Full text of Trends in Rates of Bank Earnings and Expenses

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102

FEDERAL RESERVE BULLETIN

FEBRUARY

1938

TRENDS IN RATES OF BANK EARNINGS AND EXPENSES
Net profits of banks in relation to the vol- period of 48 years there were only 11 years
ume of earning assets have declined over the in which the rate of net profits fell below
past half century. The rate of return upon 6 percent. These years were during the great
capital invested in banks has, nevertheless,
CHART I
been well maintained except during the depression years following 1929, owing to an
increasing amount of earning assets per unit
of invested capital. During the recent depression, however, large deficits have occurred and during the years since 1920 enormous losses have been suffered by both stockholders and depositors in many banks.
From the point of view of continuous operation of the banks the most important question with respect to profits is whether they 1890 1895 1900 1905 1910 1915 1920 1925 193OJ 1935 '37
are sufficient to cover expenses and losses
BANKS—ANNUAL NET PROFITS PER $1OO
and leave a reasonable profit on invested capi- NATIONAL
OF INVESTED CAPITAL, AND LOANS AND INVESTMENTS PER $1 OF INVESTED CAPITAL AND PER
tal. The rate of return on invested capital
$1 OF TOTAL RESOURCES, 189O-1937
(FISCAL YEAR BASIS)
involves many interrelated factors such as
the rate of return on earning assets, experience with respect to expenses and losses, and depressions of the 1890's and the early 1930's.
the relation of invested capital to earning During the former the rate of profit did not
fall below 4 percent, while there were deficits
assets.
of considerable proportions in the 3 years
Material for the analysis of trends in bank 1932, 1933, and 1934. There were 15 years
earnings over a long period is incomplete. of this 48-year period when the rate exceeded
The Comptroller of the Currency, however, 8 percent, while the average net profit on inhas published certain basic figures in his an- vested capital for the period is 6.9 percent.
nual reports by means of which it is possible This is a composite result, which averages
to trace in broad outline the trend of earnings profitable banks with those which had small
of national banks back into the previous cen- earnings or which incurred deficits. Further
tury. There is no comparable series of fig- comments upon this factor in connection with
ures for State banks as a whole. Kansas is the discussion of banks by size and geothe only State for which official earnings rec- graphic groupings appear at a subsequent
ords for banks cover a period of decades. point.
Earnings returns for such State banks as be- For purposes of comparability it has been
long to the Federal Reserve System are avail- necessary to present the national bank figable for recent years.
ures on a fiscal year basis,2 since figures on
a calendar year basis are not available in the
NATIONAL BANKS, 1890-1937
Net Profits.—Chart 1 shows among other earlier decades. Other adjustments of methprothings net profits of the national banking sys- ods of present-day accounting to earlier
3
tem per $100 of invested capital in each fiscal cedure have been necessary in places. While
year from 1890 through 1937.1 During this 23 See footnote 1, appendix table II.
1
For ratios shown in chart, see appendix tables I and II.
Ratios are derived from dollar figures in tables III and IV.
Net profits represent the final results of the year's operations
after all expenses have been deducted and after losses on bad
assets have been charged off.
Invested capital includes capital stock (common and preferred),
surplus, undivided profits, reserves for contingencies, and retirement funds for preferred stock.




The most important adjustment of this character is the inclusion of recoveries on charged-off assets and profits on securities
sold with gross earnings throughout the period. Total recoveries
on charged-off assets are available 1918-1926, and recoveries on
loans, recoveries on securities, and profits on securities sold are
separately available 1927-1937 except for the years 1933-1935 when
profits on securities sold were included with recoveries on securities. In current statistical presentations of earnings and expense data of member banks recoveries on loans and investments

FEBRUARY

1938

the dollar figures of various items of earnings and expenses of national banks over the
period are given in the appendix, ratios of
income and expenditures to certain asset or
liability items have been used instead in this
text since they tend to eliminate the effects
of changes in the number and size of banks
with the result that significant trends and
variations in the year-to-year comparisons
become readily apparent. For example, in
the depression year 1894 all national banks
showed a net profit of $42,000,000 on an invested capital of $1,000,000,000, a rate of return of 4.2 percent. This is to be contrasted
with the year 1930 when invested capital
reached $4,000,000,000 and net profits were
approximately $250,000,000, the rate being
6.2 percent.
Chart 2 shows that there has been a definite downward trend in the rate of net profits
on earning assets, that is, on loans and investments. The rate was above 3 percent in
1890 and 1891; below 2 percent for a few
years immediately preceding 1900; and subsequently it was above 2 percent until 1912
except for one year. After 1913 it was consistently below 2 percent and during the
prosperous years of the middle 1920's it approximated 1.25 percent.
Relation of Loans and Investments to Invested Capital.—The maintenance of a relatively high rate of profits on invested capital
during the period when the rate of profits on
loans and investments was declining reflected
a marked growth in the amount of loans and
investments per dollar of invested capital.
As is shown in chart 1, this amount grew
and profits on sales of securities are added to net earnings (before losses) to arrive at net profits, rather than being included
with gross earnings.
No adjustments were made in the officially published figures of
total resources, loans and investments, and invested capital, although the method of reporting these items has changed from time
to time. For example, currently reported figures of loans and
investments include rediscounts but exclude borrowed securities
and acceptances of other banks and bills of exchange sold with
indorsement. In 1920 and some other years, on the other hand,
rediscounts were deducted from gross loans while borrowed securities were included in investments. Available information does
not permit the figures for the entire period to be placed on a fully
comparable basis. Tests indicate, however, that any conclusions
based on ratios of earnings, expenses, invested capital, etc., to
loans and investments, calculated by using these unadjusted figures, would not be affected if all of the data were placed on a
more nearly comparable basis.




103

FEDERAL RESERVE BULLETIN

from $2.40 to $4.00 from 1890 to 1914, from
$4.00 to over $6.00 between 1915 and 1918,
and fluctuated irregularly about $6.00 thereafter. The alteration in this ratio was associated with the large increase in deposits
and loans and investments in relation to invested capital during the first three decades
of this century.
Gross and Net Earnings.—Chart 2 shows
gross earnings, net earnings (after expenses
but before losses), and net profits of national
banks per $100 of loans and investments.1
The chart brings out the fact that the rate
of net earnings (before losses) has shown a
downward trend similar to that of net profits.
CHART 2
DOLLAR3 PER

890

1895

1900

1905

1910

1915

1920

1925

1930>

1935 37

NATIONAL BANKS—ANNUAL GROSS EARNINGS (INCLUDING RECOVERIES. ETC.), NET EARNINGS, (BEFORE LOSSES). AND NET PROFITS (AVAILABLE
FOR DIVIDENDS) PER $1OO OF LOANS
AND INVESTMENTS, 189O-1937
(FISCAL YEAR BASIS)

Net earnings (before losses) decreased
from over $4.00 per $100 of loans and investments in 1890 and 1891 to about $3.00 in
1895. In the following 15 years the rate fluctuated around $3.00 although it was slowly
1

For figures see appendix table II.
Gross earnings as shown in chart 2 and appendix table II
include recoveries on charged-off assets and profits on securities
sold, although these items have been separately available in most
of the recent years. (See note 2, second column, p. 102.) Because of the form of the earlier reports, the figures could not be
adjusted so as to be comparable with current material.
Net earnings represent gross earnings less expenses, which
comprise current operating costs, including salaries and wages,
interest on deposits and borrowed money, rent, supplies, taxes,
and other expenses. Expenses do not include losses on depreciated assets or depreciation on bank building and furniture and
fixtures.
Net profits represent net earnings (including recoveries and
profits on securities sold) less gross losses.
Gross losses include total charge-offs or losses on loans and investments, allowances for depreciation on banking house and
furniture and fixtures, and all other losses and depreciation.

104

FEDERAL RESERVE BULLETIN

decreasing, and 1907 was the last year in
which it was as high as $3.00. The rate rose
in the post-war years but in 1923-1933 it approximated $2.00. Due to recoveries on
charged-off assets and profits on securities
sold, which in the case of national banks have
been included with earnings, there has been
a substantial rise in recent years.
The difference between gross and net earnings as shown, in chart 2 is the measure of
expenses per $100 of loans and investments
in each year. The movement of gross earnings has been characterized by no clearly
defined trend over the whole period although
there have been decided short-term movements. Gross earnings amounted to about
$6.50 per $100 of loans and investments in
1890, but this rate declined considerably from
1890 through 1899, reaching slightly less than
$5.00 in the latter year, while expenses
fluctuated narrowly between $2.50 and $2.20
per $100 of loans and investments. Thus, the
spread between gross earnings and expenses
narrowed gradually during this period.
Somewhat irregular but moderate changes
in gross earnings and expenses between 1900
and 1905 were followed by a period of considerable increase in both earnings and expenses per $100 of loans and investments,
culminating in record high figures in 1921.
Expenses advanced more rapidly in these
years than gross earnings, and that influence
was reflected in further declines in net earnings per $100 of loans and investments.
Gross earnings decreased to a level of
around 6.5 percent on loans and investments
in 1923. Expenses also declined sharply in
relation to loans and investments but remained at a level substantially higher than
in any year prior to 1920. From 1923 through
1933 gross earnings per $100 of loans and
investments fluctuated around $6.25 and expenses around $4.25, and in those years net
earnings rates changed little.
During the years 1934-1936 the rate of
gross earnings declined as a result of lower
yields on earning assets, and expenses were




FEBRUARY

1938

reduced by the prohibition of interest on demand deposits and the lowering of the rate
paid on time deposits.
Gross Losses.—The rate of gross losses on
loans and investments is shown in chart 3.1
No distinct trend over the 48 years from 1890
through 1937 is apparent. The rate of loss
usually increased in periods of business slackness such as 1894, 1908,1915,1921, and 19301933, and declined when conditions were
more prosperous. Years when the rate of
failure among business concerns was large
were years in which bank losses were also
great. Except in years of depression gross
losses charged off annually were usually well
below $1 per $100 of loans and investments.
The low ratio of losses between 1923 and
1930 relates only to active banks and does
not reflect losses realized on assets of banks
after they were closed, nor does it reflect
additional losses which would have been
charged off in some cases except for the fact
that depositors waived some of their claims
incident to reorganization of banks. The
number of bank failures during these years
was large and the loss realized on their assets
in liquidation was substantial. Furthermore,
bankers operating active banks may have
been reluctant to charge off losses during
those years when the rate of net earnings
(before losses) on loans and investments was
comparatively low. As a consequence, some
banks no doubt entered the depression carrying assets at figures higher than were justified by the facts. After 1930 losses charged
off rose to an unprecedented height and were
the chief factor in the large deficits recorded
by the national banking system in 1932, 1933,
and 1934.
The gross losses recorded in the earnings
and expense statements of 1935, 1936, and
1937 were also large but were to a great extent offset by substantial recoveries on loans
and investments and profits on securities
sold, as chart 3 shows. In 1936 profits on
x

For figures see appendix table II.

FEBRUARY 1938

FEDERAL RESERVE BULLETIN

105

securities sold accounted for approximately of this influence, however, is slight. Figures
35 percent of net profits of all national banks given with respect to member banks in this
and in 1937 this proportion was nearly 45 section are not wholly comparable with those
given for national banks in preceding paraCHART 3
graphs. The member bank data are on a
calendar year basis, as published in the
i
i
Board's annual reports, while the national
bank statistics are for fiscal years, since they
were available in no other way in early decades.2
Net Profits on Invested Capital.—The rate
of
net profits (available for dividends) on
1
\l
Gros s Losses // V
invested capital showed about the same move1/
*
ment for member banks as for national banks
-A .-•*
\
, Recover 'es *......,.[
over the period covered. Table 1 shows that
1920
1925 1930 1935 "37
1890
1895 1900
1905
from a level above $8.50 per $100 of invested
capital in each of the years 1927-1929 the
NATIONAL BANKS—ANNUAL GROSS LOSSES AND
rate dropped rapidly, and in 1932, 1933, and
ANNUAL RECOVERIES (INCLUDING PROFITS ON
SECURITIES SOLD. 1927-1937) PER $1OO OF
1934 sizable deficits were incurred. After
LOANS AND INVESTMENTS. 189O-1937
(FISCAL YEAR BASIS)
1934 improvement was marked, and in 1936
the
rate of net return available for dividends
percent. Similar figures are not available
was
even higher than the 1927-1929 average.
for 1933, 1934, and 1935, but on the basis of
The
improvement during the last two years
scattered evidence it is known that profits on
can
be
attributed to three factors: a substansecurities sold were important in 1934 and
tial
reduction
in the volume of losses cur1935.
rently
charged
off against depreciated assets,
MEMBER BANKS, 1927-1936
an important increase in recoveries and
Beginning in 1927 the official earnings and profits on securities sold, and to a lesser exdividends reports of members of the Federal tent the increasing proportion of loans and
Reserve System were compiled in more de- investments to invested capital.
tail with respect to the components of earnNet Profits on Loans and Investments.—
ings, expenses, and losses than had been The ratio of net profits to loans and invest1
the case previously. The data which have ments evidenced much the same general tendbeen collected and compiled in the Board's encies as did that on invested capital. After
annual reports are on an approximately unireaching a peak of nearly $1.60 per $100 of
form basis from year to year, and are sufloans and investments in 1929, it fell off subficiently comprehensive to justify further
stantially. Deficits were shown in 1932-1934,
analysis even though the period covered is
but in 1935 there were net profits (available
relatively short.
for dividends) of about $.70 per $100 of loans
In the member bank figures there is some- and investments, and in 1936 this rate was
what more weight given to larger banks than
more than doubled.
in the case of the national bank data, because
Loans and investments per $1 of resources,
of the greater proportion of large banks in2
The figures of loans and investments, total resources, and
cluded among State members. The net effect invested
capital represent averages of call dates (December to

A

r

\Jx

Including profits on securities sold 1927 - 3 7

1
Members of the Federal Reserve System include all national
banks in the continental United States and such State banks as
join the System. In 1927 the net profits of all member banks
aggregated $447,009,000, of which $257,283,000 was earned by
national banks ; in 193.6 the similar figures were $465,317,000 and
$313,570,000.




