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MAP OF THE FEDERAL RESERVE DISTRICTS I i A jNo ; 9 i--·- · KOT S. D I iN E ·- -- ..l._,.._, B R A I ei)fHVe!I /._ , 1i0 FEDERAL R£SERVE IIOARD CITY AUG RfSEIIVE CITY FEDfllAL RESERVE CITIES .I u.!.:,_!_._ _•.Lt'~=...:x:..-_1_c_o 0 "~ . , .,. FEDERAL IIESERVE CITIES AL,,o CEN'TRAL RESERVE CITIES. FEDERAL llfSERVE CITIES, AL,,o RESEIIVf CITIES RESf/!Vf CITIES FEDERAL RESERVE BANK SYSTEM. Location and Capitalization. The capitalization, location and territory of the twelve Federal Reserve Banks is as follows: Distrit:t *Capital Stock Seat Area Sq. Mi. Population Member Banks Territory Covered : 1 Boston . . . . . . . 9,711,900 66,465 6,557,841 441 11e.; N. H.; Vt.; Mass.; R. I.; and Conn. 2 New York..... 19,931,700 49,170 9,113,279 480 N. Y. State. 3 Philadelphia 12,501,500 39,865 8,110,217 758 l'-. J.; Dela.; and eastern Pa. 4 Cleveland 12,101,700 183,995 7,961,022 764 Ohio; western Pa.; northwest W. Va.; eastern Ky. 5 Richmond 6,387,400 173,818 8,519,313 496 D. C. ; Md. ; Va.; N. C. ; S. C.; remainder W. Va. •• 6 Atlanta 4,670,600 233,&60 6,695,341 381 Al_a. ; Ga. ; Fla. ; eastE:,rll Tenn. ; southe:n Miss. ; southeast La. 7 Chicago 12,687,700 176,940 12,630,383 971 Ia. ; southern Wis. ; peninsula Mich.; north. Ill. ; north. Ind. s St. Louis ....•. 4,987,500 H6,474 6,726,611 9 Minneapolis .. . 4,811,000 437,930 5,724,895 10 Kansas City .. . 5,530,300 509,649 6,306,850 11 Dallas 5,698,900 404,826 5,310,561 12 San Francisco. 7,775,400 693,658 5,389,303 459 Ark. ; all Mo. except extreme west ; south. Ill. ; south. Ind. ; west. Ky.; west. Tenn.; north. Miss. 709 Mont. ; No. Dak. ; So. Dak. ; Minn. ; northern Wis. ; remaind~r Mich . 837 Kan. ; Neb.; Co o. ; Wyo.; extreme West Mo.; northern Okla.; extreme north. N. Mex. 754 Tex.; remainder N. Mex.; south. Okla.; remainder La.; southeast Ariz. 521 Cal.; Wash.; Ore.; Idaho; Nev.; Utah; remainder Ariz. Total. ....... $106,795,600 3,016,650 89,045,616 7,571 System commenced operations (Nov. 16, Capitalization. Participating Banking Institutions. •attonal Banks can subscribe !or the capital stock of the Federal Reserve Banks (see paragraph Capitallzation) and thus become member banks; those falling to do so shall cease to act as reserve agents, and a!ter December 23rd. 1914, shall forfeit their charters State under the National Bank Act. Companies-by Trust and Banks a vote of their stockholders owning a majority of the stock-can take out a national bank charter, with the approval of the Comptroller of the Currency, and also become member banks by subscribing to the capital stock of the Federal Reserve Banks (with the approval of the Federal Reserve Board) provided they comply with the prescribed reserve and capital requirements, with the regulations and restrictions imposed on the national bank8 respecting the limitation of liability, which may be incurred by any person. firm or corporation to such banks. the prohibition against buying of or loaning on their stock, the withdrawal or impairment of capital, or the p&.yment of unearned dividends and also provided that their paid-up unimpaired capital stock is sufficient to entitle them to become a national banking association under the provisions of the National Bank Act. They will be required to make periodical reports concerning their condition like the National Banks and wlll be subject to the same periodical examinations. National Banks located in Alai-ka or outside the Continental United States, are not required to become member banks, and In that event maintain their reRerves and operations in arcordance with all present requirementi-. but they may become member hanks (with the exception of the national banki- in the Philippine Islands) with the consent of the Federal Reserve Boa rel. 1 The national banks and other institutions participating in the Federal Reserve System must subscribe to ·the capital stock of the Federal Reserve Bank in their district up to 6% o! the amount of their own paid-up capital and surplus. Of this subscription 50% ( in 3 installments of 16 2/3 % ) must be paid within 6 months after the first payment, which was made on Nov. 2, 1914. The remainder is subject to call at the discretion of the F'ederal Reserve Board. Payments are to be made in gold or gold certificates. There is a double liability for stockholders of the Federal Reserve Banks. Par value of shares is $100 each. The stock participations of member banks must always be equal to 6% of their own capital stock and surplus. Shares of l"ederal Reserve Banks are not transferable nor may they be hypothecated. Additional shares are purchasable at par plu s 1/:.i of 1% a montll from the period of the last dividend. Stock c:an be surrendered at the same orices. Division of Earnings. After deduction of all necessary expenses, there will be paid from the net profits of the Federal Reserve Banks, a cumulative dividend of 6% per annum on the amount ot capital stock paid in. Of the remaining surplus earnings, 50% goes to the United States Government as a franchise tax and the remaining 50% will be paid into a surplus fund. As soon as this surplus equals 40% of the paid-in capital stock of the Federal Reserve Bank, the entire surplus earnings go to the United States The Secretary of the Government. Treasury may use these surplus earnings to add to the gold reserve held against United States notes or shall apply them to the reduction of tbe outstanding bonded debt of the United In case of liquidation of a States . Federal Reserve Bank, all proceeds ovel' and above the par amounts of c·apita I s tock and accumulated dividrnds , accrue to the United States Federal Reserve Banks Government. (including their capital stock and surplus and the income derived therefrom) are free from taxation, except taxes upon real e tate. 1914). Working Capital of the Federal Reserve Banks. Working capital of the Federal Re·erve Banks will be provided through the capital subscriptions and deposits of the member banks, the issuance of Federal Reserve notes to the Federal Reserve Banks, the carrying of reserves of member banks with the Federal Reserve Banks and through other operations to which the Federal Reserve Danks are authorized, while the general fund of the Treasury (except the redemption funds for National Bank and and also notes) Federal Reserve the Government revenues, may be deposited in the Federal Reserve Banks; Government disbursements to be made by checks drawn against these deposits. The Secretary of the Treasury can continue to use member banks as depositories. Branch Offices. 