMENDMENTS TO FEDERAL RESERVE ACT. SENATE BILL. HOUSE BILL. [Sixty-fourth Congress, second session. Calendar No. 947. S. 8259- [Sixty-fourth Congress, second session. Union Calendar No. 443. H» Report No. 1059. In the Senate of the United States, February 14 R. 20661. Report No. 1406. In the House of Representatives, Jan(calendar day, February 15), 1917. Mr. Owen introduced the followuary 31, 1917. Mr. Glass introduced the following bill; which was ing bill; which was read twice and referred to the Committee on referred to the Committee on Banking and Currency and ordered to Banking and Currency. February 14 (calendar day, February 16), be printed. February 2, 1917. Committed to the Committee of the 1917. Reported by Mr. Owen, without amendment.] Whole House on the state of the Union and ordered to be printed.] A BILL To amend the Act approved December twenty- A BILL To amend the Act approved December twentythird, nineteen hundred and thirteen, known as the third, nineteen hundred and thirteen, known as the Federal reserve Act, as amended by the Acts of August Federal reserve Act, as amended by the Acts of August fourth, nineteen hundred and fourteen; August fifteenth, fourth, nineteen hundred and fourteen, August fifteenth, nineteen hundred and fourteen; March third, nineteen nineteen hundred and fourteen, March third, nineteen hundred and fifteen; and September seventh, nineteen hundred and fifteen, and September seventh, nineteen hundred and sixteen. hundred and sixteen. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section four of the Act approved December twenty-third, nineteen hundred and thirteen, known as the Federal reserve Act, be amended by striking out the sentence reading as follows: "One of the directors of Class C, who shall be a person of tested banking experience, shall be appointed by the Federal Reserve Board as deputy chairman and deputy Federal reserve agent, to exercise the powers of the chairman of the board and Federal reserve agent in 7 case of absence or disability of his principal/ and by adding in place thereof the following: "Subject to the approval of the Federal Reserve Board, the Federal reserve agent shall appoint one or more assistants. Such assistants, who shall be persons of tested banking experience, shall assist the Federal reserve agent in the performance of his duties and shall also have power to act in his name and stead during his absence or disability. The Federal reserve agent may require such bonds of his assistants as he may deem necessary for his own protection. Assistants to the Federal reserve agent shall receive an annual compensation to be fixed and paid in the same manner as that of the Federal reserve agent. One of the directors of class C shall be appointed by the Federal Reserve Board as vice chairman to exercise the powers of the chairman of the board in case of the absence or disability of the Federal reserve agent; in case of the absence of the chairman and vice chairman the third class C director shall preside at meetings of the board." Be it enacted by the Senate and House of Representatives of the United States of America in Congres.s assembled, That section four of the Act approved December twenty-third, nineteen hundred and thirteen, known as the Federal reserve Act, be amended in the paragraph relating to the appointment of class C directors and prescribing their duties so as to read as follows: " Class C directors shall be appointed by the Federal Reserve Board. They snail have been for at least two years residents of the district for which they are appointed, one of .whom shall be designated by said board as chairman of the board of directors of the Federal reserve bank and as 'Federal reserve agent.' He shall be a person of tested banking experience, and in addition to his duties as chairman of the board of directors of the Federal reserve bank he shall be required to maintain under regulations to be established by the Federal Reserve Board a local office of said board on the premises of the Federal reserve bank. He shall make regular reports to the Federal Reserve Board and shall act as its official representative for the performance of the functions conferred upon it by this Act. He shall receive an annual compensation to be fixed by the Federal Reserve Board and paid monthly by the Federal reserve bank to which he is designated. One of the directors of class C, who shall be a person of tested banking experience, shall be appointed by the Federal Reserve Board as deputy chairman' to exercise the powers of the chairman of the board when necessary. "Subject to the approval of the Federal Reserve Board, the Federal reserve agent shall appoint one or more assistants. Such assistants, who shall be persons of tested banking experience, shall assist the Federal reserve agent in the performance of his duties and shall also have power to act in his name and stead 178 FEDERAL RESERVE BULLETIN, SENATE' BILL. MARCH 1, 1917 HOUSE BILL. during his absence or disability. The Federal reserve agent may require such bonds of his i assistants as he may deem necessary for his i own protection. Assistants to the Federal I reserve agent shall receive an annual compenI sation, to be fixed and paid in the same manner j as that of the Federal reserve agent." SEC. 2. That the first paragraph of section SEC. 2. That the first paragraph of section thirteen be amended so as to read as follows: thirteen be further amended so as to read as "Any Federal reserve bank may receive from follows: "Any Federal reserve bank may receive from any of its member banks, and from the United States, deposits of current funds in lawful any of its member banks, and from the United money, national-bank notes, Federal reserve States, deposits of current funds in lawful notes, or checks, and drafts, payable upon money, national-bank notes, Federal reserve presentation, and also, for collection, maturing notes, or checks and drafts, payable upon notes and bills; or, solely for purposes of ex- presentation, and also for collection, maturing change or of collection, may receive from other notes and bills; or, solely for purposes of exFederal reserve banks deposits of current funds change or of collection, may receive from other in lawful money, national-bank notes, or checks Federal reserve banks deposits of current funds upon other Federal reserve banks, and checks in lawful money, national-bank notes, or checks and drafts, payable upon* presentation within upon other Federal reserve banks, and checks its district, and maturing notes and bills pay- and drafts, payable upon presentation within able within its district; or, solely for the pur- its district, and maturing notes and bills payposes of exchange or of collection, may receive able within its district; or, solely for the purfrom any nonmember bank or trust company poses of exchange or of collection, may receive deposits of current funds in lawful money, from any nonmember bank or trust company national-bank notes, Federal reserve notes, deposits of current funds in lawful money, checks and drafts payable upon presentation, national-bank notes, Federal reserve notes, or maturing notes and bills: Provided, Such non- checks and drafts payable upon presentation, member bank or trust company maintains with or maturing notes and bills: Provided, That the Federal reserve bank of its district a such nonmember bank or trust company mainbalance in an amount to be determined by the tains with the Federal reserve bank of its Federal Reserve Board under such rules and district a balance in an amount to be determined by the Federal Reserve Board under regulations as it may prescribe." such rules and regulations as it may prescribe. SEC. 3. That the fifth paragraph of section SEC. 3. That the fifth paragraph of section thirteen be, and is hereby, amended so as to thirteen be, and is hereby, amended further so read as follows: as to read as follows: "Any member bank may accept drafts or "Any member bank may accept drafts or bills oi exchange drawn upon it having not bills of exchange drawn upon it having not more more than six months sight to run, exclusive than six months sight to run, exclusive of days of days of grace, which grow out of transactions of grace, which grow out of transactions ininvolving the importation or exportation of volving the importation or exportation of goods; or which grow out of transactions in- goods; or which" grow out of transactions involving the domestic shipment of goods pro- volving the domestic shipment of goods provided shipping documents conveying or secur- vided shipping documents conveying or securing title are attached at the time of acceptance; ing title are attached at the time of acceptance; or which are secured at the time of acceptance or which are secured at the time of acceptance by a warehouse receipt or other such document by a warehouse receipt or other such document conveying or securing title covering readily conveying or securing title covering readily marketable staples. No member bank shall marketable staples. No member bank shall accept, whether in a foreign or domestic trans- accept, whether in a foreign or domestic transaction, for any one person, company, firm, or action, for any one person, company, firm, or corporation to an amount equal at^ any time corporation to an amount equal at any time in 179 FEDERAL RESERVE BULLETIN. MARCH 1,1917. SENATE BILL. HOUSE BILL. in the aggregate to more than ten per centum the aggregate to more than ten per centum of of its paid-up and unimpaired capital stock its paid-up and unimpaired capital stock and and surplus, unless the bank is secured either surplus, unless the bank is secured either by by attached documents or by some other actual attached documents or by some other actual security growing out of the same transaction security growing, out of the same transaction as the acceptance; and no bank shall accept as the acceptance; and no bank shall accept such bills to an amount equal at any time in such bills to an amount equal at any time in the the aggregateto more than one-half oi its paid- aggregate to more than one-half oi its paid-up up and unimpaired capital stock and surplus: and unimpaired capital stock and surplus: Provided, however, That the Federal Reserve Provided, however. That the Federal Reserve Board, under such general regulations as it may Board, under such general regulations as it may prescribe, which shall apply to all banks alike prescribe, which shall apply to all banks alike regardless of the amount of capital stock and regardless of the amount of capital stock and surplus, may authorize any member bank to surplus, may authorize any member bank to accept such bills to an amount not exceeding | accept such bills to an amount not exceeding at any time in the aggregate one hundred per at any time in the aggregate one hundred per centum of its paid-up and unimpaired capital centum of its paid-up and unimpaired capital stock and surplus: Provided, however7 That the stock and surplus: Provided, however, That the aggregate of acceptances growing out of aggregate of acceptances growing out of domestic transactions shall in no event exceed domestic transactions shall in no event exceed fifty per .centum of such capital stock and fifty per centum of such capital stock and surplus: Providedfurther, That in no event shall surplus." a bank accept for any one person, company, firm, or corporation to an amount equal at any time in the aggregate to more than twenty per centum of its paid-up and unimpaired capital stock and surplus." SEC. 4. That section sixteen, paragraphs two, three, four, five, six, and seven, be amended and reenacted so as to read as follows: "Any Federal reserve bank may make application to the local Federal reserve agent for such amount of the Federal reserve notes hereinbefore provided for as it may require. Such application shall be accompanied with a tender to the local Federal reserve agent of collateral in amount equal to the sum of the Federal reserve notes thus applied for and issued Dursuant to such application. The collateral security thus offered shall be notes, drafts, bills of exchange, or acceptances rediscounted under the provisions of section thirteen of this Act, or bills of exchange indorsed by a member bank of any Federal reserve district and purchased under the provisions of section fourteen of this Act, or bankers' acceptaaces purchased under the provisions of said section fourteen, or gold or gold certificates; but in no event shall such collateral security, whether gold, gold certificates, or eligible paper, be less than the amount of Federal reserve notes applied for. The Federal reserve agent shall each day notify the Federal Reserve Board of all issues and withdrawals of Federal reserve notes to 180 FEDEEAL RESERVE BULLETIN. SENATE BILL. and by the Federal reserve bank to which he is accredited. The said Federal Eeserve Board may at any time call upon a Federal reserve bank for additional security to protect the Federal reserve notes issued to it. " Every Federal reserve bank shall maintain reserves in gold or lawful money of not less than thirty-five per centum against its deposits and reserves in gold of not less than forty per centum against its Federal reserve notes in actual circulation: Provided, however, That when the Federal reserve agent holds gold or gold certificates as collateral for Federal reserve notes issued to the bank such gold or gold certificates shall be counted as part of the gold reserve which such bank is required to maintain against its Federal reserve notes in actual circulation. Notes so paid out shall bear upon their faces a distinctive letter and serial number, which shall be assigned by the Federal Reserve Board to each Federal reserve bank. Whenever Federal reserve notes issued through one Federal reserve bank shall be received by another Federal reserve bank they shall be promptly returned for credit or redemption to the Federal reserve bank through which they were originally issued or, upon direction of such Federal reserve bank, they shall be forwarded direct to the Treasurer of the United States to be retired. No Federal reserve bank shall pay out notes issued through another under penalty of a tax of ten percentum upon the face value of notes so paid out. Notes presented for redemption at the Treasury of the United States shall be paid out of the redemption fund and returned to the Federal reserve banks through which they were originally issued, and thereupon such Federal reserve bank shall, upon demand of the Secretary of the Treasury, reimburse such redemption fund in lawful money or, if such Federal reserve notes have been redeemed by the Treasurer in gold or gold certificates, then such funds shall be reimbursed to the extent deemed necessary by the Secretary of the Treasury in gold or gold certificates, and such Federal reserve bank shall, so long as any of its Federal reserve notes remain outstanding, maintain with the Treasurer in gold an amount sufficient in the judgment of the Secretary to provide for all redemptions to be made by the Treasurer. Federal reserve notes received by the Treasurer otherwise than for redemption may be exchanged for gold out of the redemption fund hereinafter provided MARGH 1, HOUSE BILL. 1917. SENATE BILL. and returned to the reserve bank through which they were originally issued, or they may be returned to such bank for the credit of the United States. Federal reserve notes unfit for circulation shall be returned by the Federal !j reserve agents to the Comptroller of the Currency for cancellation and destruction. "The Federal Reserve Board shall require each Federal reserve bank to maintain on deposit in the Treasury of the United States a sum in gold sufficient in the judgment of the Secretary of the Treasury for the redemption of the Federal reserve notes issued to such bank, but in no event less than five per centum of the total amount of notes issued less the amount of gold or gold certificates held by the Federal reserve agent as collateral security; but such deposit of gold shall be counted and included as part of the forty per centum reservo hereinbefore required. The board shall have the right, acting through the Federal reserve agent, to grant, in whole or in part, or to reject entirely the application of any Federal reserve bank for Federal reserve notes; but to the extent that such application may be granted the Federal Reserve Board shall, through its local Federal reserve agent, supply Federal reserve notes to the bank so applying, and such bank shall be charged with the amount of notes issued to it and shall pay such rate of interest as may be established by the Federal Reserve Board on only that amount of such notes which equals the total amount of its outstanding Federal reserve notes less the amount of gold or gold certificates held by the Federal reserve agent as collateral security. Federal reserve notes issued to any such bank shall, upon delivery, together with such notes of such Federal reserve bank as may be issued under section eighteen of this Act upon security of United States two per centum Government bonds, become a first and paramount lien on all the assets of such bank. "Any Federal reserve bank may at an^y time reduce its liability for outstanding Federal reserve notes by depositing with the Federal reserve agent its Federal reserve notes, gold, gold certificates, or lawful money of the United States. Federal reserve notes so deposited shall not be reissued, except upon compliance with the conditions of an original issue. "The Federal reserve agent shall hold such gold, gold certificates, or lawful money available exclusively for exchange for the outstanding Federal reserve notes when offered by the 82341—17 181 FEDERAL RESERVE BULLETIN. MARCH 1,1917. 5 HOUSE BILL. 182 FEDERAL KESE&VE BULLETIN. SENATE BILL. reserve bank of which he is a director. Upon the request of the Secretary of the Treasury the Federal Reserve Board shall require the Federal reserve agent to transmit to the Treasurer of the United States so much of the gold held by him as collateral security for Federal reserve notes as may be required for the exclusive purpose of the redemption of such Federal reserve notes, but such gold when deposited with the Treasurer shall be counted and considered as if collateral security on deposit with the Federal reserve agent. "Any Federal reserve bank may at its discretion withdraw collateral deposited with the local Federal reserve agent for the protection of its Federal reserve notes issued to it and shall at the same time substitute therefor other collateral of equal amount with the approval of the Federal reserve agent under regulations to be prescribed by the Federal Reserve Board. Any Federal reserve bank may retire any of its Federal reserve notes by depositing them with the Federal reserve agent or with the Treasurer of the United. States, and such Federal reserve bank shall thereupon be entitled to receive back the collateral deposited with the Federal reserve agent for the security of such notes. Federal reserve banks shall not be required to maintain the reserve or the redemption fund heretofore provided for against Federal reserve notes which have been retired. Federal reserve notes so deposited shall not be reissued except upon compliance with the conditions of an original issue." SEC. 5. That section sixteen be further amended by adding at the end. of the section the following: "That the. Secretary of the Treasury-is hereby authorized and directed to receive deposits oi: gold coin or of gold certificates with the Treasurer or any Assistant Treasurer of the United States when tendered by any Federal reserve bank or Federal reserve agent for credit to its or his account with the Federal Reserve Board. The Secretary shall prescribe by regulation the form of receipt to be issued by the Treasurer or Assistant Treasurer to the Federal reserve bank or Federal reserve agent making the deposit, and a duplicate of such receipt shall be delivered to the Federal Reserve Board by the Treasurer at Washington upon proper advices from any Assistant Treasurer that such deposit lias been made. Deposits so made shall be held subject to the orders of the Federal Reserve Board and shall MARCH 1, HOUSE BILL. 1917. MAIICH 1, 183 FEDERAL RESERVE BULLETIN". 1917. SENATE BILL. HOUSE BILL. be payable in gold coin or gold certificates on the order of the Federal Reserve Board to any Federal reserve bank or Federal reserve agent at the Treasury or at the Sub treasury; of the United States nearest the place of business of such Federal reserve bank or such Federal reserve agent: Provided, however, That any expense incurred in shipping gold to or from the Treasury or Subtreasuries in order to make such payments, or as a result of making such payments, shall be paid by the Federal Reserve Board and assessed against the Federal reserve banks. The order used by the Federal Reserve Board in making such payments-shall be signed by the governor or vice governor, or such other officers or members as the board may by regulation prescribe. The form of such order shall be approved by the Secretary of the Treasury. "The expenses necessarily incurred in carrying out these provisions, including the cost of the certificates or receipts issued for deposits received, and all expenses incident to the handling of such deposits shall be paid by the Federal Reserve Board and included in its assessments against the several Federal reserve banks. j "Gold deposits standing to the credit of any | Federal reserve bank with the Federal Reserve I Board shall, at the option of said bank, be | counted as part of the lawful reserve which il | is required to maintain against outstanding Federal reserve notes, or as a part of the reserve it is required to maintain against deposits. '•'Nothing in this section shall be construed as amending section six of the Act of March fourteenth, nineteen hundred, as amended by the Acts of March fourth, nineteen hundred and seven, March second, nineteen hundred and eleven, and June twelfth, nineteen hundred and sixteen, nor shall the provisions of this section i be construed to apply to the deposits made ; or to the receipts or certificates issued under this section." SEC. 6. That section seventeen be, and 'is SEC. 4. That section seventeen be, and is hereby, amended so as to read as follows: hereby, amended so as to read as follows: . "SEC. 17. So much of the provisions of sec"SEC. 17. So much of the provisions of section fifty-one hundred and fifty-nine of the tion fifty-one hundred and fifty-nine of the Revised Statutes of the United States and sec- Revised Statutes of the United States and section four of the Act of June twentieth, eighteen tion four of the Act of June twentieth, eighteen hundred and seventy-four, and section eight hundred and seventy-four, and section eight of of the Act of July twelfth, eighteen hundred the Act of July twelfth, eighteen hundred and and eighty- two, and of any other provisions of eighty-two, and of any other provisions of exexisting statutes as require that* before any isting statutes as require that before any national banking associations shall be author- national banking associations shall be authorized to commence banking business it shall ized to commence banking business it shall 184 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. SENATE BILL. HOUSE BILL. transfer and deliver to the Treasurer of the United States a stated amount of United States registered bonds, and so much of those provisions or of any other provisions of existing statutes as require any national banking associations now or hereafter organized to maintain a minimum deposit of such bonds with the Treasurer is hereby repealed." SEC. 7. That section nineteen be amended and reenacted so as to read as follows: "SEC. 19. Demand deposits within the meaning of this Act shall comprise all deposits payable within thirty days, and time deposits shall comprise all deposits payable after thirty days, all savings accounts and certificates of deposit which are subject to not less than thirty days' notice before payment, and all postal savings deposits. "Every bank, banking association, or trust company which is or which becomes a member of any Federal reserve bank shall establish and maintain with its Federal reserve bank reserves as follows: " (a) If not in a reserve or central reserve city, as now or hereafter defined, it shall hold and maintain with the Federal reserve bank of its district actual net reserves equal to not less than six per centum of the aggregate amount of its demand deposits and three per centum of its time deposits. " (b) If in a reserve city, as now or hereafter defined, it shall hold and maintain with the Federal reserve bank of its district actual net reserves equal to not less than ten per centum of the aggregate amount of its demand deposits and three per centum of its time deposits. transfer and deliver to the Treasurer of the United States a stated amount of United States registered bonds, and so much of those provisions or of any other provisons of existing statutes as require any national banking associations now or hereafter organized to maintain a minimum deposit of such bonds with the Treasurer is hereby repealed/7 SEC. 5. That section nineteen be further amended and reenacted so as to read as follows: " SEC. 19. Demand deposits within the meaning of this Act shall comprise all deposits pay* able within thirty days, and time deposits shall comprise all deposits payable after thirty days, all savings accounts and certificates of deposit which are subject to not less than thirty days' notice before payment, and all postal savings deposits. "Every bank, banking association, or trust company which is or which becomes a member of any Federal reserve bank shall establish and maintain reserve balances with its Federal reserve bank as follows: " (a) If not in a reserve or central reserve city, as now or hereafter defined, it shall hold and maintain with the Federal reserve bank of its district an actual net balance equal to not less than seven per centum of the aggregate amount of its demand deposits and three per centum of its time deposits. " (b) If in a reserve city, as now or hereafter defined, it shall hold and maintain with the Federal reserve bank of its district an actual net balance equal to not less than ten per centum of the aggregate amount of its demand deposits and three per centum of its time deposits. " (c) If in a central reserve city, as now or hereafter defined it shall hold and maintain with the Federal reserve bank of its district an actual net balance equal to not less than thirteen per centum of the aggregate amount of its demand deposits and three per centum of its time deposits. " (c) If in a central reserve city, as now or hereafter defined it shall hold and maintain with the Federal reserve bank of its district an actual net reserve equal to not less than thirteen per centum of the aggregate amount of its demand deposits and three per centum of its time deposits. "Every member bank shall maintain in its own vaults an amount of specie or currency equal to at least four per centum of its demand deposits less the amount of those reserves with the Federal reserve bank which are in excess of the minimum reserves required by this section. " No member