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FEDERAL RESERVE BOARD
WASHINGTON
November 1,. 1$21
X-3237
SUBJECT:
Reply of F e d e r a l Reserve Board t o S e n a t e R e s o l u t i o n 153
Dear S i r !
There i s e n c l o s e d h e r e w i t h , f o r your i n f o r m a t i o n ,
copy of l e t t e r addressed by the Federal Reserve Board, under
date of October 31> 1921, to the President of the Senate, in
response to Senate Resolution 153> directing the Board to
furnish the Senate with information regarding the alleged
waste of money in increase of salaries of officers and employees and in the erection of buildings, and the general
expenses of the Federal Reserve Banks.
Very t r u l y y o u r s ,
W. P . G. HARDING,
(Enclosure)
G o v e r n o r
TO GOVERNORS AND AGENTS OF ALL F.R.BANKS.
X-3237a
4 i Qr-
COPY
October 31, 1 9 a .
SUBJECT:
Response t o S. Res. 153-
Sir:
On October 18, 1921 t h e F e d e r a l Reserve Board r e c e i v e d from t h e
S e c r e t a r y of t h e Senate a r e s o l u t i o n of t h e Senate (S. R e s . l 5 3 X dated
October 14, 1921, r e a d i n g a s f o l l o w s :
"Whereas, i t i s charged i n t h e p u b l i c p r e s s of t h e country and
upon t h e f l o o r of t h e Senate t h a t t h e Federal Reserve Board h a s been
g u i l t y of an amazing waste of p u b l i c money i n i n c r e a s e of s a l a r i e s t o
o f f i c e r s and employees of the Hew York Federal Reserve Bank; and
"Whereas, s i n c e 1918 i n t h e New Ycrk branch a l o n e they have i n creased t h e number of o f f i c e r s and employees 279/ o r about 10 p e r c e n t ,
w h i l e they have i n c r e a s e d t h e s a l a r i e s about $0 p e r c e n t , p a y i n g i t s
o f f i c e r s and employees a l l t h e way from $10,000.00, $12,000* 00, $25,000*00,
$30,000.00 and one a s high a s $$0,000.CO, and t h a t p r i o r t o 19I8 s i x t y
p e r cent of t h e s e o f f i c e r s never received, over $1500.00 t o $2500.00,
but a r e now drawing s a l a r i e s a s h i g h a s $10,000.00; and
"Whereas, t h e o f f i c i a l r e p o r t s of t h e F e d e r a l Reserve Board show
t h a t i n t h e c a l e n d a r year of 192O t h e Federal Reserve Bank of New Y o r k ' s
p a y r o l l amounted t o $4,639*273* and f o r t h e c a l e n d a r y e a r 19IS t h e p a y r o l l was $3,104,830, showing an a c t u a l i n c r e a s e i n p a y r o l l s i n c e t h e
c l o s e of t h e war of $1,534,443-00; and
"Whereas, i t i s charged t h a t t h e Governor of t h e F e d e r a l Reserve
Board h a s s t a t e d t h a t t h e employees of t h e F e d e r a l Reserve Banks a r e not
p a i d by t h e Government n o r p a i d out of revenue d e r i v e d from t a x a t i o n , but
a r e p r i v a t e b u s i n e s s ogn and i n t h e banking b u s i n e s s t o make money; and
"Whereas, under t h e p r o v i s i o n s of S e c t i o n 7 of t h e F e d e r a l Reserve
Act a l a r g e p e r cent of t h e n e t r e c e i p t s made and saved by t h e F e d e r a l
Board s h a l l be p a i d i n t o t h e Federal Treasury, and i f t h e a l l e g a t i o n s
h e r e i n made a r e t r u e t h e Treasury of t h e United S t a t e s h a s been deprived
of a v a s t sum of money; T h e r e f o r e be i t
"Resolved, That t h e Federal Reserve Board, a s e a r l y a s p r a c t i c a b l e ,
be, and i t i s hereby, d i r e c t e d t o f u r n i s h t o t h e Senate t h e number of
employees, t o g e t h e r w i t h t h e i r r e s p e c t i v e s a l a r i e s , employed by t h e Fede r a l Reserve Bank i n New York,as w e l l a s i n t h e o t h e r F e d e r a l Reserve Banks
i n t h e c o u n t r y , a n d t h e e x p e n d i t u r e s made by each branch bank i n t h e e r e c t i o n
1196
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X-323?a
"of p u b l i c b u i l d i n g s and t h e g e n e r a l expenses i n t h e a d m i n i s t r a t i o n of each
Federal Reserve Bank, and how much of t h e n e t e a r n i n g s have been p a i d t o
t h e United S t a t e s a s a f r a n c h i s e t a x . "
The Board begs l e a v e t o c a l l a t t e n t i o n t o a c l a u s e i n S e c t i o n 10 of t h e
F e d e r a l Reserve Act, which r e a d s - "The Federal Reserve Board s h a l l a n n u a l l y
make a f u l l r e p o r t of . i t s o p e r a t i o n s t o t h e Speaker of t h e House of R e p r e s e n t a t i v e s , who s h a l l cause t h e same t o be p r i n t e d f o r t h e i n f o r m a t i o n of t h e
Congress",
In compliance w i t h t h e law t h e F e d e r a l Reserve Board h a s submitted r e p o r t s
f o r t h e y e a r s 1914 t o 1920, both i n c l u s i v e . These r e p o r t s have d e s c r i b e d i n
d e t a i l and a t g r e a t l e n g t h t h e o p e r a t i o n s of t h e F e d e r a l Reserve Banks, and
t h e r e have been t r a n s m i t t e d w i t h them e x h i b i t s showing t h e salaries, p a i d by t h e
s e v e r a l F e d e r a l Reserve Banks t o o f f i c e r s and employees, except t h a t t h e r e p o r t
f o r I91U shows t h e s a l a r i e s p a i d s e n i o r o f f i c e r s o n l y . I n t h a t r e p o r t (page
I 9 0 ) t h e Board s t a t e d t h a t w h i l e i t had i n a few c a s e s approved t h e s a l a r i e s
f i x e d by banks f o r o f f i c e r s o t h e r t h a n t h e Governor, a s t h e banks i n s e v e r a l
d i s t r i c t s had not yet completed t h e i r o r g a n i z a t i o n s , i t was "not deemed a d v i s a b l e t o g i v e , a t t h i s time, a l i s t , which would n e c e s s a r i l y be incomplete
of t h e s a l a r i e s p a i d t o t h e s u b o r d i n a t e o f f i c i a l s of a l l t h e banks".
In t h e r e p o r t f o r t h e year 1915 a d e t a i l e d l i s t of t h e s a l a r i e s of a l l
o f f i c e r s and employees, names omitted, i s g i v e n f o r each of t h e Federal Reserve
Banks a s E x h i b i t J on pages 97 t o 99* * n t h e r e p o r t f o r t h e year 1916 t h i s
i n f o r m a t i o n a p p e a r s a s E x h i b i t N on pages 182 t o 164. In t h e r e p o r t f o r 1917
i t a p p e a r s a s E x h i b i t N on pages 194 t o 196. I t a p p e a r s i n t h e r e p o r t f o r 19IS
a s E x h i b i t N oh pages 244 t o 246. In t h e t e x t of t h e r e p o r t f o r t h a t year
(page 29) a t t e n t i o n was c a l l e d t o t h e g r e a t expansion of t h e b u s i n e s s of t h e
Federal Reserve Banks w i t h t h e consequent n e c e s s i t y of making l a r g e a d d i t i o n s
t o t h e i r working f o r c e s . The number of o f f i c e r s and employees i n a l l d e p a r t ments &i each of t h e Federal Reserve Banks a t t h e c l o s e of t h e year was summarized on t h e same p a g e . In t h e r e p o r t f o r the year 1919 a s t a t e m e n t of
p e r s o n n e l and s a l a r i e s a t a l l Federal Reserve Banks appeared a s E x h i b i t M on
pages 274 t o 277. In t h e t e x t of t h a t r e p o r t , on page ] 4 , a t a b l e was g i v e n
showing t h e number of o f f i c e r s and employees a t each F e d e r a l Reserve Bank a t
t h e c l o s e of t h e year 1919 a s compared w i t h t h e number a t t h e end of t h e
p r e v i o u s y e a r , and a t t e n t i o n was c a l l e d a l s o t o t h e a v e r a g e s a l a r y p a i d o f f i c e r s and employees by each Federal Reserve Bank (pafee 35)* The r e p o r t f o r
t h e y e a r 1920 shows t h e s a l a r i e s of o f f i c e r s and employees of t h e Federal
Reserve Banks, a s of December 31, 1920, on pages 272 t o 274. These t a b l e s
have, i n each i n s t a n c e , s i n c e t h e e s t a b l i s h m e n t of b r a n c h e s of Federal Reserve
Banks, i n c l u d e d t h e s a l a r i e s p a i d a t t h e b r a n c h e s .
I n i t s annual r e p o r t f o r t h e year I 9 I 6 (pages 3O-3I), t h e Beard c a l l e d a t t e n t i o n t o t h e f a c t t h a t t h e g r e a t i n c r e a s e i n volume of b u s i n e s s nad rendered
i t n e c e s s a r y f o r a l l Federal Reserve Banks t o a r r a n g e f o r t n e a c q u i s i t i o n of
permanent q u a r t e r s and gave i n d e t a i l t h e e x p e n d i t u r e s t h a t had been made by
s e v e r a l of t h e banks f o r b u i l d i n g s i t e s and t h e e r e c t i o n of b u i l d i n g s . S i m i l a r
i n f o r m a t i o n was given i n t h e r e p o r t f o r 1919 (pages 37-33) and i n t h e r e p o r t
f o r 1920 (pages 93-96)* I n a d d i t i o n t o t h i s t h e sum t o t a l of t h e s e i n v e s t m e n t s
a s c a r r i e d on t h e books of a l l Federal Reserve Banks, c o v e r i n g both t h e i r head
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X-3237a
o f f i c e s and t h e i r branches, appears i n t h e s t a t e m e n t which t h e Federal Reserve
Board p u b l i s h e s each week f *,r t h e twelve F e d e r a l Reserve Banks combined. This
item a p p e a r s a l s o each week i n t h e s e p a r a t e s t a t e m e n t s p u b l i s h e d by each
Federal Reserve Bank.