1 Earh Federal Reserve Bank s hall establish branch banks within the Federal Reserve District in which it is located, or in the district of any Federal Reserve Bank which may have been suspended. These branch offices will be operated by seven directors (four to be selected by the Federal Reserve Bank, one of whom will be designated as manager, and three by the Federal Reserve Board) under rules and regulations of the Federal Reserve Board. Copyright 1914 by A. B. LEACH & Co. 3. Opr,rat · ons of the Federal Reserve Banks. The Feder a I Reserve Danks may reRestrictions to the Operations of ceive deposits from member banks, the Federal Reserve Banks. from the United States, and solely for Aside from certain limitations stated ex •hauge purposes from other Reserve in the foregoing paragraph, the folBanks; they will discount notes, drafts lowing restrictions may still be given. and bill:; of exchange not having more The amount of agricultural and livethan 90 days to run, endorsed by memstock bills rediscounted, shall be limber banks, such bills growing out of ited to a percentage of the paid-in capicommercial transactions and not protal of each Reserve Bank to be ascerhi biting notes, drafts and bills of extained and fixed by the Federal Reserve change secured by staple agricultural Board (the Board has fixed this products, or other goods, wares, or percentage, until i'.urther notice, and merchandise but not including those subject to modification in all cases covering merely investments or issued where deemed de::;irable, at 25%) ; or drawn for the purpose of carrythe amount of acreptances discounted ing or trading 10 securities, except by each Federal Reserve Bank shall those of the U. S. Government. Notes, not exceed 50% f the capital stock drafts aml bills issued or drawn for and surplus of the bank for which the agricultural purposes or based on liverediscounts are made; bills and notes stock, may have a maturity of not exof any one person, company, firm or ceeding 6 months. (The member banks corporation rediscounted for a memmay accept drafts or bills of exchange be r bank may not exceed 10% of the ba,;ed upon the importation and excapital and surplus of the bank, but this does not apply to the discount of portation of goods, not running more bills of exchange drawn in good faith than 6 months and not exceeding 50% against actually existing values. Ceror their capital stock and surplus.) tain open market dealings and transactions abroad of the Federal Reserve The Federal Resef\'e Banks will discount Banks as well as the rediscount busiacceptances endorsed by at least nl:'ss of the Federal Reserve Banks are one member bank based upon the subject to rules and regulations to be prescribed by the Federal Reserve lmportation and exportation of goods Board while all tran sactions of the aud not having more than three Banks' are under tbe s upervi : ion and wonths to run. They will purcontrol of this Board. chase and sell in the open market at home or abroad, cable transfers, Check Clearance System. b&nke1•s' acceptances and bills of exchange with or without endorsement Evr,ry Federal Reserv e 0 • ok -;ha ·1 reof the member banks ; they will ceive on deposit at pa• ,.-om IIHtVber deal in and make loans on gold banks or Federal Rese rve Bank~ coin and bullion at home and abroad, exchange Federal Reserve notes checks and drafts dra n on any of its for gold or gold certificates, contract depositors and, when remitted by a for loans or gold, buy and sell at home Federal Reserve Ban.c, checks and and abroad Government securities and drafts drawn by any dP,positor in any bills, notes, etc., not running more than other Federal Reserve Bank or member ti months, issued ( in anticipation of the bank upon funds to th€. credit of this receipt of assured revenue) by states, depositor in the Reserve Bank or the counties and municipalities in the conmember bank. The Fe<leral Reserve tinental United States, including irrigaBoard will fix the charges to be collected tion and drainage districts. They will , by the member bank!' from their patrnns furthermore buy from member banks, ' whose checks are so clf'ared, and the and l'ell with or ithout their own encharge which· may be made for cleardorsement, bills of exchange as before ings and collections by the Federal defined, and establ sh from time to time, ReserYe Banks. The Fecleral Reserve rates of discount Rubject to review and Uoard, may at its discr_t:tion, exercise d termination by the Federal Reserve ' the function of a Clearing House for Board, which latt"r can permit or rethe Federal Reserve Is nks in the transquire (by an affirmative vote of at fer of funds, chargt ,, etc., or may lea. t 5 or its 10embers) one Reserve designate for this rune, ion a Federal Bank to rediscount for another ReRel'erve Bank, wiu tl1e Ferleral Reserve Bank. The Federal Reserve Banks bel' , e Banks m2v ~ be re ·.tired to will also establish accounts with other act as a Clearing e for t11, ir memFederal Rel'erve Banks for exchange h• r banks. Memc1u, ~anhs are not propurpn!