bank shall keep on deposit with " No member bank shall keep on deposit with any nonmember bank a sum in excess of ten any nonmember bank a sum in excess of ten per centum of its own paid-up capital and per centum of its own paid-up capital and sursurplus. No member bank shall act as the plus. No member bank shall act as the me- 185 FEDERAL RESERVE BULLETIN. MARCH 1,1917. SENATE BILL. HOUSE BILL. medium or agent of a nonrnember bank in dium or agent of a nonmember bank in applyapplying for or receiving discounts from a ing for or receiving discounts from a Federal Federal reserve bank under the provisions of reserve bank under the provisions of this Act, this Act except by permission of the Federal except by permission of the Federal Reserve Reserve Board. Board. " The reserve carried by a member bank with "The required balance carried by a member a Federal reserve bank may, under the regula- bank with a Federal reserve bank may, under tions and subject to such penalties as may be the regulations and subject to such penalties prescribed by the Federal Reserve Board, be as may be prescribed by the Federal Reserve checked against and withdrawn by such mem- Board, be checked against and withdrawn by ber bank for the purpose of meeting existing such member bank for the purpose of meeting liabilities: Provided, however, That no bank existing liabilities: Provided, however, That no shall at any time make now loans or shall pay bank shall at any time make new loans or shall any dividends unless and until the total reserve pay any dividends unless and until the total required by law is fully restored. balance required by law is fully restored. "In estimating the reserves and the cash in "In estimating the balances required by this vault required by this Act, the net balance of Act, the net difference of amounts due to and amounts due to and from other banks shall be from other banks shall be taken as the basis for taken as the basis for ascertaining the deposits ascertaining the deposits against which reagainst which reserves with Federal reserve quired balances with Federal reserve banks banks and cash in vault shall be determined. shall be determined. "National banks, or banks organized under "National banks, or banks organized under local laws, located in Alaska or in a dependency local laws, located in Alaska or in a dependency or insular possession or any part of the United or insular possession or any part of tho United States outside the continental United States States outside the continental United States may remain nonmember banks, and shall in may remain nonmember banks, and shall in that event maintain reserves and comply with that event maintain reserves and comply with all the conditions now provided by law regu- all the conditions now provided by law regulating them; or said banks except in the Phil- lating them; or said banks may, with the conippine Islands may, with the consent of the sent of the Reserve Board, become member Federal Reserve Board, become member banks banks of any one of the reserve districts, and of any one of the reserve districts, and shall in shall in that event take stock, maintain rethat event take stock, maintain reserves, and serves, and be subject to all the other provisions be subject to all the other provisions of this of this Act," Act," SEC* 8. That that part of section twenty-two SEC, 6. That that part of section twenty-two which reads as follows: "Other than the usual which reads as follows: "Other than the usual salary or director's fees paid to any officer, di- salary or director's fees paid to any officer, rector, or employee of a member bank and director, or employee of a member bank and other than a reasonable fee paid by said bank other than a reasonable fee paid by said bank to to such officer, director, or employee for serv- such officer, director, or employee for services ices rendered to such bank, no officer, director, rendered to such bank, no officer, director, ememployee, or attorney of a member bank shall ployee, or attorney of a member bank shall be be a beneficiary of or receive, directly or indi- a beneficiary of or receive, directly or indirectly, r rectly, any fee, commission, gift, or other con- an} fee, commission, gift, or business of the sideration for or in connection with any transac- bank," be, and hereby is, amended and reention or business of the bank,", be, and hereby acted so as to read as follows: is, amended and reenacted so as to read as follows: "Other than the usual salary or fee paid to "Other than the usual salary or director's fee paid to any officer, director, employee, or | any officer, director, employee, or attorney of a attorney of a member bank, and other than a member bank, and other than a reasonable fee reasonable fee paid by said bank to such officer, paid by said bank to such officer, director, emdirector, employee, or attorney for services ren- ployee, or attorney for services rendered to dered to such bank, no officer, director, em- such bank, no officer, director, employee, or 186 FEDERAL RESERVE BULLETIN. MARCH 1, 191.7. SENATE BILL. HOUSE BILL. ployee, or attorney of a member bank shall be a beneficiary of or receive, directly or indirectly, any fee, commission, gift, or other consideration-for or in connection with any transaction or business of the bank: Provided, however, That nothing in this Act contained shall be construed to prohibit a director, officer, or employee from receiving the same rate of interest paid to other depositors for similar deposits made with such bank: And provided further, That notes, drafts, bills of exchange, or other evidences of debt executed or indorsed by directors of a member bank may be discounted with such member bank on the same terms and conditions as other notes, drafts, bills of exchange, or evidences of debt upon the affirmative vote or written assent of at least threefourths of the members of the board of directors of such member bank. attorney of a member bank shall be a beneficiary of or receive, directly or indirectly, any fee, commission, gift, or other consideration fo"r or in connection with any transaction-or business of the bank: Provided, however, That nothing in this Act contained shall be construed to prohibit a director, officer, or employee from receiving the same rate of interest paid to other depositors for similar deposits made with such' bank: And provided further, That notes, drafts, bills of exchange, or other evidences of debt executed or indorsed by directors of a member bank may be discounted with such member bank on the same terms and conditions as other notes, drafts, bills of exchange, or evidences of debt upon the affirmative vote or written assent of a* majority of the board of directors of such member bank. SEC. 7. That section three of the Act be amended and reonactcd so as to read as follows : "SEC. 3. The Federal Reserve Board may permit or require any Federal reserve bank to establish branch banks within the Federal reserve district in which it is located or within the district of any Federal reserve bank which may have been suspended. Such branches, subject to such rules and regulations as the Federal Reserve Board may prescribe, shall be operated under the supervision of a board of directors to consist of not more than seven nor loss than three directors, of whom a majority of one shall be appointed by the Federal reserve bank of the district, and the remaining directors by the Federal Reserve Board. Directors of branch banks shall hold office during the pleasure of the Federal Reserve Board." SEC. 8. That section fourteen, subsection (e), of the Act be.amended and reenacted so as to read as follows: " (e) To establish accounts with other Federal reserve banks for exchange purposes and, with the consent or upon the order and direction of the Federal Reserve Board, and, under regulations to be prescribed by said board, to open and maintain accounts in foreign countries, appoint correspondents, and establish agencies in such countries wheresoever it may be deemed best for the purpose of purchasing, selling, and collecting bills of exchange, and to buy and sell, with or without its indorsement, through such correspondents or agencies, bills of exchange (or acceptances) arising out of MARCH 1,1017. 187 FEDERAL RESERVE BULLETIN. SENATE BILL. i' HOUSE BILL. i actual commercial transactions which have | not more than ninety days to run, exclusive \ of days of grace, and which bear the signature i of two or more responsible parties, and, with the consent of the Federal Reserve Board, to open and maintain banking accounts for such foreign correspondents or agencies. Whenever any such account has been opened or agency or correspondent has been appointed by a Federal reserve bank, with the consent i of or under the order and direction of the I Federal Reserve Board, any other Federal I reserve bank may, with the consent and : approval of the Federal Reserve Board, be • permitted to curry on or conduct, through i the Federal reserve bank opening such account j or appointing such agency or correspondent, i any transact ion authorized by this section ' under rules and regulations to be proscribed • by the board." 1 • : ! ', Sixty-fourth Congress, second session. II. K. 20540. In the House of Jie'presoiUatives", January 26, 1917. Mr. Glass introduced the following bill: which was referred'to the Commit,Ice on Banking and Currericy and ordered to be printed.] A BILL TO authorize national banking associations to establish branches. ' Be it enacted by the Senate and House of I Representatives of the United States of America I in Congress assembled, That the Act approved i December twenty-third, nineteen hundred and I and thirteen, known as the Federal reserve | Act, be ; and the same hereby is, amended by ! adding a new section as follows: . "DOMESTIC BRANCHES. i "SEC. 25a. That any member bank located ! in a city or incorporated town of more than i one hundred thousand inhabitants and posj sossing a capital and surplus of $1,000,000 or more may, under such rules and regulations ! as the Federal Reserve Board may prescribe, | establish branches, not to exceed ton in I number, within the corporate limits of the i city or town in which it is located: Provided} I That no such branch, shall be established in ! any State in which neither State banks nor trust companies may lawfully establish I branches: And provided further, That the ! number of branches which a member bank ! may establish shall not exceed the number of branches which the laws of the State in ''• which, said bank is situated permit a State \ bank or trust company to establish within i the corporate limits of said city or town." 188 FEDERAL RESERVE BULLETIN. SENATE REPORT. [Sixty-fourth Congress, second session. Calendar No. 947. Senate Be port No. 1059. FEBRUAKY 14 (calendar day, FEBRUARY 16). 1917.— Ordered to be printed. Mr. Owen, from the Committee on Banking and Currency, submitted the following report, to accompany S. 8259.J MARCH I, 1917. man and vice chairman, the third class C director shall preside at meetings of the Board." The first section abolishes the office of deputy chairman and Deputy Federal Reserve Agent The Committee on Banking and Currency, to and substitutes therefor an assistant to be which was referred the bill (S. 8259) to amend appointed by the Federal Reserve Agent under the Federal Reserve Act, having considered the bond to the agent, at a salary to be fixed and same, report it back without amendment and paid in the same manner as that of the Federal Reserve Agent. Existing law provides that in recommend its passage. The amendments to the Federal Reserve Act! the absence of the Federal Reserve Agent, the contained in this bill are strongly recommended | Deputy Reserve Agent acts in his place. The by the Federal Reserve Board, Gov. Harding, j Board has had much difficulty in obtaining of the Board, having appeared in person before !• from class C directors men qualified to fill the the committee to explain the necessity for this ! position of Deputy Reserve Agent. This officer is required to have the same qualifications proposed legislation. as have The several sections of the bill are separately hadthe Federal Reserve Agent; he must be an banking experience and must not discussed in the following report, and for the or in any bank. convenience of the Senate each section proposed officer, director, not stockholderofficer, and his As a rule, he is a salaried to be amended is printed so as to show existing only paid directly law and the proposed change in existing law. upon compensation is the fees although he is attendance of meetings, The existing law is shown in roman type, that compelled to be prepared at all times to assume portion of existing law which is to be stricken the duties of Federal Reserve Agent in case of out is shown in line type, and new matter is the absence or disability of that officer. This shown by italics. involves a transfer and auditing of securities, and the deputy reserve agent would find it SECTION 1.—ASSISTANTS TO RESERVE AGENTS. most inconvenient to leave his business and reThat section four of the act approved De- port immediately to the bank on short notice. cember twenty-third, nineteen hundred and The adoption of the amendment will more thirteen, known as the Federal Reserve Act, definitely fix the responsibility for the funds be amended by striking out the sentence and operates to give the board more latitude reading as follows: "One of the directors of in the selection of class C directors. class C, who shall be a person of tested banking The amendment in this section further proexperience, shall be appointed by the Federal vides that one of the directors of class C shall Reserve Board as deputy chairman and dep- be appointed by the Reserve Board as vice uty Federal Reserve Agent, to exercise the chairman to exercise the powers of chairman powers of the chairman of the Board and of the Board in case of the absence or disaFederal Reserve Agent in case of absence or bility of the Federal Reserve Agent. Under disability of his principal," and by adding in existing law the Deputy Reserve Agent is also place thereof the following: deputy chairman. "Subject to the approval of the Federal Reserve Board, the Federal Reserve Agent shall appoint one or more assistants. Such assistants, who shall be persons of tested banking experience, shall assist the Federal Reserve Agent in the performance of his duties and shall also have povjer to act in his name and stead during his absence or disability. The Federal Reserve Agent may require such bonds of his assistants as he may deem necessary for his own protection. Assistants to the Federal Reserve Agent.shall receive am annual compensation to be fixed and paid in the same manner as that of the Federal Reserve Agent. One of the directors of class C shall be appointed by the Federal Reserve Board as vice chairman to exercise the powers of the chairman of the Board in case of the absence or disability of the Federal Reserve Agent; in case of the absence of the chair- SECTION 2. EXTENDING CLEARING AND COLLECTION FACILITIES TO NOXMEMBER BANKS. The following shows the proposed change in existing law: SEC. 2. That the first paragraph of section thirteen be amended so as to read as follows: * # * # [See Section 2 of Senate bill, printed above.] Section 2 proposes to amend the first paragraph of section 13 of the Federal Reserve Act so as to permit nonmember banks or trust companies to deposit funds in Federal Reserve Banks solely for the purposes of exchange or collection. This privilege is to be extended only in the event that such nonmember bank or trust company maintains with the Federal Reserve Bank of its district MARCH 1,1917. FEDEBAL RESERVE BULLETIN. such a balance as in the judgment of the Federal Keserve Board may be deemed necessary. Any clearing and collection plan to be effective must be comprehensive enough to include all checks. The following statement from the members of the Federal Reserve Board is in justification of this proposed amendment: It is contemplated that the compensating balances vrhich nonmember banks participating in the clearing plan vill be required to keep vdth "Federal Reserve Banks will be sufficiently large to protect member banks and justify Federal Reserve Banks in undertaking the service. Any clearing and collection j>lan to be effective must be so comprehensive as to include all checks. At present the par lists of the Federal Reserve Banks include the names of banks checks on which can be collected in any circumstances at a minimum of time and expense, but do not embrace a large number of tov.-ns in every State where there are no member banks; and in order to make collections on such points many banks are obliged to maintain accounts in addition to their reserve accounts with the Federal Reserve Banks. A necessary factor in any successful clearing plan is the offset whereby balances only require settlement instead of the total volume of transactions. As long as the clearing system does not embrace all of the banks, this offset is lost in a corresponding degree and the value of the system diminished in proportion. SECTION 3. FOREIGN ACCEPTANCES. SEC. 3. That the fifth paragraph of section thirteen be, and is hereby, amended so as to read as follows: * * * # [See section 3 of Senate bill, printed above.] Section 3 proposes to amend the fifth paragraph of section 13 of the Reserve Act so as to permit the Federal Reserve Board to authorize member banks to accept foreign bills of exchange growing out of transactions involving the importation or exportation of goods to an amount not exceeding 100 per cent of its paidup and unimpaired capital and surplus. The acceptance for any one person, company, or firm, is restricted, however, to not more than 20 per cent of the bank's paid-up and unimpaired capital and surplus. SECTION 4. GOLD AND GOLD CERTIFICATES AS COLLATERAL SECURITY FOR THE ISSUANCE OF FEDERAL RESERVE NOTES. SEC. 4. That section sixteen, paragraphs two, three, four, five, six, and seven, be further amended and reenacted so as to read as follows: * * * * [See section 4 of Senate bill, printed above.] The amendment to section 16 will permit the Federal Reserve Banks to receive gold coin and gold certificates in exchange for Federal Reserve notes, which is now done by indirection. It is of great importance to the Federal Reserve System to attract to the Federal Reserve 82341—17 6 189 Banks a large amount of gold which now serves no very useful purpose in the pockets of the people or as till money in the member banks. The adoption of this proposal would result in causing the gravitation into Federal Reserve Banks of probably §200,000,000 of gold. It would strengthen the potentiality of the bank in accommodating our national commerce by giving to these banks the power, in case the exigency should ever arise, and to the extent that this gold should be attracted into the custody of the Federal Reserve Banks, to issue Federal Reserve notes against qualified commercial paper at par, and would have- the effect of magnifying the power of the banks and strengthening public confidence in the Federal Reserve System. The Imperial Bank of Germany has demonstrated the value of the system of issuing legaltender notes against commercial bills of a qualified class. It has had a very great stabilizing effect upon Germany's finance, industry, and commerce. The Bank of England has on occasion, by a ministerial permit, authorized the issuance of legal-tendo/notcs against commercial bills. The Federal Reserve System has been very much more conservative than either of these plans, requiring as security for Federal Reserve notes 100 per cent in qualified commercial bills plus 40 per cent gold, besides the security of tlie entire banking system of the United States, which is, of course, behind these notes, with its capital, surplus, and double liability of stockholders. The effect of the proposed amendment is to permit the Federal Reserve Banks, if the occasion should ever arise, to issue to the limited extent that it has received gold in lieu of Federal Reserve notes—to that extent and to that extent only—Federal Reserve notes against 100 per cent of qualified commercial bills of short maturities, underwritten by member banks, as required by statute. Your committee regards this as an important improvement in the system. SECTION 5. PERMITTING DEPOSITS OF GOLD COIN AND GOLD CERTIFICATES WITH THE TREASURER AND SUBTREASURER TO THE CREDIT OF THE FEDERAL RESERVE BOARD. SEC. 5. That section sixteen be further amended by adding at the end of the section the following: * * * * * [See section 5 of Senate bill, printed above.] This is added for the convenience of the Federal Reserve Board in making its adjust- 190 FEDERAL RESERVE BULLETIN. ments of gold and gold certificates, so as to permit these adjustments to be made by a system of bookkeeping rather than by the actual physical transfer of the gold and gold certificates. SECTION 6. RELIEVING NATIONAL BANKS OF THE NECESSITY OF KEEPING ON DEPOSIT UNITED STATES BONDS WITH THE TREASURER. SEC. 6. That section seventeen be, and is hereby, amended so as to read as follows: "SEC. 17. So much of the provisions of section fifty-one hundred and lifty-nine of the Revised Statutes of the United States, and section four of the Act of June twentieth, eighteen hundred and seventy-four, and section eight of the Act of July twelfth, eighteen hundred and eighty-two, and of any other provisions of existing statutes as require that before any national banking associations shall be authorized to commence banking business it shall transfer and deliver to the Treasurer of the United States a stated amount of United States registered bonds, and so much of those provisions or of any other provisions^ of existing statutes as require any national hanking associations now or hereafter organized to maintain a minimum deposit of such honds with the Treasurer is hereby repealed." This proposed amendment merely obviates a practice no longer required under the Federal Reserve Act of compelling national banks to keep a minimum deposit of United States bonds with the Treasurer of the United States. National banks are no longer required to keep outstanding a minimum amount of circulating notes and a newly organized bank is not obliged to purchase or carry any bonds of the United States; but there are a number of national banks, organized before the passage of the Federal Reserve Act, which have retired their national bank circulation in full, yet they are, under a construction of the old law, required to keep on deposit with the Treasurer of the United States a certain minimum of United States bonds. The committee believes that these banks should be relieved of further obligation in this matter. SECTION 7. RESERVES. SEC. 7. That section nineteen be amended and reenacted so as to read as follows: [See section 7 of Senate bill, printed above.] This section provides for a readjustment and decrease in the reserves required of the member MARCH 1, 1917. banks. The object of the amendment is twofold. First, to increase the gold holdings of the Federal Reserve System, and thus strengthen the system against any exigency that may result from the European war, and secondly, to decrease the amount of reserves required of member banks. The amendment would add approximately §200,000,000 of gold to the present holdings' of the Federal Reserve Banks. The amendment also proposes to require the member banks to maintain in their own vaults, for till money, an amount equal at least to 4 per cent of its demand deposits. SECTION 8. PERMITTING DIRECTORS, OFFICERS, OR EMPLOYEES OF MEMBER BANKS TO RECEIVE INTEREST ON DEPOSITS AND TO OBTAIN ACCOMMODATIONS UNDER CERTAIN RESTRICTIONS. SEC. 8. That that part of section twenty-two which reads as follows: "Other than the usual salary or director's fees paid to any officer, director, or employee of a member bank and other than a reasonable fee paid by said 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," be, and hereby is, amended and reenacted so as to read as follows: "Other than the usual salary or director's feesfee paid to any officer, director, e^ employee, or attorney of a member bank, and other than a reasonable fee paid by said bank to such officer, director, e? employee, or attorney for services rendered to such bank, no officer, director, employee, or attorney of a member bank shall be a beneficiary of or receive, directly or indirectly, any fee, commission, gift, or other consideration for or in connection with any transaction or business of the bank: Provided, however. That nothing in this Act contained shall he construed to prohibit a director, officer, or employee from receiving the same rate of interest paid to other depositors for similar deposits made with such hanlc: And provided, further. That notes, drafts, hills of exchange, or other evidences of debt executed or indorsed by directors of a member hanlc may he discounted with such member bank on the same terms and conditions as other notes, drafts, hills of exchange, or evidences of debt upon the affirmative vote or written assent of at least threefourths of the members of the hoard of directors of such member hank. MARCH 1,1917. FEDERAL EESEEVE BULLETIN. 191 This amendment removes an evident hard- posed change will operate to fix responsibility ship imposed upon directors, officers, and em- more definitely and will give the Board more ployees "of member banks, who, under existing j latitude in the selection of class C directors. law, are precluded from drawing interest on | Section 2 of the bill proposes an amendment their deposits and prevented from obtaining i to section 13 of the Federal Reserve Act to accommodations in their own bank. The j permit nonmember State banks and trust comamendment very properly provides for restric- j panies, even though too small to be eligible for tions upon such loans which, in the judgment j membership in the Federal Reserve Banks, to of the Federal Reserve Board and of your com- avail themselves of the clearing and collection mittee, properly insures the bank against fraud facilities of the Federal Reserve System, proand incident loss. vided they cover at par checks on themselves sent for collection by the Federal Reserve Bank, and provided further that they keep a HOUSE REPORT. compensating balance with the Federal Re[Sixty-fourth Congress, second session. House of Representatives. serve Banks in an amount to be determined Report No. 1406. February 2, 1917.