AUTHORITY OF DIRECTORS OF FEDERAL RESERVE BANKS AND
SUPERVISORY POWERS OF FEDERAL RESERVE BOARD.
Inasmuch a s t h e R e s o l u t i o n of t h e Senate r e f e r s t o t h e "New York Branch"
and t o " t h e e x p e n d i t u r e s made by each branch bank i n t h e e r e c t i o n of p u b l i c
b u i l d i n g s " , t h e Board r e s p e c t f u l l y submits a b r i e f s t a t e m e n t r e g a r d i n g tne
c h a r a c t e r of t h e Federal Reserve Banks. In doing so t h e Board d i s c l a i m s any
i n t e n t i o n of s e e k i n g t o evade r e s p o n s i b i l i t y i n t h e m a t t e r s r e f e r r e d t o in
t h e R e s o l u t i o n of t h e Senate, but merely d e s i r e s t o a v o i d any p o s s i b l e grounds
f o r m i s u n d e r s t a n d i n g t h e n a t u r e of i t s r e s p o n s i b i l i t y .
The Federal Reserve Act d i d not e s t a b l i s h a c e n t r a l bank. On t h e cont r a r y , i t made p o s s i b l e t h e e s t a b l i s h m e n t of a s many a s twelve Federal Reserve
Banks, each almost wholly independent of t h e o t h e r s i n o p e r a t i o n , a s well as
i n l o c a l p o l i c i e s . From a l e g a l s t a n d p o i n t t h e s e banks a r e p r i v a t e c o r p o r a t i o n s , or ganize d under a s p e c i a l a c t of Congress, namely, t h e Federal Reserve
Act. They a r e n o t i n a s t r i c t sense of t h e word Government banks, b u t a r e
only quasi-Governmental i n s t i t u t i o n s , i n t h a t they a r e under t h e general
s u p e r v i s i o n of t h e Federal Reserve Board and have on t h e i r boards of d i r e c t o r s
t h r e e men, r e p r e s e n t i n g t h e Government, who a r e appointed by t h e F e d e r a l Reserve Board.
Each bank has n i n e d i r e c t o r s and t h e o t h e r s i x a r e chosen by t h e member
banks, which a r e t h e s o l e s t o c k h o l d e r s of t h e Federal Reserve Bank. S e c t i o n
4 of t h e Federal Reserve Act p r o v i d e s t h a t each Federal Reserve Bank, a f t e r
r e c e i v i n g i t s c h a r t e r from t h e Comptroller of the Currency " s h a l l become a
body c o r p o r a t e and a s such ** s h a l l have power*
" F i r s t . To adopt and use a c o r p o r a t e s e a l .
"Second. To have s u c c e s s i o n f o r a p e r i o d of twenty y e a r s from i t s
o r g a n i z a t i o n u n l e s s i t i s sooner d i s s o l v e d by an Act of Congress,
or u n l e s s i t s f r a n c h i s e becomes f o r f e i t e d by some v i o l a t i o n of l a w ,
" T h i r d . To make c o n t r a c t s .
" F o u r t h . To sue and be sued, complain^and defend, i n any court oflaw or e q u i t y .
" F i f t h . To a p p o i n t by i t s board of d i r e c t o r s such o f f i c e r s and
employees a s a r e not o t h e r w i s e provided f o r i n t h i s Act, t o d e f i n e
t h e i r d u t i e s , r e q u i r e bonds of them and f i x t h e p e n a l t y t h e r e o f , and
t o d i s m i s s a t p l e a s u r e such o f f i c e r s or employees.
" S i x t h . To p r e s c r i b e by i t s board of d i r e c t o r s , by-laws not i n c o n s i s t e n t w i t h law, r e g u l a t i n g t h e manner i n which i t s g e n e r a l
b u s i n e s s may be conducted, and t h e p r i v i l e g e s g r a n t e d t o i t by law
may be e x e r c i s e d and e n j o y e d .
"Seventh. To e x e r c i s e by i t s board of d i r e c t o r s , o r duly a u t h o r ized o f f i c e r s or a g e n t s , a l l powers s p e c i f i c a l l y g r a n t e d by t h e p r o v i s i o n s of t h i s Act and such i n c i d e n t a l powers a s s h a l l be n e c e s s a r y
t o c a r r y on t h e b u s i n e s s of banking w i t h i n t h e l i m i t a t i o n s p r e s c r i b e d
by t h i s A c t . "
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X-3237a
S e c t i o n 4 f u r t h e r p r o v i d e s t h a t "Every F e d e r a l Reserve Bank s h a l l "be
conducted under t h e s u p e r v i s i o n and c o n t r o l of a b o a r d of d i r e c t o r s . The
"board of d i r e c t o r s s h a l l p e r f o r m the d u t i e s u s u a l l y a p p e r t a i n i n g t o t h e
o f f i c e of d i r e c t o r s of banking a s s o c i a t i o n s and a l l such d u t i e s as a r e
p r e s c r i b e d by law". I t i s a l s o provided i n S e c t i o n 4 t h a t "-Any compensation
t h a t may be provided b y b o a r d s of d i r e c t o r s of F e d e r a l Reserve Banks f o r
d i r e c t o r s , o f f i c e r s or employees s h a l l be s u b j e c t t o the approval of t h e
F e d e r a l Reserve Board."
S e c t i o n 11 of the F e d e r a l Reserve Act a u t h o r i z e s and empowers the
Federal Reserve Board
"(f) To suspend or remove any o f f i c e r or director cf azgr Federal
Reserve Bank, the cause of such removal to be forthwith communicated
i n w r i t i n g b y the F e d e r a l Reserve Board t o the removed o f f i c e r or
d i r e c t o r and t o s a i d Bank*
(g) To r e q u i r e the w r i t i n g off of d o u b t f u l o r w o r t h l e s s a s s e t s
upon the books and b a l a n c e s h e e t s of F e d e r a l Reserve Banks*
" (h) To suspend, f o r the v i o l a t i o n of any of the p r o v i s i o n s of t h i s
-Act* the o p e r a t i o n s of any F e d e r a l Reserve Bank, t o t a k e p o s s e s s i o n
t h e r e o f , a d m i n i s t e r t h e same during the p e r i o d of s u s p e n s i o n , and,
&88iBed a d v i s a b l e , to l i q u i d a t e or r e o r g a n i z e such bank*
v j ) To e x e r c i s e g e n e r a l s u p e r v i s i o n over s a i d F e d e r a l Reserve Banks.*
S e c t i o n 21 of the Federal Reserve Act p r e s c r i b e s t h a t "The F e d e r a l
e serve Board s h a l l , a t l e a s t once each y e a r , order an examination of each
e e r a ! Reserve Bank, and upon j o i n t a p p l i c a t i o n of t e n member banks the
e e r a l Reserve Board s h a l l order a s p e c i a l examination and r e p o r t of the
c o n d i t i o n of any F e d e r a l Reserve Bank."
Other s e c t i o n s of the Act empower the F e d e r a l Reserve Board t o p r e s c r i b e r u l e s and r e g u l a t i o n s governing v a r i o u s t r a n s a c t i o n s which may be
engaged in by Federal Reserve Banks, b u t the f o r e g o i n g q u o t a t i o n s embody
a 1 t h e a u t h o r i t y which has been given the Board over the r o u t i n e b u s i n e s s
and the a d m i n i s t r a t i o n of the Banks * The Board i s n o t empowered t o s e l e c t
t
o f f i c e r s and employees of the Federal Reserve Banks, f o r i t can appoint
only the F e d e r a l Reserve Agent and h i s a s s i s t a n t s , n o r does i t i n i t i a t e the
s a l a r i e s p a i d the o f f i c e r s and employees of the F e d e r a l Reserve Banks *
These are m a t t e r s which come w i t h i n the scope of t h e a u t h o r i t y d e l e g a t e d t o
the d i r e c t o r s of the F e d e r a l Reserve Banks i n S e c t i o n 4 of the Act*
The law-makes i t c l e a r t h a t i n approving compensation proposed by the
d i r e c t o r s , < ^ the Board must n e c e s s a r i l y be governed i n l a r g e measure b y t h e i r
r e p r e s e n t a t i o n s » The d i r e c t o r s a r e Immediately r e s p o n s i b l e f o r the a d m i n i s t r a t i o n of t h e Bank and a r e f a m i l i a r wi t h the requirements f o r i t s e f f i c i e n t
o p e r a t i o n , w i t h the q u a l i f i c a t i o n s of the o f f i c e r s and employees, w i t h l o c a l
c o n d i t i o n s , such as c o s t of l i v i n g , c o m p e t i t i o n f o r s e r v i c e s by member and
o t h e r banks of the community, and the f a i r v a l u e of t h e s e r v i c e s r e n d e r e d .
The d u t y of the d i r e c t o r s as t o the management of a F e d e r a l Reserve Bank
i s q u i t e analogous t o t h a t of d i r e c t o r s of n a t i o n a l banks w i t h r e s p e c t
t o those, i n s t i t u t i o n s »
The Federal Reserve Board has n o t
approved, i.n a p e r f u n c t o r y
way
salaries
proposed
by
Federal
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X-3237&
Reserve Bank directors, but has always called for f u l l information before
taking action. In some cases i t has withheld approval pending the personal
presentation of the matter by a committee of tne directors and in other
instances i t has declined to approve compensation proposed. But the Board
has taken the position generally that as the directors are primarily responsible for the operation of the banks, great weight must be given to their
representations, There is appended, as Exhibit A, a l i s t of the directors
of all Federal Reserve Banks and branches.
