Full text of Federal Reserve Bulletin : March 1918

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FEDERAL RESERVE
BULLETIN




ISSUED BY THE

FEDERAL RESERVE BOARD
AT WASHINGTON

MARCH, 1918

WASHINGTON
GOVERNMENT PRINTING OFFICE
1918

FEDERAL RESERVE BOARD,
EX OFFICIO MEMBERS.

W. P. G. HARDING, Governor.
PAUL M. WARBURG, Vice

WILLIAM G. MCADOO,

Secretary of the Treasury,
Chairman.

Governs.

FREDERIC A. DELANO.
ADOLPH 0. MILLER.
CHARLES S. HAMLIN

J O H N SKELTON WILLIAMS,




Comptroller of the Currency.

H. PARKER WILLIS, Secretary.
SHERMAN ALLEN,

Assistant Secretary and Fiscal
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 bainks desiring to have the
Bulletin supplied to their officers and directors may have it sent
to not less than ten names at a subscription price of $1 per annum.
No complete sets of the Bulletin for 1915 are available.
Bound copies of the Bulletin for 1916 and 1917 may be had at $5
per copy.

Agent.




SECOND EDITION OF THE INDEX DIGEST.
The second edition of the Index Digest of the Federal Reserve
Act is now ready for distribution and is being sent to subscribers. The vofume contains 656 pages, and furnishes a complete
analysis of the Federal Reserve Act, as amended to date, including those provisions of other acts which affect the Federal
Reserve System. Copies bound in paper are sold for $1
each, and bound in buckram for $1.25 each. Subscriptions
may be sent to the Federal Reserve Agent of each District, or
to the Federal Reserve Board direct.
in

TABLE OF CONTENTS.
Review of the month
Interest on deposits, statement by Governor Harding
r
New issues of Treasury certificates of indebtedness.
Bills to increase Comptroller's powers introduced in Congress
Income tax on deposits of nonresident aliens
Relation of Liberty loan to the war-savings plan (statement by J. S. Drum)
Act passed by the New Jersey Legislature regarding State bank membership
Statements for the press:
Issued by the Capital Issues Committee of the Federal Reserve Board
Issued by the War Trade Board
Report on consolidation of Subtreasuries with Federal Reserve Banks
Extract from report of select committee on national expenditures of the British House of Commons
Condition of national banks as shown by Comptroller's call
Commercial failures reported
Fiduciary powers granted to national banks
Banks granted authority to accept up to 100 per cent of capital and surplus.
Charters issued to national banks during the month
State banks and trust companies admitted to the system during the month
Instructions to dealers in foreign exchange
Informal rulings of the Federal Reserve Board
Law department
±
Business conditions throughout the Federal Reserve districts
Gold settlement fund transactions
Operation of the Federal Reserve interdistrict collection system
Movement of excess reserves (" free gold ") during 1917-18
Chart showing
i
Discount operations of the Federal Reserve Banks
Acceptances
t
Resources and liabilities of the Federal Reserve Banks
..•
Federal Reserve note accounts of Federal Reserve Banks and agents
'.
Member bank condition statement
Earnings on investments of Federal Reserve Banks
*
Gold imports and exports
Discount rates in effect
Foreign bank statements




IV

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FEDERAL RESERVE BULLETIN
VOL. 4

MARCH 1, 1918.
REVIEW OF THE MONTH.

Federal Reserve Banks have more than maintained their reserve position
during the month of February,
the
combined
percentage
against notes and deposits, which, was 65.2 per
cent at the opening of the month, rising to 66
per cent on the 21st. Some liquidation by the
banks has taken place during the month, while,
on the other hand, extension of accommodation
to member banks for the purpose of enabling
them to participate as freely as they desired
in the new issues of Treasury certificates has
brought renewed demands upon the reserve
banks. Figures obtained from members located in the principal cities of the country show
that there is a steady though limited transference of the long-term bonds of the second
Liberty loan to actual investors. Some of the
Federal Reserve Banks report renewals of warloan paper by member banks. These renewals
apparently have been due to the greater difficulty experienced by customers of member
banks in obtaining new accommodation or to
their indisposition to release liquid resources
in their possession required for current business.
The consequence of these conditions has been
a disposition to request banks to carry notes
originally intended to pay for subscriptions
to Liberty loan securities and thus to prevent
liquidation from being as rapid as would
otherwise have been possible. On the whole,
liquidation has been more active at the Federal
Reserve Banks than at member banks. Meantime, the various proposals for relief legislation
have tended to improve conditions in the securities market and in consequence to place the
general banking and financial situation in a
more favorable position. Business has continued active at Federal Reserve Banks, but
there has been no change in discount rates
during the month. The action of the Secretary of the Treasury in announcing on February 21 the offer of a new issue of Treasury cer-




No. 3

tificates of indebtedness bearing 4J per cent—•
a rate one-half of 1 per cent higher than that
borne by the preceding issue—has tended to
emphasize the movement toward higher commercial rates in the open market. This influence has been especially marked in view of the
announcement made by the Secretary that
future issues of certificates of indebtedness
placed on the market prior to the next Liberty
loan will bear the higher rate of interest now
announced.
The Secretary of the Treasury, on February
8, sent to banks and trust companies throughout the country
a telegram in which he laid before them a plan for financing the immediate
needs of the Government through the issue of
certificates of indebtedness to a possible
aggregate of $3,000,000,000. He requested
that every bank or trust company should set
aside each week 1 per cent of its total resources for the purpose of investing in the new
certificates to be issued under the proposed
plan. This setting aside of resources, it was
indicated, should continue for 10 weeks, these
issues to be placed on the market^at biweekly
intervals. It was noted by the Secretary in
his statement that in selling the first and second Liberty loans, $3,358,000,000 of certificates
had been placed on the market by way of anticipation. The first and second Liberty loans, as
will be recalled, amounted in the aggregate to
about $5,808,766,000. The date of opening
the campaign for the third Liberty loan has
now been set at April 6.
*
Pursuant to the plan thus announced the
Secretary of the Treasury offered, on February
8 and 22, two issues of certificates of indebtedness of $500,000,000 each, the first bearing 4
per cent and the second 4^ per cent. Of these
two issues, the first, as will be noted, was
placed on the market simultaneously with the
announcement of the general plan for financing
the Government during the next 10 weeks by
153

154

FEDERAL RESERVE BULLETIN",

a cooperative effort of the banks. This was
fully subscribed during the two weeks succeeding the offering of the certificates. The
success thus attained was due to the action of
the larger banks in financial centers, notably
New York, in taking more than their share of
the issue and thus making up the deficiency
which arose from the failure of other banks to
respond to the request which was made on
them. Only two districts, New York and
Kansas City, exceeded their allotment, and
one, Minneapolis, equaled its allotment. The
distribution of certificates for the second issue
was therefore somewhat altered, the reserve
banks being authorized and requested to receive subscriptions and to make allotment in
full in order of receipt of applications up to an
aggregate in each district as follows:
Boston, $33,000,000; New York, $194,000,000; Philadelphia, $40,000,000; Cleveland, $40,000,000; Richmond,
$15,000,000; Atlanta, $15,000,000; Chicago, $50,000,000;
St. Louis, $25,000,000; Minneapolis, $17,000,000; Kansas
City, $23,000,000; Dallas, $18,000,000; San Francisco,
$30,000,000.

As this number of the Bulletin goes to press
it is understood that the certificates of the second issue have been substantially oversubscribed. In the first issue there were difficulties, due partly to the fact that, as the Secretary of the Treasury has stated, " * * *
some banks had only a short interval to accumulate moneys for investment in Treasury
certificates and partly because some subscribed
on the basis of 1 per cent of their resources,
not understanding that the request to set aside
1 per cent a week carried with it the request to
subscribe for an amount equal to at least 2 per
cent of their resources for each bi-weekly issue
of certificates." -There was, however, a great
increase in the number of subscribers to the
certificates of the issue of February 8, and this
increase appears to have continued in the latest
issue.
Further liquidation of discounted paper, inOperations of eluding member banks7 own
the Federal Re- notes as well as customers'
serve Banks.
paper, secured by war obligations, characterized the operations of the Fed-




MARCH 1,

1918.

eral Reserve Banks for the period between
January 25 and February 21. During the
period under review the banks decreased their
holdings of paper secured by war bonds and
certificates by 48.6 millions and their holdings
of all classes of discounted paper by about 118>1
millions, the share of war-loan paper in the total
of discounts held by the banks showing a slight
increase from about 50 to about 52 per cent.
Liquidation of discounts may be said to have
proceeded slowly though steadily to February
15, when Government short-term borrowings
were resumed and the banks found it necessary
to finance some of their members in connection
with the Government's loan operations.
Open-market purchases of bankers' acceptances and commercial bills proceeded on an
increasing scale, the reserve banks' holdings of
acceptances on February 21 reaching a new
record total of 296.2 millions, an increase of
22.2 millions since the last Friday in January,
New York and San Francisco accounting for
about 70 per cent of the total acceptances held
by the banks on the later date.
Investments in Government short-term securities, mainly certificates of indebtedness?
show an increase of nearly 100 millions, practically all at the New York bank. No material
changes are shown under the head of United
States bonds or other earning assets, including
bill of lading drafts and municipal warrants,
Total earning assets, as the result of the increase in certificate of indebtedness holdings^,
show an increase of over 2 millions and constituted 70.5 per cent of the banks' net deposits
on February 21, as against 69 per cent on
January 25.
During the period under review gold reserves
of the banks increased from 1,726.5 to 1,772.4
millions and Federal Reserve notes in circulation from 1,234.9 to 1,314.6 millions, while net
deposits decreased from 1,492.9 to 1,462.6 millions. The ratio of total reserves to aggregate
net deposit and Federal Reserve note liabilities
shows an increase from 65.4 to 66 per cent.
In the following table are shown the changes
between January 25 and February 21, 1918, in
the totals of discounted and purchased bills

MARCH 1, 1918.

FEDERAL RESERVE BULLETIN.

155

held by each of the Federal Keserve Banks, also an increase of 402.9 millions and the banks in
changes in aggregate holdings of other classes of other reserve cities with an increase of 67.8
millions. For the New York City banks alone
investments:
[000's omitted.]
an increase of 378.3 millions is shown, or about
80 per cent of the total increase.
Jan. 25, Feb. 21,
Net
Net
Federal Reserve Bank.
1918.
1918.
increase. decrease.
Loans secured by Government war obligations show a decrease for all reporting banks
$62,151
$75,723
$13,572
Boston
$36,831
390,898
354,067
New York
4,876 from 381.3 to 361.1 millions, the New York
47,989
43,113
Philadelphia
18,008
62,338
44,330
Cleveland
7,044 City banks alone reporting a decrease under
45,657
38,613
Richmond
1,991
18,172
16,181
Atlanta
Other
25 408 this head from 190.5 to 174 millions,
119,445
94,037
Chicago
8,103
35,896
27,793
St. Louis
2,605 loans and investments went up by 129.6 mil15,366
12,761
Minneapolis12,280
32,580
20,300
Kansas City.
4,487 lions from 9,897.2 to 10,026.8 millions, largely
22,762
18,275
Dallas
48,320
60,511
12,191
San Francisco
at the banks in central reserve cities. Total
805,704
95,870
901,574
Total bills
loans and investments increased by 583.7
99,463
Total United States securities 123,194 222,657
4,902
1,466
3,436
Other earning assets
millions, nearly 70 per cent of which represents
2,127
Total investments held 1,029,670 1,031,797
the increase for the banks in New York City.
Reserves of all reporting banks (held with
Weekly statements received from member the Federal Reserve Banks) show a slight
banks located in about 100 decrease for the period from 1,147.3 to 1,139.4
l e a d i n c i t i e s of t h e c o u n t r
m S S bSte*
§
y millions, a larger decrease in reserves of over
indicate considerable expansion 25 millions reported by the banks in New York
in loans and investments between January 18 City being offset largely by increases for the
and February 15 of the present year. Owing banks in Chicago and in other reserve cities.
to accession of new members and the more Cash in vault is seen to have decreased about
thorough canvass of the field by the Federal 27.4 millions, the reserve city banks reporting
Reserve Banks, the number of banks reporting the largest losses of cash.
Total net demand deposits show a gain of
about the middle of February is by 15 larger
about
184.3 millions and total time deposits a
than for January 18, though the difference
gain
of
55.9 millions. For the New York City
between the total of 662 and 679 reporting
banks
corresponding
increases of 103.8 and 10.9
banks is not large enough to invalidate conmillions
are
shown.
Government deposits at
clusions based upon comparison of the figures.
all
reporting
banks
show
a gain from 354.7 to
During the period, the Government placed
621.9
millions,
while
for
the New York City
with the banks of the country two issues of
banks
a
gain
from
137.9
to 404 millions is
400 millions and 500 millions of certificates of
reported.
indebtedness of the January 22 and February 8
The ratio of combined cash and reserve to
issues in anticipation of the third Liberty loan,
total
deposits, including Government deposits,
beside completing the marketing of 491 millions
of
all
reporting banks has declined from 14.9
of certificates in anticipation of the proceeds of
to
13.6
per cent, while for the New York City
taxes due in June. The result is seen in an
banks
this
ratio declined from 16.1 to 14*3
increase of United States securities owned by
per
cent.
Excess
reserves, in the calculation
the reporting banks from 660.8 to 1,135.2
of
which
no
account
is taken of Government
millions, the totals excluding about 275 mildeposits,
declined
from
$90,864,000 on January
lions of United States bonds with circula18
to
$61,639,000
on
February 15. For the
tion privilege deposited with the Treasurer
New
York
City
banks
the amount of excess
of the United States. Out of a total increase
reserves
shows
a
decline
between
the two dates
of 474.4 millions for all reporting banks, banks
from
$69,687,000
to
$29,420,000.
in the central reserve cities are credited with




156

FEDEBAL BESERVE BULLETIN.

Further progress in connection with the
development of machinery for
ital ?ssnes.° °aP" ^e control of new capital issues
has been made during the past
month. The Capital Issues Committee of the
Federal Reserve Board has effected the formation of 12 local committees organized for the
purpose of assisting the central committee in
passing upon applications originating in their
respective districts. In each Federal Reserve
district there has been established a subcommittee on capital issues, with headquarters at
the Federal Reserve Bank of the district, and
special local committees at Federal Reserve
Bank branch points. The subcommittee consists of the Federal Reserve agent, as chairman, the governor of the Federal Reserve
Bank, as vice chairman, and three other members chosen because of special qualifications for
the work of the committee. Bankers and others
having broad experience in the financing of
municipal, manufacturing, or public utilities
securities have been invited to become affiliated
with the subcommittee as an auxiliary body,
one or more members of which from time to
time, as their advice and experience may be
useful or helpful, will be asked to join with the
subcommittee in investigating and reporting
upon specific applications. No committee
member will give advice or report upon any
application in which he has personal interest,
either direct or indirect. Members of these
committees have undertaken this duty as a
patriotic service to the country. Applications
for the approval of security issues are expected
to be made to the Capital Issues Committee at
Washington, either direct or through the agency
of a local committee, in the manner announced
by the statement to the press on March 2
printed on another page of the Bulletin.
During the month the Board's Capital Issues
Committee, in conjunction with its Advisory
Committee, had several important conferences.
Of these, one was held in conjunction with
Mr. L. W. Page, Director of the Federal
Bureau of Public Roads, of the Department of Agriculture, with members of the
Executive Committee of the American Asso-




MARCH 1,

1918.

ciation of State Highway Officials, which took
place on February 14. The main topic of
discussion was the best method of curtailing
unnecessary expenditures in connection with
the construction of new highways. Complete
understanding as to the policy to be pursued
was reached. In general, it may be stated
that the Capital Issues Committee will favor
only construction of such new roads as are
undoubtedly of very great economic or military
importance at this time.
On February 8 a conference was held with
representatives of the Electric Railways Board,
the American Electric Railway Association,
the National Electric Street Railway Associaciation, the National Gas Association, the
American Gas Institute, the National Electric
Light Association, and representatives of
various gas and electric companies who presented to the committees the difficulties faced
by the corporations represented by them owing
to the present abnormal condition of the in-?
vestment market and pointed out the necessity of securing the committee's assistance in
facilitating renewals of obligations falling due
at this time. The policy adopted by the
committee with respect to renewals is set forth
in its statement to the press of February 17,
appearing in this issue of the Bulletin. The
question of securing economies in operation
was also discussed at a conference held on
February 28 with the Special War Committee
of the National Association of Railway and
Utilities Commissioners, representing the public
service commissions of the United States.
The commissioners expressed themselves as
in full sympathy with and guided by the same
motives that were prompting the action of
the committee. The foundation has been
laid for fruitful cooperation between the
representatives of the State and municipal
interests from the national point of view.
Suitable measures are in course of preparation and it is expected that results will be announced shortly.
On February 27 a conference took place with
the chairmen of the subcommittees on capital
issues, who had come to Washington for a

MARCH 1,

FEDEKAL KESEBVE BULLETIN.

1918.

Federal Reserve Agents' conference to be
held with the Board. At this conference, the
entire problem in its various phases was
discussed freely and a very helpful exchange
of views was secured.
The thought that guided all these conferences may best be summed up as expressed
in a letter written by Secretary McAdoo, in
which he said:
"We are engaged in a great war, a war
in which the very safety of America is seriously imperiled. We can not win this war
unless every resource of the Nation is carefully husbanded and used with the utmost intelligence. The great financial operations of
the Government, greater than those ever undertaken by any Government in the history of
civilization, make it essential that every unnecessary expenditure by the Government, by
the States and municipalities, and by private
corporations and individuals be avoided while
the war is in progress. Unless this is done it
will be impossible for the people of the United
States to furnish the money which the Government must have to support its soldiers and sailors who are shedding their blood for us upon
the battlefields."
The committee announced on February 24
that, in dealing with municipal issues, it will
consider applications amounting to $100,000
or more, reducing thereby its previous limit of
$250,000 on such issues. The limit for applications of other classes still stands at $500,000.
The development of the War Finance Corporation bill, to which reference

Was made in the last issue f the

°

Federal Reserve Bulletin, has
made further progress during the month. The
Secretary of the Treasury, Governor Harding,
and Vice Governor Warburg have appeared before the appropriate committees of Congress
and have there discussed the measures, the bill
itself being reported by the Senate Finance
Committee on February 22.
In a statement before the Senate Finance
Committee the Secretary of the Treasury thus
summed up the purposes of the proposed bill:
44072—18




2

157

" The bill contemplates that the War Finance
Corporation shall lend money to banks, both
national and State, which are making loans to
enterprises conducted by persons, firms, or corporations producing materials or supplies, or
doing anything else which is necessary for or
contributory to the war. If a bank, for
instance, should loan money, we will say, to
a munitions company and take the company's
six months7 note with the company's bond as
collateral security, that note would not be eligible for rediscount in the Federal Reserve
Banks; but the War Finance Corporation in
such circumstances could advance to the bank
against the note of the munitions company, so
secured with that bank's indorsement on it, 75
per cent of the face of the note.
" I t is important that appropriate provision
be made by law, so that, for the duration of the
war, funds available for investment in securities
shall be effectively and economically used to
supply the financial requirements of the Government and of those industries whose operations are necessary or contributory to the war.
The ordinary flow of capital, which in normal
times is left free to seek its own investment,
should during the war be so directed and conserved that these requirements shall be taken
care of before funds shall be invested either in
new enterprises or for the expansion of such
old enterprises as are not necessary or contributory to the prosecution of the war. In these
critical times funds available for investment
must not be dissipated on miscellaneous capital
expenditures which, however useful or desirable
in normal times, will not now aid in the success
of the war. It is not so much a question of
money as a question of labor and materials.
It is essential that the demand for labor and
materials for industries which are not contributory to the prosecution of the war
should be kept within bounds, so that the
war needs shall be first provided for. The
test must be whether the proposed expenditure will strengthen the industrial and
military structure of the country for the purposes of the war."

158

FEDEKAL RESEBVE BULLETIN.

Proposals to have Federal Reserve Banks
engage actively in foreign-exchan e
S business at the present
time, or to provide some other
governmental mechanism for furnishing foreign exchange, have been under consideration
during the past month, and the Board has
taken the view that such steps are not now
advisable. It is further the opinion of the
Board that until the present abnormal conditions disappear it can not be determined
precisely what machinery will be required with
reference to the foreign exchange problem
beyond the facilities provided by existing
banking arrangements. In times of peace the
foreign exchange business is highly competitive.
Ordinarily in dealings between countries having a definitely established monetary standard
there are no violent fluctuations in foreign
exchange rates, the controlling factors in
adjusting balances being the ruling interest
rates and the cost of shipping gold, the higher
value of money attracting foreign funds into
the debtor country, for temporary or permanent investment, thereby obviating the necessity of sending gold. Just now, however,
with the world at war, the foreign exchange
business is very much unsettled and is attended
by great risks because freedom in the operation
of practically all the forces normally regulating
foreign exchange fluctuations has been eliminated. Embargoes on gold in force in practically all leading countries make it impossible
to stabilize exchange rates in the ordinary
manner through gold shipments, shipments of
goods have been restricted to the minimum,
and a free exchange of securities is hampered
by apprehension on the part of the banks and
the people, by political considerations, and by the
wish of the investing classes to keep their savings
at the disposal of their respective governments.
It has been urged that American dollar
exchange should not be at a discount in any
country with which trade relations result in
balances in favor of the United States, but it
should be remembered that England, France,
and Italy are buying heavily in neutral countries, and Great Britain is sustaining the price




MARCH 1,

1918.

of sterling in New York by purchasing sterling
bills in the New York market on a basis of
4-76-T6 for cables. This rate is about 2 per
cent below the normal parity. It is obvious
that with the rates of exchange between
London and New York fairly well " stabilized,"
dollar exchange in neutral countries must move
in harmony with the rates of exchange of
sterling in neutral countries.
The discount to which the American dollar is
subject in Spanish-speaking countries has been
cited as the cause of loss to the United States.
When, however, we recall that this country is
selling to Spain more goods than it is buying
from that country, a different conclusion may
be reached. While it may be felt that the
prices on imported articles are increased
through the rise of foreign exchange rates,
such as within recent months has been characteristic of our trade with Spain, Switzerland,
Holland, Denmark, Sweden, and Norway, it
must be conceded that if such be the case our
export trade with these countries may profit
in a corresponding way; and in many cases
our exports exceed our imports. Consideration must be given also to the kinds and quantities of goods which enter into the establishment of the balance. For instance, comparative quotations in the Barcelona market, taken
from the Espana Economica y Financiera, show
that while in June, 1914, a 500-pound bale of
American middling fair cotton could buy in
Barcelona 126 gallons of Andalusian superior
olive oil, it would buy 163 gallons of the same
grade of oil in the same market early in November, 1917. Our cotton produced for us,
therefore, a relatively larger purchasing power
than the sale of an equal amount would have
yielded in former years. It resulted in a
greater credit balance than in the past, and
this balance, to the extent that it was not
settled in goods, was paid us by Spain in foreign exchanges, such as sterling and francs,
which we purchased at a discount larger than
that affecting the dollar, so that the nominal
loss on the American dollar did not hurt our
purchasing power in trade with Spain or the
interests of our country as a whole.

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

The Board does not regard the present as an
opportune time to direct Federal Reserve Banks
to engage in a general foreign exchange business when there are so many international
questions connected with an attempt to regulate foreign exchange that negotiations relating to such settlements must necessarily be
conducted by the Government. This method
has been employed in the successful rupee
arrangements recently concluded with the
Indian Government and in the arrangement
with Argentina recently perfected.
Other negotiations intended to accomplish a
like purpose are understood to be in progress.
They have for their object the creation of exchange facilities, without involving heavy shipments of gold, and these arrangements are
being perfected as rapidly as foreign Governments will agree to them.
Reports of gold movements for the four
weeks ending February 15, for
of t h e first t i m e s i n c e Jul
y> 1917 >
indicate a net inward gold
movement of about $99,000, compared with
net outward movements of $1,932,000 for the
week ending January 18 of the present year,
and of $116,059,000 since July 13 of the past
year. Gold imports for the four weeks totaling $3,103j000 came chiefly from Canada, Mexico, Central and South American countries,
while gold exports totaling $2,977,000 were
consigned chiefly to Mexico, Venezuela, and
Central America.
The gain in the country's stock of gold since
August 1, 1914, was $1,050,911,000, as may be
be seen from the following exhibit:
[000 omitted.]
Excess of

Imports. Exports. imports
over
exports.

Aug. 1 to Dee. 31,1914.,
Jan. 1 to Dec. 31,1915...
Jan. 1 to Dec. 31,1916..,
Jan. 1 to Dee. 31,1917...
Jan. 1 to Feb. 15,1918..
Total




$23,253 $104,972
451,955
31,426
685,745 155,793
553 713 372,171
5,361
4,754
1,720,027

* Excess of exports over imports.

669,116

i $81,719
420,529
529,952
181,542
607
1,050,911

159

A system of control of operations in foreign
exchange has now been defi" n i t e l y established, restrictions
being imposed upon the exchange business and upon the sale of securities
for foreign account. This is the outcome of
the Executive order of the President signed
on January 18, which became effective on
Tuesday, February 5, 1918. Instructions to
dealers, covering the business of buying, selling, or dealing in foreign exchange or securities for or through foreign correspondents
and of carrying accounts or securities With
foreign correspondents were distributed and
put into operation not later than February
15. The order of the President expressly
prohibits all transactions in foreign exchange,
export or earmarking of gold or silver coin,
or currency, transfers of credit in any form
unless wholly within the United States, and
transfers of credit in any form unless wholly
within the United States, and transfers of
evidences of indebtedness or ownership of
property between the United States and any
foreign country. These restrictions apply regardless of the status of such foreign countries or their residents, whether enemy, ally
of an enemy, or otherwise. No transfers, can
be made by any person living within the
United States, except under the regulations
of the Board.
The purpose of the order of the President
being to stop transactions originating in the
United States, which result in aid or profit to
enemies, the Board has emphasized the fact
that it is important that all those having any
foreign transactions of any nature investigate
and ascertain whether the business in which
they are engaged is such as to require them to
obtain registration certificates. In general,
"persons," as defined under the Executive
order, who are required to make application
for registration certificates, are those who
carry on a foreign exchange business, such as
banks, bankers, and others, those who carry
accounts abroad, such as certain classes of
merchants, industrial houses, and others, and

160

FEDEBAL EESBBVE BULLETIN.

those who carry accounts in the United States
for foreign interests, and those who hold or
deal in securities for foreign interests, such as
stock exchange brokers and others. Banks
and bankers or others who buy and sell foreign exchange for account of their customers
through domestic correspondents must make
application for registration certificates through
the Federal Keserve Banks of their districts,
but reports required by the Federal Keserve
Board must be made through their domestic
correspondents.
The regular quarterly session of the Federal
Advisory Council was held in
theCmonthnCeSOf Washington on February 1819, a joint meeting being held
with the Federal Reserve Board on the 18th,
while on the morning of the 19th the Council
and the Board conferred with the Secretary of
the Treasury.
Discount questions received particular attention, with special reference to forthcoming national financing, which was also the object of
the conference with the Secretary of the Treasury already referred to. Amendments to the
Federal Reserve Act proposed by the Board
likewise had the attention of the Council.
There were present Messrs. Wing (Boston),
Rue (Philadelphia), Rowe (Cincinnati), Norwood (Greenville), Lyerly (Chattanooga),Watts
(St. Louis), Mitchell (Minneapolis), Wilmot
(Austin), and Fleishhacker (San Francisco).
In the absence of President Forgan, due to illness, Mr. Rue occupied the chair.
On February 26-March 1 there was held a
conference between the Federal Reserve Board
and the Federal Reserve Agents, which was devoted to consideration of the internal problems
of the system. Special attention was given to
the functions of Federal Reserve Agents and
their assistants, and to the best methods of organizing the auditing departments of Federal
Reserve Banks. At sessions with the Capital
Issues Committee of the Federal Reserve Board
the Federal Reserve Agents considered matters
relating to the new organizations in the several
districts created for the purpose of regulating
local issues of securities. Liberty loan matters
were considered in conferences with representa-




MARCH 1,

1918.

tives of the Treasury Department. At a final
conference with the Federal Reserve Board the
work of the meetings were summarized and a
general interchange of opinions occurred.
Those present were Messrs. Curtiss (Boston),
Jay (New York), Austin (Philadelphia), Wills
(Cleveland), Hardy (Richmond), Wellborn
(Atlanta), Heath (Chicago), Rich (Minneapolis), Martin (St. Louis), Ramsey (Kansas
City), and Perrin (San Francisco).
Interest on Deposits.
Gov. Harding, on February 26, in discussing
the movement to increase interest rates on
bank deposits, made the following statement:
"The Federal Reserve Board regrets exceedingly to learn of the disposition evidenced
by banks in various sections of the country to
increase rates of interest allowed on deposits.
It is unfortunate that any bank or group of
banks should undertake, especially at the
present time, to increase deposits by offering
unusual inducements in the way oi interest,
and it follows that any aggressive steps winch
may be taken by any bank to increase its deposits at the expense of other banks will
doubtless be met by protective measures on
the part of banks whose business is subjected
to attack.
"The Board does not believe that the inducement of a higher rate of interest on deposits will bring any more real money into the
banks, and it feels that the result of a general
increase in the interest rate on deposits will be
either an added burden to borrowers in the
shape of higher interest and discount rates, or
the bringing about of conditions which would
put the banking business upon an unprofitable
basis, thereby weakening our entire banking
structure.
"The loans and deposits of banks have increased enormously during the past three
years, and it would seem to be the part of
wisdom for the banks to undertake to place
themselves in a position to continue to aid the
Government in its financial operations by curtailing unnecessary credits and by encouraging
their depositors to buy Treasury certificates
and Government bonds, even though there be
be some shrinkage in their deposits as a consequence. Banks should remember that when
deposits are reduced reserves are released.
Reckless competition for deposits supported
by high interest rates will tend to force the

MARCH 1, 1918.

Government to pay higher rates, thereby imposing additional burdens on the people; and
any forced and artificial expansion of banking
credits will promote rather than check inflationary tendencies, which should be guarded
against at the present time.
" There does not seem to be any demand on
the part of depositors for increased rates of
interest on their balances, and the Board
wishes it understood that it does not favor
any movement to increase these rates and that
it will do all in its power to discourage it.
It sincerely hopes that those banks which have
unduly advanced their rates will consider well
the consequences involved and that they will,
as far as possible, do their part toward restoring rates to the former level."
New Issues of Treasury Certificates.
The following statements were issued by the
Treasury Department on February 7 and 21:
FEBRUARY 7,

1918.

Secretary McAdoo to-day announced that
he had offered through the Federal Reserve
Banks an issue of $500,000,000 of certificates
of indebtedness to mature on May 9,1918, to be
offered at par and bearing 4 per cent interest
from February 8, 1918.
In connection with this offer, Secretary
McAdoo addressed a telegram to all national
banks, State banks, and trust companies,
approximately 25,000 in number, inviting
each, as a matter of patriotic duty, to set aside
each week about 1 per cent of its gross resources and place that amount at the disposal
of the Government by investing it in certificates of indebtedness as the Secretary will
offer them from time to time.
It is expected that these offers will be made
at intervals of approximately two weeks. It
is contemplated, if each bank will do its share,
that as a maximum 10 per cent of the gross
resources of the banks, or approximately
$3,000,000,000, will he raised between now
and the next Liberty loan, provided that it is
necessary to call upon the banks to that
extent.
The telegram of the Secretary follows:
FEBRUARY 6,

1918.

Between now and the time for making the next Liberty
loan I shall offer for subscription Treasury certificates of
indebtedness in amounts of $500,000,000 or more every
two weeks. I desire to postpone the next Liberty loan
issue until conditions will insure a wide distribution of the
bonds throughout the country. In order successfully to
carry through this program and to provide for the expendi-




161

FEDERAL RESERVE BULLETIN.

tures for the military operations of the United States and
the allies, I must have the whole-hearted cooperation of the
bankers of the United States, and to that end I request the
board of directors or trustees of each bank and trust company to reserve each week out of its loanable funds for the
use of the Government of the United States, about 1 per
cent of the gross resources of their institution not to exceed
in the aggregate 10 per cent and to invest that amount in
Treasury certificates of indebtedness. The exact amount,
interest rate, date, and maturity (not exceeding 90 days)
of each issue of certificates will be announced from time
to time by me through the Federal Reserve Banks. There
is a steady growth in the movement for economy. Banks
should be able, by participating in the campaign for
economy, which means economy of credit, as well as of
expenditure, to teach their customers to save and accumulate the means to buy the Government's certificates and
bonds. By this method, a distribution of Treasury certificates of indebtedness should become possible which
will relieve the subscribing banks of at least a part of their
purchases and furnish the means of making payments for
the next issue of Liberty bonds without undue strain.
The needs of the Government for the war are great, and
imperative. The resources of the country are ample to
meet these needs, if every bank will do its share. I
know that once it is realized that by complete cooperation
all around and by everyone doing his part, this vital and
patriotic service can be performed, every bank will do its
share. We are approaching a critical test on the battle
fronts in Europe. America's sons are now actually shedding their blood in the trenches. If the banks, which are
the first line of financial defense, fail to support the
Government fully in its necessary operations, we shall
imperil America's Army and America's safety. I know
that I have only to state the case to command the support
of every patriotic bank and banker. This is a supreme
duty of patriotism. May I count upon you to do your
part and to telegraph me immediately at my expense that
you will? I am sending this telegram to every bank and
trust company in the United States.
(Signed)

W. G. MCADOO.

In anticipation of the first and second
Liberty loans, the Secretary placed $3,358,000,000 of certificates of indebtedness, which
were liquidated by the subsequent Liberty
bonds when issued.
In sending this telegram the Secretary hopes
to include all banks of the country, a great
many of which it has not been possible to
reach heretofore, thus broadening the basis of
the Treasury's operations.
Subscription books for the $500,000,000
worth of Treasury certificates offered to-day
will close at the close of business Friday,
February 15, 1918.
Allotments in full will be made in the order
the subscriptions are received in the several
districts. Payment at par and accrued interest
for certificates allotted must be made on and
after February 8, 1918, and on or before February 15, 1918, to the Federal Reserve Bank
through which subscription may have been
made. The right is reserved to reject any
subscription and to allot less than the amount
of certificates applied for, and to close the
subscriptions at any time without notice.

162

FEDERAL BESEEVE BULLETIN,

The certificates will be in denominations of
$1,000, $5,000, $10,000, and $100,000.
Certificates will be exempt both as to
principal and interest from all taxation now
or hereafter imposed by the United States, any
State, or any of the possessions of the United
States, or by any local taxing authority,
except (a) estate and inheritance taxes and
(b) graduated additional income taxes, commonly known as surtaxes and excess profits
and war-profits taxes now or hereafter imposed
by the United States upon the income or
profits of individuals, partnerships, associations, or corporations. The interest on an
amount of bonds and certificates authorized
in said act the principal of which does not
exceed in the aggregate $5,000, owned by any
individual, partnership, association, or corporation shall be exempt from the taxes provided
for in clause (b) above.
Upon 10 days7 public notice given in such
'manner as may be determined by the Secretary
of the Treasury this series of $500,000,000 may
be redeemed as a whole at par and accrued
interest on or after any date occurring before
maturity of the certificates set for the payment
of the first installment of the subscription
price of any bonds offered for subscription by
the United States hereafter and before the
maturity of the certificate.
Certificates of this series whether or not
called for redemption will be accepted at par,
with adjustment of accrued interest, if tendered on such installment date in payment on
the subscription price then payable of any
such bonds subscribed for by and allotted to
holders of such certificates. The certificates
of this series will not be accepted in payment
of taxes.
Interim receipts may be issued pending delivery of the definitive certificates. Qualified
depositaries will be permitted to make payment by credit for certificates allotted to them
for themselves and their customers up to an
amount for which each shall have been qualified in excess of existing deposits when so
notified by Federal Reserve Banks.
FEBRUARY 21,

1918.

Secretary McAdoo to-day authorized the
following announcement:
The entire issue of $500,000,000 United
States Treasury certificates of indebtedness
dated February 8 was subscribed. This was
due to the patriotic action of the larger banks
in financial centers, notably New York, in




MAECH 1,

1918.

taking more than their share of the issue and
thus making up the deficiency which arose
from the failure of other banks to respond to
the request which was made of them. Only
two districts, New York and Kansas City,
exceeded their allotment, and one, Minneapolis,
equaled its allotment. The amount of subscriptions from the country at large was distinctly disappointing. This may be partly
because some banks had only a short interval
to accumulate moneys for investment in
Treasury certificates and partly because some
subscribed on the basis of 1 per cent of their
resources, not understanding that the request
to set aside 1 per cent a week carried with it
the request to subscribe for an amount equal
to at least 2 per cent of their resources for each
biweekly issue of certificates. No doubt this
error will not be repeated, and the banks will
subscribe at least 2 per cent of their resources
for the next issue. It should be borne in mind>
furthermore, that the program of setting aside
1 per cent a week and subscribing 2 per cent
for each issue is a minimum program; that
there must be some banks and trust companies
which can not meet even this program and
others which can do much more than the minimum. Those banks and trust companies that
can should, of course, take certificates in excess
of the indicated minimum.
The extent of the response to the telegram
sent to the banks and trust companies oi the
United States under date of February 6 is
shown by the fact that the number of subscribers for certificates of the issue dated
February 8 was double the number of subscribers for certificates of the preceding issue
dated January 22. A telegram is being sent
to every bank and trust company in the continental United States which has not as yetresponded to the telegram of February 6
asking again for a reply. The request to all
the banks and trust companies will be followed
up by the Treasury Department and through
the organizations of the Federal Reserve
Banks. The banks and trust companies - of
the country which have not responded are
earnestly requested to send in their subscriptions for the next issue to the full extent of
their ability, so that the number of subscribers
for this coming issue shall be again doubled,
and approximately every bank and trust
company in the United States shall be upon
the roll. This is a patriotic duty which is set
for the banks and trust companies of the
Nation. I hope that they will meet the requirements of the situation.

MARCH i ;

1918.

FEDERAL BJESEUVE BULLETIN.

The next issue of Treasury certificates will
bear interest at the rate of 4^ per cent per
annum. There will be no further increase in
the interest rate in connection with the issue
of certificates in anticipation of the third
Liberty loan. In order further to popularize
these issues of certificates, they will be issued
in denominations as low as $500.

Bills to Increase Comptroller's Power.
A series of 18 bills to increase the safety of
national banks were introduced in the Senate
on February 18 by Senator Owen. The bills
are based on recommendations made by the
Comptroller of the Currency in his annual report to Congress. They are numbered S. 3892
to 3909, inclusive, and were referred to the
Banking and Currency Committee. They provide in substance as follows:
3892. Amends section 5200 so as to limit the
amount of bills of exchange and commercial or
business paper that may be discounted for one
person.
3893. Authorizes the Comptroller, with the
approval of the Secretary of the Treasury, in
certain cases, to require removal of officers and
to institute suit for losses resulting from violations of law.
3894. Requires directors to qualify and file
oath of office within 30 days after election.
3895. Regulates the allowance of overdrafts.
3896. Requires building associations in the
District of Columbia to obtain authority from
the Comptroller before commencing business.
3897. Requires savings banks and trust
companies to obtain approval of Comptroller
before transacting business in the District of
Columbia.
3898. Requires cashiers and other officers to
give bond for faithful performance of duties
and prohibits erasures on books of association.
3899. Repeals that part of act of July 12,
1882, which requires national banks extending
their corporate existence to provide for immediate redemption of circulation outstanding.
3900. Permits national-bank notes to be
issued with engraved signatures of officers.




163

3901. Authorizes national banks to establish
branches under certain conditions.
3902. Makes it a misdemeanor to obtain
loans from national banks on false statements
willfully made.
3903. Limits amount that banks may invest
in bank buildings to the amount of paid-up
capital stock.
3904. Amends section 5222 so as to require
banks going into liquidation to provide for
redemption of circulation outstanding within
30 days.
3905. Extends criminal penalties of section
5209 so as to include receivers of national
banks.
3906. Requires national banks to keep stock
ledger.
3907. Provides for consolidation of national
banks without the liquidation of one of the
banks involved.
3908. Requires national banks to increase
capital stock when deposits amount to more
than ten times such capital stock.
3909. Provides for guarantee by the United
States of deposits of $5,000 or less.
3910. Authorizes suit by United States in
case of usurious transactions by national banks.
3911. Authorizes national banks to subscribe
to the American National Red Cross.
Income Tax on Deposits of Nonresident Aliens.
The Secretary of the Treasury on February
6 transmitted the following letter to the Governor of the Federal Reserve Board:
SIR: I have the honor to acknowledge
receipt of your letter dated January 9, 1918,
with reference to a ruling of the Internal Revenue Bureau requiring banks located within the
United States to withhold income tax upon
interest paid on deposits to nonresident alien
individuals and corporations. The ruling in
question required such banks to withhold the
normal tax of 2 per cent upon interest paid on
deposits to nonresident alien individuals and
the normal tax of 2 per cent and the war normal tax of 4 per cent upon such interest paid
to nonresident alien corporations "not engaged in business or trade within the United
States and not having any office or place of
business therein."

164

So far as the ruling referred to requires
banks to withhold the income tax upon interest paid on deposits to nonresident alien corporations, it is perhaps an extension of the law
beyond its necessary requirements. In view,
therefore, of the considerations suggested by
you, it has been concluded to adopt a somewhat
more conservative construction and to modify
the Treasury decision embodying the ruling
by excluding from its application such interest
paid by banks to nonresident alien corporations. There is, of course, no means of relieving
such nonresident alien corporations of their
obligations to pay the income tax imposed upon
them by statute.
Under this modified construction of the law
the requirement as to withholding interest
upon bank deposits is limited to the normal
tax of 2 per cent upon interest paid to nonresident alien individuals.
Such withholding
seems beyond any doubt to be required by the
terms of the act.
Respectfully,
W. G. MCADOO,

Secretary,
Relation of Liberty Loan to the War-Savings
Plan.
[Statement by John S. Drum, State Director of War Savings for California (northern) before Liberty loan conference in San Francisco
on Jan. 16, 1918.]

In calling for public subscriptions to Government securities issued in aid of the war,
the Treasury Department has not definitely
established the relation which exists between
the two types of securities, but has promulgated plans which contemplate that during
at least a part of the year both types will be
on sale at the same time.
The very nature of the situation precludes
any idea of competition between the Libertyloan committees and the war savings committees. At the same time it is advisable to
analyze carefully the relationship between the
two campaigns, which I shall attempt to do
under the headings of (a) objects, (6) methods,
and (c) results.
OBJECTS.

Of course, the primary object of the Liberty
loan campaign is to obtain vast credits needed
by the Government for the prosecution of
the war. Credits in the amounts necessary
can only be obtained through large subscriptions to Government loans by the great financial, commercial, and industrial interests of




MARCH 1, 1918.

FEDERAL RESEKVE BULLETIN.

the country acting together, and utilizing the
resources of the Federal Reserve banking
system. It is barely conceivable that the
war might be financed entirely in this manner,
but the results, to be discussed later, would
not be satisfactory from either an economic
or a political point of view.
The secondary object of the Liberty loan
campaign is to stimulate the patriotism of the
people by appealing to everyone to invest in
the future of the country to the extent of his
ability and at the same time relieve the
pressure upon the financial, commercial, and
industrial interests which must in any event
subscribe the bulk of the loan.
The primary object of the war savings plan,
on the other hand, is not to obtain credits for
the Government, but to stimulate patriotism
by making it possible for everyone to have a
direct financial interest in the outcome of the
war. Equally important is the object of
educating all of the people to save on nonessentials and by reducing their spending to release
labor and materials needed by the Government for war purposes, A third object is to
encourage the practice of thrift and saying,
to the end that these may become a national
habit and lay the foundation for our economic
security after the war.
Finally, there is the practical object of
raising $2,000,000,000 for war purposes, not
one cent of which contributes to an increase
in the tremendous inflation which results from
the flotation of a credit loan as distinguished
from a strictly thrift loan.
To summarize the objects, then, we find
that on the financial side the war could go on
for a time at least without the war savings plan,
but on the political side it is the policy of the
Government to attempt by every means
possible to obtain the financial help of all of
its citizens, and on the economic side it may
be stated as axiomatic that our war financing
will be sound exactly in proportion as we accomplish it without undue inflation.
METHODS.

The method of the Liberty loan campaign
is a spectacular drive; the method of the warsavings campaign is a broad educational movement involving minute organization reaching
into every home, however poor. The Libertyloan campaign is directed especially to amounts
subscribed; the effort of the war-savings campaign is directed especially to numbers of
subscribers. The one is designed, as I have

BESEBVE BULLETIN.

1, 1918.

said, to raise credits regardless of the manner;
the other is designed to bring home to every
man, woman, and child enjoying the benefits of
American life a realization of the obligations
of citizenship and how each may help through
saving, even in the smallest amounts.
This is not to say that there is no overlapping, for the Liberty-loan campaign is largely
an appeal to patriotism. The same arguments can be made for the purchase of both
types of securities. The money goes to the
same uses. The only difference is that Liberty bonds may be subscribed in large amounts
and on a credit basis, while war-savings certificates can be purchased in amounts not exceeding $1,000 for any purchaser, and they can not
be used as collateral.
To summarize methods, then, the Liberty
loan campaign is primarily a drive for subscriptions; the war-savings campaign is primarily an educational campaign to teach the
people why everyone must help finance the
war, as a concrete patriotic duty, by refraining from wasteful and needless spending and
loaning the money saved to the Government.
RESULTS.