<es (see also Check Clearance hibited from chargmg their actual exSy!:tem J and open and maintain bank- 1 penses for collec~ng and remitting Ing accounts, appoint correspondents and funds or for excuange sold to their e. tablisb agencies abroad for the purpatrons. ('ba~<-'. :-ale and collection of bill'- of x,·hange. and to buy and sell, with or without their endorsement, bills of exchange with two or more names arising out of commercial transactions and not having more than 90 days to run. The Federal Re!-erve Banks, when requlr~d by the Sec·retary of the Treasm·y, . ha 11 a<"t a s Fiscal Agents of the 11lted ~tates. 1 Federal Reserve Notes. Federal Reserve notes to be issued at the discretion of the Federal Reserve Board, for the purpose of making advances to the Federal Reserve Banks, are an obligation of the United States and receivable for all taxes, customs and other public dues ; they are furthermore a first and paramount lien on all the assets of the Federal Reserve Bank to which they are issued ; they are redeemable in gold at the Treasury in Washington or in gold or lawful money at any Federal Reserve Bank; they bear distinctive numbers of the Federal Reserve Bank through which they are issued ; they are secured by an equal amount of commercial paper accepted for rediscount under the provisions of the law, the Federal Reserve Board having the authority to ask for additional collateral to protect the notes, while the Federal Reserve Banks have the right to make changes in the collateral under regulations of the Federal Reserve Board. The notes are in denominations of $5, $10, $20, $50 and $100 each. The Federal Reserve Banks shall pay upon the notes issued to them a rate of interest to be established by the Federal Reserve Board. Whenever a Federal Reserve Bank receives notes Issued by another, it shall promptly return these notes for credit or redemption to the Federal Reserve Bank through which they were originally issued. No Federal Reserve Bank may pay out the notes of another under a penalty of 10%. 4. The Federal Reserve Board, whose Is In the Trea ury DepartWashiogton, D. C., will exercise general supervision over the Federal Reserve Banks, define character or bills eligible for discount and will Jlt nnit, or, by an affirmative vote of at least 5 members, require (at rates of inlt-rc;;t to be fixed by it) Federal Reserve Banks to redi:::count the discounted paper It n( another Federal Reserve Bank. will regulate and supervise the issue and retirement of Federal Reserve Notes. lt may add to and reclassify re erve and eentral reserve cities (it is understood that In the future no cities with le,;s than 100,000 inhabitants will be approved as reserve cities) readjust Federal Re~erve Districts, suspend or 1 emm·e officers or directors of Federal H.e:--erve Banks, require the writing off of doubtful and worthless assets, suspc-nd or take i,ossession, liquidate or reorganize any Federal Reserve Bank which violates the law, require bonds of reserve agents, permit national banks to act a,; trustee, executor, adminisll a tor or registrar of tocks and bonds "hen not in contravention of State or local laws. It will employ experts, clerk:,, etc., without civil service requirements unless so ordered by the Pre:,ident. It may suspend the reserve requirements of the Federal Reserve Banks (as shown in foregoing paragraph), and it will examine at its discretion the Federal Reserve Banks and member banks and publish weekly a statement for each Federal Reserve Bank and a consolidated statement for the entire system showing in detail assets and liabilities and character of reserve mouie:; and nature and maturity of paper and other investment· held. It ,·an levy semi-annually upon the Federal Reserve Banks in proportion to their eapital stock and surplus assessments tor defraying its expenses ( including those of printing, issuing, etc., of Federal Reserve Notes) for the succeeding 6 months including any deficit carried forward. It will submit each year an annual report to Congre s. Reserve• and Redemption Funds of Federal Reserve Banks. Resen·es of not less than 35% shall be held In gold or lawful money against the deposits of the Federal Reserve Banks and of not less than 40% in gold against the Federal Reserve notes in circulation ; part of the latter (to an extent as fixed by the Secretary of the Treasury but never less than 5%) shall be kept with the Treasury as a redemption fund. The Federal Reserve Bank · . l all reimburse this tund for the Federal Re,;erve notes redeemed at the 11 a,,ury and returned to the Federal Re erve Banks through which they were originally i,;sued. If Federal Reserve note. have been redeemed in gold or gold certificates, the funds must be reimbur ·ed to an extent deemed necessary by the Secretary of the Treasury in gold or gold certificates. Federal Re.·en·e notes received by the Treasury utb rwl!-e than for redemption may be n turned lo the issuing Federal Reserve Ur.uk for the credit of the United States or may t,e exchanged for gold out of the 1 demvtlon fund and returned to such The Federal Reserve Board may .·u:-pencl !or not more than 30 days and from time to time renew such sus1,~n ion, !or periods not exceeding 15 day·, any of the reserve requirements or the act, provided it establishes a graduated tax on the deficiencies. If the gold reserve held against the Federal Reserve notes falls from 40% to auy percentage above 32 ½ %, a tax of nut more than 1 % upon such deficiency shall be establi~hed ; under 32 ½%, the tax rate increases by not less than 1 ½ % upon each 2 ½ % or fraction o! the deThe Federal Reserve Bank ficiency. will have to add an amount equal to the tax to the rates of interest and discount ftxed by the Federal Resen·e Membershir of the Federal Reserve Board. 