—Committed to the Committee under the rules prescribed by the Federal of the Whole House on the state of the Union and ordered to be printed. Reserve Board. On this point the Federal Mr. Glass, from the Committee on Banking and Currency, submitted Reserve Board says: the following Report, to accompany II. R. 20601.] It is contemplated that the compensating balances which The Committee on Banking and Currency, nonmember banks participating in the clearing plan will to which was referred II. It. 20661, to amend be required to keep with Federal Reserve Banks will be the* act approved December 23, 1913, known sufficiently large to protect member banks and justify Any as the Federal Reserve Act, as amended by the Federal Reserve Banks in undertaking the service. be so clearing and collection plan to must acts of August 4, 1914, August 15, 1914, March comprehensive as to include all be effective present the checks. At 3, 1915, and September 7, 1916, report the bill par lists of the Federal Reserve Banks include the names of banks checks on which can be collected in any circumwith the recommendation that it do pass. minimum of time and but The modifications of the Federal Reserve stances ata alarge number of towns inexpense,State do not embrace every where Act proposed by this bill were all suggested there are no member banks; and in order to make coland are strongly recommended by the Federal lections on such points many banks are obliged to maintain Reserve Board and, in large measure, are ap- accounts in addition to their reserve accounts with the Reserve Banks. A necessary factor in any sucproved by the advisory counsel to the Federal Federalclearing plan is the offset whereby balances only cessful Reserve Board. require settlement instead of the total volume of transThe suggestion in the first provision of the | actions. As long as the clearing system does not embrace bill to abolish the title and office of Deputy I all of the banks, this offset is lost in a corresponding degree Federal Reserve Agent and to authorize the j and the value of the system diminished in proportion. Federal Reserve Agent to appoint one or more j Section 3 of the bill is an amendment of secassistants qualified to act for the Federal j tion 13 of the Federal Reserve Act designed to Reserve Agent, when necessary, was suggested restore the provision which was, by error, by the Federal Reserve Board for the reason stricken from the act in the amendments of that the practical administration of the act September 7, 1916, thus restoring to national has developed the fact that there has been banks, with the approval of the Federal much difficulty in filling the office of Deputy Reserve Board, the right to accept up to 100 Federal Reserve Agent from the class C per cent of their capital and surplus m transdirectors. This officer is required to have the actions based upon the exportation and imsame qualifications as the Federal Reserve portation of goods. Agent; lie must have had. banking experience Section 4 of the bill proposes an amendment and must not bo an officer, director, or stock- to section 17 of the Federal Reserve Act to holder in any bank. At the same time lie is make clear the intention of the act to cancel not, as a rule, a salaried officer and receives all provisions of the national-bank act which only tho customary fees paid directly for require national banks to maintain a minimum attendance upon meetings. He is obliged' to be deposit of Government bonds with the Treasprepared to assume the duties of the federal urer of the United States. National banks are Reserve Agent in case of absence or disability no longer required to keep outstanding a miniof that officer, which involve a transfer and mum amount of circulating notes, and a newly audit of securities and accounts. The Federal organized bank is not obliged to purchase or Reserve Board suggests, and the Committee on carry any bonds of the United States; but Banking and Currency believes, that the pro- there are a number of national banks organized 192 FEDERAL EESEEVE BULLETIN. before the passage of the Federal Reserve Act which have retired their national-bank circulation in full, yet they are, under a construction of the old law, required to keep on deposit with the Treasurer of the United States*a certain minimum of United States bonds. The Federal Reserve Board feels, and the committee agrees, that it is just to these banks that they be relieved of this obligation. Section 5 of the bill proposes to amend and reenact section 19 of the Federal Reserve Act so as to reduce the statutory reserves of member banks and to require all of the reserves of these banks to be deposited in the Federal Reserve Banks. The primary purpose of the proposed change is to increase the gold holdings of the Federal Reserve System so as to enable the system the better to withstand any exigency that may ensue by reason of conditions .that might arise out of the European war. The amendment suggested would add approximately $300,000,000 of gold to the present holdings of the Federal Reserve Banks, while slightly reducing rather than increasing the reserve requirements of member banks. The law thus modified would leave to the business judgment and discretion of member banks the determination of the amount of currency they should carry in their own vaults to meet their daily business requirements. Respecting this amendment the Federal Reserve Board says: The control of gold by Federal Reserve Banks in times of abundance, such as at present will decrease the danger of inflation of domestic credits and at the same time will enable the country when the tide turns to part v;ith large sums of gold with less inconvenience or shock, thus enabling us more safely and effectively to proceed with the development of our foreign trade and to give the necessary credit facilities for its extension. The United States should be in a position to face conditions which may call MARCH 1, 1917. for an outflow of gold without any disturbances of our own or to the world's business, and without making necessary drastic changes in our interest or discount rates. The amendments suggested by the board are designed to enable the Federal Keserve Banks to withdraw gold from actual circulation while enabling member banks at the same time to release gold which at present is tied up in their own vaults. The amendments are based upon the theory that all of the individual banks should strengthen the gold holdings of the Federal Reserve Banks. The country's holdings of gold are not used most effectively when they are in the vaults of a large number of banks scattered all over the country, but its greatest use would come from concentrating it to "a greater degree in the vaults of the Federal Reserve Banks, where it can be effectively protected when not required and effectively used when needed. The member bank does not require gold with which to supply the ordinary demands of its depositors so much as currency. Section 6 of the bill proposing an amendment to the penal section of the Federal Reserve Act is intended to define more clearly the rights and limitations of directors of member banks in the matter of accepting fees and compensation other than the ordinary fees paid for legitimate services rendered in the regular course of business, the performance of which service is not incumbent upon them in their capacity of directors, Sections 7 and 8 of the bill propose modifications of the Federal Reserve Act in the matter of establishing domestic and foreign branches. Under existing law Federal Reserve Banks are required to establish domestic branches; section 8 of this bill simply empowers the Federal Reserve Board to enforce this provision of existing law. In the matter of foreign branches existing law confides the sole discretion to the reserve banks, whereas the bill under consideration empowers the Federal Reserve Board to permit or require Federal Reserve Banks to establish connections abroad. 193 FEDERAL EESEEVE BTJLLEIIK. MARCH 1,1017. INFORMAL RULINGS OF THE BOARD. Below are reproduced letters sent out from time to time over the signatures of the officers or members of the Federal Reserve Board which contain information believed to be of general interest to Federal Reserve Banks and member banks of the system: Purchase of Nonnegotiablc Warrants. (To a Federal Reserve Bank.) The Board has given due consideration to your letter of January 17, with which you sent a copy of your counsel's letter of January 16, in reference to warrants issued by the city of . I quote below our counsel's opinion, in which the Board concurs: "The Board has heretofore consistently adhered to its policy of not undertaking to pass upon the legality of issue of any municipal securities. There are so many technical questions involved that it would be impossible for this office to give an opinion of value as to the legality of any issue. To do so would require a careful analysis of the laws of the State in each case and an examination of the records of the city or town issuing such securities in order to determine whether the laws had been strictly and technically complied with. You will recall that for this reason the Board requires the opinion of recognized counsel or of counsel for the city or town issuing the securities as a condition precedent to their purchase by a Federal Reserve Bank. I agree with counsel for the bank that, assuming that these warrants have been legally issued, it would be necessary for the Board to waive that provision of its regulation which requires taxes to be payable before the maturity of the warrant in order for your Federal Reserve Bank to purchase any of these warrants." The Board is further of the opinion that a Federal Reserve Bank should not buy a nonnegotiable warrant, and it would suggest further that in considering the purchase of warrants issued by a municipality it would be well to ascertain what the sinking fund requirements are with reference to bonded obligations of the municipality and whether or not these requirements are being complied with. FEBRUARY 13, 1917. Acceptances. (To a member bank.) You ask me for a letter that would guide you in your efforts to finance the cotton business of your clients by acceptances, and you wish me to illustrate, step by step, how I would do it if I were president of your bank, with a capital and surplus of $300^000, in handling acceptances for a cotton firm to the amount of, say, 8100,000. If the financing of this one firm to the extent of SI00,000 were your only problem there would be no difficulty at all. Your customer—let me call him Smith for the sake of convenience— would draw upon you at 90 days' sight, securing you by the pledge of cotton properly stored in a ware house independent of himself. Smith would then proceed to sell this acceptance, which lie could do either by going to a local bank in your city or you could send it for him to & St. Louis bank, or to the Federal Reserve Bank in St. Louis, which would buy your acceptance, provided your bank commands a sufficient credit, at the rate for private discounts— at present about 3£ per cent. Inasmuch as you accept, for one borrower in excess of 10 per cent of your capital and surplus you could not yourself buy the paper from your customer, because, in that case, you would be making him a loan and the 10 per cent limit would apply. (Sec Federal Reserve Bulletin, Decemb e r / 1916, p. 682.) The total limit up to which your bank can accept is $150,000, and inasmuch as there are, I suppose, other customers in addition to Smith, for whom you wish to undertake to finance cotton holdings, I suggest that you arrange with a bank having a greater capital and surplus, either in St. Louis or elsewhere, to participate with you in any large acceptance proposition which presents itself. For instance, take the case of Smith. You might properly accept for $30,000 and let the bank with which you have an arrangement accept for the balance of the $100,000, authorizing you to act as its agent in holding and supervising the collateral security after acceptance and compensating you for that service. I hope that this letter answers your question and shall be glad to give you any further information that you might wish. FEBRUARY 19, 1917. 194 FEDERAL RESERVE BULLETIN. MAECH 1, 1917. Our attention has been called to section 150 of the act of March 4, 1909, which provides in part that— Recently there have come to the Board some "* * * Whoever shall print, photograph, requests of Federal Reserve Banks for ap- • or in any other manner make or execute, or proval of purchases of warrants in excess of I cause to be printed, photographed, made or the 25 per cent limit. ! executed, or shall aid in printing, photograph-' The object of this letter is to inform you that ; ing, making, or executing any- engraving, phothe Board does not believe that it would be | tograph, print, or impression in the likeness of ood policy at this time for Federal Reserve | any such obligation or other security, or any lanks to invest in warrants. Such invest- | part thereof, * * * except by direction ments should be encouraged during periods of ; of some proper officer of the United States great ease of money and when rediscounts i * * * shall be fined not more than $5,000, from member banks and offers of bankers' I or imprisoned not more than 15 years, or both." acceptances are not expected to be heavy. ! The counsel is of the opinion that under a At the moment, however, when indications are I literal interpretation of this act your bank that rates are likely to harden and when ' could not engrave, photograph, print, or inake Federal Reserve Banks must be prepared to j an impression of any part of a Federal Reserve meet heavy demands upon them by their j note, which is an obligation of the United member banks, the Board thinks that it is States, without violating this statute. inadvisable to invest the funds of the Federal It seems, however, that the Secretary of the Reserve Banks in warrants. Treasury has authority under the act to auFEBRUARY 20, 1917. thorize the use of this emblem, and it is suggested that you communicate with him, making the request specifically, with a reference Use of Note Emblem. at the same time to the correspondence with [To a Federal Reserve Bank.] this office. Your letter of January 19 asking if there is JANUARY 31, 1917. any legal objection to the use on the stationery of your bank of the emblem appearing on your The Secretary of the Treasury, with whom Federal Reserve notes, has been duly consid- the matter was taken up, deemed such use. of ered by the Board and by its counsel the emblem inadvisable. Purchases of Warrants. (To Federal Reserve Banks.) f MARCH 1,1917. FEDERAL RESERVE BULLETIN. 195 LAW DEPARTMENT. The following opinions of counsel have been The question to be considered is not whether authorized for publication by the Board since i the obligation is in form a bill of exchange but the last edition of the Bulletin: whether, under given circumstances, such a I bill of exchange may be said to have been Bills of Exchange Drawn Against Actually Existing j drawn against actually existing values. This YaJue. ; A bill of exchange discounted before acceptance may be ! is a question of fact to be determined in each said to be drawn against actually existing value, within case, and it would seem to be advisable for the the meaning of section 13 of the Federal Reserve Act* Board to prescribe by regulation, or to suggest when and only when it is accompanied by shipping by circular to Federal Reserve Banks, what documents, warehouse receipts, or other papers securing factors should be considered in determining title to the goods sold. An accepted bill of exchange, unaccompanied by shipping documents or other such whether a bill of exchange has been drawn papers, may be considered as drawn against actually against actually existing values. existing value if drawn against the drawee at the time of, Section 5200, Revised Statutes, which limits or within a reasonable time after, the shipment or delivery the amount that any one person may become of the goods sold. In this latter case there must be reason- liable to a national bank for money borrowed, able grounds to believe th?t the goods are in existence in the hands of the drawee either in their original form or in contains the following proviso: the shape of the proceeds of their sale. "But the discount of bills of exchange drawn in good faith against actually existing values, NOVEMBER 27, 1916. and the discount of commercial or business Sm: Section 13 of the Federal Reserve Act, paper actually owned by the person negotiating after providing for the rediscount of notes, the same shall not be considered as money drafts, and bills of exchange by Federal Reserve borrowed." Banks for member banks, contains the followAs commercial or business paper is not ing provision: included in that part of section 13 of the "The aggregate of such notes and bills Federal Reserve Act which is quoted above, it bearing the signature or indorsement of any is evident that Congress intended to permit one person, company, firm, or corporation rediscounted for any one bank shall at no time Federal reserve banks to rediscount without exceed ten per centum of the unimpaired limit "bills of exchange drawn against actually capital and surplus of said bank; but this existing values" acquired by member banks restriction shall not apply to the discount of under section 5200 but did not intend to exempt bills of exchange drawn in good faith against from the limitations of section 13 that more actually existing values." comprehensive class of negotiable paper reThis office has been asked for an opinion on ferred to as "commercial or business paper the question of whether or not a trade accept- actually owned by the person negotiating the ance as defined by the regulations of the Board same." This latter class maybe said to inmay be treated as a bill of exchange drawn clude a note, draft, bill of exchange or other against actually existing values when offered evidence of debt given in a. commercial or for rediscount to a Federal Reserve Bank by a business transaction if the person negotiating it is the actual owner of the debt evidenced by member bank. In Regulation " B , " series of 1916, a trade the instrument in question. Congress, however, authorized Federal acceptance is defined as "A bill of exchange drawn by the seller on the purchaser of goods Reserve Banks to discount without limit only that class of commercial or business paper sold, and accepted by such purchaser." It is clear that a bill of exchange does not which consists of bills of exchange drawn lose its characteristics as such when it is against actually existing values. This being true, it is necessary to determine whether the accepted by the drawee. 196 FEDERAL RESERVE BULLETIN. MARCH 1, 39J7. language "actually existing values" when ap- ! The question to be determined, therefore, is plied to trade acceptances may be said to refer | whether such an instrument may be said to be to the value of the commodity sold and for i drawn against actually existing values. which the bill of exchange is drawn, or can be I While section 5200 has been in force since said to refer to the financial responsibility of ! June 3, 1864, I have been unable to find any adjudicated case in which the language "actuthe purchaser or drawee. The former view has been adopted by the? ally existing values" as used in the statute has office of the Comptroller as the more reasonable been construed by the United States courts. interpretation. This seems clearly justifiable, The question was considered, however, in the (a) since it is unlikely that Congress would case of The Second National Bank of Oswego v. have used the language "existing values" if it Burt, 93 N. Y. 233, when in construing the had intended to refer merely to the financial language of section 5200, under consideration, responsibility of an individual, firm, or corpora- the court said: tion, and (6) because the drawee against whom "We think it entirely immaterial whether the bill is drawn is not legally bound to pay it such bills are accompanied by a specific bill of until the bill is accepted. lading in each case or are drawn against propIn other words, if such bills were excepted erty previously consigned, and existing either in its original form or in the shape of proceeds from the limitations of section 5200 because the of sales in the hands of the consignees. In bank has recourse against some existing values either case the funds have already been proand is not dependent solely upon the responsi- vided by the drawer in the hands of the drawees bility of the drawer or indorsor who discounts to meet the requirements of the obligation. "Tho object of this provision of the Currency it, the bank must be in a position to enforce act was to guard national banks from the hazthis claim legally against whatever constitutes ard of loaning money in improvident amounts the existing value against which the bill is upon speculative and accommodation paper, drawn and must, therefore, have a lien in some but it contemplated and permitted to an unlimform evidenced by a bill of lading, warehouse ited amount the discount of paper used and receipt, or some other documentary evidence required in facilitating the transfer of property and money in the transaction of the legitimate securing the bank if it discounts a "bill of ex- business of the country." change" before it is accepted and desires to Under this decision the test appears to be treat it as drawn against actually existing value. whether the drawer of the bill has furnished In the case of trade acceptances it is understood by this office that shipping documents, to the drawee some commodity of value which warehouse receipts, or other similar papers when converted into money will enable the do not usually accompany the draft or bill drawee to pay the bill at maturity and whether this commodity is in existence either in its of exchange. It has been suggested that the original form or in the shape of proceeds of sale principal use of a trade acceptance is to in the hands of the drawee at the time the bill enable the seller of goods to put in negotiable drawn. form a claim against the purchaser for the purIf this is adopted as the true test the regulachase price of the commodity sold, which claim tions or instructions of the Board should promight otherwise be carried as a balance due on vide that a bill to be treated as drawn against open account, and that it is customary for the | actually existing values must be drawn conseller to make a direct shipment to the pur- ! temporaneously with or within a reasonable chaser of goods sold to him and to draw on him time after the shipment or delivery -of the for the purchase price. When the drawee ac- goods sold and must be for the whole or part cepts such a draft or bill of exchange, the in- of the purchase price. strument, under the regulations of the Board, Drafts for balances due on open accounts drawn indiscriminately against debtors and becomes a trade acceptance. MARCH 1,1917. 197 FEDERAL RESERVE BULLETIN. accepted by the drawees should not be treated existing value, and that part of the opinion just as bills of exchange drawn against "actually above quoted was intended to point out the existing values/ 7 but only those bills drawn fact that so far as section 5200 is concerned at, or within % reasonable time after, the ship- it is immaterial whether an accepted bill be ment of the goods to the consignee should be treated as a bill of exchange drawn against existing value or commercial or business paper considered within this class. It is manifest that unless drafts or bills of owned by the person negotiating it, since both exchange excopted from the limitations of classes are excepted from the limitations of section 13 of the Federal Reserve Act are section 5200. As commercial or business paper is not exrestricted to those which represent independent transactions this form of paper might be used ceptod from the limitations of section 13, unmerely to evade the limitations of section 5200. less it is in form a bill of exchange drawn In discussing section 5200 in an opinion against existing value, it is necessary to conof this office dated October 27, 1916, the follow- sider the effect that acceptance has on such a bill. ing statement was made: It is clear, therefore, that a bill secured by shipping documents, or by the pledge of goods actually sold, might be discounted by a momber bank before acceptance without being subject to the limitations imposed by section 5200, since this would constitute a bill drawn in good faith against actually existing value, When such bill has been accepted by the drawee, and the documents attached' have been removed, though the direct obligation of the drawee to pay such bill at maturity ., ° n u this ]lc P o i n t \Ms ods o r th office f ot'^ opimonikat t g° e proceeds of the sale of the goods are in the hands of the drawee, and the draft or bill of exchange is drawn by the seller a ! ? a r a s t t n e purchaser'for the purchase price, s ch a b l l l a l t e r ? . acceptance may be treated as drawn against existing value. To summarize the conclusions reached: (1) A bill of exchange discounted before acceptance must be accompanied by shipping i drawn, nevertheless, when . discounted by a bona fide owner for value, its discount would not be subject to the limitations of section 5200 since it would still come within the classification of "commercial or business paper actually owned by the person negotiating the same/'7 It lias been suggested that according to this opinion no bill of exchange can be treated as drawn against "actually existing values;? unless it is accompanied by shipping documents; warehouse receipts, or some other documents securing title to the goods sold, and that when such a bill is accepted it ceases to be a bill of exchange drawn against actually existing values and becomes subject to the limitations of section 13 of the Federal Reserve Act, although it is not subject to the limitations of section 5200, Revised Statutes. A bill of exchange accompanied by shipping documents was referred to in that opinion merely as an example of one drawn against securing title to the goods sold if it is to be treated as drawn against existing value. (2) If the bill is discounted after acceptance it may be treated as drawn against 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. There must bo reasonable grounds to believe at the time the bill is drawn 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. Respectfully, M. C. ELLIOTT, Counsel. Hon. W. P. G. HARDING, Governor Federal Reserve Board. Secured by or Issued for Purposes of Trading in Bonds or Notes of the United States. A n y m e m b e r b a n k m a y r e d i s c o u n t with itB F e d e r a i Reserve Bank a note, draft, or bill drawn for the purpose Discounfc of P a p e r 198 FEDERAL RESERVE BULLETIN. M A R C H 1? 