165

done. The bonds that find their way back
into the market must be absorbed, and in practice are absorbed, by the financial, commercial,
and industrial interests which were intended
to be relieved by the original wide placement
or distribution.
Moreover, it is plain that the subscriber
whose bond does not "stay put." is doing absolutely nothing to n help the Government, for
when he " spends his bond, he is competing
with the Government which his subscription
was supposed to help. If I do without a suit
of clothes which I do not need and put the
money I saved in to a Liberty bond, I am giving the Government the first call upon the
wool on the sheep's back and all of the productive factors between the wool and me. But if,
I later trade the bond for the suit, I have undone all the good arising from the first transaction.
The war savings plan is designed to encourage investing and holding. A war savings certificate is not negotiable, but as an offset it is
made redeemable at any time without loss to
the investor. The campaign will emphasize
the vital importance of saving to invest, primarily because saving reduces the individual's
demands upon the limited supply of labor and
materials available for war purposes, and, secondarily, because the thrift wealth or savings
of the people will be our chief economic security after the war.
Ten per cent of the people bought Liberty
bonds under the most favorable conditions for
securing wide distribution. At least 30 per
cent are expected to invest in war savings
stamps during the coming year. Just as the
Liberty loan campaign is far more important
financially, it is far less important politically,
where the main consideration is numbers rather
than amounts.
To summarize results, then, the Liberty loan
campaign produces money, but it must be recognized that only 10 per cent of the people
have been reached. On the economic side, it
must be recognized that the Liberty loan campaigns make for inflation, whereas the war savings campaign does not. On the political side,
the war savings campaign will be a failure
unless it reaches three times as many people as
have been reached by the Liberty loan committees.

The overshadowing result of the Liberty loan
campaign is the immediate creation of ample
credits with which to carry on the war. This
result brings with it, however, the inevitable
inflation of credits, which reacts upon our
whole economic life and contributes largely to
the increase in prices. Inflation is a necessary
evil; the effort of the Treasury Department is
to reduce it to a minimum. Hence the campaign to obtain small subscriptions, either
(a) from existing wealth, such as money on deposit in savings banks, which is already represented by funded investments which are placed
in jeopardy by the withdrawal of deposits, or
(6) ori installment contracts involving tremendous detail labor for the banks and employers
who advance the money and carry the subscribers during the period of their payments.
It can not be overlooked that thousands of
subscribers to Liberty bonds, on whom the
Liberty loan committees expend time , arid
energy during the campaigns, do not retain the
bonds they buy but "spend" them exactly as
currency in the satisfaction of personal wants
which it has not been the effort of the Liberty
CONCLUSION.
bond campaigns to curtail. It is obvious that
whenever a subscriber parts with his bond, exIt would seem that both campaigns have an
cept for reasons of necessity, the work of the important part to play, one dovetailing into
Liberty loan campaign is to that extent un- the other. Briefly stated, the object of the
44072—18




3

166

FEDEKAL BESEKVE BULLETIN,

Government is to finance the war promptly;
with a minimum of inflation and a maximum
of subscriptions. The Liberty bond campaign
is addressed primarily to obtaining the necessary credits, regardless of consequences entailed to our financial system. The primary
object of the war savings campaign is to secure
the greatest possible number of small individual investments, representing thrift wealth
solely, and without inflation.
Our appeal to patriotism is the same. The
investor in one type of security is helping exactly the same as the investor of a similar
amount in the other type of security. Experience of the first two Liberty loans has shown
that what is needed most is propaganda addressed directly to the individual, not for a
brief period but as a part of every day routine.
This is the object "of the war savings campaign. It is a propaganda of patriotism, and
m order that it may be effective, the Government has offered special inducements to the
people to save and invest small amounts, in
order to keep the evils of inflation at a minimum and to awaken the patriotic interest of
the whole public.
If the war sayings campaign is successful,
the movement will be the most active feeder
for successive Liberty loan drives. If we can
impress upon the people the vital necessity of
saving, larger amounts will be available for
subscriptions to future Liberty loans, and
without inflation.
We hope to educate the public to an understanding of why Government securities should
not be sold through the emphasis we shall place
upon the reasons why no one should redeem his
war savings certificates except as a matter of
extreme necessity.
On the other hand, the Liberty loan campaign will be an effective means, through its
publicity and advertising, of bringing home to
the people the importance of everyone doing
his part, whether his ability is measured by a
Liberty loan subscription of $50,000 or the
purchase of a single war savings certificate
stamp.
Membership of New Jersey Institutions.
The following act passed by the New Jersey
Legislature, authorizing State banks and trust
companies to become members of the Federal
Reserve system and to carry such reserves as




MARCH 1,

1918.

are required of member banks, is reprinted
here for convenience of reference:
A supplement to an act entitled "An act to authorize any trust company and State bank heretofore or hereafter incorporated under the
laws of this State to become a member of the Federal Reserve Bank,
organized or to be organized in the Federal Reserve district in which
such trust company or State bank is located, under the provisions of
the act of Congress known as the 'Federal Reserve Act/ approved
December twenty-third, one thousand nine hundred and thirteen/'
approved April fourteenth, one thousand, nine hundred and fourteen.

Be it enacted by the Senate and General Assembly of the
State of New Jersey:
1. Any trust company or State bank heretofore or hereafter incorporated under the laws of this State which shall
become a member of the Federal Reserve Bank, in accordance with the provisions of the act to which this is a supplement, shall be subject to the provisions of the Federal
Reserve Act and any amendments thereto relative to
bank reserves, in substitution for the requirements of the
laws of this State concerning bank reserves for trust companies or State banks not members of the Federal Reserve
Bank.
2. This act shall take effect immediately.
Approved March 29, 1917.

Capital Issues Committee Statements.
Following are statements for the press issued
during February by the Capital Issues Committee of the Federal Reserve Board:
FEBKUARY 10,

1918.

The Capital Issues Committee of the Federal
Reserve Board announced to-day the formation of 12 local committees organized for the
purpose of assisting the central committee in
passing upon applications originating in their
respective districts.
in each Federal Reserve district there will
be a subcommittee on capital issues, with headquarters at the Federal Reserve Bank of the
district. The subcommittee will consist of the
Federal Reserve agent, as chairman, the governor of the Federal Reserve Bank, as vice
chairman, and three other members chosen
because of special qualifications for the work
of the committee.
Bankers and others having broad experience
in the financing of municipal, manufacturing,
or public utilities securities have been invited
to become affiliated with the subcommittee as
an auxiliary body, one or more members of
which, from time to time, as their advice and
experience may be useful or helpful, will be
asked to join with the subcommittee in investigating and passing upon specific applications.

MARCH 1, 1918.

FEDERAL KESEUVE BULLETIN.

No committee member will give advice or
report upon any application in which he has a
direct or indirect personal interest.
Members of these committees have undertaken this duty as a patriotic service to the
country.
As previously announced, all applications for
the approval of security issues are expected to
be made direct to the Capital Issues Committee, Federal Reserve Board, Washington,
which will refer them to the particular district
from which a report is desired.
The local committees are as follows:
DISTRICT NO. 1—BOSTON.

167

DISTRICT NO. 6—ATLANTA.

Permanent committee.—M. B. Wellborn, chairman;
J. A. McCord, vice chairman; W. H. Kettig, Hollins
Randolph, J. E. Zunts.
Auxiliary committee.—James E. Caldwell, Edward ^W.
Lane, W. H. Hassinger, Roby Robinson, F. E. Gunter,
A.'M. Baldwin, Otto M. Marks.
DISTRICT NO. 7—CHICAGO.

Permanent committee.—W. A. Heath, chairman; J. B.
McDougal, vice chairman; E. D. Hulbert, Rufus C.
Dawes, Joy Morton. Wm. F. McLallen, secretary.
Auxiliary committee.—George Reynolds, Emory Clark,
Oliver C. Fuller, S. A. Fletcher, B. A. Eckert, Simon
Casady, Louis E. Ferguson, Chauncey Keep, E. J.
Buffington, John J. Mitchell, B. E. Sunney, Lyman A.
Walton.

Permanent committee.—F. H. Curtiss, chairman; C. A.
DISTRICT NO. 8—ST. LOUIS.
Morss, vice chairman; Robert Winsor, John E. Oldham,
Francis R. Hart.
Permanent committee.—W.McC. Martin, chairman; Rolla
Auxiliary committee.—Charles Francis Adams, Henry
vice chairman; F. 0. Watts, W. K. Bixbee, W. R.
B. Day, Allen Curtis, Allan Forbes, Philip Cabot, James F. Wells,
Comptpn.
Jackson, Henry G. Bradley.
Auxiliary committee.—N. A. McMillan, Festus J. Wade,
J. A. Omberg, S. T. Ballard, Emby L. Swearingen,
DISTRICT NO. 2—NEW YORK.
Breckinridge Jones, William E. Guy, W. L. Hemingway,
Permanent committee.—Pierre Jay, chairman; Benj. Walker Hill, Benj. Gratz, M. S. Sonntag.
Strong, vice chairman; Frederick Strauss, C. A. Stone,
John II. Morron. R. T. Swain, secretary.
DISTRICT NO. 9—MINNEAPOLIS.
Auxiliary committee.—Thomas W. Lamont, George B.
Cortelyou, Harry Bronner, Walter P. Cooke, Charles V.
Permanent committee.—John H, Rich, chairman;
Ritch, S. R. Bertron, Henry R. Towne, Mortimer L. Theodore Wold, vice chairman; William A. Durst, George
Schiff, George Hardy, W. P. Graham, E. H. Outerbridge, D. Dayton, J. L. Record.
Arthur Sinclair, jr., Edwin G. Merrill, Chas. H. Sabin,
Auxiliary committee.—George W.
Burton,
Sam
A. H. Wiggin, Nev/comb Carlton, Win. L. Saunders, Stephenson, John R. Mitchell, C. B. Little, A. M. Marshall,
Alvin W. Krech.
Walter Butler, James MacNaughton, Isaac Lincoln,
F. A. Chamberlain.
DISTRICT NO. 3—PHILADELPHIA.

Permanent committee.—R. L. Austin, chairman; C. L .
Rhoads, vice chairman; John Gribbel, A. A. Jackson,
Clarence W. Clark.
Auxiliary committee.—John Newbold, L. Scott Townsend, John Brooks, George H. Frazier,, Louis C. Lillie,
Thomas S. Gates, Ferdinand W. Roebling, jr., H. B.
Schooley, Howard S. Graham, Charles W. Welch, E. P.
Passmore, Benj. E. Mann, G.W. Reilly, C.C.Harrison, jr.
DISTRICT NO. 4—CLEVELAND.

DISTRICT NO. 10—KANSAS CITY.

Permanent committee.—Asa E. Ramsay, chairman;
J. Z. Miller, jr., vice chairman; Peter W. Goebel, H. P.
Wright, F. P. Neal.
Auxiliary committee.—0. C. Snyder, George S. Hovey,
J. G. Schneider, C. L. Davidson, J. R. Burrow, Luther
Drake, R. C. Peters, A. H. Marble, John Evans, D. N.
Fink, C. F. Colcord,
DISTRICT NO. 11—DALLAS.

Permanent committee.—D. C. Wills, chairman; E. R.
Permanent committee.—W. F. Ramsey, chairman;
Fancher, vice chairman; H. C. McEldowney, J. Arthur
R. L. Van Zandt, vice chairman, Edward Gray, Howell
House, A. E. Adams.
Auxiliary committee.—C. E. Sullivan, F. R. Huntington, E. Smith, W. C. Stripling.
Auxiliary committee.—Lewis Hancock, E. Rotan,
C. N. Manning, Chas. W. Dupuis, E.H. Cady, C. B. Wright,
D. E. Waggoner, E. O. Tenison, John Sealy, W. R. Grim,
Baird Mitchell, Wm.M. Bell.
J. 0. Terrell, R. D. Wilbor, John W. Poe, L. C. Schattuck.
DISTRICT NO. 5—RICHMOND.

Permanent committee.—Caldwell Hardy, chairman;
George J. Seay, vice chairman; Frederic W. Scott, John
M. Miller, Herbert W. Jackson.
Auxiliary[ committee.—Waldo Newcomer, F. H. Fries,
John L. Dickinson, B. H. Griswold, jr., S. T. Morgan,
Geo. A. Holderness, John Joy Edson, Coleman Wortham,
R. G. Rhett, John A. Law, E. E. Thompson.




DISTRICT NO. 12—SAN FRANCISCO.

Permanent committee:—John Perrin, chairman; James
K. Lynch, vice chairman; I. W. Hellman, George K.
Weeks, J. F. Sartori.
Auxiliary committee.—M. F. Bakus, D. W. Twony,
H. J. McClung, A. L. Mills, F. F. Johnson, Geo. A.
Batchelder, Ralph S. Stacy, L. H. Farnsworth.

168

FEDERAL RESERVE BULLETIN.
FEBRUARY 17,

1918.

The chairman of the Capital Issues Committee, when seen to-day, and asked to make
some statement concerning the activities of
this committee, said that the support which
the Committee had received from all parts of
the country was most encouraging. He cited
as an illustration a resolution voluntarily
adopted by the governing committee of the
New York Stock Exchange, reading as follows:
Whereas the Federal Reserve Board has, upon the request of the Hon. W. G. McAdoo, Secretary of the Treasury,
appointed a committee of its members to act as a Capital
Issues Committee authorized to pass upon such proposals
as may be submitted to them in respect to capital expenditures or issues of new securities;
Resolved, That the Committee on stock list will require
as a condition to the listing of such new capital issues,
the presentation of the approval of such committee of the
Federal Reserve Board.

Cooperative reso^tions have also been
passed on the part of municipalities. A case
in point is the League of Kansas Municipalities, which, among other recommendations,
resolved that—
It is recommended that during the period of the war
each and every city government in this State shall undertake only such paving and other improvement work as
may be actually necessary to be undertaken at this time;
thereby releasing men and money for the service of the
National Government.

Another illustration of this spirit of cooperation was cited by him in the resolution adopted
by the Kichmond Keal Estate Exchange,
Richmond, Va., as follows:
Resolved, by the Richmond (Va.) Real Estate Exchange,
That the President of the United States, and the Secretary
of the Treasury be, and they are hereby, requested to issue
an appeal promptly to all governors, and through them to
State legislatures, mayors, and legislative bodies of municipalities, requesting them to exercise the most careful
scrutiny over all appropriations, and to exclude from their
respective budgets every item that does not represent an
actual necessity for the proper conduct of the government,
to the end that the States and municipalities may set an
example in patriotism and sacrifice for the institutions
and individuals within their respective jurisdictions;
and that material and labor may be conserved for the needs
of out National Government.

In dealing with applications so far submitted,
the committee has adopted the policy that
whenever the* application involves the renewal of maturing obligations such renewal
should be favorably considered unless there
are particular reasons to the contrary. A
similar policy is being adopted by the committee in dealing with the funding of banking
debt incurred prior to February 1, 1918.
In dealing with bonds to be issued for the
purpose of new road construction, the com-




MARCH l t

1918.

mittee has been moved primarily by the consideration of whether or not these roads are
of importance either from a military of
economic point of view and whether or nofc
results, through the new construction, may be
expected to be obtained approximately within
the present year.
In passing favorably upon certain projects
involving the production of electric power, the
committee was guided by the fact that the
amount involved was small as compared with
the funds already hazarded in such undertakings and by the fact that the power to be
produced was required primarily for purposes
connected directly with the successful prosecution of the war.
In dealing with municipal and State issues
the decisive factor in the deliberations of the
committee has been whether or not the expenditure is absolutely necessary for the health
and welfare of the cojnmunity. The committee urges that public authorities, both State and
municipal, approve appropriations only where
urgently required by the health and welfare of
the people.
The advisory committee of the Capital Issues
Committee has been in close touch with all
local committees established by the 12 Federal Reserve Banks, and all personal presentations of applications are being made to them.
On February 8 it held a public hearing at
which there appeared representatives of the
national organizations of the public utility companies of the country. These representatives
discussed with the committee some of the problems and difficulties, both as to operation and
finance, under which they were operating due
to war conditions. They all pledged their
hearty support and cooperation to the purposes to be accomplished by the Capital Issues
Committee, and assured the committee that
during the period of the war capital expenditures would be limited strictly to the most imperative needs.
The committee is consulting freely with representatives of the various departments aiid
boards, and its work has been facilitated greatly
by their advice.
FEBRUARY 24,

1918.

The Capital Issues Committee of the Federal
Eeserve Board announced that upon the recommendation of its advisory committee, in view
of the large aggregate of municipal issues offered
in relatively small amounts, it had decided to
reduce from $250,000 to $100,000 the minimum

'MA&CH 1, 1918.

FEDERAL RESERVE BULLETIN,

limit on municipal issues upon which it would
give advice with respect to the question of
whether or not such issues at this time were
compatible with the public interest.
In a great many districts the majority of the
municipal issues (and particularly those that
might well be postponed at this time) are of
amounts smaller than $250,000, and it was for
this reason felt desirable to make this change.
A great many applications were disposed of
during the past week, and on Tuesday, the 26th
instant, it is expected that the Federal Reserve
agents of the 12 Federal Reserve districts will
be in Washington for a conference with the
Federal Reserve Board. Inasmuch as these
Federal Reserve agents are at the same time
chairmen of the subcommittees on capital issues
of their respective districts, a full conference
with them will be held by the Capital Issues
Committee and its advisory committee for a
comprehensive discussion of the problems that
may arise in their districts in connection with
capital issues.
For the information and guidance of applicants, the committee has prepared and is distributing widely in all districts the following
instructions as to the data required by the
Washington committees for intelligent consideration of applications:

169

If the issue is deemed necessary for reasons of public
health or welfare, or other public economic necessity,
describe the same in full..
If the issue is made for private financial requirement?
and no public interests are involved, a very clear exposition of necessity will be desired.
In all cases full reasons should be given why the proposed issues can not be postponed until after the war, or
why the necessity is greater than the paramount need of
the National Government in conserving the financial
resources, materials, and labor of the country for the
war.
It will be necessary to identify accurately the issues
before a final opinion is expressed. For that purpose the
following information, when appropriate, shoiild be
furnished:
WITH REGARD TO PROPOSED ISSUES OF BONDS, NOTES,
CERTIFICATES OF INDEBTEDNESS, AND OTHER SECURITIES (STATE, COUNTY, MUNICIPAL, OR CORPORATE).

1. Name, amount, date, and dates of maturity, and
serial numbers of the proposed bonds, notes, or other
securities.
2. Amount of total authorized issue of which proposed
issue is part.
3. Attested copies of votes, ordinances, or resolutions
authorizing proposed issue.
4. Attested copy of mortgage, deed of trust, or similar
instrument under which proposed issue is made or by
which it is to be secured.
5. Last balance sheet if a corporation and copy of
charter and by-laws, if in print.
WITH REGARD TO PROPOSED ISSUES OF SHARES OF STOCK..

1. Total capitalization of company.
2. Last balance sheet and copy of charter and by-laws,,
INSTRUCTIONS TO APPLICANTS WITH RESPECT TO PRO- if in print.
3. Total authorized issue of stock of which proposed
POSED ISSUES OF BONDS, NOTES, SHARES OF STOCK,
issue is part.
ETC.
4. Amount of proposed issue, method and dates of
Applications should be addressed to the Capital Issues issue, whether by offer to shareholders, sale, or public
Committee, 718 Metropolitan Bank Building, Washing- subscription.
5. Attested copies of votes authorizing proposed issue.
ton, D. C.
No prescribed form of application is required, but the
applicant should provide all the information which is
appropriate to the proposed issue, or which would faciliMARCH 2, 1918.
tate the speedy decision of the committee. For the guidThe chairman of the Capital Issues Comance of applicants the following suggestions are made:
The purpose of the issue should be fully and accurately mittee of the Federal Keserve Board, when
described.
seen to-day, stated that the work of the
If the purpose is to refund, fund, or pay or extend out
standing bonds, obligations, or indebtedness, describe committee had received a decided impetus
fully the nature and character of bonds, etc., to be re- during the past week. Applications are being
funded and state briefly the time or times and the general received in greater volume thaiii ever and
purposes for which unsecured indebtedness was incurred. are receiving the greatest possible dispatch
If the issue is to be made for war purposes or to raise
capital in connection with war contracts or warsupplies, or in consideration. He expressed the desire,
to provide equipment, buildings, or facilities of any kind however, that in view of the fact that infor war work, full description thereof and amounts needed structions were now being distributed widely
therefor should be stated.
in all districts, prospective applicants should
If any war purposes are involved, reference should be
made to the proper governmental authorities at Washing- prepare and submit their applications as
ton and elsewhere to enable definite information and far in advance of the date of the issue or sale
corroiboration to be obtained directly by the committee.
as practicable, adding that the committee
If the issue is deemed necessary oil account of any j had been considerably pushed to comply
governmental requirement, National, State, or municipal, with the many requests that had been received
or of any commission or public authority, describe the
for immediate telegraphic consideration of
same in full.




FEBRUARY .21,

1918.

170

FEDERAL RESERVE BULLETIN.

issues the sale of which was imminent or the
necessity of prompt action upon which was
necessary to meet maturing debts. While,
in a number of cases, the committee so far
has been able to meet such requests, it will
not be possible in the future to undertake
to give advice as to the compatibility of the
large issues of securities coming before it
without having received the complete information specified in its memorandum of instructions to applicants. Even then it will be
very often necessary to refer applications
to the subcommittees for further investigation and report. Applicants are requested,
therefore, to afford tne committee as much
time as possible for the intelligent consideration of contemplated issues.
It has been most encouraging to see the
hearty response that has been made to the call
for cooperation in the committee's work. The
chairman stated that, in addition to the resolutions heretofore announced as being adopted
by the League of Kansas Municipalities, the
New York Stock Exchange, the Richmond
(Va.) Real Estate Exchange, the American
Bankers' Association, and the secretaries and
officers of the Central States Banking Association (the latter representing 15 central States),
have also adopted resolutions indorsing the
aims and purposes of the committee. Similar
resolutions are being adopted by the Investment Bankers' Association.
The Chamber of Commerce of Boston has
adopted the following resolution:
Your committee, therefore, recommends that the board
of directors of the chamber bring to the attention of the
governor of Massachusetts the urgent need for economy in
municipal financing and requests his excellency to make
public a proclamation urging all cities and towns within
the Commonwealth to refrain from incurring expenditures
and indebtedness for purposes other than those imperatively necessary at this present time of national stress.

In response to inquiry by the chairman, the
director of steel supply of the war industries
board, stated:
We are certainly in sympathy with Secretary McAdoo's
appeal for cessation of building operations. We do not
feel that it would result in the hardship to labor as generally
supposed, as many of the most essential industries are
running with greatly reduced forces, and we believe labor
would be diverted to more important uses.
As regards the steel situation, would state that the supply
of structural steel is ample for all purposes, but owing to
the curtailment of operations of blast furnaces and steel
mills, due to shortage of fuel and inadequate transportation, the pig-iron situation is becoming acute and any
material increase in building operations would complicate
an already bad situation in this line. Many of the important mills of the country, including the plate mills, are
having the greatest difficulty in securing sufficient iron to




MARCH 1,

1918.

keep their plants operating, and as everyone appreciates
the necessity of plates in shipbuilding, it is obvious that
any iron put into structural work which could be utilized
to, turn out ship plates would seriously interfere with the
successful prosecution of the war. We personally think
that everything should be done to discourage any structural work or unnecessary work at the present time.

The committee and its advisory committee
have had two very interesting and helpful
conferences during the course of this week,
one with the chairmen of the various subcommittees on capital issues and the other
with the war committee of the National Association of Public Service Commissioners, representing the public service commissions of the
United States. This committee was represented by Messrs. Max Thelen, of California,
chairman; Ralph W. E. Donges, of New
Jersey; Joseph B. Eastman, of Massachusetts;
Frank H. Funk, of Illinois; Travis H. Whitney,
of New York; Edward C. Mies, of New Hampshire; and Charles E. Elmquist, secretary.
Members of the Capital Issues Committee were
delighted to find that while these commissioners naturally had to take into consideration their local conditions and requirements
they were guided in doing that by the same
motives that prompt the actions of the Capital
Issues Committee. They expressed in no uncertain terms their fullest appreciation of the
national needs at this time, and members of
the Capital Issues Committee have no doubt
that the foundation has been laid for a most
fruitful cooperation between the representatives of the State and municipal interests on
the one hand and those acting at this time
purely from the national point of view. Measures along these lines are in course of preparation and it is expected that results will be
announced shortly.
In opening the conference with the chairmen 01 the subcommittees, the chairman of
the Capital Issues Committee took occasion
to read to them the following resolution
adopted by the committee:
This committee will not express an opinion either of
approval or of disapproval in matters of new capital
issues below the minimum heretofore fixed, but will
advise the local subcommittees to discourage nonessential
undertakings, irrespective of the amount, wherever practicable.

and the chairmen of the subcommittees were
requested to urge upon the members of their
permanent and auxiliary committees the necessity of suppressing at the source all unnecessary
expenditures at this time, even though such
expenditures be below the minimum now set
by the committee. He cited the instance of a

MARCH 1,

1918.

very effective piece of work on the part of an
auxiliary committee member who, upon his
own initiative, appeared before the public-debt
commission of a certain city and, upon a simple
patriotic appeal, caused that commission to
reduce a contemplated issue of securities from
$6,000,000 to $1,000,000. If such effective
results can be obtained by such simple and
direct methods by the single-handed action of
an individual, even where the amount involved
was so large, what might not be accomplished
in the thousands of cases of unnecessary expenditures of amounts not coming within the
purview of the committee at the present time ?
The chairman stated to the conference that
the following rules of procedure with respect
to the handling of applications had been
adopted by the Advisory Committee:
Applications should be made in duplicate
and, whenever possible, should be filed with
and received by the proper subcommittee,
one copy being retained by the subcommittee
and the other sent to the Capital Issues Committee when complete:
The subcommittee shall be requested to see
that the form of the application is sufficient
and that the information furnished complies
with the requirements of the general instructions.
The subcommittee to be requested to defer
investigation and the formulation of any
recommendation until requested by the Advisory Committee.
The chairmen of the subcommittees generally
reported a most satisfactory condition of hearty
cooperation in every district on the part of the
municipalities, bankers, brokers, and others.
Some of them, however, stated that in some
rare cases the unfortunate attitude had been
taken by certain prospective applicants of
heeding peace propaganda and looking upon
the committee's work as a temporary expedient
that would soon become obsolete upon the
declaration of a not very distant peace. The
chairman emphasized the obvious fallacy of
such belief and stated that in all districts
determined efforts should be made to overcome the pernicious tendencies of such an
attitude.
Trading With the Enemy,

Following are statements for the press issued
by the War Trade Board:
BRANCHES OF AMERICAN HOUSES IN FOREIGN
COUNTRIES.

The War Trade Board has authorized
branches of United States corporations and




171

FEDERAL RESERVE BULLETIN.

other American houses, established and engaged in business in neutral countries, or in
countries associated with the United States in
the war:
1. To receive in payment of indebtedness,
and to collect drafts or checks drawn or indorsed by enemies or allies of enemies where
refusal to accept the same may result in failure
to collect the debt;
2. To pay drafts or checks drawn in favor of,
or indorsed by, enemies or allies of enemies
where refusal to pay the same will result in a
violation of law or commercial obligation;
3. To receive for collection drafts or checks
drawn by, or accepted, or indorsed by enemies
or allies of enemies; and
4. To become a party to clearing-house transactions in the ordinary course of business where
any enemy or ally of enemy may be a member of
such clearing house:
Provided, That a written report of every such
transaction of trade with the enemy or enemy
allies shall be mailed to the War Trade Board,
Washington, D. C, on the 5th day of each
month, covering the transactions of the preceding calendar month under 1, 2, and 3 above.
Such report must state the dates of the respective transactions, the respective names of the
drawers, drawees, and indorsers, and the
respective' amounts of the drafts and checks
involved. Any United States corporation or
other American house joining a clearing house
under 4 above, shall immediately mail to the
War Trade Board, Washington, D. C, a statement of the facts in the case.
JANUARY 28,

1918.

MARINE INSURANCE SURVEYS AUTHORIZED.

The War Trade Board has authorized boards
of marine underwriters and marine insurance
companies to participate in surveys to determine the cause and extent of loss of cargoes
and vessels and to issue certificates showing
the findings of such surveys, notwithstanding
that the persons who ultimately may be entitled to the insurance money are enemies or
allies of enemies. This action has been taken
in order that the insurance companies may proceed with their usual investigations of marine
losses regardless of the interests involved, but
it does not authorize the payment of any
insurance money to an enemy or ally of enemy.
The precise limits of the new regulation are
shown in the following resolution of the War
Trade Board:

172

FEDERAL RESERVE BULLETIN.

MARCH 1,

1918.

Resolved, That boards of marine underwriters (1) Resolved, That bankers and others haying coupons
to collect, due January 1, 1918, for foreign individuals,
and marine insurance companies, and their firms,
or others, are not required, until further
correspondents or agents, be, and they hereby notice,corporations,
to obtain licenses from the War Trade Board or
are, authorized in the case of damage to vessels authority from the Federal Reserve Board in order to make
such collection: Provided, That any funds so received
or cargo:
which the collecting agency has reason to believe are the
(1) To attend upon a survey, or exercise a property
of an enemy or ally of enemy, or will be used for
voice in the selection of members of a board of the benefit, directly or indirectly, of any enemy or ally
survey, to determine the exact extent of the of enemy, must be held in separate account under notice
loss and the causes which have contributed to to the Alien Property Custodian. (Adopted Dec. 31,
it, even though such boards of marine under- 1917.)
(2) Resolved, That banks and others having coupons to
writers and marine insurance companies or collect,
which are due prior to January 1, 1918, for foreign
their correspondents or agents may have individuals, firms, corporations, or others, are not required
knowledge or reasonable cause to believe that to obtain licenses from the War Trade Board, or authority
the Federal Reserve Board in order to make such
certain of the persons who ultimately may be from
collection: Provided, however, That any funds so received,
entitled to indemnity against such under- which the Collection agency has reason to believe are the
writers or insurance companies are enemies or property of an enemy or ally of enemy, or will be used for
allies of enemies or are acting for or on behalf the benefit, directly or indirectly, of an enemy or ally of
enemy, must be held in separate account under notice to
of enemies or allies of enemies.
the Alien Property Custodian. (Adopted Jan. 16, 1918.)
• (2) To sign and issue, as the result of such
FEBRUARY 18, 1918.
survey, a survey certificate showing the items
of damage, expenses, etc., and the apparent
cause or causes from which the same arose;
Provided, however, That nothing herein conGENERAL BLANKET LICENSE TO CANADA.
tained shall be deemed to authorize the payA general blanket license has been issued
ment of any indemnity by such board of underwriters or marine insurance company to an to-day permitting, without individual import
enemy or ally of enemy or person acting for licenses, the importation of all commodities
from Canada with the exception of those
or on behalf of an enemy or ally of enemy.
mentioned in the President's proclamation of
FEBRUARY 6, 1918.
November 28, 1917, this to be in force until
revoked by the Bureau of Imports.
With respect to shipments from all other
RESOLUTIONS AS TO COUPONS DUE PRIOR TO countries, importers are urged to make haste
AND ON JANUARY 1, 1918, RESCINDED.
in sending to the Bureau of Imports, Washington, D. C, their applications for imports
In view of the President's Executive order licenses.
of January 26, 1918, which requires holders of
FEBRUARY 20, 1918.
coupons for foreign account to obtain certain
certificates from the Federal Reserve Board
and otherwise conform to its regulations, the
CHANGES IN ENEMY TRADING LIST.
War Trade Board has revoked its former rulings
which authorized the collection of coupons due
The War Trade Board announces that the
on or before January 1, 1918, for foreign indi- following
name has been removed from the
viduals, firms, and corporations without ob- enemy trading
list: Martinex, Vincento (Martaining licenses from the War Trade Board, or tinez, Vincente),
Cartagena, Colombia.
authority from the Federal Reserve Board.
The
following
name
been added to the
The action of the board is set forth in full in enemy trading list: has
Struck,
German, Prothe following preamble and resolutions adopted greso and Merida, Mexico.
by it:
Whereas by an Executive order of the President, dated
January 26, 1918, covering foreign exchange and other
related transactions, the holders of coupons for foreign
account must obtain from the Federal Reserve Board
certain certificates and file certain declarations from foreign
correspondents;
Resplved, That the following resolutions of the War
Trade Board, relating to the collection of coupons due
January 1,1918, and prior thereto, for foreign individuals,
firms, corporations, or others, be and they hereby are,
repealed, namely:




FEBRUARY 20,

1918.

Subtreasuries and the Federal Reserve Banks*
A report of the Bureau of Efficiency dealing
with the work performed by the Sub treasuries7
and submitting a plan to consolidate them with
Federal Reserve Banks, was laid before Congress

MARCH 1,

1918.

173

FEDERAL RESERVE BULLETIN.

on January 26? and published as H.R. Document The Bureau of Efficiency has not attempted to make an
No. 887. The document is in part as follows: exhaustive study of the efficiency and economy with which
The act of Congress approved March 3, 1917, directs
the Bureau of Efficiency to—
investigate the work performed by the Sub treasuries and
report to the Secretary of the Treasury and to Congress
at the beginning of the next regular session what part of
the work of the Subtreasuries can be transferred to other
offices of the Government, banks of the Federal Reserve
system, or farm-loan banks.
In compliance with this act, the Bureau of Efficiency
has investigated the Subtreasury system and desires to
make the following recommendations:
(1) The immediate suspension of the Subtreasuries in
Baltimore, Philadelphia, and Cincinnati.
(2) The immediate release of the assistant treasurers
in the remaining six Subtreasuries and the placing of
direction and control, in the hands of the cashiers of these
Subtreasuries.
(3) The consolidation of the entire Subtreasury system
with the Federal Reserve Banks within six months after
the end of the present war.
THE NEED FOR READJUSTMENT.

The creation of the Independent Treasury in 1846
contemplated an absolute divorce between Government
finances and the banks of the country. The history of
the Treasury from that day has been a steady decline in
independence. The Government has more and more
sought the aid and cooperation of the banks, and with
the establishment of the Federal Reserve Banks in 1914
definitely abandoned the original theory. Gradually one
after another of the functions of the Subtreasuries has
been lopped off and undertaken by other agencies. The
Subtreasury system is really a survival.
The Bureau of Sfficiecny has found no function at
present exercised by the Subtreasuries which can not be
performed as well by Federal Reserve Banks or other
agencies. Furthermore, the bureau Is convinced that the
abolition of the Subtreasuries will effect a large saving
to the Government. It would recommend their immediate suspension were it not for the extra administrative duties imposed on the banks and the Treasury by the
war. At this time the task of financing the war is so heavy
that a change in the machinery, even though it would be
of ultimate advantage, might hamper vital operations of
the moment. Consequently, the bureau suggests that
the change be postponed until the war is over and normal
conditions are again approximated. However, it would
be possible without confusion to close three of the smaller
Subtreasuries at once—Baltimore, Philadelphia, and
Cincinnati. These three are of no vital importance to
the system even as it stands; and, furthermore, suspension
at these three places will serve as a test of the practicability
of doing away with all nine.
44072—18——4




the Subtreasuries are now run. Since the entire system
might well be abolished, the question of their relative
efficiency is of minor importance. However, the bureau
is prepared to state that the Subtreasuries are, generally
speaking, well managed. They safeguard the money
intrusted to their care and perform their duties with a
reasonable degree of dispatch at no excessive cost. The
fault lies in the system itself, not in its operation. One
immediate change would be of advantage. The positions
of assistant treasurer are entirely unnecessary. Although
the nine assistant treasurers receive salaries totaling
$45,500, it is safe to say that they render no services which
could- not be equally well performed by the cashiers.
In the ultimate abolition of the Subtreasury system
justice requires that the present employees (outside of
the assistant treasurers) be retained in Government service
except in so far as they may voluntarily seek other positions.
Despite the relinquishment, through successive yearss
of various duties to the banks and other "agencies, the
Subtreasuries now perform a considerable variety of
functions. Provision must be made for the proper discharge of each of these, if the system is to be superseded.
The Bureau of Efficiency hereafter outlines plans for the
transfer of each of the important duties of the Subtreasuries
These plans are discussed in detail under the headings
"Fiscal functions," "Trust funds," "Redemption of
currency," and "Coin exchanges."
The total cost of the Subtreasury system for the fiscal
year 1917 was $804,042. The total amount expended on
salaries was $455,705, distributed as follows:
Salaries of Subtreasury employees.
Baltimore, Md
Boston, Mass
Chicago, 111
Cincinnati, Ohio
New Orleans, La
New York, N. Y
Philadelphia, Pa
St. Louis, Mo
San Francisco, Cal

'

Total

$30,300
44,850
68, 600
24,830
27,450
149, 785
48,870
33,860
27,160
455,705

The contingent expenses of the system are given in the
recapitulation below:
Expenditures, 1917.
Insurance on shipments of currency by registered mail
$45,033.11
Postage on shipments of currency by registered mail
30,227.24
Transportation of public moneys by express.. 24,485.42

174

FEDERAL RESERVE BULLETIN.

MARCH 1,

1918.

Coin bags
$21,165.44
If the Subtreasuries were absorbed by the Federal
Stationery
6,000.00 Reserve Banks the public would have even richer facilBoxes for shipping currency
2,416.96 ities than at present. There is indeed no reason why nine
Lead seals
3,808.00 cities should be given privileges denied to the other great
Typewriters
408.00 commercial cities of the country.
Telephone service in Sub treasury offices
2, 630.09
In the event that the Federal Reserve Banks take over
Expenses of clearing houses
927.50 the work of the Subtreasuries they may incur some extra
Examinations and transfers, office and travel
expense, particularly in the discharge of fiscal duties and
expenses of employees on official business.
4,331.26 in the handling of coin. If necessary, the Government
Labor handling coin during examinations of
could reimburse the Federal Reserve Banks directly for
Subtreasuries
317.50 these extra duties. This expense, if incurred, could
Repairing machines
1,446.88 scarcely be more than 25 per cent of what the Government
Burglar-alarm service
397.00 now spends for the Subtreasuries. It might be possible,
Rent of coin-counting machines
1,920.00 however, that the Federal Reserve Banks would be willing
to undertake the additional work without special comTransportation of mail pouches containing canpensation. They would derive some advantage from the
celed currency from Subtreasuries to post
offices
978.56 change. Their credit would be to a degree strengthened.
President Wilson has recently said:
Other miscellaneous items, such as coin scales,
trucks, rubber stamps, freight, cartage, towIt is manifestly imperative that there should be a comels, soap, etc
1,844.87 plete mobilization of the banking reserves of the United
States. * * * The extent to which our country can
Total...
148,337.83 withstand the financial strains for which we must be prepared will depend very largely upon the strength and
staying power of the Federal Reserve Banks.
The estimates for the next fiscal year are higher than
The Federal Reserve Banks are not commercial instithe amounts expended in 1917.
At present there are in operation 12 Federal Reserve tutions, and they are not run for profit. According to law
Banks. There are also in operation Federal Reserve the first 6 per cent of earnings goes to the stockholders of
Branch Banks at New Orleans, Omaha, Spokane, Seattle, the Federal Reserve Banks. All earnings above 6 per cent
and Portland. Branch banks are being established in are divided equally between surplus of the banks and the
Cincinnati, Pittsburgh, Denver, Detroit, Louisville, and Government of the United States. At present every
Baltimore. This means that in every city where a Sub- Federal Reserve Bank is earning more than 6 per cent.
treasury is located there is at present either a Federal Some of the 12 are earning twice that percentage. The
Reserve Bank or a Federal Reserve Branch Bank. The per cent of net earnings to paid-in capital for the six months
Federal Reserve Banks therefore cover the entire terri- ended June 30, 1917, was as follows:
Per cent.
tory covered by the Subtreasuries and extend, more9. 9
over, to some 14 large cities besides. The distribution of Boston
New York
11. 0
these institutions is as follows:
Philadelphia
9. 3
Cleveland
8. 4
Reserve
Federal Reserve Banks. Federal
Subtreasuries.
Richmond
8. 9
Branch Banks.
Atlanta
9. 3
Chicago
10. 0
Baltimore.
Baltimore
Philadelphia
Philadelphia
St. Louis
9. 9
New York
New York
Minneapolis
12. 4
Boston
Boston .
Cincinnati.
Cincinnati
Kansas City
11. 2
Chicago
Chicago
St. Louis
St. Louis
Dallas
6. 8
New Orleans.
New Orleans
San Francisco
9. 0
San Francisco
San Francisco
Richmond
The average earning for the total Federal Reserve
Atlanta
.
Cleveland
system was 9.8 on the calculated total paid-in capital.
Minneapolis
Kansas City
The Federal Reserve Banks are prospering. They
Dallas
could afford to take on further functions. Any extra
Louisville.
Pittsburgh.
expense would, of course, retard the building up of their
Detroit.
Omaha."
surpluses. This would be probably the only disadvantage
Denver.
suffered in the assumption of the duties of the SubtreasSpokane.
Seattle.
uries. This burden they might be willing to assume.
Portland.
Possibly the Federal Reserve Banks would also gain in




MARCH 1,

vault space at New York and San Francisco. In these
two cities the Subtreasuries have separate buildings of
their own, whereas in the other seven cities the Subtreasuries are housed in the post office, or in the customhouse, or in the Federal building that serves for all three.
In New York and San Francisco the buildings with their
vaults could be turned over to the Federal Reserve Banks.
RECENT DEVELOPMENTS.

Early in 1913 some 70 employees were transferred from
the different Subtreasuries to the office of the Treasurer, in
Washington. Of these 70, 16 were money counters and
handlers for the laundry machines. The other 54 were
clerks and bookkeepers. The total salaries of the 70
persons transferred amounted to $86,450. The chief
reason why these employees were gathered in Washington
was a concentration of duties formerly performed in the
Subtreasuries. By direction of Department Circular No.
5, 1913, the keeping of the disbursing officer's accounts
was centralized in the National Capital. It was felt that
it would be more economical, as well as in closer conformity
to modern business practices, to place the receipts of the
Government in the national-bank depositaries, to have
them directly drawn upon by warrant or check made
against the Treasurer, and to have these checks sent in
daily to Washington for credit. Formerly a large portion
of this work had been performed in the Subtreasuries.
Under the new plan each Subtreasury sends in the checks
it has cashed during the day, with its transcript, the same
as does each of the other depositaries. At first this large
increase of business in the Washington office gave rise to
difficulties. However, improved methods of handling the
bookkeeping were introduced, so that it was possible, in
the end, to reduce the force in Washington from 184 clerks to
about 80 clerks, a saving in clerk hire of nearly twice the
number of persons who had been transferred from the
Subtreasuries for this particular work. Those employees,
however, who were no longer necessary in this work were
not dropped from the service, but were transferred to other
offices as vacancies occurred.
The Federal Reserve Act was passed late in 1913 and the
Federal Reserve system put into operation in 1914. Under
it the country is divided into 12 reserve districts, each
with its reserve bank. The national banks, and other
banks at their volition, are made member banks of the
Federal Reserve system. The Federal Reserve Banks
rediscount the paper discounted by member banks. The
reserve banks were also make banks of issue and allowed
to put out their own notes, secured by short-time commercial paper and gold reserves, thereby providing an
elastic currency, one that contracts and expands automatically with business needs. The Federal Reserve
system was not designed, primarily, as a substitute for the
Subtreasury system. It is really a revision and remodeling
of the national banking system established in 1863. It is
a transition from a decentralized system of banks to a
federated system with control centralized in the Federal




175

FEDERAL RESERVE BULLETIN.

191S.

Reserve Board, that is to say, in the hands of the Government. The Secretary of the Treasury can place the
funds of the Government at his discretion in Federal
Reserve Banks, just as he can in national-bank depositaries. He employs the Federal Reserve Banks as fiscal
agents of the Government and uses them to handle bond
sales and refunding operations. The first two Liberty
loans have been managed by the Federal Reserve Banks
efficiently and with practically no disturbance of the
country's business. It is difficult to conceive how loans
of this magnitude could have been successfully floated
without the help of the Federal Reserve system.
It is also true, of course, that the Federal Reserve
Banks have taken over that group of functions which had
gradually come to adhere to the Independent Treasury
and which made it the (attempted regulator of the
money market and of interest rates and the aid and support of the banks in times of panic. It provides, further,
machinery for the transfer of money from one part of the
country to the other and for the moving of crops. On
the other hand, the Federal Reserve system is not charged
with the duty of redeeming paper currency or subsidiary
coin. It does not keep the trust funds of the Government. Whether these latter functions could be taken
over with advantage by the Federal Reserve Banks is a
matter considered later in this report.
The history of the Subtreasury system shows clearly, then,
that the original theory of independence on which it was
based was soon abandoned. From the time of the Civil War
on it has by necessity come into closer and closer contact
with the banks of the country. It has used the banks
more and more in its fiscal operations, and it has gradually
surrendered the banking functions that were originally
intrusted to it. The duties which it still performs are
those which have survived the gradual but steady inroads
of other agencies. It is no longer a logical institution,
but a remnant. If all of its remaining functions were
transferred to the Federal Reserve Banks the change
would be the natural climax of its development and
modification throughout the threescore and ten years of
its history.
FISCAL FUNCTIONS.