'fhe Board consists of seven members, viz : The Secretary of the Treasury, Ex-Officio Member and Chairman; The Comptroller of the Currency, Ex-Officio Member ; and five members (not more than one from any one Federal Reserve District) appointed by the President, by and with the consent and advice of the Senate ( one of whom shall act as governor and another as vice-governor), in due regard to a fair representation o! the different commercial, industrial and geographical divisions of the country, two of whom to be experienced in banking or finance. After the first period of incumbency, which ranges from two to ten years, bas elapsed, all appointive members shall serve for ten years, unless sooner removed for cause by the President. No member of the Board shall be a member of Congress nor an officer or director of any bank, banking institution, trust company or Federal Reserve Bank, nor hold stock in any bank. The members of the Board incl udin§. the ex-officio members and the a sistant secretaries of the Treasury are ineligible during the time they are in office and for two years thereafter to hold any office, position or employment in any member bank. The governor of the Board shall act as the active executive officer. Management of Federal Reserve Banks. The management of each Federal Reserve Bank rests with a Board of Directors, each consisting of three classes ; Class "A" being three members chosen by and representative of the stockholding banks; Class "B", three members {also chosen by the stockholding banks) who at the time of their election are actively engaged in their district in commerce, agriculture or some other industrial pursuit; Class "C", three members (residents of the district at least 2 years) to be designated by the Federal Reserve Board, one of whom will act as Chairman of the Federal Reserve Bank, and another as Deputy Chairman. Both shall be persons of tested The Chairman banking experience. shall act as "Federal Reserve· Agent" and the Deputy Chairman, as "Deputy Feneral Reserve Agent." The Chairman will act as the official representative of the Federal Reserve Board, and the Deputy Chairman as such in case of absence or disability of his principal. Directors of class "B" may not be an officer, director or employee, and those of class "C" may not be an officer, director, employee, or ·a stockholder, in any bank. Senators and Representatives in Congress are not eligible. After tbe first term of incumbency, which ranges from one to three years, all directors shall serve three years. Federal Advisory Council. Salaries and Compensation s. The Federal Advisory Council will be composed of as many members as there are Federal Reserve Districts (at the present time numbering twelv~) one chosen annually by each Board of Directors of each Federal Reserve Bank. The Federal Advisory Council will act in an advisory capacity to the Federal Reserve Board. lt will hold meetings in Washington, D. C., at least four times each year and oftener if called by the Federal Reserve Board. It may hold additional meetings in Washington, D. C., and elsewhere, if considered necessary, and it may select its own officers. A majority of its members will constitute a quorum. It will confer directly with the Federal Reserve Board on general business conditions. It will make oral or written representations concerning matters within the jurisdiction of the Federal Reserve Board nd call for information and make recommendation s in regard to discount rates, rediscount business, note issues, reserve conditions, purchase and sale of gold or securities, open market operations and the general affairs of the system. Appointive members of the Federal Reserve Board shall receive an annual salary of $12,000, plus necessary traveling expenses, and the Comptroller of the Currency in addition to his salary as such shall receive $7,000 for his services as a member of the board. Each Federal Reserve Bank shall fix the compensation and allowances of the members of the Federal Advisory Council. Directors of Federal Reserve Banks shall receive in addition to any compensation otherwise provided, a reasonable allowance for necessary expenses in attending board meetings. All of the above compensations as well as the salaries, etc., of officers aucl employees of the Federal Reserve Banks shall be subject to the approval of the Federal Reserve Board. Gold Standard. Nothing in the Federal Reserve Act shall be construed to repeal the parity provisions contained in the act establishing the gold standard and the Secretary of the Treasury may, for the purpose of maintaining the gold parity and strengthening the gold reserve, borrow gold on the security of United States bond~ or on one-year gold notes or sell the same, i! necessary, to obtain gold . The Aldrich-Vreel and Act. The Aldrich-Vreelan d Act has been extended to June 30, 1915, and the tax rate on emergency circulation has been changed to 3% per annum for the first three months upon the average amount of emergency circulation outstanding and ½ of 1 % per annum for each succeeding month until a tax of 6% per annum is reached, which latter rate will be in force thereafter. Emergency circulation can be taken out up to 125% of the capital stock and surplus of the applying bank. District No. 5-Federal Reserve Bank of Richmond, Class A, Group 1 : Waldo Newcomer, Baltimore; Group 2: John F. Bruton, Wilson, N. C.; Group 3: Edwin Mann, Bluefield, W. Va. Class B: Group 1: George J. Seay, Richmond; Group 2: D. R. Coker, Hartsville, S. C. ; Group 3 : j. F. Oyster, Washington. Class C: William Ingle, Baltimore, Md., Chairman; James A. Moncure, Richmond, Vice-Chairman; M. F. H. Gouverneur, Wilmington, N. C. Gover11c;t·: Geo. J. Seay, Richmond. Personnel of the Federal Reserve Board. William G. McAdoo, Ex-officio member and Chairman (Secretary o! the Treasury, Builder o! the McAdoo Tubes under the Hudson River, New York) ; John Skelton Williams, Ex-officio member (Comptroller o! the Currency, Exmember of the banking firm John L. Williams & Son, Richmond, Va. ; Expresident and organizer o! the Seaboard Air Line Railway System) ; Charles S. Hamlin, Governor (Ex-Asst. Secretary of the Treasury) ; Adolph Caspar :O.Iiller (Ex-Asst. Secretary of the Interior, Economist, Ex-professor University of California, Author of publications on monetary matters) ; William G. P. Harding (Ex-president of the First National Bank o! Birmingham, Ala.) ; Paul M. Warburg (Ex-member of the banking firm Kuhn, Loeb & Company, New York City) ; and F. A. Delano ( Ex-president of the Chicago, Railway & Louisville Indianapolis Company)_ Ramsey, Muskogee, Okla., Vice-Chairman; R. H, Malone, Denver, Colo. Governor: Charles M. Sawyer, Topeka Kan. District No. 11-Federal Reserve Bank of Dallas, Class A, Group 1 : Oscar \Velis, Houston, Tex. ; Group 2 : E. K. Smith, Shreveport, La.; Group 3: B. A. McKinney, Durant, Okla. Class B, Group 1: Marion Sanson, Fort Worth, T ex. ; Group 2: Frank Kell, Wichita Falls, Tex.; Group 3: J. J. Culbertson, Class C: E . 