FEDERAL RESERVE BANK BUILDINGS.
The buildings owned by the Federal Reserve Banks, or which are now in
course of construction, are not, in the view of the Board, "public buildings".
They constitute a part of the invested assets of the respective banks, the
funds for their acquisition or construction were not provided by a Congressional appropriation, the t i t l e i<s vested in the Federal Reserve Bank and not
in the United States, and they are subject to state and local taxation.
("Federal reserve banks, including the capital stock and surplus therein, and
the income derived therefrom shall be exempt from Federal, State and local
taxation, except taxes upon real estate". Sec. '()
At the instance of the Federal Reserve Board a b i l l was introduced during the third session of the 65th Congress to amend Section 7 of the Federal
Reserve Act by permitting Federal Reserve Banks to create a maximum surplus .
•out of earnings equal to 100$ of their paid-in capital, instead of UQ$> as
originally provided, When the Committees on Banking and Currency of the
Senate and House of Representatives were considering this b i l l early in the
year 1919/ the Governor of the Federal Reserve Board called the attention of
the Committees to the fact tjiat all Federal Reserve Banks would be obliged
to acquire or construct their own buildings as i t was not practicable to lease
adequate quarters and otherwise provide suitable vaults for the custody of the
large amounts of cash and securities held by the banks. Especial attention was
called to the large expenditures which would have to be made in providing
buildings and one argument made in favor of the b i l l was that the banks should
be permitted to increase their surplus in order to reduce the proportion to
the banks1 capital account of the fixed assets represented by the buildings.
The Committees were so impressed with this argument that the b i l l as reported,
which became the Act of March 3* 1$19, amending Section "J, went beyond the
Board's recommendations and provided that Federal Reserve Banks might create
a surplus out of earnings equal to 100% of their subscribed capital, plus
10% of the net earnings annually, after such a surplus had been created.
There does not appear to be any specific requirement anywhere in the
Federal Reserve Act that the Board should approve the expenditures made by the
Federal Reserve Banks in their building operations, but under i t s power of
general supervision tne Board informed tne brinks tnat they would be required
to suomit for tne consideration of the Board all options for the purchase of
real estate, all plans and specifications for buildings and vaults, and that
they snould not enter into any contracts involving expenditures for these
purposes until authorized to do so by the Board.
In order that the Board might be in position more intelligently to pass
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X-3237a
upon these various mattersp i t decided to employ a consulting architect who
should devote his entire time to Federal Reserve Building projects*
In the
interest of economy i t was determined to engage as consultant the same
architect who had already been employed in a similar capacity by the Federal
Reserve Bank of New York.
Mr, Alexander B, Trowbridge, of the firm of
Livingston and $rowbridge, Architects, of New York City, was induced to sever
his connection with his firm and to enter into the employ of the Federal
Reserve Board as Consulting Architect, at an annual salary of $6,666.66,
which has not been increased. This i s one-third of his total salary of
$20,000, the other two-thirds being paid by the Federal Reserve Bank of New
York*
He began his work in April 1919* At that time only one Federal Reserve
bank building - that at Atlanta - had been completed (page 38 annual report
for 1919)*and the working plans and specifications for the Richmond and Dallas
buildings were finished* Since then, the Consulting Architect has appeared
as consultant in connection with the projects for New York, Boston, Chicago,
Kansas City, Cleveland, San Francisco, Minneapolis and St* Louis, and with
the new vault at Pb.iladelphia, the bank there being the only one which i s
housed in a purchased building. He has also been consult##' in connection with
the additions to the Atlanta bank, the Annex buildings in Richmond and New York,
and with branch banks in Buffalo, New Orleans, El Paso, Houston, Louisville,
Nashville and Oklahoma City.
Consulting Architect he has
(1) Discussed with bank officers the property under consideration for
purchase, and advised as to i t s advantages and disadvantages*
(2) Advised bank officers in the matter of selecting an architect,
(3) Consulted with the banks and their architects as to the size, design
and planning of the proposed buildings, during the preliminary stages.
(4) When working drawings and specifications were completed, examined
then for the purpose of detecting and having eliminated any wasteful or
extravagant features*
(5) Advised the banks and their architects as to the best methods of
vault construction, so as to obtain the maximum amount of protection for the
money expended.
(6) Consulted with and advised the banks in connection with the selection
of contractors.
(7) Assisted the banks in drawing up contracts, both by preparing contracts and by studying and analyzing contracts prepared by others for the
signatures of the banks,
(8) Acted as arbiter in case of disputes where contractors claimed extras
which the barfks did not consider justified*
(9) Advised as to the necessity for changes, additions and omissions
during the course of construction of the buildings*
(10) Reported to the Federal Reserve Board from time to time, in connection
with the &bove activities*
There *h^s been no attempt to exercise centralized, control* • * ''The services
have been advisory dnd not mandatory in character. It has been possible through
a tactful presentation, to apprise the bank officers and their architects
- 7 -
X-3237a
of the wishes of the F e d e r a l Reserve Board t o keep d e s i g n s simple and t o
avoid t h e use of meaningless ornament and c o s t l y m a t e r i a l - Good m a t e r i a l
simply d e s i g n e d and d e t a i l e d has been reconanended• The u n d e r l y i n g purpose
of the Board i n the employment of a Consulting A r c h i t e c t has been to s e c u r e
w e l l c o n s t r u c t e d , s e r v i c e a b l e b u i l d i n g s of d i g n i f i e d a s p e c t b u t w i t h o u t any
d i s p l a y of c o s t l y f i n i s h which i s u n n e c e s s a r y and i n q u e s t i o n a b l e t a s t e .
The Board has recognized the n e c e s s i t y of adequate p r o v i s i o n f o r f u t u r e
growth and can c i t e numerous i n s t a n c e s i n growing c i t i e s where g r e a t expense
has been i n c u r r e d b e c a u s e of s h o r t - s i g h t e d n e s s i n o m i t t i n g p r e p a r a t i o n of
t h i s k i n d . The o f f i c e of t h e Consulting A r c h i t e c t has a t a l l times b e e n open
t o Bank o f f i c e r s and t h e i r a r c h i t e c t s - A g r e a t many c o n f e r e n c e s of i m p o r t ance have taken p l a c e t h e r e and the C o n s u l t i n g A r c h i t e c t has p e r s o n a l l y
v i s i t e d a number of the Banks and has c o n f e r r e d w i t h B u i l d i n g Committees
i n t h e i r own c i t i e s *
All of t h i s has been dene a t a very s m a l l expense t o t h e F e d e r a l Reserve System. The Consulting A r c h i t e c t has given up h i s p r i v a t e p r a c t i c e
and has devoted a l l of h i s time to the work of the Board< His s t a f f c o n s i s t s
of one a s s i s t a n t , h i s s e c r e t a r y and s t e n o g r a p h e r , w i t h o c c a s i o n a l h e l p from
a draughtsman who i s i n t h e employ of the F e d e r a l Reserve Bank of New York.
I t i s e s t i m a t e d t h a t , t h e t o t a l sum p a i d i n s a l a r i e s t o t h e Consulting
A r c h i t e c t and h i s s t a f f during the two and one-half y e a r s he has been i n the
Board's s e r v i c e amounts t o o n e - t w e n t i e t h of one p e r c e n t of t h e approximate
amount of a l l sums s e t a p a r t f o r F e d e r a l Reserve Bank b u i l d i n g s d u r i n g t h a t
. period.
There a r e a t t a c h e d h e r e t o ( E x h i b i t B) t a b l e s r e l a t i n g t o the r e a l
e s t a t e purchased by t h e F e d e r a l Reserve Banks and t h e b u i l d i n g o p e r a t i o n s
which have been engaged i n . These t a b l e s show f o r e a c h F e d e r a l Reserve Bank
the o r i g i n a l investment i n p r o p e r t y p u r c h a s e d , the amount expended i n r e modeling and i n the c o n s t r u c t i o n of new b u i l d i n g s , t h e amounts charged off
on account of d e p r e c i a t i o n and a m o r t i z a t i o n and the book v a l u e of bank
premises a c c o u n t s as of September 30, 1921. E x p l a n a t o r y d a t a have a l s o been
added showing the d a t e s on which r e a l e s t a t e was purchased b y each F e d e r a l
Reserve Bank, the number of square f e e t of ground p u r c h a s e d , amounts p a i d
t h e r e f o r , the c o s t of b u i l d i n g o p e r a t i o n s t o d a t e , and t h e e s t i m a t e d c o s t
t o complete b u i l d i n g s i n course of c o n s t r u c t i o n . I t w i l l be n o t e d f r o m t h e s e
t a b l e s t h a t t h e t o t a l amount e x p e n d e d ' f o r banking houses by a l l F e d e r a l Reserve Banks and Branches t o the end of September, 1921 was $36,158,000, o r
about 60% of t h e amount of f r a n c h i s e t a x e s p a i d t o t h e Government a t t h e
end of 1920 and about the same p r o p o r t i o n of the amount which i t i s
e s t i m a t e d w i l l be p a i d t o t h e Government a t the end of t h e y e a r 1921.