The fiscal functions exercised by the Treasurer through
Subtreasuries fall broadly into three classes:
(1) The receipt of deposits from various sources of
funds due the Government.
(2) The payment of checks, warrants, and drafts that
are drawn against the Treasurer of the United States and
presented at a Subtreasury for payment.
(3) The sale of bonds of the United States and the payment of coupons and interest checks.
The Federal Reserve Act specifically gives the Secretary
of the Treasury the right to employ Federal Reserve
Banks as fiscal agents, and he has already made extensive
use of them. The language of the law runs:
The moneys held in the general fund of the Treasury,
except the five per centum fund for the redemption of

176

FEDERAL BESBBVE BULLETIN.

outstanding national-bank notes and the funds provided
in this act for the redemption of Federal Reserve notes,
may, upon the direction of the Secretary of the Treasury,
be deposited in Federal Reserve Banks, which banks,
when required by the Secretary of the Treasury, shall act
asfiscalagents of the United States, and the revenues of the
Government or any part thereof may be deposited in such
banks and disbursements may be made by checks drawn
against such deposits.
So far as bond issues are concerned the Government has
ceased to place any reliance on the Sub treasury system.
The enormous bond transactions necessitated by the
floating of the Liberty loan have been handled entirely
through the Federal Reserve Banks. Indeed it is difficult
to imagine how these great public borrowings could have
been effected had not the machinery of the Federal
Reserve system been available. If the Sub treasuries had
had to stand the strain, they would have broken under it
long ago. The Federal Reserve Banks, on the other hand,
have not only successfully performed all of the work of
floating the bond issue, but they have effectively handled
these immense sums of money and transferred enormous
credits from one part of the country to another without the
slightest disturbance of the interest rate and without
shock or interference to the normal course of business.
Such a feat the Sub treasuries could never have performed;
the experience of other decades clearly proves this. It
is true that the Subtreasuries have been asked to perform
some very minor duties; they have, for example, held the
printed bonds until called for by the banks; and in New
York the Subtreasury handled the cash sales of bonds in
the second Liberty loan drive. However, these services
were purely ancillary. Ninety-nine per cent of the work
has been done by the Federal Reserve Banks. And these
banks are entirely able to take care of the interest payments.
It has been found indeed, generally speaking, that the
Federal Reserve Banks are able to manage transfers of
money from one part of the country to another much more
expeditiously than the Subtreasury system ever did. The
chief need for cash in the interior comes in the fall of the
year, when the crops are moved. The Subtreasuries up
to the establishment of the Federal Reserve Banks tried
to meet this need, and with a great deal of effort managed
to do so with only a fair degree of satisfaction. The Federal Reserve Banks, however, have managed to take over
this function of transferring money to the points needed
with smoothness and dispatch. One evidence of their
success in money transfers is the experience of San Francisco banks. Since the Federal Reserve system has been
in operation the San Francisco banks have not had to
resort to the use of order gold certificates to settle their
balances in New York.
Here and there the Subtreasuries undertake small conveniences for the public of one sort and another. For
example, it is the practice of importers of merchandise in
New York City to make preliminary deposits against
customs duties in the New York Subtreasury. The im-




MARCH 1, 1918.

porters (acting through customs brokers) seek in this way
to save time. The customs brokers, for example, will go
Saturday noon to the Subtreasury and deposit $100,000,
receiving for it a Treasury receipt. If their ship arrives
Saturday night the customs brokers present this receipt
to the customs officials and so secure the release of their
merchandise at once. If the Subtreasury in New York
were done away with, this arrangement for the benefit of
importers, in a hurry to unload, could be continued by the
Federal Reserve Bank of New York, if it were thought
desirable. The customs officials would undoubtedly be
willing to accept the receipt of the Federal Reserve Bank
as readily as that of the Subtreasury.
We see, then, in general that the employment of
national banks and of Federal Reserve Banks as fiscal
agents of the Government has already developed to such
an extent that the transfer of the remaining part of these
functions to them would be no radical step. In fact, it
would simply be the completion of a logical development that has been going on for many years. The Federal Reserve Banks without any substantial increase in
equipment can handle all of the fiscal functions of the
Government that are now handled by the Subtreasuries.
They could handle them just as cheaply; indeed, more
cheaply, in the sense that it is more economical to run one
office than two.
TKTJST FUNDS.

The trust funds of the Government fall into several
classes. The most important class comprises the gold
and silver securing issues of paper money. The law
requires that gold certificates have dollar for dollar in
gold either in coin or bullion behind them in the custody
of the Treasurer. On November 1, 1917, the amount of
gold certificates outstanding was $1,479,979,517. An
equivalent amount of gold was held by the United States
against these certificates. The law also provides that
the Government shall hold as reserve against the $346,681,016 of United States notes (greenbacks) and against
the $1,920,770 of Treasury notes of 1890 outstanding a gold
reserve of $152,979,025.63.
The law further requires that silver dollars must be held
against the silver certificates outstanding and the Treasury
notes of 1890 outstanding. The silver dollars held in the
Treasury against these liabilities amounted, on November
1, 1917, to $477,852,158. These silver dollars, and the
gold coin and bullion mentioned above, constitute the
chief trust funds of the Government.
These trust funds are not held separately, that is to say.
they are not segregated in separate vaults. They are a
part of the funds of the Treasurer held in Washington, at
the nine Subtreasuries, and in the mints and assay offices.
The distinction between the trust funds and the general
fund of the Treasurer is a bookkeeping distinction. However, no part of these funds is on deposit in the national
banks or with the Federal Reserve Banks or the Federal
farm-loan banks.

MARCH 1, 1918.

FEDERAL RESERVE BULLETIN".

In the event that the work of the Subtreasuries was taken
over by the Federal Reserve Banks it hardly seems desirable that these trust funds or any part of them should be
put into the hands of the banks. They should remain in
the custody of the Treasurer. Some part of these trust
funds are now in Subtreasury vaults, and the only difficulty that would be encountered were the Subtreasuries
abolished might be a lack of vault space.
In removing these trust funds to other places of deposit,
the silver dollars would constitute the greatest problem.
However, the standard dollars in the Chicago and St. Louis
Subtreasuries could probably be accommodated in the
mint at Denver. The silver dollars in the Subtreasury at
New York might well remain under custody of the assay
office in the vaults where they now are, even though the
Subtreasury building were taken over by the Federal
"Reserve Bank. The silver dollars in the other six Subtreasuries could be moved to the mint at Philadelphia,
where there is considerable extra space. The vaults at
Washington contain an enormous quantity of silver dollars
already and could scarcely hold any more of this bulky
money.
The gold is far more concentrated in volume and presents no great difficulty. It could be removed either to
the mints or to Washington. Just at present, because.of
the unusually large increase in the gold held by the Government, the assay office in New York City, which is just
next door to the Subtreasury, has put in the Subtreasury
vaults about $930,000,000 in gold bars. This is said to be
the largest amount of gold that has ever been collected in
a single spot in the history of the world. Of course, if the
Subtreasury were done away with, this gold need not be
moved. Custodians could be kept in the present building
to guard it. If the trust funds of the United States were
consolidated and more concentrated, it would be less expensive to look after them and guard them. As matters
stand, no new vaults need be built, and no expense need
be incurred except that of guardianship and occasional
examination. The Treasurer could handle his accounts
just as he does now. The trust funds would not be locked
up in any particular place, but would be kept in the accounts of the Treasurer as at present, with the distinction
between trust funds and other funds maintained on the
books.
The Treasury carries certain special deposits which are
in the nature of fiduciary obligations. A number of these
can not be deposited by law in the Federal Reserve
Banks. A list of the latter, with their amounts on November 1, 1917, follows:
Redemption of Federal Reserve notes (5
per cent fund)
$43, 883, 715.15
Redemption of Federal Reserve Bank
notes (5 per cent fund)
536, 700.00
Redemption of national-bank notes (5 per
cent fund)
28, 683,239.10
Total




177

In the case of these particular liabilities it is necessary
for the Treasurer to keep the funds in his custody. They
should be deposited with the Treasurer in Washington
and the necessary balances settled weekly or monthly.
All other moneys now in the general fund of the Treasurer
can be turned over to the Federal Reserve Banks.
There is one other item held by the Treasurer that
must be provided for. This is the gold settlement fund
of the Federal Reserve Board. The fund is steadily increasing. On November 1, 1917, it was $681,097,160;
on November 15 it was $711,641,260. It now amounts to
practically half of the gold certificates outstanding. The
primary purpose of the fund is to effect settlements between the various Federal Reserve Banks. These settlements are made mostly by telegraph from Washington
every Thursday. Of course, this settlement fund also
counts as reserves against Federal Reserve notes outstanding of which there are now nearly a billion. It is
the policy of the Federal Reserve Board, and indeed of
the Government in general, to swell this fund as large as
possible in order to strengthen the credit of the Federal
Reserve Banks.
Most of the settlements are made by telegraphic transfers of credit on New York City, and the New York City
Federal Reserve Bank settles in gold with the New York
Subtreasury. Although this gold settlement fund is
held by the Treasurer at the call of the Federal Reserve
Banks and although it can be withdrawn at any time,
it nevertheless constitutes a trust fund that must be
carefully administered. At the beginning, when the
fund*was much smaller, it was all held in Washington.
At present the Subtreasuries, particularly the Subtreasury
in New York, are used as depositories. Should the Subtreasury system be done away with, it is suggested that
this gold settlement fund be held in Washington and in
New York City. An office could be fitted up in the
New York assay office to take care of the money and keep
the books. The only vault that would be needed in
New York would be a bin to hold gold certificates, with
now and then some gold coin. Ail that the Federal
Reserve needs really for its gold settlement fund is a safe
place to hold it.
REDEMPTION OF CURRENCY.

One of the important services which the United States
Government performed for the people of the country is
the so-called redemption of paper currency. When notes
wear out or become dirty, the Government will take them
upon presentation and give back clean new notes. The
old notes are punched, cut in half, and ground into pulp.
The new notes, which have been printed at the Government's expense, are paid out to the banks or individuals
either from Washington or from the Sub treasuries. The
Government does not compel anyone to return unfit currency, but it invites whoever cares to make the exchange
71,103,654.25 to avail himself of the privilege. This operation is usually

178

FEDEBAL BESERVE BULLETIN.

called "redemption and exchange." Technically, of
course, redemption means only the payment of gold or
lawful money for redeemable currency, so that most of
this operation that we call redemption might more accurately be termed "replacement and exchange." However, since redemption is the word commonly used, it
will be employed in the usual sense here.
All of the national-bank notes and of Federal Reserve
Bank notes are sent in to Washington to be redeemed at
the National Bank Redemption Agency.
Whatever Federal Reserve Bank notes and nationalbank notes come into the Subtreasuries are sent directly
to Washington for redemption; at least, that was the
practice before the war. This measure was incorporated
in the law as a method of preventing inflation. These
notes are not cut at the Subtreasuries, but are merely
transported to Washington and turned over to the National
Bank Redemption Agency in the Treasurer's office. It
hardly seems that this function is any longer vital, since
provision is made in the law to have the Federal Reserve
Banks take care of any redundancy of currency and to
prevent inflation.
COIN EXCHANGES.

At each of the Subtreasuries considerable amounts of
metallic money are brought in daily for deposit, and considerable amounts are daily withdrawn. This money
comes bagged by denominations; that is, by halves,
quarters, dimes, nickels, and pennies. This function
of the Subtreasuries is commonly called the redemption of
subsidiary silver and minor coins, but, as a matter of fact,
most of this business is merely exchange.
The Government undertakes to redeem the coin that it
issues. Standard silver dollars may be presented for
exchange into silver certificates. Subsidiary silver coin
and minor coin may be presented in sums or multiples of
$20 to the Treasurer or to any Assistant Treasurer for
redemption in lawful money. These coins must be
sorted by denominations and put up in separate packages.
The coin room of the Sub treasury counts the money so
presented and throws out coin that is mutilated or defaced.
Mutilated coin, whether punched, clipped, or chipped,
and counterfeit coin, are stamped and returned to the
depositor. Coin that is worn thin or smooth or that is
bent or twisted is redeemed in good coin. The quantity of
this unfit money, however, is relatively small. Most of
the deposits of coin are rebagged and held until they are
called for by banks or individuals who wish to use them in
the channels of trade.
Possibly if the Federal Reserve Banks were to take over
the work now done by the Subtreasuries they would be
willing to handle subsidiary silver and minor coin without
compensation, but in the event that the Government was
required to maintain a small coin division of its own in
each of the Federal Reserve Banks, equipped with coincounting machines and other facilities, the expenses would
surely be far less than they are now—$40,000 would be an
outside figure. The services, furthermore, would be more




MARCH 1, 1918.

widely distributed over the United States since there are
over twice as many Federal Reserve Banks and branches
as there are subtreasuries.
GOLD.

With the fundamental gold transactions of the Government, the Subtreasuries had nothing to do. The country
is on a gold basis; which means that unlimited amounts of
gold metal can be exchanged at a fixed ratio for coin at the
mints and assay offices. Sometimes payments in gold are
made in the Subtreasuries for the assay offices, but this is a
mere matter of convenience.
However, considerable amounts of gold coin are presented at the Subtreasury offices throughout the year.
Gold coin, according to law, is issued by the Treasurer or
any Assistant Treasurer for gold certificates, United States
notes, or Treasury notes of 1890. In case this coin is
shipped, it is sent by mail with postage and insurance
deducted; or, if otherwise transported, the charges are
paid by the consignee on delivery of the coin. Gold certificates are issued by the Treasurer or any Assistant
Treasurer upon a deposit of gold coin. Whenever gold
coin comes into a Subtreasury it is weighed. The law
permits a certain amount of abrasion—equivalent to onehalf of 1 per cent for a circulation lasting 20 years. Gold
coin above this limit of tolerance is accepted at par.
Gold coin below the limit of tolerance is accepted only
for its weight and the difference is charged to the depositor.
Of course, individuals and banks do not like to sustain
this loss, which is sometimes considerable. On the Pacific
coast, where gold coin is more generally used than elsewhere in the Union, two classes of gold are in circulation—
one called Treasury gold, above the limit of tolerance, and
the other commercial or bank gold, which is light weight.
Ultimately, however, all lightweight gold comes to the
Government, or is melted down by the individuals; and
the Government will not accept it at its face value if it is
below the legal limit without collecting 2 cents for each
half grain or fraction thereof below the standard weight.
In the fiscal year of 1917 the total gold-coin receipts in the
New York Subtreasury were $114,427,000. Of this money
$21,511,000 came from New York City, while $92,916,000
came from outside of New York. All of this money was
weighed. The other Subtreasuries also received considerable amounts of gold coin.
In the event that the Subtreasury system should be
absorbed by the Federal Reserve Banks it would be well
to have the Government station a gold counter in each of
the Federal Reserve Banks under control of the agent.
The Government counter would be there for the purpose
of receiving coin which the public wished to redeem.
When not busy with gold he could be employed in the
counting of subsidiary silver and minor coin.
In 1915 the gold coin in circulation amounted to
$429,177,608, and the gold coin in national banks was
$184,034,281, a total outstanding of $613,211,889. Gold
was therefore recoined in the tiny percentage of 0.32 of
1 per cent.

MARCH 1,

FEDERAL RESERVE BULLETIN.

1918.

Furthermore, the Federal Reserve Banks should
undertake to issue gold certificates upon the deposit of
gold coin. They would be acting in this respect as agents
for the Treasurer in Washington. This duty would
not be burdensome.
SUMMARY.

In our examination of the various duties performed
by the Subtreasuries we have seen that the bulk of them
can with advantage be transferred to the Federal Reserve
Banks. The Federal Reserve Banks might be willing
to undertake these duties without compensation in return for buildings and vault space in New York City and
San Francisco and in return for the working balances in
the Subtreasuries. Still, it would not be unjust if the
Federal Reserve Banks should ask the Government to pay
the expenses of keeping up coin-exchange departments.
The Subtreasuries now cost over $6Q05000 a year. Were
they abolished, the following expenses would take the
place of this expenditure:
Extra redemptions of paper currency in Washington..
"
$75,000
Coin-exchange departments in 12 Federal Reserve
Banks and 11 branches
40, 000
Cost of coin shipments
30, 000
Extra guards and custodians for trust funds at
assay offices and mints
5, 000
Total.

150,000

The direct saving to the Government would, therefore,
be $450,000 a year. Furthermore, the postal revenues
would be increased by $15,000 at least, through the concentration of currency redemption in Washington; and
also there would be available for Government uses considerable amounts of office and vault space in the Federal
buildings of those seven cities outside of New York and
San Francisco where the Subtreasuries are housed with
other Federal offices.
The Bureau of Efficiency recommends the ultimate
abolition of the whole subtreasury system.. It believes
not only that the Government will save money by this
change but that also the public will in the end be better
served. It will be appreciated that in making this recommendation the Bureau of Efficiency seeks only to serve
the public interest. If, however, the Subtreasuries are
to be continued, the Bureau of Efficiency suggests the
following as a minimum program:
The elimination of the three Subtreasuries—Baltimore,
Philadelphia, and Cincinnati—which are of no essential
value to the system.
The abolition of the post of assistant treasurer everywhere
and the transfer of responsibility to the cashiers.
A reduction in the amount of coin-exchange business
undertaken at the Subtreasuries and by the cash room of
the Treasury in Washington through the charging of a fee
for receiving or paying out current coin.
The concentration of all the redemptions of paper currency in Washington.
Scarcely less than this can be done for the good of the
Treasury and the people.




179

Expenditure and Prices.
The following extract from the second report
of the select committee on national expenditure of the British House of Commons, December 13, 1917, is herewith published as a contribution from an important official source to
the current discussion of the causes of rise in
prices:
16. The gradual growth in the expenditure
upon the war is due, not only to new services
and increased demands, but also, in no small
degree, to the increase in prices. It may be
calculated very roughly that an all-round
increase of 10 per cent in wages and in the cost
of commodities purchased at home now involves an increase in the national expenditure
of about £130,000,000 a year.
Your committee have consequently found
themselves obliged to extend their inquiry
into the causes of the increase in prices and the
possible checks that may be applied.
17. The chief causes are: The expansion
of credits during the war; the demand for
commodities exceeding the supply and the
inadequacy of Government action to control
prices; increases of wages and consequent
increases in the cost of production; increases
in the rates of profit; unfavorable rates of
exchange in some countries from which supplies are imported.
Some of these are at once effects of the increase of prices and causes of further increases.
18. It would be difficult, and it is also unnecessary, to determine what is the order of
importance of these various factors. But it
is certain that among the most important is
the expansion of credits. If it had been possible to finance the war from day to day by
means entirely of the proceeds of taxation and
of loans of money drawn from the savings of
the people, there can be no doubt that the
general increase of prices would have been
considerably less than it has been; the result
would have been to transfer purchasing power
from the hands of individuals to the hands of
the Government. But the Government,
through the Bank of England and the joint
stock banks, has created large new credits to
enable its contractors to expand their production. It has also borrowed from the Bank
of England large sums on ways and means
advances, and in so far as these advances have
not been offset by equivalent borrowings from
the market on the part of the bank, which has
not always been the case, this operation has
been a pure creation of credit. The Government has received from time to time con-

180

FEDERAL "UEST5BVE BULLETIN.

siderable sums from the reserves of the joint
stock banks in subscriptions to the newly
created Government securities, and these sums
have been liberated in the course of Government expenditure. These measures may not
in any way affect the soundness and stability
of our financial institutions, but the^r have had
the result of creating new purchasing power
on a' large scale. This new purchasing power
distributed over the greater part of the nation,
in so far as it spends itself in investments in
Government loans, does not take the form of
additional demands for goods and does not
send up prices. But in so far as this new
purchasing power comes into the market for
commodities and takes the form of additional
demands for goods, it does send up prices.
19. In other words, the responsibility for the
rise of prices, so far as it is due to this cause,
rests partly with the Government and partly
with the public. There have indeed been verylarge increases in taxation, and vast loans have
been raised from the savings of the* people.
But to the extent to which this policy has not
been pursued, and, instead, fresh credits have
been created, the Government has given the
po^er to the public to spend more freely on
things. And the public, so far as it spends
more freely on things, instead of in vesting in
Government securities, raises prices against
itself. If these two processes go further,
prices will tend to rise still further. If these
two processes are checked, one important
cause of the rise in prices will be romoved.
20. In the expansion of credit, the issue of
paper currency, as hitherto practiced in this
country during the war, plays a very subordinate part. If in any degree contractors'
accounts had been met, or if the soldiers and
sailors had been, paid, simply by using the
printing press and issuing fresh supplies of
currency for such purposes, the effect would,
of course, have been serious. But this has not
been done and is not in contemplation. Notes
are not issued in order to make Government
payments. They are issued to meet requests
from the banks for the currency needed by
their customers; their quantity is regulated by
those requests, and neither exceeds nor falls
short of them; they have to be paid for by the
banks by transfer of securities or in other ways.
The amount of currency has largely increased.
At the outbreak of the war it is estimated to
have been., in circulation or in bank reserve^,
about 222 millions; it is now calculated at
about 338 millions, not including such small
quantities of gold as may remain, in the hands




MARCH 1,

1918.

of the public. It is held, however, by the
treasury that this increase .is necessary in
order to keep pace with the growth of transactions as measured in terms of money, and
that it is a consequence, and not a cause, of
the increased purchasing power of the community.
21. The supply of goods falling short of
demand is clearly one of the main causes of
higher prices. Lessening of production, from
whatever cause it may arise, adds to this. It
would carry our inquiry too far, however, to
enter into those matters. The extent to
T&hich the State can successfully stop rises of
price, when demand exceeds supply, by
direct Government action, is also too large
and complex a question to be dealt with here.
And it would be too remote from the original
purpose of our inquiry to examine the means
which have been or might be adopted to
maintain a favorable rate of exchange in
countries from which we draw supplies, and
so prevent increases in the prices of imported
articles due to the depreciation of our currency
in the countries from which they come. We
have .found it necessary, however, to give
closer attention to increases in the rates of
wages and, of profits, which have a direct bearing on the question now under consideration.
22. Demands from the working classes for
war bonuses or ^vage increases are based, as a
rule, on one or more of the following grounds:
(a) The cost of living has increased and
wages must be increased also in order to enable
the working class family to pay its way.
(6) The employing class is making large
profits out of the war, and so long as they do
so, it is legitimate that the working classes
should do the same.
(c) The demand for labor exceeds the supply,
and it is inevitable, therefore, that wages
should rise.
(d) The worker's output has been increased,
and he is entitled to a higher wage in consequence.
\e) Increases have been given, in one industry
or in one grade, and, in ordei to prevent
inequality or unfairness, increases must follow
in other industries or grades as "well.
We will examiae each of these points in
turn.
23. It is generally agreed that with the
great increase in the cost of living which has
taken place during the war—whatever may be
its causes—it ^would have been neither just nor
practicaWe to have kept ^ages at their prewar
level. We have formed no estimate of the

MARCH l,

FEDERAL RESERVE BULLETIN.

1918.

extent of the rise of wages which has taken
place, nor its relation to the increased cost of
living. The rise has not been equally distributed, and to arrive at the facts would have
involved a prolonged and detailed inquiry into
the movement of wages in all the industries,
and in ail the grades of labor in each industry
throughout the country. We, therefore, express no opinion on these points. Moreover,
on the other side of the account, the extent to
which the cost of living has in fact increased
does noc appear to have been ascertained with
any certainty.
24. The figures published monthly, formerly
by the board of trade and now by the ministry
oi labor, are usuaPy accepted as the measure
of the increase without much question. These
figures, as published in the Labor Gazette of
November, 1917, state that, between July,
1914, and November 1, 1917, the level of
prices of food in the United Kingdom has
increased by 106 per cent. If all the items
usually comprised in the expenditure of a
working class family are taken into account,
including food, rent, clothing, fuel, light, etc.,
the increase in the cost of living as a whole
might be estimated at 85 per cent, of which
5 per cent is due to additional taxation of
commodities.
25. We have made inquiry into the basis of
these calculations, and we find that they rest
on a collection of the household budgets of a
number of working class families made by the
board of trade as long ago as 1912. It is indeed stated in the Labor Gazette that they
make no allowance for any changes in dietary
that may have taken place for reasons of
economy during the war; and it is instanced,
by way of illustration, that "if eggs were
omitted from the dietary, margarine substituted for butter, and the consumption of sugar
and fish reduced to one-half of that prevailing
before the war, the general percentage increase since July, 1914, instead of being 106,
would be 59." On this basis the increase in
the total cost of living would be, not 85, but
53. If taxation intended to be borne by consumers were deducted, the figure would be
under 50. The statistics, which are accepted
as the starting point for all discussions of
wages, may perhaps represent the actual facts
as they now are, but it is far from certain that
they do, and in any case it has not been ascertained that they do.
26. We consider it essential that at the
earliest possible date this matter should be
reviewed, and that an inquiry should be set on
44072—18




5

181

foot, in the direction of which the representatives of labor should have a full share, to
ascertain whether the prewar basis of these
figures still holds good; whether the average
working class family has changed its items of
expenditure to meet war conditions; if not,
whether families of the middle class with
fixed incomes have altered their consumption,
and in what way; whether the articles that are
now being consumed can, in fact, be obtained
at the shops, and at the prices at which they
figure in the ministry of labor tables; to what
extent the increase of prices has been counterbalanced on the average by greater regularity
of employment and greater facilities for members of the families to find remunerative work.
It may be that such an inquiry would show
that the increases of wages which have been
obtained, or are now being claimed, on the
ground of the cost of living, can be fully justified, or in some cases can be more than justified, if real hardship is to be avoided. But
it may be that it would not. In any case, the
parties directly concerned, and the country as
a whole, should know what the facts really are.
27. The second cause for the claims of the
working classes for advances of wages is the
increase in the amount of profits. There is
no doubt that there have been,
particularly
in the earlier stages of the w ar ? many striking
instances of great profits being made by companies and individuals. Gradually, however,
the State has exercised a more and more
effective control. The excess-profits duty recovers for the community, in most of the important cases, 80 per cent of the profits of
trades and businesses in excess of their prewar
standard of profit. Except in the case of
small or moderate sized incomes, one-fourth of
the remaining 20 per cent of these excess
profits is taken in income tax, and a further
proportion in supertax. Moreover, the profits
of munition manufacturers, shipowners, coal
owners, and many classes of food producers
are now restricted. We have obtained from
the various departments concerned a summary
of the measures they have taken in this direction. The question of the adequacy of the
steps taken to restrict the profits on contracts
has engaged, and will continue to engage, the
attention of the committee.
28. So far as the increase is due, not to the
increase in the rate of profit per cent, but to
the increase in the volume of work done, it is
not in itself a direct element in the rise of
prices. If, however, the increase in the total
profit is due to the rise in the prices of raw

182

FEDEEAL EESERVE BULLETIN.

material and labor, and to the consequent increase in the annual turnover of a business,
the larger profits in such cases are an element
in causing a further rise in the price of the
product.
29. Increases of wages have in some cases
been secured apart from any question of the
cost of living, through advantage being taken
of the shortage of its supply in relation to the
demand. However legitimate this may be in
time of peace, it should be remembered that
in existing circumstances it is a direct cause of
further rises in prices, and of further increases
in national expenditure. At the same time, it
is essential that, if labor is asked to forego the
advantages of its economic position from
motives of patriotism, the same measure
should be effectively applied to capital.
30. So far as increased earnings follow increased output due to greater effort or skill,
they do not involve increase in the cost of production or in prices, though they would have
the effect of preventing a reduction.
31. It is the case that increases of wages in
one trade or grade have been used as a reason
for further increase in others, on the ground
of similarity, and apart from questions of
cost of living. Hitherto there has been no
effective check on this competition. Several
different authorities have been dealing with
wage questions in different industries independently of one another, although it has been
obvious that the course taken by any one of
them must tend to be used as a precedent for
the rest. We find, indeed, that there is frequently wanting a proper cooperation between
Government departments in dealing with
labor, which sometimes passes into active
competition.
The concentration of all these matters under
one authority has long been under consideration, but no effective action appears to have
been taken until a coordinating committee was
established under the chairmanship of Mr.
Barnes at the end of November, 1917.
32. Fresh cycles of wage advances succeed
one another. Each one results in further increases of prices or in preventing a reduction
of prices. An individual trade may obtain,
by a wage advance, temporary relief from the
increase in the cost of living, but only, as a
rule, at the expense of all other trades. And
the gain is short lived, for the result is a demand
from the others for similar advances, which
raise the cost also of the commodities which
they produce. The producers are raising
prices against themselves as consumers. Mean-




MARCH 1,

1918.

time the cost of the war is vastly increased.
We are deeply impressed by the seriousness of
the position in this respect, and are convinced
that, if the process continues, the result can
hardly fail to be disastrous to all classes of
the Nation.
33. Our recommendations, in respect to
those aspects of the question of prices which
are dealt with in this report, are as follows:
1. Whatever measures are possible should be
taken by the Government to avoid the creation
of ilew credits in financing the war.
2. An inquiry should be set on foot to ascertain what has been the actual increase in the
cost of living to the working classes, and how
far it has been counterbalanced by advantages
apart from wage advances, due to war conditions.
3. The measures for the limitation of profits
should be continued and strengthened, and
should be made more widely known to the
people.
4. The strongest case should be required to
be established before any advance of wages is
conceded on any ground other than the rise in
the cost of living. Nor should it be regarded
as a rule—and we have no reason to think that
labor in general desires that it should—that
wage earners, in receipt of not inadequate pay
before the war, should be exempted from all
share in the economic sacrifices involved by a
state of war.
5. A single policy under the general direction of one authority should be adopted in all
industries in the determination of wage questions.
Condition of National Banks December 31,1917.
The Comptroller of the Currency on February
19 issued the following statement:
Deposits.—The deposits of the national banks
of the United States, at the time of the call of
November 20, 1917, had reached the highest
figures ever shown, and were at that time
$1,564,079,000 more than at the preceding call
of September 11, 1917. This increase was to
a considerable extent accounted for by deposits
received in connection with settlements for the
second Liberty loan, and it was thought that
when the deposits which the Government had
made with national banks at that time should
be withdrawn to meet the Treasury requirements there might be a large reduction in deposits.
The reports of the national banks, however,
just compiled, show that on December 31, 1917,

MARCH 1,

1918.

FEDEEAL EESEEVE BULLETIN.

the deposits of the national banks throughout
the country were even greater than at the time
of the November 20, 1917, call, if we should
eliminate the reductions in deposits shown by
national banks in New York, Massachusetts,
and Pennsylvania.
The aggregate of deposits in all national
banks on December 31, 1917, was $14,445,689,000. This was $352,647,000 less than the
total of all deposits on November 20, 1917, but
as the reduction in national bank deposits for
the States of New York, Massachusetts, and
Pennsylvania amounted to $359,042,000, we
find that the deposits of the national banks of
the United States on December 31, 1917, exclusive of these three States, exceeded by
$6,395,000 the greatest deposits ever previously shown, and the increase in the deposits
of all national banks of the United States December 31, 1917, as compared with December
27, 1916, was $2,178,843,000.
Resources.—The resources of the national
banks on December 31, 1917, amounted to
$18,073,308,000, a reduction as compared with
November 20, 1917, of $479,889,000, of which
reduction 215 millions were in the national
banks of New York City, 65 millions in the
national banks of Boston, 28 millions in the
country banks of Massachusetts, and 55 millions in the country banks of New York State.
Of the reserve cities and central reserve
cities outside of New York and Boston about
half showed increases in national bank resources between November 20 and December
31, 1917. The largest increase was reported by
Chicago, of $13,149,000, and the next largest
by Baltimore, $11,694,000, followed by Cleveland, which increased $9,348,000. The largest
reduction shown in resources exclusive of New
York and Boston was reported in Philadelphia,
$20,006,000, and the next largest reduction by
San Francisco, $14,904,000.
Among the country banks outside of New
York, Massachusetts, and Pennsylvania the increases or decreases were not great. The State
showing the largest increase in resources of
country banks was Iowa with $6,367,000. The
State whose country banks showed the largest
reduction next to New York, Massachusetts,
and Pennsylvania was Illinois, where the reduction was $14,329,000.
Loans and discounts of all the national banks
in the United States on December 31, 1917,
were reported at $9,390,836,000, a reduction as
compared with November 20, 1917, of $144,691,000, and an increase as compared with December 27, 1916, of $1,050,210,000. The pro-




183

portion of loans to deposits was December 31,
1917, 65 per cent; previous year, 68 per cent.
United States bonds.—The amount of United
States bonds, including Liberty bonds and certificates of indebtedness held December 31,
1917, was $1,624,529,000, a decrease as compared with November 20,1917, of $729,654,000,
and an increase as compared with December 27,
1916, of $907,569,000. This latter increase is
principally in certificates of indebtedness and
Liberty bonds—the total holdings of Liberty
bonds of both issues December 31, 1917, being
$609,626,000, or a little more than 3 per cent
of the total resources of the national banks.
The holdings of bonds other than United
States bonds December 31, 1917, was $1,870,967,000, a reduction as compared with November 20, 1917, of $35,815,000.
Cash on hand and due from Federal Reserve
Banks.—On December 31, 1917, the cash on
hand and due from Federal Reserve Banks was
$1,800,988,000, an increase as compared with
November 20, 1917, of $42,049,000 and an increase as compared with December 27, 1916, of
$211,790,000.
Bills payable and rediscounts December 31,
1917, were reported at $741,848,000, an increase since November 20, 1917, of $141,903,000, and an increase since December 27, 1916,
of $652,090,000, largely obtained from the
Federal Reserve Banks.

Commercial Failures Reported.
No change from the highly favorable features
which have characterized the returns for many
months appears in the insolvency record, commercial failures in the United States during
three weeks of February, as reported to R. Ge
Dun & Co., numbering only 752, as against 897
in the same period of 1917, when the showing
was also unusually gratifying. The exhibit
for January, the latest month for which complete statistics are available, discloses 1,178
defaults, involving $19,278,787, the number
being the smallest of any January in over a
decade and the indebtedness the lightest*
excepting the $18,283,120 of January, 1917y
since 1909. Comparing with last year, when
1,540 insolvencies were reported in January, a
numerical reduction of 362 is shown, and fewei
failures appear in all of the 12 Federal Reserve

184

FEDEKAL EESEEVE BULLETIN.

MARCH 1, 1918.

districts, aside from the second and seventh Trustee, executor, and administrator:
First National Bank, Dublin, Ind.
districts, where the increases are trifling. In
First National Bank, New Carlisle, Ind.
point of number, an especially good showing is
First National Bank, Marshalltown, Iowa.
made by the third, fifth, sixth, and twelfth
DISTRICT N O . 8*
districts, while the liabilities are smaller than
Trustee,
executor,
and
administrator:
in January, 1917, in every district, except the
United
States
National
Bank, Owensboro, Ky.
second, fourth, and tenth districts, the expansion in the tenth district being notably heavy.
DISTRICT N O . 10.
Failures during January.
Liabilities.

Number.

Districts.
1918

First
Second
Third
Fourth
Fifth
Sixth
Seventh
Eighth
Ninth
Tenth

Eleventh
Twelfth

Total

160
243
51
95
39
59
183
60
41
62
48
137
1,178

1918

1917

176 $1,671,615
241 5,474,984
77
705,692
129 1,292,797
104
496,483
161
391,985
181 2,581,533
68
981,566
54
316,366
78 3,932,938
58
455,538
213
977,290
1,540

19,278,787

1917
$2,201,296
4,446,073
1,702,861
990,378
549,458
1,486,533
2,954,773
1,422,831
447,077
310,284
498,256
1,273,300
18,283,120

Fiduciary Powers.

The applications of the following banks for
permission to act under section ll(k) of the
Federal Reserve Act have been approved since
the issue of the February Bulletin:

Trustee, executor, administrator, and registrar of stocks
and bonds:
Commercial National Bank, Independence, Kans.
Merchants National Bank, Omaha, Nebr.
San Miguel National Bank, Las Vegas, N, Mex.
Farmers National Bank, Pond Creek, Okla.
Trustee and registrar of bonds:
Shoshone National Bank, Cody, Wyo.

Acceptances to 100 Per Cent.

Since the issue of the February Bulletin the
following banks have been authorized to accept
drafts and bills of exchange up to 100 per cent
of their capital and surplus:
National Bank of New Jersey, New Brunswick, N. J.
Merchants Loan & Trust Co., Chicago, 111.
Peoples National Bank, Rock Hill, S. C.
American Exchange National Bank, Dallas, Tex.
Farmers Loan & Trust Co., New York City.
Union Commerce National Bank, Cleveland, Ohio.
Interstate Trust & Banking Co., New Orleans, La.

New National Bank Charters.
DISTRICT N O . 1»

Trustee, executor, administrator, and registrar of stocks
and bonds:
Bennington County National Bank, Bennington, Vt.
DISTRICT No.

3.

Trustee, executor, and administrator:
First National Bank, Danville, Pa.
DISTRICT N O . 4.

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
26, 1918, to February 22, 1918, inclusive:
Banks.

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

Trustee, executor, administrator, and registrar of stocks Aggregate number of new charters and banks
increasing capital
and bonds:
With aggregate of new capital authorized..
First National Bank, Paris, Ky.
Number of banks liquidating (other than
those consolidating with other national
Trustee:
banks)
Second National Bank, Titusville, Pa.
Capital of same banks
Number of banks reducing capital
DISTRICT NO. 7*
Reduction of capital
Trustee, executor, administrator and registrar of stocks Total number of banks going into liquidation or reducing capital (other than those
and bonds:
consolidating with other national banks).
First National Bank, Newcastle, Ind.
Aggregate capital reduction
First National Bank, Hillsdale, Mich.




13
$5,450,000
23
1, 600,000
36

7
2

9

7,050,000

2,250,000
150,000

2,400,000

185

FEDERAL RESERVE BULLETIN.

The foregoing statement shows the aggregate of
increased capital for the period of the banks
embraced in statement was
$7,050,000
Against this there was a reduction of capital
owing to liquidations (other than for consolidation with other national banks) and reductions of capital of.
2,400,000
Net increase.

4,650,000

State Banks and Trust Companies Admitted.

The following list shows the State banks
and trust companies which have been admitted
to membership in the Federal Reserve system
during the month of February:
Capital.
Security State Bank & Trust Co.,
Luhbock, Tex
Bank of Boyceville, Boyceville,
Wis
Merchants Trust Co., Lawrence,
Mass
The Farmers Loan & Trust Co.,
New York City
Leesburg State Bank, Leesburg,
Fla
Markle Banking & Trust Co.,
Hazleton, Pa
Farmers & Mechanics Bank, Ann
Arbor, Mich...
Farmers & Merchants Bank, Chelsea, Mich
Centralia State Bank, Centralia,
Wash
City Bank & Trust Co., New Orleans, La
The Superior Savings & Trust
Co., Cleveland, Ohio
The Central Savings & Trust Co.,
Akron, Ohio.
Presque Isle County Savings
Bank, Rogers City, Mich
Madison & Kedzie State Bank,
Chicago, 111
The Bank of Hammondsport,
Hammondsport, N. Y
G. W. Jones Exchange Bank,
Marcelius, Mich
Bank of Southwestern Oregon,
Marshfield, Oreg
Mountainair State Bank, Mountainair, N. Mex
State Bank of Coloma, Coloma,
Mich
Bank of Santa Monica, Santa
Monica, Cal
First State Bank of Paris, Paris,
Tex
Tradesmens State Bank, Oklahoma City, Okla.
Rutherford Trust Co., Rutherford, N. .T
The State Savings Bank of Warren, Warren, Mich
*
Western Bank & Trust Co., Cincinnati, Ohio
Beaverhead State Bank, Dillon,
Mont
Farmers & Merchants State Bank,
Shamrock, Tex
Citizens State & Trust Bank,
Edwardsville, 111
Alliance Trust & Guaranty Co.,
Hackensack, N. J
Citizens Bank & Trust Co.,
Athens, Ala




Surplus.

Total

$100,000
30,000

$5,000

275,728

300,000

150,000

5,648,227

5,000,000

Capital.
Guaranty Bank & Trust Co.,
Memphis, Tenn
*.
Lewistown State Bank, Lewistown, Mont
Farmers & Merchants Bank*
Filer, Idaho
Birmingham Trust & Savings Co.,
Birmingham, Ala
Thompson Savings Bank, Hudson, Mich
Exchange Bank of Jefferson City,
Jefferson City, Mo
State Exchange Bank of Macon,
Macon, Mo
Trust Co. of Wyoming County,
Warsaw, N. Y.
..
First Bank of Grantsburg, Grantsburg, Wis
Bank of Camilla, Camilla, Ga
State Bank of Wayne, Wayne,
Nebr
Union Bank & Trust Co., Helena,
Mont
Scandinavian American Bank,
Marshfield, Oreg.
Guaranty State Bank, Hansford,
Tex
First State Bank, Magnolia, 111
Security State Bank, Neligh,
Nebr
Wapello State Savings Bank, Wapello, Iowa
Total

Surplus.

$500,000
50,000

Total

$620,000
$10,000

401,133

500,000

650,000

12,836,371

100,000

50,000

1,362,837

100,000

20,000

1,111,788

100,000

20,000

817,544

100,000

20,000

780,057

50,000
50,000

2,000
50,000

547,155
634,828

25,000

37,260

40,000

10,000

724,321

250,000

150,000

6,626,654

25,000

5,000

202,037

25,000
25,000

5,"666'

74,245
180,345

25,000

5,000

260,122

30,000

8,000

396,391

10,730,000

5,315,000 298,059,275

1,000,000 196,061,446

30,000

10,000

323,095

100,000

500,000

4,180,919

150,000

75,000

1,941,323

25,000

25,000

523,669

100,000

2,000

478,511

200,000

100,000

4,161,096

500,000

1,000,000

17,327,461

500,000

500,000

10,719,917

35,000

12,000

709,133

200,000

50,000

1,463,651

50,000

50,000

1,041,166

40,000

16,000

562,145

100,000

5,000

857,648

25,000

5,000

154,488

25,000

6,000

434,221
1,569,713

110,000

48,000

150,000

75,000

1,572,099

200,000

10,000

5,077,527

100,000

25,000

1,125,016

25,000

15,000

533,082

375,000

500,000

11,218,621

25,000

25,000

430,844
688,985

50,000

153,873

60,000

33,000

100,000

50,000

750,140

30,000

18,000

292,674

Three hundred and forty-three State institutions are now members of the system, having a total capital of $243,339,800, total
surplus of $317,469,446, and total resources
of $5,327,110,351.
Foreign Exchange Instructions.
The following instructions to dealers as
defined under Executive order of the President
of the United States, dated January 26, 1918,
were made public by the Federal Reserve
Board on February 3:
Every individual, partnership, association, company,
or other unincorporated body of individuals, or corporation, or body politic desiring to engage in the business of
buying, selling, or dealing in foreign exchange, or of
buying, selling, or dealing in securities for or through
foreign correspondents, or of carrying accounts or securities
with or for foreign correspondents, is prohibited from engaging in such transactions, except under authority of and
in conformity with the orders, rules, and regulations of the
Federal Reserve Board as now or hereafter issued.
Every person who desires to undertake any of the
transactions mentioned must obtain a registration certificate and must make application to the Federal Reserve
Board through the Federal Reserve Bank of his district
for such certificate on or before February 5,1918, or should

186

FEDERAL RESERVE BULLETIN.

he not now be engaging in any such transaction, but should
desire to do so in the future, it will be necessary for him to
apply for and obtain a registration certificate before he
canfdo so.
The system of reports and control, as developed by the
Federal Reserve Board, is intended to facilitate the foreign
business of the Nation and allow it to proceed with the
least amount of friction to dealers in the United States
that is possible, and still prevent the carrying on of any
foreign business which will be of benefit, either directly
or indirectly, to an enemy or ally of enemy.
It is also the intention of the Board to obtain all information that may be of value in determining the advisability
offgold shipments, and that may be useful to the War
Trade Board in issuing export and import licenses.
The forms for reports have been drawn up in such
manner as to protect the confidential business relations of
dealers, and for the present reports are only required after
transactions have taken place, in order to prevent unnecessary interference with the transaction of business.
SPECIAL REPORTS.

It is desired, however, that all dealers fully realize that
when they have filed the reports required they are not
released from responsibility in reporting to the Board,
promptly and fully, whenever they shall have reason to
believe that any transactions within their knowledge
involve or may involve, directly or indirectly, the payment of funds or delivery of securities to, or the transfer
of credit or securities for, the benefit of an enemy or ally
of enemy. It is expected that every dealer will consider
himself an active part of a machine, of which the Federal
Reserve Board is the head, that is engaged in the work of
protecting our foreign transactions of all kinds from being
of value to the enemy, and every clerk inHhe office of every
dealer should be impressed with this fact.
If, as the situation develops, it is found that an occasional
dealer here and there is careless or untrustworthy, registration certificates will be revoked when there seems sufficient cause, but if it is found that satisfactory cooperation from dealers as a whole is being obtained, it is hoped
that it may not become necessary to consider the question
of having transactions of certain kinds referred to the Board
before they can be undertaken, instead of being reported
afterwards.
Arbitrage transactions are undertaken by enemy interests for the purpose of placing funds which may become
available in one country, where they are not required, in
another country where their use is desired. For instance,
enemy funds in Argentina might be desired in Sweden,
Norway, Denmark, Holland, or Switzerland, where they
could be used to pay for imports, say to Germany, from
those countries. Any arbitrage transactions through any
country to such countries through Spain, or through other
countries, might, without knowledge to the contrary,
represent transfers that might be of value to the enemy.
Again, funds might be required by the enemy in countries




MARCH 1, 1918.

where special propaganda or a campaign of destruction
is being carried on.
Therefore all arbitrage transactions made at the request
of foreign correspondents or foreign persons carrying accounts with dealers should be scrutinized carefully, and
if there appears to be any reason to believe that they may
be for enemy account the Director of the Foreign Exchange Division of the Federal Reserve Board should be
notified before such transactions are consummated. When
there seems to be no cause to believe that arbitrage transactions are for enemy account, but it is felt that knowledge
of the transactions might be of value to the Board, such
operations, until otherwise instructed, may be carried out,
but advice of the details should be given the Board by
letter.
CENSORSHIP.