0. Tenison, Paris, Tex. Dallas , 'I'ex., Chairman; W. F. McCaleb, San Antonio, Tex. , Vil''.l-Clhairman ; Felix Martinez, El Paso, Tex. ; Governor: Oscar Wells, Houston, Tex. District No. 6-Federal Reserve Bank of Atlanta, Class A, Group 1: L. P. Hlllyer, Macon, Ga. ; Group 2 : F. vV. Foote, Hattiesburg, )1iss. ; Group 3 : Class B: W. H. · Toole, Winder, Ga. Group 1: P. H. Saunders, New Orleans; Group 2 : J. A. Mccrary, Decatur, Ga. ; Group 3: W. H. Hartford, Nashville. Class C: M. B. Wellborn, Anniston, D i strict No. 12-Federal Reserve Bank of San Francisco, Class A, Group 1 : C. K. McIntosh, San Francisco ; Group 2: James K. Lynch, San Francisco ; Group 3 : Alden Anderson, Sacramento. Class B, Group 1: A. B. C. Dohrman, San Francisco ; Group 2 : J. A. McGregor, San Francisco; Group 3 : Elmer H. Cox, Madera, Cal. Class C: John Perrin, Pasadena, Cal., Chairman ; Claude Gatch., San Francisco, Peabody, Chas. E. Vice-Chairman; Governor: Archibald Seattle, Wash. Ka in s, San Francisco. rAla., 1 Directors and Governors of the Federal Reserve Banks. Chairman; Edward T. Brown, Atlanta, Ga., Vice-Chairman ; W. H. Governor: Kettig, Birmingham, Ala. Joseph A. McCord, Atlanta. t No . 7-Federal Reserve Bank Di,stric_ District No. 1-Federal Reserve Bank of Chicago, Class A, Group 1 : George of Boston, Class A, Group 1 : Thomas M. Reynolds, Chicago ; Group 2 : J. B. P. Beal, Boston; Group 2: C. G. Sanl<'organ, Chicago ; Group 3 : E. L. fcrd. Bridgeport, Conn.; Group 3: Class B: John son, Waterloo, Iowa. Heard, Manchester, N. H. M. A. Group 1 : Henry B. Joy, Detroit; Group Class B, Group 1 : Charles A. Morse, 2 : M. B. Hutchison, Ottumwa, Iowa ; Bei. ton ; Group 2 : E. A. Morse, Proctor, Group 3: A. H. Vogel, Milwaukee. Vt. ; Group 3 : Charles G. Washburn, Class C: C. H. Bosworth, Chicago, Worcester, Mass. Class C, Frederic Chairman; W. L. McLallen, Columbia H. Curtiss, Boston, Chairman ; Walter City, Ind., Vice-Chairman; Edwin T. S Hackney, Providence, Vice-Chair- ' Meredith, Des Moines, Ia. Govern.or: man; Allen Hollis, Concord, N. H. Governor: Alfred L. Aiken, Worcester, .James B. McDougal, Chicago. Mass. 8-Federal Reserve No. District Bank of St. Louis, Class A, Group 1; District No. 2-Federal Reserve Bank Walker Hlll, St. Louis; Group 2: F. O. of • ew York, Class A, Group 1 : "\'i atts, St. Louis; Group 3 : Oscar FenWilliam Woodward, NE>w York; Group ley , Louisville. Class B, Group 1: 2: R. H. Treman, Ithaca, N. Y.; Group Murray Carleton, St. Louis; Group 2 : 3: Franklin D. Locke, Buffalo, N. Y. W. B. Plunkett, Little Rock, Ark.; Class B. Group 1: H. R. Towne, New Group 3 : Le Roy Percy, Greenville, York; Group 2: Wllliam B. Thompson, Mbs. Class C, Wm. McC. Martin, St. Yonkeri;, N. Y.; Group 3: Leslie R. Louis , Chairman; Walter W. Smith, Palmer, Croton-on-Hudson, N. Y. Class John Vice-Chairman; Louis, St. C: Pierre Jay, New York, Chairman; Ind. Governor: Boehn e, Evansville, Rolla Wells, St. Louis. ~ District No. 9-Federal Reserve Bank Starek, New York, Vice-Chairof )!inneapo!is, Class A, Group 1 : E. man ; George F. Peabody, Lake George, W. Decker, Minneapolis; Group 2 : L. B. N. Y. Governor: Benjamin Strong, Jr., Hanna, Fargo, N. D. ; Group 3: J. C . . ·ew York. Class B: Bassett, Aberdeen, S. D. Group 1 : F. R. Bigelow, St. Paul ; District No. S-Federal Reserve Bank Group 2 : F. P. Hixon, La Crosse, Wis.; of Philadelphia, Class A, Group 1: Group 3: Norman B. Holter, Helena, Charles J. Rhoads, Philadelphia; Group Class C: John F. Rich, Red )Iont. 2 : W. H. Peck, Scranton ; Group 3 : \Ying, l\'linn., Chairman ; P. M. Kerst, .'.\I. J. Murphy, Scranton. Class B, St. Paul, Vice-Chairman; John W. Group 1: Alba B. Johnson, Philadelphia, Mich. Governor: Houghton, Black, Group 2 : Edwin S. Stuart, PhiladelTheodore Wold, Minneapolis. phia; Group 3: George W. F. Gaunt, Mullica Hill, N. J. Class C: Richard District No. 10-Federal Reserve L. Austin, Philadelphia, Chairman; Bank of Kansas City, Class A, Group M. LaMonte, Bound Brook, 1: Gordon Jones, Denver; Group 2: Vice-Chairman ; George W. W. J. Bailey, Atchison, Kan. ; Group Philadelphia. Governor: Chas. 3: C. E. Burnham, Norfolk, Neb. Class J. Rhoads, Philadelphia. B, Group 1: M. L. McClure, Kansas City, Mo.; Group 2: T. C. Byrne, District No. 4-Federal Reserve Bank Omaha ; Group 3 : L. A. Wilson, or Cleveland, Class A, Group 1 : Robert El Reno, Okla. Class C: J. Z. Miller, Wardrop, Pittsburgh; Group 2: W. S. Kansas City, Mo., Chairman; A. E. Rowe, Cincinnati ; Group 3 : S. B. Rankin, South Charleston, Ohio. Class B: Group 1 : Thomas A. Combs, LexGroup 2: C. H. Bagley, ington, Corry, Penn. ; Group 3 : A. B. Patrick, 'alyersville, Ky. Cla.~s C: D. C. Wills, Bellevue, Pa., Chairman ; Lyman H. Treadway, CIElveland, Vice-ChJ.irman; H. P. Wol!e, Columbus, O. Governor: E. R. Fancher. I Secretaries of the Federal Reserve Board. ! Secretary : Dr. Henry Parker Willis, mon etary expert to the House Committee on Banking and Currency, at the time of the drafting of the Federal Reserve Act; Assistant Secretary: Sherman A' Jen, formerly Assistant Secretary of the Treasury. Members Federal Advisory Council. DisNames trict 1 Daniel G. Wing, Bo. ton. 2 J. P. Morgan, New York. :3 Levi P. Rue, Philadelphia. 