I t should be borne i n mind, however, i n c o n s i d e r i n g b u i l d i n g o p e r a t i o n s
t h a t the F e d e r a l Reserve Banks i n a c q u i r i n g b u i l d i n g s i t e s and cons t r u e t-.i
ing bank b u i l d i n g s a r e making c a p i t a l e x p e n d i t u r e s and c o n s e q u e n t l y
t h e s e o p e r a t i o n s do n o t d i m i n i s h i n any way t h e amount of f r a n c h i s e
taxes payable t o the United S t a t e s Government. The amount of t h e f r a n c h i s e
tax i s a d v e r s e l y a f f e c t e d only t o the e x t e n t t h a t t h e F e d e r a l Reserve
Banks a r e a u t h o r i z e d t o charge d e p r e c i a t i o n and a m o r t i z a t i o n
allowances
on t h e i r bank p r e m i s e s
to current
net earnings.
i
—8—
X-3237B
•As t h e F e d e r a l Reserve Bank of New York h a s engaged i n t h e l a r g e s t and most
expensive of a l l t h e b u i l d i n g p r o j e c t s , and a s i t h a s been made t h e s u b j e c t of
e s p e c i a l c r i t i c i s m , t h e Board submits h e r e w i t h ( E x h i b i t C) copy of a statement
which h a s a l r e a d y been submitted by t h e Governor of t h a t bank t o t h e J o i n t
Commission of A g r i c u l t u r a l I n q u i r y of Congress. This s t a t e m e n t s e t s f o r t h i n
minute d e t a i l a l l f a c t s r e g a r d i n g t h e a c q u i s i t i o n of t h e r e a l e s t a t e , employment of a r c h i t e c t s , p r e p a r a t i o n ot p l a n s and s p e c i f i c a t i o n s , l e t t i n g of cont r a c t s , and scope of t h e b u i l d i n g . There a r e appended a l s o t a b l e s showing t h e
l a r g e volume of r o u t i n e o p e r a t i o n s of t h e bank, which c a l l f o r t h e employment
of a l a r g e f o r c e of employees, whose number i n t u r n r e n d e r s a l a r g e b u i l d i n g
necessary.
The Board w i s h e s t o add t h a t l i k e c a r e h a s been t a k e n i n t h e p r e p a r a t i o n of
p l a n s and s p e c i f i c a t i o n s f o r a l l o t h e r Federal Reserve Bank b u i l d i n g s , but e l a b o r a t e s t a t e m e n t s g i v i n g d e t a i l s of a l l Federal Reserve Bank b u i l d i n g s a r e not
i n c l u d e d i n t h i s r e s p o n s e t o t h e Senate because of t h e added l e n g t h such s t a t e ments would g i v e t o t h i s communication*
SALARY POLICY OF FEDERAL RESERVE BANKSThere have been p r e p a r e d f o r use i n t h i s communication c e r t a i n t a b l e s which
appear a s E x h i b i t D. These t a b l e s show t h e number of o f f i c e r s and employees of
a l l F e d e r a l Reserve Banks, w i t h o f f i c e r s ' s a l a r i e s i n d e t a i l and employees 1
s a l a r i e s i n t h e a g g r e g a t e , and, i n a d d i t i o n , t h e g e n e r a l e x p e n s e s i n t h e a d m i n i s t r a t i o n of each Federal Reserve Bank. They a l s o give f o r p u r p o s e s of comp a r i s o n , d a t a a s t o t h e i n c r e a s e i n t h e r o u t i n e o p e r a t i o n s of t h e banks. In
c o n n e c t i o n w i t h t h e s e t a b l e s , t h e Board begs t o remark t h a t t h e o f f i c e r s of
Federal Reserve Banks a r e not o f f i c e r s of t h e United S t a t e s Government o r of any
of i t s d e p a r t m e n t s . Each Federal Reserve Bank i s now t h e l a r g e s t banking i n s t i t u t i o n i n i t s d i s t r i c t and t h e conduct of t h e b u s i n e s s of a F e d e r a l Reserve Bank
which has t r a n s a c t i o n s many t i m e s g r e a t e r t h a n t h o s e of t h e l a r g e s t of i t s
member banks, w i t h . g r e a t r e s p o n s i b i l i t i e s t o t h e member banks, t o t h e p u b l i c ,
and t o t h e Treasury of t h e United S t a t e s , r e q u i r e s t h e s e r v i c e s i n e x e c u t i v e
and o t h e r c a p a c i t i e s of t r a i n e d and competent o f f i c i a l s , who w i l l d e v o t e a l l
of t h e i r time t o t h e work of t h e bank, n o t only i n t h e o r d i n a r y r o u t i n e b u t i n
t h e study of a g r e a t v a r i e t y of t e c h n i c a l s u b j e c t s . I t i s e s s e n t i a l t h a t t h e
s e r v i c e s be o b t a i n e d of menwho can be r e l i e d upon t o measure Up t o t h e i r d u t i e s
and r e s p o n s i b i l i t i e s .
The o f f i c e r s and employees of Federal Reserve Banks a r e not p e r m i t t e d t o
engage i n any o t h e r b u s i n e s s , t o t a k e p a r t i n p o l i t i c a l a c t i v i t i e s nor t o hold
p u b l i c o f f i c e . Their s e r v i c e i n t h e Federal Reserve Bank i s not a s t e p p i n g s t o n e t o a p o l i t i c a l c a r e e r n o r does i t a f f o r d means of o u t s i d e f i n a n c i a l
p r o f i t . The d i r e c t o r s of F e d e r a l Reserve Banks have r e p e a t e d l y p o i n t e d out
t o t h e Board t h a t i t would be i m p o s s i b l e t o s e c u r e t h e s e r v i c e s of competent and
e f f i c i e n t o f f i c i a l s f o r the Federal Reserve Banks w e r e t h e i r s a l a r i e s t o be
measured by t h e s a l a r i e s p a i d t o t h e p o l i t i c a l o f f i c e r s of t h e Government.
With few e x c e p t i o n s , a l l o f f i c e r s and employees of t h e F e d e r a l Reserve
Banks a r e dependent upon t h e i r s a l a r i e s f o r l i v e l i h o o d . During t h e y e a r 1919
t h e r a t e of compensation a t Federal Reserve Banks was g e n e r a l l y advanced, both
a s t o o f f i c e r s and employees. This was due t o g r e a t e r c o m p e t i t i o n f a r s e r v i c e s ,
i n c r e a s e d c o s t of l i v i n g and t o a very g r e a t i n c r e a s e i n t h e volume of t r a n s actions.
I n i t s annual r e p o r t f o r 1 9 I 6 (page 29) t h e Board d i s c u s s e d
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-9-
X-323?a
t h e n e c e s s i t y , p a r t i c u l a r l y w i t h r e s p e c t t o j u n i o r o f f i c e r s and employees, of
paying s a l a r i e s approximating t h e s a l a r i e s p a i d by t h e l a r g e member banks i n
t h e c i t i e s where t h e Federal Reserve Banks a r e l o c a t e d . E x p e r i e n c e h a s shown
t h a t many of t h e l a r g e r member banks a r e d i s p o s e d t o draw upon t h e Federal
Reserve Banks f o r men t o f i l l high o f f i c i a l p o s i t i o n s . During t h e p a s t s i x
y e a r s f i v e Governors of Federal Reserve Banks have r e s i g n e d i n o r d e r t o a c cept e x e c u t i v e p o s i t i o n s w i t h o t h e r banking i n s t i t u t i o n s a t much h i g h e r s a l a r i e s
t h a n they were r e c e i v i n g a t t h e Federal Reserve Banks and t h e same i s t r u e w i t h
r e s p e c t t o a c o n s i d e r a b l e number of Deputy Governors and j u n i o r o f f i c e r s . In
o r d e r t o r e t a i n t h e s e r v i c e s of o f f i c e r s who a r e c o n s t a n t l y b e i n g tempted w i t h
o u t s i d e o f f e r s a t h i g h s a l a r i e s , i t h a s become n e c e s s a r y t o r e c o g n i z e t h i s comp e t i t i o n , and w h i l e t h e Board h a s i n no case approved s a l a r i e s f o r s e n i o r o f f i c e r s of F e d e r a l Reserve Banks a s h i g h a s t h o s e p a i d o f f i c e r s of s i m i l a r rank
by t h e l a r g e r member banks i n t h e p r i n c i p a l c i t i e s of t h e c o u n t r y , i t has r e c o g nized from t h e o u t s e t t h a t the s a l a r i e s paid j u n i o r o f f i c e r s , heads of d e p a r t ments and c l e r k s must be i n l i n e w i t h t h o s e p a i d by t h e l a r g e r member banks i n
t h e v a r i o u s Federal Reserve c i t i e s . I f , i n o r d e r t o reduce e x p e n s e s , t h e p o l i c y
should be adopted of making t h e Federal Reserve Banks mere t r a i n i n g schools f o r
bank o f f i c e r s , i t does not seem p o s s i b l e , because of t h e f r e q u e n t changes i n volved, t h a t t h e banks would have t h e degree of e f f i c i e n c y i n a d m i n i s t r a t i o n and
smoothness of o p e r a t i o n which they would have if t h e compensation p a i d be s u f f i c i e n t l y l i b e r a l t o r e t a i n t h e s e r v i c e s of t r a i n e d and c a p a b l e men.
The Board does n o t f o r a moment b e l i e v e t h a t t h e d i r e c t o r s of any Federal
Reserve Bank, i n f i x i n g s a l a r i e s or i n a u t h o r i z i n g e x p e n d i t u r e s i n developing
t h e b u s i n e s s , have been a c t u a t e d by t h e s l i g h t e s t d e s i r e t o d e p r i v e t h e
Government of t h e revenue which i t i s e n t i t l e d t o r e c e i v e under t h e terms of
S e c t i o n 7 of t h e Federal Reserve Act, and most a s s u r e d l y t h e F e d e r a l Reserve
Board would not be a p a r t y t o any such u n d e r t a k i n g .