For the purpose of preventing unnecessary friction and
delay to dealers in the carrying on of their foreign business, the Board has made arrangements for the expediting
of the foreign mail of holders of registration certificates.
The detail of this arrangement can not be outlined, but
in order to obtain the quicker service and to conform with
these regulations dealers must stamp their envelopes with
the words "Foreign Exchange, U. S. F. R. B. No.
."
For the sake of uniformity and greater efficiency, stamps
should be made as follows:
Foreign Exchange,
U. S. F. R. B. No.

,

and should be placed upon the lower left-hand corner of
the envelope in red ink. Each dealer should use the
number of his registration certificate.
Particular attention is called to the fact that no one,
other than a dealer, is authorized to use such stamp, and
if attempted it will result in extended delays of such correspondence while its character is being particularly looked
into. The foreign exchange censors will have complete
lists of dealers holding registration certificates.
Dealers are prohibited from inclosing customers' mail in
envelopes stamped for the foreign exchange censor except
under the following circumstances: Where a dealer is engaged in some transaction which should be expedited in
the interests of the United States, he may submit the facts
to the Federal Reserve Bank of his district and such bank,
in its discretion, may make the following notation on the
letter of the customer which the dealer desires to inclose: "For exchange censor. Approved, Federal Reserve Bank." This notation must be signed by an officer
of the bank. Such a notation may also be made by the
Foreign Exchange Division of the Federal Reserve Board.
To prevent misunderstanding, the attention of dealers is
called to the fact that under these regulations it will be
necessary for them to stamp all their mail whose destina^
tion is outside of the United States, as heretofore outlined,
without regard to whether there is special need for expedition.

MARCH 1, 1918.

FEDERAL RESERVE BULLETIN".

The same stamp must be used on cablegrams and must
be placed on the lower left-hand corner of every cablegram filed for transmission.
All cablegrams must also bear as the last word of the
signature the word "dealer.*' (Example: Cablegram to
Foreign Bank, London, from Third Bank, Chicago, would
read:
Foreign Bank London
Charge our account and pay John Jones London one hundred pounds
Third Bank dealer)
Both the Postal Telegraph Co. and the Western Union
Telegraph Co. have agreed to carry the word "dealer" as
far as the cable censor at the local rate for one word from
the point of sending to the station of censorship. The
censor will delete the word "dealer" before the message is
released. (The censor's office is not in position to assume
the cost of carrying the word "dealer" if through oversight it should not be deleted, but very positive regulations have been issued by the chief cable censor and errors
should not occur.)
No person other than a dealer is authorized to use either
the stamp or the word "dealer" in the manner outlined,
andfany attempt to do so will be dealt with as the occasion
warrants.
DECLARATIONS OR AGREEMENTS PROM FOREIGN CORRESPONDENTS.

Dealers of all classes, A, B, and C, will be required immediately upon receiving their registration certificates to
obtain from all of their foreign correspondents declarations upon the forms to be furnished by the Board for the
purpose. They must notify the Board, through the Federal Reserve Bank of their district, on the date that such
forms together with form of accompanying letter (marked
"Exhibit A") are mailed to their correspondents, giving
a complete list of such correspondents, with their names
and full addresses.
The Federal Reserve Board may prohibit a dealer from
doing business with any foreign correspondents who do not
sign the declarations and return them by such date as the
Board may decide, and in case it is deemed by the Board
as being incompatible with the public interest, it may
prohibit the continuation of business with any foreign
correspondents who may have signed the agreements. It
shall be the general policy of the Board, however, to endeavor to further all business relationships which may
seem to be to the advantage of this country.
Before new accounts can be opened with or for foreign
correspondents declarations of such prospective correspondents must be filed with the Federal Reserve Board.
All declarations of correspondents must be filed with
the Federal Reserve Board through a Federal Reserve
Bank.
The War Trade Board has issued a general license to
American banking institutions, permitting them to continue business relations until further notice, under such




187

regulations as may from time to time be prescribed by the
Federal Reserve Board, with any foreign correspondent
not disapproved by the Federal Reserve Board, who signs
the declaration required by these regulations.
Declarations will not be required from institutions in
enemy countries, and American persons having accounts
or securities with or for correspondents in Germany, or any
of its allies, need not forward such declarations, but must
furnish the Board, through their Federal Reserve Banks,
with an itemized list of all deposits and securities so held.
It is the intention of the Federal Reserve Board to present such lists at the proper time to the Alien Property
Custodian in order that the interests of Americans in property which may come into his hands may be called to his
attention.
Special attention is called to the fact that the Federal
Reserve Board, should it deliver such lists to the Alien
Property Custodian, would be doing so gratuitously and
would assume no responsibility, and that because of sucjh
action by the Board dealers would not be relieved from
taking any steps that might otherwise be necessary under
the law in order to protect their property.
AMERICANS RESIDENT IN FOREIGN COUNTRIES.

It will be necessary for declarations to be sent to American citizens resident abroad on the same form used with
foreign correspondents. This does not apply to American
citizens who may be temporarily traveling in foreign countries, but only to those who have taken up their residence
abroad for apparently a permanent or indeterminate and
extended time.
Foreign exchange and security transactions undertaken
for account of American citizens resident abroad should be
entered upon all forms, exactly as though dealings were
had with a foreign correspondent.
DATES FOR FILING DECLARATIONS.

No announcement will be made of the dates on which
declarations from foreign correspondents must be filed with
the Federal Reserve Board, and they will be determined
without warning, so that it is incumbent upon every foreign
correspondent to return their declarations promptly. In
considering the time the Board will take into account the
distance and time required for mail to reach each country
in the world, but as the public interest would seem to
require that such declarations be in hand at the earliest
possible moment, all dealers should forward letters and
declaration forms in duplicate or triplicate as the distance
of each addressee and mailing conditions would seem to
make advisable.
It will be noted that the form of declaration covers business both for or through foreign correspondents. In case
dealers have operations with foreign correspondents only
one way, they may draw a line through the words in the
declaration which apply to the part of the agreement not
to be undertaken. If the other r elation is later developed,
it will be necessary to obtain a new declaration covering it.

188

FEDEBAX EESEBVE BULLETIN.

COUPONS, INTEREST, DIVIDENDS, AND MATURING OBLIGATIONS.

The declarations of foreign correspondents cover all
transactions, but additional declarations will be required
for the collection of coupons, interest, dividends, and
maturing obligations for foreign correspondents and the
sale or delivery of securities for foreign correspondents.
In all such cases it will be necessary, in addition to the
general declaration on file, to obtain a special declaration
covering particular items on Form F. E. 113. These special declarations are required, as instruments of this
nature may have been enemy owned since February 3,
1917.
These declarations need not accompany the items being
presented for payment, but must be filed with the Federal
Reserve Board, through the Federal Reserve Bank, at the
time of collection. (See last paragraph under " Securities. ")
ENEMY TRADING LIST.

The War Trade Board is issuing from time to time a list
of those who are considered enemies in connection with
the trading-with-the-enemy act. All such names are of
persons situated outside of the United States. No person
in the United States, who does not hold a dealer's registration certificate, can collect instruments of any kind
which reach him directly from any foreign point.
In order to facilitate business, the War Trade Board, in
anticipation of the issuance of the Executive order in connection with the control of the foreign exchanges, has
advised collecting agencies throughout the United States,
bankers and others, that it is not necessary for them to
examine indorsements for enemy names, but under these
regulations it now becomes the duty of all dealers to examine all instruments received by them from foreign
points, for enemy drawers or indorsers, and dealers must
return all items to the correspondents from whom received
that bear enemy drawers or indorsers which were placed
upon such instruments after the date that such names
were put upon the enemy trading list. As all foreign correspondents in their declarations agree not to send items
drawn by, or indorsed by, an enemy, or ally of enemy,
they are on notice that such items will be returned to
them without payment, if forwarded for collection through
error, or otherwise.
As names are added to the enemy trading list, it is
inevitable that in many cases commercial paper, which
has been negotiated in good faith, may have been drawn
or indorsed by those on such list and forwarded for collection by foreign correspondents. It is also probable that
time drafts drawn upon American persons, especially
banks issuing commercial letters of credit, may have been
accepted by the drawees while drawers or indorsers may
not have been on the enemy trading list, but where their
names have been placed on such list after acceptance.
The War Trade Board has ruled that where drawers or
indorsers have been put upon the enemy trading list after
items from foreign correspondents were in transit to Amer-




MARCH 1,

1918.

ican dealers (or after confirmation of letters of credit to such
drawers) that they may be accepted and paid by those
upon whom they are drawn in this country, and that
where the names of drawers or indorsers of such items
have not been on the enemy trading list at the time of
acceptance by American dealers, that such dealers may
pay them at maturity without the necessity in any case of
obtaining a license from the War Trade Board.
If dealers consider it to the public interest that certain
items should be paid, which might be received by them
for collection, where the names of drawers or indorsers
had been put upon the enemy trading list before the items
were mailed to this country by a foreign correspondent,
they may apply to the War Trade Board for a license to
permit collection before returning them.
CUSTOMERS' STATEMENT.

It is incumbent upon every dealer to require all " customers" with whom they have business defined under
the word "dealer" in the Executive order, to supply the
dealer with such information as is necessary to enable
him to list all transactions under their proper headings
in his reports to the Federal Reserve Board.
Customers' applications for service must bear the following statement:
"This transaction is made under representation by the
undersigned that there is not involved in connection therewith any trading, directly or indirectly,
with, to, from, for, or on account, behalf, or benefit
of any enemy or ally of enemy of the United States,
or any transaction violative of the trading-withthe-enemy act of the United States."
Dealers may include this statement in their order forms
and application forms, or may use a rubber stamp, but the
agreement must be over signature.
Such agreements need not be filed with the Federal
Reserve Board unless requested.
LICENSES.

No authority is extended under these regulations fco
dealers holding registration certificates to engage in any
transaction which involves, or may involve, trading with
an enemy or ally of enemy, and should occasion arise
where a dealer might desire to undertake such a transaction, he can not do so until he has obtained a license from
the War Trade Board.
BOOKS AND ACCOUNTS AND GENERAL REPORTS.

The reports to be made to the Federal Reserve Board
require the purchases and sales of foreign exchange to be
divided into various classes, and the same is true of
dealings in securities. It will be necessary for all dealers
to keep their books and records in such manner as will
enable them to give the information required on the
proper forms, promptly and accurately.
Dealers in all three classes must file statements of
balances of accounts and securities as of the close of business February 20, 1918.

MARCH 1,

1918.

FEDERAL BESERVE BULLETIN.

Dealers of class A must make weekly reports of all
purchases and sales of foreign exchange and dealings in
securities and also of transactions going through the dollar
accounts of their foreign correspondents. A confirmation
of balances will be required (which must balance to the
cent), and a detailed statement of arbitrage and security
transactions must be made. All forms will be provided
by the Federal Reserve Board, through the Federal
Reserve Banks. All reports must cover' transactions
from every preceding report to the close of business on
Wednesday night of each week and must be made in
duplicate. Dealers situated in cities where there are
Federal Reserve Banks must deliver such.reports to the
Federal Reserve Banks by messenger at the opening of
business Thursday morning. The Federal Reserve Banks
will forward one copy of such reports to the Federal
Reserve Board, in Washington, D. C , and one copy to
the Director, Division of Foreign Exchange, Federal
Reserve Board, 16 Wall Street, New York, on Thursday
afternoon. Dealers situated in other towns and cities
must mail one copy of their report on Wednesday night
to their district Federal Reserve Bank, and the second
copy of the report must be mailed Wednesday night to
the Director, Division of Foreign Exchange, Federal
Reserve Board, 16 Wall Street, New York, unless otherwise instructed. Federal Reserve Banks will forward
copies received by them to the Federal Reserve Board,
Washington, D. C.
Dealers of classes B and C must make such reports in
duplicate as are required of them in exactly the same
manner, but such dealers who have only occasional
changes in their accounts need only report at the close
of business on the last Wednesday of each month in such
months as they do have transactions, but each report
made must cover every transaction that has occurred
since the filing of the preceding report. When, however,
transactions occur in excess of $100,000 reports should be
brought up to the close of business on the following
Wednesday, and further reports made as from such date.
AMERICAN BRANCHES OF FOREIGN BANKS.

All American branches of foreign banks, or other institutions, must take out registration certificates of the
proper class. When giving balances and securities held
in the United States they must also give the totals of
earmarked gold held in this country and of balances in
gold under their control; also, securities which are their
own property, as well as securities which they are holding
in this country for other account. In case any such
institutions have difficulty in determining their balances
because of the nature of their bookkeeping in connection
with their head offices and their branches, the Board
should be notified immediately, but a proper record
should be kept of all transactions following the date for
which balances are called and reports should be rendered
weekly while balances are being determined. Reports
must be made in the same manner as those of American
dealers.




189

AMERICAN BANKS WITH FOREIGN BRANCHES.

Dealers having branches abroad must consider their
dealings with such branches as though they were dealing
with foreign correspondents.
FOREIGN ITEMS DRAWN IN DOLLARS.

Items drawn in dollars on foreign countries must be
considered as purchases of exchange on the foreign
countries to which they are sent when the dealers are
credited at a conversion rate in their foreign accounts.
Dealers must record the entries under their proper classifications. When such drafts are forwarded for collection
and actual remittance in dollars they must be entered as
purchases of exchange against the country to which sent
and under their proper classification, and a counter entry
made in column 12 of Form 10, Sales of Exchange, for
balance. (See instructions following:)
FOREIGN COLLECTIONS.

Foreign items taken for collection need only be entered
at the time the entry goes through against the foreign
account, whether such collections are drawn in dollars or
foreign moneys. When a remittance is made, instead of
the exchange going into a foreign account entry should
be made on Form IB, Purchases of Exchange, and counter
entry for purpose of balance made on Form 10, Sales of
Exchange, in column 12. (See instructions following:)
COMMERCIAL LETTERS OP CREDIT.

Commercial letters of credit may be issued to cover
imports from other countries to the United States without reference to the Federal Reserve Board until otherwise instructed. Drafts against such letters can only be
created when imports are permitted by the War Trade
Board, and it is the duty of the importer applying for a
commercial letter of credit to keep himself informed as
to what commodities can be imported from the countries
with which he is dealing, rather than the dealer from whom
he may obtain a commercial letter of credit.
It is incumbent upon dealers, however, to see that no
commercial letters of credit are issued where the beneficiary is on the enemy trading list. (See instructions
under "Enemy trading list" in regard to items bearing
names, as drawers or indorsers, which appear upon such
list, that may have been placed on the enemy trading
list after the items were drawn or indorsed.)
Commercial letters of credit may be issued by dealers
for the purpose of financing exports from the United
States without first being referred to the Federal Reserve
Board, until otherwise instructed. It is the duty of the
exporter obtaining the letter of credit to assure himself
as to his ability to obtain a license when required from
the War Trade Board permitting the export, and not that
of the dealer.
These instructions apply only in so far as the Federal
Reserve Board is concerned in the operations of the dealer,
and are not intended to relieve the dealer from familiar-

190

FEDEBAL KESEKVE BULLETIN.

king himself for his own practical and legal protection,
with all phases of such transactions as may be necessary.
Any dealer having occasion to issue a letter of credit
for the exportation of goods from one foreign country to
another foreign country must first obtain authority from
the Federal Reserve Board.
When dollar commercial letters of credit are issued to
cover exports and reimbursement is received by charging
dollar accounts of foreign correspondents at maturity, or
when dollar remittances are received in payment from
foreign correspondents the amounts should be entered
under exports against the importing country on Form IB,
purchases of exchange, and a counter entry for balance
should be made on Form 1C, sales of exchange, column
12. When payment is received in dollars from allied
Governments or their American agents no entry need be
made.

MARCH 1, 1918.

that they take out either class B or class C registration
certificates, or both, when necessary.
CLASS A REPORTS.

Holders of class A registration certificates must render
reports on Forms Nos 1A, 1AA, IB, 1C, 1BC, ID, IE, 1FS
1G, and 1FG, covering exchange transactions; on forms 1H,
1J, and 1JX and 1L, 1LA, and 1LB for security transactions; and on forms IK and 1KA for commodity transactions. All entries must be in dollars, which represent
the exact amount paid for or received from the various
classes of exchange transactions, and the totals must be
entered against the country in which the exchange is to
be paid, or upon which it is drawn. Only the totals of
transactions in each class for the week need be given.
(See "Books and accounts and general reports.")
FORM NO. 1A, BALANCES WITH FOREIGN CORRESPONDENTS.

DBALEES WHO TRANSACT FOREIGN BUSINESS THROUGH
DOMESTIC CORRESPONDENTS.

Total balances in each country in dollars as they appear
on the books of the American dealer should be entered
Many dealers in foreign exchange do their foreign ex- opposite the country of deposit.
change business through the foreign accounts of a meFORM NO. IB, PURCHASES OF EXCHANGE.
tropolitan bank or exchange house. All such dealers
must take out proper registration certificates and must
This form is divided into a number of columns in order
keep their records in such manner that they can give the to separate purchases of foreign exchange into such classes
institutions through whom they operate such information as are considered necessary.
as will enable the latter to include in their reports to the
All entries must be in dollars which represent the exact
Federal Reserve Board all transactions under their proper
amount paid for the various classes of exchange purchased
headings. Should such dealers consummate any transand the totals must be entered against the country in which
actions directly with foreign correspondents they must
the exchange is to be paid. For instance, drafts drawn on
make separate reports to the Federal Reserve Board
Italy payable in London would be listed as against Great
through the Federal Reserve Bank, and must not include
Britain.
them or include with them any operations consummated
Columns Nos. 1 and 2.—All purchases of exchange,
through their domestic metropolitan agencies.
either demand or cable, from dealers of class A and class B,
would be entered in these columns, except such exchange
STOCK EXCHANGE BROKERS.
as would properly belong under any of the other headings.
Stock exchange brokers, or others who deal in securities
Column No. 3.—Purchases of time finance bills from
for foreign account, must take out class C registration cer- dealers of class A and class B and the dollar proceeds of
tificates, and make reports on regular forms.
any exchange created through foreign loans obtained by
In such brokers, or others, buy or sell securities in for- the reporting dealer should be entered in this column.
eign countries for American or foreign account, or hold When foreign funds are received from the issuance of long
securities in foreign countries for American or foreign bills the proceeds must appear in this column as exchange
account, they must take out class B registration certifi- against the country where the funds are deposited. Such
cates also, and must make reports of such transactions on bills should also be entered in column 3 on Form 1C, Sales
class B forms.
of Exchange.
If such brokers, or others, also buy, sell or deal in foreign
Occasionally long bills in foreign moneys are purchased
exchange, they must take out class A registration certifi- from dealers in the United States by domestic persons,
cates, and must make all reports on class A forms.
who may or may not be dealers, and who at the time of
the purchase sell exchange for future delivery, in order to
APPLICATIONS FOR CERTIFICATES.
fix the interest return. Where the dealer selling the long
It is desired that all applications for registration cer- bills is also the purchaser of the exchange at maturity,
tificates be made for the particular classes which cover both the purchase and sale of exchange should be entered
the business of the applicant, in order to add to the effi- at the time the transaction is made, and also at its comciency of the books of control. The Board will, therefore, pletion. In other cases purchases of exchange for future
refuse all applications for class A registration certificates, delivery need only be entered at the time of delivery.
Columns Nos. 4, 5> and 6.—All purchases of exchange
where the buying and selling of foreign exchange is not
the natural business of the applicant, and will require against exports should be entered in these columns.




MARCH l,

1918.

EEDEBAL BESERVE BULLETIN.

Column No. 7.—Particular attention must be given to
transactions covered under this column which represent
purchases from foreign interests not domiciled in the
United States. All purchases of exchange aimed to create
dollars which are to be used to pay for imports of other
foreign countries must be entered in this column. For
instance, if a house in Great Britain having an agent in
the United States should purchase goods in, say, Chile
and should pay for them by a dollar draft in Chile but
should create the dollars through sterling exchange in the
United States drawn upon the English house or its agent,
the dollars paid for the sterling exchange must appear in
this column. It is incumbent upon all dealers to familiarize themselves suffciently with the nature of the business
of their customers from whom they buy foreign exchange
to enable them to ascertain with certainty all purchases of
exchange that represent a transfer of any foreign moneys
into United States dollars for the use directly or indirectly
of any foreign interest.
Great care must be exercised in entering the detail
in this column on the special form provided for that
purpose, No. ID. If a bank in New York purchased
10,000 pounds sterling from a bank in Argentina, it would
appear in column 7 as a purchase of exchange on Great
Britain, but on Form ID it would show that the sterling
had been purchased from Argentina. On Form ID all
purchases of exchange would be entered under the column
"Bought from," but opposite the country listed on the
left-hand side of the sheet which sold the exchange.
Also all exchange sold to those outside of the United States
would be entered on Form ID under "Sold to." (See
instructions under Form 1C, Sales of Exchange.)
Column No. 8.—All purchases of exchange from foreign
houses domiciled in the United States should be entered
in this column. It should also include purchases of exchange from commercial houses having offices in the
United States. These transactions must be reported
in detail by letter, but only in totals from countries.
When in doubt as to whether a house should be considered
as a foreign institution domiciled in the United States.
exchange purchased should be listed in this column and
attention should be called to the concern from which it
was purchased, by letter. All exchange purchased from
American branches of foreign banks should be entered
under column 7.
Column No. 9.—All exchanges purchased against securities sold abroad should be entered in this column and the
detail should be carried forward on Form No. IE, under
the column "Sold to," under the proper classification
and against the country for which the securities are sold.
(See "Securities.")
Column No. 10.—All coupons and dividends payable
in foreign countries which represent income from foreign
securities held in the United States should be entered in
this column.
Column No. 11.—All exchange made through the exportation of gold or silver should be entered in this column.
Also foreign currency in separate total marked F. C.




191

Column No. 12.—All purchases of exchange not applicable to any of the classifications should be entered in
this column, also book entries, such as exchange, commissions, profits, etc.
In case exchange is purchased where the dealer has
doubt as to the classification, it should be entered in
column 12, and a letter of explanation should accompany
the report.
Column No. IS.—A cross footing should be made
against each country and placed in the total column,
No. 13. Footings should also be made of each class of
exchange purchased and the cross footings of the totals
should agree before dealers send in their reports.
FORM NO. ICJ SALES OF EXCHANGE.

This form is divided into a number of columns in order
to separate sales of exchange into the same classes as
those of purchases of exchange and such others as are considered necessary.
Columns Nos. 1 and I?.—Sales of exchange, either
demand or cable, to dealers of class A and class B would
be entered in these columns, except such exchange as
might properly belong under any of the other headings.
Column No. S.—Sales of long bills must be entered
in this column, regardless of whether they are sold for
United States dollars or for foreign currency, although
in the latter event a purchase of exchange must be shown
against the country where the proceeds are deposited,
(See column 3, Form IB, Purchases of Exchange.)
Column No. 4.—All sales of exchange to be used for
payment of imports must be entered in this column.
Every dealer must ascertain for what purpose exchange
sold is required, and when doing so must be particular to
find out whether its purpose is directly or indirectly for
the payment of imports to the United States.
To these figures must be added all settlements of commercial letters of credit against the country where drafts
drawn against such credits are made payable, with the
exception of dollar commercial letters of credit issued
against imports. (Commercial letters of credit for domestic use not included.) The dealer must on presentation
enter in this column drafts drawn under dollar commercial
letters of credit against the country from which the importation is made, and in order to balance his report must
make a counter entry in the report of "Purchases of Exchange," Form IB, under column 12 and against the exporting country.
Column No. 5.—All sales of exchange to make payments
for freight, insurance, or other services rendered by foreign
institutions in connection with transportation and life
and fire, guaranty, or other forms of insurance, should be
entered in this column.
Column No. 6.—Sales of exchange for the purpose of
making remittances to pay income of foreigners or Americans living abroad, and also foreign taxes of any kind,
should be entered in this column. Ordinary remittances
made by foreigners to relatives in foreign countries should
not be included.

192

FEDEBAL EESEKVE BULLETIN.

Column No. 7.—The entries in this column correspond
to those in column 7 of the form " Purchases of Exchange"
and should cover all exchanges sold to interests outside
of the United States, whether payment is made in dollars
or foreign moneys. If in foreign moneys, a purchase of
exchange should be recorded also. The detail must be
carried forward into Form ID under the second division
of each country listed across the top under " Amount sold
to." Example, in case £10,000 sterling was sold to an
Argentine bank, this would appear in column 7 under
sales of exchange against Great Britain as, say, $47,500,
and would be entered in Form IB opposite Argentina,
among the countries listed on the left-hand side, under
"Exchange on Great Britain," and under "Amount sold
to " in the right-hand column.
Column No. 8.—The conditions covering entries in
column 8 in the report of "Purchases of Exchange," Form
IB, should be read and applied here.
Column No. 9.—All exchange sold in order to pay for
securities purchased abroad should be entered in this
column and the detail carried forward on Form No. IE
under the column "Bought from" under the proper classification and against the country from which the securities
are purchased. (See "Securities.")
Column No. 10—Travelers' letters of credit and travelers'

checks.—Letters of credit: Drafts presented to foreign correspondents drawn against travelers' letters of credit
issued under guaranty, when credited to the foreign
accounts by the dealers, should be entered in this column.
Letters of credit sold against cash should be entered in
this column as of the time the credit is made to the foreign
account.
Travelers' checks: Travelers' checks are sold for use in
the United States and all parts of the world, and at the
time of their sale it is impossible to determine in what
country they will be charged to American account. At
the time of sale of travelers' checks, therefore, whether
against cash or otherwise, no entries need be made upon
any foreign exchange report and inland correspondents
selling checks against the accounts of metropolitan banks
or exchange houses need make no report whatever of such
sales. When dealers, whose business it is to protect
travelers' checks, receive advice that such checks have
been charged to their accounts by foreign correspondents,
they must at the time they credit such foreign correspondent for travelers' checks paid by the latter enter the
total in this column. (See "Customs.")
Column No. 11.—Exchange disposed of through the
importation of gold or silver should be listed in this
column. In case gold or silver is not imported to the
United States but is shipped from one foreign country to
another foreign country, a record should be made under
column 7, Form IB, "Purchases of Exchange," of the
exchange received, but advice by letter should accompany the report, stating the nature of the transaction.
(As a shipment of this nature might be for enemy account
or benefit a permit must be obtained from the Federal




MARCH 1, 1918,

Reserve Board before any gold or silver can be shipped
from one foreign country to any other foreign country.)
Also foreign currency in separate total, marked F. C»
Column No. 12.—All sales of exchange which represent
funds being transferred to relatives or friends as presents,
gifts, or voluntary contributions and that do not represent
a remittance due the beneficiary account of property
held in the United States should be entered in this column.
All other sales of exchange which do not clearly belong
under any other column should be entered in column 12;
also all book entries, such as exchange, commissions,
losses, etc.
Column No. IS.—A cross footing should be made against
each country and placed in this column. Footings should
also be made of each class of exchange sold, and the cross
footings of the totals should agree before dealers send in
their reports.
MONEY ORDERS AND POSTAL REMITTANCES.

Dealers who sell money orders or postal remittances
must require all customers to make the regular customer's
statement of nonenemy interest, and they must also
obtain from purchasers of money orders and postal remittances such information as is necessary to enable them
to list all transactions under their proper headings in the
reports to be rendered the Federal Reserve Board. Where
money orders or postal remittances are made payable in
any one of several countries, entries should only be made
in the proper columns in the report of" Sales of Exchange'5
at the time credit is given to the particular countries
where the money orders or postal remittances are paid
by the dealer either through a branch office or agency of
such dealer or a foreign correspondent.
PURCHASES

AND

SALES OF EXCHANGE
' DELIVERY.

FOR

FUTURE

All entries for purchases and sales of exchange for future
delivery should be made at the time of delivery, with
the following exception: When exchange is purchased for
future delivery at the maturity of and against long bills
issued by the dealer making the purchase for the purpose
of taking up such bills, entries should be made in accordance with instructions under column 3, Form IB, "Purchases of Exchange."
FORM NO. ID, ARBITRAGE.

Entries upon this form have been described i n purchases and sales of exchange, Forms IB and TO, under
column 7 in each.
FORM NO. IE, FOREIGN EXCHANGE TRANSACTIONS AGAINST
SECURITIES.

Entries upon this form have been described in purchases
and sales of exchange, Forms IB and 10, under column
9 in each.

MARCH 1,

1918.

FEDERAL EESERVE BULLETIN.

FORM I B C J EXCHANGE BALANCE SHEET.

This balance sheet must be forwarded with the reports
of sales and purchases of exchange each week.
Column No. 1.—In this column must be entered the
totals from column 13 of Form IB, purchases of exchange.
Column No. 2.—In this column totals of column 13 of
Form 1C, sales of exchange, must be entered.
Column No. 3.—The difference between columns 1 and
2 must be carried to this column in black ink if purchases
of exchange exceed sales or red ink if sales of exchange exceed purchases.
Column No. 4.—The previous balance as turned in on
Form 1A at the close of business February 20, 1918, and
thereafter as turned in on Form 1BC, the exchange balance
in column 4, for the week previous to the making of the
report, must be entered.
Column No. 5.-—The new balance represented by the
previous balance, increased or decreased by the transactions of the week, as shown in column 3? must be entered.
REPORTS OF TRANSACTIONS FOR FOREIGN ACCOUNTS.

Many holders of class A registration certificates carrybalances on their books due to foreign accounts. Reports
of transactions coming through such accounts must be
reported on Forms 1AA, IF, 1G, and 1FG. Only the
totals of transactions in each class for the week need be
given.
(See "Books and accounts and general reports.)
FORM 1AA, BALANCES HELD IN THE UNITED STATES FOR
FOREIGN CORRESPONDENTS.

Total balances held for each country in dollars as they
appear on the books of the American dealer should be entered opposite the country of depositor.
FORM IF, DEBITS TO FOREIGN ACCOUNTS.

Column No. 1.—Payment to banks or others in the
United States either through drafts drawn or letters of
instruction or by cable are to be entered in this column,
except where they specifically belong in some other
column.
Column No. 2.—All payments to banks or others outside
of the United States or to banks in the United States for
accounts of banks or others outside of the United States
situated in a different country from that of the depositor,
whether by cable, letter of advice or draft, should be
entered in this column.
All drafts drawn against the dollar accounts of foreign
persons which bear a foreign indorsement in a country
different from that of the drawer, should be entered in
this column and the detailed statement should show the
country of the drawer and country of the foreign indorser.
The detail of entries in this column should be given by
letter. Such detail need not include the names of payees,
but the total amount in debits created by payments made
in each foreign country outside of the depositor country by
the depositor country should be reported.




193

Column No. 3.—All payments for merchandise of any
kind, whether against shipping documents, warehouse
receipts, or transfers, should be entered in this column.
Column No. 4.—The cost of the purchase of all securities
should be entered in this column and the details should
be reported on Form IE, " Securities/' etc., under
column "Sold to" and against the proper country. (See
"Securities.")
FORM 1G, CREDITS TO FOREIGN ACCOUNTS.

Column No. 1.—Credits received from persons in the
United States, whether made through deposit of such
persons or through the collection of drafts drawn upon
them, except where such items clearly come under other
headings, should be entered in this column.
Column No. 2.—Remittances received direct from the
foreign account in the shape of bills of exchange where
the drawers are located in a foreign country not that of
the depositor, and all remittances received from foreign
countries outside of that of the depositor for account of
the depositor, should be entered in this column; also all
deposits made by American institutions at the request or
for the account of foreign interests. The detail of entries
in this colume should be given by letter. Such detail
need not include the names of drawers or remitters, but
the total amount of credits as from each foreign country
outside of the depositor country to the depositor country
should be reported.
Column No. 3.—The proceeds of securities sold should
be entered in this column and report of details should be
made on Form IE against the proper country and under
the column "Bought from." (See "Securities.")
Column No. 4.—It is customary for many foreign interests carrying accounts in the United States to send commodities for sale, the proceeds to go to their credit. Totals
of such sales should be entered in this column. Also the
proceeds of documentary remittances.
COUPONS, INTEREST, AND DIVIDENDS.

The Board desires information as to the total in American coupons, maturing interest payments, and dividend
warrants that may be sent for collection by foreign persons having accounts with American dealers. Separate
entries should be made of the total of such items received
for collection, and they should be reported by letter
accompanying Form 1G; "Credits to foreign accounts."
The reports of these items by letter should be in two
totals, one giving the amount covered by separate declarations which must accompany the letter to the Federal
Reserve Board, and the other, the amount covered by
declarations which appear upon the back of dividend
checks. Should it be found advisable later, a separate
column may be introduced in Form 1G for such entries.
Particular attention is called to the fact that in no case
do declarations follow the items, but that in every case
they must go forward to the Federal Reserve Board with
the weekly reports which contain entries of the items
covered.

194

EEDEKAL KESEBVE BULLETIN.

In this connection attention is called to the fact that
the responsibility for the collection of all items received
for foreign account, whether for credit or collection and
remittance, is placed under these rules and regulations
upon the dealer receiving the items from abroad, and not
upon the persons upon whom they are drawn. This does
not, however, relieve any payer from the necessity of
being guided by the provisions of the trading-with-theenemy act in case he has knowledge or has reason to
believe that any items which may be presented to him
for payment are not presented through a dealer, and, or
if presented through a dealer, if he has knowledge or
reason to believe that such dealer may be attempting to
evade these rules and regulations, or may be endeavoring
to operate for, on account of, for the benefit of or on behalf
of an enemy or ally of enemy.
In connection with reports on Forms IF, "Debits.to
foreign accounts/' and 1G, il Credits to foreign accounts,"
if any transactions have gone through the books where
the dealer believes it necessary for the public interest
that the transaction be reported to the Board, full details
by letter should accompany reports. In case any dealer
receives instructions in connection with any account
which he may have for foreign persons that he believes
would be incompatible with the public interest to have
carried out, he should advise the Board, either by mail,
telephone, or telegraph, as seems necessary, of the detail
of the transaction and the reason of the dealer for believing it inadvisable to allow of its consummation before
the transaction is effected and should then await authority
from the Board before undertaking it.
FORM 1FO, DOLLAR BALANCE SHEET.

This balance sheet must be forwarded with the reports
of the debits and credits to foreign accounts each week.
Column No. 1.—In this column must bo entered the
totals from column 6, Form 1-F, "Debits to Foreign
Accounts."
Column No. t.—In this column totals of column 6,
Form 1-G, "Credits to Foreign Accounts," must be
entered.
Column No. $.—-The difference between columns 1
and 2 must be carried to this column in black ink, if
• "Credits to Foreign Accounts" exceed "Debits to Foreign
Accounts" (if column 2 exceeds column 1), or in red ink,
if column 1 exceeds column 2.
Column No. <£.-—The previous balance, as turned in
on Form 1-AA at the close of business February 20, 1918,
and thereafter as turned in on Form 1-FG, "Dollar Balance
Sheet," in column 5, for the week previous to the making
of the report, must be entered in this column.
Column No. 5.—The new balance represented by the
previous balance increased or decreased by the transactions of the week, as shown in column 3, must be entered.
SECURITIES.

In connection with the foreign exchange transactions
of the country it has been found necessary to require




MAUCH 1,1918.

complete records of the buying, selling, dealing in, transfer, or delivery of securities for or through foreign correspondents. (See "Customs.")
All securities held by dealers in the United States for
foreign account must be listed on Form 1-H, as of the
close of business February 20, 1918, and forwarded to the
Federal Reserve Board, in the same manner as reports on
foreign exchange. The par values of all securities issued
in foreign moneys must be converted into dollars at mint
par figures, but only the thousands need be entered.
Securities held in trust should be separated from
securities which are hypothecated and should be entered
in red ink in the proper column as to nationality of securities and against the country in the left-hand column for
whose account they are held. Hypothecated securities
should be entered in black ink in the same manner under
the right-hand column of the national division. Some
institutions carry securities in trust for foreign accounts,
which have been made avaialble through agreements, to
cover loans or overdrafts. Such securities should be
entered in the column under hypothecated securities.
Forms 1-J, "Securities Held by Us Abroad for American
Account," and 1-JX, "Securities Held by Us Abroadfor Foreign Account," must be treated in the same manner
as Form 1-H, and the instructions given in connection
with Form 1-H apply to Forms 1-J and 1-JX.
As reports are being made from week to week of foreign
exchange transactions and those going through dollar
accounts, where securities are involved, which are covered
on Forms 1-H, 1-J, or 1-JX, entries of which are made on
Form 1-E of the actual amounts involved in the sale or
purchase of the securities, the Board should be advised
by letter, giving par values in United States dollars
figured at the mint par, when securities are in foreign
moneys, and stating specifically which statement, Forms
1-H, 1-J, or 1-JX, such securities should be added to or
subtracted from. When accounts showing such transactions are sufficiently active, reports may be made on
Forms 1-L, 1-LA, and 1-LB, instead of by letter.
There may be special cases, due to large Government
transactions, where the Board may be willing to accept
reports of securities held in trust, or which may be hypothecated, in the form in which they are held by those carrying them. In cases where it is desired to make reports
on special forms of balances of securities, the Board should
be informed and its permission obtained before the date
on which security balances are to be filed.
Stock exchange brokers and other persons who may
carry class A or class C registration certificates may have
occasion to pass the proceeds of security transactions or
transfers through other dealers of class A—that is, when
the exchange made by the sale of securities is sold to or
the exchange required to purchase securities is bought
from class A dealers. In all such cases class A dealers
must be furnished with the information that may be required by them in order to enable them to properly classify
their foreign exchange transactions. It will not then be
necessary for the stock exchange brokers or other persons

MARCH 1, 1918,

195

FEDERAL RESERVE BULLETIN.

who may hold class A or class 0 registration certificates
to make any other report of the foreign exchange transactions to the Federal Reserve Board. It will be necessary for them, however, to advise the Board of any increase
or decrease that such dealings in securities may make in
securities held in trust or that may be hypothecated with
them for foreign account that have been previously reported in connection with Forms 1-H? 1-J, or 1-JX.
If stock exchange brokers, or other persons, are holders
o! class A registration certificates, they must make reports
on regular class A forms of all exchange made against
security transactions, except those handled through other
class A dealers.
The declarations of foreign correspondents cover all
transactions, but additional declarations on form No.
FE-113 will be required for all securities held in trust or
hypothecated for foreign account on January 26, 1918,
and for all securities before they can be sold, transferred,
or delivered for foreign account. These special declarations are required, as instruments of this nature may have
been enemy owned since February 3, 1917.
Particular attention is called to the fact that in no case
do declarations follow the items, but that in every case
they must go forward to the Federal Reserve Board with
the reports which contain entries of the items covered.

FORM l-KA, CHANGES IN COMMODITIES HELD FOR FOREIGN
ACCOUNT.

Any changes that may occur in connection with commodities held for foreign account are to be reported on
this form. (See last paragraph "Books and accounts and
general reports.)
CLASS B REPORTS.

Holders of class B registration certificates must render
reports on Forms 2-A, 2-B, and such class A forms as their
operations may make necessary. All entries must be in
dollars, which represent the exact amount paid for or
received from exchange transactions as they go through
the books of the American office of the class B dealer,
whether such transactions are handled through a foreign
person or their own foreign agency or branch.
FORM 2-A.

All balances carried abroad must be reported on Form
2-A. Only the total dollars carried in each country need
be given as against each country, and countries must be
listed in the left-hand column under "Country of deposit."
All entires must be in dollars as they appear upon the books
of the class B dealer, and must represent totals held aboard,
whether with foreign persons or their own agencies or
COMMODITIES.
branches. Balances in enemy countries must be given,
The declarations of foreign correspondents cover all as well as those of all other countries.
commodity transactions, and no additional declarations
FORM 2 - B .
are required in connection with commodities with the
All changes in balances held abroad must be reported
exception of those being held for foreign correspondents
on January 26, 1918. As all such commodities may have on this form (see last paragraph "Books and accounts
been owned or held for account of an enemy or ally of and general reports"). The names of the countries
enemy since February 3,1917, it will be necessary to have where changes have occurred should be entered under the
special declarations for such commodities on Form FE-113 word "Country," and the totals of "Withdrawals" from
(note next preceding paragraph). Should any dealers and "Deposits" in each country opposite their respective
because of foreign exchange transactions previously countries. The "Previous balance" should be filled in as
engaged in or for any other reason have cause to believe from the last report, and must include all countries where
that any commodities held in the United States in ware- balances are held, without regard to whether changes
house, under bill of lading or otherwise, are the property have taken place. The new balance should then be carried
of an enemy or ally of enemy, the Federal Reserve Board in under "Present balance," and all columns should be
should be advised by letter, giving all available par- footed. No withdrawals or deposits may represent transactions not authorized class B dealers.
ticulars.
FORM l-&j

COMMODITIES HELD FOB FOREIGN

ACCOUNT.

Report of commodities held for foreign account as of
February 20, 1918, is to be made on this form.
Column 1.—In this column is to be entered the names
of countries for whom commodities are held.
Column 2.—Enter in this column the number of units
of the commodities-—barrels, bushels, tons, etc.
Column 3.—The commodity held is to be entered in
this column—-oil, grain, metals, cotton, etc.
Column 4.—In this column state whether held under
warehouse receipt, bill of lading, or otherwise.
Column 5.—Enter in this column, in dollars, the present
approximate market values of the commodities held.




SECURITY REPORTS, CLASS B.

Balances of securities should be reported on Form 1-J,
described under *' Securities." When changes in balances
of securities held abroad occur, advice should be given by
letter, giving the details shown on Form 1-LA, unless the
accounts are sufficiently active to necessitate that re»
ports be made on Form 1-LA.
Those taking out class B registration certificates can not
buy or sell in the United States foreign exchange or
foreign securities, except for their own account, and then
only through holders of class A registration certificates.
They may accumulate exchange which results from their
ordinary business transactions, which can not be foreign

196

FEDERAL RESERVE BULLETIN.

exchange business, and may use such exchange for the
conduct of their business through payments in the countries where the accounts are located. Because of the
nature of their business, some holders of class B registration certificates may have special transactions that are
defined under class A. In such cases special application
should be made for permission to carry out the transactions. At the discretion of the Federal Reserve Board,
such permission may be given, or the applicant may be
required to apply for a class A registration certificate.
CLASS C REPORTS .

MABCH 1, 1918.

SECURITIES CLASS C.

All security forms applicable to the business of dealers
of class C, which are described under "Securities" under
class A forms, must be used by them in making their reports (see "Securities" and the last paragraph of "Books
and accounts and general reports").
COMMODITIES, CLASS C.

All commodity forms applicable to the business of
dealers of class C, which are described under "Commodities," must be used by them in making reports.
CUSTOMS,

Holders of class C registration certificates must render
TRAVELERS' LETTERS OF CREDIT.
reports on Forms 3-A, 3-B, and such class A forms as their
The customs authorities have ruled that travelers1 letters
operation may make necessary.
of credit and travelers' cheques issued by dealers in the
United States, or by foreign correspondents of such dealers
FORM 3-A.
who may have signed the regular declarations required of
Only total balances carried for account of each country them under these regulations, may be carried upon the
need be given. Balances held for account of enemy person of beneficiaries, who are not enemies or allies of
countries must also be entered, and if such funds have enemies, when going from or coming into the United States.
been turned over to the Alien Property Custodian mention
Travelers' letters of credit for more than $1,000 but less
should be made of the fact,
than $5,000 must be reported by dealers to the Federal
Reserve Board as soon as issued.
FORM 3-B.
Dealers desiring to issue such letters of credit to any one
All changes in balances held for foreign correspondents person, firm, or corporation for more than $5,000 must first
must be reported on this form (see last paragraph "Books file a statement with the Federal Reserve Board through
and accounts and general reports"). The names of the the nearest Federal Reserve Bank showing the details of
countries where changes have occurred should be entered the transaction involved, in order that the board may deunder the word "Country," and the totals of withdrawals termine whether their issuance is compatible with the
and deposits account each country must be entered. public interest.
SECURITIES.
The "Previous balance" should be filled in as from the
Any person desiring to make delivery of securities in any
last report, and must include all countries for whom
balances are held without regard to whether changes manner which necessitates the transportation of such sehave taken place. The new balance should then be carried curities into or out of the United States must file a declafn under "Present balance," and all columns should be ration of nonenemy interests, as required by Executive
order of the President, and must obtain a certificate from
footed.
the Federal Reserve Board, through a Federal Reserve
Bank, that such declaration has been filed.
SPECIAL REPORTS, CLASS C—DEBITS AND CREDITS.
Securities unaccompanied by such certificate will not
Particular attention is called to the fact that holders of be permitted by customs officials to be brought into the
class C registration certificates, who have foreign corre- United States and delivered to persons within the United
spondents carrying on operations covered by "Reports of States, or carried out of the United States for delivery to
transactions for foreign accounts," which pass through the persons outside of the United States.
books of class C dealers, must use Forms 1-F, "Debits to
Upon receipt of advice of shipment of securities to this
Foreign Accounts," and 1-G "Credits to Foreign Ac- country from abroad dealers holding declarations may
counts," and 1-FG "Dollar Balance Sheet." Instruc- apply for certificates for deposit with the customs officials
tions under column 2, Form 1-F, and column 2, Form 1-G, on arrival.
should be especially noted.
W. P. G. HARDING,
Where dollar accounts held for foreign correspondents
Governor Federal Reserve Board.
represent balances used as a basis for security transactions,
FRED I. KENT,
reports of changes in balances may be made upon Form
Director Division of Foreign Exchange,
3-B.
Federal Reserve Board.




MARCH 1,

197

FEDEBAL BESEBVE BULLETIN.

1918.

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:

This question has heen presented to the Federal Reserve Board for its consideration on
several other occasions, and a similar ruling
has been made in each case, owing to the
obvious limitations contained: in the law.

Notes of Finance or Credit Companies.

Limitations Under Section 5200 R. S.

FEBRUARY 11,

1918,

(To a member bank.)

(To a Federal Reserve Bank.)