1017. of carrying or trading in bonds or notes of the United j The particular question under consideration States, and may also procure advances from its Federal was whether a branch of a national bank could Reserve Bank on its own promissory note secured "by a ! make loans to one person under authority of deposit of or pledge of bonds or notes of the United States. section 5200, Revised Statutes,, to the extent [The text of this opinion will be found on ! of 10 per cent of the capital and surplus of the pages 158-9.] ; parent bank, or only to the extent of 10 per cent of the capital assigned for the business of the branch. The Attorney General held that Branch Banks. j loans could be made by the branch to one perA foreign branch established by a national bank is not ! son to an amount equal to 10 per cent of the an independent corporation, and the creditors of the ; branch are general creditors of the parent bank. ! capital and surplus of the parent bank. The position taken by the Attorney General FEBRUARY 8, 1917. , as to the status of the branch is in accordance SIR: The following question has been sub- with the decisions of State courts in a number mitted to this office for an opinion: "In the! of cases which deal with this subject. For event of the failure of a national bank having : example, it has been held that the principal branches in foreign countries, would the ! bank and branches together constitute but one creditors of the branches become general j corporation, and consequently every contract creditors of the bank or only creditors of the ! entered into by the branch is in contemplation branch with which they were doing business?" ; of law the act of the bank itself. (Brown v. The authority of a national bank to estab- ; Bank of the State, 5 Ark., 235, cited with aplish a foreign branch is contained in section 25 ; proval in Wallace v. State Bank, 7 Ark., 61, 65.) of the Federal Reserve Act. Comparatively j In the case of Brown v. The Bank of the few branches have been established, and there j State, supra, the court said: has been no decision of any court dealing with j "We are, therefore, bound to know judicially their status. Prior to the passage of the Federal j that there is a branch of said bank at Arkansas, Reserve Act national banks were not permitted i and that it is but a portion or integral part of to establish branches, but State banks having ' said corporation; consequently, every thing branches which were converted into national I done by or to those intrusted with, the manageits business at said banks under authority of section 5154, Revised : ment of must be considered branch in respect thereto, as done by or to Statutes, were authorized to retain and to con- the corporation; because, being but an integral tinue to operate such branches. The status of part of the whole, it can have no existence these branches was considered in an opinion of j separate from, and independent of, the corthe Attorney General dated September 15, 1909 poration, of which it is a member only, and (see Op. A. G., 601). In this opinion it was >therefore those who act therein can not act for, ; or as the agents of, that particular branch only, said: but must act for, and as agents of, the whole I corporation, may "The branch banks have no separate exist- be restricted notwithstanding their powersreferso that they can only act in ence. * * * The parent bank with its. ence of the branches is one association, as contemplated j shall to such portion at that business thereof as be transacted particular branch in these laws, with one set of directors or stock- \ or place." holders, and all transactions are regarded as ! those of one corporation or institution." j Following out this line of cases, it has also In another part of the same opinion, he said: j been held that a delivery to a branch is tantamount to a delivery to the principal institution "'Inasmuch as depositors, including the itself (Murphy v. State Bank, 7 Ark. 57), and United States, in any of the branch banks have j that payment to the mother bank of a debt the protection of the whole capital, surplus, j and undivided profits of the mother bank, irre- j due to it, though it may have arisen from disspective of how it may be divided, there is no j counting a note by a branch bank is a discharge question of public policy involved in the con- j of the debt. (Smith v. Lawson, 18 West Va. straction of the law as here expressed." ; 212, 241.) MAUCH 1, FEDERAL RESERVE BULLETIN. 1917. Section 25 of the Federal Reserve Act, as amended by the Act approved September 7, 1916, provides that: Any national banking association possessing a capital and surplus of 81,000.000 or more may file application with the Federal Reserve Board for permission to exercise, upon such conditions and under such regulations as may be prescribed hj the said Board, either or both of the following powers: • First. To establish branches in foreign countries or dependencies or insular possessions of the United States for the furtherance of the foreign commerce of the United States, and to act, if required to do so, as fiscal agents of the United States. >£ * % * % Such application shall specify the name and capital of the banking association filing it, the powers applied for, and the place or places where the banking operations proposed are to carried on. * * * Every such national banking association shall conduct the accounts of each foreign branch independently of the accounts of other foreign branches established hj it and of its home office, and shall at the end of each fiscal period transfer to its general ledger the profit or loss accrued at each branch as a separate item. There is nothing in this language to indicate that branches established in foreign countries are to have a separate existence and constitute separate corporations. On the contrary, it is clear that the parent bank is merely to engage in certain foreign transactions through its foreign branch. This viow is substantiated by the fact that the profit and loss accruing to each bank is to be entered on the general ledger of the parent bank at the end of each fiscal year. The status of all claims against insolvent national banks is fixed by sections 5235 and 5236, Revised Statutes. These sections provide in part as follows: SEC. 5235. The comptroller shall, upon appointing a receiver, cause notice to be given, by advertisement in such newspapers as he may direct, for throe consecutive months, calling on all persons who may have claims against such association to present the same, and to make legal proof thereof. 199 SEC. 5236. From time to time, after full provision has boon first made for refunding to the United States any deficiency in redeeming the notes of such association, the comptroller shall make a ratable dividend of the money so paid over to him by such receiver onfall such claims as may have been proved to his satisfaction or adjudicated in a court of competent jurisdiction. * * * It will be observed that in case of insolvency of a national bank all claims against the estate of the bank are paid rat ably except the claim of the United States for any deficiency in the security deposited as collateral for the circulating notes of the bank. As no priorities are recognized by the statute the creditors of a branch of a national bank would, in the opinion of this office, bo general creditors of the parent bank and would be permitted to prove their claims in the same manner as local creditors. Respectfully, M. C. ELLIOTT, Counsel. Hon. W. P. G. HARDING, Governor Federal Reserve Board. Transfer of Federal Reserve Bank Stock. A national bank acquiring assets of another national bank in liquidation is not entitled to have transferred to it the Federal Reserve Bank stock held by the liquidating bank. FEBRUARY 3, 1917. SIR: From the attached correspondence it appears that a certain national bank A went into voluntary liquidation, and its assets were apparently taken over by the B National Bank, the name of the latter bank being changed to the A-B National Bank. The cash-paid subscriptions of the A National Bank were returned to the liquidating agent, but claim is now made for accrued dividends on these subscriptions. Counsel for the Federal Reserve Bank has advised that bank that under the law it is not authorized to pay an amount in excess of the book value of the stock held by the A National Bank at the time that it went into liquidation. This is entirely in accord with the views of this office as expressed in numerous opinions. 200 FEDERAL RESERVE BULLETIN". MARCH 1, 1917. The language of the Act is clear and unam- Drafts Payable with Interest. biguous. As pointed out by counsel, it pro- A provision in a draft or bill of exchange that it is payable "with interest at the rate of — per cent per annum vides that in case of voluntary liquidation— after maturity if payment is delayed " does not; affect the "* * * ^ e shares surrendered shall be negotiability of the instrument. cancelled and the member bank shall receive FEBRUARY 19, 1917. in payment therefor, * * * a s u m equal to its cash-paid subscriptions * * * and SIR: The attached form of trade acceptance, one-half of 1 per centum a month from the which provides that payment shall be "in period of the last dividend, not to exceed the funds current in or with exchange upon book value thereof." Chicago, 111., or New York, N. Y., and with This statute fixes the cash surrender value interest at the rate of — per cent per annum of stock held by a bank which withdraws from | after maturity if payment is delayed; value the system by going into voluntary liquida- i received out of the purchase of machinery or tion. The status of such bank is changed from | other goods, wares, and merchandise from us; that of stockholder to that of creditor to the j and charge the same to our account," has been extent of this cash surrender value. The stock ; submitted to this office for consideration. in question can not be transferred or hypotheApparently the only disputed question is cated. It is not possible, therefore, under the whether the words "with interest at the rate terms of this Act for the National Bank A in of — per cent per annum after maturity if payliquidation to transfer its rights to the A-B : ment is delayed77 destroy the negotiability of National Bank, which is a separate and dis- I the draft on the ground that it would not be tinct corporation. This situation is substan- payable in a sum certain in money as required tially similar to that of a national bank going by section 1 of the Negotiable Instruments into liquidation, its assets being taken over by ! Law. a State bank and the State bank entering the ! Section 2 of that Act provides that "the system. This situation was considered in an I sum payable is a sum certain within the meanopinion filed with the Board and published on ing of this Act, although it is to be paid (1) with page 117 of the February, 1917, Federal interest; * * * (4) with exchange, whether Reserve Bulletin. at a fixed rate or at the current rate/ 7 etc. It If the National Bank Act provided for the is evident, therefore, that a draft payable in a consolidation of two banks so as to obviate the I definite sum plus interest is a draft payable in necessity of one going into liquidation, a differ- a sum certain in money, even though the exact ent situation might result but the mere fact amount due at maturity must be figured by an that the assets of the liquidating bank are addition of the amount prescribed on the face taken over by another does not, within the of the bill and the interest based on that terms of the statute, give the liquidating bank amount for the duration of the draft. the right to transfer its stock to the new bank. The acceptance under consideration is even Respectfully, I more definite than that which is thus shown to M. C. ELLIOTT^ Counsel. ; be permissible under the Negotiable Instru| ments Law, because it is payable at maturity Hon. W. P. G. HARDING, j in the sum fixed on the face of the instrument, Governor Federal Reserve Board, MARCH 1,1917. FEDERAL RESERVE BULLETIN. 201 and the question of interest arises only if the i jectionable than the stipulation concerning 1 draft is not paid when due and applies only to attorney fees, which was considered in the case the time elapsing between the date of maturity |1 of Seaton v. Scovill (18 Kans., 433), for there the amount was not fixed and named, but the and actual payment. i stipulation was for reasonable attorney fees. It is generally held by the courts that a pro- : (See also 1 Daniel on Neg. Insts., sees. 53, 54, vision in a bill or note that in case of nonpay- : 61, 62: Tholen v. Duffy, 7 Kans., 410: Goulds. ment at maturity a certain specified rate of Bishop Hill Co., 35 HI., 325.)" interest shall be paid from the date of the note I The clause in the acceptance under considdoes not make the amount to be paid at" | eration differs from that discussed above only maturity uncertain. (See Norton on Bills and • in that interest applies from the date of maNotes, 4th ed., p. 76, note 17, and cases cited.) turity instead of from the date of the instruIn the case of Parker v. Plymell (23 Kans., : merit. To that extent it would seem to be all 402) the court considered the negotiability of i the less uncertain, and it is, therefore, the a note containing the words "If this iaote is not opinion of this office that the acceptance in paid at maturity the same shall bear 12 per question is not rendered ineligible because of cent interest from date/' and it was said: the provision for the payment of interest if the "Clearly these words do not destroy the acceptance is not paid at maturity. negotiability of the paper. They do not leave In an opinion printed on page 458 of the uncertain either the fact, the time, or the September, 1916, Federal Reserve Bulletin, amount of payment. Indeed, up to and including the maturity of the notes, they are jit was shown that a bill payable "with cxentirely without force. They become opera- | change'' is payable in a sum certain within the tive only after the notes are dishonored and meaning of the Negotiable Instruments Law, have ceased to be negotiable, and then there is so that question need not be discussed here. no uncertainty in the manner or extent of their Respectfully, operation. They create, as it were, a penalty M. C. ELLIOTT, Counsel. for nonpayment at maturity, and a penalty the amount of which is definite, certain, and Hon. W. P. G. HARDING, fixed. In this respect they are even less obGovernor Federal Reserve Board. 202 MARCH -1, 1.9.17. FEDERAL RESERVE BULLETIN. SUMMARY OF BUSINESS CONDITIONS FEB. 23, 1917. District No. 1— Boston. G eneral business District No. 2— New York. Large volume being transacted. Good; larger than a year ago. Crops: Condition. Outlook. Industries of the district, Busy mainly on old orders. Construction, building and engineering. Busy. Foreign trade New record. Bank clearings. Little change. Money rates Increasing. Railroad, post-office, and other receipts. .do. Labor conditions .' Fully employed Outlook.. I Moderately good, i but much hesita| tion. Business in general is awaiting outcome of international situation. Remarks. i District Mo. 7— Chicago. General business Crops: Condition. Outlook... Industries of the district. Construction, building, and engineering. Active; some uncertainty. Good District No. 3— Philadelphia. Good. Active ! Quiet but good Good. : Highly satisfactory Uncertain. I Fair i Must have more moisture. Busv Busv despite rail- ''• Active... road difficulties. : Prospects good " Increase.. Active. Quiet.. I Increase Money rates. Increasing j Steady to firm Railroad, post-office, and oilier receipts. Post-office receipts j Increase increasing. Labor conditions • Slight increases.. Good Steady Increase Unchanged, I About the same... Increase Fully employed at! Fair to good high wages. j ' Favorable G eneral 1 y favorable. Favorable Doubt as to the out- Wheatneedsmois- ' come of the foreign I ture and snow situation is a re- ! protection, straining influence. | Very promising Active Favorable if sufficient rain. ! Hampered by lack of transportation. I l a m p e r e d b y Decrease over 1918:! 70 per cent increase with good wca-' j over correspondweather condiIher expected j ing month last tions. Less activity. Decreasing . Good, but affected Some slowing up, by embargoes but very satisj and lack of fuel, i tory. District No. 6— Atlanta. j District No. 8— ! District No. 9— ! District No. 10— District No. 11— j District No. 12— j Ksmsas City. ! Pallas. i San Francisco. 1 St. Louis. . Minneapolis. Bank clearings. Remarks. District No. 5— Richmond. ! Limited truck Fair. | shipments bring| ing good prices. j Extensive prepDo. i orations. Active, but ham- Very busy. above As active as trans- i Operating full on Continue pered by freight normal. portation and j profitable basis. fuel conditions congestion. permit. Less than a year : Increased cost and Plans for future Interference by- Fair. ago. ' scarcitjr of labor contemplate inbad weather, and materials creased activity. b u t outlook deterrent factors. good. Larger in Janu- i Still very large. No report In good volume, Limited. ary; imports ; Lack of ocean but congested at growing; retard- !: tonnage continports. ed this month, j ues. Increased : C l e a r i n g s far Substantially in- 13 per cent in- Continue to inI ahead of last creased. * • crease. crease. year. All higher; very i Hardening tend- S t e a d y , w i t h ! 4 per cent to 6 per Stiffening slightly. firm for time j ency. cent; increasing higher tendenloans. ! demand for new cies. i crops. Increased volume.;! Continue high, Good. Increased ' Increase.. with some inI i creases. Well employed; ••Scarcity of help in i Good, with active .. Fully employed Fair. scarcity on railnearly all lines I demand for all ; at good wage's. roads. of business. m \ kinds of skilled, j Unsettled ; Favorable.. Consensus of opin- ! Hopeful Good. ion is that out- i look is good. | Restrained, waitEmbargoes by : General conditions ing attitude in railroads and hi- ! throughout the general business; adequate fuel j district sound. good prospects supply have ' for domestic been deterring j spring trade. influence in all i lines. ; Foreien trade... Outlook District No. 4 Cleveland. | Satisfactory. I Promising I above normal, j year. Increase I Large increase in exports. 38perccntincrease I 50 per cent increase over correspondfor January over 1916. * I ing month in 1916. Rates easy, no cyi- j Easy. donee of material j change. j Railroad increase j Increasing. over 1916; post | office, 18 per : cent increase. I "Well employed; Fairly settled. .good demand for laborers. Very promising. Favorable. Spring trade, though early, very good. No change in the Business is at a generally good high tide of prosbusiness* condiperity. tion. MAECH 1,1917. FEDERAL EESEEVE BULLETIN. 203 GENERAL BUSINESS CONDITIONS. There is given on the preceding page a sum- ! The cotton goods industry is quieter, with mary of business conditions in the United '.new buying orders very limited. Mills are States by Federal Reserve districts. The re- busy on old advance contracts. The demand ports are furnished by the Federal Reserve for goods for future delivery which was so Agents, who are the chairmen of the boards of j urgent a few months ago has practically subdirectors for the Reserve Banks of the several, sided. Buyers are apparently waiting for districts. Below are the detailed reports as of lower prices or clearer general conditions approximately February 23: before entering into new commitments. Money rates in this district are firm. ComDISTRICT NO. 1—BOSTON. mercial paper handled by brokers is moving While business continues in large volume, so slowly and many merchants who are acmuch uncertainty exists regarding the future customed to sell their paper in the open that merchants and manufacturers are await- market are now going to their own banks. ing further developments before entering into Call money, 4 per cent; time money, 4* per new commitments. Apprehension regarding cent upward for four to six months; year international conditions is the predominant money, 4 | per cent; town notes are selling as feature of the present situation. Mills and high as 4 per cent for fall maturities. Notes factories, however, appear to have sold their of Massachusetts municipalities, exempt from output so far ahead that, despite the feeling of Massachusetts taxes and duo soon after April 1 hesitation, they are being run as nearly at (tax day), are selling at 2\ per cent discount capacity as labor and material conditions will upward as compared with par plus a premium at this time last year. Bankers acceptances, permit. There has been much, press comment of late 3J per cent indorsed, 3-| per cent upwards regarding railroad embargoes, but this has unindorsed. applied rather to other lines east of Chicago Loans and deposits of the Boston Clearing than to those entering this district, the em- House banks have within the last two weeks bargoes in force here being but a trifle more reached a new high point, while excess reserves restrictive than last month. It is expected have decreased to a point far below the high that with the advent of warmer weather records made in October, 1915. Loans and. freight conditions will be much improved. discounts on February 17, 1917, amounted to Leather prices are firmer, due partly to the- $472,293,000 as compared with 8449,217,000 fact that inasmuch as our imports of hides are last month and 8397,580,000 on February 12, greater than our exports of leather, any cur- 1916. Deposits on February 17, 1917, totaled tailment of our exports and imports would $366,275,000 as compared with 8366,139,000 tend to cause a shortage in that commodity. on January 20, 1917, and $336,748,000 on The between-seasoiis period in the boot and February 12, 1916. The amount "due to shoe, industry has caused a decrease in the banks" on February 17 was 3146,432,000 as activities of shoe factories. compared with $149,955,000 on January 20. There is little change in the woolen and The excess reserve of these banks decreased worsted industry. Mills continue very bus}" from $42,314,000 on January 20 to $26,110,000 with orders booked well, ahead. Wool prices on February 17. are still advancing. There is little or no Exchanges of the Boston Clearing House for domestic wool in the market and it will be some the week ending February 17, 1917, were months before any considerable part of the $231,906,304, compared with. $217,128,678 for new wool, already contracted for on the sheep's the corresponding week last year and $261,back, will be received. 325,917 for the week ending February 10, 1917. 204 FEDERAL RESERVE BULLETIN. Building and engineering operations in New England from January 1 to February 14, 1917, amounted to $20,167,000 as compared with $17,767,000 for the corresponding period of 1916 and $21,168,000 for the same period in 1914, the highest previous year on record. Imports and exports of the port of Boston for January, 1917, established new high records. Exports amounted to $24,193,104 as compared with $21,669,660 for December, 1916 (the largest amount previously recorded) and $8,322,467 for January, 1916. Imports amounted to $32,419,881 as compared with $19,381,587 for December, 1916, and $22,258,716 for January, 1916. The previous high record of imports was $28,581,611 made in February, 1916. The principal exports were horses, munitions, wheat, and leather, while the imports consisted to a large extent of wool and hides. The receipts of the Boston post office for January, 1917, show an increase of $80,476 or about 11 per cent over January, 1916. For the first 15 days of February, 1917, receipts were about 6 per cent, or $21,940 more than for the corresponding period last }^ear. Boston & Maine Railroad reports net operating income, after taxes, for December, 1916, as $1,078,648 as compared with $917,548 for the corresponding month of 1915. New York, New Haven & Hartford Railroad reports net operating income, after taxes, for December, 1916, as $1,786,359 as compared with $1,463,078 for the same month last year. DISTRICT NO. 2—NEW YORK. Business in general manifested but little disquiet over the recent serious change in American foreign relations. More conservative tendencies and caution in making long commitments had been apparent for some time and, thus, commerce and industry were in a measure prepared for the unexpected developments. Sharp declines in prices of listed securities were quickly followed by substantial recoveries and a dull, comparatively steady market. MARCH 1, 1017. Uneasiness among the foreign element caused withdrawals of small deposits in isolated instances, particularly in the larger cities, but that lasted only a few days. To meet the increasing demands for currency, this bank issued Federal reserve notes for $32,500,000, from February 1 to 19, inclusive, against §9,800,000 paid out during the preceding month and S6,250,500 in February a year ago. Low rates for money prevailed in the open market from the beginning of the year until February 1. The market then became narrower and much firmer, particularly for all time loans and rates generally advanced h to 1£ per cent. Prime commercial paper, which sold at 3 per cent in January, is now 4J per cent. Bankers7 acceptances, sold in the open market at 2f per cent a few weeks ago, are now offered at 3f per cent. There is a growing demand for commercial loans, created in part by borrowers who, in these uncertain times, prefer to anticipate future requirements, but chiefly the- result of continued activity in trade and industry, high and rising costs of goods and materials, and the congestion of freight. The greatest handicap to domestic and foreign trade is the transportation problem. For over a year the railroads have been unable to handle promptly the enormous movement of merchandise. The situation has been made more serious during the last few weeks by extremely cold weather and postponed sailings of ships. Railway lines and terminals are crowded with unloaded cars; mills and factories can not get prompt deliveries of fuel and raw materials. Notwithstanding all the drawbacks and the more restrained, waiting attitude of business in general, reports indicate a large volume of spring trade, satisfactory payments and continued activity in the production and sale of goods. The New York Clearing House banks on February 17, 1917, reported loans, etc., 83,466,662,000, deposits $3,706,146,000, and MARCH 1,1917. FEDERAL RESERVE BULLETIN. 205 excess reserves §165,715,220. Since Decem- good margin on the increased costs of producber 30, 1916, these totals have increased as tion. follows: Goal.—There is a heavy demand for coal at a time of limited output at the mines. Prices Loans, etc $127,212,000 Deposits 212, 089, 000 are extraordinarily high and scarcity in yard Excess reserves 48,379,530 labor, severe weather conditions and abnormal Large additional imports of gold have been demands have caused much embarrassment to received recently, bringing the total inflow, anthracite dealers. Both wholesalers and retailers have been overrun with orders for since January 1, up to $101,500,000. quick deliveries to fill consumers7 needs. DISTRICT NO. 3.—PHILADELPHIA. Prices of bituminous coal have hardened According to reports received from all parts recently, car shortage still being the disturbing of this district, the difficulties of the railroads factor. There is about a 20 per cent deficiency and steamship companies in moving goods in the supply of coke, due also to car shortage. promptly, the scarcity and inefficiency of Cotton yarns.—Extreme quiet prevails in the labor, and the increased cost and inadequate local cotton-yarn market. The slackening in supply of coal and other materials, are some- the demand for yarns has been due to the dewhat curtailing production. Activity contin- cline in the price of cotton and to the fact that ues in practically all industrial and other lines of manufacturers are well stocked up for three to business, and no difficulty is experienced in dis- five months ahead. posing of products, and orders in hand insure Dry goods and notions.—Good business is rethe operation of mills for months to come. ported by the wholesale dry goods houses, with In some localities, there is much conserva- prices generally remaining firm. Buyers are tism in the placing of new orders. Quite a assuming a conservative attitude. In the dressnumber of important industrial concerns are goods trade fall lines have been entirely sold out enlarging their plants. Collections are gen- in many cases and withdrawn from the market. erally reported to be satisfactory. Glass.