In t h i s connection t h e Board i n v i t e s a t t e n t i o n t o t h e views of a former
S e c r e t a r y of t h e Treasury, and e x - o f f i c i o chairman of t h e F e d e r a l Reserve Board,
Hon. W. G. McAdoo, At a meeting of t h e Federal Reserve Board on December 14,
1915, he advocated approval of a s a l a r y of $50, 000 p e r annum which t h e d i r e c t o r s
of the Federal Reserve Bank of New York had voted f o r t h e Governor of t h a t i n s t i t u t i o n and s t a t e d t h a t h i s a t t i t u d e had been t h a t d u r i n g t h e f o r m a t i v e
p e r i o d of t h e Federal Reserve System comparatively low s a l a r i e s should be p a i d
u n t i l t h e b u s i n e s s of t h e banks could be e s t a b l i s h e d and a f a i r pleasure obtained
of t h e i r o p e r a t i o n s and a more a c c u r a t e r e a l i z a t i o n reached of t h e dimensions
of t h e problems and r e s p o n s i b i l i t i e s of t h e banks 1 o f f i c e r s , s t a t i n g t h a t p r e v i o u s l y he had opposed an i n c r e a s e i n t h e s a l a r y under c o n s i d e r a t i o n only because
t h e country was a t war. He s a i d , now t h a t t h e b u s i n e s s of t h e banks had been
well e s t a b l i s h e d and t h e y were making l a r g e e a r n i n g s f o r t h e Government, t h e
time had come when t h e o f f i c e of Governor of a Federal Reserve Bank should
command on i t s m e r i t s a f a i r and j u s t compensation, and t h a t he would v o t e t o
f i x t h e s a l a r y of the Governor of t h e Federal Reserve Bank of New York a t t h e
amount proposed by t h e d i r e c t o r s of t h e bank, t o w i t , $50,000 p e r annum. He
s t a t e d i t a s h i s view t h a t t h e p r i n c i p l e governing t h e f i x i n g of s a l a r i e s of
o f f i c e r s of Federal Reserve Banks shouldbe t h a t t h e s a l a r y be made s u f f i c i e n t l y
a t t r a c t i v e t o make a man w i l l i n g t o adopt t h e Federal Reserve System a s a
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X-3237a
permanent c a r e e r , having i t s rewards i n t h e way of promotion l i k e any o t h e r
i n s t i t u t i o n * He opposed, t h e view t h a t t h e o f f i c e of head of a F e d e r a l Reserve
Bank should be considered on a p a r i t y w i t h high Government o f f i c e , s t a t i n g
t h a t heads of F e d e r a l Reserve Banks could n o t he s a i d t o e n j o y t h a t magnitude
of power and p r e s t i g e p e r t a i n i n g t o h i g h Government o f f i c e , while the hank
o f f i c e r s were y e t p l a c e d i n a d i f f e r e n t p o s i t i o n from those engaged i n p r i v a t e
i n s t i t u t i o n s i n t h a t they were a f f e c t e d by the mutations of p u b l i c l i f e and
c o n t r o l l e d b y a changing p u b l i c Board.
There i s t r a n s m i t t e d herewith as E x h i b i t E, copy of a l e t t e r , d a t e d
October 11, 1921, touching upon the s u b j e c t of s a l a r i e s , which was addressed
by the Governor of the F e d e r a l Reserve Board t o t h e Chairman of t h e J o i n t
Commission of A g r i c u l t u r a l I n q u i r y
the United S t a t e s Congress.
Since the c l o s e of t h e y e a r 1918, t h r e e o t h e r d i s t i n g u i s h e d men have f i l l e d
the ^ o f f i c e of S e c r e t a r y of the Treasury. I n view of t h e i r v o t e s and expressed
opinions on q u e s t i o n s r e l a t i n g to the s a l a r i e s p a i d o f f i c e r s of F e d e r a l Reserve
Banks the Board has no reason to b e l i e v e t h a t they t a k e the view t h a t t h e r e
has been "an amazing waste of p u b l i c money" i n the i n c r e a s e of s a l a r i e s t o
o f f i c e r s and employees of Federal Reserve Banks or t h a t by reason of such i n crease* " t h e Treasury of t h e United S t a t e s h a s been d e p r i v e d of a v a s t sum of
money
I t w i l l be noted from the t a b l e s above r e f e r r e d t o ( E x h i b i t D) t h a t the
s a l a r i e s of the P r e s i d e n t s of the l a r g e r banks i n New York C i t y a r e i n s e v e r a l
cases from 75$ to 100$ i n excess of the s a l a r y p a i d the Gbvernor of the Federal
Reserve Bank and t h a t i n the case of t h r e e of t h e s e banks t h e r e i s a Vice
P r e s i d e n t whose s a l a r y exceeds t h a t of the Governor of t h e F e d e r a l Reserve Bank
of New York. I t i s proper t o s t a t e t h ? t while t h e s e n i o r o f f i c e r s of t h e
Federal Reserve Bank have never received any e x t r a compensation o r bonuses,
very s u b s t a n t i a l bonuses have been p a i d t o the h i g h e r o f f i c e r s b y some of the
n a t i o n a l banks i n v a r i o u s p a r t s of the c o u n t r y . For example, the examination
r e p o r t f o r 1920 of Bank "A" of New York City shows t h a t the Chairman of t h e
Board received a bonus of $35*000, the P r e s i d e n t a bonus of $30,000, one of
the Vice P r e s i d e n t s a bonus of $25,000, and o t h e r o f f i c e r s r e c e i v e d s m a l l e r
amounts i n p r o p o r t i o n t o s a l a r i e s p a i d , while a l l the s e n i o r o f f i c e r s of Bank
"F" received a bonus equal t o 25$ of t h e i r annual s a l a r i e s .
The s a l a r i e s p a i d Vice P r e s i d e n t s of the l a r g e r n a t i o n a l banks and t r u s t
companies i n New York City 6re much i n excess of those p a i d t o t h e Deputy
Governors and C o n t r o l l e r s of the F e d e r a l Reserve Bank of New York, t h e h i g h e s t
s a l a i y paid t o a Deputy Governor of t h e F e d e r a l Reserve Bank of New York b e i n g
$30,000, while the s a l a r i e s of Vice P r e s i d e n t s of t h e s i x New York C i t y banks
l i s t e d i n E x h i b i t D range from $30,000 t o $75,000 p e r annum.
If t h e average annual s a l a r i e s p a i d a r e c o n s i d e r e d , i t w i l l b e found t h a t
the Federal Reserve Bank of New York, w i t h *40 o f f i c e r s and w i t h a t o t a l o f f i c i a l
p a y r o l l as of October 1, 1921 of $509»800 p e r annum, p a i d i t s o f f i c e r s an
average annual s a l a r y of $12,745, while t h e average annual s a l a r y p a i d to
o f f i c e r s of t h e s i x N a t i o n a l banks l i s t e d i n E x h i b i t D, some w i t h & l a r g e r and
others with a s m a l l e r number of o f f i c e r s than t h e F e d e r a l Reserve Bank, ranged
from $11,466 t o $28,792, the average annual s a l a r y p a i d b y Bank "E" b e i n g
1205
-ii-
X-3237a
c o n s i d e r a b l y more than twice t h a t paid by t h e Federal Reserve Bank of New York.
While t h e average annual s a l a r y paid by Bank "A" a p p e a r s a s $11,466, or
s l i g h t l y l e s s t h a n t h a t paid by t h e Federal Reserve Bank, i t w i l l be found,
a s above s t a t e d , t h a t t h e Chairman of t h e Board of t h a t bank r e c e i v e d a bonus
of $35# 000, b r i n g i n g h i s t o t a l compensation f o r the year up t o $100,000; the
p r e s i d e n t , a bonus of $30,000; one Vice P r e s i d e n t , a bonus of $25,000; and
o t h e r o f f i c e r s s m a l l e r amounts i n p r o p o r t i o n t o t h e i r s a l a r i e s . If bonus p a y ments were included i n a r r i v i n g S t average annual s a l a r i e s , t n e average s a l a r y
paid by Bank "A" would be m a t e r i a l l y i n excess of t h a t p a i d by t h e Federal
Reserve Bank of New York.
As w i l l b e seen from t h e t a b l e s included i n E x h i b i t D, e x t r a compensation
or bonus payments made by t h e Federal Reserve Banks nave i n most c a s e s been
l i m i t e d t o o f f i c e r s and employees r e c e i v i n g $5,000 p e r annum or l e s s . In a few
c a s e s bonuses have been paid t o o f f i c e r s r e c e i v i n g somewhat h i g h e r s a l a r i e s ,
but i n only two i n s t a n c e s have bonuses been p a i d t o o f f i c e r s r e c e i v i n g more
t h a n $7,500 p e r annum. I t i s proper t o s t a t e t h a t t h e bonuses which have been
paid t o j u n i o r o f f i c e r s and employees have been approved by t h e Board upon
r e p r e s e n t a t i o n s from the r e s p e c t i v e boards of d i r e c t o r s of Federal Reserve Banks
t h a t t h e i r o b j e c t i n recommending t h e bonuses was t o enable t h e r e c i p i e n t s
t o meet abnormal c o s t s of l i v i n g # without making s p e c i f i c i n c r e a s e s i n s a l a r y .
Bonuses have been p a i d w i t h t h e understanding t h a t such p o l i c y was temporary
only and t h a t t h e payment of bonuses would e v e n t u a l l y be d i s c o n t i n u e d . During
t h e p r e s e n t y e a r they have a l l been m a t e r i a l l y reduced and i n some cases
abolished e n t i r e l y .
The f o l l o w i n g t a b l e b r i n g s out c l e a r l y t h e d i f f e r e n c e i n the average
s a l a r i e s , e x c l u s i v e of bonuses, paid by t h e Federal Reserve Banks and by t h e
l a r g e r member banks i n t h e Federal Reserve Bank c i t i e s :
Average Annual S a l a r i e s Paid t o O f f i c e r s by Each Federal Reserve
Bank and by Three of t h e Larger Member Banks i n Each Fede r a l Reserve Bank City a s of October, 1$21.