December, inclusive, except 1933) in the case of member banks,

for the call date nearest June 30. In the official publications of
the Board of Governors earnings ratios have been related to balance sheet items averaged for the several calls of the year. For
the long-term survey of national banks an averaging method did
not appear to justify the cost involved.

106

FEDERAL RESERVE BULLETIN

FEBRUARY 193S

TABLE 1.—OPERATING RATIOS OF MEMBER BANKS BY CALENDAR YEARS, 1927-1936
1927

1928

1929

1930

1931

1932

1933

1934

1935

$6.15
4.63

$6.32
4.65

$6.71
4.71

$6.10
4.53

$5.51
4.00

$5.45
4.01

$4.95
3.44

$4.62
3.15

$4.17
2.88

1.52

1.67

2.00

1.57

1.51

1.44

1.51

1.47

1.29

1.27

.63
.47

.63
.41

.82
.38

1 03

1.85

2 73

3.43

3.24

.33

.38

.40

.50

.94

1 86
1.30

1.41
1.62

.16

.22

.44

.70

1.47

2.33

2.93

2.30

.56

1+.21

1.36

1.45

1.56

.87

.04

-.89

-1.42

-.83

.73

1.48

$8.66
6.34
.77

$8.96
6.18
.76

$8.75
5.62
.75

$4.56
5.26
.75

$.19 $-4.50 $-7. 26 $-4. 45
5.33
5.23
5.04
5.10
.72
.76
.75
.77

$4.14
5.65
.69

$8.93
6.02
.68

1936

Per $100 of loans and investments:
Gross earnings (excluding recoveries, etc.).
Expenses.
Net earnings (before losses)
Gross losses
_ ____ _
Recoveries and profits on securities sold...
Net losses

__

Net profits* (available for dividends)

$4.05
2.78

Other ratio items:
Net profits* (available for dividends) per $100 of invested
capital
Loans and investments per $1 of invested capital
Loans and investments per $1 of total resources

1
Net recovery.
2 Minus figures represent net deficits.
NOTE.—For more detailed figures see appendix table VII; for dollar amounts see appendix table VIII.

as shown in table 1, decreased in recent years
because banks were holding unusually large
amounts of idle funds. Consequently, net
profits as a percentage of total resources in
recent years have compared less favorably
with the period 1927-1929 than net profits
as a percentage of loans and investments.
Loans and investments per dollar of invested capital at $6 in 1936 were somewhat
less than in 1927. However, there was a
material reduction in the ratio during 19271932 to a low of about $5.00, followed by an
upturn which continued during 1933-1936.
It will be observed that in the case of national
banks1 the decline (based on mid-year figures) during the former period was not as
great, but the growth in the proportion of
loans and investments after 1933 was of
somewhat greater magnitude.
Gross Earnings on Loans and Investments.
—For the period under consideration in this
section, 1927-1936, it is possible to segregate
recoveries and profits on securities sold from
gross and net earnings figures. Owing to
the fact that profits on securities sold were
not segregated from "other earnings" prior
to 1927 and that recoveries were not so segregated prior to 1918, these items were included
1

See chart 1.




with earnings in the national bank statistics
for the entire period. Hence the trends
shown in the two series of earnings data are
not completely comparable. The discrepancy
has been particularly significant in recent
years, when recoveries and profits on securities sold have risen to such an extent that
in 1936 they more than offset the substantial
losses on bad assets which were charged off.
As shown in table 1, the gross earnings of
member banks per $100 of loans and investments increased from 1927 to 1929 but after
the latter year they started on a steady and
pronounced downward movement which continued through 1936. During the period
1929-1936 the reduction in the rate of gross
earnings amounted to nearly 40 percent.
This decrease reflected a corresponding
shrinkage in the rate of gross return on loans
and investments, only minor changes being
shown in most other types of earnings. An
analysis of changes during the period in the
relative rates of return on loans as against
investments appears in subsequent paragraphs.
Expenses in Relation to Loans and Investments.—The sharp decline in earnings on
loans and investments during the 7 years
subsequent to 1929 was to a considerable ex-

FEBRUARY

1938

FEDERAL RESERVE BULLETIN

tent offset by a parallel reduction in interest
paid on deposits. In fact the amount of interest paid on deposits per $100 of loans and
investments declined in every year of the
1927-1936 decade, and in the final year was
only about $.60 as against almost $2.20 in the
first year of the period.1
Annual salary and wage payments expressed as a percentage of loans and investments also showed a downward tendency
from 1929 to 1936 but the amount of decline
was relatively small. Tax payments as a percentage of loans and investments were also
reduced somewhat, although they turned upward in 1936.
Total expenses fluctuated between $4.50
and $4.70 per $100 of loans and investments
during 1927-1930, were at the $4.00 level in
the two subsequent years, and decreased
steadily thereafter, amounting to about $2.75
in 1936.
Net Earnings (Before Losses).—The net effect of the fluctuations in gross earnings (excluding recoveries, etc.) and expenses of
member banks during the 10-year period was
an increase in net earnings (before losses)
from $1.50 per $100 of loans and investments
in 1927 to $2.00 in 1929, followed by an extended downward trend. By 1936 the rate
had declined to about $1.25. This movement
is to be contrasted with the wider fluctuation
registered by net profits.
Losses and Recoveries.—While gross losses
rose to record high levels in the early 1930's,
offset to only a small degree by recoveries
and profits on securities sold, the annual rate
reflected a sharp reduction in 1935 and 1936
coincident with a sharp expansion in the
amount of recoveries (including profits on
securities sold) per $100 of loans and investments.
1
Detailed figures for expenses appear in appendix table VII.
Payment of interest on demand deposits by member banks was
prohibited by the Banking Act of 1933, and the Board of Governors of the Federal Reserve System was authorized to limit the
rates payable on time deposits. The decline in interest paid on
deposits was somewhat offset by the provision in the Banking
Act of 1933 for Federal deposit, insurance. Assessments against
member banks for deposit insurance in 1936 amounted to 1/12 of
1% of deposits.




107

The growth in recoveries and profits on
securities sold in recent years, accompanied
by diminishing charge-offs of losses on bad
assets, has been so large that it has much
more than offset the declining tendency in
net earnings from operations (i.e., before
losses) and has been the prime factor in the
recent improvement in the net profits ratios
of member banks. Even in 1935 and 1936
gross losses charged off were larger than in
any of the years 1927-1930, and if it had not
been for the considerable volume of recoveries and profits on securities sold the
banks would still have been operating at a
deficit as they did in the 3 preceding years.
KANSAS STATE BANKS, 1902-1935

The analysis of earnings rates for a period
of decades must of necessity be based upon
national banks because similar data are not
available for State banks generally. The only
State for which earnings and expense figures
are available over a long period is Kansas,
and the record of banks in this State cannot
be considered as typical of State banks as a
whole, since Kansas is predominantly agricultural and changed from a frontier to a
settled community during the period under
review.
Chart 4 2 presents data for Kansas State
banks similar to those for national banks
used in charts 2 and 3. One of the principal
points to be noted in this chart is the distinct
downward trend in gross earnings of Kansas
State banks per $100 of loans and investments in contrast with the fluctuating rate,
for national banks. The unusually high rate
of Kansas State banks in the earlier years,
more than $9 per $100 of loans and investments for the first decade of this century,
may be explained by the fact that Kansas at
the beginning of the century was in an early
stage of economic development, when risks
were comparatively great but opportunities
for profitable use of funds were such as to
encourage borrowing even at high rates of
2

For figures see appendix table X.

108

FEDERAL RESERVE BULLETIN

FEBRUARY 1938

interest. The expenses of Kansas State records of others. One means of further
banks, which in the earlier years were con- analyzing the records is to examine the residerably more than twice as high per $100 sults of smaller groups of banks in order to
of loans and investments as those of. national determine whether certain classes of banks
banks, showed little change between 1905 and are more profitable than others.
1918, while the expenses of national banks A long-term comparison of net profits on
rose considerably. The higher level of ex- capital and surplus of national banks by geoCHART 5

CHART 4
DOLLARS PER $ 1 0 0 OF
LOANS a INVESTMENTS

12

12

Gross Earnings

10

^V y \

^Including Recoveries, etc.J

10

8
\

Expenses^.^^
6

/
4

s

**~
vs

^^\~>

8

^

Net Earnings

.^sJBefore

A

Losses)

Net Prof
Gross Lc

«s-—"x_
0
1900

1905

1910

—^

^—
1915

1920

N

1925

i
1930

6

PER

20
15
10
5
0
-5
-10
-15
-20

WESTERN

NEW ENGLAND

j

\

—

2
0

1935 '37

10
5
0

-5

1
PACIFIC

fa

J

1 1
l\
rI

-15
-20

10

-15

-20

-10

20
15

\
_j_'

i

-5
KANSAS STATE BANKS—ANNUAL GROSS EARNINGS
(INCLUDING RECOVERIES, ETC.), EXPENSES. NET
EARNINGS (BEFORE LOSSES). GROSS LOSSES.
AND NET PROFITS PER $1OO OF LOANS
AND INVESTMENTS, 19O2-1935
(CALENDAR YEAR BASIS)

k
\

I

20
15

.
\
\

A-s

V

I

^Q

- -5
-10
15
-20

ALL NATIONAL BANKS

r\

5
0

-10

20
15

15
10

Si

V
EASTERN

4

20

/1

I

r

PER CENT

I

A

J

/

^

\

20
15
10
5
0
-5
-10
-15
-20

f vJ
penses per $100 of loans and investments 5 J
\
0
\1
i
probably reflects the fact that most of the
\
-5
1
\
Kansas State banks were small institutions -10
V
which tend to have higher gross earnings and -15
expenses per $100 of loans and investments -20
"37
MIDDLEI WESTERN
20
than do larger banks.
/
A I
These variations in levels of gross earnings 1510
VJ
and expenses over a period of years resulted 5
\ I
in a greater decline, proportionately, in net -50
earnings (before losses) of Kansas State -10
u1
-15
banks over the years than was shown by na- -?0
tional banks. Net profits per $100 of loans
1890 1900 1910 1920 1930 '37
and investments also declined more for Kan- NET PROFITS PER $1OO O~ CAPITAL AND SURPLUS
OF NATIONAL BANKS BY GEOGRAPHIC AREAS,
sas State banks than for national banks be189O-1936 (FISCAL YEAR BASIS)
tween 1902 and 1922.
graphic regions is available from data conRESULTS BY SPECIAL CLASSES OF BANKS
tained in the annual reports of the CompThe foregoing sections have dealt with the troller of the Currency. 1Data for 6 regions
profits experience of the banking system in are presented in chart 5, which shows that
general and are, therefore, a reflection of banks in the areas of more recent economic
averages; the good records of profitable insti- development, notably the Western and Pacific
tutions have been averaged with the poor
For figures see appendix table V.




