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(c 0 e y)

February 13, 1924

My dear Mr. Congressman:
Pursuant tti our telephonic conversation, I am enclosing for
your information a copy of statements showing the net earnings of the
Federal reserve banks for 1921ยป 1922 and 1923, and what would happen
if Zi> interest were paid by the banks on realized balances to member
You will note in 1923 the Federal reserve banks of the whole
system would have lost, to be exact, $24,738>65^# and in addition they
could have paid no dividend, could have set apart no surplus, nor pay
any franchise tax; whereas, in 1922, the twelve Federal reserve banks
would have lost $19#124,764, and only one bank in the system could have
paid any part of its dividend; that was the bank at Philadelphia, which
could have paid $120,976 on its dividend. You will note that none of
the banks would have been able to have paid dividend, surplus or franchise tax. In 1921, the banks could have paid 2% interest, amounting to
$33 >457.380; but this was one of the unusual years that came about by
financing the war and when the banks were imposing a 6 $ and 7% rediscount rate, which, as you know, was not very popular.
In qy opinion, an attempt to pay 2$ interest on deposits is
wrong iz^ principle and should not be imposed upon the banks. If it
should fee imposed the Federal reserve banks will have to buy paper in
the open market in competition with member banks and non-member banks
in order to make its dividend, interest and expenses. I think you will
agree that such practice would be detrimental to the individual banks.
It mast be borne in mind well that at the time the banks were
making these big profits it was while they were financing the war, and
it should not be used as a pretext for the passage of an act to provide
for 2$ interest on realized balances.
I am also handing you an analysis of the statements which
will be self-explanatory,
Very truly yours,
D. B. Crissinger,
Hon. Otis Wingo,
House of Representatives,
Washington, D. C.'1