—The plants are running at as near There is a general feeling of confidence and capacity as possible. Orders in some cases optimism as to the future, but on account of the have been refused, owing to inability to increase extraordinary conditions and the uncertainty production. The labor situation is serious. of the foreign situation, it appears that busiGroceries.—Prices of groceries have generally ness is being conducted in a conservative way. advanced. Canned goods are higher and scarce. Automobiles.—The automobile pleasure car Sugar is being shipped from New York and Bosbusiness is usually dull during the winter ton for temporary needs. It is thought that months. This winter, however, business has the strike situation in the refineries in this city been good. Costs of materials have greatly will be satisfactorily adjusted within a short increased, and they are not altogether offset time. There is no famine here. Prices were by increases in selling prices. A leading pro- forced up because all consumers were trying to ducer of trucks reports sales ahead of last year, buy much more than their normal amount bewith prospect for continued heavy demand. No cause of the fear of a shortage. early falling off in the cost of labor and materials Hardware.—Scarcity in many lines continues is expected. Rapid expansion has not been and prices are firm. The volume of business is possible because of the inability to procure suffi- satisfactory. cient labor, machinery, and other materials. Iron and steel.—General conditions among the Cement—The cement plants are reported to ! iron and steel industries are reported to be quite be busy and prospects for the future are good. satisfactory as to prices and volume of business; Selling prices are high enough to return a operating conditions, however, arc not satisfac- 206 FEDERAL RESERVE BULLETIN. MABCH 1, 1917. tory because of labor conditions in mills and gestion is serious, and the fact that many people mines, scarcity of materials, and the inability prefer to pay demurrage charges rather than of the railroads to handle the business. store the goods in warehouses at higher figures Leather.—The leather market is active; aggravates the situation. prices are firm and rising, although there is Silk.—The broad silk business is active and considerable recent uncertainty. Manufactur- absorbing production as fast as the product ers are proceeding slowly in filling orders, espe- can be delivered. The ribbon business has cially for export business, in order that they revived and is better than for some time. may be in a better position to fill Government Present unsettled international conditions have needs in case of military necessity. Stocks on not affected the supply of raw materials, as hand are small, and raw skins are still scarce. they come chiefly through Japanese sources. Locomotives.—A leading producer of locomo- Mills are being run to capacity and parts of tives reports unprecedentedly favorable condi- some plants are being worked both day andtions as to the future, inasmuch as business in night. Several factories are being enlarged. hand is sufficient to operate the plant to its Textiles.—The textile industries are active, maximum capacity during the greater part of having abundant orders on hand with no finthe year 1917. ished stock and prospects are generally good. Payer.—Paper mills report great difficulty in Operations are somewhat curtailed owing to obtaining wood pulp, and the price is the high- scarcity of operators. Mills manufacturing est ever known. Paper dealers are experienc- lace curtains have been hampered to some ing the usual lull after the first of the year, but degree because of the shortage of certain supat this time it is more pronounced than usual, plies which come from England. Cotton-goods because of the phenomenal business prior to the plants are running at full "capacity. Business first of the year. Stocks are below normal and in the hosiery trade is good, but high prices of no break in prices is expected. yarns and scarcity of labor are disturbing Retail trade.—Retail business is very satis- factors. One large textile mill reports that factory and the general opinion is that war more caution .and conservatism has been noted complications will have no immediate effect among their customers within the past 60 days, on present conditions. Buyers are providing which they attribute partly to the uncertain only for reasonable needs. Manufacturers tell international situation and partly to the them that if they do not place orders now to recognition that prices are very high. This cover requirements throughout the year, no condition has decidedly checked speculative goods will be available; but there is a disposi- buying. Since it is difficult in most localities tion to regard this as an effort to entice them to secure sufficient labor to operate at more to stock up at current high prices. People than 80 per cent of capacity, this condition continue to buy with care and are buying more is automatically tending to restrict overdurable goods. Some of the large stores report production. that they are not making many more transWool.—In the local wool market, prices actions than last year, but the transactions have advanced 7|- to 15 per cent in the last amount to more in dollars. e month. A decrease in imports from abroad, Railroads.—The railroads in the district are the levying of duties on exports from South not buying equipment to any appreciable America, high insurance rates, and the possiextent, but one road is making an effort to bility of a war demand make for an uncertain reserve space in the steel mills for supplies market. There is a shortage in yarns, and which will be needed at the end of the year. orders could be taken in much greater volume Repair shops are very busy. The freight con- if they could be filled. MARCH 1 , 1 9 1 7 . 207 FEDEBAL BESEBVE BULLETIN DISTRICT NO. 4—CLEVELAND. to secure proper supplies of raw materials and General embargoes by the railroads; car to move out finished products. From nearly all shortages, and lack of adequate fuel (gas and sections in which these industries are leading coal) supplies, aggravated by continued ex- ones, the closing down of plants is reported. Rubber goods.—In this district all of the factremely cold weather, have caused a marked lessening of activities and tempering of op- tories are running to capacity, with continued timism in industrial pursuits throughout the demands greater than their ability to supply. district. From all sections the reports indi- Conditions in this industry appear to be more cate inability to secure fuel to maintain oper- satisfactory than in any other lines. Automobiles and parts.—As far as reported, ations, as well as cars to move out finished products or to bring in raw materials. The the activity in these lines continues unabated, outlook for early improvement of this situa- though somewhat checked by car shortage and tion is. however, now at least hopeful, if not fuel inadequacy. Some factories are receiving promising. freight rather more freely than they would if Iron and steel trades,—The demand for all it were not that they wished the cars for outlands of iron and steel products continues going freight. Mercantile business.—The reports indicate insistent, and prices are firm to higher. Inadequate fuel supply has caused several blast continued activity in all mercantile pursuits, furnaces and mills to cease operations, and money values of sales being greater than ever lack of available cars has seriously impeded and collections normal, or better. Foodstuffs deliveries. Billet, bar, sheet, plate, and rail are at the highest prices ever known throughproduction continues to the fullest extent out the district. Stocks in all lines are low, possible in view of the fuel situation. and the inclination seems to be to pursue the Finished steel.—The embargoes have affected "hand-to-mouth" policy. Building operations.—As is to be expected, quite seriously the manufacturers of finished steel in all branches, and the fuel situation the extremely cold weather has caused a fallhas curtailed operations generally. There does ing off in actual construction work, but the not seen to be any reduction in demand, and reports indicate that the plans for the current the general market tone is good. Factories year show steady enlargement, particularly in are engaged in stocking up nearby customers, respect of business properties. In most of the so as to be better enabled to handle outside communities there is indicated a considerable business when transportation becomes available. increase in residence construction. The folCoal and other fuels.—There has been a slight lowing table gives the permits and values for increase in the production of coal at the mines the month of January, 1917, as compared with during the month, but it still is considerably 1916: below normal, due largely to inadequacy of Permits Valuations. issued. labor. The natural gas supply seems to have _l Increase | Per fallen off materially, and, owing to the exI Jan- I Jan- January, January, I decrease.! cent. uary, ; uary, 1917. 1916. tremely cold weather, its use in industrial pur1917. | 1916. suits has been greatly curtailed. In numerous ! 5272,355! 194 Akron, Ohio ! 270 15S £560,785 oo 163,210; 137 445,895; 865 609,105 localities there has been some suffering among Cincinnati, Ohio ° 1,600,8951 211,655 2 14 620j 1,389,240 614, Cleveland, Ohio 86,405i 2 39 223,415| 129! 137,010 the people b}7 reason of the lack of fuel, and Columbus, O hio 79 117,459 1101 115,645i 32 233,104 92 78,209 116,171' 63 194,380 drastic action by municipal authorities, such Dayton. Ohio 86 Erie, Pa 344,944 390,179 U13 95 735,123 159: Pittsburgh, Pa 560,875 471,232 184 165 1,032,107 as confiscation of coal, has been reported. 193: Toiedo, Ohio 96,345 55 169,980 73,635 175 67 Youngstown, Ohio.. .j Glass, -potteryt and clay products.—Rather 5,060,8341 3,792,615; 1,268,219 38.4 2,443' 2,: Total.. serious curtailments in these industries are rea Decrease. ported by reason of lack of fuel and inability 1 Increase. 101 ft ; ! ! 2 2 ; 208 FEDERAL RESERVE BULLETIN. MARCH i, 1917. Money and investments.—The general bank- will probably see general business in all lines ing situation is still in the best of condition, in this district resume at high speed. with plenty of loanable funds; rates generally DISTRICT NO. 5—RICHMOND. unchanged—in some communities fractionally General conditions continue sound and proshigher. A scarcity of currency in pay roil perous, and the outlook for the future is redenominations became apparent during the middle of February and was met by issuance | garded as encouraging. There has been some of Federal Reserve notes to the amount of slowing up in exports, although actual figures $3,200,000. Investment securities markets for last month still show an increase. This have recently been marking time only with recession is occasioned by the scarcity of oceanslightly lower prices. Bank clearings show freight room due to interference with neutral substantial increases, as indicated by the fol- shipping by submarines. But for this condiowing table, giving the figures for the month, tion the movement of freight to the ports for from January 16 to February 15, as compared export would have resulted in larger increases in their volume. The accumulation of goods with the same period of last year: intended for export is further evidenced by a very considerable volume of bankers' acceptJan. 16 to Feb. 15, incluPer sive. ances which are being issued for their financing, cent Increase. increase*. pending actual export and payment for same. 1916 1917 Postal revenues, clearing-house returns, and 321,520,000 812,664,000 Akron, Ohio 38,856.000 70 railroad earnings continue at or above recent 175,044,498 134,911,200 Cincinnati, Ohio 40,133,298 29 260,982,067 163,034,294 Cleveland, Ohio 97,947,773 59 maximums, excepting some railroad returns, 43,918,400 35,058,200 Columbus, Ohio 8,860,200 25 16,116,023 12,694,953 Dayton, Ohio 3,421,070 24 which indicate a falling off in revenues from 6,822,822 5,040,446 Erie, Pa 1,782,376 35 318,093,345 245,023,356 Pittsburgh, Pa 73,089,989 30 coal traffic. This has been interfered with 46,447,879 34,698,428 Toledo, Ohio 11,749,451 34 13,984,121 7,991,024 Youngstown, Ohio 5,993,097 75 particularly by car shortage, and coal is bringTotal 902,929,155 651,115,901 251,833,254 38.6 ing record high prices. Trade in all lines continues good, although a Post-office receipts.—The postal receipts in little slackening in some lines is noted in comthe nine larger cities of the district for the parison with recent months. This is due to month of January as compared with January, high prices, which are inducing conservatism 1916, are as follows: in purchases among dealers and consumers. The increased difficulty in the movement of Per freight and the consequent delay and uncerJanuary, January, cent Increase. 1917. 1916. increase. tainty are additional causes operating in the same direction. Collections, notwithstanding, Akron, Ohio 869,403.55 550,002.44 $19,401.11 are reported as good, and dealers generally are Cincinnati, Ohio 266,261.63 248,450.77 17,810.86 7.1 343,313.81 Cleveland, Ohio 259,935.65 83,378.16 32.7 looking forward to continued good business. 127,961.49 Columbus, Ohio 117,360.90 10,600.59 9.0 Dayton, Ohio 60,275.26 52,248.09 8,027.17 15.3 Building is reported in lair volume, some 26,196.89 22,550.41 Erie,Pa 3,646.48 16.2 333,504.10 Pittsburgh, Pa 351,991.56 18,487.46 5.5 points showing a very considerable percentage 85,873.53 98,517.95 12,644.42 Toledo, Ohio 14.7 25,957.92 5,067.65 Youngstown, Ohio... 31,025.57 19.5 of increase. Manufacturers of vehicles, furniTotal 1,374,947.71 1,195,883.81 179,063.90 14.9 ture, and other lines report stocks of goods as limited and the demand excellent. The lumLabor conditions.—-There is no disturbance ber business has improved appreciably and is or unrest in the labor situation reported. The apparently only limited by the inadequate demand for all grades of skilled labor is greater freight facilities and consequent congestion. than the supply. Farmers are prosperous from the returns Warmer weather, resumption of foreign of the past season, and preparations for plantshipping, and betterment in the car conditions ing are on a large scale for new crops, but the MARCH 1,1917. FEDERAL RESERVE BULLETIN". 209 bad weather has prevented much actual head- no cancellations being reported and prompt way in preparations. Staple crops are in delivery of goods on old orders being urged. contemplation at normal or increased acre-1 Most of the mills are reported to have ample ages, and reports indicate a growing extension supplies of cotton on hand to protect sales in the diversification of small crops for home and to meet requirements for some time to supplies. come. The demand for fertilizers has been strong Some banks are still reporting unusual ease and some of the largest manufacturers report in financial conditions, but reports more genbeing oversold and having withdrawn their erally indicate some natural decrease in desalesmen from the market. posits at this season of the year with an inBoll weevil are reported having advanced creased demand for money, particularly for nearly to the southern border of South Caro- crop preparations. Railroad lines indicate lina. This menace is receiving the attention unprecedented southern travel, some of this of the Government and State authorities, as due to an increasing number of home seekers well as the urgent attention of the business in the district. interests of the territory menaced. It is DISTRICT NO. 6—ATLANTA. hoped that by prompt and efficient attention There is apparently no uneasiness due to the the possible damage from this pest will be at possible entry of the United States into the least reduced to a minimum. war. It is the consensus of opinion that conWhile farmers generally have been pros- tinued prosperity will obtain in this district for perous, some reports indicate that tenant the next year, whether our nation is at peace or farmers who raise chiefly staple crops for market war and that unless shipping facilities are furhave suffered by necessity of purchasing ther interrupted business will be extended. family supplies at present high figures. Never in its history has the South been in posiThe recent unprecedented cold weather tion more easily to afford a broadening-out which swept over the Southern Atlantic sea- policy in industrial and agricultural affairs. board did considerable damage to garden Money is plentiful with rates stiffening a little. truck and small crops, but reports of damage Loans indicate a healthy condition, being in such cases are frequently exaggerated, and largely of a commodity nature to carry prodsteps are being taken at once to, as far as possi- ucts, and little, if to any extent, for liquidation ble, remedy this condition. of past indebtedness. The good roads movement is receiving The only anticipated handicap is one of efficient attention in the district, with the labor. With no immigration and a neglible prospect of steady improvement. Labor is migration of labor from other States, a conwell employed; in fact, there is considerable tinued movement of negro laborers to northern scarcity, notwithstanding which many small fields will present a serious shortage of labor new industries are planned and in contempla- not only in agricultural but in industrial and tion throughout the district. public work lines. Much attention continues to be given to Atlanta has just closed the southeastern stock raising, the high prices for hogs and land show, an exhibition of products and adcattle stimulating improved breeding by the vertisement of the advantages of lands in the importation of blooded stock. States in this district. Considerable publicity The reports from cotton mills are somewhat work of this nature has been carried on during mixed, some falling off in new orders being the past year with a view of attracting'settlers reported, while others indicate that the de- from other States. mands have held up remarkably well, considVarying reports have been received with ering the uncertainty of our foreign relations, regard to the damage done oats and wheat by 210 FEDEBAL BESEBVE BULLETIN. 1IA2CH 1, 1917. the freeze during the early part of February. factory and on this account some trouble is Oats planted during January, and which had experienced in shipping spring orders complete. just come up will be almost a total loss, but While sales are good, retail merchants are grain sowed during October, November, and buying rather conservatively. The weather December, while somewhat damaged, is by no ; has been unfavorable for men on the road, means a total loss and the outcome may be I somewhat reducing the volume of orders as better than early reports indicated. compared with January this year. Wholesale The February cold "spell" was unusual for millinery houses in the trade centers have had this section and cost the farmers of the South their openings of spring merchandise and several millions of dollars. Early vegetables of report a healthy trade this season. all kinds were seriously damaged or destroyed. Shoe manufacturers report a slowing-down Fortunately a large per cent of the citrus fruits in the industry, due at first to peace talk and had been picked in Florida, and of the crop of later to the break with Germany. There was a grape fruit and oranges approximately 70 per tendency to overbuy so long as prices continued cent were frozen. The estimated loss is to increase and most factories had sold ahead 1,500,000 boxes of oranges and 500,000 boxes | beyond their ability to procure needful material of grape fruit. I at prices allowing a legitimate profit. The In the coal and iron fields domestic ship- I pause will give manufacturers a chance to ments have been extremely heavy, with high | catch up on orders and tend to check high prices continuing. Coal mines report increased I prices. While prices have not advanced to output. Keen interest is shown in the war | any great extent during the past six weeks there situation, and while iron manufacturers are has likewise been no material decline except in not disturbed they are watching events a few grades of raw material. closely. In the graphite fields of Alabama The season for trapping is now closed in about 20 additional plants or mines are being Tennessee and dealers report a very satisoperated and in course of construction, and j factory fur trade, especially in skunk and within 60 days there will probably be a 40 per | possum pelts. The Tennessee wool markets cent increase of output. are quiet, stocks having been cleaned up, and New Orleans reports the organization of the dealers are now looking forward to the new world's greatest live-stock farm with a capital season. It is thought there will be about a of $1,500,000, its headquarters being at Morgan normal wool clipping, though high prices have City, La., where it owns 16,000 acres of land j tempted many farmers to sell sheep. in pasturage and forage crops. As an indiResin exports show a very favorable gain for cation of the widespread interest in the cattle the first eight months of the naval stores seaindustry in Mississippi, as a result of the son. While the trade is seriously missing the State-wide tick-eradication law, recently former shipments with Germany and Hungary, passed, 4,500 dipping vats will be put into which approximated 650,000 barrels annually, commission in that State about March 1, and exports for the first eight months were 18,377 experts predict that Mississippi will be rid of barrels greater than for the same period last the tick at the close of 1917. year. The recent cold "spell" caused conThe retail trade in Atlanta is quiet, at siderable damage in the turpentine fields, and Savannah light. New Orleans and Nashville hundreds of crops of cups were burst. report satisfactory conditions, and Florida and Indications are that the district will use an Gulf Coast towns report trade good as result increased amount of fertilizer for the growing of large tourist travel. of the crops of 1917. Conservative estimates The wholesale houses report deliveries from place this increase at about 15 per cent. An manufacturers and mills still remain unsatis- Atlanta concern recently closed a contract for MARCH 1,1917. FEDERAL RESERVE BULLETIN. fertilizer with the Netherlands Government involving $2,500,000. Comparing the fertilizer prices with the season of 1915-16 the advance is about 10-per cent to 15 per cent over the past year, ^hich manufacturers claim does not represent the actual difference in cost to the manufacturer of the materials purchased in operation of the industry. DISTRICT NO. 7.—CHICAGO. Basic business conditions in this district have not changed to any marked degree since last month. The banks are well supplied with funds, for which there appears to be a better demand, and in some instances heavy reserves are being held to provide against contingencies. From one or two sources it is understood that minor quantities of gold have been withdrawn by depositors, but the amount has been small and the tendency of short duration. Farm loans continue in good demand, with low rates and high valuations, but the bond market has been inactive owing to general uncertainty and the apparent desire of investors to hold their funds liquid. Railroad embargoes and car shortages have affected almost every line of industry, and country banks are frequently called upon to finance the storage of farm products in elevators pending shipping facilities. Collections have been unfavorably affected, due to the same causes. Manufacturers are finding difficulty in securing raw materials and coal, and also in many instances have been compelled to warehouse their finished product in large quantities until the railroad situation clears up. The consensus of opinion is that while labor is well employed at this time a further demand for help will develop and that a shortage may result in the spring. Agricultural implements are in good demand at high prices, but the transportation question as affecting deliveries is serious. Coal mines have been active, but reports indicate some interference with their operations during the past month on account of the extremely cold 211 weather. This fact, together with the heavy demand and the railroad troubles has brought about high prices and a serious shortage in some manufacturing centers. Some of the distilleries, while reporting good business, feel that the prohibition laws may result in destroying the value of their plants and equipment. Dry goods merchants are finding spring business in excess of a year ago, but recent developments give evidence of a more conservative buying policy, both on the part of the retailers and the public. The grain markets have passed through a rather trying period, but a number of authorities believe that the prices are basically sound and that the foreign demand can be counted upon to maintain the values regardless of war or peace. This opinion is predicated on the reported Argentine shortage and the presumed requirements of the foreign nations. While Australia has approximately 100,000,000 to 135,000,000 bushels of wheat for export, and Argentina about 40,000,000 bushels, shipments from the Southern Hemisphere are very much restricted, owing to the difficulties of ocean transportation and the length of the trip. I t is estimated that as high as 60,000,000 bushels of wheat have been bought in the United States by the allies for shipment during February, March, and April, and the Chicago elevators at this time are holding approximately 30,000,000 bushels of grain, a large share of which has been sold to go forward, although the movement has been delayed owing to the inability of the railroads to furnish equipment. The grocery business is fair and hardware good, although in the latter line one manufacturer reports that shortly after the German peace proposals orders fell off 50 per cent within three days. The volume of business at the present is satisfactory. The leather industry has been retarded somewhat. Packing houses state there is a good demand for their products at substantial prices. The past winter has been a good one for the lumbering industry in northern Wisconsin, but 212 FEDERAL EESERVE BULLETIN". wholesalers and manufacturers are finding business only moderately active, with collections fair. Piano concerns report a good volume of orders and active operation in their plants to care of the new business, as well as the unfilled orders from last year. Shipbuilders have their equipment well employed. Steel prices are higher than before with no let-up in demand. Wool is quoted several cents higher than last month, and woolen manufacturers appear to have a good quantity of business, in fact, are inclined to go slow in taking on further orders until the future outlook for this industry is more clearly defined. Clearings in Chicago for the first 19 days of February were $1,205,000,000, being $236,000,000 more than for the corresponding 19 days in February, 1916. Clearings reported by 21 cities in the district outside of Chicago amounted to $241,000,000 for the first 15 days of February, 1917, as compared with $186,000,000 for the first 15 days of February, 1916, Deposits in eight central reserve city member banks in Chicago were $743,000,000 at the close of business February 17, 1917, and loans were $510,000,000. Deposits show an increase of approximately $5,000,000 and loans an increase of approximately $22,000,000 over last month. MAECH 1, 1917. The iron and allied interests report heavy increases in sales with sufficient contracts on hand to insure capacity operations for some months. Six weeks or two months ago the paper industries reported a decrease in business and at that time this was attributed to a feeling that prices would be lower. No concessions were granted, however. Buyers are again in the market and this has resulted in an increased activity in all paper lines in the last 10 days. The Missouri State Board of Agriculture reports a decrease in the wheat acreage in Missouri of 7^ per cent, the acreage planted being smaller than for several years. Reports indicate that the condition of the crop is not entirely satisfactory, due to severe weather and lack of moisture and snow protection. Reports from Little Rock and Memphis indicate exceedingly prosperous conditions in the southern portions of the district. The stock of factors7 cotton in Memphis is the largest known in the history of the Memphis Cotton Exchange, and the entire tendency seems to be to hold this cotton for prices approximating the high level of the season. A month ago it was expected that the high price of cotton would tend largely to increase the acreage this season. Reports from private sources in the cotton sections of the disDISTRICT NO. 8.