1890

1

1

1900

1910

1920

1

1930

1

FEBRUARY 1938

FEDERAL RESERVE BULLETIN

109

States, often had much higher annual rates to what may be called medium-size banks the
of profits than banks in the older sections typical rate during these years was about
where economic activities had become more 7.5 percent, while that for larger banks was
diversified and stabilized. Equally impor- moderately higher. Typically, the unfavortant, the banks in the new regions had at able experience of small banks was associated
times much lower profits rates than those in with relatively high operating expenses. Almore settled areas. In New England, for ex- though these were offset by relatively high
ample, during the 41 years from 1890 gross returns, net profits were unsatisfactory
through 1930 national banks had profits of because of the necessity for writing off large
4 percent or more on capital and surplus in proportions of depreciated assets. Since a
every year, and the rate exceeded 8 percent large proportion of small banks were located
in only 10 years. In the case of the Western in agricultural regions, the unfavorable exStates, on the other hand, net profits exceeded perience of these banks during 1926-1930 re12 percent on capital and surplus in 14 years flected in part agricultural difficulties.
while in 8 years they were less than 3 percent.
ECONOMIC CONDITIONS AND RATES OF
It is apparent that the degree of economic
EARNINGS AND EXPENSES
development and conditions of prosperity or
depression are major factors in determining Business conditions influence the earnings
the profitability of banks as a whole in any positions of banks by affecting the level of
given area. Unfortunately, there is not suffi- interest rates and therefore the rate of gross
cient statistical material available to illus- earnings on earning assets; by affecting the
trate many other factors which are generally costs or expenses of banking; and by affectcharacteristic of unprofitable banks over the ing the losses and subsequent recoveries from
whole period since 1890. Some of these char- such losses. While all of these elements in
acteristics are suggested by records other the earnings of national banks have been inthan official earnings reports. For example, fluenced by changes in business conditions
it is reasonable to assume that those types of during the period under review, there is no
banks whose failure experience has been single factor which has shown wider year-toworse than the average have also been char- year changes than losses. The following
acterized by unfavorable profits records. The paragraphs present by periods some of the
record of bank suspensions during 1921-1936 important influences of business conditions
shows that the rates of failure among the on the earnings of national banks.
groups of banks with small amounts of re- 1890-1900.—Several of the years between
sources compared unfavorably with the aver- 1890 and 1900 were characterized by deage experience.1 For a bank to survive over pressed conditions in the economic system
a long period of time its earnings must be generally, and banks suffered declines in
sufficient to cover its expenses, its losses on gross earnings per dollar of loans and investbad assets, and, in addition, some return on ments as well as increases in losses on assets.
invested capital.
As a consequence, net profits on loans and inOne limited study of all national banks for vestments and on invested capital of national
the period 1926-1930 showed that the typical banks were comparatively low from 1894
rate of net profits on invested capital of banks through 1899.
with loans and investments of less than $500,- 1900-1920.—The period from a little be000 was less than 4 percent. For those with fore 1900 until 1920 was marked by an almost
loans and investments of less than $250,000 continuous rise in commodity prices and farm
it was scarcely half as good. With respect land values. The upward tendency of prices
and values was an important factor in the
FEDERAL RESERVE BULLETIN for September and December 1937.
1




110

FEDERAL RESERVE BULLETIN

FEBRUARY 1938

growth of national income which enabled bor- time deposits points definitely to increased
rowers generally to repay loans and helped interest costs, whether or not the rate paid
maintain the value of bank investments. Its by banks was bid up. As a matter of fact,
effect is reflected to some extent in the com- commercial banks did tend to raise their
paratively low level of bank losses during rates paid on both time and demand accounts
these years, and consequently in the small in an effort to attract deposits.
portion of net earnings used in writing off
One feature of the increase in time deposits
worthless assets. Reflecting in part the small was the tendency to look upon time accounts
losses, net profits on invested capital of na- as less subject to withdrawal than demand
tional banks (see chart 1) ranged around 8 accounts, and as justifying increases in loans
percent during much of this period, and in and investments which rested on capital
the war years were considerably above that values rather than the turnover material of
rate.
business. The almost continuous appreciaThe relatively high level of bank profits tion in prices and values up to the war and
after 1900 encouraged the opening of addi- the marked rise from 1915 to 1920 in incomes
tional banks, charters for which were freely and net worth helped to sustain the value of
granted by supervisory authorities. Many of capital assets. The ratio of losses to loans
the new banks were located in small towns, and investments was low.
often already served by banks, and conse- Not only did the total volume of loans and
quently obtained relatively small amounts of investments, both short-term and long-term,
deposits and assets. An effect of the marked increase sharply, but rates of return on loans
increase in the number of small banks is seen and investments were gradually tending upin the fact that, despite considerable growth
in the resources of the banking system, the
average volume of loans and investments per
bank was lower in 1915 than in 1900.
Increases that became evident in bank operating expenses per $100 of loans and investments after 1907 may be ascribed in general
terms to increased competition, partly growing out of the larger number of banks. It is
impossible to analyze in detail the form of
the increased costs since, with the exception
of Kansas State banks, no segregated data of
earnings and expenses are available for the
period prior to 1918. Growth in the amount
of interest paid by banks was an important
factor, however, as is indicated by an analysis
of deposits. At all commercial banks in the
United States time accounts represented
about 12 percent of total deposits, excluding
interbank balances, in 1900. By 1915 time
accounts included about 30 percent, and by 1900 1905 1910 1915 1920 1925 1930 1935 *37
N U A L INTEREST E A R N I N G S , INTEREST EXPENSE,
1930 about 40 percent of total deposits. At A NOTHER
EXPENSE, A N D NET SPREAD BETWEEN I N TEREST E A R N I N G S A N D INTEREST EXPENSE,
national banks alone, time deposits reprePER $1OO OF LOANS A N D I N V E S T M E N T S OF
ALL N A T I O N A L B A N K S . 1 9 1 8 - 1 9 3 7 (FISCAL
sented about 43 percent of total deposits in
YEAR BASIS), A N D OF KANSAS STATE
B A N K S , 1902^1935 (CALENDAR
1930. This growth in the relative volume of
YEAR BASIS)




FEBRUARY

1938

FEDERAL RESERVE BULLETIN

ward from 1900 until 1921. At the same
time, however, the increase in interest paid
by banks helped narrow the spread between
gross earnings and expenses, resulting in the
steady decline in net earnings (before losses)
per $100 of loans and investments.
Although no detailed classification of national bank income and expenses is available
prior to 1918, the ratios of interest and other
expenses to loans and investments for Kansas
State banks since 1902 indicate what was
happening in that State, and perhaps furnish
a clue to the operating results of banks in
general. As is shown by chart 6,1 the amount
of interest paid by Kansas State banks per
$100 of loans and investments rose almost
continuously from 1902 until 1922. Expenses
other than interest (mainly salaries, space,
and supplies) declined slightly between 1909
and 1917. In 1921, however, the ratio of noninterest expenses to loans and investments at
all national banks and at Kansas State banks
advanced sharply. The absolute amount of
such expenses increased only moderately in
that year but the ratio increased considerably
since large amounts of loans and investments
were liquidated.
The Post-War Decade.—After 1920 bankers were confronted writh economic conditions
different from those that had prevailed between 1900 and 1920. Commodity prices declined precipitously after the middle of 1920
and in 1921; the volume of goods produced
was sharply curtailed; and incomes of business concerns and individuals were consequently reduced. Losses of national banks
per dollar of loans and investments rose
sharply, as shown in the difference between
the curves of net earnings (before losses)
and net profits in chart 2, owing to increased
charge-offs and the reduced volume of earning assets.
Farm real estate prices also started to decline in 1920. Unlike commodity prices, however, they continued downward without interruption over a period of 13 years, whereas
1

For figures see appendix tables VI and XII.




111

the more drastic 1920-1921 drop in commodity prices was followed by 8 years of comparative stability. In addition to the difference between changes from 1921 through
1929 in farm land prices and average prices
of all commodities, the contrast between
agricultural and non-agricultural conditions
is sharpened by noting that prices of corporate equities advanced markedly in these
years. Prices of urban real estate, especially
in some large communities affected particularly by industrial conditions, also advanced
considerably.
Gross earnings and expenses of national
banks per $100 of loans and investments did
not change greatly between 1923 and 1929.
Revenue from the operation of trust departments tended to increase, but it remained a
very small portion of total income. Among
the expense items interest paid on deposits
continued to grow, both because banks were
increasing their rates and because the proportion of time deposits in the banking system was growing rapidly. The increase in
interest paid on deposits was partly offset by
reductions in interest paid on borrowed
money and by reductions in taxes.2
Since neither earnings nor expenses of national banks per $100 of loans and investments changed materially between 1923 and
1929, the rate of net earnings (before losses)
was comparatively steady. The rising volume
of production at a stable commodity price
level and the advancing prices of securities
enabled most borrowers to repay bank loans
with reasonable promptness. Reflecting a
lower rate of charge-offs for losses, net
profits per $100 of loans and investments
increased slightly. Loans and investments
expanded proportionately more than capital
funds after 1921, and the rate of net profits
on invested capital tended to rise.
Although the banking system as a whole
made high profits during the decade of the
2
Statistics of earnings for national banks are classified in less
detail prior to 1927 than thereafter. Details of earnings and expense items of member banks in each year 1927-1936 appear in
appendix tables VII and VIII.

112

FEDERAL RESERVE BULLETIN

1920's, some important portions did not
prosper. An indication of this was given in
earlier paragraphs dealing with the experience of banks by location and by size.
Depression and Post-Depression Years.—
Following the collapse in security prices in
1929 there was a severe decline in commodity
prices, both agricultural and non-agricultural, which extended over a period of more
than 3 years. This decline was accompanied
by an even greater proportionate contraction
in national income. The net profits of national banks were also sharply reduced, and
for some time during and after the reaching
of the lower depression levels there were net
deficits for the banking system in general.
The outstanding factor responsible for the
movement of net profits from the high level
of the 1920's to a point below zero was the
charging off of large amounts of depreciated
assets.
With the progress of recovery following
the banking crisis in 1933 values of bank
assets appreciated. Charge-offs of losses continued heavy in 1933 and 1934, however,
since many of the banks that did not fail had
been unable to write off all their losses in
previous years. As values continued to rise
in 1934, 1935, and 1936, gross losses were
reduced, and banks began to obtain substantial recoveries on assets previously
charged off. Such losses as were written off
in the fiscal years 1936 and 1937 were substantially offset by recoveries on previous
charge-offs and profits on securities sold.
Without these unusually large recoveries and
profits on securities sold the banking system
would have been earning a rate of net profit
substantially under the levels of the pre-depression period.
Increased Proportion of Investments.—Decreases in gross earnings per $100 of loans
and investments of national banks between
1929 and 1936 resulted partly from a decline
in the relative importance of loans which, on
the whole, yield more than investments. The
vShift from loans to investments has been




FEBRUARY

1938

underway for many years and has been part
of a widespread movement on the part of
corporate and other large-scale borrowers to
reduce short-term commercial loans and replace them by longer-term securities. From
1931 through 1936 the increased importance
of securities among bank assets was greatly
accelerated. Commercial loan demand grew
slowly, while borrowings of the Federal Government increased markedly. Banks acquired
a considerable part of the new Government
issues, thus increasing their earning assets
and at the same time making funds available
to the Government, the expenditure of which
increased the amount of funds in the hands
of business and made less necessary additional borrowing by business concerns. By
the middle of 1936 investments represented
60 percent of the total loans and investments
of all commercial banks in the United States,
as compared with 27 percent in 1929 and 25
percent in 1921. There has been some decline in this proportion since the middle of
1936.
Aside from reducing rates of gross earnings, an increasing proportion of securities
among bank assets has its bearing on bank
profits in other ways. To the extent that
banks hold long-term investments they are
subject to considerable change in the value
of those assets because of changes in the
long-term interest rate. An advance in that
rate may be reflected in losses on securities
sold unless the securities have been written
down previously. On the other hand, decreases in interest rates during recent years
have given banks opportunities to realize
profits from the sale of securities, and that
source produced an important part of net
profits of the banking • system in 1935 and
1936, and to a lesser extent in the first half
of 1937. Beginning in 1927 the reports of
member bank earnings and expenses have
shown separately the amounts of interest income on loans and discounts, and on investments. During the 10 years for which such
information is available the gross interest re-