(Bonus excluded)
Federal Reserve D i s t r i c t F,R.Bank
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
System
$ 9,679
12,745
10,125
(*) Six National Banks.
5,677
7,934
7,078
6,478
6,147
5,512
6,459
7,743
Member Bank
$14,7^5
17,331*
15,733
10,061
6,473
7,825
15,440
11,675
10,621
10,313
5,767
11, 409
13,092
^
X-]2)Ta
I t w i l l be seen from t h i s t a b l e t h a t t h e average s a l a r y of o f f i c e r s i n
a l l Federal Reserve Banks i s $7#743, w h i l e t h e a v e r a g e s a l a r y p a i d by t h e
l a r g e r member banks i n Federal Reserve Bank c i t i e s i s $13* 092, o r 69 p e r c e n t ,
i n e x c e s s of t h a t paid by t h e Federal Reserve Banks.
With r e f e r e n c e t o t h e s t a t e m e n t f r e q u e n t l y made t h a t s a l a r i e s p a i d by
t h e Federal Reserve Bank of New York i n c r e a s e d $0 p'er cent between t h e y e a r s
191S and 1920, w h i l e a t t h e same time t h e number of o f f i c e r s and employees
i n c r e a s e d only 1 0 p e r c e n t , t h e Board would s t a t e t h a t d u r i n g t h i s p e r i o d
t h e t o t a l s a l a r i e s of o f f i c e r s and employees i n c r e a s e d by $1,534,443, of which
amount $1,336,443 r e p r e s e n t e d t h e i n c r e a s e i n s a l a r i e s p a i d t o employees and
only $19S,0C0 t h e i n c r e a s e i n s a l a r i e s paid t o o f f i c e r s . In e x p l a n a t i o n of
t h e h i g h e r a g g r e g a t e s a l a r i e s p a i d t o employees of t h e Federal Reserve Ban*, of
New York, whicn i n c r e a s e d 47 p e r c e n t « d u r i n g t h e two y e a r s a s compared w i t h
an i n c r e a s e i n number of only 10 p e r c e n t , t h e r e i s g i v e n below a t a b l e
showing t h e average annual s a l a r y p a i d t o employees by t h a t bank, a s of t h e
l a s t day of December of each year from 1915 t o 1920, b o t h i n c l u s i v e , and a s
of July 1 , 1921, a s w e l l a s by each other Federal Reserve Bank.
AVERAGE SALARIES fAID TO EMPLOYEES OF EACH FEDERAL RESERVE BANK
(including branches)
BANK
1415
$1,086
Boston
New York
1,152
Philadelphia
1,000
1,242
Cleveland
1,044
Richmond
Atlanta
1,005
1,142
Chicago
1,068
S t . Louis
1,289
Minneapolis
Kansas City
936
1,382
Dallas
San F r a n c i s c o L.496
SYSTEM - $ 1 , 1 2 3
(Bonus excluded)
D e c e m b e r
1 1
1416
iqib
1417
$
$ 929
$ 991
935
1, 095
1,003
934
983
838
796
1, 183
1,020
335
99b
691
794
993
1,053
869
1 , 094
1,120
949
1, 028
986
953
646
661
942
024
1,
1,063
961
110
1,
1,017
919
9,25 . , 1 , 1 4 4 , — i . 227
$: .. 912
$1,004
$1,062
1419
1Q20
$1,164
$1,271
1,456
1,253
1,206
1A33
1,206
1,030
1,054
1,115
1,051
1,091
1,194
l,lb3
1.263
$l,lb3
1,360
1,190
1,149
1,310
1,214
July 1
1421
$1,401
i :tll
1,353
1,233
1,281
1.160
1,408
- 1,32b
1, 2qS
1,442
1,447
1.521,,
$1,319
$1,402
1,262
1,209
1,270
I t w i l l be observed t h a t t h e average s a l a r y p a i d t o employees by t h e
Federal Reserve Banks was very low i n 1913, being p r a c t i c a l l y on a l e v e l w i t h
s a l a r i e s p a i d bank employees p r i o r t o t h e War, when p r i c e s were about one-half
of what they were i n 1919 and 1920 when t h e i n c r e a s e i n t h e average s a l a r y paid
t o employees took p l a c e .
.
An i n v e s t i g a t i o n made by t h e Federal Reserve Bank of New York i n 1919
showed t h a t the average annual s a l a r y , i n c l u d i n g bonus, p a i d t o employees by
t h e bank was $1,440, w h i l e t h e average annual s a l a r y , i n c l u d i n g bonus, p a i d t o
ic*.'
• '^
X- </F7
X-3237a
- 13 -
employees by t e n of the l a r g e New York C i t y banks ranged from $1,620 t o
$2,265. In f a c t , i t was found t h a t i n s i x of t h e banks t h e average s a l a r y _
p a i d employees was i n excess of $ 2 , 1 0 0 . I t was r e p r e s e n t e d t o t h e Boar t »
i f t h e F e d e r a l Reserve Bank of New York was t o r e t a i n i t s employees i t would
have t o i n c r e a s e s a l a r i e s t o a l e v e l more n e a r l y a p p r o a c h i n g s a l a r i e s p a i
f o r s i m i l a r work b y o t h e r banks i n New York C i t y . The f a c t t h a t t h e average
s a l a r y p a i d employees b y t h e F e d e r a l Reserve Bank a t t h e end of 1915 was on y
$ 1 , 0 9 5 , when t h e c o s t of l i v i n g index as p u b l i s h e d b y t h e Bureau of Labor
S t a t i s t i c s of t h e Department of Labor was 77 p e r c e n t s h ° v e t h e p r e - w a r eve ,
g r a d u a l l y i n c r e a s i n g t o 119 p e r c e n t i n December 1920, would seem
the i n c r e a s e i n s a l a r i e s g r a n t e d employees d u r i n g t h e y e a r s , 1919 and
I n o r d e r t h a t the Senate may be informed a s t o whether t h e number 01
o f f i c e r s of F e d e r a l Reserve Banks h a s i n c r e a s e d r e l a t i v e l y more t h a n the
number of employees, and w h e t h e r t h e number and s a l a r i e s of o f f i c e r s and
employees of t h e F e d e r a l Reserve Banks have i n c r e a s e d more r a p i d l y than
volume of b u s i n e s s , and r o u t i n e o p e r a t i o n s of those b a n k s , the f o l l o w i n g
t a b l e i s s u b m i t t e d showing t h e changes i n p e r s o n n e l and s a l a r i e s , t h e growtn
i n t h e p r i n c i p a l items of a s s e t s and l i a b i l i t i e s of t h e Banks and t
inc
i n t h e volume of t h e i r o p e r a t i o n s b y y e a r s f r o m 1915 t o 1920.
INDEX OF GROWTH, 1915-1920, IN NUMBER AND SALARIES OF OFFICERS
AND EMPLOYEES, AND IN BUSINESS TRANSACTED, FOR EACH F . R . BANS
Federal
Reserve
Bank
:Volume :of d i s - :
count
:
Number S a l - ^Earning : ? . R. :and open ;
a r i e s ': Assets m o t e s i n : m a r k e t :
: c i r c u l a - : opera- :
tion t i o n s
:
Officers
Number
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas C i t y
Dallas
SanFrancisco
SYSTEM
(1915 = 1)
O f f i c e r s and : A s s e t s and
Employees : l i a b i l i t i e s
Salaries
4
5
3
U
5
4
5
3
3
5
4
5
3
5
3
5
5
4
9
5
3
7
5
8
:
5
:
4
:'
28
20
95
35
39
17
18
47
42
23
21
14
93
21
29
15
21
l"6
9
25
14
13
20
*13
26
39
4o
19
31
22
11
35
22
23
22
20
51
:
20
:
39
31
12
32
33
10
10
203
17
6
11
5
53
::
18
•
:
225
989
2S1
244
77
66
281
224
107
113
53
263
314
Transactions
through
Gold
Settlement
Fund
37
88
38
238
60
41
45
36
111
70
63
74
:
50
i £ O S
- l4 -
X-323|a
From t h i s t a b l e i t w i l l "be s e e n t h a t w h i l e b o t h t h e number and. s a l a r i e s
of o f f i c e r s of t h e New York F e d e r a l R e s e r v e Bank were f i v e times as l a r g e i n
1920 as t h e y were i n 1915, t h e number of o f f i c e r s and employees combined was
*40 t i m e s as l a r g e and t h e a g g r e g a t e s a l a r i e s p a i d o f f i c e r s and employees 29
times a s l a r g e i n 1920 a s t h e y were i n 1915. thus i n d i c a t i n g t h a t t h e number
of o f f i c e r s i n c r e a s e d r e l a t i v e l y much l e s s t h a n t h e number o'f employees and
t h a t i n consequence of t h e d e c r e a s e i n t h e r a t i o of o f f i c e r s t o employees t h e
a g g r e g a t e s a l a r i e s p a i d t o o f f i c e r s and employees i n c r e a s e d much l e s s r e l a t i v e l y
than t h e i r number.
The t a b l e below shows the g r a d u a l i n c r e a s e i n t h e a v e r a g e number of
employees p e r o f f i c e r f o r each F e d e r a l R e s e r v e Bank.