—ST. LOUIS. Business activity in this district continues trict indicate that the high price of fodder, unabated. Wholesalers of dry goods, boots | foodstuffs, etc., will tend to limit the cotton and shoes, hardware, and other necessities acreage, and it is not now expected that the report increases in shipments and the outlook acreage this year will exceed that of 1916. Provisions generally show an increase in for spring is favorable. In general the stocks price from week to week, and this is reflected of merchandise in the hands of both wholesalers and retailers are larger than they were in all index figures of the cost of living. The a year ago. This expansion has been noted in increase in potatoes, onions, and cabbage are all lines. Seasonable winter weather through- especially notable, with eggs, which are slightly out the district has stimulated retail distribu- lower, as the exception. Reports from the St. Louis National Stock tion of wearing apparel, particularly underwear, Yards for January show an increase in the hosiery, and ready to wear clothing for men and women. Collections keep pace with sales. receipts of cattle and a decrease in the receipts The January fur sale in St. Louis was approx- of hogs, sheep, horses, and mules. The hog imately three times the January, 1916, sale, market has shown high records from week to while prices realized averaged approximately week, hogs last week selling at $12.65. It is reported that foreign buyers have withdrawn 10 per cent above those of a year ago. MARCH 1,1917. FEDERAL RESERVE BULLETIN. 213 from the horse and mule market, due to the DISTRICT NO. 9—MINNEAPOLIS. increased difficulties of ocean transportation. Traffic difficulties, due to the severe cold and The St. Louis clearings for January were the to the effects of the car blockade, have had a largest ever recorded in the history of the very serious effect on Northwestern business. clearing house. Clearings in all of the prin- It has been variously estimated that there are cipal cities of the district for the week ending from 14,000,000 to 18,000,000 bushels of wheat February 10 show increases ranging from in storage in Minneapolis alone under contract, 22T% to 46^- per cent. some of it for November and December deThe gross railroad earnings for December for livery, that can not be moved, together with the roads operating in this district continue to an immense tonnage of flour, feed and mill show the substantial increases which have been stuffs. Manufacturing concerns that are under so noticeable for the past 18 months. Net contract for deliveries in the East are having earnings for this period, however, do not show the greatest difficulty in obtaining cars. The the same percentage of increases, two of the recent car relief measures promise some imroads operating in this district showing an provement in the situation, but expert authoractual decrease in net. It is believed that this ities predict that the difficulties will continue is due to the marked increase in operating ex- throughout the spring, and that it will be well penses and to the high price of all supplies into the summer before conditions can get back and equipment. to normal. Car shortage has had a tendency to hamper Severe cold has prevailed during the month, business activity, and owing to recently im- and the snowfall in the Northwestern States posed embargoes may cause further difficul- has been unusually heavy. Heavy winds have ties. The movement of live stock and perish- accompanied some of the storms, blockading able freight is about normal. There is little railway lines, and seriously interfering with the difficulty in handling shipments of any kind movement of trains on branch lines. to and from the South and West, but the Coal shortages have been avoided, but only movement of freight to the East is seriously because of the vigorous efforts of both the raildelayed. The movement of cotton has been ways and distributing companies. Coal disseriously hampered by embargoes on New tributing concerns in the larger centers have England points and export. These same con- had no difficulty in securing delivery at terminals ditions have made both the receipt and ship- of sufficient coal for their local requirements, ment of grain difficult and the grain business but the congestion has been so great that it has has slowed down. The stock of grain in ele- been very difficult to get cars switched to the vators is reported to be about normal. coal docks and to keep the supply available St. Louis, Memphis, and Little Rock show a to the delivery forces. gain in building permits for January, the gain There was a very heavy falling off of shipin St. Louis being especially noticeable. Louis- ments of flour and mill feed in January, and ville building permits show a decrease for Jan- February shows no improvement. The prouary of this year. St. Louis and Memphis duction has been very sharply curtailed, and postal receipts show gains for January. will not get back to normal until a considerMoney for legitimate business is plentiful, ably larger movement of empty cars from the but banks in the larger cities, particularly in East can be brought about. St. Louis, are careful to . maintain adequate j Business during the month has been rather reserves and remain in a liquid condition. quiet, but still satisfactory. The serious interCommercial paper is now quoted at 4 to 4J national situation does not seem to have proper cent as against 3 | to 3^ per cent a month duced any perceptible change, either in the ago, with an active demand from country volume of trade or.in the sentiment of business banks. Bank rates to customers show no men, who look for favorable conditions, at least change. 214 FEDERAL SESERVE BULLETIN. MARCH 1. 1917. More than usual interest attached to the into the spring months. Country banks are in very good shape, and are making no unusual report of the Kansas State Agricultural College demands. Banks at the larger cities show concerning the development of a pure-bred excess reserves, with the prospect that any hard winter wheat designated as P-762, a relief of the car situation will improve their single head having originally been selected figures hj easing the burden of financing, which from a plot planted to Crimean seed imported the congested traffic situation has brought from the Don territory of Russia. Fifty-nine about. The conditions that have prevailed tests on 29 different farms have resulted in the since the first of the year have influenced statement that had this wheat been generally business men in all lines to exercise more than sown in Kansas the past three seasons the value ordinary care and prudence. The general opin- of the production of that State would have been ion is that the Northwest is in a.very good posi- increased by almost $63,000,000. tion to meet any situation that may develop. Live stock.—Top prices for 14 classifications Bank rates at the larger centers are firm at a of stock on the local market for the week ending minimum of 4^ per cent. Kates at country February 10 made an average gain over the points show no change. Collections continue same top prices.a year ago of $2.62 per hundred pounds, hogs being $4.10 higher that week than fairly good. Spring construction will be somewhat cur- the same week a year ago. There has been a tailed by high labor costs and the high price of vigorous midwinter demand for desirable stock steel and of all building materials. While labor cattle and feeding steers at the highest prices conditions are satisfactory at the present time, ever prevailing. The conviction is growing there is a growing prospect of disturbances, and that the heavy cattle receipts at the markets it is considered probable that strikes in several must result in at least a comparative shortage trades will signalize the breaking up of the and that the potential supply of beef makers is being sacrificed in order to take advantage of winter. While the business of this Federal Reserve high prices. The January cattle receipts at Bank shows no evidences of any unusual con- the four largest markets in the district showed dition in the district, the volume of redis- an increase of almost 70,000 over January, counted paper is larger than a month ago and 1916, a considerable increase in the receipt of indicates a substantial increase as compared sheep but a falling off in hogs. Profits now with the same dates a year ago. The currency being realized on short-fed cattle and hogs, demand, although somewhat heavier during despite high-priced corn, are gratifying. There the month, is far short of what may be expected has been a slight decline both in the killing and packing of hogs. during a period of real apprehension. Mining.—Record prices for minerals have Bank clearings at the chief centers of the district show little change, although they ex- caused many large companies to engage serihibit a slight increase as compared with a year ously in reworking old mines, many of which | have been idle since 1893. Colorado fields ago. report January as a record-breaking month in DISTRICT NO. 10—KANSAS CITY. the volume of production. Cold weather has Eeports would indicate that the new winter hampered operations to some extent. Many wheat crop will be cut short owing to the dry I of the larger mines have planned extensive season, though a wet spring may improve the operations at greater depth. Early in Februoutlook. The need of moisture is general in I ary, in the Missouri-Kansas-Oklahoma district, the southwest. Nebraska, Kansas, Missouri, 75 per cent of the mines were either badly and Oklahoma have shown a marked deficiency I crippled or completely frozen up because of in precipitation for the past seven months, below zero weather, but subsequent moderations have improved this situation. Much January being particularly dry. 1,1917. FEDERAL RESERVE BULLETIN. 215 activity is reported from the new potash fields buyers from replenishing stocks which are low. An early return of activity is anticipated. in Nebraska. The automobile industry is easily surpassing Oil.—Prices of crude oil remain unchanged since last month's report. Throughout the this season last year, assembling plants and fields of the mid-continent regions there is a dealers being pushed to capacity. Oklahoma general slump in operations, owing to the fact reports a gain of 116 per cent in automobile that water for steam-making purposes has been I registration for 1916 over the previous year, difficult to obtain. In addition, the shortage surpassed by but one State in the Union. of pipe and casing and the general high cost of The prices of necessities continue upward and materials have had their effects. Cold weather, the situation in this respect is anything but combined with other factors has caused a reassuring. As an instance of this, one point sharp decline in production. The program for in the district reports that wholesalers are offerpipe-line laying during the present year is the ing $2.75 per bushel for Irish potatoes and find greatest in the history of the industry. Much the response scant. interest is manifested in what is known as Freight congestion in the East has resulted "casinghead" gasoline, produced from gas by in embargoes by several railway lines serving forcing it through pipes under heavy pressure, this territory, and, as a consequence, there are heating and cooling and .finally condensing into many reports of congestion in the yards, and a, liquid which, when mixed wTith naphtha, freight officials do not anticipate an immediate results in a high-grade gasoline, the gas itself betterment. It is estimated that there are being sent back to the wells where it serves a 30,000 cars on western roads destined east variety of purposes. which can not be moved. Fortunately these Wholesale and retail.—The volume of spring embargoes do not include perishable goods, business in implements is said to have reached food, fuel, live-stock, and oil shipments, but such a point that wholesalers will need no this situation, coupled with the car shortage, second-order business to exceed the total volume is a serious deterrent to business in many lines. of spring business last season. The only conLumber.—The car shortage also continues to cern has to do with obtaining cars for delivery. hamper this industry, and has curtailed shipGeneral retail stores report a steady increase ments anywhere from 25 to 50 per cent, of sales since January 1 over the corresponding depending upon the line on which mills are located, and this has had a tendency toward period last year. The new year has started briskly in whole- higher prices. The steady increase in building sale drugs—one of the largest houses in the permits has been lessened in some quarters district reporting sales during January 33 J per by reason of unfavorable weather, which has naturally affected the wholesale and retail cent above those of last year. In dry goods and clothing the markets are lumber trade. Contract work out for bids has taking on a decidedly market-buying aspect, been favorable in totals, but few large jobs and high prices are evidently not retarding are reported, the greater number being medium freedom in buying. There has been marked sized projects. Much work of importance is activity in staple merchandise, including cotton under contemplation and the future would dress goods, sheetings, and various domestic seem unusually favorable. Labor.—Very few labor disturbances are lines. Wholesalers have taken the precaution to cam' the fullest possible stocks. reported, and those affect but small numbers Flour mills are running at about two-thirds and are strictly local. capacity, and are largely engaged in filling Financial.—If there has been any disturbearlier sales. Current business is reported light ance of the money situation due to existing by reason of the erratic wheat markets and international complications, it is not sufficient violent changes in prices which appear to deter to cause uneasiness. Banks in this district 216 FEDERAL RESERVE BULLETIN. are in a strong position and well fortified to meet any unusual development. Discount rates remain practically the same. There is doubtless no better indication of general business activities than reports of bank clearings, and that the year has opened with a flying start is evidenced by the fact that the total clearings for January in the 15 most important cities in Federal Reserve District No. 10 showed an average increase of 55.5 per cent over the month of January, 1916, the lowest percentage in the list being 24.4 per cent and the highest 145.6 per cent. Reports at hand show further noticeable increases in postal receipts as compared with last year. DISTRICT NO. 11—DALLAS. MARCH 1, 1917. southwestern section and much damage was done to the winter truck crops. Such crops were a total loss. Although replanting will be done, it will be some 60 days before conditions are normal. Reports vary as to the damage done . to citrus fruit. One of our correspondents reports that the damage to citrus fruit was fully 90 per cent and the crop was practically destroyed. The cabbage crop of the Brownsville country was damaged probably 50 per cent by the freeze of early February, and the onion crop likewise suffered. All parts of the district report that farmers are giving considerable attention to diversification, and the outlook for the- present season, so far as farming interests are concerned, is extremely favorable. In the Rio Grande Valley the planting of potatoes, beans, and tomatoes for spring shipment is heavy, and the outlook for market conditions is the best the growers ever had. In answer to an inquiry, one of our correspondents in Oklahoma, probably the largest wholesale grocery firm in that section, replied as follows: Wholesale trade particularly has been rather active during the past 30 days through the inauguration of trade excursions, and the larger markets of the district have been crowded by out-of-town buyers. Inform action is that spring trade up to this time has been unusually good and heavier than last year. Wholesalers advise that there is some disposition among merchants to proceed cautiously on account of European conditions; Business conditions in Oklahoma were never better than they are at present. Farmers are all in good shape. also continued difficulty is experienced in Lots of new land is being put into cultivation in this obtaining satisfactory stocks of goods from section. Farmers generally are planting lots of feedstuffs northern and eastern mills. Manufacturers this year and are not going in so heavy on cotton. We have booked all the orders they can handle, feel much encouraged over the present outlook. and are therefore reluctant to make contracts There is some evidence that demand with very far in advance. Collections continue banks is getting more active, especially in the. very satisfactory and above normal. cattle-raising sections. Rates remain easy There have been no notable changes in and unchanged over a month ago. There has general commercial conditions in the district been some increased activity with this bank in the past 30 days. The lull in trade incident in the way of offerings for rediscount by to the midseason is still apparent, and if any member banks in the past 30 days. Within changes are to be noted they are mainly in the another month seasonal demands of our memmore advanced sale of spring lines and the ber banks will undoubtedly be felt. Bank preparation for the coming season's business. clearings for the cities of Austin, Dallas, Fort Farming operations are well advanced for Worth, Galveston, and Houston for the the season and beyond normal in connection month of January show an increase of 38 per with preparing the soil for the coming season. cent over 1916, the figures for January this During the past 30 days the district experi- j year being $205,717,950 and for 1916, $149,enced the coldest weather of the winter, which | 064,641, or an increase of $56,653,309. The materially affected agricultural conditions. larger banks of the district still confront the Freezing weather was felt even to the extreme problem of seeking satisfactory investments MARCH 1,1917. FEDEBAL RESERVE BULLETIN. for their surplus funds, though conservatism seems to be the watchword. Notwithstanding the severest weather of the winter there have been very few losses in cattle and there is no evidence of unfavorable conditions among the live-stock interests. Receipts* at the Fort Worth market have continued heavy and prices for all classes high. While there is little demand for range steers, trading in stock cattle is brisk. The present is an off season for sheep men and no activity is noticeable in that line. However, when contracts are made for lambs for fall delivery it is anticipated that prices will be in line with the top figures of last year. Activity is noted in lumber, cement, and other building materials, and, as one dealer stated, all that is necessary is good open weather for the trade. The building permits issued in the six largest cities of the district reporting show, in the aggregate, an increase in number but a decrease in valuation, the figures being: In 1916—number, 651; valuation, $1,653,032. In 1917—number, 685; valuation, $1,311,265. The lumber trade has been stimulated recently by the prospects of Government purchases in large amounts along the border. The car situation with building trades continues serious. The post-office receipts of five of the largest cities in the district for January of this year aggregated $328,290 against $281,193 for last year, or an increase of $47,097, or 17 per cent. Transportation business has been seriously affected during the latter part of the month by the embargo placed on Eastern shipments. At the present time, the embargo extends to the Indiana-Illinois State line and threatens to grow quite serious. Congestion at seaboard points through lack of shipping space and inability to unload cars has caused this condition. Locally little difficulty is being experienced. Failures in the district for the month of Januar}r were 58, with liabilities of $498,256. For the same period of 1916 there were 129, 217 with liabilities of $1,292,696. These figures clearly indicate the general improvement of business throughout this district. There is no diminution in activity in the oil fields. The daily production in the Humble, Tex., field alone is around 20,000 barrels. Lack of water for drilling operations is still seriously affecting the production, though relieved to some extent by the rains of the past month. The high prices obtained for petroleum continue and tend to stimulate operations in the fields. The coal mines of Oklahoma and the copper mines of Arizona and New Mexico worked full time during January. The mining companies of Oklahoma report that orders for commercial coal have decreased to some extent in the past two weeks, but that they still have sufficient orders in sight to run indefinitely. DISTRICT NO. 12—SAN FRANCISCO. Reports from all sections of this district give evidences of generally prosperous conditions. This is largely due to unprecedented prices for metals, live stock, and many agricultural products with abundant harvests. Wages have been increased under the influence of active demand. There are few reports of labor disturbances. Cold weather in the Northwest and a general lack of rainfall has hampered planting of many crops and retarded the growth of others. In California the precipitation thus far this season has been materially below normal. However, instead of heavy midwinter rains, with none during the spring, it is of greater benefit to have a smaller total precipitation, with spring rains distributed over a considerable period. There still remains enough of the season classed as rainy for adequate precipitation, but the dry season in California is so long that sufficient moisture must be had in the rainy season to render crops possible. Delayed precipitation consequently always tends to rouse apprehension. Snow has covered the ground in Idaho, preventing damage being done to fall-sown grain by the cold weather. Except 218 FEDERAL RESERVE BULLETIN. for unusual cold about the end of December, Arizona reports a mild winter with sufficient precipitation to insure early feed. The present indications are for large crops of both wheat and barley in this district, provided sufficient rains are forthcoming. Due to the high prices received during 1916, there has been a considerable increase in the acreage planted. It is predicted that the berry crop of Washington in 1917 will be abundant. The fall frosts have put the plants in good condition to withstand the winter weather. The prices of onions, cabbage, potatoes, and some other vegetables have advanced extraordinarily. The present market for apples is unsatisfactory. Sales have been recorded at prices as low as $1.10 per box, with transportation costs of 50 cents per box; there is little profit from sales at such prices. Stocks on hand January 1, 1917, were not as large as those at a corresponding date last year by approximately 1,500,000 barrels. Final figures for 1916 place the California raisin crop at 126,000 tons, compared with 124,000 tons in 1915. The prices in 1916 were from $15 to $20 per ton higher than those in 1915. The output of sweet wine in 1916 was five times that of 1915 and aggregated over 19,000,000 gallons. Laws prohibiting the sale of alcoholic beverages have gone into effect in four of the seven states of this district, viz: Arizona, Idaho, Oregon, and Washington, and a law of this character has passed both houses of the legislature in Utah and has recently been signed by the governor, becoming effective August 1, 1917. The climate and soil of California are admirably adapted to grape culture. In this industry and in the production of wine many millions of dollars are invested and many thousands of people employed. Constitutional amendments looking to prohibition, which were voted upon at the last election, were voted down by such moderate majorities as to lead the interests concerned to adopt unusual courses. It is reported that the wine producers will sever MALICII 1, 1917. relations with other liquor interests and endeavor to close all saloons in the State, and that the liquor dealers in San Francisco are proposing to reform liquor selling by reducing the number of saloons one-half and doubling the license fee. In 1873 the first Washington navel orange tree was planted in southern California. The development of the citrus-fruit industr}^ of the State has been chiefly since that time. Now there are approximately 205,000 acres planted to citrus fruits, of which 130,000 acres are in bearing, representing an investment of probably $200,000,000, with an annual product having a value of near $50,000,000. During the past seven years the amount of California citrus fruit consumed by the people of this country has increased more than six times as rapidly as has the population. At this season shipments are going forward in large quantities and satisfactory prices are being received. The damage to the fruit by frost in January was slight. The shortage of cars and high producing costs are the present dominating factors in the lumber industry. Orders are considerably above production and some mills have found it necessary to refuse further orders until transportation facilities are available. Labor in this industry is reported as less efficient than formerly and having a tendency to shift from place to place. Salmon prices continue to advance as the stocks in the hands of the packers diminish. The supply of the higher grades is entirety sold out. Daily production of petroleum for January, 1917, averaged 261,879 barrels, and shipments averaged 293,364 barrels. The daily production during this month came nearer equaling shipments than at any time since July, 1916, the decline in stocks in January being but 31,485 barrels daily, compared with 60,580 barrels daily in December. Total crude-oil stocks on hand January- 31, 1917, were 43,060,154 barrels. The greatest activity in rig building since May, 1911, was reported in January, when 100 new rigs were constructed. MARCH 1,1917. FEDERAL BESEEVE BULLETIN. 