FEBRUARY 1938

FEDERAL RESERVE BULLETIN

113

turns on loans have averaged more than 1 charge-offs on loans exceeded those on investpercent1 above the gross interest returns on ments in every year except 1931. The highinvestments, the difference being greatest in est rate of net charge-offs per $100 of loans
the latter half of the period. This differential during the period was $3.30 in 1934 comis shown by years in table 2. The decline in pared with $.40 in each of the years 1927,
the gross interest return both on loans and 1928, and 1929. The highest rate on investon investments since 1929 may -also be ob-ments was $2.20 in 1933.
served. The gross interest return on loans The rates of net charge-off do not fully redeclined about 1.5 percent while that on in- flect the year-to-year changes. It would apvestments was more than 2 percent lower in pear that the losses on investments are recognized and written off earlier than those
1936 than in the years 1927-1929.
on loans, and because of this lag the losses
TABLE 2.—GROSS INTEREST RETURN, N E T CHARGE- on loans did not increase as early in the deOFFS, AND N E T RETURN ON LOANS PER $100 OF pression years but persisted longer after the
LOANS, AND ON INVESTMENTS PER $100 OF INVESTbanking holiday than the losses on investMENTS OF MEMBER BANKS, 1927-1936
ments. The difference in the time required
Loans
Investments
for recognizing and writing off such losses
Calendar
probably results from the availability of marGross
Net
Net
year
Gross
Net
Net
interest1
chargechargereturn interest
return ket quotations on investments which respond
offss
off^
return
return1
promptly to changes in the business outlook.
$5.10
3 $ + . 80
$5. 50
$.40
$4.70
$5.50
1927
, The proportion of investments in the port5.30
.40
4.70
5.20
5.70
3 +.50
1928
5.70
.40
4.70
4.70
6.10
1929
.70
4.70
5.40
4.50
4.30 folios of banks varies in different parts of
.20
1930
3.70
4.90
1.20
4.10
1931
1.50
2.60
2.30
3.90
1.80 the country as do rates charged on loans to
1932
5. 10
2.10
2.80
1.60
3.10
3.50
4.70
2.20
1.30
1933
In general, the banks in the
1.00
4.30
3.30
3.30
.90
2.40 customers.
1934
2.70
4.20
1.50
2.80
3 +.40
3.20
1935
3.20
3 + 1 . 40
4.10
.90
2.60
4.00 Northeastern part of the country have re1936
ceived about as high a rate of net return from
1
Includes interest and discount in the case of loans, and interest and
investments
as from loans and consequently
dividends
in
the
case
of
investments.
2
The amount of net charge-offs is obtained by deducting recoveries
have
not
been
particularly sensitive to
and
profits
on
securities
sold
from
gross
losses.
3
A plus charge-off indicates an excess of recoveries and profits on
changes in the proportions between the two
securities sold over gross losses.
Source: Appendix table XIV.
major types of earning assets. Banks in the
Western and Southern areas have received in
The differences between the gross return the past and continue to receive higher net
on loans and that on investments do not carry returns on loans than on investments. Bank
over to net returns because of considerably earnings in these areas, therefore, are sensidifferent rates of charge-off. During the 10- tive to changes in the portfolio proportions
year period, the net return on investments of loans and of investments.2
exceeded that on loans in 1927, 1934, 1935, Easy Money Conditions.—Table 2 reflects
and 1936. For the period as a whole, how- the decline in interest rates associated with
ever, the average net rate of return on loans easy money conditions which have obtained
was somewhat higher than on investments,— in recent years. In 1929 member banks
about $3.90 on loans and $3.40 on investments. realized a gross return of 6 percent on their
In three of these years recoveries and profits loans and more than 41/2 percent on their inon securities sold exceeded gross charge-offs vestments. For 1936 the comparable rates
on securities so that the net return on securi- were 4 percent and 2y2 percent, respectively.
ties exceeded the gross return. The net
The decline in interest rates was to a large
1
2
Percentages referred to in this section are percentage points,
Gross interest return, net charge-offs, and net return for all
not actual changes measured in percentages. That is, a decline member banks, by Federal Reserve districts and by years, 1927from 5 to 4 is referred to as a decline of 1, not 20, percent.
1936, appear in appendix tables XV, XVI, and XVII.




114

FEDERAL RESERVE BULLETIN

degree an outgrowth of increasing amounts
of idle bank reserves seeking employment,
but that broad influence was supplemented
by competitive factors in the form of low
rates offered bank customers by various
governmentally sponsored agencies. Banks
found it necessary to lower their rates somewhat in order to retain loans, or, in the case
of those paid off, to employ the funds by investing in lower-yield securities. At the end
of 1937 banks continued to have a large volume of idle funds.
The rate of gross income on total assets
of banks has, of course, been affected by the
large volume of idle funds which banks have
held. Loans and investments constituted
about 75 percent of total assets of member
banks during the pre-depression years but
only 68 percent in 1936, as table 1 shows.
From the standpoint of the rate of net profits
this is of importance only in so far as the
offsetting liabilities of the banks in the form
of deposits cost something in interest and
other out-of-pocket expenses.
Reduction of Interest on Deposits.—The
decline in expenses of member banks per
$100 of loans and investments which occurred between 1929 and 1933 resulted
mainly from decreased interest payments on
deposits. The substantial reduction in expenses in 1933 and 1934 was largely a result
of the prohibition of interest on demand deposits and decreased interest payments on
time deposits. Before the easy reserve position of banks had become widespread in 1933,
many banks had begun to reduce rates paid
to depositors because they were having difficulty in employing their funds profitably,
and because they were being pressed to reduce operating costs. The reduction of rates
had often been postponed because of competitive situations under which some banks hesitated to initiate lower rates at the risk of
losing deposits, even though they may not
have been desirous of obtaining additional
deposits at high cost.




FEBRUARY

1938

Although the movement had begun by
1933, widespread and substantial declines in
rates of interest paid on all deposits, and thus
in total operating costs, followed the passage
of the Banking Act of 1933. The act prohibited payment of interest on demand deposits and contained provisions under which
the Board of Governors of the Federal Reserve System in November 1933 set a maximum rate of 3 percent that member banks
could pay on time and savings deposits. This
maximum was lowered to 2V& percent effective February 1, 1935, with even lower rates
on some types of time deposits. The Banking Act of 1935 contained provisions under
which the Federal Deposit Insurance Corporation issued similar regulations setting
maximum rates which might be paid by insured nonmember banks at the same levels as
those applying to member banks.
With the impetus of these measures and
continued pressure of idle reserves, many
banks carried their reductions further, lowering rates on ordinary savings deposits to 2
percent and IV2 percent or even less. Mainly
because of these voluntary and mandatory
decreases in interest rates, total operating
costs of banks were reduced sufficiently in
1934, 1935, and 1936 to offset almost entirely
the effects of lowered rates of return on loans
and investments, and rates of net earnings
(before losses) declined only slightly.
New Sources of Income.—The presence of
ample reserves and the slow rise in commercial demand for loans have caused banks to
seek new employment for funds. Although
no statistics on the subject are included in
bank condition reports, it is known that in
the past few years instalment and personal
loans have grown substantially. Since gross
rates of earnings on these advances are
higher than on other types of loans, continued growth of the business may tend to
raise the average rate of return on loans.
Some addition to gross earnings of banks
in recent years has resulted from extension
of service charges in various forms. These

FEBRUARY

1938

FEDERAL RESERVE BULLETIN

are primarily on deposit accounts, but some
banks have installed such charges on small
loans. While arguments for imposition of
service charges on deposit accounts have been
widespread among bankers' associations recently, such charges have not been of great
importance as a source of gross earnings to




115

banks generally. Figures for service charges
on deposit accounts were not reported separately until 1933 and in that year they constituted somewhat less than 2 percent of
gross returns of national banks. During the
fiscal year ending June 30, 1937, they constituted about 3.6 percent of such returns.

116

FEDERAL RESERVE BULLETIN

FEBRUARY

1938

APPENDIX
EXPENSES,
TABLE I.—LOANS AND INVESTMENTS OF NATIONAL TABLE I I . — A N N U A L GROSS EARNINGS,
NET EARNINGS, GROSS LOSSES, AND N E T PROFITS OF
BANKS PER $1 OF TOTAL RESOURCES AND PER $1 OF
NATIONAL BANKS PER $100 OF LOANS AND INVESTINVESTED CAPITAL, AND NET PROFITS PER $100 OF

MENTS, 1890-1937 1

INVESTED CAPITAL, 1890-1937 a

Loans and investments per $1 of:
Year
Total
Invested
resources capital2
1890.
1891.
1892.
1893.
1894.
1895.
1896.
1897.
1898
1899.
1900
1901.
1902
1903.
1904.
1905.
1906
1907.
1908.
1909.
1910.
1911.
1912
1913.
1914
1915.
1916.
1917.

$.73

1918.
1919
1920.
1921
1922.
1923.
1924.
1925.
1926.

.74
.74
.71

1927.
1928.
1929.
1930
1931.
1932.
1933.
1934.
1935.
1936.
1937.

.73
.71
.74
.70
.71
.69
.69
.68
.67
.69
.68
.70
.72
.71
.71
.71
.72
.71
.71
.71
.71
.72
.73
.73
.74
.73
.73

. 74
. 76
.79
.76
.76
.76

. 77

.78
.78
.75
.75
.78
.74
.71
.69
.68
.69

Net
profits3
per
$100 of
invested
capital

$2.39
2.29
2.43
2:30
2.38
2.50
2.48
2.56
2.85
3.34
3.37
3.64
3.54
3.51
3.52
3.67
3.70
3.80
3.73
3.85
3.82
3.83
3.95
3.94
4.08
4.15
4.81
5.40

$7.71
7.67
6.59
6.68
4.19
4.75
5.06
4.60
5.24
5.74
8.61
7.70
9.00
8.55
8.37
7.53
8.55
9.49
7.87
7.52
8.33
8.12
7.51
7.87
7.28
6.03
7.49
8.84

6.05
6.62
6.33
5.42
5.55
5.88
5.87
6.20
6.24

9.44
10.17
10.76
7.73
6.45
7.08
6.71
7.54
8.07

6.28
6.25
5.84
5.48
5.55
5.33
5.42
5.68
5.86
6.40
6.52

7.79
7.57
8.21
6.19
1.40
4 - 4 . 26
4
-7.65
* -10. 11
2.31
7.64
8.93

1
Loans and investments, invested capital, and total resources as
of call nearest June 30 in each year. Net profits figures for fiscal years
ending August 31, 1890-1906; 10 months September 1, 1906-June 30, 1907;
and thereafter for fiscal years ending June 30. See note below table II.
2 Invested capital includes common and preferred stock, surplus,
undivided profits, reserves for contingencies, and funds for the retirement
of preferred stock.
3
Available for dividends.
^ Deficit.
NOTE.—The data in this table and others relating to national banks
include the figures of nonmember national banks located in U. S. possessions except for the year 1937, which covers only the member national
banks.
Source: Ratios computed from dollar figures shown in tables III and IV.




Gross
earnings
(including
recoveries,
etc.)

Expenses

1890
1891
1892...,
1893
1894
1895....
1896
1897. ._
1898
1899....
1900
1901
1902....
1903....
1904...
1905....
1906
1907..__
1908
1909
1910
1911...
1912. .
1913
1914
1915
1916...
1917

$6.49
6.70
6.04
6.41
5.87
5.50
5.85
5.59
5.27
4.95
5.66
4.87
5.28
5.20
5.25
4.81
5.06
5.16
5.35
5.19
5.70
5.80
5.74
6.20
6.17
6.05
5.84
5.62

$2.30
2.44
2.38
2.58
2.51
2.43
2.50
2.48
2.29
2.17
2.13
2.01
2.03
2.07
2.17
2.17
2.18
2.16
2.42
2.64
2.97
3.14
3.30
3.53
3.61
3.69
3.66
3.46

$4.19
4.26
3.66
3.83
3.36
3.07
3.35
3.11
2.98
2.78
3.53
2.86
3.25
3.13
3.08
2.64
2.88
3.00
2.93
2.55
2.73
2.66
2.44
2.67
2.56
2 36
2.18
2.16

$.95

1918
1919
1920
1921
1922 _.._
1923
1924
1925
1926

5.98
5.96
6.82
8.09
7.02
6.51
6.47
6.32
6.41

3.75
3.91
4.43
5.47
4.63
4.36
4.47
4.34
4.37

2.23
2.05
2.39
2.61
2.38
2.15
2.00
1.99
2.04

.67
.52
.69

1927
1928
1929
1930!~.
1931
1932] " I I
1933
1934
1935 . . . .
1936
19373 . . .