The Federal Reserve Board has received and
considered your letter of February 6 relating
to the right of a Federal Reserve Bank to rediscount the collateral notes of a certain corporation.
The Federal Reserve Act authorizes any
Federal Reserve Bank to discount a note or
bill drawn for an agricultural, industrial, or
commercial purpose; that is, a note or bill the
proceeds of which have been used, or are to be
used, for such purpose.
The Federal Reserve Board has always ruled,
therefore, that the note of a finance or credit
company which is drawn either directly or
indirectly to finance some industrial or commercial concern in the transaction of its business is not eligible for rediscount, even though
it may be secured by paper which is itself
eligible for rediscount.
Congress has made a very evident distinction
between the two kinds of paper, and this distinction was emphasized when an amendment
to the Federal Reserve Act was passed last year,
expressly authorizing Federal Reserve Banks
to discount the note of a member bank when
secured by eligible paper, but this amendment
was specifically limited to notes of a member
bank and can not be construed to authorize
the rediscount of notes of any other sort of
financial institution, even though most adequately secured by paper which is itself eligible
for rediscount.
The Board must, therefore, necessarily rule
that the note of a credit company, even if
secured by eligible paper, is not eligible for
rediscount if its proceeds are not used for one
of the purposes specified in the law.

The Federal Reserve Board has received and
considered your two letters of February 5, 1918,
asking whether, if a national bank has loaned
to a singlefirm,or corporation an amount equal
•to 10 per cent of its capital and surplus, it may,
while such loan remains outstanding, accept
an;f drafts drawn by that same corporation.
In an opinion of counsel for the Federal
Reserve Board, printed on page 680 of the
December, 1916, Bulletin, the conclusion is
reached that the limitations imposed by section 5200 of the Revised Statutes on the
amount of money which may be borrowed by
any one firm or corporation from a member
bank do not apply to or restrict acceptances
by that bank.
The Board is of the opinion, therefore, that
in the cases which you cite, where the national
bank has already loaned 10 per cent of its
capital and surplus to a certain company, it
may, while the loan is still outstanding, obligate
itself as acceptor on a draft drawn by that same
company. The limitations of section 5200 on
the amount of money which may be borrowed
from a member bank are separate and distinct
from and in no way restrict the limitations of
section 13 of the Federal Reserve Act on the
amount of drafts which a member bank might
accept for any one firm or corporation. If,
however, the member bank discounts its own
acceptance under the foregoing circumstances,
it must, as heretofore ruled, treat the transaction as a loan and not as an acceptance, and
could not in that case lend to and accept for
the same firm in an aggregate amount in excess
of the 10 per cent prescribed by section 5200,




FEBSUAEY 8," 1918,

198

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

LAW DEPARTMENT.
The following opinions of counsel have been other words, it would be sufficient under this inauthorized for publication by the Board since terpretation if the shipping documents are so
the last edition of the Bulletin:
drawn as to convey the title to the purchaser,
for whom the draft is accepted by the bank.
Acceptance of Drafts with Documents Attached.
The question to be determined is whether
Under the provision of section 13, which authorizes this was the intention of Congress. Considerany member bank to accept drafts based upon domestic
shipment of goods, provided shipping documents con- ing only that part of section 13 above quoted,
veying or securing title are attached, such documents it would seem to be clear that Congress inmust be made out or indorsed so as to convey or secure tended to require the title to be conveyed or
title to the accepting bank.
secured to the bank and not to some third
J A N U A R Y 31,
1918.
party, and the history of this legislation seems
SIR: The Board is asked to rule on the ques- to support this view.
tion whether documents attached to drafts or
Prior to the passage of the Federal Reserve
bills of exchange drawn in domestic transac- Act national banks were not permitted to lend
tions and accepted by a member bank must be their credit by accepting drafts or bills of exmade out or indorsed to order so as to convey change. When the act was originally passed
title to the accepting bank.
this power was added to national banks, but
This ruling involves a further interpretation under the terms of the act such banks were
by the Board of that part of section 13, which permitted to exercise it only when such acceptreads in part as follows:
ances grew out of transactions involving the
Any member bank may accept drafts or bills importation or exportation of goods. It was
of exchange * * * which grow out of not until the act was amended by the act of
transactions involving the domestic shipment
of goods, provided shipping documents con- September 7, 1916, that national banks were
veying or securing title are attached at the permitted in any case to accept drafts growing
time of acceptance.
out of domestic transactions, and definite reThe suggestion is made that this language strictions were imposed upon the exercise of
should be interpreted to mean "that shipping this power in domestic transactions which
documents must be attached to the draft at were not imposed in those transactions which
the time of acceptance solely for the purpose involved the importation or exportation of
of enabling the accepting bank to make certain goods.
that the draft is drawn against a transaction
There would have been no reason for imposinvolving the domestic shipment of goods, and ing the condition that shipping documents conthat it is not necessary for the accepting bank, veying or securing title should be attached at
when within the limit of 10 per cent of its the time of acceptance, if Congress had not
capital and surplus, to ever have title to the intended to restrict the power of acceptance
goods."
in domestic transactions to a greater extent
It will be observed that the statute expressly than it had restricted this power in transacprovides that the shipping documents must tions involving the importation or exportation
convey or secure title to the goods.
of goods. In other words, if it had intended
The suggestion made, therefore, must be merely to require the banks to be assured that
based upon the assumption that Congress in- the drafts or bills were drawn in a transaction
tended merely to provide that the title to the involving the domestic shipment of goods, it
goods must have passed from the seller, but could have used language substantially similar
did not intend to require such title to be con- to that used in the case of foreign and other
veyed or secured to the accepting bank. In acceptances.




MARCH 1,

1918.

199

FEDERAL RESERVE BULLETIN.

For example, the act provides that—
Any member bank may accept drafts or
bills of exchange * * * whicn grow out of
transactions involving the importation or exportation of goods.
The regulations of the Board prescribe what
evidence is required that such accepted drafts
have been drawn in transactions growing out
of the importation and exportation of goods.
If Congress had intended to put domestic
drafts on the same basis, it might merely
have provided that member banks should accept such drafts " which grow out of transactions involving the domestic shipment of
goods," in which case the Board would prescribe by regulations the evidence required
that such drafts conform to the provisions of
the statute. In adding this power, however,
Congress went further and attached a proviso
that "shipping documents conveying or securing title" must be attached at the time of
acceptance.
If we are to give any meaning to this language, as we must under the settled rules
of construction, the conclusion seems to be
inevitable that the title must be conveyed
or secured to the bank at the time of acceptance, and not to some third party.
I am unable, therefore, to agree with the
interpretation suggested, and am of the opinion
that the shipping document attached to or
accompanying the draft or bill of exchange
at the time of acceptance by a member bank
must be so drawn as to convey or secure the
title to the member bank.
Respectfully,
M. C. ELLIOTT, Counsel.

JANUARY 31,

1918.

SIR: The accompanying letter asks for a
ruling of the Board on the question whether
certain deposits of a certain trust company
may be properly classified as savings accounts.
Regulation D, series of 1917, provides that
"The term 'savings account' shall be held to
include those accounts of the bank in respect
to which, by its printed regulations, accepted
by the depositor at the time the account is
opened: (a) The pass book certificate, or
other similar form of receipt, must be presented
to the bank whenever a deposit or withdrawal
is made, and (6) the depositor may at any
time be required by the bank to give notice of
an intended withdrawal not less than 30
days before withdrawal is made,' 7
The pass book of the trust company contains
a provision that "This book must be brought
to the bank whenever a deposit is made and
left at the bank when notice of withdrawal
is given." It also contains the following
provision with reference to withdrawals:
"Withdrawals may be made at any time during
business hours, provided notice shall have been
given for same according to the following
table: For $100* and under, one week; from
$100 to $300, two weeks; from $300 to $500,
three weeks; for over $500, four weeks. For
form of withdrawal see back of pass book.''
It does not, therefore, conform to that part
of the Board's regulations which requires the
depositor to agree at the time of opening the
account that he may at any time be required
by the bank to give notice of an intended
withdrawal, not less than 30 days before a
withdrawal is made It does contain, howTo Hon. W. P. G. HARDING,
ever, a provision as follows:
Governor Federal Reserve Board.
All notices in relation to deposits or depositors posted conspicuously in the bank shall
be deemed and taken as actual notice to each
depositor; any amendments to the rules and
Savings Accounts as Time Deposits.
Savings accounts opened under regulations which do regulations so posted shall be binding upon all
not specifically reserve to the bank the right to require depositors as a part thereof.
30 days' notice before a withdrawal are not savings accounts
It is contended that this provision gives
within the definition of that term in Regulation D, series the trust company a right to demand 30 days'
of 1917; even though the regulations contain a provision
notice before withdrawal, and that such acthat they may be amended by notices posted in the
bank and that such amendments shall be binding on counts should accordingly be treated as sav-*
ings accounts.
depositors.




200

FEDEBAL KESEBVE B U L L E T I N .

I am unable to agree with this conclusion.
There is considerable doubt whether a notice
posted in the bank to the effect that 30 days*
notice of withdrawal will thereafter be required
wou*d be binding on the depositor if he immediately made demand under the terms of
his pass book. The terms of deposit are a
matter of contract. Both parties to the contract must assent, and I think it improbable
that the court would sustain a provision to
the effect that one party to the contract may
at any time alter or amend its terms by merely
posting a notice to that effect, unless the other
party were given an opportunity upon such
notice to terminate the contract. A different
situation would be presented if the bank had
posted notice and the depositors had after a
reasonable time not exercised their option to
make withdrawals under the terms of the
original contract Unless, therefore, the depositors are notified that the bank reserves
the right to require 80 days' notice before
withdrawal, these deposits can not, in the
opinion of this office, be consistently classified
as savings accounts.
Kespectfuliy,
M. C. ELL!OTT, Counsel.
To Hon. W. P. G. HARDING,

Governor Federal Reserve Board.
Trade Acceptance Providing for Discount if Paid at
Maturity.
A trade acceptance which consists of an order to pay
a certain amount, which is the amount of the debt minus
a discount for prompt payment at maturity, or, if not
paid at maturity, to pay a greater amount, which is the
amount of the debt without any discount, is an order to
pay a sum certain and is negotiable.
JANUARY 26,

1918.

SIR: The accompanying form of trade acceptance has been submitted to this office for.
an opinion as to its negotiability. The order
of the drawer reads as follows:
after date pay to the order of ourselves
dollars, or if not paid until after due date •
• dollars,
with interest from said due date at 6 per cent per annum.
This acceptance is drawn to cover invoices of
— for
goods furnished by the drawer to the acceptor, and if
paid at date of maturity gives the acceptor the benefit of
a discount of five per cent (5$) or $ — - on the amount
of such invoices.




MARCH 1,

1918.

The question is presented whether the words
"and if paid at date of maturity gives the
acceptor the benefit of a discount of 5 per cent
7
or $
o n t^Q amount of such invoices '
would in any way invalidate its use or eligibility, and the Board is asked to express an
opinion on the advisability of retaining the
clause "if not paid until after due date, etc,
with interest from said due date at 6 per cent
per annum."
In the opinion of this office none of the foregoing provisions would destroy the negotiability of the instrument. The only question
involved appears to be whether the sum payable under the order of the drawer is definitely
fixed.
The rule, as stated in Daniel on Negotiable
Instrumentsj is that "if the amount can be
ascertained from the face of the paper, the
form of expression is immaterial."
Corpus Juris, volume 8, page 146, which
contains a review of State decisions on cases
analogous to the one under consideration, reads
in part as follows:
Certain sum minus fixed discount.
It has been held in Minnesota, Nebraska,
Texas, and Canada that a promise to pay a
certain sum, with a provision that a fixed discount is to be allowed if paid before maturity
or before a certain date, is negotiable; and in
Ohio the same is held as to a provision for
discount if paid "at" maturity. However, the
contrary has been held in Michigan, Oklahoma, South Dakota, and Tennessee. So in
Iowa a note with the provision that the maker
may pay a reduced amount and sell a certain
amount, of goods as the payee's agent, within a
certain time, is not negotiable. The distinction drawn by the Minnesota court, and which
seems to be supported by the better reasoning,
is this:
A promise or order to pay a definite sum
plus or minus a "definite" amount or discount is negotiable, while a promise to pay a
stated sum of money plus or minus an "indefinite" amount or discount is not negotiable.
In the opinion in the case of Loring v. Anderson, 95 Minn. 101, 103, Northwestern 722,
mentioned with approval in the above quotation, Chief Justice Start said:
* * * This is a question of some difficulty. The case of Mansfield Savings Bank v.
Miller, 2 Ohio Civ. Ct. R. 96, cited by counsel

MARCH 1,

1918.

for the plaintiff, is the only one that we have
been able to find touching the question. In
that case the note contained this provision:
"If this note is paid in full when due, a discount of $39.78
is to be made from the amount
then due/ 1 It was held that this provision
did not render the note uncertain as to the
amount thereof, for the reason that "the presumption is that parties will perform their
obligations rather than break them, and therefore, in the commercial world, if this note
should be offered for negotiation, the amount
at the time of payment would be known with
certainty. While the note is undishonored
and has any standing in the commercial world,
the amount is definitely fixed. If any uncertainty could in any way arise, it is only
when it becomes dishonored and ceases to have
any standing as commercial paper." This reasoning is applicable to the note nere in question,
for, in legal effect, it is a promise to pay
October 1, 1903, $250 with interest at the rate
of 10 per cent per annum, less a discount of
6 per cent if paid on or before maturity. If
the note were not paid when due, there could
be no uncertainty as to the amount recoverable
on it, for such amount would not depend upon
any contingency or question of fact, for the
law would determine the amount due on the
note from its terms. See Smith v. Crane, 33
Minn. 144, 22 N. W. 633, 53 Am. Rep. 20.
On the other hand, while there is a contingency
before the maturity of the note as to whether
the maker will pay it at maturity or before,
there is no contingency or uncertainty as to
the amount to be paid in full discharge of the
note at maturity, or at any time before if the
maker elects to pay before * * *
The principles established in the Minnesota
case, which appear to be well sustained, would
$eem to apply to the case under consideration.
The form of bill submitted contains an order
to pay a fixed amount (which is the amount
of the debt with the discount already deducted)
and merely provides that if the debt is not
paid at maturity the drawer shall pay a greater
amount (which is the amount of the debt
without the discount deducted).
It is true that there are some cases to the
effect that the provisions in an instrument for
the payment of a certain amount at maturity,
Or a greater amount if not paid at maturity,
is in the nature of a provision for a penalty,
and that the penalty is unenforceable. (See




201

EEDEKAL BESEBVE BULLETIN.

Norton on Bills and Notes, 4th ed., p. 76, footnote 17.)
The explanatory provision to the effect that
the sum payable at maturity is the amount of
debt less a fixed discount would seem, however,
to make it clear that the provision in this case
is not a penalty but on the contrary a bona
fide provision for a discount.
Respectfully,
M. C. ELLIOTT, Counsel.
To Hon.

W. P. G. HARDING,

Governor Federal Reserve Board.

Calculation of Dividends on Surrendered Stock.
When a national bank going into voluntary liquidation
fails to promptly apply for surrender and cancellation of its
stock in the Federal Reserve Bank, it is within the province of the Federal Reserve Board to allow the Federal
Reserve Bank to pay dividends on such stock up to the
date when such application was actually made, if, in the
opinion of the Board, the liquidating bank did not unreasonably delay filing such application.
JANUARY 25, 1918.

SIR: It appears from the accompanying
letter that a certain national bank was absorbed by another national bank. That on
September 20, 1917, the deposit balance
standing to the credit of the liquidating bank
was transferred to the credit of the absorbing
bank. On November 6 application was made
for repayment of the amount paid on 720
shares of the stock of the Federal Reserve Bank
standing in the name of the liquidating bank.
On November 9 application for 300 additional
shares was filed by the absorbing bank.
The question is presented as to what date
should dividends be calculated in making repayment to the liquidating bank for its shares.
There is no provision in the national bank
act for the consolidation or merger of two
national banks. Whenever this is attempted
it is necessary for one of the national banks to
be placed in voluntary liquidation and its
assets to be taken over by the other bank.
Under the terms of the Federal Reserve Act
the capital stock of the Federal Reserve Banks
can not be transferred or hypothecated. In
the liquidation, therefore, of a national bank it

202

can not sell and assign its stock to the banks
purchasing its assets. This being true, it is
necessary in the present case, and in all similar
cases, to adjust the stock subscription of the
liquidating bank on the same basis that such
subscriptions are adjusted in any case where a
member bank goes into voluntary liquidation.
Section 5 of the Federal Reserve Act provides that—™
When a member bank voluntarily liquidates
it shall surrender all of its holdings of the
capital stock of said Federal Reserve Bank and
be released from its stock subscription not
previously called. * * * the shares surrendered shall be canceled and the member
bank shall receive in payment therefor, under
regulations to be prescribed by the Federal
Reserve Board, a sum equal to its cash-paid
subscriptions on the shares surrendered and
one-half of one per centum a month from the
period of the last dividend, not to exceed the
book value thereof, less any liability of such
member bank to the Federal Reserve Bank.
Regulation I, series of 1917, prescribed by
the Federal Reserve Board pursuant to the
foregoing statute, provides as follows:
Whenever a member bank goes into voluntary liquidation and a liquidating agent is
appointed, such agent shall file with the Federal
Reserve Bank of which it is a member an application on Form 86, which is made a part of
this regulation, for the surrender and cancellation of the stock held by and for the refund of
all balances due to such liquidating member
bank. Upon approval of this application by
the Federal Reserve Agent the Federal Reserve
Bank shall accept and cancel the stock surrendered, and shall adjust accounts between
the liquidating member, bank and the Federal
Reserve Bank by applying to the indebtedness
of the liquidating member bank to such Federal




1918.

FEDEBAL BESEBVE BULLETIN

Reserve Bank all cash-paid subscriptions made
by it on the stock canceled with one-half of 1
per cent per month from the period of last
dividend, if earned, not to exceed the book
value thereof, and the balance, if an^, shall be
paid to the duly authorized liquidating agent
of such liquidating member bank.
In the present case it appears that the
liquidating bank went into liquidation sometime prior to November 6, since its deposit
balance was transferred on September 20 to the
credit of the absorbing bank. The stock of the
liquidating bank should have been surrendered
and canceled within a reasonable time after the
bank was placed in liquidation in which case
dividends would have been paid only to the
date of such surrender and cancellation. The
bank, however, failed to file its application for
surrender and cancellation of its stock until
November 6. The question, therefore, arises
whether dividends should be paid up to that
date.
The Federal Reserve Bank had the use of the
stock subscription and the deposit balance of
the bank during this period. As the statute
authorizes the Board to prescribe regulations
providing for the surrender and cancellation of
stock and as no time limit was fixed in the regulations bearing on this subject it would seem to
be within the province of the Board to allow the
Federal Reserve Bank to pay dividends up to
November 6 if, in the opinion of the Board, the
liquidating bank did not unreasonably delay
filing its application.
Respectfully,
M. C. ELLIOTT,

Counsel.
To Hon. W. P. G. HARDING,

Governor Federal Reserve Board.

MARCH 1,

208

FEDERAL RESERVE BULLETIN.

1918.

SUMMARY OF BUSINESS CONDITIONS, FEB. 23, 1917.
District No. 1—
Boston.

District No. 2—
New York.

District No. 3—
Philadelphia.

Concentrating o n Improved w i t h Good .. . . . . . . . .
coming of milder
war necessities.
weather.
Crops:
Unsatisfactory..... Planting of acreage
Condition
above normal expected.
Outlook
Recovering from ef- Busy
Industries of the dis- Busy.....
fect of fuel and
trict.
transportation
difficulties.
Construction, build- Decreased
Very
light.
Very little build.
ing operations.
ing, and engineering.

General business

Bank clearings.......
Money r a t e s . . . . . . . . .
Railroad, post office,
and other receipts.
Labor conditions....
Outlook




•

Good
do
Excellent
Generally active
No activity...
Slight decrease
Hard..
Post-office receipts
normal.'
Labor well employed.
Good

District No. 8 St. Louis.

District No. 9—
Minneapolis.

Generally satisfac- Good....
tory.
Active........
Quiet

Good......

Inactive

Do.

For great activity.
do.....
Do.
Handicapped by Limited by sup- Good with excepplies and translack of transportion of coal.
portation.
tation.
Falling off.....

District No. 10—
Kansas City.

Private building Slow.
negligible; Government work,
particularly
housing, active.
Congestion someDo.
what relieved.

District No. 11—
Dallas.

Good.............. Good

Fair
Improved
Active...
Slow............... Curtailed

Little change
Firm....
No change
Fair to good......
Generally favorable Satisfactory

Increase
Slightly firmer
Increase in postal
receipts.
Rather unsettled...

District No. 6—
Atlanta.

Active: limited by Good,
supplies a n d
transportation.

General trade re- L a r g e . . . . . . . . . . . . .
duced; Government shipment
increased.
Lower than same Decrease...
Slight increase.... Increase of 21 per
Increase....
time last year.
cent.
Firmer...
Increasingly firm.. Good demand—6
Increasing
Increased
per cent; increasing.
Railroad, irreguDecreasing
B.eavy
Mixed...,
Increase..
lar; post office,
volume large;
reflect increased
rates.
Strong demand; In demand; high
Little unemploy- Unsettled..
Unsettled
wages.
wages increasment, except in
ing.
special instances.
Improving
Generally satisfacGood...
Satisfactory, unless Improved
tory.
there is some sudden change in
general conditions.
Increased activity
The dominant facpromising, with
tor has been the
improved
weather, which,
weather conditurning milder,
tions.
has permitted recovery and general improvement
of business.
District No. 7—
Chicago.

General business
Crops:
Condition........
Outlook
Industries of the district.
Construction, building and engineerin?.
Foreign trade
Bank clearings......
Money rates
Railroad, post-office,
and other receipts.
Labor conditions

District No. 5 Richmond.

Fair....

Unsatisfactory

Foreigntra.de

Outlook
Rsm&rkSe

District No. 4—
Cleveland.

.'

Increased
Firm
Increase
Miners'strikes....
Good
Bank clearings
continue to increase greatly;
building operations reduced.

Increase.
Stiffening.
Good.

Fair.
Do.

District No. 12—
San Francisco.
Active.

Fair.
Good.
do
Encouraging.
Very active.
Active
Inactive, except Decreasing.
on Government
orders,
flood
Slight increase.
Largely increasing.
Easy
Firm.
Increase
Increasing.
Scarcity in most Unsettled.
linos.
Good
FavorableWeather conditions have
helped business
and stimulated
farm work; retail trade good,
increase over last
yoar; outlook
for early spring
trade in practically oil lines
is excellent.

204

FEDERAL BESEKVE BULLETIN.

MARCH 1, 1918.

GENERAL BUSINESS CONDITIONS.
However, laborers who are securing high wages
and persons making large profits are spending
freely and business in nonessentials is reported
to be good for that reason.
The crop situation is unsatisfactory, winter
crops being injured by a thick layer of ice
which has been beneath the snow all winter.
The retail boot and shoe dealer continues to
liquidate
his stock, and manufacturers report
DISTRICT NO. 1—BOSTON.
domestic
business quiet. Orders from the
Participation of New England industries in
Government
for Army shoes, placed some time
the production of war requisites has increased,
ago,
have
not
been completely filled and facuntil now it is the controlling factor in all
tories
are,
for
the most part, running at
business operations. Manufacturers and mercapacity.
chants are intensely patriotic and, in spite of
The dry goods business is active and wholethe serious handicaps encountered in carrying
salers
are doing an increased volume of business
on their businesses, are anxious to do everyat
higher
prices. Small and medium sized rething possible to help prosecute the war to a
successful conclusion. Increased taxes are tailers are comparatively heavier purchasers
met without complaint and United States cer- than the larger merchant. However, retail
tificates of indebtedness are being taken wher- business is good and unless the general situation changes suddenly this should cause no
ever funds are available.
uneasiness.
This district has been affected more than
Some trades are noticing a falling off in colany other by the scarcity of coal and as it is for
the most part a manufacturing section, the lections the last few weeks, while others are
shortage has been keenly felt by both employer still finding them good.
The wool market is quiet and firm, with some
and employee. The labor situation is far
from satisfactory and much difficulty is being division among the trade regarding the future
found in retaining help. Where, two or three supply owing to the Government's option to
years ago, employees struck en masse, now take imported wools at a fixed price. Prices in
they walk out singly whenever they are dis- South America have advanced to a point where
satisfied and secure positions elsewhere, fre- wool can not be purchased and sold to this
quently at increased wages. Not only labor, Government at the price fixed without a loss.
but all factors entering into manufacturing For this reason, much of the South American
costs are abnormal, and capital requirements clip is going to other markets and some dealers
are not only increasingly heavy, but business fear a shortage of wool suitable for Army needs
generally is more unsatisfactory to conduct, later in the season. Woolen and worsted mills
owing to new and unprecedented problems to continue busy, largely on Government orders.
be met. The traffic congestion is delaying They are well supplied with wool and the
merchandise and raw material. Retail business Government still holds some purchased earlier
is good in those sections where profits are being in the year.
made on war business and where labor is re- The cotton mills are receiving more orders
ceiving high wages.
than for a long time and enough business is in
Municipalities are tending to restrict ex- sight to keep them running at capacity until
penditures for all unnecessary work and there well into the summer. Prices are higher and
is evidence of saving among well-to-do people. production has been reduced by Monday holi-

There is given on the preceding page a summary of business conditions in the United
States by Federal Eeserve districts. These
reports are furnished by the Federal Reserve
agents, who are the chairmen of the boards of
directors for the Federal Reserve Banks of the
several districts. Below are the detailed reports as of approximately February 23:




MABCH 1,

1918.

FEDERAL RESERVE BULLETIN.

days.. It is reported that a large Government
order is impending for 36-inch low-count goods
and this has upset the Fall River market
completely.
The money market is very firm and dull,
funds being available only for recognized necessary undertakings. Mortgages are particularly
hard to place, restricting new building of all
kinds unless necessary for war purposes. All
banks are conserving their resources and maintaining as liquid a condition as possible.
Money on call is 6 per cent. Time money
is firm at 6 per cent, with commercial paper
quoted at the same rate, with practically no
exceptions below it.
The exchanges of the Boston Clearing House
for the week ending February 16, 1918, were
$260,667,182, compared with $231, 906, 304 for
the corresponding week last year and $219,966,886 for the week ending February 9, 1918.
Building and engineering operations in New
England from January 1 to February 14, 1918,
amounted to $10,544,000, as compared with
$20,167,000 for the corresponding period of
1917 and $13,608,000 the average for the last
10 years.
The receipts of the Boston post office for
January, 1918, show an increase of $79,229.74,
or about 10 per cent more than January, 1917.
For the first 15 days of February, 1918, receipts were about 17 per cent, or $66,160.52,
more than for the corresponding period of last
year.
Loans and discounts of the Boston Clearing
House banks on February 16, 1918, amounted
to $476,410,000, as compared with $482,062,000
last month and $472,293,000 on February 17,
1917. Demand deposits on February 16, 1918,
amounted to $392,771,000, as compared with
$403,700,000 on January 19, 1918, and $366,275,000 on February 17, 1917. Time deposits
on February 16, 1918, totaled $22,787,000, as
compared with $22,254,000 on January 19,
1918, and $35,156,000 on February 17, 1917.
The amount "Due to banks" on February 16,
1918, was $129,913,000, as compared with
$130,745,000 on January 19, 1918.




205

DISTRICT NO. 2—NEW YORK.

With mild weather which began early in
February, distinct improvement has come in
the fuel and transportation situation. Rail
congestion has been relieved, the regional
director of railroads reporting a 44 per cent
reduction of car congestion on railroad lines
east of the Mississippi River between February
6 and February 19. Fuel deliveries have increased and are coming through fairly satisfactorily as indicated by the dumping of 90,000
tons at tidewater on February 19, the largest
arrival of coal in New York for any day this
year. Ships have been coaled and dispatched.
This does not mean that business and industry
have fully recovered from the hardships of fuel,
shortage, transportation tie-ups and enforced
holidays, but the crisis is past and the outlook
much improved.
During recent months a slight decrease has
occurred in the volume of exports and imports
other than Government shipments.
Though building operations are lighter than
ever before, and are expected to be only about
half as extensive in 1918 as in 1917, the prices
of materials continue firm, apparently because
of the extent to which such materials are needed
for use in shipyards, which require not only
many of the materials which would ordinarily
go into the building construction, but also the
same sort of labor. Business in the hardware
trade is quiet, especially as to builders' lines.
Stocks are moving slowly and orders are on a
limited scale. Glass factories, under agreement with the Government, are to curtail production 50 per cent during the current year.
Steel production for January was only about 80
per cent of that for December, and the rate of
production in early February was even lower,
but milder weather has permitted quick recovery to about 80 per cent of capacity.
The machine tool industry continues to
operate at maximum capacity, which is hardly
equal to the demand for the heavier line of
machine tools, as the Government is taking,
directly or indirectly, almost the entire production along these lines, which is little more

206

EEDEBAL BESEBVE BULLETIN.

than adequate to meet the shipbuilding and
munition program. Since January 1 railroads
have come into the market for increased motive
power equipment and equipment for maintenance and repair shops. Indications therefore
point to a high level of activity in this business
for many months to come. Commercial orders
for electrical equipment are reported in good
volume, though not quite as extensive as a
year ago.
Rubber manufacturers, in spite of continued
demand, expect some decrease in tire production because of the need of the Government
for a large portion of the spindles in the
cotton mills employed on tire fabrics, though
the large number of mills engaged in this class
of work will insure a supply of fabric not
greatly below normal.
Business in drugs and chemicals is running in
fairly steady channels, though production and
sales for February have been curtailed by fuel
shortage and transportation difficulties, which
appear to have proved particularly embarrassing to this industry.
The volume of trade in the shoe industry is
smaller than for the same period last year.
Dealers are well stocked and retail business in
recent weeks has been dull, so that their tendency is to buy only for immediate needs.
Scarcity of labor and materials is expected to
maintain prices.
Conditions in the rural districts have not
heen uniformly of the best, and transportation
difficulties, resulting in slow movement of
products to market, have been keenly felt.
Milk producers have been fairly well served by
special milk trains run on approximately passenger train schedules. Retail merchants are
buying carefully because of extremely high
prices, especially as extreme cold weather,
transportation and fuel difficulties have made
for light retail business. Farmers are planning for heavy plantings and a very busy spring,
but anticipate much difficulty in obtaining
farm labor. High prices of seed and scarcity
of potash for fertilizer are also troublesome
factors.




MAKCH 1,

1918.

The ice crop from the Hudson River Valley
amounting to about 2,000,000 tons has been
harvested, a tonnage considerably above the
total of natural ice sold last year having been
stored against possible shortage of artificial ice.
What threatened to be a very serious strike
by shipyard laborers at New York Harbor
yards has been called off, following appeal by
the President to the striking employees. Labor
is reported scarce throughout the district, but
disturbances have been lacking.
Reports indicate that in some lines collections are somewhat slower than last month.
Prices of stocks of industrial corporations
have continued to advance. Bonds and railroad stocks, after showing weakness in the
latter part of January, recovered and have
since remained steady.
Money rates have fluctuated only slightly.
Commercial paper rates have been quoted at
5J to 6 per cent, the lower figure being onefourth per cent below that ruling in the early
part of last month. Rates for time loans on
stock exchange collateral continue practically
unchanged at 5f to 6 per cent. Call money was
fairly easy during the last weeks of January at
around 4 per cent and only slightly firmer
during early February, but advanced on February 13 to 6 per cent. Rates on February 21
were—call money, 6 per cent; time loans on
stock exchange collateral, 6 per cent; and
commercial paper, 5 | to 6 per cent.
Withdrawals of funds by out-of-town banks
in connection with subscriptions for certificates
of indebtedness reduced the excess reserves of
the New York Clearing House banks to
$29,000,000 on February 15, the lowest since
September 1, 1917.
DISTRICT NO. 3—PHILADELPHIA.

Aside from the interruption in business
caused by the closing down order on Mondays,
there has been no important change in conditions, manufacturers, as a rule, continuing to
operate to as near capacity as circumstances
will permit.

MARCH 1,

1913.

FEDEKAL BESEBVE BULLETIN.

Retail trade is running ahead of last year,
both in quantity of goods sold and in value of
sales. Dry goods, hosiery, underwear, etc.,
are in scant supply, and on account of the
continually advancing prices, retailers have a
tendency to overbuy. In many cases there is
a disposition to expand credit much beyond
normal amounts, but efforts are being made to
keep them within reasonable lines.
The railroad embargo, and the embarrassment and distress resulting from freight congestion, scarcity of coal, etc., have been the
absorbing subjects of the month. Due to the
inability to make shipments, large quantities
of finished goods have accumulated, which has
resulted in curtailing production and the tying
up of much capital.
Collections throughout the district are reported fair. In some lines, such as iron and
steel, the condition is somewhat unsatisfactory,
as bills have been falling due before the materials have been received, and some large consumers are reported as being slow in their payments.
Some sections have been decidedly benefited
by the mild weather which has prevailed
recently, and report a lessening of the coal
stringency. For the most part, however, there
has been only a moderate improvement in the
situation, as there has not been sufficient time
to straighten out the difficulties which resulted
in the unfavorable weather conditions.
There is a good demand for cotton* wool,
hosiery, underwear, silk goods, etc. Inability,
however, to secure sufficient raw materials is
hampering textile production.
The curtailment of the production of paper
since the first of the year, incident to coal
shortage and the difficulties in obtaining supplies, because of the freight congestion, has
resulted in an increase in the cost of production.
Manufacturers have as yet been unable to obtain the increase in the selling price necessary
to offset the increased cost, and it is reported
that in some cases paper is being marketed
below cost. Such information as is available
indicates that the manufactured stocks in the




207

hands of mills and dealers are in the aggregate
smaller than for many years past.
Rates for money have advanced somewhat,
commercial paper selling at 6 per cent, a slight
concession being made, however, for the best
names of short maturities. Rediscounts at the
Federal Reserve Bank during January amounted to $36,200,000, compared with $45,025,000
the preceding month and $565,000 in January
of last year.
DISTRICT NO. 4-—CLEVELAND.

During the past four weeks business has had
experiences which in ordinary times would
have produced paralysis. Despite a breakdown in the transportation service, coal shortages, the taking over of the railroads, closing
orders, capital restrictions and unprecedented
weather conditions, business generally, except in
restrained lines, is fair, and apparently in all
lines has a good underlying foundation for future building and readily responds to encouraging conditions.
Manufacturing.—A decided improvement is
noted in manufacturing lines in the past 10
days, occasioned largely by more favorable
weather, the opening of navigation on the rivers, and less congestion on the railroad. Especially is this the case in the steel and correlated industries. Increased war orders are
causing anxiety on the part of steel manufacturers who have not covered their requirements, and signs are apparent of an acute
shortage of iron. Furnaces, however, are
gaining headway, and prospects are encouraging for all lines of iron and steel production
for the spring.
The coal trade still suffers from shortage of
cars, and, while the river mines have been
favored somewhat by the milder weather of
the past few days, many mines are running at
a very reduced output.
Clay and brick manufacturers have been curtailed in their output by having to give way to
the manufacture of more necessary war commodities, and as a consequence there is little
activity and the volume of business is very
much decreased.

208

FEDERAL PESERVE BULLETIN.

Lack of fuel and transportation still continues to hamper the glass factories. Higher
prices for window glass have been an incentive
for this branch of the industry to increase its
production.
Mercantile lines.—Jobbing business is good,
and for 1918 in most quarters has surpassed
expectations. This is especially true in mercantile lines. Merchandise made of cotton,
wool, silk, and linen is said to be very scarce,
and prices are increasing. Orders on hand are
very satisfactory. In the retail trade the volume of business compares favorably with, and
in some cases largely exceeds, last year's business, and it would seem that buying is proceeding with unusual vigor and that the buying
power of the consumer has not been curtailed.
Agriculture.—The farmers of the district are
greatly interested in tractors, as shown by the
registration of approximately 2,000 students
for a tractor school under the auspices of the
Ohio State University. A number of young
women are among those taking the course. It
is believed that the agricultural community is
keenly alive to the shortage of labor for next
season's work, and are looking to the tractor
as a partial solution.
Considerable damage by freezing is reported
to that part of the potato crop which was
pitted and stored on the farms. In northern
Pennsylvania the condition of winter wheat is
said to be only fair, and the acreage only
slightly increased over last year.
The tobacco crop is being marketed rapidly,
and the supply will be disposed of in the next
few weeks.
Collections.—Collections, except in a few
quarters where there are unfavorable conditions, are reported better than last year at the
same period, due in part to a closer scrutiny of
credits.
Transportation.—-While some betterment is
noted in railroad transportation service due to
a decreased output of factories and mines and
more favorable weather, nevertheless it is
wholly unable to meet the situation, and all
business is curtailed by reason of its inability.




MARCH 1,

1918.

In some instances crews are reported laid off
because of lack of motive power. When
spring comes it is believed that railroad tracks
will be found in bad condition by reason of the
severe winter, and labor for repairs will be very
scarce.
In the Pittsburgh district the street-car
service is badly crippled due to labor shortage
and inadequate equipment.
Labor.—With the opening of spring and any
considerable mending of transportation service, the labor problem will assume new proportions. In the manufacturing centers skilled
mechanics are almost impossible to obtain.
In the rural districts, common labor, attracted
by higher wages paid in the cities, is leaving,
and the problem of obtaining help on the farms
is a serious one.
Building operations.—Building activities
have been practically suspended for the winter. In some localities plans are being submitted and a resumption on a limited scale is
expected in the spring. There are occasional
instances of the erection of dwelling houses in
considerable numbers, but as a rule there is
very little being done in this line of building.
Consequently, building permits, both in number and in valuation, show a very heavy decline as compared with last year.
Money and investments.—There is a strong
demand for money, and in some quarters rates
have advanced. Banks for the most part are
endeavoring to confine their dealings to shorttime obligations, and only accept long-time
paper when absolutely necessary. While
money is not as plentiful as heretofore, deserving patrons have little difficulty in obtaining accommodation commensurate with
their business needs.
DISTRICT NO. 5—RICHMOND.

Activities in the district are only just
beginning to recover from the unprecedented
weather conditions noted in the January
report. Four fuelless Mondays were cheerfully observed under the regulations promulgated by the Government. It was suggested
in the last report that final judgment on the

MARCH 1,

1918.

FEDERAL RESERVE BULLETIN.

209

measures adopted regarding the fuel question! by the Government and for domestic trade.
would be based upon the results accomplished Collections are good, money is circulating freely,
in relieving congested conditions. While the and the outlook is satisfactory. Commercial
relief was delayed for some time by continued statements indicate large profits from last
severe weather, it was finally achieved to such year's business, notwithstanding the greatfinan extent that the steps taken have met with crease in expenses, and commercial failures
approval by the public at large. In this show a large decrease as compared with the
district there has been no serious inconven- same period of last year.
Steel mills and other producers of metal
ience to private consumers, and sufficient coal
has reached the seaboard to supply waiting products are still badly tied up by freight
vessels and send a large fleet of them abroad. difficulties. Some concerns, however, whose
Transportation difficulties, however, are but products are particularly essential in connecslowly on the mend at the mines, where produc- tion with railroad and war work have suction is still seriously hampered by lack of cars. ceeded in securing relief from embargoes and
Delay in transportation is still seriously retard- are maintaining their production at about
ing the movement of materials and commodi- normal. The production of paper is reported
ties, making it difficult to get raw supplies or to be only about 50 per cent of normal, owing
ship out finished products. These conditions, to lack of raw material and coal, but upon
accentuated by scarcity of labor, are impressing relief from these conditions, the industry will
upon the public the necessity of differentiating return to activity. Cotton mills continue to
between essentials and nonessentials. Energies operate to capacity on a profitable basis.
are therefore being concentrated on the essen- Clearings continue in increasing volume, as is
tials for winning the war, and people are being the case also with postal receipts, the latter
urged to exercise economy and avoid ex- being chiefly due, however, to increased rates.
penditures for nonessentials.
Reports from agricultural districts still indiIn regard to trade generally, there is an cate a considerable proportion of the corn crop
active demand for merchandise of every kind, on hand. Farmers generally continue to be
particularly food supplies, although the public reported in better financial condition than
is acquiescing cheerfully in the restrictions im- ever before. Instances in which they are payposed by the regulations of the Government. ing out of debt are still reported and they are
Large amounts of money are being disbursed supplying their farms with better mules and
in connection with the cantonments in the improved implements. This buying is reported
district, with a corresponding increase in the to be more largely on a cash basis and less
purchasing power of mechanics and laborers. credit than usual. Purchases of this character
Jobbers are disposed to limit credit and favor show a large increase.
Money is reported to be plentiful, but it
orders from those who discount their bills, as
the high prices and the cost of doing business would probably be more accurate to say that
increase enormously capital requirements. it is circulating freely. The deposits of the
There is evidently a larger percentage of busi- banks are high, but owing to the increased
ness being done on a cash basis than ever capital requirements of borrowers, heretofore
referred to, and high costs in every direction,
before.
Wagon builders report an extraordinary bank resources are finding active employment.
demand by the Government, which will prob- This should suggest and enforce conservatism,
ably restrict to some extent the supply to not only in trade, but also in the judicious
farmers, and they are looking forward to a exercise of economy in crop preparations.
good business. Tobacco manufacturers report Government financing has made considerable
products of all kinds in strong demand, both demand upon the resources of the district.




210

FEDERAL KESEKVE BULLETIN.

This has been reflected to a considerable extent
in the demand for rediscounts from the Federal
Reserve Bank. At the chief centers in the
district the banks and the people at large have
accorded the Government loyal support and
cooperation in its financing, and every effort is
being made to organize the coming campaign
for the next Liberty loan more effectively, if
possible, with the view to securing the support
of every interest and every individual in the
district. The necessity for reaching the people,
and especially the farmers, is fully recognized.
Not only will it be necessary to bring out a
large part, if not all, of the "hidden money"
of the country for investment in Liberty bonds,
but in addition the Government will have need
for a generous share of the credit which now
exists or which can be established.
Bankers in all parts of the country should
realize that in order to lend to the Government what it now needs, or for which it will
have imperative need as the war progresses
constant and persistent efforts must be made
to reduce or eliminate credits now used by the
"nonessential" industries and even to curtail
those used by the "essential" industries to the
lowest possible point consistent with efficiency.
This will be one of the lessons to be learned
in the handling of the proposed series of
certificates of indebtedness recently announced
by the Treasury Department.
DISTRICT NO. 6—ATLANTA.

Weather conditions during February, unsettled transportation facilities, and fuel regulations considerably deranged general business.
Orders in the wholesale trades continue heavy,
with inability to promise deliveries and high
prices prevailing.
Collections are reported good, with credit
somewhat tightening on account of the general
tendency of banks to conserve resources in
order to facilitate war loans.
At the time of making this report a strike
ha»s been called in the Birmingham district,
with several thousand coal miners idle. The
miners claim that the operators have failed




MARCH 1,

1918.

to put into execution an agreement proposed
by the Federal Fuel Administrator. A representative of the Federal Fuel Administrator
has been making an investigation in the Alabama coal fields, and some understanding is
looked for at a very early date.
The production of coal in Alabama during
the year 1918 will be approximately 21,000,000
tons, while coke production shows a material
increase over previous years, being about
6,000,000 tons. Production of coal during the
present month has not been as great as it
might have been had there been no labor
trouble. The demand for coal continues to be
extraordinarily heavy, The cold weather hampered operations, and the heavy rains during
February drowned out many of the mines for
days, causing a loss in tonnage. The railroads
are drawing more coal from the district than
in previous years, and with many ships not
heretofore calling at Pensacola, New Orleans,
and other Gulf ports, the demand on this section has materially increased. There is considerable unrest in the labor situation.
In the1 Tennessee district there are plenty of
cars for coal, and the mines are running full
time, with a few small mines preparing to
open.
Officers and leaders of the metal trades council of the Birmingham district are threatening
a strike for eight hours a day. Some plants
have already closed down owing to these labor
difficulties, and should these trades go out on
a strike probably 15,000 workers would be
affected.
Commissioners of agriculture report that an
increased acreage will be planted in cotton this
season and that, while large food and feed
crops will be planted, in view of the scarcity
of labor, with an increase in the cotton crop
it is not expected that there will be much, if
any, large production of food and feed stuffs
during the coming season. Various plans are
being proposed by the commissioners of agriculture of the States in this district and by
different agriculture associations to increase
the food crops. A fifty-fifty plan has been

MARCH 1,

1918.