AVERAGE NUMBER OF EMPLOYEES PER OFFICER FOR EACH
FEDERAL RESERVE BANK (INCLUDING BRANCHES)
Federal
Reserve
Bank
;
:
D e c e m b e r
: 1915 : 1916 :
1917 :
'4
10
14
7
Boston
New York
Philadelphia
Cleveland
Riclanond
.Atlanta
Chicago
S t - Louis
Minneapolis
Kansas C i t y
Dallas
San F r a n c i s c o
12
SYSTEM
13
18
21
34
68
31
25
17
25
39
17
24
24
1912
52
31
:
1919
62
92
46
44
31
19
40
25
32
33
39
47
9
21
12
7
5
11
27
22
26
8
15
31
45
44
6
6
6
12
17
12
12
1920
•59
78
83
47
36
18
47
42
45
38
31
36
115
58
4l
30
18
44
33
40
33
29
22
12
15
10
•:
:July 1,
: I92I
51
76
85
39
36
23
39
38
38
36
27
38
44
The e a r n i n g a s s e t s of t h e F e d e r a l Reserve Bank of New York, composed
l a r g e l y of b i l l s d i s c o u n t e d f o r member "banks, were 95 t i m e s a s l a r g e i n 1920 as
i n 1915; F e d e r a l Reserve c i r c u l a t i o n 12 times as l a r g e ; t h e volume of d i s c o u n t
and open-market o p e r a t i o n s , which were v e r y heavy i n 1919 and 1920, - 9&9 times
as l a r g e ; and t r a n s a c t i o n s t h r o u g h t h e Gold S e t t l e m e n t Fund, m a i n t a i n e d i n
Washington b y t h e F e d e r a l Reserve Board f o r t h e p u r p o s e of s e t t l i n g i n t e r - b a n k
t r a n s a c t i o n s , - 88 times a s l a r g e . F o r a l l F e d e r a l Reserve Banks combined, t o t a l
e a r n i n g a s s e t s were 39 t i m e s as l a r g e i n 1920 as i© 1915) F e d e r a l Reserve
c i r c u l a t i o n 18 times a s l a r g e ; t o t a l ix&caurit and open-market o p e r a t i o n s , 31^
times as l a r g e , and t r a n s a c t i o n s t h r o u g h t h e Gold S e t t l e m e n t Fund, $0 times aa
l a r g e , w h i l e t h e number of b f f l e e r s was 5 t i m e s and t h e i r a g g r e g a t e s a l a r i e s
f o u r times as l a r g e a t t h e c l o s e of 1920 as t h e y were a t t h e end of 1915;
and t h e number of o f f i o e r s and
X-3237a
- 15 -
employees combined, 28 t i m e s and t h e s a l a r i e s of a l l o f f i c e r s and employees
combined, 20 t i m e s a s l a r g e .
The t a b l e g i v e n below shows t h a t t h e average number of employees p e r
o f f i c e r i n s i x New York City banks ranged from 14 t o 57# w h i l e t h e number of
employees per o f f i c e r i n t h e F e d e r a l Reserve Bank of New York, e x c l u s i v e of
t h e B u f f a l o Branch, was 80. The p r o p o r t i o n of t h e t o t a l p a y r o l l r e p r e s e n t e d
by o f f i c e r s 1 s a l a r i e s i n t h e s i x member banks ranged from 20 p e r cent t o 38
p e r c e n t , w h i l e t h e p r o p o r t i o n o b t a i n i n g a t t h e F e d e r a l Reserve Bank of
New York was 10 p e r c e n t . I t w i l l be noted a l s o from t h i s t a b l e t h a t i f
o f f i c e r s ' s a l a r i e s are related to t o t a l resources, the proportion for the
l a r g e r New York C i t y member banks ranges from about 3 t o 15 t i m e s a s high a s
t h a t o b t a i n i n g a t t h e F e d e r a l Reserve Bank.
COMPARISON OF PERSONNEL OF FEDERAL RESERVE BANK OF
NEW YORK m TH PERSONNEL OF SIX OF THE LARGE NEW
YORK CITY MEMBER BANKS ABOUT THE END OF 1920.
u
0
Federal Reserve Bank
34
(Excluding B u f f a l o Branch)
Bank 1
74
Bank 2
122
Bank 3
32
Bank 4
14
Bank 5
37
Bank 6
73
<D
1
:Average : P e r c e n t of : P e r c e n t of
Number of
:number o f z t o t a l p a y - : o f f i c e r s *
o f f i c e r s employees : e m p l o y e e s : r e l l r e p - : s a l a r i e s
:per o f - ire sented by:to t o t a l
: o f f i c e r s 1 :resources
ficer
.•salaries
2,734
go
10
.024
4,259
3,222
946
57
26
29
51
29
14
25
21
38
20
30
32
.36
.22
.27
,068
.15
.29
726
1,093
1,054
If t h e r a t i o of t o t a l s a l a r y payments t o t o t a l r e s o u r c e s of each Fede r a l Reserve Bank be compared w i t h c o r r e s p o n d i n g p e r c e n t a g e s f o r a l l N a t i o n a l
banks i n each Federal Reserve D i s t r i c t , i t w i l l be found t h a t t h e p e r c e n t a g e s
f o r t h e Federal Reserve Banks a r e m a t e r i a l l y l e s s t h a n t h o s e f o r t h e N a t i o n a l
banks, a s w i l l be seen from t h e f o l l o w i n g t a b l e :
RATIO OF TOTAL SALARY PAYMENTS TO TOTAL RESOURCES AT FEDERAL RESERVE BANKS
AND AT ALL NATIONAL BANKS
Federal Reserve D i s t r i c t :
Boston
New York
Philadelphia
Cleveland
Federal Reserve Bank
p e r <?9Qt
.19
.23
.24
.21
N a t i o n a l Banks
per cent
.71
*6?
.72
1210
<
-16-
X-3237a
Continued:
RATIO OF TOTAL SALARY PAYMENTS TO TOTAL RESOURCES AT FEDERAL RESERVE BANKS
AND AT ALL NATIONAL BANKS
F e d e r a l Reserve D i s t r i c t
:
•-
Federal Reserve Bank :
per cent. T :
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis
Kansas City
Dallas
San F r a n c i s c o
TOTAL
N a t i o n a l Banks
per cent.
• 31
.26
.23
.37
•30
.36
.47
.31
• .82
1.00
• 77
.90
1.03
1.08
1.18
1.00
.25
•79
NOTE: Based on s a l a r i e s p a i d by Federal Reserve Banks
during 1920 a s r e l a t e d t o t h e i r c o n d i t i o n on June 25,
1920; and on s a l a r i e s paid by n a t i o n a l banks d u r i n g
t h e year ended June 30, 1$20 a s r e l a t e d t o t h e i r r e s o u r c e s on June 30, 1$20. F i g u r e s f or Federal Reserve
Banks i n c l u d e head o f f i c e and b r a n c h e s .
The F i s c a l Agency work of the Federal Reserve Banks assumed very l a r g e p r o p o r t i o n s d u r i n g t h e war and has continued on a l a r g e s c a l e s i n c e . As an example
of t h e volume of such t r a n s a c t i o n s by t h e F e d e r a l Reserve Banks, i t may be s t a t e d
t h a t d u r i n g t h e f o u r yeais ended December, 1920 t h e Federal Reserve Bank of New
York a l o n e p a i d 37, 8l6, OCO Government checks and w a r r a n t s , handled 159# 530* 000
p i e c e s of L i b e r t y Bonds, coupons, and t h r i f t s e c u r i t i e s i n i t s Government bond
department, r e c e i v e d over 90,000,00G payments on L i b e r t y Bonds s o l d , i s s u e d and
redeemed $27,238,000,000 of c e r t i f i c a t e s of i n d e b t e d n e s s , and handled
$ 4 9 , 3 9 4 , 0 0 0 , 0 0 0 of d e p o s i t s and w i t h d r a w a l s of c o l l a t e r a l pledged a s s e c u r i t y
f o r Government war l o a n d e p o s i t s with d e p o s i t a r y banks. The s t a t e m e n t given
below, which i s t a k e n from t n e r e c o r d s of t h e Treasury Department, shows t h a t
f o r t h e p e r i o d b e g i n n i n g w i t h t h e f i r s t L i b e r t y l o a n i n 1917 and ending June
30, 1921, t h e twelve Federal Reserve Banks, i n t h e d i s c h a r g e of t h e i r f i s c a l
agency f u n c t i o n s , handled n e a r l y one b i l l i o n p i e c e s of Government s e c u r i t i e s
valued a t more t h a n $286, 000, 000,000.
LIBERTY BONDS, VICTORY NOTES; CERTIFICATES OF INDEBTEDNESS, TREASURY
NOTES AND WAR SAVINGS SECURITIES HANDLED BY THE TWELVE FEDERAL RESERVE
BANKS, APRIL, 1917 t o JUNE 30, 1921.
Stock shipped t o F.R.Banks by
Treasury Department
Stock r e t u r n e d by F.R.Banks u n i s s u e d
Delivered t o p u b l i c
NUMBER OF PIECES
332,492, 222
39,404,439
235,946,770
:
AMOUNT
86,864,790,706 .
7,117,492,880
79,594,958,704
-17Continued:
LIBERTY BONDS, VICTORY NOTES, CERTIFICATES OF INDEBTEDNESS, TREASURY
NOTES AND WAR SAVINGS SECURITIES HANDLED BY THE TWELVE FEDERAL RESERVE
BANKS, APRIL, 1917 TO JUNE 30. 1921.
Number of p i e c e s
:
Amount
Received from p u b l i c f o r excnange,
c o n v e r s i o n , redemption, e t c ,
144,202,924
57,494,860,598
Returned t o T r e a s u r y Department c a n c e l l e d , account exchanges, c o n v e r s i o n s
133,602,847
55,041,636.342
TOTALS
935,649,202
286,113,739,230
Tne Board t r a n s m i t s nere-vitn a s E x h i b i t F copy of a l e t t e r a d d r e s s e d t o i t
by t n e Governor of t n e F e d e r a l Reserve Bank of New York, u n d e r d a t e of October
6, 1921, i n wnicti he d i s c u s s e s i n d e t a i l some of tne o p e r a t i o n s of t n e bank and
t h e r e a s o n s wnicn a c t u a t e d tne d i r e c t o r s i n v o t i n g t h e i n c r e a s e s i n s a l a r y f o r
o f f i c e r s and employees which nave been approved by t h e Board.