6.28
6. 19
6.80
6.70
6.44
6.47
6.20
5.53
5.53
5.43
5.38

4.33
4.29
4.60
4.59
4.54
4.42
4.30
3.27
3.06
2.73
2.76

1.94
1.90
2.20
2.11
1.90
2.06
1.90
2.26
2.47
2.70
2.62

Year

Net
earnings
(before
losses)

Gross
losses

Net
profits
(available
for
dividends)
$3. 23
3.35
2.71
2.91
1.76
1.90
2.04
1.80
1.84
1.72
2.55
2.12
2.54
2.44
2.38
2.05
2.31
2.50
2.11
1.96
2.18
2.12
1.90
2.00
1.79
1.45
1.56
1.64

.91
.94
.93

1.60
1.16
1.30
1.31
1.15
1.07
.98
.74
.70
.70
.70
.59
.57
.51
.81
.60
.55
.54
.54
.67
.78
.90
.61
.53

1.19
1.22
.95
.86
.77
.75

1.56
1.54
1.70
1.43
1.16
1.20
1.14
1.22
1.29

.70
.69
.80
.98

1.24
1.21
1.41
1.13

1.65
2.86
3.31
4.04
2.08
1.50
1.25

.25

2 -.80
-1.41
2 -1.78
2

.39

1.20
1.37

1 For fiscal years ending August 31, 1890-1906; 10 months September 1,
1906-June
30, 1907; and thereafter for fiscal years ending June 30.
2
Deficit.
3
Member national banks.
NOTE.—In computing the above ratios for the years 1918-1937 the figures
of gross earnings and net earnings before losses were changed from the
form in which they were officially reported in order to establish a comparability with the period prior to 1918. This change consisted of the
addition to reported figures of earnings of (1) amounts of recoveries on
charged-off assets for the years 1918-1937 and (2) the amounts of profits
on securities sold during 1927-1937. In current compilations these recoveries and profits are added to net earnings (before losses) to arrive at
net profits. Because of the form of the earlier reports the figures could
not be adjusted so as to be comparable with current material.
No adjustments were made in the officially published figures of total
resources, loans and investments, and invested capital, although the
method of reporting these items has changed from time to time. For
example, currently reported figures of loans and investments include
rediscounts but exclude borrowed securities and acceptances of other
banks and bills of exchange sold with indorsement. In 1920 and some
other years, on the other hand, rediscounts were deducted from gross
loans while borrowed securities were included in investments. Available information does not permit the figures for the entire period to be
placed on a fully comparable basis. Tests indicate, however, that any
conclusions based on ratios of earnings, expenses, invested capital, etc.,
to loans and investments, calculated by using these unadjusted figures,

117

FEDERAL RESERVE BULLETIN

FEBRUARY 1938

TABLE III—TOTAL RESOURCES, LOANS AND I N - TABLE IV—ANNUAL GROSS EARNINGS, EXPENSES,
VESTMENTS, AND INVESTED CAPITAL OF NATIONAL
NET EARNINGS, GROSS LOSSES, AND NET PROFITS OF

BANKS, 1890-1937X

NATIONAL BANKS, 1890-19371

[In thousands of dollars]

[In thousands of dollars]

Total
resources

Loans
and investments

1890
1891.
1892.
1893.
1894.
1895
1896.
1897.
1898
1899.
1900.
1901.
1902.
1903
1904.
1905.
1906
1907
1908.
1909.
1910
1911.
1912.
1913
1914.
1915.
1916
1917.

3,061,
3,113,
3, 493,
3, 213,
3, 422,
3, 470,
3, 535,
3, 563,
3,977,
4, 708,
4,944,
5, 675,
6,008,
6, 286,
6, 655,
7, 327,
7, 784,
8, 476,
8, 714,
9, 471,
9, 896,
10, 383,
10, 861,
11,036,
11,482,
11, 795,
13,926,
16, 290,

2, 229,891
2, 258, 753
2, 461,124
2,365,096
2, 379, 646
2, 463, 811
2, 435, 462
2, 461, 823
2, 718, 675
3,159, 498
3, 418, 788
3, 866, 624
4,191, 446
4, 507,077
4, 753,173
5,169, 000
5, 520, 289
6,099, 632
6, 213,095
6, 709, 539
7,067,863
7,396, 624
7,835,034
8,051, 723
8, 360, 443
8, 733, 514
10,121,056
11,865,511

934, 543
987,551
1,011,145
1,028, 870
1,001, 388
987, 228
982, 996
962, 420
954, 988
947,187
1,013, 084
1,062, 459
1,184, 368
1, 285, 690
1, 349,017
1, 406, 858
1, 491, 293
1, 604,104
1, 667,802
1, 744,075
1,850,970
1,933,134
1,984, 398
2,045, 667
2,049, 715
2,105, 364
2,103, 288
2,198, 553

1918
1919
1920
1921
1922
1923
1924
1925
1926

18, 354,942
21, 234, 918
23, 411, 253
20, 517, 862
20, 706, 010
21, 511, 766
22, 565, 919
24, 350, 863
25, 315, 624

13, 606, 455
15, 639, 433
16, 609,064
15,160,150
15, 820, 737
16, 897, 804
17,131,131
18, 413, 863
19, 269, 646

2, 249, 793
2, 363, 478
2, 622,075
2, 796, 291
2, 848, 456
2, 875, 712
2, 916, 245
2, 970,074
3,089, 358

1927
1928
1929
1930
1931
1932.
1933.
1934
1935
1936
1937!

26, 581, 943
28, 508, 239
27, 440/228
29,116, 539
27, 642, 698
22,367,711
20, 860, 491
23, 901, 592
26,061,065
29, 702, 839
30, 280, 025

20, 358, 702
22, 302, 581
21, 467, 858
21, 785, 375
20, 860,112
17, 483,029
15, 491, 403
17,046,296
18,085,103
20, 245, 967
20, 893, 471

3, 239, 539
3, 570,988
3, 674, 763
3,976,148
3, 755, 730
3, 279,848
2, 856, 554
3,001,033
3,086, 418
3,165, 728
3, 205, 577

Year

Invested
capital2

1 As of call nearest June 30 in each year. See note below table II.
2
Invested capital includes common and preferred stock, surplus,
undivided profits, reserves for contingencies, and funds for the retirement
of preferred stock.
3
Member national banks.
Source: Annual Reports of the Comptroller of the Currency. Figures
for 1937 are from the FEDERAL RESERVE BULLETIN for September 1937.

would not be affected if all of the data were placed on a more nearly comparable basis.
The ratios for the items of recoveries and profits on securities sold per
$100 of loans and investments are as follows:
Profits on
securities
Year
Recoveries
Year
Recoveries
sold
1918
$.12
1927
$.16
$.26
1919
.13
1928
.16
.27
1920
.14
1929
.17
.16
1921
.16
1930
.15
.19
1922
.26
1931
.17
.24
1923
.30
1932
.24
.14
1924
.20
1933
*. 51
1925
.22
1934
*
*.79
1926
.23
*
1935
*1.10
1936
1937

1.09
.74

.39
.60

* Profits on securities sold included in recoveries for the years
1933-1935.
Source: Ratios computed from dollar figures shown in tables III and
IV.




Year

Gross
earnings
(including
recoveries,
etc.)

Expenses

Net
earnings
(before
losses)

Net
profits
(available
for
dividends)

Gross
losses

144,614
151, 335
148, 559
151, 695
139,725
135, 459
142, 443
137, 728
143, 394
156, 520
193, 649
188, 266
221, 278
234, 583
249, 412
248, 584
279,312
314, 702
332,454
348,674
402, 665
428, 973
450,043
499, 252
515, 624
527, 985
590, 642
667, 406

51,266
55,036
58, 682
60,909
59, 683
59, 990
61,006
61,153
62,182
68, 498
72, 714
77, 667
85, 235
93,121
103,050
112, 206
120, 448
131, 544
150, 551
177,035
209, 785
232,062
258, 731
284, 516
301, 425
322, 451
370, 903
410, 753

93, 348
96, 299
89, 877
90, 786
80,042
75, 468
81, 437
76, 574
81,212
88,022
120, 936
110, 598
136,044
141, 462
146, 362
136, 379
158, 863
183,158
181,903
171, 640
192, 882
196, 912
191,313
214, 736
214, 200
205, 535
219, 740
256, 653

21, 292
20, 535
23, 219
22,035
38,087
28, 602
31, 695
32, 301
31,179
33, 675
33,659
28, 745
29,462
31,580
33, 425

1918..
1919..
1920..
1921..
1922..
1923..
1924..
1925..
1926..

813, 997
931, 826
1,133,028
1, 225,897
1,109,050
1,100, 508
1,109,054
1,163, 783
1, 236, 223

510,185
610, 780
736,390
829,906
732,990
736, 582
766,044
798, 714
841, 666

303, 812
321,046
396, 638
395,991
376,060
363,926
343,010
365,069
394, 557

91,480
80,680
114, 555
179, 885
192, 390
160, 438
147, 304
141,134
145, 39®

212, 332
240,366
282,083
216,106
183, 670
203, 488
195, 706
223, 935
249,167

1927..
1928..
1929..
1930..
1931..
1932..
1933..
1934..
1935..
1936_.
19373.

1, 276, 382
1, 380, 875
1, 460,128
1, 458,962
1, 344, 077
1,132, 366
960, 921
941, 877
1,001, 366
1, 098, 331
1,124, 588

882, 374
957, 661

394,008
423, 214
473, 246
459, 896
396, 053
360, 768
294, 911
384, 834
448,163
545, 903
548,091

141, 689
153,056
171, 442
213, 635
343, 512
500, 548
513, 295
688, 380
376, 791
303, 932
261, 971

252, 319
270,158
301, 804
246, 261
52, 541
2-139,780
2 -218,384
2 - 3 0 3 , 546
71, 372
241, 971
286,120

1890
1891
1892
1893
1894
1895
1896
1897
1900..
19011902..
1903..
1904..
1905..
1906..
1907..
1908..
1909..
1910..
1911..
1912..
1913..
1914..
1915_.
1916..
1917..

948,024
771, 598
666, 010
557,043
553, 203
552, 428
576, 497

30, 470
31, 337
30,922
50,568
40, 454
38, 714

39, 926
42, 256
53, 756
64, 930
78, 482
62,196
62, 332

72, 056
75, 764
66, 658
68, 751
41, 955
46, 866
49, 742
44, 273
50,033
54,347
87, 277
81, 853
106, 582
109, 882
112,937
105,909
127, 526
152, 236
131, 335
131,186
154,168
156, 986
149, 057
160,980
149, 270
127,053
157, 544
194, 321

1 For fiscal years ending August 31, 1890-1906; 10 m o n t h s September 1,
1906-June 30, 1907; and thereafter for fiscal years ending J u n e 30.
2
3
Deficit.
M e m b e r national b a n k s .
N O T E . — T h e above figures for t h e years 1918-1937 have been changed
from t h e form in which t h e y are officially reported in order to establish
a comparability with t h e period prior to 1918. Recoveries on charged-off
assets for t h e years 1918-1937 and profits on securities sold 1927-1937 have
been included with gross earnings rather t h a n added to net earnings before t h e deduction of gross losses to arrive at net profits (available for
dividends). T h e figures for these items (in thousands of dollars) are as
follows:

Year
1918
1919
1920
1921
1922
1923
1924
1925
1926

.
...
.
_
. .

Recoveries
16,107
21,066
23,912
23.978
41, 782
51,100
34, 495
39,686
44,005

Year
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937

Recoveries
33, 339
36, 469
35, 643
31, 621
35, 310
42, 325
*78,559
*135,351
*198,232
220, 379
154, 676

Profits on
securities
sold
52,660
59, 328
35,085
41, 783
50, 342
24,869
*
*
*
78, 956
124, 765

* Profits on securities sold included in recoveries for the years
1933-1935.
Source: Annual Reports of the Comptroller of the Currency. Figures
for 1937 are from the FEDERAL RESERVE BULLETIN for November 1937.