4 W. S. Rowe, Cleveland. 5 George J. Seay, Richmond . 6 Charles A. Lyerly, Atlanta. 7 J. B. Forgan, Chicago. 8 . . . . . . . . .. ....... . .. . ... ... . . . 9 C. T. Jaffray, :.\1inneapolis. 10 E. F . Swinney, Kansas City. 11 .J. Howard Ardrey, Dallas. 12 . . . . . . . . . . . . . . . . .............. . RESERVE REQUIREMENTS OF MEMBER BANKS. The reserve requirements of the member banks will be as follows : Country Banks Res. City Banks Cent. Res. City Bks. 18% 15% 12% Demand Deposits (all deposits payable within 30 days)...... . . . . . . . . . . . . . . . . . . . . 5% 5% 5% Time Deposits (all deposits, saving accounts, etc., payable after 30 days) . . . . . . . . . . The above reserves will be held as follows from the time of the beginning of the system ( November 16th, 1914) : From: Nov. 16, 1914 Nov. 16, 1915 May 16, 1916 Nov. 16, 1916 May 16, 1917 Nov. 16, 1917 (A-Country Banks) and after To: Nov. 15, 1915 May 15, 1916 Nov. 15, 1916 May 15, 1917 Nov. 15, 1917 (B-Res. City Bks.) B A B A B A B A B A B A Compulsory : 5-15 4-12 6-15 5-12 5-12 6-15 5-12 6-15 5-12 6-15 In own Vaults ............. ·.... 5-12 6-15 6-15 5-12 6-15 5-12 5-12 6-15 4-12 5-15 3-12 4-15 In Fed. Res. Banks. . . . . . . . . . . . 2-12 3-15 !'-:ot Compulsory: In own Vaults, Fed. Res. Banks, and Res. City or Cent. Res. City 2-12 3-15 Banl{s . . . . . . . . . . . . . • . . • . . . 5-12 6-15 *3-12 *4-15 3-15 2-12 3-12 4-15 4-12 5-15 * To be held in own vaults, or in Federal Reserve Banks, or in both at the option of the member bank. The reserves of the Central Reserve City member banks shall be held as follows : 6/18 in own vaults, 7 /18 in Federal Reserve Banks and remainder in own vaults or Federal Reserve Oanks, at option. Notc.-An amendment is pending allowing the member banks for the first three years after the beginning of the system, to carry in the Federal Reserve Banks any portion of their reserves required as above to be held iP their own vaults . This amendment has heen endor~,.,d by the Federal Reserve Board ·•on the ground that it will greatly facilitate and amplify the relief which the Federal Reserve System is expected to afford the business interests of the country in the existing financial emergency.·• Reserves carried by a member bank with a Federal Reserve Bank, may be checked against and withdrawn for the purpose of meeting existing liabilities, but no bank shall make new loans or pay dividends until the total reserve required by the law is fully restored. Federal Reserve Banks may receive from member banks as reserves, paper eligible and acceptable for rediscount and properly endorsed, to the extent of not exceeding 011e-half of each reserve installment. The 5% redemption fund of national banks held with the Treasury cannot be considered part of the reserve·. No deposits of any kind or character, including Government depos\ts, etc., are 1:?xempt from reserve requirements. State banks and trust companies required by the law of their state to keep reserves In their own vaults or in those of another state bank or trust company can continue to do so up to November 16, 1917 ; such reserve deposits so kept shall be construed as if they were reserve deposits in a national bank in a Reserve or Central Reserve City. Except as thus provided, no member bank shall keep on deposit with any non-member bank, more than 10% of its own capital and surplus. I II 1 'I Added Privileges, Etc., of National Sanks. Member banks not situated in a central reserve city, unless expressly excepted by the Federal Reserve Board, are authorized to make loans not running more than fl ve years, on improved and unincumbered farm lands within their districts, which loans may not exceed 50% of the actual value of the property offered as security, the aggregate amount of such loans not to exceed 25% of capital and surplus of the banks and une-third of their time deposits. Member banks with $1,000,000 or more capital and surplus may, subject to the approval and under regulations of the Federal Reserve Board, ei;tablish branches in foreign countries or in dependencies of the United States. No member bank shall a ct as the medium or agent of a no_n-memh~r bank in applying for or rece1 vmg <llscounts from a Federal Reserve Bank except by permission of the Federal Res~~ve Board. No public funds of the Ph1llppine Islands or Postal Savings funds or any government funds shall be deocsited in any bank in the Continental United Statei;, not belonging to the (For acceptance privileges of System. the member banks see "Operations o! the Federal Reserve Banks.") The provision in the national bank act is repealed which requires that befo_re an_y national bank can commence buswess 1t shall traw-;fer to the Treasurer of the United Stales a given amount of U. S. Government bonds. Refunding of United States Government 2 ~o Bonda. At any time from December 23, 1915, to December 23, 1935, at the request of any member bank (filed with the Treasurer of the United States) desiring to retire the whole or part of its circuiating notes, the Federal Reserve Board may require Federal Reserve Banks to pun·hase (in lawful money J at par, in quarterly installments, Government 2 % bonds, now used to secure circulation and so offered for sale by the member banks the amount of these purchase:; (incrndiug tl,e bonds purchased by the Fed ,ral Reserve Banks in the regular course of their business) not to . exceed $25,000,000 in any one year. If a larger sum is offered for sale, the Federal Reserve Board will allot to each Federal Reserve Bank such I?roportion of the bonds as the capital and surplus of the bank shall bear to the aggregate capital and surplus of all the Federal Reserve Banks. The Treasurer of the United States shall pay to the member banks selling the bonds, any balance due after deducting a sum sufficient to redeem the outstanding notes ( to be canceled when offered for redemption) secured by such bonds. The Federal Reserve Banks may i~sue on these bonds and on any bonds with the circulati?g privilege acquircl1 by the banks, new circulating notes equal to the par value of the amount of bonds so deposit..