219 Charter rates are reported as slightly firmer. sponding month in 1916, Los Angeles leading During the past month, the organization of the in the percentage of increase. Real estate Pacific Development Corporation has been an- transactions are in increasing volume and nounced, consolidating two companies operat- greater activity is anticipated during 1917. ing in the Orient with the purpose of expandOn January 1, 1917, there was on deposit in ing the scope of their business. both national and State banks in the Twelfth Clearings of 19 principal cities of the district Federal Reserve District approximately during January, 1917, show an increase of 50 | $1,688,000,000 or $260 for each inhabitant of per cent over those of January, 1916; Salt the seven States that comprise this district, Lake City led with 63 per cent, followed by San viz, Arizona, California, Idaho, Nevada, Oregon, Francisco with 56 per cent and Seattle with Utah, and Washington. This is $60 per capita, 50 per cent. Building permits of the same 19 more than on January 1, 1915, when there cities increased 70 per cent over the corre- was on deposit approximately $1,265,000,000. 220 FEDERAL RESERVE BULLETIN". MARCH 1, 1917. DISCOUNT OPERATIONS AT THE FEDERAL RESERVE BANKS. Total discount operations of the Federal Reserve Banks for the month of January, 1917, amounted to $18,326,286, compared with $11,114,900 for January, 1916, and $10,712,800 for January, 1915. Nearly 47 per cent of the total Federal Reserve discounts for the month is reported for the Richmond district, where $6,667,000 of advances were made by the reserve bank on 31 member banks' collateral notes secured by commercial paper. As against 70 per cent for December, 1916, the three eastern banks report less than 13 per cent of the January discounts, the bulk of their operations for the month being made up of purchases of acceptances in the open market. Of the total discounts for the month $9,517,329 is represented by member banks7 collateral notes, $574,464 by trade acceptances (twoname paper) and $1,564,653 by commodity paper. The total of these three classes of paper, nearly all discounted at preferential (i.e., lower than ordinary) rates, was $11,656,446, or over 63 per cent of the total discounts for the month. Over one-half of the January discounts is represented by member banks' collateral notes handled by nine banks, Richmond alone reporting about 70 per cent of this class of paper. Discounts for the month of trade acceptances reported by 10 banks were much below the total reported for the immediately preceding month, though in excess of the average monthly total for the past year. Over 70 per cent of this type of paper was handled by the three southern banks. On the other hand the monthly total of commodity (all cotton) paper handled exclusively by the three southern banks shows a considerable increase over the December, 1916, total. The aggregate number of bills discounted during the month, exclusive of 78 collateral notes, was 3,408, while the average size of theso bills was about $2,590, compared with an average amount of about $122,000 advanced during the month on a collateral note. Nearly 30 per cent of the rediscounted paper is repre- sented by the largest-sized bills (of over $10,000 each) and over 40 per cent by medium-sized paper (in denominations of over $1,000 to $5,000). Small notes (in amounts up to $250) constituted almost 20 per cent of the total number, though less than 1 per cent of the total amount rediscounted during the month. Over one-half of the number of these small bills, practically all trade acceptances, is reported by the Philadelphia bank. Nearly 60 per cent of all the paper, including collateral notes, discounted during January, was 15-day paper, i. e., maturing within 15 days from the date of discount by the Federal Reserve Banks. The share of 30-day paper was 9.3 per cent, that of 60-day paper 14 per cent, and that of 90-day paper 14.4 per cent, January discounts of agricultural and livestock paper maturing after 90 days from date of rediscount with the Federal Reserve Banks (six-months' paper) were $591,882, compared with over 1.5 millions for January, 1916. Discounted paper held on the last Friday of the month aggregated $15,711,000, as against $30,196,700 about the end of December and $26,900,500 on the corresponding date the year before. Of the total holdings at the end of January $2,672,000 were member banks' collateral notes, $4,291,254 agricultural paper, of various maturities and types, including trade acceptances and commodity paper, originally discounted, with member banks to obtain funds for agricultural purposes; $1,136,294, live-stock paper; and $7,592,119 industrial and commercial paper proper. Over 80 per cent of the agricultural paper was held by the Atlanta, Chicago, Richmond, and Minneapolis banks, while nearly 85 per cent of the live-stock paper was held by the Dallas, Kansas City, and Minneapolis banks. Of the 7,631 member banks reported at the end of the month only 310, or slightly over 4 per cent, availed themselves of their discount privileges during the month under discussion. The number of rediscounting institutions in the three southern MARCH 1,1917. 221 FEDEKAL RESERVE BULLETIN". districts was 140, compared with 324 in January, the Richmond Federal Reserve district, while 1916. The largest number of member banks the smallest number is shown for the New accommodated during the month is shown for York district. Commercial paper discounted by each Federal Reserve Bank during January, 1917, distributed by sizes. NUMBER OF PIECES AND AMOUNTS. I Over $100 Over S250 i Over S500 _ To t 0 S250 to $500. j to §1,000. Over SI ,000 to $2,500. Over $2,500 to $5,000. Over 810,000. Over $5,000 I to $10,000. I Total. Per cent ° .! Banks. fa ft Boston 81001 22 84L047 22 New York 916 17 3,517 Philadelphia 8, 075 304 10,673! Cleveland 3,850 Richmond L5,008 Atlanta (including New New Orleans branch). 4,764 449' Chicago... 4,257 1,551 800 St. Louis 150 2,743 Minneapolis 2,154 Kansas City 1,719 Dallas 2,""" San Francisco Total. 89,188 35 8,801 27,522 8,434 13 66,950 165 133; 427 §68,516 56,892 86,577 67,278 11764 19,607, 16,061 1,662 13.237 13:624 10,944 194,548 101,755 67,961 130,139 69,1191 72,4201 321,945 241,987 39,458 14,186 31,437 46,149 206,737 140,208 55,356 453,669 3,056 0.2 0.6 475,222 79,094 47,000! 188,776 5,282 132,245 34,307 98,968 357,2841 42,469] 158,508! 22,262j 369 16,165 292 53,301 514 199,086 568 445 Per cent Member banks' collateral notes 10 §200,506 210 8749,763 1 14,668 142 328,162 550 335,122 383,60S 133 644,971 338,652 854 1 .,915; 382 $177,129 25,075 23,629 116,620 593,586 $259,307 716,307 290,000 503,137 12,498 98.768 2 20,900 434 1,793,072 "~ 774, Ib3 97 230,727 2981, ,226,753 175 191,295 8. 8 * 2.6 13.9 2.2 5.6 123,358 1.4 180 98 2,579,094 3,408 8,808,957 2511.897,965 21.5 29.3 55,000 2.3 709,462,329 Member banks' collateral notes, trade acceptances, and commodity paper discounted during and 1916. 8.5 3.7 3.8 7.3 21.8 100,0 78 9,517,329. the month of January, 1917, i Banks. Collateral notes. Boston New Y o r k . . . . Philadelphia Cleveland . Richmond Atlanta (including New Orleans) • Chicago 8448,699 270,000 230,000 Trade Commodacceptity, paper. ances. 862,433 6,667,000 1*797 240,283 769,000 520,000 75,157 8,609 $598,807 961,746 Banks. Total. 8511,132 270,000 245,164 1,797 7,508,090 1,805,903 528,609 St Louis Minneapolis Kansas City Dallas San Francisco notes. | ances 1 Commodity, paper. $11,930 55,678 75,000 162,630 ""ftL'n'fiV """$4,"i66* . . . . . . . . . . . ~8",850 8375,000 . . . Total Jan. 1917 Total Jan 1916 9,517,329 574,464 11,504,653 444,400 1,863,600 Total. $386,930 55,678 75,000 261,293 8,850 11,656,446 2,308,000 'All cotton paper. Amounts of discounted paper, including member banks7 collateral notes, held by each Federal Reserve Bank 1917, distributed by classes. Agricultural paper. Boston New York Philadelphia Cleveland Richmond Atlanta Chicago Livestock paper. Commer- Member cial and banks' industrial collateral paper, notes. $754,623 $19,404 60,685 54,358 923,578 1,030,878 942.624 83,329 1,534,249 456,564 434,565 1,734,754 945,222 84,316 422,424 48,138 835,000 145,000 20,000 1,'492,'665" 69,000 508,800 Total. S789,623 I St. Louis ! Minneapolis... 1,701,982 527,149 . Kansas Citv... 488,923 I D a l l a s . . . . ; . . . . 4,150,332 San Francisco. 2,129,416 Total 1,921,986 Agricultural paper. 109,179 618,389 254,126 136,538 151,595 Live stock paper. 37,699 202,448 208,029 549,943 2,392 on Jan. 26, Commer- Member cial and banks' industrial collateral paper. notes. Total. 332,309 784,321 26,462 134,237 554,187 75,000 210,000 1,815,158 523,617 35,000 902,826 82,108 52,260 206,247 J4,291,254 1,136,294 J7,611,990 2,671,908 15,711,446 222 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. Distribution by sizes of bills bought in the open market by all the Federal Reserve Banks during January, 1917, and 1916. To $5,000. To 510,000. To $25,000. Acceptances bought in open market. To $50,000. To §100,000. ! Over §100,000. Total. i | I I January, 1917: Bankers' acceptances Trade acceptances.. Total Percent Total acceptances bought during January, 1916 ! 10 994,090 29,120 390 1,023,210 5.0 194 546,959 474 1,640,256 1292 5,122,294 151 6,868,118 115,912 65,813 I 8 30,924 -I- 483 1,706,069 1300 5,238,206 152 6,898,412 25.4 33.5 8.3 . . . . s Q 220 1,720,758 4,113,726 47 1,857,477 3,891,515 48 3,891,515 1,859,768 1,356 1120,376,041 28 I 2 2 4i;i39 11 18.8 98.8 1.2 1,859,768 1,384 ! 20,617,180 100.0 9.0 1,284,593 695 9,523,513 1 Of the above total, bankers' acceptances totaling 514,834,291 were based on imports and exports, and §5,541,750 on domestic trade transactions. 2 All of the above transactions were drawn abroad on importers in the United States and indorsed by foreign banks. ACCEPTANCES. Acceptances bought in open market and held by Federal Reserve Banks as per schedules on file on dates specified, distributed by classes of accepting institutions. [In thousands of dollars; i. e., 000's omitted.] Bankers' acceptances. Bankers' acceptances. Date. Trade accept- Total Nonmember banks. ances bousrht acceptMemances. Total. in open ber Trust market. banks. compa- State Private nies. banks. banks. 1915. Feb.22 Apr. 5 May3 June 7 July3 Aug. 2 Sept. 6 Oct. 4 Nov. 1 Dec. 6 93 3,653 5,038 5,242 4,342 5,350 6,087 9,000 8,477 12,311 7,820 8,189 4,516 5,267 5,407 6,305 4,898 4,331 5,172 1916. Jan. 3 Feb. 7 Mar. 6 Apr. 3 Mavl Tune 5 15,494 15,681 17,182 21,000 24,875 24,680 7,160 7,876 8,670 13,573 15,400 17,029 20* 20 132 253 275 110 110 192 161 352 472 343 204 396 93 11,593 13,347 9,960 9,770 11,129 12,884 14,373 13,265 18,154 362 336 408 473 585 644 822 1,456 1,781 3,262 3,430 7,007 23,838 25,349 28,041 38,308 44,290 49,360 10 10 10 93 11,593 13,347 9,960 9,770 11,129 12,884 14,373 13,265 18,154 489 462 722 1,477 2,208 23,838 25,838 28,503 39,030 45,767 51,568 Trade accept- Total ances bought acceptTotal. in open ances. market. Private Nonmember banks. Date. Member Trust banks. compa- State nies. banks. banks. 1916. July3 Aug. 7 Sept. 4 Oct. 2 Nov. 6 Dec. 4 32,989 39,695 41,413 37,798 37,770 47,748 18,921 19,060 20,356 21,782 29,474 33,232 471 738 726 712 1,014 1,(530 11,830 13,940 12,491 9,944 12,147 16,069 1917. Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 Feb. 5 Feb. 12 Feb. 19 Feb. 26 66,803 34,625 60,066 32,467 59,710 30,691 56,334 26,286 52,439 22,744 50,361 *23,511 54,945 33,473 59,165 35,745 59,498 36,478 1,502 1,325 1,245 1,146 1,054 972 1,265 1,268 1,094 18,224 121,154 4,585 16,915 110,773 4,249 15,862 107,508 4,386 14,119 97,885 4,102 12,949 4,041 93,227 13,775 4,041 192,800 17,952 4,896 2113,199 21,842 4,982 3123,679 20,389 5,068 3123,204 1 Includes §140,000 of bills accepted by foreign branches and agencies. 2 Includes 5668,000 of bills accepted by foreign branches and agencies. 3 Includes ,§677,000 of bills accepted by foreign branches and agencies. 64,211 73,433 74,986 70,236 80,405 98,679 3,422 67,633 4,225 77,658 3,673 78,659 2,306 72,542 2,378 82,783 4,487 103,166 125,739 115,022 111,894 101,987 223 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. Amounts of paper discounted and acceptances and warrants bought by each Federal Reserve Bank during January, 1917, distributed by maturities. 15-day maturities. 30-day maturities. Federal Reserve Banks. Discounts. ! Warrants. Total. Discounts. Total. ! Boston New York Philadelphia Cleveland Richmond Atlanta (including New Orleans Branch) Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Total. $847,389 279,272 247,937 182,617 6,897,047 980,486 521,480 406,500 376,428 75,606 162,630 4,514 4,514 j . 10,804,495 ! 177,411 $102,136 $5,096 69,457 7,299 120,203 106,300 271,658 51,666 382,399 1,308,877 142,699 52,000 337,583 108,333 73,000 : 30,000 179,316 ! 5,738 ! 11,630 ! 25,000 7,863 ; 48,428 $107,232 76,756 226,503 323,324 1,691,276 194,699 445,916 103,000 179,316 5.738 36.630 56,291 10,981,906 §847,389 279,272 247,937 .1. 182,617 ' 6,737,047 I S160,000 !. 963,075 17,411 !. 521,480 ! I. 406,500 i 376,428 i. .1. 75,606 L 162,630 !. 1,703,682 | 1,742,999 3,446,681 Percent 23.5 7.4 60-day maturities. Federal Reserve Banks. Discounts. Boston New York Philadelphia. Cleveland Richmond : Atlanta (including Now Orleans Branch) Chicago St. Louis Minneapolis Kansas City Dallas San Francisco. Total..... 8126,008 123,129 184,102 163.128 626.129 479,583 320,909 31,546 356,354 38,780 111,350 25,569 ! 2,586,587 Accept- "Warrants. 90-day maturities. Total. Discounts. Accept- 8191,728 123,129 850,008 248,707 983,212 1,301,783 426,657 195,996 381.354 100;989 ; 111,350 543,518 665,906 85,579 357,083 822,200 105,748 164,450 25,000 62,209 517,949 2,871,844 8122,929 126,304 12,080 16,690 815,186 948,064 47,659 67,247 197,410 49,344 199,020 37,707 82.858,308 2,598,262 1,074,162 1,214,534 659,400 850,211 796,169 281,631 1,396.725 323;179 282,374 2,312,373 5,458,431 865,720 2,639,640 14,647,328 Per cent I Federal Reserve Banks. Discounts. 1,020 $2,981,237 2,724,566 1,086,242 1,237,375 1,474,586 1,798,275 844,848 348,878 1,594,135 372,523 48i;394 2,350,080 7,171 17,294,139 86,151 Acceptances. Warrants. 37.1 Totals. Total. Discounts. Acceptances. Warrants. Per cent. Total. AcI Dis- cept- War! counts. ances. rants. Total. 84,237,301 j Boston !. $109,715 8109,715 $1,198,462 L$3,038,839 New York i 82,798,013 j 2,798,013 598,162 2,605,561 $2,798,013 6,001,736 ! 565,122 2,107,327 1,268,322 3,940,771 j Philadelphia I 8800 260,959 1,268,322 ' 1,530,081 832,063 842,941 838,214 2,834,964 i 644,971 1,351,779 Cleveland | 10,878 21,621 8,582,382 2,485,360 11,067,742 ! Richmond ' 21,621 Atlanta (including New j 3,000 j 31,65112,562,072 1,741,822 3,000 4,306,894 Orleans Branch) j 28,651 1,169,634 ' 1,236,216 I 1,294,163 ; 1,010,250 1,170,704 3,475,117 Chicago i 66,532 465,957 2,354,689 St. Louis i 27,434 806,924 465,957 . 1,300,315 ! 605,727 i 1,283,005 151,684 i 268,929 I 1,226; 753 1,421,725 151,684 2,800,162 Minneapolis ! 117,245 152,243 ! 803,926 152,243 1 249,070 ! 266,295 Kansas City j 96,827 385,388 121,718 i 1,087,911 121,718 295,907 ! 658,819 Dallas i 174,189 307,374 760,645 | 3,762,753 San Francisco I 47,705 760,645 | 808,350 ! 123,358 2,878,750 Total. 11.7 Over 90-day maturities. Total Percent Warrants. j 591,8 ! 1,177,598 j 7,723,329 ; 9,492,809 |18,326,286 :20,617,180 ' ; 20.3 ' 7,730,500 146,673,966 ; | 160.0 i 28.3 1.0 14.3 22.7 77.5 71.7 43.4 53.5 47.7 82.5 46.6 32.2 29.6 100.0 100.0 100.0 100.0 100.0 50.5 37.2 25.7 ! 43.8 ! 33.1 | 60.6 I 3.3 40.4 29.1 54.5 50.8 47.9 28.2 76.5 .1 33.7 19.8 5.4 19.0 11.2 20.2 100.0 100.0 100.0 100.0 100.0 100.0 100.0 39.2 i 44.2 i 16.6 ! 224 FEDERAL RESERVE BULLETIN". Maturities M A R C H 1, 1917. of bills discounted, acceptances, and municipal warrants held by the Federal Reserve Banks January 26, 1917. on Friday, [In thousands of dollars, i. e., 000's omitted.] 1 to 15 days. 31 to 60 days. 16 to 30 days. 61 to 90 days. MuMuMuMuBills Bills Accept- niciBills Bills Accept- niciAccept- niciAccept- nicidis- i disdisdispal Total. count- ances ances pal Total. count- ances pal Total. count-! ances pal Total. count- bought. warbought. warwared. ed. ed. bought. rants. ed. 1 bought. warrants. rants. rants. Banks. Bosto71 New York 230 813 285 268 2,084 563 1,041 263 457 94 160 58 Cleveland Richmond Atlanta Chicago St Louis Minneapolis Kansas City Dallas San Francisco 3,029 7,152 2,088 1,329 1,217 931 2^272 839 997 595 679 1,958 125 177 76 52 61 278 57 76 75 62 6,316 Philadelphia 291 477 122 138 581 360 170 64 334 44 75 35 2,834 5,435 1,883 1,410 297 414 1,111 758 357 93 89 1,421 23,086 1,106 30,508 2,691 16,102 327 25 15 2 i After 90 days. 3,145 6,177 2,005 1,548 878 775 1,30(5 822 706 136 166 1,456 234 311 108 58 1,005 7(59 399 142 481 103 227 54 4,580 12,962 4,144 3,730 1,425 1,730 3,898 3,731 3,766 2;329 813 4,735 19,120 20 265 67 3,384 8,142 2,449 1,649 3,362 1,772 3,370 1,178 1,529 751 839 2,083 3,951 47,843 129 5,127 13,608 4,308 4,706 2,430 2,616 4,442 3,906 4,585 2,498 1,040 4,918 2,390 54,184 313 335 56 918 117" 145 33 338 6 35 3,055 101 1 1,855 7 878 13 874 749 456 i 826 409 156 198 217 48 845 143 27 90 95 236 1,089 10 2 436 26 30 50 50 3,255 2,001 890 969 1,205 1,237 790 291 988 147 381 1,149 10,666 891 13,303 1,746 165 45 5 82 Percentages. Total. • Mudis- Accept- nicipal ances count- bought. wared. rants. Banks. Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Bills discounted. Bills .. . Dallas San Francisco 5 12 24 28 114 37 400 133 205 49 1,007 Acceptances bought. Municipal warrants. Amoimi Per Per Per cent. Amoum cent. Amount cent. Amount cent. 5 1,121 404 177 127 126 583 6 2,887 1,350 766 24 33 1,235 441 577 260 331 632 790 1,702 527 489 4,150 2,129 1,922 554 1,815 524 903 206 5.0 10.8 3.4 3.1 26.4 13.6 12.2 3.5 11.6 3.3 5.8 1.3 13,498 27,404 8,993 7,342 3,688 3,902 7,436 5,545 5,966 3,044 1,676 9,203 13.8 28.1 9.2 7.5 3.8 4.0 7.6 5.7 6.1 3.1 1.7 9.4 629 3,709 1,482 1,806 61 402 1,784 539 605 225 178 829 7,535 8,542 15,711 100.0 97,697 100.0 12,249 6 2,887 1,345 754 Total. Total. MuAcBills cept- nici- Total. dispal count- ances wared. bought rants. 14,917 32,815 11,002 9,637 7,899 6,433 11,142 6,638 8,386 3,793 2,757 10,238 11.9 26.1 8.7 7.7 6.3 5.1 8.9 5.3 6.7 3.0 2.2 8.1 5.3 5.2 4.7 5.0 52.7 33 0 17.2 8.3 21.6 14.1 32.8 2.0 90.0 83.5 81.7 76.1 46.6 60.6 66.7 83.5 71.1 80.0 (50.8 89.9 4.7 11.3 13.6 18.9 .7 6.4 16.1 8.2 7.3 5.9 6.4 8.1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 125,657 100.0 12.5 77.8 9.7 100.0 5.1 30.3 12.1 14.8 3.3 14.6 4.4 4.9 1.8 1.4 6.8 Conversion operations of each Federal Reserve Bank for January, 1917. Bank. Boston New York Philadelphia Cleveland Richmond Atlanta 2 per cent bonds converted. Amounts allotted by Federal Reserve Consols of j Panamas Board. Total. 1930. ! Of 1936-1938. Chicago St. Louis Minneapolis... Kansas City... Dallas San Francisco. $2,696,200 6,412,900 2,814,200 3,227,200 1,799,100 j 1,335,500 3,722,100 1,504,600 1,281,600 1,642,900 1,451,200 2,112,500 Total.... 30,000,000 880,000 900,000 1,201,900 900,100 658,100 1,445,000 $666,000 521,000 825,000 1,202,000 899,000 667,000 1,445,000 $1,332,000 1,042,000 1,651,000 2,403,900 1,799,100 1,325,100 2,890,000 1,060,000 1,642,900 1,451,200 2,000,000 530,000 821,900 726,200 1,000,000 530,000 821,000 725,000 1,000,000 1,060,000 1,642,900 1,451,200 2,000,000 18,597.200 9,296,200 9,301,000 18,597,200 $1,332,000 1,042,000 1,651,000 2,403,900 1,799,100 1,325,100 2,890,000 50,000 250,000 500,000 13,838,200 i 4,759,000 $1,252,000 142,000 1,651 000 903,900 999,100 1,205,100 2,331,000 1,010,000 1,392,900 951,200 2,000,000 1,500,000 800,000 120,000 559,000 Conversion bonds and 1-year Treas- Balance of ury notes issued to the banks. allotment which may be Conversion Treasury converted Total. notes. in 1917. bonds. 8666,000 521,000 826,000 SI 364 200 5,370,900 1,163,200 823,300 10,400 832,100 1,504,600 221,600 112,500 11,402,800 225 FEDERAL EESEBVE BULLETIN. MARCH!, 1917. Total investment operations of each Federal Reserve Bank during the month of January, 1917. Federal Reserve Bank. Bills discounted for member banks. Bills bought in open market. Bankers' acceptances. Trade acceptances. $1,198,462 $3,038,839 598 162 2,556,318 565,122 2,095,209 644,971 1,351,779 8,582,382 2485,360 2,562,072 1 736,622 , , , I 1,294,163 994,661 1 605,727 1,283,005 | 1,226,753 1,421,725 | 266,295 385,388 I I 658,819 307,374 ! 123,358 2,719,761 Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Totals: January, 1917.. January, 1916. 18,326,286 11,114,900 20,376,041 9,374,500 Total. Municipal warrants bought. City. $3,038,839 1 2,605,561 !i 32,798, 1,268,322 2,107,327 " """ 1,351,779 822,842 2,485,360 5,200 1,741,822 1,010,250 i 15,589 660,484 1,283,005 ! 465,957 1,421,725 ! 151,684 385,388 ; 152,243 307,374 i 121,718 760,645 2,878,750 i 158,989 State. All other. $49,243 12,118 241,139 149,000 20,617,180 9,523,500 7,201,908 9,507,800 §15,372 Total. 82,798,013 1 268 322 838,214 §2,040 3,000 508,180 3,000 1,170 704 465,957 151,684 152,243 121,718 760 645 2,040 236,000 526,552 62,500 7,730,500 9,806,300 Total investment operations. United States bonds and Treasury notes. Federal Reserve Bank. 2 per cent. 3 per cent. | 4 per cent. Boston New York Philadelphia... Cleveland Richmond..... Atlanta Chicago St. Louis Minneapolis Kansas C i t y . . . Dallas SanjFrancisco.. Totals: January, 1917. January, 1916. 512,500 §60,000 |. 26,400 46,250 525 000 25,000 January, 1917. January. 1916. 34,237,301 6,074,236 3 940,771 2,861 364 11,113,992 4,831 894 3,475,117 2354,689 2,801,402 828,926 1,087,911 5,919,680 $3,411,100 10,167,700 3,012,800 1,400,500 3,494,700 2,269,000 3,838,200 1 903,800 853,400 1,775 200 2,270,500 2674600 2,431,390 49,105,356 6,626;800 37,071,500 Total. 872,500 26,400 46,250 525,000 1,240 'i'735,'666 2,370,150 4,393,800 1-year notes. 1,240 25,000 1,735,000 61,240 ! 403,000 I 1,830,000 226 FEDEEAL EESEBVE BULLETIN. HABCH 1, 1917. RESOURCES AND LIABILITIES. Resources and liabilities of each of the Federal Reserve Banks and of the Federal Reserve System Fridays, Jan. 26 to Feb. 23, 1917. at close of business on RESOURCES. [In thousands of dollars, i. e., 000's omitted.] Boston. Gold coin and certificates in vault: Jan. 25 Feb.2 Feb.9 Feb. 16 Feb. 23 Gold settlement fund: Jan. 26 Feb. 2 Feb.9 Feb.16 Feb. 23 Gold redemption fund: Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 Legal tender notes, silver, etc.: Jan. 26... Feb. 2 Feb.9 Feb.16 Feb.23 Total reserve: Jan. 26 Feb. 2 Feb.9 Feb. 16 Feb. 23 5 per cent redemption fund against Federal Reserve Bank notes: Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 Bills discounted—members: Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 Bills bought in open market: Jan. 26 Feb.2 Feb.9 Feb.16 Feb. 23 United States bonds: Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 1-year Treasury notes: Jan. 26 Feb.2 Feb. 9 Feb.16 Feb. 23 Municipal warrants: Jan. 26 Feb.2 Feb.9 Feb.16 Feb. 23 Federal Reserve notes, net: Jan.26 Feb.2 Feb.9 Feb.16 Feb. 23 New York. Phila- Cleve- Richdelphia. land. mond. Atlanta. Chicago. Minne- Kansas St. Louis. apolis. City. Dallas. L San Francisco. Total. 1 14,977 13.983 12;838 12,498 12,740 145,136 23,558 16,860 156,451 23,651 j 16,711 124,074 27,792 i 16,101 128,155 28,305 15,704 138,403 24,070 15,010 5,434 5,296 5,280 5,291 5,373 6,138 5,448 5; 801 5,687 5.736 33,034 33,216 31,042 28,310 31,523 26,552 18,085 28,777 17,701 25,251 18,379 25,443 18,258 26,510 16,826 2.912 5,791 7,012 8,002 5,197 33,504 38,920 35,298 40,048 32,694 3,468 3,583 1,510 437 2,302 495 528 502 493 478 200 200 200 200 200 1,296 1,225 1,279 1,231 23,891 10,233 23,356 13,063 23,955 14,540 23,990 15,461 22,768 12,642 15,132 15,237 19,901 18,472 17; 825 50,897 39,182 46,089 56,644 53,768 15,117 14,258 8,633 3,944 10;855 50 48 50 48 50 250 250 250 250 250 100 100 100 100 100 48 40 27 25 66 1,350 ! 2,158 I 152 922 840 459 158 233 974 536 408 202 204.352 39,697 197', 233 38,849 172 571 36,984 185,201 32,507 200,232 35,258 44,420 46,502 41,915 41,580 41,788 1,270 1,207 511 140 22(5 31,429 30,475 33,300 31,158 30,841 7,831 I 245 257 234 328 448 127 102 62 113 121 6,900 6,855 7,295 7,365 7,562 5,833 5,940 6,535 6,717 6,948 19,530 13,930 13,526 13,928 13,027 302,341 306,964 274,194 274,367 281,355 6,316 6,124 5,831 4,857 4,457 27,355 29,443 28,363 25,687 27,358 10,629 11,067 9,101 7,854 7,660 3,804 2,878 7,593 6,575 8,409 213,771 212,961 212,961 216,221 213,861 84 68 47 41 19 125 125 125 125 125 156 163 156 154 149 45 41 28 25 22 15 15 15 15 15 1,813 1,835 1,734 1,804 1,922 1,110 1,505 996 987 927 3,054 3,376 3,176 2,788 2,822 497 607 643 665 711 220 185 88 90 81 572 648 755 785 819 90 95 24 44 45 17,579 12,185 10,633 7,609 15,249 67,848 73,841 67,536 69,545 65,344 21,079 21,751 17,584 14,347 14,696 17,406 17,615 17,658 16,973 16,703 14,473 10,468 14,724 10,759 12,851 11,059 11,081 11,326 9,553 11,410 34,631 17,079 23,439 535,504 16,918 533,945 36,646 35,902 16,419 21,158 499,522 33,296 15,381 20,562 500,001 35,150 15,449 21,496 512,387 300 300 300 300 300 790 747 792 2,208 2,969 1,702 1,473 1,345 1,988 2,066 13,498 11,962 13,292 13,877 12,749 27,404 25,599 33,615 35,544 33,384 100 100 100 100 100 I 400 400 400 400 400 489 428 1,068 1,478 1,963 4,150 3,609 3,444 3,874 3,710 2,129 2,273 2,540 2,474 2,219 1,922 1,159 1,700 1,616 1,198 554 541 541 581 556 1,815 1,795 1,949 2,570 2,467 524 509 512 489 509 903 1,310 1,278 1,375 1,141 206 212 199 206 164 15,711 14,707 16,200 19,553 20,266 8,993 7,342 i 11,194 6,404 I 14,815 8,217 i 15,166 10,859 14,130 10,484 3,688 4,414 4,717 5,584 6,681 3,902 7,436 3,435 7,080 3,538 8,338 3,484 10,135 3,444 10,689 5,545 4,980 6,237 7,968 8,446 5,966 5,689 6,384 6,735 6,940 3,044 2,833 2,735 4,358 4.950 1,676 1,159 1,286 2,320 2,517 9,203 8,363 8,918 10,024 9,552 97,697 93,112 112,092 126,054 123,966 527 651 832 694 1,304 232 59 70 71 71 826 136 6,117 5,171 4,985 4,985 4,985 1,340 587 440 442 442 1,372 296 50 50 50 7,413 6,203 5,963 5,961 5,961 2,203 2,203 2,203 2,203 2,203 1,913 1,495 1,409 1,409 1,409 8,518 8,518 8,518 8,518 8,518 3,603 3,403 3,403 3,403 3,403 1,919 2,369 2,429 2,429 2,429 36,122 30,550 29,470 29,471 29,471 1,666 1,666 1,666 1,666 1,666 1,726 726 726 726 726 1,999 :,999 ,999 1,820 1,820 1,820 1,820 1,820 1,969 1,969 1,969 1,969 1,969 1,491 1,491 1,491 1,491 1,491 2,962 2,962 2,962 2,962 2,962 891 891 891 1,230 1,230 1,230 1,230 1,230 963 963 963 963 1,430 1,430 1,430 1,430 1,430 1,500 1,500 1,500 1,500 1,500 19,647 18,647 18,647 18,647 18,647 629 504 631 621 611 3,709 4,300 4,631 5,534 5,534 ,482 ,406 ,431 ,431 1,431 1,806 1,918 2,401 2,910 2,962 61 402 124 123 124 124 1,784 1,855 2,588 2,842 2,842 539 600 924 1,127 1,127 605 555 530 515 515 225 238 340 340 492 178 199 254 254 506 829 965 965 965 965 12,249 12,664 14,833 16,678 17,124 1,069 1,070 882 1,390 18,927 18,814 16,948 16,200 14,958 1,342 627 893 934 1,018 775 859 155 220 439 2,993 2,014 2,472 2,401 2,446 27,061 25,515 23,290 22,520 22,076 110 1,695 1,665 1,739 1,315 2,738 142 I. MARCH 1, 1917. 