118

FEDERAL RESERVE BULLETIN

FEBRUARY 1938

PAID,
TABLE V—NET PROFITS PER $100 OF CAPITAL AND TABLE VI—INTEREST RECEIVED, INTEREST
EXPENSE OTHER THAN INTEREST, AND THE D I F SURPLUS OF NATIONAL BANKS, BY GEOGRAPHIC
x
FERENCE BETWEEN INTEREST RECEIVED AND INTERAREAS, 1890-1936
EST PAID PER $100 OF LOANS AND INVESTMENTS OF
NATIONAL BANKS, 1918-1937x
MidAll
New
South- dle
naWest- Pacific
Eng- EastYear
ern
ern
Westtional
land
Difference
ern
banks
between
Expense
Interest
interest
Interest
Year
other than received
received
paid
1890.
$5.59 $8.75 $10.35 $9.53 $10. 48 $12. 86
$8.51
interest
and in9.63
9.02
12.00
1891.
6.46
8.43
9.27
8.48
terest paid
7.64
9.72
8.58
1892.
5.12
7.59
7.12
7.27
8.94
7.87
7.80
1893.
5.71
8.00
7.46
7.40
1.72
4.19
1.00
1894.
4.01
5.91
4.83
4.61
$5. 47
$1.93
$1.82
$3.54
4.22 1918..
5.83
2.74
1895.
4.04
5.62
6.29
5.18
5.41
2.01
1.88
3.40
3.69 1919..
5.17
2.38
1896.
4.95
6.35
6.90
5.54
6.09
2.23
2.20
3.86
4.33
2.55
2.47 1920.
1897.
4.79
5.83
5.74
4.99
1921.
7.30
2.71
2.76
4.59
5.84
5.89 1922.
1898.
4.30
5.98
6.52
6.85
5.82
6.04
2.16
2.59
3.88
6.52
1899.
4.42
8.32
7.88 1923.
6.79
7.58
6.35
5.56
2.04
2.31
3.52
1900.
6.86 11.82 10.88 10.10
9.32
11.68 1924.
10.14
5.64
2.13
2.33
3.51
1901.
5.73
9.97 11.91
11.54 1925..
9.05 11.63
9.06
5.30
2.11
2.23
3.19
1902.
5.73 12.46 11.64 10.69 16.89
13. 19 1926.
10.92
5.43
2.11
2.26
3.32
1903.
6.72
14.22 1927.
10.50 11.57 10.25 14.24
10.21
5.24
2.09
2.23
3. 15
1904.
5.96
9.62 12.93
12.95 1928.
10.34 11.22
9.81
5.17
2.11
2.18
3.06
1905.
5.70
8.81 13.33
12.84 1929.
8.61
8.95
11.30
5.76
2.28
2.32
3.48
1.906.
7.59
9.73 14.52
13.69 1930.
10.06 11.69
10.27
5.63
2.23
2.35
3.40
1907.
8.43
18.23
10.54
14.93
10.59
12.40
11.16
1931.
5.31
2.
15
2.39
3.16
1908.
7.84
9.11 13.97
11.84 1932.
9.11
8.35
9.77
5.30
1.97
2.44
3.33
1909.
6.43
14.22
11.33
8.31
8.18
9.50
8.72
1933.
4.96
1.75
2.55
3.21
1910.
8.68
15.55
12.19 1934.
8.89
9.05 10.10
9.67
4.00
1.07
2.20
2.93
1911.
7.79
12.52
10.54
10.82
7.94
10.09
9.36
1935.
3.72
.92
2.14
2.80
1912.
7.02
8.19 11.95
9.38 1936.
8.18
9.62
8.59
3.25
.69
2.04
2.56
1913.
7.94
11.57
8.55
10.22
8.64
10.10
9.06
3.29
.63
2. 13
2.66
1914.
6.50
10.72
8.22 19372.
8.79
7.80
9.55
8.39
1915.
5.91
10.24
7.98
7.23
5.99
7.59
7.08
1916.
8.13
11.89
7.49
8.29
9.15
8.31
8.76
1 Fiscal years ending June 30.
1917.
9.04
8.56
11.13
9.97 10.10 14.26
10.52
2
1918.
9.62 11.12 10.96 11.30 14.49
Member national banks.
9.25
11.09
1919.
9.93
10.63
13.65 11.14 11. 21 13.57
Source: Computed from dollar figures shown in the Annual Reports
12.11
1920.
13.62 of the Comptroller of the Currency.
12.78 10.33 12.61 14.24 12.59 13.51
1921.
8.38
7.14
8.86
11.29
9.60
8.12
9.40
1922.
6.64
2.39
5.98
7.93
9.84
6.20
7.79
1923.
7.86 11.58
2.23
6.05
6.75
7.34
8.48
19242
6.95 10.59
-.19
6.82
6.86
8.04
8.11
1925.
7.61 11.76
2.69
7.23
7.68
7.90
9.00
1926.
9.38 10.91
4.41
8.50
8.39
9.47
9.54
1927.
7.38
5.41
8.50
8.40
7.32
11.25
9.24
1928.
8.92
8.07
8.47
7.99
7.73
9.90
8.96
1929.
7.57
11.68 11.15
8.85
8.32
9.76
9.72
1930.
5.38
11.29
7.87
10.24
6.36
6.93
7.38
19312
.90
5.36
3.95
6.16
.94
-.13
1.65
19322
1.29
-4.94 -6.01 -5.74 -2.45 - 7 . 6 9 -5.28
19332
-4.39
- 9 . 0 8 -9.95 -10.37 -8.76 -9.24 -7.26
19342
-5.44
-11.71 -6.41 -12.61 -8.05 -17.56 -12.63
1935.
1.97
4.60
1.57
5.62
4.40
1.92
2.70
1936.
6.35
11.08
8.65 10.64
8.37
9.06
1 Forfiscalyears ending August 31, 1890-1906; 10 months September 1,
1906-June
30, 1907; and thereafter for fiscal years ending June 30.
2
Minus figures represent net deficits.
3 The capital as of June 30,1933, used in computing ratios for that year,
did not include the small amount of preferred stock outstanding because
most of it had been recently issued.
Source: Annual Reports of the Comptroller of the Currency. In some
years, particularly those prior to 1912, when the ratios were not shown
or were not on a fiscal year basis, they were derived from other data
reported by the Comptroller.




FEBRUARY

119

FEDEKAL RESERVE BULLETIN

1938

TABLE VII—AMOUNTS OF EARNINGS, EXPENSES, LOSSES, RECOVERIES, AND N E T PROFITS
BANKS PER $100 OF LOANS AND INVESTMENTS, BY CALENDAR YEARS, 1927-1936

OF

MEMBER

1927

1928

1929

1930

1931

1932

1933

1934

1935

$3.83
1.40
.11

$3.96
1.44
.09

$4.37
1.32
.09

$3.81
1.33
.10

$3.21
1.44
.08

$2.98
1.60
.06

$2.42
1.71
.03

$2.00
1.76
.01

$1.72
1.62
.01

$1.64
1.55

5.34

5.49

5.79

5.25

4.73

4.64

4.16

3.77

3.35

3.19

.13
.10
.16

.13
.06
.19

.17
.07
.22

.14
.07
.23

.11
.08
.23

.10
.08
.23

.11
.07
.26
.10
.31

.10
.04
.27
.12
.29

.10
.04
.28
.13
.31

1936

Earnings:
Interest, and discount on loans
Interest and dividends on investments
Interest on balances with other banks, .

...

. . _ ._

Total interest earned
Collection charges, commissions, fees, etc.. __
Foreign department
_
__
_.
Trust department
Service charges on deposit accounts
Other current earnings
__-__..._
Gross earnings (excluding recoveries, etc.)

0)

0)

0)

0)

0)

0)

.42
6.15

.40

.10
.08
.24
.08
.29

6.32

6.71

6.10

5.51

5.45

4.95

4.62

4.17

4.05

1.24
.69
.25

1.27
.68
.22

1.25
.69
.19

1.27
.64
.21

1.16
.42
.16

1.06
.34
.12

.93
.17
.05

.84
.05
.01

.68
.03
.01

.56
.02
.01

2.18

2.17

2.13

2.12

1.74

1.52

1.15

.90

.72

.59

.07
1.28

.14
1.27

.18
1.30

.06
1.28

.06
1.23

.14
1.25

.06
1.23

.01
1.22

1.16

1.12

(2)
.34
.76

(2)
.32
.75

(2)
.31
.79

(2)
.32
.76

(2)
.26
.71

(2)
.24
.86

(2)
.23
.77

(2)
.23
.79

(2)
.22
.78

.02
.26
.79

4.63

4.65

4.71

4.53

4.00

4.01

3.44

3.15

2.88

2.78

1.52

1.67

2.00

1.57

1.51

1.44

1.51

1.47

1.29

1.27

.38

.34

.39

.55

.88

.79
.09
.09

1.41
1.07
.08
.17

1.70
1.38
.14
.21

1.68
1.19
.15
.23

.69
.12
.18

.12
.21

.45

.46

.41

.36

Expenses:
Interest on time deposits
__. _ _
Interest on demand deposits
Interest on bank deposits
Total interest on deposits
Interest and discount on borrowed money
Salaries and wages
Fees paid to directors and members of executive, discount,
and advisory committees _
Taxes
Other expenses
._ _
Total expenses

_. _ __

Net earnings (before losses)...
Losses and depreciation:
On loans
_
On investments
___
On banking house, furniture, and fixtures
All other..

.11
.08
.06

Total losses and depreciation.

.87

.66
.42

.13
.09
.06

.27
.09
.07

.31
.10
.07

.63

.63

.82

1.03

1.85

2.73

3.43

3.24

1.86

1.41

.08
.03
.32
.04

.08
.03
.26
.04

.07
.05
.21
.05

.07
.03
.20
.03

.08
.04
.21
.05

.09

.12
.32
.06

.16
.69
.09

.25
.96
.09

.30
(.51
(.74
.07

.47

.41

.38

.33

.38

.40

.50

.94

1.30

1.62

1.36

1.45

1.56

.87

.04

-.89

-1.42

-.83

.73

1.48

Recoveries, profits on securities, etc.:
Recoveries on loans
Recoveries on investments
Profits on securities sold
All other
Total recoveries, etc
Net profits 3
1

. . . . .
...

.10

Included in "other current earnings."
2 Included partly in "salaries and wages" and partly in "other expenses."
3 Minus figures represent net deficits.
Source: FEDERAL RESERVE BULLETIN and Annual Reports of the Board of Governors of the Federal Reserve System. For dollar amounts see
appendix table VIII.




120

FEDERAL RESERVE BULLETIN

FEBRUARY 1938

TABLE V I I I — A N N U A L EARNINGS, EXPENSES, LOSSES, RECOVERIES, AND NET PROFITS OF MEMBER BANKS,
AND AMOUNTS OF LOANS AND INVESTMENTS, TOTAL RESOURCES, AND INVESTED CAPITAL, BY CALENDAR

YEARS, 1927-1936
fin thousands of dollars]
1927

1928

1929

1931

1930

1932

1933

1934

1935

1936

851,007
457, 712
16, 759

604, 297
426, 391
7,705

540,014
473, 791
2,425

498, 419
467, 217
1,681

513, 399
487,101
1,207

Earnings:
Interest and discount on loans . . . ___ 1, 254, 289 1, 374,130 1, 562, 769 1, 349, 364 1, 072, 927
480, 296
472, 351
498, 420
472, 868
458, 401
Interest and dividends on investments.
28, 682
33,178
33, 264
35, 799
36, 318
Interest on balances with other banks _
Total interest earned..

.. _._ _ _ 1, 749,008 1,905, 728 2,068,901 1, 857, 514 1, 581, 905 1, 325, 478 1, 038, 393 1,016, 230

Collection charges, commissions, fees,
etc.
Foreign department __ .
Trust department
Service charges on deposit accounts
Other current earnings
Gross earnings

41,127
32, 352
52, 971

44, 662
22, 913
65,956

61, 299
26, 209
77, 589

50, 328
25,011
80, 280

38, 389
25, 727
75,041

27, 943
22, 531
64, 822

138,112

154, 765

164, 995

144, 789

120, 302

112,844

0)

0)

0)

0)

0)

0)

24, 487
21, 791
59, 658
20, 574
71,961

27, 810
17,975
70, 994
27, 619
83, 245

967, 317 1,001, 707
28,
12,
77,
35,
84,

825
282
703
634
888

31, 397
12,165
88,297
39, 415
97, 927

_. 2,013, 570 2,194,024 2, 398,993 2,157, 922 1, 841, 424 1, 553, 618 1, 236, 864 1, 243,873 1, 206, 649 1, 270, 908

Expenses:
Interest on time deposits
Interest on demand deposits. _ _
Interest on bank deposits

405, 711
225, 685
81,642

439, 384
234, 926
75, 352

444, 636
246, 493
68,131

450, 865
225, 280
72, 847

387, 284
140, 691
52,935

301, 863
97, 862
34, 599

231, 765
42,802
13, 424

227, 371
12, 494
3,498

196, 490
9,298
2,695

175,164
7,137
2,175

Total interest on deposits

713,038

749, 662

759, 260

748, 992

580, 910

434, 324

287, 991

243, 363

208, 483

184, 476

24, 514
420,128

48, 443
440,000

64, 265
463, 847

22,001
451, 776

19,136
412, 531

38, 814
356, 557

15,178
306,021

3,637
327, 424

1, 230
334,468

613
351, 714

190, 778
248, 246

113,759
261, 947

112, 476
283, 872

113,418
268,148

86, 367
236,435

67,077
246, 612

58,028
192, 082

62, 278
212, 687

63, 680
224, 654

6,269
81,145
247, 897

1, 515, 704 1, 613, 811 1, 683, 720 1, 604, 335 1, 335, 379 1,143, 384

Interest and discount on borrowed
money
_
_
Salaries and wages
Fees paid to directors and members of
executive, discount, and advisory
committees _
. _ _
Taxes
Other expenses
Total expenses
Net earnings (before losses)

859, 300

849,389

832, 515

872,114

497, 866

580, 213

715, 273

553, 587

506,045

410, 234

377, 564

394, 484

374,134

398, 794

123, 745
37 284

119, 290
45, 293

139, 588
95, 465

194, 725
109, 028

295, 241
264,170

403, 272
304, 961

425, 442
344,053

451, 782
320, 496

252, 374
198, 765

206, 548
131, 406

27,172
20, 492

31, 832
20, 779

33,171
27, 249

36, 601
24, 960

29,661
31,984

21, 370
48, 627

35, 758
53,026

39, 422
61, 244

33, 586
53, 537

38, 721
64, 873

208, 693

217,194

295, 473

365, 314

620, 456

778, 230

858, 279

872, 944

538, 262

441, 548

26,010
10, 830
106, 707
14, 289

26, 502
11, 475
89,974
12, 898

25, 204
19, 956
75,106
16, 448

24, 584

28, 815

44, 389

71, 901

60,191

80, 072

185, 591

277, 027

157, 836

140, 849

136, 714

118, 229

447, 009

503, 868

556, 514

306, 502

Losses and depreciation:
On loans
On banking house, furniture, and
fixtures
. __ _
All other
Total losses and depreciation
Recoveries, profits on securities, etc.:
Recoveries on loans
Recoveries on i n v e s t m e n t s _
Profits on securities sold
All other
T o t a l recoveries, etc
N e t profits