Much p u b l i c i t y
has been given r e c e n t l y t o a s t a t e m e n t p u r p o r t i n g t o snow the p r e s e n t s a l a r i e s
of c e r t a i n o f f i c e r s of t h e F e d e r a l Reserve Bank of New York as compared w i t h
t h e i r i n i t i a l s a l a r i e s a t t n e time of employment and w i t h s a l a r i e s o b t a i n e d b y
tnem p r e v i o u s t o t h e i r engagement by t h e Federal Reserve Bank.
Tne Board i n v i t e s p a r t i c u l a r a t t e n t i o n t o tne d i s c u s s i o n of t h i s m a t t e r i n
E x n i b i t F and d e s i r e s t o p o i n t out t n a t i n t n e c a s e of n i n e of t n e s e o f f i c e r s
whose s a l a r i e s nave been e s p e c i a l l y c r i t i c i z e d t h e i r c o n n e c t i o n w i t n the F e d e r a l
Reserve Bank of New York has extended over a p e r i o d of seven y e a r s , two of them
xiave oeen w i t h tne bank s i x y e a r s , s i x — f o u r y e a r s , one — t n r e e y e a r s , f o u r —
two years and two f o r one year.
Seven of t h e s e men wno e n t e r e d tne s e r v i c e of
t h e Bank seven years ago a t s a l a r i e s ranging from $1,500 t o $6,000 p e r annum
nave been advanced from time t o time on t h e i r m e r i t s and a r e now r e c e i v i n g
s a l a r i e s ranging from $8,000 t o $22,000 p e r annum.
In a l l o t n e r F e d e r a l Reserve Banks t h e r e have been s i m i l a r i n s t a n c e s of
deserved promotion.
I t seems t o the Board t h a t the d i r e c t o r s of the F e d e r a l
Reserve Banks should be commended r a t h e r than condemned f o r a p o l i c y which r e c o g n i z e s m e r i t and promotes l o y a l and e f f i c i e n t employees.
There i s a l s o t r a n s m i t t e d , a s E x h i b i t G, copy off a l e t t e r , d a t e d October 26,
1921, signed by each of t n e n i n e d i r e c t o r s of the F e d e r a l Reserve Bank of New York
which p r e s e n t s the views of t h e s e d i r e c t o r s <*s t o t h e i r d u t i e s and r e s p o n s i b i l i t i e s and reviews the s a l a r y p o l i c y of t h a t b a n k
FRANCHISE TAXES PAID TO THE UNITED STATES.
I n r e p l y t o t n a t p a r t of t h e R e s o l u t i o n of tha Senate which c a l l s f o r i n f o r m a t i o n a s t o "how much of the n e t e a r n i n g s have been p a i d t o t n e United S t a t e s a s a
f r a n c h i s e t a x " , t h e Board would s t a t e t h a t u n t i l March 3 , 1919 S e c t i o n 7 of t h e
F e d e r a l Reserve Act p r o v i d e d t h a t " a f t e r a l l n e c e s s a r y expenses of a F e d e r a l
R e s e r v e bank have been p a i d or p r o v i d e d f o r , t h e s t o c k h o l d e r s s n a i l be e n t i t l e d
t o r e c e i v e an a n n u a l d i v i d e n d of s i x pe r centum on t n e p a i d - i n c a p i t a l s t o c k ,
which d i v i d e n d s h a l l be c u m u l a t i v e .
A f t e r the a f o r e s a i d d i v i d e n d claims have
been f u l l y m e t , a l l the n e t e a r n i n g s s h a l l be p a i d t o t h e United S t a t e s a s a
f r a n c n i s e t a x , except t n a t o n e - h a l f of Such n e t e a r n i n g s s n a i l be p a i d i n t o "a
s u r p l u s f u n d u n t i l i t s h a l l amount t o f o r t y p e r centum of t h e p a i d - i n c a p i t a l
s t o c k of such bank"*
^J L fO* f-M._ #Ss4
o
- 18 -
X-3237a
U n t i l t h e y e a r 1917 t h e e a r n i n g s of t h e F e d e r a l Reserve Banks were
c o m p a r a t i v e l y small and i t was n o t u n t i l June 30, 1918 t h a t a l l a c c r u e d
d i v i d e n d s had been p a i d "by a l l Banks. As the n e t e a r n i n g s of the F e d e r a l Res e r v e Banks were n o t s u f f i c i e n t d u r i n g 1914, 1915 and 1916 t o e n a b l e them to
pay a l l accrued d i v i d e n d s no f r a n c h i s e t a x e s were p a i d t o t h e United S t a t e s
f o r t h o s e y e a r s « During t h e y e a r 1917» however, s i x of the F e d e r a l Reserve
Banks had e a r n i n g s s u f f i c i e n t t o pay a l l accrued d i v i d e n d s and t h e y p a i d a
f r a n c h i s e t a x t o t h e Government a t t h e end of the y e a r amounting t o $1,134,234
and c a r r i e d a l i k e amount t o t h e i r s u r p l u s a c c o u n t s ( a n n u a l p r e p o r t f o r 1917'page 2 8 ) . At the end of the y e a r 1918, a l l accrued d i v i d e n d s having been p a i d ,
a l l the F e d e r a l Reserve Banks were p r e p a r e d t o pay f r a n c h i s e taxes t o the
United S t a t e s amounting i n t h e a g g r e g a t e t o $26,728,440 ( a n n u a l r e p o r t f o r
1918 - page 29) b u t i n view of l e g i s l a t i o n then pending the Treasury Department
agreed t o w i t h h o l d demand f o r t h e s e f r a n c h i s e t a x e s u n t i l t h e adjournment of
Congress on March 4 f h . The Act of March 3» 1919 amended S e c t i o n 7 of t h e
F e d e r a l Reserve Act so t h a t i t now r e a d s : " A f t e r t h e a f o r e s a i d d i v i d e n d claims
have been f u l l y m e t , t h e n e t e a r n i n g s s h a l l be p a i d t o t h e United S t a t e s as a
f r a n c h i s e t a x except t h a t the whole of such n e t e a r n i n g s , i n c l u d i n g t h o s e f o r
the y e a r ending Decenber t h i r t y - f i r s t , n i n e t e e n hundred and e i g h t e e n , s h a l l
b e p a i d i n t o a s u r p l u s f i n d u n t i l i t s h a l l amount t o one hundred p e r centum
of t h e s u b s c r i b e d c a p i t a l s t o c k of such bank, and t h a t t h e r e a f t e r ten p e r
centum of such n e t e a r n i n g s s h a l l be p a i d i n t o t h e s u r p l u s " « I n c o n f o r m i t y
w i t h t h e law a s thus amended, t h e F e d e r a l Reserve Bank of New York p a i d i n t o
t h e T r e a s u r y a t the end of the y e a r 1919 as i t s f r a n c h i s e t a x the sum of
$2,703,894 ( a n n u a l r e p o r t f o r 1919 - page 3 7 ) • The o t h e r F e d e r a l Reserve Banks
p a i d no t a x as t h e y had n o t t h e n accumulated t h e maximum s u r p l u s allowed by
law. At the end of the y e a r I92O n i n e I n d e r a l Reserve Banks p a i d t o t h e
United S t a t e s as a f r a n c h i s e t a x the sum of $60,724,742 ( a n n u a l r e p o r t f o r
1920 — page 9 0 ) • The F e d e r a l Reserve Banks of C l e v e l a n d , St* Louis and D a l l a s
p a i d no t a x as they had n o t y e t accumulated the maximum s u r p l u s »
The f o l l o w i n g t a b l e shows the amount of f r a n c h i s e t a x e s p a i d t o the
Waited S t a t e s by e a c h F e d e r a l Reserve Bank as of December 3 1 , 1917 > 1919 and 1920*
ffWCHISE TAXES PAID TO THE UNITED STAVES GOVERNMENT
Bsderal Reserve :
Bank
Boston
New York
Philadelphia
Richmond
Atlanta
Chicago
Minneapolis
Kansas C i t y
San F r a n c i s c o
TOTAL
C
1917
: $
:
75.000
648,363
116,472
40,000
215,799
37,500
r
1919
2,703.894
•
-
-
$1,134,234
—
$2,703,894
:
1920
:
TOTAL
$ 2,473,499
$39,318,511
363,662
204,585
2,136,288
10,394,480
524,234
2,240,228
3,069,255 -
$ 2,548,599
42,671,768
363,662
321,057
2,176,288
10,610,279
561,734
2,240,228
3.069,255
$60,724,742
$64,562,870
± 2 1
-19-
X-32}7a
During t h e p a s t y e a r t h e Federal Reserve Banks have s e t up a r e s e r v e
f o r f r a n c h i s e t a x , the t o t a l of which was on October 27, 1921 $53,93^,000
(weekly s t a t e m e n t Federal Reserve Banks combined, October 27, 1 5 2 1 ) .
This t a x r e s e r v e i d a d j u s t e d weekly and t h e t o t a l amount shown t o be due
t h e Government at t h e c l o s e of b u s i n e s s December 31, 1921 w i l l be p a i d t o
t h e Treasury on January 2, 1922*
The Board t r u s t s t h a t t h i s communication c o n t a i n s t h e i n f o r m a t i o n d e s i r e d and w i l l c h e e r f u l l y f u r n i s h a t any time any a d d i t i o n a l f a c t s which
may be c a l l e d f o r by the Senate.
Respectfully submitted,
W. P . G. HARDING,
G o v e r n o r .
The P r e s i d e n t of t h e Senate,
@FedFRASER