-d. These notes which are a first and paramount lien du all the assets of the issuing bank, shall be issued and redeemed under the same terms a.ud conditions as national bani{ notes, except that they shall ;1ot be limited to the amount of cap1tal stock of the Federal Reserve Bank issuing them. Any Federal Reserve Bank may exchange (with the approval of the Federal Reserve Board) U. S. Government 2% bonds, against which no circulation is outstanding, to the amount of not more than one-half for one-year 3% U. S. Gold notes without any circulation privileges and for the remaining onehalf, U. S. 3% 30-year bonds without circulation privileges, provided the bank agrees to pu1·chase for gold, if so reque,:ted by the Secretary of the Treasury at the end of each year, for a period of , not more than 30 succeeding years, an amount of notes fixed by the Secretary of the 'freasurv t-ut not to exceed the amount of the notes so first received. The latter notes on the approval of the Federal Reserve Board may be exchanged for U. S. 3% 30-year bonds, FEDERAL RESERVE BANKS. "The New Elastic Financial Reservoir System of the United States." SAl..IENT ~'EA'l'URES as pointed out by the Advocates ot the System. New System. Old System. 1. Establishment of a 11ormaL discourit market in the United States (through 1. No such discount market exists at present. .Most of the paper taken by th• banks consists of single promissory notes, which are kept until maturity by the banks that discount them; this virtually immobilizes American bank capital so invested. The absence of a rediscount syi;tem and of a ready market for America-n bills, compels our merchants engaged in foreign trade, to pay yearly a large tribute in colllmission:s ou bills, etc., abroad. · ., 2. American business men, doing business abroad, under the present system, have to depend on foreign bank,, for their accommodation or finance themselves prnctically unaided. This works as a drawback In establishing credit and trade connections abroad for the American industry, and gives the foreign competitor the advantage of his native banking representation, there. the tlii;counting of bills and accept- • ances and the rediscount business with the Federal Reserve Banks) for the enormous amount of commercial bills, etc., entering into our trade transactions, domestic as well as foreign. This will give us a market of liquid commercial paper. The maturities of bills discounted with the Federal Re::;erve Banks will be ::;hort and well distributed, enabling these Banks to have a firm hold on the general ·llloney market. E.cp1.msiu1i of A.mericaIi banking a/Jruad, together with greater bank- ing facilities abroad for our manufacturers, the member banks being perU1itted to establish branches in foreign countries, with the approval or the Federal Reserve Board. This will serve the foreign interests of our merchant!; and will put American dealers on a footing of equality with foreign competitors. ..,_ Esta/Jlishmerit (ultimately) of an elastic cttr1·e1lcy system, the Federal 3. •L EstabLisnme11t of a clearance check system on a par basis, through the 4. Checks on country banks are at present collected at great expense and with much unnecessary labor. Existing charges often cause the sending of checks by devious routes, making for considerable delay in redemption. The exchange charges at present aggregate an enormous sum annually 5. Ec;u1wmy of uu1· gold supply and concentration and mobilization of our at present widely scattered gold reserves into a number of central reservoirs which through the rediscount provi::,ious are piped together. This justifies a lowering ot the bank reserves which enhance::; the lending power of our banks, auli it meanwhile makes tor quick and effective work when called tor, while the gold re::;erves of all banks will back those of each and every bank in the sy:stem, creating a spirit of co-operation and accommodation. 5. We have been compelled to use much larger gold reserves than any other country in the world in proportion to the amount of business done. At present, each bank feels that it can hardly rely on its own reserve in time ot distress ; which is just the time when reserves are needed. This invites in such times to a dangerous struggle for reserves, causes hoarding and even this does not always prove adequate. u. More imifonnity fo reserve regulations and in general supervision of a larger number of banking institu- 6. At the preRent time our trust companies and State banks operate under State charters, and are subject to different requirements as to reserves, amounts of capital stock and periodical examinations and to other regulations than are in torce for the national banks. All credit information gathered is now in the files of the Controller of the CurrP,ncy, who cannot furnish any information therefrom without the permission of the Pre:-ident. Better accommodatioa /Jy local banks 7. The rigidity of our present currency system often tends to undue stringency in some sections, which (through high interest rates) hampers legitimate business. It may also cause superabundance in other sections. The new system will relieve the extreme pressure on the money market in the active seasons of the year, and will abate violent interest rates. The absence of a discount market tendi- to the loaning of an undue large part of the resource:of our banks on i-tock exchange call loani- whl¢) together with sudden wltlldrnw~s in times or sea:-;onal monetary. stringency, makes for Reserve notes being issued against bona fide commercial paper (of es,-;entially a "self-liquidating" character J and coming back for redemption as soon as they have served