227 FEDERAL RESERVE BULLETIN. Resources and. liabilities of each of the Federal Reserve Banks and of the Federal Reserve System at close of business on Fridays, Jan. 26 to Feb. 23, 1917—Continued. RESOURCES-Continued. [In thousands of dollars, i. e., 000's omitted.] New ! Phila- Clove- St. Minne- Kansas Louis. apolis. City. Chi- York, delphia.i land. Total. Due from other Federal Reserve Banks, net: Jan. 26 Feb. 2. Feb. 9. Feb. 16. Feb. 23 Uncollected items: Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 All.other resources: Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 Total resources: Jan. 26 Feb. 2... Feb. 9... Feb. 16. Feb. 23. 159 11,560 1,061 10,136 15,780 7,044 15,799 8,160 16,270 7,730 :17,735 14.524 26,997 15,482 • 24,292 9,387 23,640 13,660 29,918 15,257 29,590 14,497 18,613 18,319 21,275 17,133 9,266 8,917 8,823 12,055 11,731 8,575 7,212 7,321 8,261 7,969 701 779 2,343 407 313 474 621 361 298 280 737 971 168 484 266 227 147 137 128 102 2,727 2,521 1,979 1,948 2,225 |62,293 ! 285,750 69,837 74,922 74,741 79,101 73,530 75,489 73,512 72,772 77,024 77,017 43,901 41,294 43,089 44,529 44,725 33,206 32,117 33,336 32,762 31,172 = i ...I j 1 i 313 94 : 08 I 273,275 62,908 60,400 [ 263,064 64)674 ! 275,589 66,409 : 286,894 1,933 2,116 982 3,687 3,783 3,750 10,307 377 S3 403 539 1,804 460 509 193 55 467 14,123 3,594 U2,687 1,102 U3,255 415 17,840 1732 1,431 8,137 6,019 7,496 9,748 9,562 4,358 3,076 3,654 3,710 4,063 8,985 6,699 7,359 7,996 8,540 3,917 4,032 4,967 5,608 4,560 4,229 9,426 5,829 6,553 5,034 126,437 126,611 121,225 144,249 136,940 3,616 3,532 3,215 2,482 2.201 117 119 85 81 108 566 497 326 208 187 1,737 1,800 1,240 1,289 1,510 612 304 395 431 343 13,609 13,153 11,078 8,619 8,271 107,949 I 44,497 115,221 42,633 111,395 40,073 1116,630 39,347 1117,233 ! 39,682 34,091 33,614 33,370 33,732 33,435 57,756 57,203 56,955 56,661 59,664 31,000 31,367 31,000 31,599 30,852 45,397 45,665 44,967 45,486 45,360 880,314 881,991 860,012 894,032 890,280 2,402 ! 3,074 3,074 2,402 3,074 2,405 3,074 2,405 3,074 2,407 2,694 2,695 2,693 2,693 2,695 3,930 3,930 3,913 3,915 3,915 55,694 55,725 55,713 55,773 55,989 441 2,335 j 2,287 ! 940 1,844 i 98 923 ; 2-670 632 | 140 1,492 1,578 1,070 731 2,643 2,844 2,042 1,197 1,374 25,607 23,333 15,525 10,851 13,407 1,109 970 516 769 668 LIABILITIES. Capital paid in: Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 Government deposits: Jan. 26 Feb. 2 Feb.9 Feb. 16 Feb. 23 Due to mombers—Reserve account: Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 Collection items: Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 Federal Reserve notes, net: Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 Due to other Federal Reserve Banks, net: Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 All other liabilities: Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 Total liabilities: Jan. 26 Feb.2 Feb.9 ! Feb. 16 Feb. 23 1 4,990 4,990 4,990 5,035 5,083 11,852 . 5,230 11,858 i 5,230 5,230 11,860 11,861 I 5,243 11,888 ; 5,259 6,020 6,020 6,020 6,020 6,087 3.361 3)363 3,363 3,363 3,412 2,410 2,417 2,420 2,418 2,419 6,932 6,947 6.946 6.947 0.950 325 - 38 2-108 2 - 89 340 3,197 ! 2,861 2,027 : 2,778 169 ! 2,077 1,817 1,616 1,191 1,157 1,140 965 1,037 1,079 2,058 1,489 1,472 1,518 1.516 2,873 2,577 2,599 2,032 1,859 1,592 ! 4,633 2,164 3,547 1,566 55 : 2 -416 416 2 -334 2 ! . • ' j ' 2,799 2,799 2,799 2,799 2,800 j 47,488 ! 246,548 i 46,086 58,582 ! 26,153 49,980 ' 238,015 j 48,496 56,804 : 25,778 229,947 I 46,314 ! 56,774 ! 26,181 47,658 229,110 ! 50,489 I 58,280 ! 25,206 49,243 233,368 | 46,458 j 58,202 ! 20,048 49,783 14,097 16,851 17,059 19,943 19,972 90,500 94,251 94,248 95,459 90,465 26,737 27,760 26,807 26,680 27,372 26,758 ! 26,682 ! 26,986 " 26,842 20,079 45,623 45,246 45,461 44,903 46,416 23,303 24,800 24,769 25,146 25r005 35,966 35,215 35,966 37,290 37,007 687,841 689,878 678,170 688,591 692,475 14,928 18,300 16,349 19,770 17,398 9,730 7,324 9,548 ; 6,820 9,013 : 6,864 11,687 ! 8,252 11,049 : 7,709 9,929 6,806 8,397 5,138 3,235 8,526 11,859 8,470 13,069 12,881* 5,587 6,180 6,958 6,699 2,596 2,243 2,135 2,836 2,178 5,839 5,476 5,502 6,665 7,147 3,117 2,294 2,468 2,642 2,130 2,784 3,599 2,963 2,998 2,979 97,374 101,232 97,207 121,218 108,826 3,749 3,530 5,209 6,190 6,040 3,897 3,466 2,861 3,077 2,935 726 992 1,824 1.535 1,845 2,689 3,181 394 457 1,847 3,086 7,023 7,458 7,778 10,063 11,107 2,421 461 18,875 ; 21,242 j 21,088 : 31,140 I 23,712 : 5,199 : 33 642 i 3,645 2,940 2,721 2,560 2,827 399 1,256 i 314 935 932 975 4,175 331 46 57 82 ! 91 94 79 100 197 205 285,750 273,275 0,400 j 263,064 275,589 64,674 6,409 j 280,894 62,293 154 1,464 13,885 753 766 318 547 74 77 I 75,489 I 73,512 | 72,772 I 77,024 77,017 85 43,901 | 41,294 : 43,089 j 44,529 ! 44,725 33,206 32,117 33,336 32,762 31,172 107,949 !115,221 111,395 1116,630 ;117,233 I 44,497 42,633 40,073 39,347 39,682 34,091 33,614 33,370 33,732 33,435 Difference between net amounts due from and net amounts due to other Federal Reserve Banks. 387 190 90 ! 118 ; 139 i . 136 138 69,837 74,922 74,741 79,101 73,530 13,509 11,471 13,093 17,089 19,061 57,756 31,000 57,203 31,367 56,955 31,000 56,661. 31,599 59,664 30,852 2 352 304 510 522 45,397 45,665 44,967 45,486 45,360 880,314 881,991 860,012 894,032 890,280 Overdraft. 228 FEDERAL BESERVE BULLETIN. MARCH 1, 1917. FEDERAL RESERVE NOTES. Federal Reserve note account of each Federal Reserve Agent at close of business on Fridays, Jan. 26 to Feb. 28, 1917. [In thousands of dollars; i. e., 000's omitted.] Boston. Federal Reserve notes: Received from ComptrollerJan. 26 Fob. 2 Feb. 9.. Feb. 16 Feb. 23 Returned to ComptrollerJan. 26 Feb.2 Feb. 9 Feb. 16 Feb. 23 Chargeable to Federal Re- \ serve AgentJan. 26 Feb.2 Feb.9 Feb.16 Feb. 23 In hands of Federal Reserve AgentJan. 26 Fob. 2 Feb.9 Feb. 16 Feb. 23 Issued to Federal Reserve | Bank, net— j Jan. 26 Feb.2 Feb.9 Feb.16 Feb. 23 Amounts held by Federal Reserve Agent: In reduction of liability on outstanding notes— Gold coin and certificates on h a n d Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 Credit balance in gold redemption fund— Jan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 Credit balance with Federal Reserve BoardJan. 26 Feb.2 Feb.9 Feb. 16 Feb. 23 As security for outstanding notesCommercial paperJan. 26... Feb.2 Feb.9 Feb. 16 Feb. 23 TotalJan. 26 Feb.2 Feb.9 Feb.16 Feb.23 Memorandum: Total amount of commercial paper delivered to Federal Reserve AgentJan. 26 Feb.2 Feb.9 ... Feb. 16 Feb.23 28,880 28,880 28,880 33,880 33,880 7,772 7,819 8,385 8,570 8,626 New Phila- Cleve- RichAtYork. jdelphia. land. mond. lanta. 185,400 185,400 224,260 237,680 246,080 j 30,480 17,660 i 30,480 17,660 30,480 22,660 33,480 23,860 37,520 23,860 59,890 6,340 60,548 6,790 60,813 | 6,830 61,274 6,908 61,534 7,144 21,108 21,061 20,495 25,310 25,254 125,510 124,852 163,447 176,406 184,546 7,210* 7,210 6,710 10,560 10,560 18,020 18,020 42,680 47,200 50,000 4,046 4,099 i 4,188 j 4,220 4,728 24,140 13,614 23,690 13,561 23,650 18,472 26,572 19,640 30,376 19,132 7,260 7,260 4,860 5,760 9,240 3,100 3,100 6,800 7,600 5,900 Chicago. St. Minne- Kansas Louis. apolis. City. Dallas. Fran- II Total. Cisco. 29,500 29,500 29,500 29,500 29,500 35,380 35,380 36,380 36,380 36,380 11,880 11,880 12,680 13,680 17,680 22,540 22,540 22,540 22,540 22,540 26,500 26,500 26,500 26,500 32,000 7,402 7,736 8,018 8,235 8,375 4,089 4,186 4,360 4,430 4,580 1,719 1,724 1,734 1,737 1,847 2,737 2,767 2,824 2,844 3,273 994 1,022 1,074 1,090 1,136 22,098 21,764 21,482 21,265 21,125 31,291 10,161 31,194 10,156 32,020 10,946 31,950 11,943 31,800 15,833 4,000 8,135 3,000 4,000 8,635 I 3,000 3,900 9; 935 I 2,500 3,900 10,385 2,500 3,900 10,385 2,500 13,898 13,851 13,785 14,750 14,694 107,490 16,880 10,514 18,098 23,156 7,161 106,832 16,430 10,461 17,764 22,559 7,156 120,767 18,790 11,672 17,582 22,085 8,446 129,206 20,812 12,040 17,365 21,565 9,443 134,546 21,136 13,232 17,225 21,415 13,333 13,150 13,150 12,850 13,850 13,850 103,349 103,349 114,949 123,549 121,146 748 701 935 900 844 4,141 3,483 5,818 5,657 5,400 870 770 ! 930 | 1,052 1,216 ! 12,280 i. 11,930 l! . 12,730 . 12,530 ' 12,130 ; 1,400 3,500 4,060 13,898 13,851 13,785 14,750 14,694 634 581 660 5,063 5,327 5,554 5,706 5,947 104,358 106,394 108,262 109,827 112,101 19,803 25,506 25,807 30,257 15,727 19,773 25,478 25,754 16,550 19,716 25,426 25,672 29,766 16,526 19,696 25,410 25,642 29,614 16,225 19,267 30,864 26,161 29,373 16,208 365,022 363,826 407,618 429,673 449,939 3,040 3,040 3,040 3,040 3,040 5,620 5,620 5,620 5,020 10,520 4,958 5,108 4,658 3,688 3,538 1,000 8,256 8,567 8,567 8,887 13,030 4,370 4,370 4,370 4,370 4,370 13,230 13,230 13,230 I ! i ! ! 22,271 21,737 21,199 21,047 20,486 j j j ! ! 10,340 10,540 10,110 10,110 10,110 i : ; ! 1,131 1,167 1,059 1,107 1,046 151 146 136 133 123 741 711 854 834 785 878 826 1,010 96 1,231 1,149 1,119 1,038 12,900 12,900 11,000 10,000 10,000 13,850 13,700 13,900 13,450 13,450 7,010 7,010 8,310 9,310 13,210 6,510 7,010 6,810 6,810 6,430 3,250 3,250 3,250 3,250 3,250 13,660 13,260 13,260 13,260 13,380 ! 4,290 4,090 5,865 6,750 4,631 4,281 3,781 3,781 3,781 4,347 3,847 3,847 3,847 3,847 2,500 2,500 2,500 3,100 3,100 1,935 1,785 2,235 3,205 3,835 4,655 1 4,304 1 3,809 3,810 3,809 73,329 73,249 99,270 108,220 118,470 i 16,763 19,886 20.849 16,733 19,858 20,646 16,676 19,806 21,014 16,656 20,390 21,954 16,227 20,344 22,623 1,715 1,618 1,444 1,374 1,224 4,649 5,953 6,778 7,263 8,119 469,380 470,220 515,880 I 539,500 i 562,040 1,993 2,010 2,034 2,335 2,352 774 717 615 565 107,490 16,880 10,514 18,098 23,156 7,161 106,832 16,430 10,461 17,764 22,559 7,156 120,767 18,790 11,672 17,582 22,085 8,446 129,206 20,812 12,040 17,365 21,565 9,443 134,546 21,136 13,232 17,225 21,415 13,333 1,401 3,502 4,062 2,313 2,366 2,448 2,478 2,559 5,165 5,165 5,165 5,165 5,165 2,960 2,960 2,960 2,960 2,960 3,730 : 9,880 3,730 ' 9,880 3,730 10,980 3,730 11,380 3,730 12,543 28,120 35,320 17,720 28,120 35,320 18,560 28,120 35,320 18,560 28,120 35,320 18,560 28,720 35,320 18,560 16,763 16,733 16,676 16,656 16,227 4,347 3,848 3,848 3,850 3,850 1,941 1,939 2,236 3,217 290,577 308,348 321,453 331,469 166,174 166,374 178,344 188,144 194,904 607 590 566 545 13,436 12,650 15,126 15,006 14,722 10,130 14,120 10,030 15,960 10,030 15,960 9,830 15,680 9,330 15,380 93,710 95,050 95,250 94,120 96,560 ! ; ! i j 670 19,886 20,849 22,271 19,858 20,646 21,737 19,806 21,014 21,199 20,390 21,954 21,047 20,344 22,623 20,486 2,500 2,500 2,500 3,100 3,100 14,727 16,550 16,526 16,225 16,208 1,023 1,148 1,143 2,004 1,842 18,373 16,503 19,628 24,183 25,283 14,727 16,550 16,526 16,225 16,208 291,693 290,577 308,348 321,453 331,469 19,115 19,692 21,715 26,746 28,618 MARCH l , 229 FEDERAL BESERVE BULLETIN. 1917. Federal Reserve note account of each Federal Reserve Bank at close of business on Fridays, Jan. 26 to Feb. 23, 1917, [In thousands of dollars; i. e., 000's omitted.] ! | AtPhila- Clove- ' Richdelphia. land. | mond. lanta. Chicago. St. Minne- Kansas Louis. apolis. | City. 18,098 17,764 17,582 17,365 17,225 23,156 22,559 22,085 21,565 21,415 7,161 7,156 8,446 9,443 13,333 16,763 16,733 16,676 16,656 16,227 893 934 1,018 775 859 541 560 656 5G0 620 734 815 920 704 846 1,695 1,665 1,739 1,315 2,738 702 907 88,563 15,538 88,018 15,803 103,819 17,847 113,006 19,159 119,588 20,162 9,621 9,527 10,654 11,265 12,373 17,557 17,204 16,926 16,805 16,605 22,422 21,744 21,165 20,861 20,569 5,466 5,491 6,707 8,128 10,595 107,490 106,832 120,767 129,206 134,546 10,514 ! 13,808 18,525 10,461 ! 13,674 18,278 11,672 i 11,717 18,304 12,040 10,615 17,784 13,232 10,565 17,634 Boston. Federal Reserve notes issued to banks: Jan. 26 Feb.2 Feb.9 Feb.16 Feb. 23 Federal Reserve notes in hands of banks: Jan. 26 Feb.2 Feb.9 , Feb. 16 Feb. 23 Federal Reserve notes in circulation: Jan. 26 , Feb.2 Feb.9 Feb.16 Feb. 23 Gold and lawful money deposited with or to credit of Federal Reserve Agent: Jan. 26 Feb.2 Feb.9 Feb. 16 , Feb. 23 New York. 13,898 13,851 13,785 14,750 14,694 107,490 106,832 120,767 129,206 134,536 16,880 16,430 18,790 20,812 21,136 10,514 10^461 11,672 12,040 13,232 1,069 1.070 '882 1,390 839 18,927 18,814 16,948 16,200 14;958 1,342 627 943 1,653 974 12,829 12,781 12,903 13.360 13;855 13,898 13,851 13,785 14,750 14,694 19,886 20,849 19,858 20,646 19,806 21,014 20,390 21,954 20,344 22,623 San Francisco. 14,727 291,693 16,550 290,577 16,526 308,348 16,225 321,453 16,208 331,469 22,271 21,737 21,199 21.047 20,486 2,993 2,014 2,472 2,401 2,446 31,925 30,547 29,825 29,614 28,298 11,734 ! 14,536 j 14,054 I 13,824 ! 13,762 259,768 260,030 278,523 291,839 303,171 1,126 1,287 1,020 2,642 2,736 2,511 2,374 2,108 111 250 390 516 654 276 155 220 439 236 16,061 15,826 j| 15,550 15,369 i 15,207 17,244 17,122 17,295 18,016 18,236 20,738 20,396 20,624 21,438 21,969 21,995 21,582 20,979 20,608 20,250 17,386 17,358 17,306 17,290 17,244 18,914 21,601 i 14,727 j 273,320 18,861 21,737 ; 16,550 j 274,074 " 18,779 21;199 16,526 : 288,720 18,749 21,047 16,225 : 297,270 18,788 20,486 16,208 306,186 j 16,880 16,430 17,390 17,312 17,076 Total. 7,161 ! 12,416 7,] 56 12,886 8,446 i 12,829 9,443 12,809 13,333 ! 12,380 I GOLD IMPORTS AND EXPORTS. Gold imports and exports into and from the United States from Jan. 26 to Feb. 16, 1917. [In thousands of dollars; i. e., 000's omitted.] Feb. 16, 1917. Feb. 9, 1917. Jan. 26, 1917.. Feb. 2, 1917. 265 385 269 897 500 1 133 2 2 707 Total since Jan. 1, 1917. Total for corresponding period during 1916. IMPORTS. Ore and base bullion United States mint or assay office bars.. Bullion, refined United States coin.. . . . Foreign coin 1,066 36,066 1,681 5 18 734 51,005 41,042 17,014 193 15 495 3 500 359 4,198 45 1,662 521 1,478 51,757 112,467 22,682 1 11 114 4,950 19 514 59 719 2,764 1 233 4,054 35 1,184 1,063 25,929 1,303 509 6,735 5,076 Total imports 1,311 3,273 4,288 28,211 8,809 1,134 31 1,815 6,130 1,134 1,840 6,130 5,422 30,057 14,939 EXPORTS. Domestic: Ore and ba^e bullion United States mint or assay office bars. . Bullion refined Coin Total Foreign: Bullion, refined Coin . . Total Total exports Excess of gold imports over exports since Jan. 1,1917 Excess of gold imports over exports since Aug. 1, 1914 31 159 • 190 5,266 1,311 3,273 57 714 882,410 951,172 230 FEDERAL RESERVE BULLETIN. MAKCH 1, 1917. EARNINGS ON INVESTMENTS OF FEDERAL RESERVE BANKS. amounts of earning assets held by each Federal Reserve Bank during January, 1917, earnings from each class of earning assets, and annual rates of earrings on the basis of January, 1917, returns. Average balances for the month of the several classes of earning assets. Bills bought in open market. United States bonds and Treasury notes. SI.578,732 $13,443,098 3;795,495 33,033,475 766,946 10,501,050 595,783 8,718,124 3,873,734 3,663,500 2,946,127 4,242,304 3,174,927 8,840,944 781,055 6,407,550 1,809,200 6,422,500 492,445 3,354,022 845,821 2,036,426 216,537 10,911,610 $2,234,484 2,069,437 2,735,129 7,791,699 3,145,151 2,854,467 10,219,358 3,093,900 3,101,600 9,463,108 5,033,250 3,351,072 S755,711 $18,012,025 2,557,181 41,455,588 928,012 14,931,137 1,973,427 19,079,033 60,750 10,743,135 400,909 10,443,807 1,550,655 23,785,884 614,247 10,896,752 11,883,800 550,500 204,054 13,513,629 8,080,411 164,914 15,408,408 929,189 i 20,876,802 111,574,603 55,092,655 10,689,549 I 198,233,609 Bills discounted, members. Boston New York Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City.... Dallas San Francisco., Total Earnings from— United States Bills Bills disMunicibonds pal warcounted, bought in open and memmarket. Treasury rants. bers. notes. Municipal warrants. Total. Calculated annual rates of earnings from— Total. United Bills States Bills disMunicibonds pal warcounted, bought in open and memmarket. Treasury rants. bers. notes. $44,810 100,709 36,836 46,049 29,954 27,649 60,588 26,218 30,625 29,643 19,698 36,140 Per cent. Per cent. Per cent. Per cent. \ Per 2.96 2.81 3.82 3.09 3.00 •2.76 3.54 2.99 I 3.00 2.79 3.92 3.13 I 2.66 2.78 4.14 3.40 2.93 3.08 3.76 3.50 2.96 3.07 3.64 3.57 2.59 2.77 4.82 3.29 2.47 2.83 3.83 3.26 2.58 2.85 4.49 2.99 2.37 2.85 4.92 2.46 2.65 2.85 4.65 3.33 2.63 2.77 4.67 2.93 488,919 Total. t $5,617 5,314 6,981 17,693 7,815 Boston New York.... Philadelphia. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis.. Kansas City.. Dallas........ San Francisco $5,128 11,413 2,556 2,094 12,384 8,815 12,991 2,540 6,905 2,058 3,278 856 $32,080 77,473 24,828 20,559 9,572 10,719 20,777 15,445 15,519 8,128 4,834 25,641 22,491 6,534 6,804 19,030 11,128 7,329 $1,985 6,509 2,471 5,703 183 1,177 4,329 1,699 1,397 427 458 2,314 Total... 71,018 265,575 123,674 j 28,652 4.01 2.80 2.64 3.16 cent. 2.93 2.86 2.90 2.84 3.28 3.22 3.00 2.83 3.a3 2.58 2.93 2.76 2.90 231 FEDEKAL RESERVE BULLETIN. MABCH 1,1917. DISCOUNT RATES. Discount rates of each Federal Reserve Bank in effect Feb. 28, 1917. Maturities, Commodity paper maturAgriculing tural within To 31 to 60 11 to 30 to 61 90 Within Within days, in-j ; 16 to 30 i 31 in- 60 to in- and live- days,30 days, in-| I 61 to 90 days. days, stock indays, in- days, days, in- 90 10 days. 15 days. clusive, elusive. clusive. clusive. paper clusive. clusive, j elusive. over 90 Discounts. Trade acceptances. Paper bought in open market. Member banks1 collateral loans. j Boston New York Philadephia Cleveland Richmond Atlanta Atlanta (New Orleans branch) Chicago St. Louis Minneapolis Kansas City Dallas San Francisco 31 4 3 31 3* 4 31 1 s34 (*> i 31-51 3-5 31 31 f 31 4 i Rate for bills of exchange in open-market operations. a Rate for trade acceptances bought in open market without member bank indorsement. * Rate for commodity paper maturing within 30 days, 31 per cent; over 30 to 60 days, 4 per cent; over 60 to 90 days,4$ per cent; over 00 days, 5 per cent. NOTE.—Rate for bankers' acceptances, 2 to 4 per cent. NET DEPOSIT LIABILITIES, RESERVES HELD IN VAULTAND IV/TH FEDERAL RESERVE BANKS, AND RESERVE PERCENTAGES BY CLASSES OF NATIONAL BANKS, /9/4 TO/9!6. CUrvca / represent J^ee7>ejtoai£9on TvliccfvSfcserycis computed-. GxrrcaZ. represent MtuteJteserpas/tUcs dm0ivi&dcu;/m/7t&dcnilJfoeryvJ8anJlQF. CurwJ. TCfinescnerJh'ccntagesofJZeservc iTtrkuZt and wUfv JZdcralJZeserycjdanlCs agains&jfc£ -Zkfuxrt6 £uz&CU£Cos. NATIONAL BANKS IN CENTRAL RESERVE CITIES. NATIONAL BANKS IN RESERVE CITIES. to COUNTRY BANKS. * > 00 tv w tv i* X » 7 - —i •47t V /» All w 00 V 3 oo tv 00 —=_ 4 CO a tot % 2f 2* e * V 9 tr 4 > t! V - — — y f s — - ....... 2 0 jmtxJtn.t!ax.» jv/rgjc sena oc X =© j/ I9M- KX4 MO-/ junta xrrj. mm /mr./a at e.fr *«-» mm. jttex> sore /IKP *G I3IS MS a/g t9i6 fteszRwz: F£RC£NTAGES FOR ALL ^AT/ONAL^AW^S. Ar t V 0 t s f jwieJD seme arj/ xv,C3f HOI.4 HiTt. JCIKEO JBTZ %\t\t\$\t X MXB r^ST Jtf tm.? tur/. Jv*ija sore « « » * |||'|J1|1|]1 I ll^ll'l^ ti|i t9i6 are SUSHI 233 FEDERAL RESERVE BULLETIN. MARCH 1,1917. GOLD HOLDINGS IN MILLIONS OFDOLLARS OF TREASURY, NATIONAL BANKS, FEDERAL RESERVE BANKS,AM? FEDERAL * RESERVEAGE/iTS IN 1314,1915,$/d/6. Curve /. reprcsen&s Gold held, irvJreasary, kwe ofamourtte 7ielda^axnsd6old, Qsrttf(cafes #00 7300 k J ^ ^ S t f ^ d J S Curve 2. represents Gold held, i/njrcasizrif asuC JfatzorialJdctftJcs. Curve 3. represents Gold, held. inJreasury, JfafalJ8Jc dS t o l J l B Curve4, rejvrcsents Aggregate 6otd,JfoZdcru?s /SCO I2OO I2OO //GO IIOO 1000 /ax? / 300 900 SCO too A-—' POO 6oo 600 SCO SOO 400 4QO 300 300 '••..I •* BOO 200 __ \ ] ^_ \ _ SSCJtf f'lCX? M/iY! ^ 234 FEDERAL RESERVE BULLETIN. MARCH 1 , 1 9 1 7 . FOREIGN BANK STATEMENTS. Comparative statements shovring condition of the four principal European banks of issue at close of calendar years 1913 to 1916. [Original figures have been converted into United States dollars at the following legal equivaoents: £=$4.8665; franc=19.3 cents; ruble=51.5 cents; mark= 23.8 cents.] [In thousands of dollars; 000 omitted.] BANK OF ENGLAND. [Combined data for issue and banking departments.] [From the London Economist.] • Dec. 29, 1915. Dec. 31, I Dec. 30, 1913. I 1914. Dec. 27, 1916. ASSETS. Gold and silver 170,245 Government securities: j Held by iss"ue department. 89,787 Held by banking department 64,233 Other securities I 253,729 Total LIABILITIES. 264,275 338,191 250,510 89,787 89,787 89,787 72,061 516,998 159,816 545,416 278,304 518,094 | 577,994 |l,017,037 |l,045,529 1,150,460 = j' i j RUSSIAN STATE BANK. [From weekly statements of the Russian State Bank.] Dec. 16/ Dee. 16/ Dec. 16/ 29,1913. 29,1914. 29,1915. Gold bullion and s p e c i e . . . . . . S780,902 $800,124 8830,046 $758,396 In vault 87,097 110,319 139,050 1,107,171 Gold abroad 31,886 24,678 18,928 59,089 Bills on ha^id ". 318,383 202,325 126,468 Shorfcterni bills of the Imperial Treasury 255,720 11,670,959 3,365,036 Advances on securities 90,790 131,036 340,939 276,749 Advances on merchandiscl.. 84,604 56,921 I 58,128 23,734 Advances to popular credit institutions 35,505 46,988 | 39,802 i 22,171 Advances to farmers 8,440 10,765 ! 11,572 9,247 Advances to manufacturers.. 7,743 5,726 | 4,444 3,892 Loans to the Petrograd and Moscow public pawnshops. 10,083 : 7,932 6,371 8,122 Protested bills 6,513 ! • 1,974 597 3,162 75,358 I 133,612 Securities owned 53,774 70,098 128,923 160,890 Due from branches and offices 189,011 7(5,316 70,627 53,581 67,399 j Total.. 70,822 1,539,811 2,057,853 :3,689,378 16,111 253,624 LIABILITIES. 616,715 Capital. 28,325 28,325 28,325 107 Current account of the Impe193,081 rial Treasury 113,426 105,134 299,476 188,425 437,736 account 111,947 Total | 577,994 1,017,037 1,045,529 j 1,150,460 Current and time deposits 198,326 217,383 Special deposits 188,814 Drafts and letters of credit 8,042 unpaid 12,424 3,993 BANK OF FRANCE. Notes in circulation 859,293 1,474,880 2,731,879 61,053 Accrued nrofits an operations.! 33,630 33,218 [From weekly statements of the Bank of France.] 14333 95,444 Sundry libiliti Sd liabilities • 14,333 13,211 [000 omitted.] Total 1,539,811 2,057,853 3,689,378 Dec. 26, Dec. 10, Dec. 30, Dec. 28, 1914.1 1915. 1916. 1913. GERMAN REICHSBANK. Proprietors' capital Rest (surplus) Public deposits Other deposits Seven-day and other bills Notes in circulation 70,822 15,827 49,913 297,280 I 66 | 144,086 Dec. 16/ 29,1916. 70,822 i 70,822 16,118 15,978 131,067 241,755 ! 623,182 544,914 ; 87 116 ! 175,872 171,833 : 1 6,088,657 28,325 111,247 804,603 301,002 15,643 4,424,512 230,173 173,152 6,088,677 ASSETS. Gold in vault Other metallic reserve Total vault reserve Foreign credits Government securities: Bonds, consols, and advances to the GovernmentPermanent investments Advances made since outbreak of war Treasury bills discounted (advances to foreign governments) Loans and discounts Bills matured and extended.. Advances on bullion, specie, securities, etc Sundry assets Total 678,856 123,532 799,359 67,750 967,950 67,953 652,885 56,910 802,388 867,109 1,035,903 709,795 326,766 159,380 203,962 57,900 57,900 694,800 965,000 41,165 702,040 121,590 82,839 354,002 149,074 2 150,686 93,064 222,320 60,674 294,607 1,397,033 3,145,224 Dec. 31, Dec. 31, Dec. 30, 1915. 1916. 1914. $599,873 t98,0S9 S581,954 $278,453 Gold 7,633 3,884 65,886 8,774 Other metallic reserve.. Total metallicreserve.. 344,339 I 506,863 589,587 603,757 1,428,200 Imperial Treasury and Loan Bank certificates 100,457 10,996 j 208,250 306,531 332 of other banks 745 3,038 1,264 347,400 Notes checks, and discounted Bills, 119,599 354,798 936,903 1,381,189 2,287,124 Treasury bills 258,395 3,079 22,485 2,322 5,443 Advances on collateral 96,012 12,227 19,932 8,086 254,326 Securities 53,582 64,790 186,622 51,173 Sundry assets 86,627 885,250 1,717,1 2,358,130 3.200,546 Total 3,789,422 LIABILITIES. 35,223 35,223 35,223 35,223 Capital 8,292 8,292 8,206 Surplus incl. special reserves.. 4,853 4,211 309 Dividends unpaid 2,897 33,562 77,848 34,075 Government deposits 436,223 111,038 515,687 407,970 Other deposits 1,102,715 1,927,306 2,568,801 3,219,012 Bank notes in circulation 82,922 87,165 61,694 Sundry liabilities 1,397,033 3,145,224 3,789,422 1 No data available as at end of 1914. Incomplete data for Dec. 10, 1914, taken from the annual report of the bank for 1914. 2 Advances on securities only. Dec. 31, 1913. 57,900 LIABILITIES. Total [From the Deutcher Reichsanzeiger No. 3, 1915, and No. 4, 1917.] 42,840 42,840 42,840 Capital paid in I 42,840 20,342 19,171 17,726 Surplus... ! 16,671 Notes in circulation 617,240 1,200,924 1,646,465 1,917,007 Other liabilities payable on 561,445 1,086,281 418,144 188,763 demand 134,076 38,348 88,209 19,736 Sundry liabilities Total 885,250 1,717,982 2,358,130 3,200,546 INDEX. rag0 Page. - Acceptance.?, distribution of, by sizes, maturities. etc * 222-224 Amendments to Federal Reserve Act: Comparative Senate and House bills 177-187 Senate and House reports 188-192 Bank of France, agency with 175 Branch agency at Memphis, experience with 168-171 Business conditions throughout the Federal Reserve districts 202-219 Charts: Reserves held in vault and with Federal Reserve Banks 232 Gold holdings 233 Clearing and collection: Operation of system 171 At Boston, Mass 162-164 Commercial failures in January 167 Commercial paper, discount of 220 Deposits, withdrawals of, by foreign depositors 154 Discount operations of the Federal Reserve Banks.. 220 Discount rates in effect 231 Earnings on investments of Federal Reserve Banks. 230 Federal Reserve Agents' fund, summary of transac176 tions Federal Reserve Banks, investments held 153 Federal Reserve Bulletin, bound copies of 158 Federal Reserve note account of agents and banks.. 228 Federal Reserve note issues 155 Federal Reserve system, letter of a Texas banker regarding operation cr 159 Fiduciary powers granted 167 Foreign banks, statement showing condition of 234 Foreign exchange problems 156 Gold imports, increase of 153 Gold imports and exports, statement showing 229 Gold settlement fund 175,176 Harding, Hon. W. P. G., message of, to North Carolina business men, bankers, etc 159-3 61 Informal rulings of the board: Purchase of nonnegotiable warrants 193 Acceptances 193 Purchase of warrants in excess of 25 per cent limit 194 Use of note emblem 194 Insurance agents, regulations under which national banks may act as 164-166 Law department: Discount of paper secured by United States bonds or notes 197 Branch banks 198 Transfer of Federal Reserve Bank stock 199 Bills of exchange drawn against actually existing values 195-197 Drafts payable with interest 200 National banks: Acting as insurance and real estate agents,'regulations governing..." 164-166 Charters granted to 167 Real estate agents, regulations under which national banks may act as 164-166 Report, annual, of Comptroller of the Currency, synopsis of 172-174 Reserve conditions 154 Resources and liaoilitios of Federal reserve banks. 226, 227 Review of the month 153-157 State banks admitted to system 158 Statements for the press: Message of Hon. W. P. G. Harding to North Carolina business men, bankers, etc 159-161 Compilation of national bank returns by office of Comptroller of the Currency 161 Trade acceptance situation 157 United States bonds: Conversions of, statement showing 224 Loans based upon, memorandum of board regarding 158 O