3

_____

Loans and investments 4
T o t a l resources 4___ _ _ _ _ _ _ _ _
I n v e s t e d capital 4_ __
_____

_

23,
12,
70,
11,

402
334
852
641

28, 334

15, 998

23, 979

27,078

94, 247
{160,318
\230, 698
22, 808

113,109

124, 885

253, 959

376,006

508, 071

12, 261 - 2 5 4 , 8 8 7

- 3 5 5 , 830

- 2 2 4 , 501

211,878

465, 317

28,000
13, 541
70, 078 |
15,053
126, 672

32, 755 970 34, 721, 879 35, 727,128 35, 395, 412 33, 431, 791 28, 522, 520 24, 986, 279 26, 930, 457 28, 898, 458 31, 382, 839
. . . 42, 800, 432 45, 596,198 47, 533, 082 47, 164, 240 43, 991, 171 37, 042, 289 33, 366, 549 37,176,100 41, 613, 260 45, 903, 758
5, 162, 702 5, 622, 312 6, 360, 306 6, 722, 782 6, 395, 866 5, 660, 145 4, 902, 319 5, 049, 525 5,118, 478 5, 209, 486

i Included in "other current earnings."
2 included partly in "salaries and wages" and partly in "other expenses."
Minus figures represent net deficits.
For 1933, figures of loans, investments, total resources, and invested capital are averages of amounts from reports of condition for 3 call dates
(June 30, October 25, and December 30, 1933); for other years they are averages of amounts for all call dates during the year and the last call date
in the previous year.
Source: FEDERAL RESERVE BULLETIN and Annual Reports of the Board of Governors of the Federal Reserve System.
3
4




FEDERAL RESERVE

FEBRUARY 1938

TABLE IX—INTEREST
WAGES, AND OTHER
AND INVESTMENTS
1902-19352 AND OF

1937 2

ON DEPOSITS, SALARIES AND TABLE X—GROSS EARNINGS, EXPENSES, N E T EARNINGS, GROSS LOSSES, AND NET PROFITS PER $100 OF
EXPENSES PER $100 OF LOANS
LOANS AND INVESTMENTS
OF KANSAS
STATE
OF KANSAS STATE BANKS X
BANKS, 1 1902-1935
A L L NATIONAL BANKS, 1918-

Interest on
deposits

Year

Salaries
and wages

Calendar year

Other
expenses

Kansas National Kansas National Kansas National
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922.
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937 3

..

$ 76
75
88
92
.99
.98
1 16
1 05
1 07
1 21
1.34
1 47
1. 58
1 60
1 67
1 95
1.81
1.75
1.72
1.81
1.92
1.85
2.05
2.06
1.92
1.86
1.80
1.72
1.65
1.68
1.69
1.65
1.39
1.10

$2 37
2.28
2 31
2.35
2.31
2.16
2 40
2.19
2 20
2.39
2.31

$1.79
1.66
1.73
1.92
1.86
1.89
1.97
2.03
2.02
2.00
2.02
2.12
2.10
2. 11
1.85
1.64
1.04
.91
.69
.63

1

2.29
2.20
2.07
1.92
1.81
1.86
1.98
2.23
2.32
2.29
2.54
2.39
2.33
2.38
2.39
2.39
2.40
2.62
2.62
2.59
2.51
2.42

$ .84
.89
1.06
1.34
1.25
1.20
1.23
1.18
1.19
1.19
1.18
1.27
1.27
1.32
1.37
1.32
1.19
1.16
1.06
1.09

$1.84
2.09
1.79
2.20
1.80
1.71
1 77
2.36
1.81
1.91
1.80
1.75
1.81
1.87
1.79
1.73
1.86
2.07
2.14
2.46
2.25
2.13
2.38
2.29
2.13
2.08
2.06
1.96
1.78
1.75
1.77
1.79
1.85
1.80

$1.12
1.36
1.64
2.21
1.52
1.27
1.27
1.13
1.16
1.14
1.09
1.21
1.22
1.11
1.20
1.34
1.04
.99
.98
1.04

Includes State and private banks and trust companies.
2 Kansas figures for calendar years; national bank figures forfiscalyears
ending June 30.
3 Member national banks.
Dollar amounts for Kansas State banks in table XI; for national banks
computed from dollar figures shown in the Annual Reports of the Comptroller of the Currency.




121

BULLETIN

1902.
1903.
1904.
1905.
1906.
1907_
1908,
1909.
1910,
191L
1912.
1913.
1914.
1915.
1916.
1917.
1918.
1919.
1920.
1921.
1922.
1923.
1924.
1925.
1926.
1927.
1928.
1929.
1930.
1931.
1932.
1933.
1934.
1935.
1

Gross
earnings
$10. 57
10.26
10.30
10.40
9.89
9.10
10.22
9.98
9.26
9.35
9.27
9.31
8.95
9.09
9.18
8.81
8.11
8.29
8.10
8.41
8.44
8. 13
8.75
8.61
8.38
8.38
8.47
8.37
8.51
7.99
7.39
7.10
8.04
8. 16

Expenses
$4.97
5.12
4.98
5.47
5.10
4.85
5.33
5.60
5.08
5.51
5.45
5.49
5.67
5.67
5.53
5.60
5.48
5.68
5.84
6.50
6.49
6.27
6.97
6.74
6.38
6.32
6.25
6.07
5.83
6.05
6.08
6.03
5.75
5.32

Net
earnings
$5.60
5.14
5.32
4.93
4.79
4.25
4.89
4.38
4.18
3.84
3.82
3.82
3.28
3.42
3.65
3.21
2.63
2.61
2.26
1.91
1.95
1.86
1.78
1.87
2.00
2.06
2.22
2.30
2.68
1.94
1.31
1.07
2.29
2.84

Gross
losses
$ .94
.57
.46
.71
.46
.60
.78
.48
.49
.39
.43
.65
.47
.43
.48
.52
.40
.40
.50
.78
1.05
1.05
1.03
1.12
1.32
1.39
1.17
1.02
1.52
1.52
1.83
3.27
4.18
2.46

Includes State and private banks and trust companies.
Deficit.
Dollar amounts shown in table XI.

2

Net
profits
$4.66
4.57
4.86
4.22
4.33
3.65
4.11
3.90
3.69
3.45
3.39
3.17
2. 81
2.99
3. 17
2.69
2.23
2.21
1.76
1.13
.90
.81
.75
.75
.68
.67
1.05
1.28
1.16
.42
2-.52
2 - 2 . 20
2-1.89
.38

FEDERAL RESERVE BULLETIN

122

TABLE
XI—LOANS
AND INVESTMENTS,
ANNUAL
GROSS EARNINGS, ANALYSIS OF EXPENSES, GROSS
LOSSES, AND N E T PROFITS OF KANSAS
STATE
BANKS, 1 1902-1935 2
[In thousands of dollars]

TABLE XII—INTEREST RECEIVED, INTEREST PAID, E X PENSE OTHER T H A N INTEREST, AND THE DIFFERENCE
BETWEEN INTEREST RECEIVED AND INTEREST PAID
PER $100 OF LOANS AND INVESTMENTS OF KANSAS
STATE BANKS, 1 1902-1935

Expenses
Loans
and
investments

Gross
earnings

32,483
37,677
40,510
44,657
50,985
61, 514
60,854
75, 593
84, 878
83, 510
92,200
99,155
102,929
115,170
132,705
162, 615
208,155
245, 510
287, 313
266, 724
244,192
240,024
219,649
224, 299
223, 201
210,113
207, 265
207,693
193, 590
155,967
129,842
105,737
104,351
108,828

3,433
3,866
4,172
4,644
5,042
5,597
6,217
7,542
7,856
7,806
8,550
9,230
9,209
10,464
12,183
14,332
16,872
20,349
23, 264
22, 423
20,616
19, 517
19,210
19, 316
18,703
17,604
17, 564
17,385
16,484
12,460
9,597
7,508
8,394
8,882

Year

1902....
1903....
1904-...
1905....
1906....
1907....
1908....
1909....
1910....
1911...
1912....
1913....
1914....
1915....
1916....
1917....
1918....
1919....
1920....
1921....
1922....
1923....
1924....
1925....
1926....
1927....
1928....
1929....
1930....
1931._._
1932....
1933 . . .
1934....
1935....

Total

1,616
1,929
2,019
2,442
2,602
2,982
3,241
4,236
4,308
4,605
5,026
5,445
5,837
6,527
7,344
9,112
11, 399
13,949
16, 773
17, 346
15, 851
15,040
15,311
15,122
14, 235
13, 286
12,947
12,600
11,296
9,430
7,893
6,375
6,004
5,794

Interest
received

Calendar year

Gross
SalInteraries est on Other losses
exand
dewages posits penses

Net
profits

769
859
935
1,051
1,179
1,325
1,458
1,653
1,863
2,000
2,131
2,255
2,354
2,529
2,747
3,115
3,766
4,584
5,696
5,960
5,660
5,490
5,568
5,352
5,199
5,011
4,950
4,960
4,737
4,094
3,406
2,737
2,622
2,640

1,511
1,721
1,966
1,883
2,208
2,244
2,504
2,945
3,131
2,879
3,126
3,143
2,892
3,444
4,204
4,371
4,643
5,422
5,054
2,984
2,190
1,963
1,637
1,675
1,513
1,395
2,187
2,668
2,254
659
8-672
-2,324
-1,972
406

599
788
725
979
920
1,053
1,075
1,786
1,535
1,598
1,656
1,734
1,860
2,151
2,374
2,819
3,861
5,074
6,140
6,566
5,489
5,113
5,235
5,145
4,743
4,366
4,272
4,074
3,359
2,719
2,292
1,894
1,929
1,959

248
282
359
412
503
604
708
797
910
1,007
1,239
1,456
1,623
1,847
2,223
3,178
3,772
4,291
4,937
4,820
4,702
4,437
4,508
4,625
4,293
3,909
3,725
3,566
3,200
2,617
2,195
1,744
1,453
1,195

306
216
187
319
232
371
472
361
417
322
398
642
480
493
635
849
830
978
1,437
2,093
2,575
2,514
2,262
2,519
2,955
2,923
2,430
2,117
2,934
2,371
2,376
3,457
4,362
2,682

F E B R U A R Y 1938

1902
1903.
1904
1905
1906
1907
1908
1909
1910
1911.
1912
1913.
1914
1915
1916
1917
1918
1919.
1920
1921.
1922
1923.
1924
1925.
1926
1927.
1928
1929.
1930
1931.
1932
1933.
1934
1935..

... _

.

Interest
paid

$9.16
8 80
9.07
8.97
8.92
8 20
8.97
8 38
8.23
8 66
8 51
8 46
8.34
8 44
8 44
8 25
7.63
7 75
7 58
7 84
7.53
7 15
7 66
7 43
7 17
7.01
7 09
7.06
6 73
6.60
6 16
5.84
5 77
5.45

$.81
81
.93
.98
1.04
1 03
1.21
1 18
1.19
1 3?
1 48
1 57
1.78
1 78
1 82
2 05
2.00
2 09
2 16
2 29
2.22
2 10
2 27
2 24
2 10
2 02
1 92
1 85
1 75
1.85
1 94
1.81
1 50
1.17

Expense
other
than
interest

Difference between interest
received and
interest paid

$4.17
4 31
4.05
4.49
4 06
3 82
4 11
4 43
3 88
4 20
3 98
3 92
3 89
3 89
3 72
3 56
3 48
3 59
3 68
4 22
4 27
4 17
4 70
4 50
4 28
4 31
4 33
4 22
4 08
4 20
4 14
4 22
4 25
4 15

$8.35
7 99
8.14
7.99
7 88
7 17
7 76
7 20
7 04
7 34
7 03
6 89
6 56
6 66
6 62
6 20
5 63
5 66
5 42
5 55
5 31
5 05
5 39
5 19
5 07
4 99
5 17
5 21
4 98
4 75
4 22
4 03
4 27
4 28

1

Includes State and private banks and trust companies.
Dollar amounts shown in table XIII.

i Includes State and private banks and trust companies.
2 Loans and investments as of June 30 each year; other data on calendar
year basis,
a Deficit.
Source: Biennial reports of the Bank Commissioner of the State of
Kansas.

TABLE

XIII—INTEREST

RECEIVED,

INTEREST PAID, AND E X P E N S E OTHER T H A N
STATE BANKS, 1 1902-1935

INTEREST OF KANSAS

[In thousands of dollars]
Interest paid
Interest
received

Calendar year

1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918

-

1

2,975
3,314
3,673
4,007
4,549
5,043
5,460
6,331
6,989
7,228
7,849
8,393
8,577
9,719
11,199
13,409
15,890

On deposits

Other

248
282
359
412
503
604
708
797
910
1,007
1,239
1,456
1,623
1,847
2,223
3,178
3,772

15
24
18
26
27
27
31
94
103
94
122
102
208
198
187
149
384

Total

263
306
377
438
530
631
739
891
1,013
1,101
1,361
1,558
1,831
2,045
2,410
3,327
4,156

Expense
other
than
interest

1,353
1,623
1,642
2,004
2,072
2,351
2,502
3,345
3,295
3,504
3,665
3,887
4,006
4,482
4,934
5,785
7,243

Interest paid

1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930..
1931
1932
1933....
1934
1935

Includes State and private banks and trust companies.
Source: Biennial reports of the Bank Commissioner of the State of Kansas.