EEDEItAL BESEKVE BULLETIN.

suggested, that the farmers plant an acre of
foodstuffs for each acre of cotton, but this is
not looked upon with great favor for the reason that the section has not the labor to carry
out such an enlarged plan. Others suggest
that a tax be placed on each bale of cotton
ginned, and also that the placing of an embargo on all food shipments from the North
and West, beginning in the fall of 1918 and
extending to the harvesting of crops in 1919,
would have the effect of awakening the producer to the fact thafc he must not only raise
enough food for himself but sufficient quantity
to sustain the southern section.
Mississippi reports that there is a scarcity of
labor caused by the drafting of negroes into
the Army. Georgia reports that field labor
has been reduced 25 per cent, and if there is
another draft it will be reduced to 50 per cent.
Reports show 3,700,000 bales of cotton in
warehouses and compresses, as compared with
3,600,000 at the same period last year* A
large amount of this cotton has been sold, but
owing to eastern embargoes deliveries can only
be made through southern ports by water
route to the eastern mills. Quite a lot of cotton is beginning to move this way.
Peanuts proved a very profitable crop, and
for the coming season indications point to a
heavier acreage in peanuts than ever before.
That peanuts are more profitable than cotton
for the farmer is shown in figures of the United
States Department of Agriculture, showing
1917 value of cotton per acre as $49,82, compared with $59.20, value of peanuts per acre
last year.
Since September 15, 1917, to January 1,
1918, a total of nearly 3,000,000 crates of fruits
and more than a half million crates of vegetables
were shipped out of the State of Florida. This
included only shipments in carload lots. With
the part-carload shipments, it is estimated that
5,000,000 crates of fruits and vegetables have
been shipped.
The weather during the latter part of February was very favorable for deliveries in the
dark tobacco fields, and the product is moving




211

to the market very fast. The rush would ordinarily tend to lower prices, but the market has
been upward on nearly all grades, the prices
ranging from $11 to $21. The firmness of the
farmers in their demands for higher prices is a
good sign for a betterment on conditions of this
market. Mass meetings of representative growers have been held in several places and resolutions adopted agreeing on $20 as a minimum
price for tobacco. This is based largely on the
belief that the Government in case the war continues will order tobacco for 1918 eliminated
and food crops grown instead. Such action
would naturally cause tobacco to jump in price.
No improvement is shown in the Florida
phosphate field. Florida has 80 per cent of
the phosphate resources of the United States
and 52 per cent of the world's supply. Prior
to the war Florida was a very heavy shipper
of phosphate, but lack of vessel bottoms for
carrying this cargo has curtailed shipments,
and instead of shipping to 18 foreign countries,
only about 4 countries now receive this
product.
The lumber business has suffered somewhat
on account of embargoes on this commodity
since the Government tobk charge of the
railroads. A number of lumber concerns report lumber ready to ship, but an inability to
obtain the movement of cars.
There is a tendency of increasing money
rates in the cities; the rates in the country remaining nominally the same. There is a
tightening up of credits and a tendency to
extend credits only for business needs, that is,
where the account of the customers justify the
accommodation, and to shut out the more unprofitable outside loans.
The war-savings-stamp campaign is being
carried on energetically, but a certain element
of the public fail to realize their duty as to
war savings, and the real benefit to be derived
by those who buy thrift stamps and war-savings certificates. The campaign is being handled in a very systematic, thorough way, and
the people are gradually becoming more interested in the purchase of these war-savings

212

FEDERAL RESEEVE BULLETIN.

MARCH 1,

1918.

stamps. The amount that has already been is no lessening of demand for most products,
subscribed will not affect momentary condi- nor any inability to meet prices, as labor is
tions in the district.
generally well employed at high wages. Such
a condition augurs well for the quickening
DISTRICT NO. 7—CHICAGO.
and maintaining of practically all business at
There has been a decided change for the
capacity. Construction alone seems to be at
better in conditions throughout this district
a standstill, though business in luxuries
and business sentiment seems to be comparaseems to suffer some restraint due as much
tively cheerful. Prospects for an early return
to Government restrictions as to a growing
to normal conditions, as far as the word "normal" can be applied to the situation of a na- disposition to conserve.
There has been considerable activity in the
tion at war, seem good. The moderation in
short-term
obligations of high class publicthe weather has relieved the traffic blockade to
service
corporations
and industrials at very
such an extent that credits depending on
attractive
yields,
and
a much more favorable
transportation are beginning to be liquidated.
attitude
is
observed
toward
railroad bonds,
Particularly in the country, the increased
due
probably
to
Government
control. There
movement of live stock has eased a tight money
seems
to
be
much
investment
money seeking
situation. It is said banks in these sections
the
high
rates
obtainable,
and
this will no
have been buyers of commercial paper.
doubt
continue
until
the
expected
Liberty
Coal has been moving and present situation
loan.
promises the satisfaction of current requireAgricultural implement concerns fear they
ments. Steel mills and all industries in so far
as fuel needs are concerned are favorably will be unable to make delivery of machinery
affected. In the money centers deposits have by the time it is required for spring planting
declined somewhat and there is no prospect in on account of their inability in the past months
the immediate future of any idle money. to secure the necessary raw materials to go
While there is a tendency in all sections to into manufacture and the present limited and
watch the Government's needs, and therefore to uncertain transportation facilities. Volume
discriminate somewhat in loaning, there are no of orders is normal and collections are reported
reports of the denial of credit to worthy good.
Automobile manufacturing conditions reborrowers.
Winter wheat is in good condition so far. main about as previously reported, with a large
The month of March is the telling one with part of the energies of this industry directed
this crop and much depends on the weather toward Government needs. Theblockadeof the
during the next 30 days. There is a great past few weeks has reduced to the minimum
amount of corn in the fields still to be husked, shipments by railroad for private use, and the
and owing to the condition of the corn the so-called roading of cars has been made imposfarmer will be put to great difficulty in securing sible, due* to heavy snows. Both difficulties are
seed corn of desirable quality. The heavy now righting themselves, promising more satissnows will leave the soil in excellent condition, factory deliveries for the future.
During the past month the production of
and, barring any unforeseen inclemency in the
weather, the outlook is bright.
mines in Illinois and Indiana has been greatly
There has been, and still is, a congestion of curtailed. The burden of supplying" this disbusiness in merchandising, manufacturing, trict has been placed entirely upon these
and agricultural lines, though, as before mines, no coal being received from outside
stated, this appears to be breaking up. If sources. Production is expected again to apthe weather continues clement there should proach normal with a continuance of the mild
be still more marked improvement. There weather.




MARCH 1,

1918.

FEDERAL RESERVE BULLETIN.

Building and construction are far below
normal, with no prospects of any improvement. There seems to be a thoroughly general
indisposition to any activities in this direction.
Liquidation of accumulated beverage liquor
inlthefdistilling line continues to the satisfaction of thejjdistiller. Their facilities in some
instances have been turned to commercial
alcohol manufacture. Maltsters have been unable to market their product satisfactorily and
are said to have large stocks on hand. Past
weeks have been trying ones on account of the
railroad situation. Collections are fair to
good.
Money value of sales for future delivery in
dry goods is breaking all records. There is
undoubtedly a speculative tendency here. It
is difficult to supply the goods required. At
present retailers experience a falling off in sales,
which is attributed to bad weather and heatless
days and by some to economy among consumers. Long, severe winter has reduced
heavy stocks. Collections are satisfactory.
Government efforts toward relieving the
farmers of excessive stocks of soft corn seem to
begin to bear fruit. It is estimated that approximately 8,000 empty cars have been
turned over by eastern to western roads during
the month of January, and that in the neighborhood of several hundred cars have been so
delivered daily thus far this month. Heaviest
receipts of corn for months, about 2,000 cars,
were recorded in two days recently in Chicago,
and if this movement continues there will result not only a great saving of soft corn, but
terminals will acumulate stocks against the
time when the farmer will be busily engaged in
spring planting. The capacity of Chicago and
vicinity is sufficient to take care of well beyond
600,000 bushels of soft corn daily. Movement of wheat has likewise had Government
attention, with salutary effect. Farmers are
thought to hold oats in large quantities, but
due to the effort to move wheat and corn receipts are light, and to this is attributed partly
the recent considerable advance in prices.
On the other hand, farmers are said to be in-




213

clined to hold oats for higher prices on account
of proposals introduced in the Senate to raise
materially the guaranteed minimum price of
the 1918 wheat crop.
Demands on wholesalers in the grocery
business continues strong. Restrictions on the
use of various staples are inclined to advance
prices for substitutes. Volume of sales is in
excess of last year; tonnage also shows some
increase. Collections are reported good, considering condition of farmers.
The hardware line is beginning to recover
from the apathy effected by the severe winter.
The breaking of the snow blockade is expected
to quicken activities among farming communities, which will be evidenced by a return to
normal volume of sales. Collections are not
complained of.
Civilian shoe business among leather concerns is light. Government orders promise to
occupy the principal attention of many houses
for some time to come. Capacity of all manufacturers has exceeded transportation facilities.
Collections are satisfactory.
Though present weather conditions permit
an increasingly large movement of live stock,
it is said that it will take some time to completely relieve the congestion brought about
by freight blockade. The situation of the
feeder is anomalous in that stock well finished
by expensive feed does not seem to bring commensurate returns, while cattle of fair to
medium weight are in fair demand. The experience of lamb feeder is practically the same.
Hogs in large number are still waiting to be
marketed.
It is somewhat difficult to make any accurate forecast of prospects in the lumber
business. Practical stagnation describes the
situation for the past month. Building is expected to be spotty and limited to necessary
operations. Receivables seem to be in good
shape.
Mail-order business continues to show its
usual increasing volume.
Piano manufacturers are keeping abreast of
new orders but are working on January busi-

214

FEDEEAL EESEBVE BULLETIN.

ness, of which they were able to ship only a
fraction. Belated supplies are now coming to
hand. Collections vary according to localities.
Shipbuilding and steel industry was very
much handicapped during the past month.
In the latter line a recovery from subnormal
operations, occasioned by fuel and transportation shortage, brings operations to nearly
normal. The Government absorbs most of
the steel products to the neglect of domestic
consumers. Unfilled tonnage promises continued activity into midyear, and there will
be no slackening as long as the war lasts. Collections are excellent.
Demand for watches continues far in excess
of supply. This is the feature of the jewelry
business.
Transportation difficulties interfere with the
sale of wool. Woolen garments will not be
much in evidence for civilian use, substitutes
predominating to a considerable extent. Government demands will absorb a large proportion of available stocks.
Clearings in Chicago for the first 15 business
days of February were $1,170,000,000, being
$35,000,000 less than for the corresponding 15
business days in February, 1917. Clearings
reported by 22 cities in the district outside of
Chicago amounted to $241,631,000 for the
first 15 days of February, 1918, as compared
with $241,479,000 for the first 15 days of
February, 1917. Deposits in the 12 central
reserve city member banks in Chicago were
$834,000,000 at the close of business February
18, 1918, and loans were $580,000,000. Deposits show an increase of approximately
$27,000,000 over last month and loans a decrease of approximately $34,000,000.
DISTRICT NO. 8—ST. LOUIS.

The milder weather during February brought
considerable improvement in transportation
and materially benefited business. The coal
shortage has also been greatly relieved, and
plants that were compelled to shut down because they could not obtain fuel are now again
in operation.




MARCH 1,

1918.

In manufacturing circles, attention is more
and more being paid to those articles necessary
for the prosecution of the war. The shoe and
clothing industries continue especially busy on
Government contracts, as are also the metal
and allied lines.
Many out-of-town buyers are in the larger
centers obtaining goods for the spring trade,
and wholesalers report a good demand, although more discrimination and conservatism
in purchasing is noted. Interest now centers
mainly in the Easter trade, and wholesale
milliners and jobbers of ready-to-wear garments report a satisfactory business. Many
dealers state they are having difficulty in replenishing their stocks of certain merchandise.
Prices continue high, and some feel that no recession in prices is in sight. There is little
speculation. Collections are reported to be
good.
During the early part of the month a strike
of the street car conductors and motormen in
St. Louis caused considerable disturbance to
business in that city, but it was settled after
five days. The labor situation in general is
rather unsettled.
The milder weather and moisture in this
district during the past month have been of
material benefit to the winter wheat, and
prospects are favorable.
In the St. Louis market the demand for live
stock during January has been quiet. The report of the St. Louis National Stock Yards shows
decreases in the sales of all kinds of live stock,
excepting horses and mules, in which there
was an increase of 8,169 head over the previous
month. Decreases are also shown in the
receipts of live stock, excepting sheep, in which
there was an increase of 3,412 head, and horses
and mules, in which there was an increase of
8,789 head over the previous month.
The postal receipts for January in St. Louis,
Louisville, Memphis, and Little Rock all show
substantial increases over the corresponding
month last year, but in this connection the
increased postal rates must be taken into consideration.

MARCH 1, 1918.

FEDERAL RESERVE BULLETIN.

215

issued bonds to provide funds for the purchase
of grain for spring planting. Similar action
which is contemplated by the counties in
eastern Montana is defeated by an adverse
ruling of the supreme court as to the constitutionality of the State grain law of that
State. The governor immediately called a
special session of the legislature for the purpose
January, 1918.
January, 1917.
of remedying the defects in the act and finding
a method by which public funds could be
Permits. ConstrucPermits. Construction.
tion.
provided for the purchase of seed. The work
which has already been done in the various
186 $167,319
St. Louis
601 $2,286,844
35,800 States and the additional steps taken by the
31
Louisville
88,170
80
79,450
43
Memphis
268,850
135
State authorities in North Dakota and Montana
will probably result in providing the required
There has been an increased demand for amounts of small grain for seeding.
money during the past month. This was
The situation as to corn is more difficult,
reflected in the demand for accommodations since the same shortage that exists in the
at the Federal Reserve Bank, which was district extends to practically all of the remainunusually brisk for this time of the year.
ing corn territory of the country, making it
The bank rate to customers in the large extremely difficult to obtain and ship in satiscenters is now 6 per cent, and in the outlying factory seed. In view of this condition the
districts slightly higher.
farmers throughout the ninth district are being
Practically none of the banks in the large warned to save corn grown in their own localicenters are in the market for commercial paper, ties for their ear production in 1918, to make
though some of the country banks in the careful ear tests of all corn saved for spring
South, where cotton has been moved, are planting, and to use seed brought in from
buying. The prevailing rate is now full 6 points farther south for forage corn and
per cent for maturities from three to six months. ensilage. Price fixing applying to wheat alone
has had the effect of rigidly controlling the
DISTRICT NO. 9—MINNEAPOLIS.
The most important problem of the month market on wheat, while the prices of com,
has been the seed situation and preparations for barley, oats, and rye have steadily advanced
spring planting. Montana is short of its normal to higher levels than have ever been known
seed-wheat requirements. North Dakota has before. Rye flour sold on the Minneapolis
a sufficient supply, but it will require careful market during the month at a higher price
distribution. The remainder of the district than wheat flour, and barley reached a level
will be able to obtain its normal requirements. very nearly equal to wheat. This condition
In the western part of the district there is a has caused serious apprehension that many
shortage of barley and oats for seed, and over farmers will curtail their spring wheat planting
the entire district there is a severe shortage in favor of the earlier, more productive, and
of seed corn. Very active work has been in safer crops of barley and rye, which are iiot
progress during the month to inform the affected to the same degree as wheat by rust
farmers of the essential facts of the seed and other plant diseases.
The farmers have shown keen interest in the
situation, and warn them to take early steps
to provide for their individual requirements. discussions in Congress relative to the price of
Some of the western counties of North Dakota wheat of the 1918 crop and the possibility of a
have taken advantage of the seed law and have Government price higher than the present

During the past month building operations
have been practically at a standstill in this
district. The following table shows the number of permits issued and the estimated cost of
construction, as compared with January, 1917,
according to reports received from the larger
cities in this district:




216

FEDERAL RESERVE BULLETIN.

fixed market, which, already had the effect of
checking wheat shipments, which has to some
extent reacted in a higher price for other grains.
The Montana winter wheat acreage is large
and weather conditions have been very favorable. Over the remainder of the district the
amount of snow on the ground is not entirely
satisfactory, and without considerably heavier
snowfalls during the remaining weeks of the
winter, there is a possibility of deficient moisture in the spring.
The banks of the district were called upon
during the month to subscribe to short-time
certificates issued by the Treasury Department,
and responded by taking the allotment set for
the ninth district.
Interest rates have remained firm and the
demand has been active.
The banks in the western part of the district
have been seriously embarrassed by the inability of the farmers to ship live stock and
other products on account of traffic congestion
and their consequent inability to meet their
obligations at their banks. The usual liquidation has been interfered with, and there is no
present prospect of much improvement in the
car situation.
Retail business over the district is satisfactory, and manufacturing enterprises are busy.
Labor is fully employed at good wages.
Winter construction has been slow, and the
outlook for spring is uncertain, due to the high
price of material and labor costs.
DISTRICT NO. 10—KANSAS CITY.

Agriculture.—The fact that January receipts
on the local market were only one-fourth of
normal indicates a scarcity of wheat in this
section. With mills operating at about threefourths capacity (as compared with 67 per
cent capacity a year ago), there was a material
increase in the flour output of about one-sixth
over the same month last year. Reserves of
wheat are being steadily decreased. All mills
are operating on the basis of supplying 30 per
cent of their output to the Government. The
Food§Administration, in order to keep all on an




MARCH 1,

1918.

equitable basis, is closing down the mills in
this zone that have ground three-fourths their
normal amount of flour.
Mild weather the first part of this month
has melted the January snowfall, which was
unusually heavy throughout most of the district, and in view of the dry fall and early
winter the present wheat outlook is better than
expected.
Local corn receipts and shipments as compared with the same month last year gained
56 and 87 per cent, respectively. Supplies of
corn at the four principal grain markets have
more than doubled during January. The
milling demand for corn, oats, and barley to
furnish substitutes for wheat, has resulted in
maintaining unusually high prices at all terminal markets, notwithstanding the fact that
there were large crops last year. The seed
corn situation presents a serious problem, due
to the fact that so much of the crop is immature.
Farmers have been urged to exercise great care
in the selection of corn which will germinate.
Hay prices have maintained an extraordinary high level, although the movement to
market is somewhat above normal. The
movement of oats has been the largest for 10
years.
Live stock.—Cattle receipts for January at
the six principal markets of the district increased about 14 per cent over the same month
a year ago. Indications continue to show
supplies of cattle are abundant in the West
and receipts are expected to continue above
those of last year.
The average weight of hogs on the local
market was 218 pounds, 29 pounds heavier
than a year ago, and the heaviest January
average in 10 years. The district markets
receipts decreased about one-tenth under the
same month last year. Feeders are following
the Food Administration and Government suggestion by keeping hogs until fattened. Prices
are well maintained above the tentative minimum price suggested by the Food Administration, and though farmers complain that
there is no profit in feeding corn at the present

MARCH 1,

1918.

FEDERAL RESERVE BULLETIN.

high prices and selling the hogs at $16, there
are no indications that feeding operations have
been curtailed. For the first time in many
months hog slaughterings by the district
packers for January showed an. increase over
the same month a year ago.
The sheep movement is smaller than last
year. Receipts declined 10 per cent under
January, 1917. The fiockmasters have shown
a disposition to hold their ewes for breeding
purposes and to keep their flocks until shearingseason because of the high prices received for
wool. Feeders are also complaining that they
lose $3 a head on all lambs marketed.
The aggregate live stock value on the farms
of the States in whole or part within this district, on. January 1, 1918, by Government estimates, was 1,837 million dollars, a one-fourth
increase over the live stock valuation on the
same date last year.
Mining.—The metal mining industry of
Colorado is reported about as dull as during
recent years. The primary cause of this is the
increased cost of production, which at a conservative estimate is 60 per cent, due to advanced wages of labor and high prices for
supplies. This has not been accompanied by a
corresponding increase in metal prices, and
unless more favorable conditions develop it is
feared the metal production of the State will
rapidly decline. It is said, however, that the
production of molybdenum, from present
indications, will reach by midsummer a million
dollars' worth of metal a month. These
operations are based on Government contracts,
which will take practically the entire output
for war purposes.
The production and shipments of zinc and lead
from the Missouri-Kansas-Oklahoma district
have been considerably curtailed by the shortage of coal and a railroad embargo. During
tKe month zinc ore prices declined slightly with
the market fairly quiet. Lead ore, however, is
bringing top prices at $85 a ton, and the market is very strong with an unusual demand.
The heartiest spirit of cooperation and compliance with the Government Fuel Adminis-




217

tration orders has been shown in all parts of
this district.
Oil.—The unusually cold weather of the
past month, with heavy snows and a water
shortage, has caused the curtailment of all
field operations, and "the shut down" of many
wells and drilling rigs in this district. Oklahoma completed less than three-fourths as
many ¥/ells in January as in the preceding
month, and that State's new production decreased one-fifth under December. Kansas
also showed a decline of over 30 per cent in
the number of wells completed for the month,
but made an increase of over one-third in
new production, almost sufficient in quantity
to offset Oklahoma's loss.
The total monthly oil production of Kansas
continues far above last year's records, the
January output exceeding that of the same
month last year by nearly 80 per cent. The
steady decline in Oklahoma's production continues, and the output during the past month
dropped 14 per cent as compared with a year
ago.
Lumber and construction.—Although the demand of the country yards for lumber is slightly
under normal, and the city yards demand is far
below normal, the general demand is reported
heavy, stimulated by large Government war
orders for cantonments and other buildings.
The extremely cold weather has made all
building impractical, but the general impression is that there will be a large volume of
buying with better weather. Home building
has been greatly reduced because of the war.
Building permits in the 10 principal cities
of this district for January decreased in volume
nearly 42 per cent under the same month a
year ago. The estimated value of these buildings declined 38 per cent under January, 1917,
as compared with a 48 per cent decrease in
the largest cities of the entire United States.
A loss of about one-tenth in volume and value
was shown under December.
Mercantile.—Statistics for the month of
January for the States in whole or part within
this district as compared with the same month

218

FEDERAL RESERVE BULLETIN.

last year show a slight increase in purchases, a
decrease of nearly 3 per cent in indebtedness,
and an increase of over 3 per cent in payment
activity.
Manufacturers, especially of shoes, iron, and
steel products, are active, but experience some
difficulty in securing materials, adequate transportation facilities, and coal. Trade in nearly
all wholesale lines is reported as good. Buyers
are placing orders early and evidently anticipate a shortage in supplies. The present outlook for improved retail trade, which has been
greatly curtailed by weather conditions and
the fuel situation, is much brighter. Hardware, drugs, and groceries are in good demand
at advanced prices. Dry goods, notions, and
millinery sales are heavy for the season.
Labor.—The usual number of small labor
disturbances were experienced during the past
month, with nearly all of them quickly and
satisfactorily settled. The number of strikers
in the southern Kansas coal fields has increased to about 1,000, due to continued disturbances, which conditions have caused the
loss of a daily production much greater than reported last month, and estimated at 5,000 tons.
Supplying the farms with labor for next
summer by Government plans depends on
two factors—greatly improved methods of
distribution of the available labor, and intensive cooperation between the towns and the
farms. Even a greater problem than securing
this temporary labor is that of obtaining allyear-round farm hands to replace those who
have gone into war service, and it is planned to
divert as many of the unskilled laborers as
possible to the farms.
Financial.—The condition of all business
activities is reflected by the increased bank
clearings of this district. Clearings in 17
principal cities of the district for January
increased 41 per cent over the same month
last year, and gained 125 per cent over January
two years ago. In comparison, the cities of
the entire United States showed a gain of
3.6 and 31 per cent over January, 1917 and
1916, respectively. Bankers report a strong
demand for money, and rates are firm.




MARCH 1,

1918.

DISTRICT NO. 11—DALLAS.

Warmer weather has prevailed during the
month and as a result there has been a general
improvement in business. Some recovery is
noted from the seasonal trade depression reported in the February letter. Correspondents
in the agricultural sections report that farm
work is well advanced and active preparations
are being made for the season's crops. Good
rains have fallen over a portion of the droughtstricken area of central, west, and southwest
Texas, and at present the business outlook is
good, and agricultural conditions greatly improved. Active campaigns are being conducted in all parts of the district for an
increased food production and the planting of
home gardens. This is meeting with a response in every quarter, and it is believed that
there will be even a larger acreage planted in
foodstuffs this season than last.
During the month the semiannual trade
excursions were started and wholesalers report
an active trade. Retail business also is good,
and shows an increase over the same reason
last year. Collections are fair to good. There
has been no recovery in, the building industry
and beyond the activity in Government
orders, previously reported, operations are
quiet. There is evidently a disposition to
postpone construction until after the war,
except where unusual conditions make immediate work necessary.
There is little change in the live-stock situation. Cattle and sheep are wintering well,
although our correspondent at Roswell advises
that the losses in that section up to the present
time have been, rather heavy, especially in
eastern New Mexico. Conditions in Arizona
show improvement on account of a recent rain.
Ranchmen are feeding a large quantity of
cottonseed cake, and more could be used if
available. Advices are that unless early and
adequate rains soon fall other losses are sure to
follow. Collections in that section are slow,
especially with the live-stock interests.
There is still unsold and stored in warehouses
in Roswell approximately one and one-half
million pounds of last year's wool crop.

MARCH 1,

1918.

219

FEDERAL RESERVE BULLETIN.

Member banks report only a fair demand for
funds, and the banking situation shows little
change over 30 days ago. State banks are
coming into the Federal Reserve system, and
within the past 30 days there has been a
lively interest manifested. State banks are
beginning to realize the importance of cooperating with the Government and their duty to
join the system from a patriotic standpoint,
if for no other.
Clearings at the principal cities of the district
for January show an increase of 40.3 per cent
over the same period in 1917.
The labor situation is the same as 30 days
ago and is generally satisfactory, although
there is a surplus of workmen for skilled lines,
caused by the completion of cantonment work.
One cause for the general scarcity for workmen
is the unsatisfactory living conditions at
various construction places. One of the principal difficulties is to get men to remain at these
places on account of high prices for the character of food and lodging to be had.
Post-office receipts at the principal cities
show an increase of 58 per cent for January
over January, 1917. Cantonment cities continue to make the most favorable showings.
The increase at Waco for January amounted
to 180 per cent.
Oil producers are greatly handicapped by
lack of water for operations. Producers are
pumping and hauling water long distances,
and some wells have discontinued operations
entirely.
While some of the large operators in the copper-producing sections of Arizona are working at
normal production, others in the same section
are only working at 65 to 75 per cent of normal,
on account of scarcity of labor and other conditions. Our correspondent in Oklahoma reports
the coal mines there working to capacity.
The general business outlook is all that
could be desired.

State.

Arizona
California
Idaho
Nevada.
Oregon
Utah
Washington
Total

Population,
1910 census.

Rank
among
States
in farm
products.

Total
value
of farm
products
in 1917.

204,354
2,377,549 I
325,594
81,875
672,765
373,351
1,141,990

$27,068,000432,285,000
94,890,000
25,655,000
108,632,000
49,627,000
144,422,000

5,177,478

882,579,000

This, compares with an average total of
$452,348,000 for the five-year period, 19111915. Illinois, with a population in 1910 of
5,638,591, having an area of 58,665 square
miles, ranks first of all States in farm products
with a value of $842,042,000 in 1917. This
shows the relatively small output for the great
area in this district of 716,499 square miles,
almost double the area of the seven Middle
Western States—Illinois, Indiana, Iowa, Michigan, Wisconsin, Minnesota, and Missouri—with
a population of 21,077,314, the farm products
of which in 1917 were valued at $3,878,310,000.
It is interesting to note that there is close
approximation of the same value of product
per capita in this district and in the Middle
West. "
In California there has been less precipitation from February, 1917, to February, 1918,
than in any year since the establishment of the
Weather Bureau in San Francisco in 1871.
In certain districts the feeding of cattle now
presents an acute problem, not of feeding to
fatten, but merely to sustain life. Lack of
snow in the mountains and lack of water storage mean inevitably a shortage of water for
irrigation next summer.
In other parts of the district, Oregon, Washington, Idaho, northern Utah, there has been
adequate precipitation since the unfavorable
fall, and agricultural and live stock conditions
are now almost ideal. In the colder sections
the winter has been open, so that the ranges
DISTRICT NO. 12—SAN FRANCISCO.
have largely sufficed for cattle and sheep, with
great
saving of hay, which, in southern Idaho,
The Government estimates the value on the
for
example,
is now reported as selling as low
farm of farm products in the seven States of
as
$9
or
$10
per
ton.
this district for 1917 as follows:




220

FEDERAL RESERVE BULLETIN".

The grain planting -last fall was almost a
failure in Washington and Oregon, but conditions are so favorable this spring that an exceptionally large acreage is anticipated. Seeding began in the first 10 days of February.
The lumber output is reported as almost 80
per cent of capacity, with 90 per cent of the
mills in Oregon and Washington running. It
is reported that shipbuilding activities have
not had large influence, as only about 8 per cent
of normal output goes into this use, and building requirements are light. New uses are
developing for lumber, such as for ammunition
boxes, thick lumber for patterns for heavy
castings, etc.
Petroleum production in California during
January was 8,400,681 barrels, while shipments were 9,078,681 barrels. This excess of
consumption reduced stored stocks by 678,000,
barrels, from 32,450,465 barrels on December
31, 1917, to 31,772,465 barrels on January 31,
1918.
Imports and exports at Pacific coast ports
for the years^ 1914, 1916, and 1917 have been
as follows:
1914

Imports:
Washington (Seattle)
San Francisco
Southern California (Los
Angeles)
Oregon (Portland)

$62,872,287
69,995,216

1917

1916

1161,779,832 $289,078,274
117,128,253 231,979,474

5,049,879
4,117,340

5,462,810
2,434,679

17,400,000
2,438,624

47,951,445
66,122,214

198,747,108
126,758,024

195,927,355
168,147,580

2,113,147
14,249,450

4,439,848
4,019,260

Combined imports and exports:
Washington (Seattle)
110,823,732
San Francisco
136,117,430
Southern California (Los
Angeles)
7,163,026
Oregon (Portland)
t 18,366,790

360,526,940
243,886,277

485,005,629
400,127,054

9,902,658
6,453,939

13,900,000
8,854,112

620,769,814

907,886,795

Exports:
Washington (Seattle)
San Francisco
Southern California (Los
Angeles)
Oregon (Portland)

Total

272,470,978

1

6,500,000
6,415,488

i Estimated.

An interesting item of importation is the
dried meat of the coconut, called copra, of
which 160,000 long tons were brought last year
from South Sea Islands, the Philippines, Australia, Sumatra, and Java. At the present
selling price of approximately 9 cents per




MARCH 1,

1918.

pound the value of this would be about
$32,000,000. It is used in the manufacture of
soap and explosives.
In the February Bulletin report was made
of shipbuilding at San Francisco and Seattle.
Reports not then at hand are now given regarding this industry at Portland and Los Angeles:
Shipbuiding on the Columbia and Willamette Rivers
(Portland).
1916
Plants building steel ships
Plants building wooden ships..
Number of employees
Monthly pay roll
Steel cargo ships launched
Tonnage of steel ships launched
Wooden ships launched
Tonnage of wooden ships launched.
Cargo ships in ways, Dec. 10
Tonnage of ships in ways, Dec. 10..
Total amount of contracts

4,200
$302,000

18,000
11
48,000
$22,250,000

1917
14
17
19,084
$1,757,280
8
59,800
24
j62,000
94
2 370,400
$155,300,000

1
With 1 under construction.
2 Steel, 76,800 tons. Wood, 293,600 tons.

Los Angeles Harbor District.
1917.

Plants building steel ships
4
Plants building wooden ships
2
Number of employees (estimated)
8,500
Steel cargo ships launched and under construction Dec. 1024
Tonnage of steel ships launched and under construction Dec.
10
84,600
Wooden ships launched and under construction Dec. 10...
8
Tonnage of wooden ships launched and under construction
Dec. 10
28,000
Total amount of contracts (estimated)
$34,500,000
Government contracts awarded the shipyards of this district
for submarines. 2 of which have been launched, are estimated at
,
$2,730,000

A South Carolina shipbuilding company
estimated that their output should be an
average of 25 tons per man. Under conditions
of forced development it is thought that 20
tons per man would be a more accurate estimate at Pacific coast yards. With this as a
basis, a poll of trades of the operatives employed would determine the number of men
needed to secure a desired output. Government agencies are endeavoring to develop a
systematic and dependable system in this connection.
During January building permits in 18
principal cities of this district were $3,736,000,
comparing with $9,031,000 for the same month
last year, a decrease of 63.3 per cent. A considerable part of this building is due to necessary housing for operatives in shipbuilding
industries.

MAECH 1, 1918.

FEDERAL RESEBVE BULLETIN'.

221

Comparing reports of December 31, 1917,the war, should determine extensions of credit,
with those of a year before, deposits of national not alone by the financial strength of the borbanks of eight reserve cities of this district show rower but also by the essential necessity,
a gain of $67,604,000, an increase of 13.13 per judged by war needs, of the intended use of the
cent, while loans and discounts increased funds. Credit for nonessential purposes must
$53,630,000, a gain of 16.30 per cent, in detail be carefully restricted." We must concentrate
all energies on war business. The Governas follows:
ment's needs • of money and credit for prosePer cent
cuting the war must have precedence over
Jan. 31,1917. Dec. 27,1916. increase.
City.
private needs.
Too little attention seems to be given to the
$97,570,000
$90,043,000
8.359
Los Angeles
280,837,000
241,466,000
16.305 demands which will be made upon banks for the
San Francisco..
9,721,000
9,444,000
2.933
Ogden
32,358,000
112.071 June payment of income and excess-profit
28,452,000
Salt Lake City.,
.55,893,000
53,568,000
4.340
Portland
*...
06,976,000
51,135,000
30.978 taxes, estimated at an • amount equal to about
Seattle
31,583,000
28,395,000
11.227
Spokane
11,602,000
34.578 one-fourth the total deposits of all national
Tacoma
8,621,000
Borrowers in good credit are apt to
515,030,000
13.126 banks.
582,634,000
Total.
defer arranging for payment and for the
Loans and discounts:
Los Angeles......
69,846,000
61,654,000
13. 287
186,162,000
160,940,000
15. 671 means of payment until near the time limit,
San Francisco....
29.928
Ogden
5,159,000
6,703,000
15.372 i t does not seem to be generally understood
Salt Lake City....
17,297,000
19,956,000
10.509
Portland
32,011,000
35,375,000
33. 487 that credit may then be temporarily difficult
28,599,000
Seattle
38,176,000
10.000
18,251,000
20', 076,000
Spokane
Those having such payments to
24.213 to obtain.
6,397,000
Tacoma
5,150,000
16.297 make should now purchase through their
329,061,000
382,691,000
Total.
banks 4 per cent Treasury certificates of ini Decrease.
debtedness available for use in making such
Clearings for 18 cities in this district in payments. These certificates are not to be
January, aggregating $979,560,000, show an in- confused, however, with those available for
crease of $151,716,000 over the same month in Liberty loan payments. No prudent bank
1917.
should rest until its customers and the bank
The Secretary of the Treasury has announced together acquire an amount of such certificates
a policy for 10 weeks of selling every 2 weeks equal to the entire amount of such taxes to be
$500,000,000 Treasury certificates of indebt- paid by its customers. If such purchases are
edness in anticipation of the third Liberty loan, made now, adjustments are had and a concenand has telegraphed a request to every bank trated strain will be averted.
to set aside for this purpose each week an
The Capital Issues Committee of the Federal
amount equal to 1 per cent of its resources. Reserve Board at Washington has been organMany banks fail to realize the importance of ized to pass upon issues of securities to be
compliance. In the first place, it is necessary offered, the purpose being to bring about a
that the Government have the funds; in the restriction of such issues to those which are
second place, even if it involves curtailment of clearly in the national interest, in other words,
credit to customers, it is of great importance which will help win the war. Although there
that each bank by buying Treasury certificates are subcommittees in each Federal Reserve
provide itself with the maens to meet drafts district, all applications are to be addressed to
made upon it to pay for bonds of the next Federal Reserve Board, Capital Issues ComLiberty loan. Those banks which do not do mittee, Washington, D. C.
so risk finding themselves unprepared to meet
Electric light and power companies, because
unexpected requirements.
of the low water in California streams, are
The time has come when every bank, in finding themselves nearing the point where
pursuance of patriotic effort to aid in winning certain industries must be cut off, a result




222

FEDERAL RESERVE BULLETIN.

wMcli is said to be inevitable before the summer is over unless new development of hydroelectric plants is undertaken with extraordinary energy. The gold miners, it is said, contend that theirs is an essential industry and
should not be cut off, because additional gold
for Federal Reserve Bank reserves is important.
The State of California, however, by the provisions of its laws concerning bank reserves, is
tying up as much gold in the vaults of the
State banks as could be produced by the mines
of the State in two years. A two or three
days7 special session of the legislature amending the law, as has been done in Pennsylvania
and other States, so that State banks becoming
members of the Federal Reserve system would
only be required to carry reserves the same as
the Federal Reserve Act requires of member
banks, would make it possible for this large
amount of gold to be added to the strength of
the Federal Reserve Bank, further safeguarding
the banks and business interests of the State.
On October 13 last the President appealed
to every eligible State bank to join the Federal
Reserve system as an act of patriotism. Only




MARCH 1,

1918.

three California banks have complied. These
have resources of $6,158,000 out of a total of
$993,201,000 (Nov. 20, 1917). No one would
intimate that Californians are not patriotic,
but the banking law, which stands unamended,
has the same effect as if deliberately and unpatriotically planned against the course of
action urged by the President.
In the present circumstances, probably more
than at any time in our history, the welfare of
the Nation and the safeguarding of all business
interests depend upon efficient and uninterrupted banking service. The developments of
the past three years have demonstrated the
vital need of the support of the Federal Reserve
system as a means to that service. Without
State banks, however, the Federal Reserve
system has only half strength. Should the
national interest suffer or should business be
hampered, because of failure to give opportunity for State banks to add their quota of
strength by prompt amendment of laws in
those States whose laws are now unfavorable,
the grave responsibility must rest upon those
who have failed to act.

MARCH l,

228

FEDERAL RESERVE BULLETIN.

1918.

GOLD SETTLEMENT FUND.
Heavy movement of funds, largely on account of Government fiscal operations, including the concentration in New York of amounts
received in payment for certificates of indebtedness issued in anticipation of the third Liberty loan and the return movement from New
York of funds to the interior, have resulted in
combined clearings and transfers through the
gold settlement fund of $3,803,149,000 during
the five-week period from January 17 to February 21, averaging $760,629,800 per week,
compared with a like average of $745,089,750
for the preceding four-week period. New
York shows a net gain through transfers of
$219,000,000 as against a loss of $198,212,000
through settlements, the result being a net
gain in the ownership of gold through transfers
and settlements of $20,788,000, compared with
a loss of $15,893,000 for the preceding period.
New York, Philadelphia, Cleveland, St.
Louis? and Chicago show the largest gains in

balances through the shifting of credits in the
fund, while San Francisco, Boston, and Richmond show the largest losses. Changes in the
ownership of gold in the banks' fund amount to
1.90 per cent of the obligations settled, as
against 2.47 per cent for the preceding fourweek period and 1.43 per cent for the period
from May 20, 1915, to February 21, 1918.
The combined total of the banks7 and
agents' balances increased by $66,453,100
during the five weeks, chiefly through deposits
of gold by the Philadelphia, Boston, Chicago,
New York, and San Francisco banks. Total
credit balances of the 12 banks and agents in
the fund amounted to $911,619,600 on February 21, a gain of $103,372,600 since January 1,
1918.
Below are given figures showing changes in
the fund between January 17 and February 21,
inclusive.

Amounts of clearings and transfers through the gold settlement fund by Federal Reserve Banks, from Jan. 18,1918, to Feb.
21 y 1918, both inclusive.
[In thousands of dollars.]
Total
clearings.
Settlement of—
Jan. 24,1918
Jan. 31,1918....
Feb. 7, 1918
Feb. 14,1918
Feb. 21,1918
Total
Previously reported for 1918....
Total since Jan. 1,1918...
Total for 1917




Balances
adjusted.

819,561
642,158
602,539
551,908
710,081

48,635
39,671
51,808
85,346
58,290

97,000
96,140
107,000
112,362
64,400

3.326,247
1,950,822
5,277,069
24,319,200

283,750
142,385

476,902
158,500

426,135
2,154,721

Clearings
and transfers.

Transfers.

635,402
2,835,504.5

Total
Total
Total
Total

for 1918 t ro d a t e .
for 1 9 1 7
for 1916
.
for 1915
. .

.

. . .

.

[Total clearings and transfers, May 20,1915, to Feb. 22,1918.

1

5,912,471
27.154,704.5
5'. 533,966
i; 052,649
39,653,790.5

224

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

Changes in ownership of gold.
[In thousands of dollars.]
to Feb..21,1918, both in- Total changes from May
Total to Jan. 18, 1918. From Jan, 18, 1918,clusive.
20,1915, to Feb. 22,1.918.

Federal Reserve Sank of—
Decrease.

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

Increase.

38,954
588,906

. .
-.

«

- . .

-.

. .

...
588,906

....

66,859
86,249
8,048
61,028
59,167
28,417
19,279
57,481.5
45,709.5
117,714
588,906

Balance to
credit Jan.
17, 1918,
plus net
deposits of
gold since
that date.

Balance
Feb. 21,
1918.

Decrease.

42,225
42,879
36,037
35,732.9
20,733.8
18,789
53,399.3
19,433.4
6,737
23,748.9
21,385.2
56,593

28,206
63,667
49,663
52,897.9
11,214.8
14,594
50,144.3
26,776.4
8,011
35,700.9
16,042.2
20,756

5," 343*
35,837

377,673.5

377,673.5

72,148

Increase.

Decrease.

20,788
13,626
17,165

688,118

Increase.

14,019

9,"5i9*
4,175
3,255

24,935
80,485
103,414

i*47i"

56.853
55;912
35,760
20,553
69,433.5
40,386.5
81,877

7,343
1 274
11,952

72,148

569,589

569,589

Gold settlement fund—Summary of transactions from Jan. 18, 1918, to Feb. 21, 1918, both inclusive.
[In thousands of dollars.]

Federal Reserve
Bank of—

Boston
TSj"ew York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total

Balance
last statement, Jan.
17,1918.

Weekly settlements, Jan. 24, 1918, to Feb. 21,
1918, both inclusive.

Transfers.

Gold.
Withdrawn.

Deposited.

5,500

Debit.

Credit.

37,425
34,689
31,452
44,830.2
19,820
15,364
45,228
20,820.4
10,262
31,531.1
17,737.7
39,463

10,300
8,190
29,985
8,166.6
1,315
7,955
70,662.8
4,613
5,475
3,217.8
6,627
18,890

35,000
120,500
27,000
48,362
23,000

5,000
339,500

25,400
17,263.9
401.2
4,550
62,491.5
6,000
9,000
11,000
2,979.5
1,760

94,666

101,000

i,5oo
42,900
9,640
75,000

21,002

348,622.4

146,346.1

175,397.2

476,902

476,902

Net.
debits.

Total
debits.

Total
credits.

Net
credits.

Balance in
fund after
close of
business,
Feb. 21,
1918.

252,529
1,129,082
349,058
256,706
153,282
101,860
460,136
211,702
114,071
123,977
90, 111
83,703

268,510
930,870
389,684
321,833
156,763
97,685
449,881
219,045
116,845
178,829
94,438
101,864

28,731
1,422
40,626
65,127
9,619
5,630
37,239
11,146
5,218
54,852
5,979
18,161

28,206
63,667
49,663
52,897.9
11,214.8
14,594
50,144.3
26,776.4
8,011
35,700.9
16,042.2
20,756

283,750 | 3,326,247

3,326,247

283,750

377,673.5

12,750
199,634

400
10,000

6,138
9,805
47,494
3,803
2,444
1,682

Federal Reserve agents1 fund—Summary of transactions from Jan. 18, 1918, to Feb. 21, 1918, both inclusive.
[In thousands of dollars.]

Federal Reserve agent at—

Boston
New York....
Philadelphia.
Cleveland
Richmond
Atlanta
,
Chicago
,




Balance
Gold
last
statement withJan. 17, drawn.
1918.
6,000

40,000
56,924
14,970
35,000
25,000
43,420
6,700
138,657.5 60,184.5

Gold
dex>osited.

5,500

Balance
in fund
Feb. 21,
191S.

11,500
40,000
65,354
50,000
25,000
41,270
4.550
62; OIL 5 140,484.5
23,400
15,000

Federal Reserve agent at—

St. Louis
Minneapolis..
Kansas City...
Dallas
San Francisco,
Total...

Balance
last
Gold
statement- withJan. 17, drawn.
1918.
32,902.6
21,500
42,3fiQ
8,374
46,406

1,165
5,000
500
3,500
11,550

Gold
deposited.

6,009
9,009
11,000
2,750
1.760

Balance
in fund
Feb. 21,
1918.

37.737.
25,500
52,860
7,624.
36;616

496,544.1 103,569.5 140,971.5 533,946.1

225

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

OPERATION OF THE FEDERAL RESERVE CLEARING SYSTEM, JAN. 16, 1918, TO
FEB. 15, 1918.
Items drawn on
drawn on Items handled Total (exclusive
Items drawn on
Numbanks in district Items
drawn on on
banks in other by both bank of items
Treasurer of Num- ber of
outside Federal districts
Treasurer of
(daily
and
branches
United States ber of nonReserve city
United
States)
average).
(daily average). (daily average). (daily average). mem- mem(daily average).
ber
banks ber
in dis- banks
par
NumNumNumNumNumNumtrict. on
list.
ber. Amount. ber. Amount. ber. Amount. ber. Amount ber. Amount. ber. Amount.
Items drawn on
banks in Federal Reserve city
(daily average).

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
,
Chicago
St. Louis...
Minneapolis
Kansas City
Dallas
San Francisco
Totals:
Jan. 16 to Feb. 15
Dec. 16 to Jan. 15
Nov. 16to Dec. 15....
Oct. 16to Nov. 1 5 . . . ,
Sept. 16to Oct. 1 5 . . .
Aug. 16 to Sept. 15...
July 16to Aug. 1 5 . . . ,
June 16to July 1 5 . . .
May 16 to June 15....
Apr. 16 to May 15....
Mar. 16to Apr. 1 5 . . .