their immediate purpose, because they cannot be counted as reserves, the collateral is constantly maturing, etc. This, together with provision, making practically impossible the carrying ot Federal Re::;erve notes of one bank by another and with reasonable provi:sions to regulate reserve deticiencie against the outstanding notes, will create a currency capable of expanding when expansion is required by trade activity, the progression of good:; from producer to consumer, etc., and contracting when these trade requirements are at an end. clearance ot individual checks, and checks of one .F 'ederal Reserve Bank on another, through the Federal Reserve machinery. This will create a national clearing house system which will give a higher velocity to the credit system of the United States, establh;h parity of exchange between all places in a Federal Reserve District and between the Federal Reserve Districts themselves. tions, the law allowing under certain con di t10ns the participation ot trust companies and State banks in the stock of the 1''tderal Reserve Uanks. Uolrormity iu the relation of certain liabilities of the member banks to the amount of their capital stock and surplus. The {ultimate) establishment, through the filing of credit information, of a central credit bureau for the benefit of all the Federal Reserve Banks of the system. to aid legitimate local business and a more eveu and equitable distribution of our credit resources coupled with a normalization ot interest rates, facilitating a free flow of capital anQ credit, throughout the country; all thi::; made possible and facilitated through the discount privileges of the ' member banks with the Federal Reserve Banks and through the rediscoun t business of one Reserve Bank with auother, with the approval or at the direction of the I<'ederal Reserve Board. Our present ailoual Bank note circulation, which was conceived (11side from the aim of attaining more uniformity of the circulating medium) by the necessity for a market for our Government bonds is based upon the amount of such Government bonds outstanding and not upon the actual currency needs of the country. lt therefore lacks all qualities of normal expansion and contraction. lt is rigid, unwieldy, uneconomical and unscientific. The Jfederal Reserve Act contains provisions which may ultimately refund the present 2% Government debt with circulation privilege, into a 3% Government debt without this privilege. i 8. 'J'he establishment of a discount market which may, if desirable, at- tract foreign capital and will make c.:ommercial paper a more liquid asset than hitherto ; the accumulation of a huge foreign exchange portfolio cont sbting of foreign bills and ba;:\ker~ acceptances which will gi,ve our terior gold movement a system brake:;; the regulation of interes rates to be effectively used whe necessary, the dealing in gold an bullion; the added prestige of Ameri can commercial paper made possibl through the backing of the new sy tern and the standardization of co mercial paper ; the establishment ~ foreign branches and other activitie abroad; all this will eliminate clums and devious commercial practices ; will cut down the cost of banking and consequently the relative charg thereof on the entire community-, and will render the control or the country's gold stock more s imple a d easy. It will stabilize commerce a d finance. 8. The lack of a concentrated and regulated supply of foreign bills militate against rational foreign exchange transactions. The absence of a discount market and uniform discount rates often deprives our markets from attracting gold when needed ; it leaves our gold flow without regulators, and sometimes without direction. The backing by the entire banking resources of the United States of the American b!lls of exchange . under the new law, will work for a direct American exchange market where the importance of our foreign trade permits it and w!ll go far in having the prestige of the American bill of exchange installed as a gold document, which will free our country from a somewhat burdensome commercial isolation , so far experienced. 1 9. At the helm of the system, guiding the banking and credit machinery and gold reserves of the country, stands a body, representative of the public of the United States, viz. : the Federal Reserve Board aided by the Federal Advisory Council, surveying the entire commercial and credit relation s within the United States and without; scanning the financial and commercial horizon and being in a position (equipped with economic barometers of every kind and character) to reasonably forecast the changes in financial and commercial conditions and act accordingly. The law will ultimately give the United States leadership and a conservative influence in finance, it will afford stability to business conditions and will give the country a system of greatest co-operation and co-ordination that will go a long way to establish the commercial supremacy of the United States in the world. 9. Our credit system lacks at present supervision and direction which sometimes makes for entirely unwarranted feelings of antagonism between several groups of banking, and several banking sections of the country, and ·oftentimes for unjustified criticism by the public. It also is a potent factor in causing unpreparedness when emergency calls for quick and decisive action. The excellent manner in which the Federal Reserve Board and the bankers of the country are handling the present situation, created by the European war, in face of the existing decentralized conditions, augurs well for the good that will result, when under the new system, the banking and credit resources of the country are well mobilized, guided and correlated. :\'ovember, 1914. NOTE : The Statements contained in this Chart are based upon information which we consider trustworthy, but they are not guaranteed by us. A. B. LEACH & Co.