3,213 $12, 271,067 33, 729 $4,468,661 735 $6,404,609
3,011,935
5,843 " 557,945 38', 455 31,457,442
442 20,51813:
2,873,24010;
099,938
7,124,591
13,973
017,963
li
3,101,527
1,534
669 $3,304,210
388,188
6,067/950
3,458,158
1,221
511,060
2,672,898
1,510,395 473 247,556
1,656
912,000
3,802,000
626,000
7,948
681,978
2,479,244
965,579
2,265
10 242,720
060,477
1,032,026
1,454,771
2,596
979,598
7,804,457
011 3,514,232 2,'057 1,325,136
2,066
659,672
4,965,909
577 1,217,187
1,111
707, —
463,388 3,919 717,336
2,781
2,158,179 446

40,677 $23.!,144,335
64,816113'1,027,322
43,820 26,097,769
26,248 22,890,160
23,247 13,914,296
15,056 6,941,910
27,882 22,340,000
13,276 11,369,521
15,199 7,547,274
19,698 20,623,423
13,993 7,842,769
21,389 7,046,585

3,534$1,939,980
406
22,458 8,767,408
674
4,709 1,881,770
628
737 421,147
771
1,110
230,121
535
1,613
532,374
404
5,550 1,712,000 1,128
4,153
706,884
479
344
106,789
790
1,655
330,732
960
949
221,162
633
1,412 4,465,666
564

0,248,466 44, 654 42,852,372 7,128 5,836,958 325, 301282,785,364 48,224 21, 316,033
46,207153, 847,568 227, 312 80,
9,065,135 49, 342 52,175,578 7,718 3,402,035 359,067
067 292,585,856
48,549148; 033,108 253,
38,130 21, 116,293
292:
.
353 58,458,952
334, 787 314,623,152 33,806 27, 179,053
47,678 171, 723,439 240, 756 84'4,440,76146,
47,574 166, 552,773 232, 723 64!
325' 690 283,938,810 30,426:17, 496,974
4,296,210 45, 393 53,089,827
293; 742 220,732,251 26,797! 13, 518,566
40,591128, 271,466 212, 935 47!
7,476,204 40, 216 44,984,581
36,306100. 331,694182, 191 41
1,323,62132 564 40,648,168
251, 061182,303,483 23,492jll, 006,515
36,727 98! 075,919 175, 625 40:
0,353,278"" 273 37,981,022
243, 625176,410,219 19,533 9, 701,569
38,476109! 722,256182, 622 41
1,004,720 941 46,762,698
255, 039197,489,674 19,100 11,637,899
322,883179, 193 38!
150 38,314,393
250, 241174,236,737 16,344 414,508
8,599,461
37,898
370,859171, 093 36;
428 36,
238, 288160,680,956 15,925 597,865
6,473,163
33,767
288,002168, 607 32
231, 777127,648,503 12,582 643,408
31,162
2,666,959
008 34,693,542

254 '
425
315
564
1,462
315
2,229
1,003
1,067
1,529
218
1,138

7,972 10,519
7 . — 9,268
9,321
7,826 9,210
7,747 9,052
7,718 8,934
7. — 8,837
8,805
7,651 8,789
7,634 8,926
7,625 8,607

226

MOVEMENT OF EXCESS RESERVES ("FREE
GOLD") DURING 1917-18.
In the following table and attached diagram
there are presented amounts of minimum reserves required to be held by the Federal
Eeserve Banks against their net deposits and
Federal Reserve notes in circulation, also actual
cash reserves held by the banks and agents at
close of business on each Friday of the calendar
year 1917 and during the first two months in
1918. By deducting from the total reserves
held the aggregate amounts required to be held
against net deposits and notes, there are obtained the excess reserves, or the "free gold,"
which may serve as the basis for additional
reserve deposit credits or additional note issues.
It is seen that since the beginning of April,
1917, the cash reserves of the banks have nearly
doubled, while their excess reserves, owing to
the simultaneous increases in net deposits and,
even more so, in note circulation, have increased
slightly over 45 per cent. Especially large
gaijis in reserves and excess reserves may be
noted about the middle of 1917, following the
enactment on Juae 21 of the amendments to
the Federal Reserve Act, providing, among
others, for the maintenance of member banks7
reserves exclusively at the Federal Reserve
Banks, and since December of the past year,
when the Federal Reserve Banks gained considerable amounts of gold while issuing relatively small amounts of Federal Reserve notes.
On February 21 the excess reserves, or the
"free gold" of the Federal Reserve Banks
amounted to $794,772,000. On the basis of 40
per cent required reserve against Federal Reserve notes and 35 per cent required reserve
against deposits this amount will support additional reserve note issues of $1,986,930,000
or additional deposits of $2,270,777,000.




MARCH 1, 1918.

FEDERAL RESERVE BULLETIN.

Reserves required and actually held} also excess reserves
("free gold") of the Federal Reserve Banls during 1917
and 1918.
[000 omitted.]

1917

Jan. 5 . . . .
12...
18-19.
26....
Feb. 2 . . .
9...
16...
23...
Mar. 2 . . .
9...
16...
23...
30...
Apr. 5-6.
13...
20...
27...
May 4 . . .
18"'.'.
25...
June 1 . . .
8...
15...
22...
29...
July 6 . . .
13...
20...
27...
Aug 3

i o:::

17...
24...
31...
Sept. 7 . .
14..
21..
28...
Oct. 5 . . .
11-12
19...
26...
Nov. 2 . . .
9...
16...
23...
30...
Dec. 7 . . .
14...
21...
28...
Jan. 4 . . .
11...
18...
25...
Feb. 1 . . .
8...
15...
21...

Reserve
required
against
net
deposits.

Reserve
required
Total
against
Total
cash
Federal reserves
reserves
reserves ("free
Reserve required.
notes in
held.
gold").
circulation.

$227,938 $109,149 $337,087 $758,242
107,267 347,754
792,433
240,487
234,692 105,187 339,879 783,822
238,092 103,907 341,999 808,824
236,301 104,012 340,313 808.019
111,409 341,157 788,242
229,748
234,000 116,736 350,736
797,271
236,963 121,268 358,231 818,573
125,703 364,171 846,093
238,468
130,645 376,401 885,616
245,756
247,413 134,424 381,837 914,102
138,722 382,164 922,720
243,442
247,417 143,044 390,461 947,328
416,703 962,662
266,099 150,604
260,609 160,724 421,333 971,606
165,743 426,139 982,633
260,396
168,204
428,441 975,481
260,237
283,111 171,401 '454,512 1,030,201
175,287
460,734 1,035,759
285,447
277,560 178,600 456,1,60 1,016,745
181,761 434,170 1,014,263
252,409
270,181 185,946 456,127 993,427
306,837 192,588 499,425 1,051,511
196,646 551,817 1,075,408
355,171
199,888 634,662 1,247,698
434,774
441,630 203,501 645,131 1,334,352
615,487 1,356,017
404,503 210,984
427,359 213,003 640,362 1,400,916
445,759 213,690 659,449 1,430,321
431,270 213,606 644,876 1,414,052
634,274 1,421,382
417,960 216,314
410,103 219,698 629,801 1,424,059
637,594 1,427,489
414,081 223,513
403,326 229,220
1,424,769
235,166 632,040 1,406,108
396,874
404,923 248,520 653,443 1,415,391
398,162 257,827 655,989 1,426,034
403,872 268,098 671,970 1,452,251
417,860 280,085 697,945 1,457,559
439,772 296,366
736,138 1,486,715
311,954
429,564
741,518 1,495,558
418,387 326,084
744,471 1,520,512
461,579 339,002
800,581 1,552,942
501,470 352,400 853,870 1,596,819
492,991 373,005
865,996 1,625,585
530,378 389,034
919,412 1,636,853
541,493 406,357 947,850 1,658,762
558,429 422,793 981,222 1,676,211
516,000 444,215 960,215 1,683,307
461,354 999,729 1,700,384
538,375
513,213 491,057 1,004,270 1,693,670
510,298 498,595 1,008,893 1,720,768
506,180 500,482 1,006,662 1,733,030
505,716
1,002,596 1,748,031
523,735 495,519 1,019,254 1,784,307
522,507 493,974 ,016,481 1,782,759
520,813 494,440 ,015,253 1,775,457
525,999 504,488 ,030,487 1,813,094
491,272 512,418 ,003,690 1,818,736
511,920 525,832 ,037,752 1,832,524

$421,155
444,679
443,943
466,825
467,706
446,535
460,342
481,922
509,215
532,265
540,556
556,867
545,959
549,673
556,494
547,040
575,689
575,025
560,585
580,093
537,300
552,086
525,591
613,036
689,221
740,530
760,554
770,872
769,176
787,108
794,258
789,895
792,223
774,068
761,948
770,045
780,281
759,614
750,577
754,040
776,041
752,361
742,949
759,589
717,441
710,912
723,092
700,655
689,400
711,875
726,368
745,435
765,053
766,278
760,204
782,607
815,046
794,772

MARCH 1, 1918.




227

FEDEBAL RESERVE BULLETIN.

CASH RESERVES AND
EXCESS RESERVES OF THE /f/?. BANKS
191?-1918
Carre A Cash, Steseires required agamst
Jt&t Sefmsit and JTJ$.JYbce &a&iii£ie$ -combuw

ZS 16Z3307 &ZI284 11. 18ZSI 8 IS21

228

FEDEKAL RESERVE BULLETIN.

MARCH 1,

1918.

DISCOUNT OPERATIONS OF THE FEDERAL RESERVE BANKS.
Discount operations of the Federal Reserve
Banks during January aggregated $868,421,473,
compared with $892,237,774 for December,
1917, and an average of over 2\ billions for the
last quarter of 1917. Of the total discounts for
the month, 351.7 millions, as against 238.8 millions the month before, represents the total of
member banks' collateral notes secured byGovernment war obligations, while an additional 40.4 millions represents the discounts
during the month of customers' paper thus
secured. Over 45 per cent of the January discounts are thus directly traceable to the banks'
war finance transactions for the month.
Discounts of collateral notes secured by commercial paper aggregated 130.3 millions, the
New York and Chicago banks accounting for
over 85 per cent of the total. Acceptances discounted totaled about 18 millions, of which 13.5
millions were trade acceptances in the foreign
and domestic trades. Richmond and Chicago
report a total of 1.6 millions of nonmember bank
paper discounted for their members. Customers' paper rediscounted with the Federal
Reserve Banks during January totaled 332.7
millions, the Richmond and New York banks
reporting over one-half of this class of paper.
Over 70 per cent of all paper discounted during
the month is shown for the New York, Chicago
and Richmond banks. The total of 868.4 millions is exclusive of 3.3 millions advanced on bill
of lading drafts with indefinite maturity, mainly
by the Dallas, Minneapolis, and Chicago banks.




About 85 per cent of the month's discounts
was made up of 15-day paper (i. e., maturing
within 15 days from date of discount with the
Federal Reserve Bank), this percentage running as high as 90 per cent in the case of the
Chicago bank. Six-month paper discounted
during the month, i. e., agricultural and livestock paper maturing after 90 days, totaled 5.3
millions, of which over 85 per cent was handled
by the Federal Reserve Banks at Minneapolis,
Kansas City, Dallas, and San Francisco.
On the last Friday of the month the Federal
Reserve Banks held a total of $627,662,000 of
discounted bills, compared with $680,706,008
at the end of December, 1917. Of the total discounts on hand about one-half was made up of
paper secured by Government obligations, over
11 per cent of member banks' collateral notes
secured by customers' paper, and over 37 per
cent by customers' paper otherwise secured and
unsecured, the remainder being agricultural and
live stock paper carried largely by the four
above-named western banks.
During the month the number of member
banks increased from 7,882 to 7,978, largely as
the result of admission to membership of State
banks and trust companies. The total number
of members discounting during January was
1,432, Chicago and New York with 299 and 208
member banks accommodated during the
month leading all other Federal Reserve districts.

229

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

Bills1 discounted during the months of January, 1918 and 1917, distributed by classes.
Member banks' collateral
notes.
Customers
paper secured
by Liberty
Secured by
bonds or
Liberty
United States bonds
Otherwise
or
certificates of United States
secured.
indebtedness. certificates of
indebtedness.

Federal Reserve Bank.

$6,232,229
18,843,279
4,416,425
306,330
9,687,106

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

120,075

$5,978,158
173,529,413
3,548,155
20,720,500
11,152,470
6,215,300
89,209,492
9,363,100
1,490,788
23,074,455
2,841,000
4,541,300

40,366,235

351,664,131

390,984
309,965
31,780
28,062

Total, January, 1918.
Total, January, 1917.

AH other
discounts.

Trade
acceptances.

$991,000
18,453,590
260,000
10,000
751,250
94,175,983
630,000
11,464,814
1,951,609
1,590,000
130,278,246

Total.

681,761
$9,636,052
732,859
83,581,938
118,747
28,117,655
882,166
27,493,545
801,209 107,290,896
621,871
6,629,209
281,487 | 16,223,923
947,171
27,653,294
65,349 I 3,245,143
582,139
5,044,814
2,383,000
15,351,414
1,747,219

$24,519,200
299,141,079
36,200,982
50,662,541
128,941,681
14,217,630
200,281,869
38,273,530
5,463,060
40,194,284
7,175,609
23,350,008

2

332,650,883

868,421,473

8,234,493

18,326,286

13,461,978

9,517,329

574,464

1 Exclusive of $3,334,030 of bills of lading drafts,
2
Includes $4,489,381 of bankers' acceptances discounted, and $1,607,416 of nonmember banks' paper rediscounted for member banks.

Amounts of discounted paper, including member banks' collateral notes, held by each Federal Reserve Bank on the last Friday
in January, 1918, distributed by classes.
[In thousands of dollars; i. e., 000 omitted.]
Member banks' collateral notes.
Customers'
paper secured by
Liberty Secured by
Liberty
Agricul- Live-stock bonds or
bonds or
United
tural paper. paper.
United
States
Otherwise
States
certificates
secured.
of indebt- certificates
of indebtedness.
edness.

Banks.

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




.

60
1,262
428
199
417

63
1,546
1,638
2,291
2,129

36,437
69,016
17,236
11,882
6,637
29
5,947
1,931
220
496
4,086
519

3,032
.5

7,672
1.2

154,436
24.6

130

. . . . .
536

.

5

All other
discounts.

Total.

365
14,700
1,017
465

12,220
57,487
14,883
22,152
19,811
7,584
28,003
24,275
9,009
13,260
774
22,985

52,844
222,620
33,810
49,360
32,254
11,348
110,924
29,966
13,140
32,545
9,499
29,352

70,829
11.3

232,443
37.0

627,662
100.0

3,777
83,804
1,561
15,291
5,255
3,674
35,521
3,637
738
2,023
1,132
2,837

410
12,313

159,250
25.4

35
10
61
41,453

230

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

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

Feb. 22
Apr. 5
May3
June 7
July3
Aug. 2
Sept. 6....
Oct. 4
Nov. 1
Dec.6

1915.

Nonmember
trust
companies.

Nonmember State
banks.

$93,000
3,653.000
5,038,000
5,242,000
4,342,000
5,350,000
6,087,000
9,000,000
8,477,000
12,311,000

$7,820,000
8,189,000
4,516,000
5,267,000
5,407,000
6,305,000
4,898,000
4,331,000
5,172,000

$10,000
10,000
10,000

15,494,000
15,681,000
17,182,000
21,000,000
24,875,000
24,680,000
32,989,000
39,695,000
41,413,000
37,798,000
37,770,000
47,748,000

Member
banks.

Foreij
Private
banks.

andagen-

Total.

Trade acceptances
bought in
open
market.

Total acceptances.

20,000
20,000
132,000
253,000
275,000

$110,000
110,000
192,000
161,000
352,000
472,000
343,000
204,000
396,000

$93,000
11,593,000
13,347,000
9,960,000
9,770,000
11,129,000
12,884,000
14,373,000
13,265,000
18,154,000

7,160,000
7,876,000
8,670,000
13,573,000
15,400,000
17,029,000
18,921,000
19,060,000
20,356,000
21,782,000
29,474,000
33,232,000

362,000
336,000
408,000
473,000
585,000
644,000
471,000
738,000
726,000
712,000
1,014,000
1,630,000

822,000
1,456,000
1,781,000
3,262,000
3,430,000
7,007,000
11,830,000
13,940,000
12,491,000
9,944,000
12,147,000
16,069,000

23,838,000
25,349,000
28,041,000
38,308,000
44,290,000
49,360,000
64,211,000
73,433,000
74,986,000
70,236,000
80,405,000
98,679,000

$489,000
462,000
722,000
1,477,000
2,208,000
3,422,000
4,225,000
3,673,000
2,306,000
2,378,000
4,487,000

23,838,000
25,838,000
28,503,000
39,030,000
45,767,000
51,568,000
67,633,000
77,658,000
78,659,000
72,542,000
82,783,000
103,166,000

66,803,000
50,361,000
53,288,000
43,979,000
49,192,000
69,262,000
108,597,000
112,433,000
94,597,000
131,997,000
150,301,000
171,723,000
227,717,000

34,625,000
23,511,000
32,518,000
20,328,000
19,650,000
27,611,000
30,390,000
43,107,000
33,273,000
14,987,000
3,147,000
5,338,000
8,163,000

1,502,000
972,000
1,090,000
689,000
236,000
584,000
3,333.000
2,564,000
2,312,000
2,193,000
1,307,000
753,000
3,179,000

18,224,000
13,775,000
20,581,000
16,830,000
19,177,000
21,077,000
38,082,000
20,782,000
18,086,000
21,708,000
21,083,000
18,201,000
20,137,000

239,000
3,805,000
1,087,000
1,369,000
2,286,000
2,153,000
3,163,000
7,657,000

121,154,000
88,759,000
107,837,000
82,026,000
88,349,000
118,773,000
184,785,000
179,973,000
149,637,000
173,171,000
177,991,000
199,178,000
266,853,000

4,585,000
4,041,000
2,535,000
1,144,000
1,679,000
3,022,000
4,660,000
4,242,000
4,952,000
6,942,000
6,224,000
6,275,000
6,383,000

125,739,000
92,800,000
110,366,000
83,170,000
90,028,000
121,795,000
189,445,000
184,215,000
154,589,000
180,113,000
184,216,000
205,453,000
273,236,000

240,259,000

5,547,000

3,522,000

22,099,000

6,947,000

278,374,000

6,363,000

284,737,000

$93,000
11,593,000
13,347,000
9,960,000
9,770,000
11,129,000
12,884,000
14,373,000
13,265,000
18,154,000

1916.
Jan. 3
Feb. 7
Mar. 6
Apr. 3
Mayl
June 5
July3
Aug. 7
Sept. 4
Oct. 2
Nov. 6
Dec. 4 . . .
Jan. 1
Feb.5
Mar.5
Apr. 2
May7
June 4
July 14-16
July 3 1 . .
Aug. 31
Sept. 29
Oct. 31
Nov.30
Dec. 31
Jan. 31




1917.

,
,

$140,000
354,000
200,000
94,000

1918.

281

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

Amounts of bills discounted and acceptances and warrants bought by each Federal Reserve Bank during January, 1918,
distributed by maturities.
15-day maturities.

30-day maturities.

Banks.
Discounts.

Acceptances.

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

$12,890,384
256,865,896
29,408,481
41,024,643
121,794,314
8,369,062
190,500,190
28,646,292
2,240,574
35,022,957
5,218,109
8,434,483

Total.
Percent

740,415,385

Warrants.

$9, 039,292

239,000
266," 23i
75,545

$2,000

183*666
360,328
10,163,396

2,000

Discounts.

Total.

Acceptances.

$12,890,384
265,905,188
29,647,481
41,024,643
122,060,545
8,446,607
190,500,190
28,646,292
2,240.574
35,022)957
5,401,109
8,794,811

$2,923,578
5,737,040
1,873,118
2,209,505
1,718,178
1,969,619
2,254,229
4,360,070
239,994
483,545
257,996
2,336,826

$198,300
7,165,769

750,580,781
74.3

26,363,698

11,808,577

60-day maturities.

Warrants.

27,675
1,132,223
278,337
280,000
361,953

Total.
$3,121,878
12,902,809
1,873,118
2,237,180
2,850,401
2,254,018
2,534,229
4,722,023
239)994
485,161
1,720,950
3,236,576

$6,062

1,616
1,462,954
899,750
6,062

38,178,337
3.8

90-day maturities.

Banks.
Discounts.

Acceptances.

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

$3, 986,
12, 823,
1, 839,
2, 964,
2, 416,
2, 669,
3, 921,
2, 753,
1, 186,
1, 235,
530,
4, 138,

$1,188,640
17,313,015
690,973
316,473
2,462,546
1,271,082
170,000
378,888

Total.
Percent

40,465,215

33,325,121

Warrants.

$10,000
2,020

4,518
4,530,539
4,998,447
12,020

Over 90-day maturities.
Banks.

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




Discounts.
$134,607
15,000
21,411
36,568
531,793
31,635
962,246
1,818,369
832,588
881,078
5,265,295

Acceptances.

Warrants.

610,685

3,493,388

Discounts.

Warrants.

$5,175,499
30,136,764
2,540,002
3,280,473
4,879,306
3,942,766
4,091,571
3,132,136
1,186,540
1,239,732
5,061,010
9,136,537

$4,583,772
23,714,394
3,080,334
4,449,393
2,991,018
1,172,717
3,074,086
2,482,285
833,706
1,634,199
336,445
7,559,531

$4,524,563
46,492,531
3,627,180
2,539,031
4,991,247
1,684,802
2,693,870
769,394

73,802,356
7.3

55,911,880

82,297,347

Total.

Discounts.

Acceptances.

Warrants.

$8,001,703
80,010,607
5,167,838 $10,000
2,883,179
9,077,247
3,309,766
17,082
3,697,161 1,000,000
1,524,447

Total.
$9,108,335
70,206,925
6,707,514
6,988,424
7,982,265
2,864,519
6,097,956
3,251,679
833,706
1,639,588
2,492,652
20,372,664

$7,000
330,000

5,389
2,156,207
12,813,133

Total.

138,546,227
13.7

337,000

Per cent.
Total.

Dis- Accept- Warcounts. ances. rants.

$32,520,903
379,151,686
41,378,820
53,545,720
138,018,928
17,544,478
204,979,030
39,797,977
5,463,060
40,205,807
15,728,309
42,421,666

75.4
78.9
87.5
94.6
93.4
81.0
97.7
96.2
100.0
100.0
45.6
55.0

24.6
21.1
12.5
5.4
6.6
18.9
1.8
3.8
53.0
45.0

i.4

890,000 9,648,683 868,421,473 141,087,829 1,247,082 1,010,756,384
0.9
100.0

85.9

14.0

0.1

$2,224,807 $24,519,200
299,141,079
610,685 36,200,982
15,000 50,662,541
246,411 128,941,681
225*666"
14,217,630
36,568
553,291 $670,000 1,755,084 200,281,869
45,847 38,273,530
14,212
5,463,060
962,246
1,818,369 40,194,284
"220," 666 1,052,588 7,175,609
881,078 23,350,008

$2,090,200

Total.

11,523
8,332,700
19,071,658

220,000

0.1
0.5

Total.
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

232

FEDEKAL RESERVE BULLETIN.

M A R C H 1,

1918.

Maturities of discounts, acceptances, and municipal warrants held by each Federal Reserve Bank on Friday, Jan. 25, 1918.
[In thousands of dollars; i. e., 000 omitted.]
1 to 15 days.
Banks.

Bills discounted.

Acceptances
bought.

16 to 30 days.

Municipal
warrants.

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

5,277
126,758
17,951
30,503
21,301
6,520
80,998
16,993
2,G29
18,925
2,458
9,607

569
27,321
2,386
3,988
3,725
2,117
695
1,941
1,726

Total..
Percent

339,320

50,927

Bills discounted.

Total.

149

4,967
1,485

149

5,846
154,079
20,337
34,491
25,026
8,786
81,693
18,934
3,755
18,932
7,425
11,092

4,070
49,342
9,948
9,538
4,525
1,781
18,013
7,203
5,791
15,341
4,404
5,384

390,396
43.3

135,340

31 to 60 days.
Banks.

Bills discounted.

Acceptances
bought.

5,819
33,980
4,343
6,726
4,609
2,088
5,150
4,353
2,723
2,256
757
8,322

4,641
80,116
5,912
5,218
3,684
2,934
4,869
2,061
340

Total.
Percent

81,126

122,496

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




Bills
discounted.

2
26
58
4,124
69
1,744
2,337
1,217
1,074
10,658

Acceptances
bought.

Bills discounted.

Total.

10
123

5,183
7,538

133

Over 90 days.
Banks.

Municipal
warrants.

4,670
78,315
11,792
10,787
6,756
2,872
18,382
8,263
5,951
15,360
7,117
8,437

600

28,462
1,844
1,249
2,231
1,089

369
1,060

160
19
2,713
3,053

42,849

333
335

Total.

2
26
60
4,124
69
1,744
2,337
1,550
1,074
10,993
.2

178,702
19.8

513

Acceptances
bought.

10,460
114,096
10,265
11,944
8,293
5,145
10,019
6,414
3,063
2,256
5,940
15,860

37,678
12,533
1,568
2,591
1,793
901
2,639
1,348
853
1,686
663
4,965

3,497
32,379
4,037
2,523
3,763

203,755
22.6

69,218

57,641

Municipal
warrants.

Bills
discounted.

Acceptances
bought.

52,844
222,620
33,810
49,360
32,254
11,348
110,924
29,966
13,140
32,545
9,499
29,352

9,307
168,278
14,179
12,978
13,403

627,662

273,913

41,175
44,912
5,605
5,114
5,556
1,592
5,227
2,216
853
1,695
1,063
11,858

9
400
6,893

126,866
14.1

Percentages.
Municipal
warrants.

511
10

283
8,521
5,930
2.226
35
13,263
18,969

Total.

684
2,588
868

Total.

Municipal
warrants.

Total.

61 to 90 days.

Municipal
warrants.

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

Acceptances
bought.

333
1,137

Total.

Bills Accept- Munici
disances cipal
warht rants.
counted bought.

62,151
391,409
47,999
62,3B8
45,657
18,455
119,445
35,896
15,366
32,580
23,095
48321

85.1
56.9
70.5
79.2
70.6
61.5
92.9
83.5
85.5
99.9
41.1
60.7

14.9
43.0
29.5
20.8
29.4
37.0
7.1
16.5
14.5
0.1
57.5
39.3

902,712
100.0

69.5

30.3

0.1
1.5

1.4
1.2

Total.

100.0
100.0
100.0
100.6
100.0
ioo;o
106; 0
100.0
100.0
100.0
106.0
100. C
100.0

233

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

Total investment operations, exclusive of purchases of United States certificates of indebtedness, of each Federal Reserve Bank
during the months of January, 1918 and 1917.

Federal Reserve Banks.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City
Dallas
SanfFrancisco
Total, January, 1918
Total, January, 1917

Bills bought in open market.
Bills discounted for
Trade
members and
Bankers'
Total.
F. R. Banks. acceptances. acceptances.
$8,001,703
79,213,025
4,893,266
2,883,179
9,077,247
3,309,766
3,697,161
1,524,447
11,523
8,332,700
17,583,486

1,488,172

11,523
8,332,700
19,071,658

868,421,473
18,326,286

138,527,503
20,376,041

2,560,326
241,139

141,087,829
20,617,180

State.

City.

$8,001,703
80,010,607
5,167,838
2,883,179
9,077,247
3,309,766
3,697,161
1,524,447

$24,519,200
299,141,079
36,200,982
50,662,541
128,941,681
14,217,630
200,281,869
38,273,530
5,463,060
40,194,284
7,175,609
23,350,008

$797,582
274,572

Municipal warrants*
All other.

$8,082
$300,000

8,082
7,201,908

520,000
2,040

United States bonds and Treasury notes.

2 per cent. 3 per cent. 3 | per cent. 4 per cent.

1-year
Treasury
notes.

Total.

$1,987,088

Dallas
San Francisco.

.

$2,370,150

719,000
526,552

1,247,082
7,730,500

49,000
2,000

2,100,000
13,100
50,000
24,000

2,149,000
13,100
50,000
26,000

926,000

13,411,638

520,000

January,
1918.

January,
1917.

49,105,356

4,305,000

$61,240

220,000

14,857,638 1,025,614,022
2,431,390

3,980,000

1

17,082
1,000,000

$4,237,301
6,074,236
3,940,771
2,861,364
11,113,992
4,831,894
3,475,117
2,354,689
2,801,402
828,926
1,087,911
5,919,680

325,000

. . .

Total January, 1918...
Total, January, 1917

9,000
700,000

$34,507,991
379,671,686
47,126,270
53,605,720
138,018,928
21,849,478
204,979,030
39,797,977
7,612,060
40,218,907
15,778,309
42,447,666

$1,987,088
520,000
5,747,450
60,000

$520,000

5,197,450
60,000

St. Louis
Minneapolis

$10,000

Total investment operations

$550,000
,

$10,000

220,000

Federal Reserve Banks.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta

Total.

United States securities held by each Federal Reserve Bank on Jan. SI, 1918, distributed by maturities.
United States bonds with circulation
privilege.
Federal Reserve Banks.

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

2 per
2 per
3 per
cent
cent
cent
Panaconsols.
loan
of
mas of
of 1930. 1936-1938.
1918.
$750
50
6,400
915,100
640,600
1,862,500
100
323,050
7,155,850
2,450,900
2,428,750

4 per
cent
loan of
1925.

United States securities without circulation privilege.
3 per
3 per
cent
3 per
cent
convercent
1-year
sion
loan
of
bonds of Treasury
1961.
notes.
1946-47.

$529,000 $2, 194,000
1,255,400 013,000
$50,000
$100
549,200 548,000
414,800
467,200 2,653,660 $2,378,200
221,000
969,000
237,000
10,300 491,000
21,000
367,300 2,581,000 1,768,000 427,400 378,000
1,153,300 444,000
1,080,000
16,260 1,199,180 206,250 114,800 340,000
825,000 838,500 784,000
22,240
1,233,600 430,000
281,500
500,000

15,784,050 1,412,600 7,563,840 5,177,450 6,526,300 27,312,000

United
4 per
£p
cent
cent
certifiLiberty Liberty cates
of
loan of loan of indebted1942-1947. ness.
1947.
$80,000
359,650
472,850
1,967,000
42,900
265,450

$400
500

29,000
7,500
2,100
28,250

Total.

$1,844,042 $165,000 $4,812,792
3,469,250 700,000 10,847,350
6,299,400 1,284,000 11,153,550
378,25030,150,000
41,636,510
36,400
"" '"n
573,000 3,773,400
3,114,200 700,000 6,242,550
5,783,000 16,167,600
3,677,400
2,063,050 1,114,500 6,406,590
13,100 4,353,000 14,999,190
103,000 1,400,000 6,901,100
24,000
3,981,000

900 3,254,70017,344,692 46,222,500 130,599,032

Total United States bonds with circulation privilege, $29,937,940. Total United States securities without circulation privilege, $100,661,092.
i Includes unpaid portion of Liberty loan bonds sold to individual subscribers.




234

FEDERAL RESERVE BULLETIN.

MAECH 1, 1918.

RESOURCES AND LIABILITIES OF FEDERAL RESERVE BANKS.
Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays, Feb. 1
to 15, and on Thursday, Feb. 21, 1918.
RESOURCES.
*!

Boston.

Gold coin and certificates in vault:
Feb. 1
Feb. 8
Feb. 15
Feb. 21
Gold settlement fund—
Federal
Reserve
Board:
Feb.1
Feb. 8
Feb. 15
Feb. 21
Gold|with foreign agencies:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Gold with Federal Reserve agents:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Gold redemptionjjfund:
Feb.l......-!
Feb. 8
Feb. 15
Feb. 21.....
Total gold reserves:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Legal-tender notes, silver,
etc.:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Total cash reserves:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Bills discounted for members and Federal Reserve Banks:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Bills bought in open
market:
Feb.l
Feb. 8
Feb. 15
Feb. 21
United States Government long-term securities:
Feb.l
Feb. 8
Feb. 15
Feb. 21
United States Government short - term securities:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Al lother earning assets:
Feb.l
Feb. 8
Feb.15
Feb. 21




New
York.

[In thousands of dollars; i. e,, 000 omitted.]

Philadelphia.

Cleveland.

Richmond.

Atlanta.

MinneSt.
Chicago. Louis. apolis. Kansas Dallas.
City.

11,401
11,398
10,112
9,760

328,174
303,221
304,027
308,316

6,552
6,682
10,917
10,593

22,898
20,608
22,706
20,530

6,273
6,311
6,328
6,276

6,078
5,922
5,893
5,781

31,867
30,632
30,587
30,143

25,840
37,906
18,572
28,206

102,024
90,820
107,790
63,667

47,786
60,109
40,281
45,383

42,442
47,770
52,437
53,188

18,760
13,439
15,132
17,715

15,195
19,553
13,772
15,639

37,500
39,627
41,416
46,827

3,675
3,675
3,675
3,675

18,112
18,112
18,112
18,112

3,675
3,675
3,675
3,675

4,725
4,725
4,725
4,725

1,837
1,837
1,837
1,837

1,575
1,575
1,575
1,575

7,350
7,350
7,350
7,350

2,100
2,100
2,100
2,100

44,334
45,287
47,225

231,802
255,525
255,239
254,887

64,469
73,031
71,645
71,083

62,025 26,259 48,127
68,336 26,072 46,872
74,047 25,982 46,306
80,903 25,888 48,112

120,042
135,512
134,671
142,980

34,490
34,454
35,030
40,016

2,000
2,000
2,000
2,000

10,000
10,000
10,000
10,000

1,500
1,500
1,500
1,477

828
868
855
943

851
1,044

87,250
100,266
81,584
92,337

690,112
677,678
695,168
654,982

123,982
144,997
128,018
132,211

5,636
5,806
5,990
5 954

38,827
38,577
39,202
39,712

1,798
1,164
1,821
937

1,476
1,568
1,622
1,727

322
388
366
378

1,603
1,751
1,635
1,637

728,939
716,255
734,370

125,780
146,161
129,839
133,148

133,585
143,024
155,828
161,382

53,656
48,549
50,064
52,445

48,036
55,803
59,436

215,529
177,237
161,396
177,330

33,629
25,153
26,226
24,849

47,198 30,321
41,194 28,449
38,601 34,929
35,392 35,116

11,724
13,757
14,923
16,287

177,407
166,237
170,760
176,737

13,860
13,260
17,738
18,264

10,689
9,418
8,905

2,610
610
630
1,330

5,132
4,793
4,789
4 785

7,072
6,070
6,128

2,194
2,194
2,194
2,194

9,213
106,893
45,963
112,589

3,952
3,337
3,352
4,527

511
511
511

10
10
10
10

106,072
87 574
98,291

19
17
291

205
502
419
351

1,140
1,225
908

132,109 53,334 71,941
141,456 48,161 75,062
154,206 49,698 68,771
159,655 52,067 72,015

4,888
4,996
5,002
4,653

San
Francisco.

Total.

412
393
376
273

9,128

26,969 | 14,644 27,183
23,402 9,535 29,959
31,593
7,322 26,485
26,805
8,011 35,701

17,100
15,396
17,185
16,025

18,181
16,526
14,981
18,106

393,624
404,042
386,966
375,273

1,838
1,838
1,838
1,838

2,888
2,888
2,888
2,888

52,500
52,500
52,500
52,500

37,439 48,334 22,303 42,043
40,268 48,269 22,658 41,975
41,158 55,727 23,943 41,402
41,050 55,664 24,515 43,229

781,667
838,259
852,375
877,023

15,373
15,485
15,667
15,630

2,100
2,100
2,100
2,100

1,262
1,308
1,418
1,449

2,625
2,625
2,625
2,625

458
440
430
412

26,715
25,457
25,900
8,637 26,916

1,264
1,290
1,303
1,020

469,759
439,907
446,378
447,508

27
31
178

19,472
19,960
20,323
20,091

197,587
70,818 79,012 51,633 89,915
213,989 65,820 68,696 81,686 49,984 86,873
214,879 74,576 67,665 85,643 53,132 85,202
228,243 74,618 68,240 94,675 52,035 91,317

1,717,022
1,754,668
1,758,542
1,772,395

4,824
5 034
5,294
5,459

1,189
1,345
1,372
1,353

90

58,435
58,426
60,194
60,129

79,102
81,782
85,711
94,753

53,190 90,398
51,700 87,246
55,044 85,501
53,971 91,671

1,775,457
1,813,094
1,818,736
1,832,524

12,607 35,302
12,011 32,581
11,658 17,597
10,865 18,811

10,638 30,047
10,995 29,252
8,128 29,802
8,304 30,389

606,778
525,121
501,916
509,534

12,445
12,171
11,291
9,971

24.504
29,621
30,479
30,122

289,805
280,705
287,263
296,170

4,071
4,071
4,021
4,021

2,481
2,481
2,457
2,457

57,561
55,782
52,343
52,950

2,830
2,730
2,730
2,730

1,500
1,500
1,502
1,502

75,071
170,100
105,981
169,707

874
1,321
1,352

62
111
274

3,805
4,423
4,486

78

73,544
76,813
70,406
73,652

202,411 70,518 71,448
219,023 67,165 69,304
220,173 75,948 68,278
233,702 75,971 68,844

9,158
10,541
10,320
9,462

100,662 32,024
77,702 31,970
83,841 23,615
78,110 21,470

14,368
12,968
3,264
3,497

7,076
6,634
6,620
6,719

10,039
10,899
14,401
15,927

5,727
5,213
5,431
6,323

1,937
500
1,957
1,896

8,261
8,261
8,261

1,231
1,231
1,231
1,234

4,792
5,369
3,494
3,464

7,007
7,007
7,007
7,007

2,233
2,233
2,233
2,233

4,000
3,792
3,288
3,168

33,462
31,908
28,723
26,262

2,542
1,969
1,969
1,979

1,491
1,591
3,016
3,051

8,155
5,197
5,004
4,732

1,444
1 444
1,444
1,444

2,305
5,910
5,018
4,244

31
31

446
454
434

610
612
678

146
159

1,557
1,716
1,912
1,936

483
373
299
354

613
604

1,078
1,090
1,081

29
27
1,494
1,489

8,862

5,983
5,427
5,066

235

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system at close of business on Friday, Feb. 1
to 15y and on Thursday, Feb. 21, 1918—Continued.
RESOURCES.
[In thousands of dollars; i. e., 000 omitted.]
Boston.
Total earning assets:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Due from other Federal
Reserve Banks—net:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Uncollected items:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Total deductions from
gross deposits:
Feb.l.
Feb. 8
Feb.15
Feb. 21
5 per cent redemption
fund against Federal
Reserve bank notes:
Feb.l
Feb. 8
Feb. 15
Feb. 21
All other resources:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Total resources:
Feb.l
Feb. 8
Feb. 15
Feb. 21

New
York.

30,858
31,288
27,522
25,949

58,594
62,965
64,514
64,799

1,033,020
1,036,131
951,989
1,031,797

329

1,346
540
2,441
1,053

i 44,456
112,458
U7,258
i 11,463

19,207 18,437 10,713
14,585 14,268 11,749
25,216 19,261 12,542
23,880 17,021 11,266

321,994
272,506
357,069
299,402

12,059
12,289
14,983
12,319

366,458
284,964
374,327
310,865

Richmond.

Atlanta.

58,331
48,832
53,396
53,778

99,611
90,781
84,490
78,853

48,493
44,648
41,393
41,826

22,963
24,589
23,884
23,024

126,473
101,417
110,931
106,465

41,611
41,143
32,869
31,629

21,927
23,303
23,002
21,171

50,176
46,897
33,019
33,615

4,865

8,119
1,161
2,593
6,046

805
3,895
5,367
2,048

1,554

13,381
25,366
18,487
16,055

1,290
3,543
2,454
8,712

4,018

*i,*975"

9,923
13,547
2,919

17,935
15,461
17,120
17,040

53,582
49,521
60,042
50,460

17,182
14,974
18,085
16,175

7,396
6,055
11,709
8,976

19,489
15,461
19,095
17,040

66,963 18,472
74,887 18,517
78,529 20,539
66,515 24,887

407,792
455,671
383,419
471,441

6,356
2,458
7,801

1,424

19,262
16,486
25,802
17,897

83,010
65,481
85,883
62,991

27,437
37,243
33,856

18,630 17,871
17,236 19,253
21,552 22,614
18,836 21,004

25,618
18,944
33,603
17,897

84,434
65,481
85,883
62,991

43,634
27,437
41,069
33,856

26,749 18,676
18,397 23,148
24,145 27,981
24,882 23,052

"3," 826*

385
466
376
382
1,221,165
1,237,407
1,203,672
1,229,126

Total.

Cleveland.

66,191
64,597
73,550
79,247

184,695
189,613
194,727
195,435

San
Francisco.

Philadelphia.

228,130
222,896
224,680
221,164

259,945
252,202
264,463
265,117

14

47
47
67

120,910
116,383
119,438
117,337

116,085
116,910
113,432
113,783

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

395,847
395,327
409,633
406,682

7,396 28,091
10,073 24,508
11,709 38,763
8,976 26,799

18,437
14,268
19,261
17,350

400
400
400
400

137
137
137
137

537
537
537
537

159

559
551
582
731

130,601 100,771 157,769 102,622 161,051
126,825 102,680 153,587
162,500
157,893 101,964 165,157
129,356
132,487 98,991 155,567 97>407 169,057

3,176,023
3,135,277
3,146,171
3,176,454

LIABILITIES.
Capital paid in:
6,004
6,815
19,213
Feb.l
6,826
6,004
19,383
Feb. 8
6,845
19,656
6,006
Feb. 15
6,840
19,665
6,005
Feb. 21
Surplus:
75
649
Feb.l
75
649
Feb. 8
649
Feb. 15
75
649
Feb. 21
75
Government deposits:
25,637
4,098
Feb.l
3,279
7,504
4,239
Feb. 8
6,288
8,485
4 544
Feb. 15
7,405
4,272
1,611
Feb. 21
Due to members—reserve
account:
83,383 670,652
87,991
Feb.l
88,256 676,908
88,415
Feb. 8
77,116 613,234
83,923
Feb. 15
84,711 645,429
82,845
Feb. 21
Collection items:
14,394
30,284
57,905
Feb.l
20,893
11,887
44,081
Feb.8
28,755
21,392
63,246
Feb. 15
27,084
14,482
49,757
Feb. 21
Due to other Federal Reserve Banks—net:
Feb.l
29,909
Feb.8
38,226
Feb. 15
22,974
1,405
Feb. 21
Other deposits, including
foreign
Government
credits:
45,958
Feb.l
52,619
Feb.8
,
47,113
Feb. 15
53,443
Feb. 21
i Difference between n e t a m o u n t s




3,482
3,482
3,482

2,654
2,655
2,656
2,659

3,397
3,401
3,403
3,413

2,795
2,798
2,798
2,815

3,739
3,739
3,739
3,739

2,865
2,867
2,877
2,877

9,219
9,237
9,250
9,254

116
116
116
116

40
40
40
40

216
216
216
216

24,803
7,455
13,969
6,935

7,247
828
4,343
1,412

5,914
3,986
2,903
2,440

13,895
6,262
11,229
4,275

12,354
4,003
5,232
4,138

4,864
9,218
5,547
2,756

8,190
2,915
7,389
4,815

6,581
3,618
6,182
4,772

10,381
6,181
11,532
11,334

132,790
59,488
87,643
56,165

108,764
112,447
111,459
114,067

44,636
44,321
43,346
43,231

38,846
40,999
37,399
38,464

173,520
175,412
177,086
179,349

46,915
50,409
48,436
52,382

38,867
38,630
38,474
39,221

75,812
74,045
71,783
71,070

41,571
41,825
41,798
39,810

67,687
69,634
65,660
69,141

1,478,644
1,501,301
1,409,714
1,459,720

13,875
13,335
18,412
17,809

12,890
14,769
14,805
15,424

9,907
9,134
12,945
10,539

16,537
16,533
23,330
20,736

11,158
12,052
14,444
13,487

3,109
2,645
3,459

6,767
7,697
9,449
9,085

5,826
5,328
7,817
7,537

8,631
8,800
235

191,283
167,154
228,289
199,278

3,550
2,828
2,617

51,769
59,874
52,315
58,329

8,218
8,218
8,293
8,319

484

2,717
228

10

1,492
208
290

38
2,736
14
173
3,100
172
2,020
135
177
1,919
156
d u e from a n d n e t a m o u n t s d u e to other Federal Reserve B a n k s .
344

72,620
72,829
73,229
73,305
1,134
1,134
1,134
1,134

38
38
38

5,076
2,045

4,219
4,219
4,224
4,230

236

FEDEEAL BESERVE BULLETIN.

MARCH 1, 1918.

Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays,
to 15, and on Thursday, Feb. 21, 1918—Continued.

Feb^l

LIABILITIES—Continued.
[In thousands of dollars; i. e., 000 omitted.]

Boston.

Total gross deposits:
Feb.l
Feb.8
Feb.15....
Feb. 21
Federal Reserve notes in
actual circulation:
Feb.l
Feb. 8
Feb. 15
Feb. 21
Federal Reserve bank
notes in circulation—
net liability:
Feb 1
Feb 8
Feb. 15
Feb 21.
AH other liabilities:
Feb 1 . . . .
Feb.8
Feb. 15
Feb 21
T«tal liabilities:
Feb 1
Feb.8
Feb 15
Feb. 21

New
York.

Philadelphia.

Cleve- Fuehland. mond.

Atlanta.

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

San
Francisco.

Total.

101,875
104,382
106,993
104,870

800,152
811,021
768,107
779,008

127,101
118,871
117,222
112,148

147,786
133,645
143,975
138,967

64,773
59,918
62,494
60,067

54,669
56,168
53,253
51,929

206,688
201,307
213,665
206,279

70,465 48,930
66,637 50,498
68,284 50,213
70,184 '45,693

90,784
84,672
88,646
84,979

55,470
50,979
56,087
52,119

89,361
88,165
90,255
92,948

1,854,486
1,787,817
1,777,961
1,773,492

76,434
78,755
80,985
83,701

398,933
404,131
412,449
426,557

94,214
97,199
100,613
102,176

103,714
109,979
111,960
117,434

52,282
52,610
53,079
53,415

58,511
57,835
57,262
58,937

179,667
184,211
186,355
190,442

56,379
56,389
57,265
58,445

55,196
57,084
57,416
58,719

44,251
43,507
42,976
42,369

67,417
70,087
70,678
71,879

1,236,101
1,261,219
1,281,045
1,314,581

49,103
49,432
50,007
50,507

8,000
8,000
7,999
7,999

8,000
8,000
7,999
7,999
307
397
668
784

2,218
2,223
2,811
3,247

184,695
189,613
194,727
195,435

1,221,165
1,237,407
1,203,672
1,229,126

228,130
222,896
224,680
221,164

227
360
235
397

10

259,945
252,202
264,463
265,117

120,910
116,383
119,438
117,337

57
356
147
491
116,085
116,910
113,432
113,783

395,847
395,327
409,633
406,682

275
317
325
369

46
57
75
94

392
430
429
457

106
109
103
104

54
29

3,682
4,278
4,803
5,943

130,601 100,771 157,769 102,622 161,051 3,176,023
126,825 102,680 153,587 97,393 162,500 3,135,277
129,356 102,989 157,893 101,964 165,157 3,146,171
132,487 98,991 155,567 97,407 169,057 3,176,454

FEDERAL RESERVE NOTES.
Federal Reserve note account of each Federal Reserve Bank at close of business on Fridays, Feb. 1 to 15, and on Thursday,
Feb. 21, 1918.
[In thousands of dollars; i. e., 000 omitted.]

Boston.

Federal Reserve notes received from agent—net:
Feb.l
Feb.8
.
Feb. 15
Feb. 21
Federal Reserve notes
held by banks:
Feb.l
Feb.8
Feb. 15....
Feb. 21
Federal Reserve notes in
actual circulation:
Feb.l
Feb.8
Feb. 15
Feb. 21
Gold deposited with or
to credit of Federal Reserve agent:
Feb.l
Feb.8
Feb. 15
Feb. 21
Paper delivered to Federal Reserve agent:
Feb.l
Feb.8
Feb. 15
Feb. 21




New
York.

Philadelphia.

80,734
81,687
83,625
85,796

472,942
466,665
470,379
493,227

4,300
2,932
2,640
2,095

74,009
62,534
57,930
66,670

3,975
3,852
5,352
3,227

76,434
78,755
80,985
83,701

404,131
412,449
426,557

94,214
97,199
100,613
102,176

44,334
45,287
47,225

36,705
36,612
36,416
57,868

Cleve- Richland. mond.

Atlanta.

San
St.
Minne- iKansas Dallas. FranChicago. Louis.
apolis. City.
cisco.

190,987
194,317
196,117
201,425

58,297
58,261
59,797
60,813

4,563
4,133
4,830
3,481

11,320
10,106
9,762
10,983

1,918
1,872
2,532
2,368

103,714 52,282 58,511
109,979 52,610 57,835
111,060 53,079 57,262
117,434 53,415 58,937

231,802
255,525
255,239
254,887

64,469 62,025 26,259 48,127
73,031 68,336 26,072 46,872
71,645 74,047 25,982 46,306
71,083 80,903 25,888 48,112

246,362
212,983
220,955
354,066

33,747 57,887 44,720
28,126 50,612 41,447
47,506 38,193
44,330

108,325 60,099 63,074
101,051 112,036 59,478 61,968
105,965 115,547 59,321 62,092
105,403 121,363 58,797 62,418
4,611
2,057
3,587
3,929

7,817
6,868
6,242
5,382

15,067
15,945
15,867
14,589

Total.

51,035 59,344 44,685 80,147 1,367,858
51,164 61,978 43,776 81,279 1,373,660
51,304 62,646 43,185 82,506 1,392,484
51,596 63,280 42,581
1,429,732
4,148
4,894
5,230
4,561

209
212

131,757
112,441
111,439
115,151

179,667
184,211
186,355
190,442

56,379 49,103 55,196 44,251
56,389 49,432 57,084 43,507
57,265 50,007 57,416 42,976
58,445 50,507 58,719 42,369

67,417 1,236,101
70,087 1,261,219
70,678 1,281,045
71,879 1,314,581

120,042
135,512
134,671
142,980

34,490 37,439
34,454 40,268
35,030 41,158
40,016 41,050

48,334
48,269
55,727
55,664

29,223
30,461
25,652
26,044

12,442 23,083
14,640 23,166
7,326 19,419
14,668 18,275

71,821
59,786
62,442
61,448

1,932
1,732
1,297
1,089

13,835
11,794
12,301
10,753

434 12,730
11,192
11,828
11,154

22,303 42,043
22,658 41,975
23,943 41,402
24,515 43,229
43,900
49,132
54,294
55,579

781,667
838,259
852,375
877,023

574,704
575,434
732,855

237

FEDERAL RESERVE BULLETIN,

MARCH 1, 1918.

Federal Reserve note account of each Federal Reserve agent at close of business on Fridays, Feb. 1 to 15, and on
Feb. 21,1918.

Thursday,

[In thousands of dollars; i. e., 000 omitted.]

Boston.

New
York.

Philadelphia.

111,960
111,960
115,720
115,720

710,680
710,680
710,680
721,280

134,200
134,200
140,720
142,840

21,446
21,933
22,235
22,564

127,938
134,215
134,501
134,853

90,514
90,027
93,485
93,156

582,742
576,465
576,179
586 427

9,780
8,340

109,800
109,800
105,800
93,200

80,734
81,687
83,625
85,796

472,942
466,665
470,379
493,227

33,109
33,110

4,220
4,220

13,109

179,750
204,083
204,064
204,064

21,497
24,018
22,464
24,418

4,225
4,177
4,116
4,087

12,052
11,442
11,175
10,823

5,120
5,422
5,336
5,729

5,528
5,818
6,583
6,485

7,000
8,000
10,000
11,500

40,000
40,000
40,000
40,000

36,400
36,400
36,400
37,100

241,140
211,140
215,140
238,340

80,734
81,687

472,942
466,665
470,379
493,227

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

Cleve- Richland. mond.

Atlanta.

81,740
81,740
81,740
81,740

89,620
89,620
89,620
89,620

241,380
243,640
246,040
248,640

73,860
73,860
73,860
73,860

67,980
67,980
67,980
67,980

82,740
82,740
83,740
83,740

68,500
68,500
68,500
68,500

86,900
88,100
89,400
90,600

1,883,320
1,890,180
1,910,160
1,926,680

20,771 9,995 16,146
22,109 10,284 16,467
22,195 10,573 16,624
22,757 10,717

11,456
11,712
11,878
12,072

8,173
• 8,543
8,943
9,194

9,288
9,324
9,748
9,762

10,715
10,886
10,996
11,244

12,736
12,922
13,234
13,400

12,945
13,109
13,325
13,484

6,753
6,821
6,894
7,567

268,362
278,325
281,146
284,452

65,594 78,164
65,273 77,908
65,116 77,742
64,902 77,548

233,207
235,097
237,097
239,446

64,572 57,265 70,004 55,555 80,147
64,536 57,194 69,818 55,391 81,279
64,112 56,984 70,506 55,175 82,506
64,098 56,736 70,340 55,016

1,614,958
1,611,855
1,629,014
1,642,228

Total.

FEDERAL RESERVE NOTES.

Received from Comptroller:^ g.
it'
Feb.l..
.~
Feb.8
Feb. 15
Feb. 21
Returned to Comptroller:
Feb.l
Feb.8
Feb.15
Feb. 21
Chargeable to Federal
Reserve agent:
Feb.l
Feb.8
Feb. 15
Feb. 21
In hands of Federal Reserve agent: &**•$
Feb.l
Feb.8
Feb. 15
Feb. 21
Issued toJFederal Reserve
, Bank, less amount returned to Federal Reserve agent for redemption:!
Feb.l
Feb.8
Feb. 15.,.
Feb. 21....
Collateral held as security
for|outstanding notes:
Gold coin and certificates on hand—
Feb.l
Feb.8
Feb. 15
Feb. 21
In gold redemption
fund—
Feb.l.
Feb.8.
Feb. 15
Feb. 21
Gold settlement
fund—Federal Reserve Board—
Feb.l
Feb.8
Feo.15
Feb. 21
Eligible paper, reQuired TrpT

Feb.l
Feb.8
Feb. 15
Feb. 21
Total—
Feb.l
Feb.8
Feb. 15
Feb. 21




85,796
1

113,429
112,091
118,525
120,083

133,760
137,160
142,160
142,160

123,765
126,876
131,587
131,443

5,495
5,795
5,795
6,105

15,090
15,940
15,650
15,130

42,220
40,780
40,980
38,021

108,325 60,099
101,051 112,036 59,478
105,965 115,547 59,321
105,403 121,363 58,797

63,074
61,968
62,092
62,418

190,987
194,317
196,117
201,425

15,240 15,440
11,040 14,840
12,560 16,040
14,680 10,080

6,275
6,275
4,315
3,285

10,660 10,870
7,840 11,615
11,990
7,060 12,435

14,580
14,> 580
14,580
14,580

13,102
13,102
13,102
13,102

2,853
2,598
2,432
3,238

381
232

55,129 35,000 25,000 41,670
63,389 38,500 25,000 40,670
66,309 45,000 25,000 40,270
65,354 50,000 25,000 41,270

119,661
135,280
134,073
142,485

495

247,100
238,195
236,530
212,496

58,297 51,035 59,344 44,685 80,147
58,261 51,164 61,978 43,776 81,279
59,797 51,304 62,646 43,185 82,506
42,581
60,813 51,596

3,604
3,604
3,604
3,604
1,259
1,072

6,230
5,930
5,680
5,140

1,367,858
1,373,660
1,392,484
1,429,732

969,862
296,717
290,923
292,877

2,474
2,409
2,867
2,804

2,354
2,339
2,311

4,377
4,309
4,236
4,113

44,872
43,830
44,512
45,699

32,123 22,500 45,860
32,123 25,500 45,860
32,738 26,500 52,860
37,738 25,500 52,860

5,324
5,724
7,024
7,624

37,666
37,666
37,166
39,116

466,933
497,712
516,940
538,447

2,367
2,331
2,292
2,278

1,837
1,666
1,556

2,448

14,947
15,096
15,786
14,306

70,945
58,805
61,446
58,445

23,807
23,807
24,767
20,797

13,596
10,896
10,146
10,546

11,010
38,104
13,709 21,118 39,304
6,919 19,242 41,104
7,616 18,066 39,804

586,191
535,401
540,109
552,709

108,325 60,099 63,074
101,051 112,036 59,478 61,968
105,965 115,547 59,321 62,092
105,403 121,363 58,797 62,418

190,987
194,317
196,117
201,425

58,297
58,261
59,797
60,813

51,035 59,344 44,685 80,147
51,164 61,978 43,776 81,279
51,304 62,646 43,185 82,506
51,596
42,581 83 033

1,367,858
1,373 660
1,392,484
1,429,732

33,720
28,020
34,320
34,320

46,300
43,700
41,500
40,460

33,840
33,406
33,339
32,909

For actual amounts see item " Paper delivered to Federal Reserve agent/' on p. 236.

288

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

MEMBER BANK CONDITION STATEMENT.
Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of
business on Fridays, Jan. 25, 1918, to Feb. 15, 1918.
[In thousands of dollars; i. e., 000 omitted.]
1. TOTAL FOR ALL REPORTING BANKS.
Boston.
Number of banks reporting:
Jan. 25....
Feb. 1
Feb. 8
Feb. 15
United States securities
owned:
Jan. 25
Feb. I
Feb. 8.
Feb. 15
1
Loans secured by United
States bonds and certificates:
Jan 25
Feb. 1
Feb. 8
Feb. 15
All other loans and investments:
Jan. 25
Feb. 1
Feb. 8
Feb. 15
Reserve with Federal Reserve Banks:
Jan. 25
Feb. 1
Feb. 8
Feb. 15
Cash in vault:
Jan. 25
Feb.l
Feb. 8
Feb. 15
Net demand deposits on
which reserve is computed:
Jan. 25
Feb.l
Feb. 8
Feb. 15
Time deposits:
Jan. 25
Feb.l
Feb.8
Feb. 15
Government deposits:
Jan. 25
Feb.l
Feb.8
Feb. 15..

New
York.

San
MinnePhiladel- Cleve- Rich- At- Chicago. St.
FranLouis. apolis. City. Dallas. cisco.
phia.
land. mond. lanta.

671
675
670
679

91

$30,642
31,978
36,255
41,272

$551,992
705.321
714;460
823,719

$34,882
37,677
41,926
49,594

i$128,301
|119,678
119,862
124,234

$43,352
44,294
42,959
44,853

39,771
40,800
38,236
34,314

198,232
194,789
205,319
195,283

25,560
24,618
24,070
22,423

26,867
27,821
27,010
25,263

13,369
13,148
13,259
12,863

2,026
2,512
2,239

43,121
44,801
37,665
38,459

4,084,480
701,817 4,062,284
697,232 4,022,579
716,600 4,136,563

615,270
605,080
616,788
613,674

883,337
865,645
899,456
890,534

328,301
331,800
313,351
317,703

270,877
263,861
266,438
274,815

1,357,276
1,354,091
1,330,340
1,337,836

$31,250
34,038
36,136
37,412

$31,752
30,115
30,572
32,735

9,025
9,278
9,578
9,169

2,405
2,487
1,933
2,753

2,642
2,574
2,710
3,092

3,708
3,647
3,711
3,661

386,540
388,900
353,126
372,536

243,167
247,693
249,161
241,920

433,426
444,862
444,913
452,228

134,998
18,945
135,874
19,344
135,939 35,218 19,186
140,769 34,734 19,856

41,386
43,197
43,180
41,902

19,166
19,201
19,032
19,132

44,950
43,217
45,078
42,314

1,199,201
1,203,956
1,208,992
1,139,386

655,009
644,994
590,088

59,446 81,612
60,492 80,041
60,665 86,780
58,831 86,172

29,899
29,320
27,840
26,424

25,313
24,411
25,813
24,911

22,725
22,132
22,461
23,033

124,192
116,420
117,201
125,042

22,490
20,933 36,274
21,721 32,637
21,372 37,720

17,206
16,033
16,150
15,283

13,586
12,488
12,197
12,766

569,275
603,074
602,016
613,038

4,275,436
4,320,672
4,308,652
4,360,110

78,759
81,402
81,653
81,430

296,683
295,428
296,048
303,008

43,807
15,506
14,931 205,879 45,418
15,363 203,155 44 697
15,850 198,905 45,677

32,919
36,972
39,407
33,689

272,300
360,442
356,186
418,060

28,5§5
30,825
40,434
36,330

677,355
675,904
694,116
699,471

$55,584 $1,069,395
55,693 1,222,724
57,155 1,260,391
60,859 1,410,185

$32,245 $75,258 $37,180 $16,957
29,084
81,203 36,089 17,559
32,270
93,449 37,597 17,750
! 35,969 95,666 43,077 20,795

56,808
60,220
65,267
54,253

567,847
566,476
574,804
577,112

Total.

6,210

*%1

374,276
371,966
371,636
355,078

197,290 479,385 9,967,941
9,947,932
196,633
192,638 476,467 9,862,489
190,738 481,671 10,026,818

61,854
60,897
60,821
60,594

13,705
13,375
13,216

9,281
9,081
9,354
8,715

17,109
17,176
16,228
16,210

12,839
12,744
12,452
12,705

25,284
22,709
21,486
21,471

374,968

262,594
982,546
260,678 198,207 1,000,411
252,307 195,794 996,912
250,676 200,536 1,014,935

266,906
271,107
270,664
270,472

174,843
178,743
178,972
181,306

363,192
362,945
373,483
373,660

189,387
185,516
181,935
182,156

360,276
357,294
355,906
362,735

8,892,320
8,981,027
8,985,561
9,086,207

48,489
51,718
52,0311
49,872

40,719
53,093
44,066
59,146

23,913
23,850
23,828
24,128

101,184
101,559
101,560
102,123

1,351,798
1,359,956
1,358,737
1,381,799

11,286 13,159
10,279 13,329
11,800 14,199
19,356 10,365

11,050

8,620
7,980
8,195
8,718

10,322
8,812
7,596

485,086
555,848
593,318
621,873

38,486 10,271
20,452 9,270
27,436 11,905
28,837 6,379

70,079
63,609
72723
75,209

341,542
341,691
342,457
343,222

1,774
2,276
4,566
6,952

46,314
46,491
58,461
39,864

88,734
81,378
81,156
83,229

ii'r*
13^3

355,924
367,503

2. MEMBER BANKS IN CENTRAL RESERVE CITIES.
CENTEAL BESERVE CITIES.

Number of banks reporting:
Jan. 25
Feb.l
Feb.8
Feb. 15
United States securities
owned:
Jan. 25
Feb.l
Feb.8
Feb. 15

57
57
57
58

38
39
39
40

15
15
14
14

$511,865
665,706
674,884
783,000

$24,258
28,828
39,969
39,381

$24,403
23,017
25,140
30,042

Loans secured by United
States bonds and certificates:
Jan. 25
Feb. 1
Feb, 8 . . . . . .
Feb. 15

175,720
173,846
182,011
174,036

27,123
28,582
21,450
22,909

7,431
7688
8,051
7 765




::::::::

110
111
110
112

•

i
j

[
\

$560,526
717551
739,993
852,423

210,274
208,116
211,512
204,710

M A R C H 1,

239

FEDERAL RESERVE BULLETIN.

1918.

Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of
business on Fridays, Jan. 25, 1918, to Feb. 15, 1918—Continued.
[In thousands of dollars; i. e., 000 omitted.]
2. MEMBER BANKS IN CENTRAL R E S E R V E CITIES—Continued.

Boston.

New
York.

Philadelphia.

Cleveland.

Richmond.

Atlanta.

San
St.
Minne- Kansas Dallas. FranChicago. Louis.
apolis. City.
cisco.

Total.

CENTRAL RESERVE CITIES—continued.
All other loans and investments:
Jan. 25
Feb.1.
Feb.8
Feb 15
Reserve with Federal Reserve Bank:
Jan. 25. .
Feb 1
Feb. 8. .
Feb. 15
Cash m vault:
Jan 25
Feb 1
Feb. 8
Feb. 15
Net demand deposits on
which reserve is computed:
Jan. 25
Feb 1
Feb. 8 ..
.. .
Feb 15
Time deposits:
Jan. 25
Feb 1
Feb. 8
Feb 15
Government deposits:
Jan. 25
Feb 1
Feb. 8
Feb 15

3,664,635
3,639,408
3,597,834
3,710,680

857,644
847,214
841,957
826,707

279,401
280,589
250,338
276,285

4,801,680
4,767,211
4,690,129
4,813,672

608,804
618,612
606,121
553,283

95,480
97,616
97,083
97,522

26,224
25,784
27,069
26,406

730,508
742,012
730,273
677,211

108.241
101,575
102,445
109,088

39,203
36,918
37,818
37,434

8,141
8,079
7,566
7,032

155,585
146,572
147,829
153,554

3,884,853
3,933,968
3,924,219
3,969,885

674,023
685,870
688,671
683,161

187,431
191,120
193,030
191,739

4,746,307
4,810,958
4,805,920
4,844,785

254,635
251,389
250,616
259,258

136,857
136,549
136,861
137,577

69,932
62,574
62,370
63,367

461,424
450,512
449,847
460,202

30,423 10,301
29,978 8,661
39,445 10,668
27 407 16,441

295,966
381,214
386,682
447,844

255,242
342,575
336,569
403 996

i
3.

MEMBER BANKS IN RESERVE CITIES.

OTHER RESERVE CITIES.

Number

of banks re-

Jan>25
Feb.l
Feb.8
Feb. 15
United States securities
owned:
Jan. 25
Feb.l
Feb.8
Feb. 15
Loans secured by United
States bonds and certificates:
Jan. 25.
Feb.l
Feb.8
Feb. 15
All other loans and investments:
Jan.25
Feb.l
Feb.8
Feb. 15
Reserve with Federal
Reserve Bank:
Jan.25
Feb.l
Feb.8
Feb. 15
Cash in vault:
Jan.25
Feb.l
Feb.8
Feb. 15




16
17
17
17

27

48

415
415
414
417

$15,944
16,606
20,983
24,069

$22,319
22,750
23,616
24,683

$28,218
30,630
34,660
41,494

$117,958
109,625
109,920
114,253

$29,441
30,245
30,632
30,697

$26,416
23,518
28,247
31,233

32,978
34,207
31,717
28,534

11,989
12,353
12,657
11,742

24,972
24,031
23,407
21,747

26,143
27,080
26,273
24,548

11,640
11,465
11,252
10,675

3,186
1,836
2,336
1,972

15,487
15,701
15 917
15,069

514,040
! 523,560
i 525,315

259,222
258,008
259,322

554,982
545,026
553,862
552,576

812,532 246,973 233,313
797,190 245,162 225,961
829,374
235,755
824,342 224,812

488,720
496,012
482,970
499,876

46,277
49,466
54,575
43,455

31,987
25,562
27,817
26,299

55,418
56,539
56,339
54,302

76,495
75,332
81,797
81,287

24,131
24,031
22,730
20,097

22,491
21,733
23,808
22,488

38,762
37,484
38,472
42,433

6,265
6,370
6,530
6,568

15,271
15,522
15,200
16,116

16,338
16,161
16,339
16,855

9.150
8,547
7,981
8,7.54

20,282
18,687
19,255
18,902

30,883
32,729
29,073
32,777

13,698
12,386
12,937
11,447

11,489
10,375
10,756
11,045

22,286
23,525
22,707
22,618

4,385
4,143
4,490
4,353

5,899
5,315
5,847
5,775

i
!
|
1
!

$48,769 $9,869 $12,822 $31,250 $26,328
50,041 10,145 12,110 34,033 25,788
52,489 9,425 11,841 36,136 26,427
53,854 10,025 15,580 37,412 28,323

$55,584
55,693
57,155
60,859

$424,918
421,184
441,531
472,482

6,210
5,'633
5,559

142,358
142,338
138,469
130,209

82,867 181,854 433,426 166,683 479,385
83,722 181,309 444,862 166,063 485,266
444,913 162,767 476,467
78,330
71,750 180,952 452,228 160,730 481,671

4,453.997
4,452,141
4,470,690
4,486,636

1,250
1,261
1,213
1,102

2,214
2,270
1,728
2,593

2,642
2,574
2,710
3,092

3,647
3,583
3,626
3,576

44,950
43,217
45 078
42,314

420,164
415,290
432,198
414,067

17,109 11,084 25,284
17,176 10,939 22,709
16,228 10,821 21,486
21,474
16,210

187,887
182,692
177,920
181,149

41,386
43,197
43,180
41,902

16,731
16,837
16,672
16,806

240

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of
business on Fridays, Jan. 25, 1918, to Feb. 15, 1918—Continued.
[In thousands of dollars; i. e., 000 omitted.]
3. MEMBER BANKS IN RESERVE CITIES—Continued.

Boston.

Net demand deposits on
which reserve is computed:
Jan. 25
Feb.l...
Feb. 8
Feb. 15
Time deposits:
Jan. 25
Feb.l
Feb.8
Feb. 15
Government deposits:

Jan. 25
Feb.l
Feb. 8..
Feb. 15

New
York.

Philadel- Clevephia.
land.

Richmond.

Atlanta.

Chicago.

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

San
Francisco.

Total,

447,072
477,401
477,737
486,573

235,408
232,890
235,007
233,632

514,567
513,187
517,737
519,895

616,516
616,891
634,325
639,497

197,196
195,169
194,689
175,536

176,709
172,174
176,757
181,299

300,512
306,317
304,216
323,172

62,073
62,304
60,080
60,691

131,560
134,866
134,727
139,211

363,192
362,945
373,483
373,660

163,084
159,131
156,652
156,491

360,276
357,294
355,906
362,735

3,571,165
3,590,569
3,621,316
3,652,392

30,049
32,051
31,952
31,526

25,514
26,822
28,000
27,139

9,702
9,089
9,472
9,854

185,764
188,755
186,086
182,038

34,623
35,525
35,489
32,179

55,860
49,494
59,556
61,398

200,516
203,079
202,916

12,762
12,868
12,838
13,863

27,020
27,383
27,108

40,719
53,093
44,066
59,146

19,232
19,071
19,007
19,276

101,184
101,559
101,560
102,123

742,380
755,863
758,488
768,564

29,427
31,784
34,058
30,167

10,195
10,657
12,307
7,074

27,062
29,172
38,146
35,142

37,796
19,912
26,896
28,577

7,149
6,509
8,981
5,057

1,461
2,014
4,312
6,440

15,801
16,323
18,826
12,327

1,198
712
2,154

11,818
11,737
12,137
8,915

11,050
8,720
13,133
13,273

8,456
7,796
8,011
8,573

10,322
8,812
7,596

171,159
154,634
185,115
157,749

4. MEMBER BANKS OUTSIDE RESERVE CITIES.
COUNTRY BANKS.
Number of banks reporting:
Jan. 25
Feb.l
,
Feb. 8
Feb. 15
United States securities
owned:
Jan. 25
Feb.l
Feb. 8
Feb. 15
Loans secured by United
States bonds and certificates:
Jan. 25
Feb.l
Feb. 8
Feb. 15
All other loans and investments:
Jan. 25
Feb.l
Feb. 8
Feb. 15
,
Reserve with Federal
Reserve Bank:
Jan. 25
,
Feb. 1
Feb. 8
Feb. 15
Cash in vault:
Jan. 25
,
Feb.l
Feb. 8
,
Feb. 15
,
Net demand dep9sits on
which reserve is computed:
Jan. 25
Feb.l
Feb. 8
Feb. 15
Time deposits:
Jan. 25
Feb.l
Feb. 8..
Feb. 15
Government deposits:
Jan. 25
Feb.l
Feb. 8
Feb. 15




25

146
149
146
150

14,698
15,372
15,272
17,203

17,808
16,865
15,960
16,036

6,664
7,047
7,266
8,100

10,343
10,053
9,942
9,981

13,911
14,049
12,327
14,156

5,566
4,023
4,736

6,793
6,593
6,519
5,780

10,523
10,590
10,651
9,505

587
663
676

724
741
737
715

1,729
1,683
2,007
2,188

174,552
178,257
171,917
178,666

160,623
164,868
165,423
165,217

60,054
62,926
61,098

70,805
68,455
70,082
66,192

10,531
10,754
10,692
10,798

12,084
10,835
11,056
10,506

4,028
3,953
4,326
4,529

6,387
5,971
6,122
6,178

6,801
6,298
6,775
7,200

122,203
125,673
124,279
126,465

2,231
2,334
991
2,431

2,908
2,927
3,032
3,010

4,135
5,449
5,909
5,215

180
190
176
267

511
518

344
329
314
302

191
217
205
160

81,328
86,638
74,685
92,891

37,564
37,900
30,683
35,716

10,912
10,865
5,413
11,253

5,117
4,709
4,983
4,885

5,768
5,289
5,110
6,327

2,822
2,678
2,005
2,423

756
774

2,208
2,246
2,466
2,470

3,814
3,545
3,564
4,943

3,508
3,647
3,213

2,097
2,113
1,441
1,721

365
454

155,175
153,814
149,426
156,593

53,280
53,289
57,067
57,217

60,839
59,013
59,791
59,974

65,398
65,509
57,618
75,140

48,710
49,351
49,701
49,904

16,534
17,217
17,432
16,611

5,804
5,842
5,891
5,996

16,619
17,124

3,492
5,188
5,349
3,522

6,863
7 210
7,310
6,990

1,523
1,653
2,288
1,188

24,272 61,313
24,589 66,384
24,458 66,212
24,501 60,968

5,424
4,327
4,145
4,412

83,951
78,867
85,280

21,644
21,512
21,655
20,159
30,607
30,570
29,871
30,008

712,264
728,580
701,670
726,510

1,314
1,476
1,619
1,760

3,674
3,822
3,986
3,740

2,435
2,364
2,360
2,326

48,529
46,654
46,521
48,108

542

1,179
1,153
1,160
1,204

3,382
3,766
3,507
2,940

1,755
1,805
1,631
1,766

31,496
30,998
30,175
32,800

25,954
26,033
19,037
19,237

8,011
8,224
4,025
8,602

17,402
17,683
17,554
18,042

40,283
43,877
44,245
42,095

26,385
25,283
25,665

574,848
579,500
558,325
589,030

16,869

9,184
9,893
9,208
13,498

14,219
14,115
13,167
13,811

4,702
4,626
2,517
2,729

6,040
5,936
5,948
5,999

21,501
24,698
24,648
22,764

4,681
4,779
4,821
4,852

147,994
153,581
150,402
153,033

540
540
260

3,122
2,761
2,924
.1,322

313
262
254
512

90
190
190
130

363
420
420
761

1,341
1,592
2,062
1,450

164
184
184
145

17,961
20,000
21,521
16,280

814

M A R C H 1,

241

FEDERAL BESEBVE BULLETIN.

1918.

EARNINGS ON INVESTMENTS OF FEDERAL RESERVE BANKS.
Average amounts of earning assets held by each Federal Reserve Bank during January, 1918, earnings from each class of
earning assets, and annual rates of earnings on the basis of January, 1918, returns.
Average balances for the month of the several classes of earning assets.
Bills disbought
counted for Bills
in open
members and
market.
F. R. Banks.

Banks.

United
States
securities.

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

$54,494,904
231,540,019
31,990,666
41,430,208
29,149,147
12,292,340
97,930,291
31,928,226
12,739,800
32,347,087
9,022,135
26,370,401

$8,361,473
155,615,869
15,582,286
15,344,263
13,439,367
6,670,012
8,783,723
6,691,188
3,844,000
193,292
13,395,572
17,669,318

$3,769,879
40,210,981
9.017,042
41,657,252
4,251,337
3,590,360
12,065,406
3,677,400
4,697,200
14,646,190
6,830,777
3,842,233

Total...

611,235,224

265,590,363

148,256,057

Earnings from—

Banks.

Boston
New Y o r k . . .
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco
Total...




Bills disBills
counted for bought
in
members
open
and F. R.
market.
Banks.

$179,
726,
105
136,

$29,321
475,881
47,639

43,
342,
111,
48,
113,
32,

41,320
20,964
27,731
21,066
13,648
728
40,712
53,700

2,038,285

820,806

United
States
securities.

$9,722
116,662
27,666
122,987
7,378
9,567
31,028
8,509
11,324
34,508
16,402
8,073

Municipal
warrants.

$510,701
2,580

161,290

""i',m
*327,"i84

Total.

$66,626,256
427,877,570
56,592,574
98,431,723
46,839,851
22,832,934
118,940,710
42,296,814
21.282,600
47; 186,569
29,575,668
47,881,952

1,283,577

Calculated annual rates of earnings from—

Municipal
warrants.

$1,681
10
863
662

1,127
4,349

Total.

$218,254
1,320,329
181,212
147,661
74,559
402,298
140,988
73,127
148,971
91,168
160,686
3,267,266

Bills discounted
Bills
United Municipal
for mem- bought
States warrants.
bers and in open securities.
F. R.
market.
Banks.

Total.

Per cent. Per cent. Per cent. Per cent. Per cent.
3.87
4.13
3.04
3.68
3 87
3.69
3.60
3.41
3.63
4. 49
3.89
3.59
3.61
3.77
3.89
3.48
3.68
3.99
2.04
3.71
4.13
3.14
3.84
3.70
3 63
4.12
3.03
3.98
3.72
4 82
4.11
2.64
4.08
3.71
4.45
2.84
4.04
4.18
4.46
4.13
2.77
3.70
4.44
4.38
2.88
3.70
3.65
4 13
4.42
2.47
3.96
3.58
3.94

3.64

3.27

3.75

242

FEDERAL RESERVE BULLETIN.

MARCH 1, 1918.

GOLD IMPORTS AND EXPORTS.
Gold imports and exports into and from the United States.
[In thousands of dollars; 1. e. , 000 omitted.]
Week ending—
Jan. 25,1918. Feb. 1,1918. Feb. 8,1918. Feb. 15,1918.

Total for
Total since corresponding
Jan. 1,
period
1918.
during 1917.

IMPORTS.

Ore and base bullion
United States Mint or assay office bars
Bullion refined
United States coin
Foreign coin
Total

286

Ill

163

185

1,211

338
1,012

148
2

222
41

333
258
3

i,774
2,358
' 17

1,681
5
18,734
51,005
41,042

1,636

261

426

779

5,360

112,467

3

5

11

1
1,075

1
391

2
1 054

1
341

13
4,557

35
1,184
1,063
25,929

1,076

395

1 061

342

4,581

28,211

45

16

41

i72

31
1,815

EXPORTS.

Domestic:
Ore and base bullion
United States Mint or assay office bars
Bullion refined
Coin
Total
Foreign:
Bullion refined
Coin

45

16

41

1,121

411

102

Total
Total exports

342

172

1,846

4,753

30,057

Excess of gold imports over exports since Jan. 1,1918, $607; excess of gold imports over exports since Aug. 1,1914, $1,050,911.

DISCOUNT RATES.
Discount rates of each Federal Reserve Bank in effect Feb. 28, 1918.
Maturities.
Trade acceptances.

Discounts.

Federal Keserve Bank,

Within 15
days,
including
member
banks'
collateral
notes.

16 to 60
days.

61 to 90
days.

Agricultural and
live-stock
paper
over 90
days.

Secured by U.S. certificates of indebtedness or Liberty loan
bonds.
Within 15
days, including
member
banks'
collateral
notes.

Ito60
days,
inclusive.

61 to 90
days,
inclusive.

16 to 90
days.

Boston
New York i . . .
Philadelphia...
Cleveland. *
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.
1

Rate of 3 to 4£ per cent for 1-day discounts in connection with the loan operations of the Government.
NOTE 1.—Rate for acceptances purchased in open market, 3 to 4§ per cent, except for Boston, Chicago, and Minneapolis, whose rates range from
3 to 5 per cent.
NOTE 2.—In case the 60-day trade acceptance rate is higher than the 15-day discount rate trade acceptances maturing within 15 days will be
taken at the lower rate.




MABCH 1,

243

FEDERAL KESEBVE BULLETIN.

1918.

FOREIGN BANK STATEMENTS.
Comparative statements showing condition of the five principal European banks of issue at close of calendar years 1918 to 1917.
{Originalfigureshave been concerted into United States dollars at the following legal equivalents: £-$4.8665; franc=19.3 cents; rubles 51.5 cents;
mark-23.8 cents; krone=*20.26 cents.]
BANK OF ENGLAND.
[Combined data for issue and banking departments.]
[From the London Economist.]
[000 omitted.]
Bee. 31,

Dec. 30,
1914.

Dec. 29,
1915.

$170,245

$338,191

$250,510

$264,275

$283,899

89,787
64,233
253,729

89,787
72,061
516,998

89,787
159,816
545,416

89,787
278,304
518,094

53,605
283,732
497,958

577,994

1,017,037

1,045,529

1,150,460

1,119,194

70,822
15,827
49,913
297,280
66
144,086

70,822
15,978
131,067
623,182
116
175,872

70,822
16,118
241,755
544,914
87
171,833

70,822
16,111
253,624
616,715
107
193,081

70.822
16,065
204,439
604,232
50
223,586

577,994

1,017,037

1,045,529

1,150,460

1,119,194

Dec. 26,
1913.

Dec. 10,
1914.1

Dec. 30,
1915.

Dec. 28,
1916.

$678,856
123,532

$799,359
67,750

$967,950
67,953

$652,885
56,910

47,798

867,109

1,035,903

709,795
326,766
159,380

687,480
393,162
150,231

354,002
222,320
79,806

57,900
1,428,200
347,400
21,742
119,599
258,395
254,326
105,919

57,900
2,412,500
621,460
21,805
176,009
221,395
236,386
130,046

3,145,224

3,789,422

5,108,374

35,223
8,292
4,211
33,562
407,970
2,568,801
87,165

35,223
8,292
4,853
2,897
436,223
3,219,012

35,223

82,922

4,311,002
137,911

3,145,224

3,789,422

5,108,374

1913.

Dec. 27,
1916.

Dec. 26,
1917.

ASSETS.

Gold and silver
Government securities:
Held by issue department
Held by banking department
Other securities
Total
LIABILITIES.

Proprietors' capital
Rest (surplus)
Public deposits
Other deposits
Seven-day and other bills
Notes in circulation
Total

'•.

BANK OF FRANCE.
[From weekly statements of the Bank of France.]
[000 omitted.]

Gold in vault
Other metallic reserve
Total vault reserve
Gold held abroad
Foreign credits
Government securities:
Bonds, consols, and advances to the Government—
Permanent investments
Advances to the Government since outbreak of war
Treasury bills discounted (advances to foreign Governments).
Other Government securities
Loans and discounts
Bills matured and extended
Advances on bullion, specie, securities, etc
Sundry assets
,

""203," 962*
57,900
694,800
294,607

149,074
93,064

41,165
702,040
2 150,686

1,397,033

Total.,

57,900
965,000
121,590
21,882

Dec. 27,
1917.

LIABILITIES.

Capital......
Surplus, including special reserves..
Dividends unpaid
Government deposits
Other deposits
Bank notes in circulation
Sundry liabilities
Total..
1

35,223
8,206

35,223

309
77,848
111,038
1,102,715
61,694

34,075
515,687
1,927,306

1,397,033

No data available as at end of 1914. Incomplete data for Dec. 10,1914, taken from the annual report of the bank for 1914,
* Advances on securities only.




4,985
48,609

244

FEDERAL RESERVE BULLETIN.

MARCH 1,

1918.

Comparative statements showing condition of the five pricipal European banks of issue at close of calender years 1913 to
1917—Continued.
RUSSIAN STATE BANK.
[From weekly statements of the Russian State Bank.]
[000 omitted.]
Dec. 16-29, Dec. 16-29, Dec. 16-29, Dec. 16-29, Oct. 16-29,
1913.
1914.
1915.
1916.
1917.1
ASSETS.

$780,902
87,097
31,886
295,583

Gold bullion and specie in vault
Gold held abroad
Silver, copper, etc., bullion
Bills on hand
Short-term treasury bills
Advances to the treasury account food-distribution service.
Advances on securities
Advances on merchandise
Advances to popular credit institutions
Advances to farmers,
Advances to manufacturers
Advances to the Petrograd and Moscow public pawnshops.
Protested bills
Securities owned
Due from branches and offices
Sundry assets

$800,124
110,319
24,678
255,720

90,790
84,604
35,505
8,440
7,743
7,932
1,974
53,774

Total.

131,036
56,921

$830,046
139,050
18,928
202,325
1,670,959

1,107,171
59 089
126,468
3,365,036

340,939
58,128
39,802
11,572
4,444
8,122
3,162
133,612
160,890

276,749
23,734
22,171
9,247
3,892
6,371
597
70,098
189,011
70,627

$667,041
1,188,954
91,757
233,876
7,839,089
668,274
775,369
40,727
44,445
9,928
5 433
10,874
215
93,356
501,125
101,792

53,581

10,765
5,726
10,083
6,513
75,358
128,923
76,316

1,539,811

2,057,853

3,689,378

6,088,657

12,272,255

859,293
33,630
14,333

113,426
188,425
198,326
8,042
1,474,880
33,218
13,211

28,325
105,134
437,736
217,383
12,424
2,731,879
61,053
95,444

28,325
111,247
804,603
301,002
15,643
4,424,512
230,173
173,152

28,325
105,525
1,298,115
376,448
54,000
9,456,516
461,857
491,469

1,539,811

2,057,853

3,689,378

6,088,677

12,272,255

Dec. 31,
1914.

Dec. 31,
1915.

Dec. 30,
1916.

Dec. 31,
1917.

LIABILITIES.

Capital
Current account of the State Treasury.
Current account deposits
Special and time deposits
Drafts and letters of credit unpaid
Notes in circulation
Accrued profits on operations
Sundry liabilities

28,325
299,476
111,947
188,814

Total.
i Latest available data.

GERMAN REICHSBANK.
[From the Deutcher Reichsanzeiger.]
[000 omitted.]
Dec. 31,
1913.
ASSETS.

Gold
O ther metallic reserve
Total metallic reserve
Imperial Treasury and Loan Bank certificates
Notes of other banks
Bills, checks, and discounted Treasury bills
Advances on collateral
Securities
Sundry assets
Total

$278,453
65,886

8,774

$581,954
7,633

$599,873
3,884

$572,768
43,161

344,339
10,996
3,038
354,798
22,485
96,012
53,582

506,863
208,250
1,264
936,903
5,443
8,086
51,173

589,587
306,512
745
1,381,189
3,079
12,227
64,791

603,757
100,457
332
2,287,124
2,322
19,932
186,622

615,929
312,920
160
3,473,873
1,217
21,220
497,752

885,250

1,717,9

2,358,130

3,200,546

4,923,071

42,840
16,671
617,240

42,840
17,726
1,200,924
418,144

42,840
19,171
1,646,465
561,445
88,209

42,840
20,342
1,917,007
1,086,281
134,076

42,840
21,453
2,729,324
1,915,993
213,461

1,717,982

2,358,130

3,200,546

4,923,071

LIABILITIES.

Capital paid in
Surplus
Notes in circulation
Other liabilities payable on demand
Sundry liabilities
Total




j

19,736
885,250

MARCH 1, 1918.

245

FEDERAL RESERVE BULLETIN".

Comparative statements showing condition of the five principal European banks of issue at close of calendar years 1913 to
1917—Continued.
AUSTRO-HUNGARIAN BANK.
[000 omitted.]
Dec. 31,
1913.

July 23,
1914.

Dec. 7,
1917.

$251,421
12,156
52,989

8250,794
12,156
59,031

853,525
12,156
11,131

316,566

321,981

187,607

155,562
37,790

Other assets-

12,156
3,467
60,757
27,823

12,156
3,570
60,779
23,358

76,812
21,482
571,948
695,305
1,831,504
842,411
12,156
12,103
59,225
178,673

Total..

671,307

615,196

4,301,619

42,546
6,515
505,212
34,119
59,106
23,809

42,546
6,515
431,489
59,012
59,011
16,623

42,546
8,291
3,594,156
424,004
55,977
176,645

671,307

615,196

4,301,619

Goldfjcoins and gold in bars.
Bills and foreign notes
Silver and token coins
Total
Notes of the war loan banks
Discounted bills, warrants, e t c . . . .
Loans on security
Loans to Austrian Government...
Loans to Hungarian Government.
OldlAustrian loans
Securities

LIABILITIES.

Share capital
Surplus
Notes in circulation.
Current accounts....
Mortgage bonds
Other liabilities
Total.
NOTE.—No data available for Dec. 31,1914,1915,1916, and 1917.




INDEX.
Acceptances:
Page.
Banks granted authority to accept up to 100
per cent of capital and surplus.
184
Distribution of
230
Aliens, income tax upon interest paid on deposits
to nonresident
163
Bill to increase power of the comptroller introduced
in Congress....163
Business conditions throughout the Federal Reserve districts
203-222
Capital Issues Committee:
Committees appointed by, in the Federal Reserve districts
167
Press statements issued by
166-171
Certificates of indebtedness, issue of
153,161
Chart showing cash reserves and excess reserves of
Federal Reserve banks, 1917-18
227
Charters issued to national banks during month
184
Check-clearing and collection system, operation of. 225
Commercial failures reported
183
Comptroller of the Currency, bills introduced in
Congress to increase powers of
163
Discount operations of the Federal Reserve banks. 228-234
Discount rates in effect
242
Earnings on investments of Federal Reserve banks. 241
Failures, commercial, reported during the month.. 183
Federal Advisory Council, conference of, with
Board
160
Federal Reserve agents, conference of, with Board. 160
Federal Reserve agents' fund, transactions under.. 224
Federal Reserve Banks:
Discount operations of
228-234
Earnings on investments of
241
Resources and liabilities of
234
Report on consolidation of, with Sub treasuries. 172
Federal Reserve note accounts of Federal Reserve
Banks and agents
236
Fiduciary powers granted to national banks
184
Foreign bank statements.
243-245
Foreign exchange, instructions to dealers i n . . . . . 185-196
Gold imports and exports
242
Gold settlement fund, transactions under
223-224
Great Britain, extract from committee of Parliament of, on national expenditures
179-182
Income tax on deposits of nonresident aliens, letter
of Secretary of the Treasury regarding
163




Page.

Informal rulings of the Board:
Notes of]fmanceor credit C 0 ^ P ^ 2 £ L
"™" of ^forrediscountT... 1T..'....
.'
Limitations under section 5200, R. S
197
Law department:
Acceptance of drafts with documents attached. 198
Savings accounts as time deposits
199
Trade acceptance providing for discount if paid
at maturity
200
Calculation of dividends on surrendered stock.. 201
Liberty loan and war-savings plan, statement of
J. S. Drum regarding.
164-166
Member banks, statement showing condition of.. 238-240
National banks:
Charters issued to
184
Fiducuary powers granted to
184
Statement showing condition of, on Dec. 31,
1917
182
Review of the month:
Growth of banking strength
153
Sale of Treasury certificates
153
Operations of the Federal Reserve Banks
154
Condition of member banks
155
Control of capital issues
155
War Finance Corporation bill
157
Control of dollar quotations
157
General exchange situation—
158
Movement of gold
159
Control of foreign exchange
159
Conferences with Advisory Council and Federal
Reserveagents
160
Reserves, excess, movement of, during 1917-18
226
Chart showing
227
State banks and trust companies:
Act passed by New Jersey Legislature regarding
membership of, in system
166
List of, admitted to membership in system during the month
185
Subtreasuries, consolidation of, with Federal Reserve Banks, report on
172-179
Treasury certificates of indebtedness, issues of
153,161
War-savings plan and Liberty loan, statement of
J. S. Drum regarding
164-166
War Trade Board, statements for the press issued
by
171-172
i