Interest
received

Calendar year

...

..

19,020
21,775
20, 912
18, 398
17,164
16, 815
16, 662
16,006
14,733
14, 701
14, 659
13,029
10, 298
8,003
6,174
6,019
5,927

On deposits

Other

4,291
4,937
4,820
4,702
4,437
4,508
4,625
4,293
3,909
3,725
3,566
3,200
2,617
2,195
1,744
1,453
1,195

833
1,258
1,278
723
606
473
407
390
329
247
269
196
271
321
166
112
83

Total

5,124
6,195
6,098
5,425
5,043
4,981
5,032
4,683
4,238
3,972
3,835
3,396
2,888
2,516
1,910
1 565
1,278

Expense
other
than
interest

8,825
10,578
11, 248
10,426
9,997
10, 330
10,090
9,552
9,048
8,975
8,765
7,900
6,543
5,377
4,465
4 439
4,516

123

FEDERAL RESERVE BULLETIN

FEBRUARY 1938

TABLE XIV—AVERAGE LOANS, 1 AVERAGE INVESTMENTS, 1 AND GROSS RETURN, GROSS LOSSES, RECOVERIES,
NET LOSSES, AND NET RETURN ON LOANS AND ON INVESTMENTS OF ALL MEMBER BANKS, ANNUALLY,

1927-1936
[In millions of dollars]
Gross return 2 on Gross losses on

Average
Calendar year

1927
1928
1929
1930
1931
1932
1933 .
1934
1935 . .
1936

Recoveries on

Loans

Investments

Loans

Investments

Loans

Investments

Loans

23,006
24,154
25, 615
25,018
21, 732
16, 744
12,917
12,477
11,985
12, 544

9,750
10,568
10,112
10,377
11,700
11,779
12,070
14,454
16,913
18,839

1,254
1,374
1,563
1,349
1,073
851
604
540
498
513

458
498
473
472
480
458
426
474
467
487

124
119
140
195
295
403
425
452
252
207

37
45
95
109
264
305
344
320
199
131

26
27
25
23
28
25
29
44
72
94

Net losses on

Net return on

InInvest- Loans vest- 4 Loans
ments3
ments
118
101
95
83
84
60
80
186
277
391

98
93
114
171
267
379
397
407
180
112

+80
+56
26
181
245
264
135

+78
+260

1,157
1,281
1,448
1,178
806
472
208
133
318
401

Investments
539
555
472
447
300
213
162
339
545
747

1
Average of amounts reported on call dates, December through December, except in 1933.
2 Gross return is comprised of interest and discount on loans, and interest and dividends on investments.
Profits on securities sold are included in recoveries on investments.
A plus sign indicates an excess of recoveries and profits on securities sold over gross losses.
Source: FEDERAL RESERVE BULLETIN and Annual Reports of the Board of Governors of the Federal Reserve System.

3
4

TABLE XV—GROSS ANNUAL RATES OF RETURN ON LOANS AND ON INVESTMENTS
FEDERAL RESERVE DISTRICTS, 1927-1936

OF MEMBER

BANKS, BY

[Figures in percentages]

Calendar year

All
member
banks

Federal Reserve districts
New
York

Boston

Philadelphia

Cleveland

Richmond

Atlanta

Chicago

St.
Louis

Minneapolis

Kansas
City

Dallas

5.8
5.9
6.2
5.6
5.3
5.6
5.2
4.9
4.7
4.7

6.3
6.4
6.8
6.5
6.0
5.9
5.5
5.0
4.7
4.7

6.7
6.8
7.0
6.8
6.5
6.5
6.3
6.0
5.8
5.8

7.1
7.0
7.4
7.0
6.6
6.6
6.4
6.3
6.4
6.5

6.0
6.2
6.3
6.1
5.9
5.7
5.6
5.2
5.0
5.1

4.6
4.6
4.7
4.6
4.3
3.9
3.5
3.3
3.1
2.7

3.9
4.2
4.4
4.4
4.3
4.4
4.0
3.8
3.1
2.9

4.3
4.3
4.4
4.4
4.2
4.0
3.4
3.4
3.0
2.6

3.4
3.5
3.9
3.7
3.4
3.5
3.3
3.3
2.9
2.9

4.1
4.3
4.2
4.4
4.0
3.8
3.6
3.5
3.1
2.8

San
Francisco

Gross return 1 on loans
1927.
1928.
1929.
1930.
1931.
1932.
1933.
1934.
1935.
1936.

5.5
5.7
6.1
5.4
4.9
5.1
4.7
4.3
4.2
4.1

5.0
5.4
6.1
5.2
4.8
5.0
4.6
4.3
4.1
4.0

4.7

'

5.2

5.9
4.6
4.1
4.4
3.8
3.3
3.0
2.9

5.4
5.5
5.8
5.4
5.2
5.1
4.9
4.6
4.5
4.5

5.8
5.9
6.1
5.8
5.4
5.5
5.5
5.2
5.0
4.9

6.0
6.1
6.1
5.8
5.6
5.5
5.5
5.3

52
5.2

6.3
6.4
6.6
6.1
5.8
5.7
5.3
5.1
5.0
5.1

5.4
5.5
6.0
5.6
4.6
4.9
4.3
4.2
4.2
4.0

Gross return 2 on investments
1927..
1928..
1929..
19301931..
1932..
1934..
1935_.
1936..
1

4.7
4.7
4.7
4.5
4.1
3.9
3.5
3.3
2.8
2.6

5.1
4.9
4.8
4.8
4.3
4.0
3.6

3. 6
3.0
3.0

5.1
5.0
4.9
4.5
3.9
3.7
3.5
3.0
2.3
2.2

5.0
5.0
5.2
5.1
4.7
4.4
4.0
3.9
3.7
3.5

4.9
5.0
5.0
4.8
4.6
4.3
3.8
3.7
3.3
3.1

4.0
4.1
4.1
4.1
3.8
3.6
3.5
3.4
3.1
2.8

4.1
4.2
4.0
4.0
3.8
3.7
3.2
3.4
3.0
2.9

Interest and discount.
2 Interest and dividends.
Source of basic figures from which percentages were computed: FEDERAL RESERVE BULLETIN.




4.3
4.6
4.4
4.4
3.8
3.7
3.0
2.9
2.4
2.3

124

FEDERAL RESERVE BULLETIN

FEBRUARY 1938

TABLE X V I — N E T ANNUAL RATES OF LOSS ON LOANS AND ON INVESTMENTS OF MEMBER BANKS, BY F E D -

ERAL RESERVE DISTRICTS, 1927-1936
[Figures in percentages]
Federa 1 Reserve districts
All

Calendar year

member
banks

Boston

New
York

Philadelphia

Cleveland

Richmond

Atlanta Chicago

San
Francisco

St.
Louis

Minneapolis

Kansas
City

Dallas

.4
.4
.4
.5
.9
1.3
3.2
2.7
1.1
.3

.8
.8
.7
.6
.9
1.8
2.8
4.3
1.3
2

1.0
.7
.6
.8
1.5
2.5
3.3
3.1
1.6
.2

.9
.8
.8
1.3
2.1
2.8
4.2
3.3
1.3
.4

.5
.4
.3
.5
.6
1.3
1.9
2.3
1.2
1.2

+.7
+.5
+. 1

+.2
+.1

+.3

.3
1. 7
1.6
2.4
1.1

.1
1.0
2.6
3.1
1.9

+.3
+.1
+.2

+.7
+.6
+2

Net loss1 on loans
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936

.

.

.4
.4
.4
.7
1.2
2.3
3.1
3.3
1.5
.9

.5
.6
.5
.7
1.0
1.8
3.4
2.8
1.0
1.0

.3
.2
.4
.8
1.5
3.1
2.7
3.7
1.7
.8

.3
.4
.3
.6
1.2
2.3
2.6
3.2
2.2
1.4

.4
.3
.3
.5
.7
1.5
2.5
3.5
1.3
1.2

.6
.5
.6
.6
1.3
1.6
3.1
3.1
1.5
.6

.7
.8
.9
1.3
1.7
1.3
3.1
3.2
1.4
.9

.4
.3
.5
.5
1.1
2.2
6.2
3.4
1.6
1.0

Net loss2 on investments

_

+.8
+.5

+.6
+.6

.2
1. 5
2.1
2 2
.9

1.8
.2
1.8
2.8
2.4
.7

+.4
+1.1

+1.0
+.8
+.3

.7
1.8
2.0
2.8
1.3

4.2
2.2
1.4

+.5
+1.9

+.7
+.6
+.2

+.6
+.3

.3

+.1
+1.0

+.4
+.4

.1
.3
1.3
1.0
1. 5
. 1

.2
.2
1.8
2.4
3.0

1.7
1.9
1.3
1.0
.1

+.1

+.9

+.7
+.9

CO OO

+.4
+1.4

+1.1
+.6
+.2

++

19273
19283
19293
19303
1931
1932
1933
19343
19353
19363

+.8
+.6
+• 1
+.3
1.0
2.3
2.6
.4

+.4
+ 1.3

+.5
+1.1

+.4
+.5

2
.2
1 0
1.0
1.0
.4

+.6
+.6

.8
.5

+.2
+1.0
+.9

.4
.6
.6
.5

+1.0
+1.2

1

Gross losses on loans less recoveries on loans.
Gross losses on investments less recoveries on investments and profits on securities sold.
3 A plus sign indicates an excess of recoveries and profits on securities sold over gross losses.
Source of basic figures from which percentages were computed: FEDERAL RESERVE BULLETIN.
2

TABLE X V I I — N E T ANNUAL RATES OF RETURN ON LOANS AND ON INVESTMENTS OF MEMBER BANKS, BY
FEDERAL RESERVE DISTRICTS, 1927-1936
[Figures in p ercentages>]
Federal Reserve districts
Calendar year

All
member
banks Boston

New
York

Philadelphia

Cleveland

Richmond

Atlanta Chicago

St.
Louis

San
Francisco

Minneapolis

Kansas
City

Dallas

5.4
5.5
5.8
5.1
4.4
4.3
2.0
2.2
3.6
4.4

5.5
5.6
6.1
5.9
5.1
4.1
2.7
.7
3.4
4.5

5 7
6.1
6.4
6.0
5.0
4.0
3.0
2.9
4.2
5.6

6 2
6.2
6.6
5.7
4.5
3.8
2.2
3.0
5.1
6.1

5.8
6.0
5.6
5.3
4.4
3.7
2.9
3.8
3.9

5.3
5.1
4.8
4.3
2.6
2.3
1.1
2.2
3.6
3.8

4.1
4.3
4.3
4.5
3.3
1.8
.9
1.9
3.5
3.4

4.6
4.3
4.2
4.2
3.2
3.0
2.4
3.0
3.6
3.2

3.7
3.4
3.8
3.9
2.7
2.7
2.8
3.5
3.9
3.8

4.8
4.9
4.4
4.4
3.6
3.2
3.0
3.0
4.1
4.0

Net return l on loans
1927
1928
1929
1930
1931
1932
1933
1934
1935.
1936

5 1
5.3
5 7
4.7
3.7
2.8
1.6
1.0
2.7
3.2

. .

4 5
4.8
5.6
4.5
3.8
3.2
1.2
1.5
3.1
3.0

4 4
5.0
5. 5
3.8
2.6
1.3
1.1
2-. 4
1.3
2.1

5 1
5.1
5.5
4.8
4.0
2.8
2.3
1.4
2.3
3.1

5.4
5.6
5.8
5.3
4.7
4.0
3.0
1.7
3.7
3.7

5.4
5.6
5.5
5.2
4.3
3.9
2.4
2.2
3.7
4.6
]Vet

1927
1928
1929
1930
1931
1932
1933
1934
1935
1936

.

..

5.5
5.2
4.7
4.3
2.6
1.8
1.3
2. 4
3.2
4.0

5.7
5.5
3.0
4.6
2.5
1.2
1.2
2.9
3.4
4.1

6.2
5.6
5.1
3.8
2.1
1.7
.7
1.7
2.8
4.1

6.0
5.8
5.5
4.8
2.2
.2
1.8
2.5
3.8
4.5

5.6
5.6
5.2
4.8
2.9
2.4
2.5
2.7
3.2
4.0

5.6
5.6
5.7
4.8
4.1
4.4
2.2
1.9
3.6
4.2

5.0
5.2
5.5
5.1
3.5
2.7
2-1.9
.8
2.6
3.0

return 3 on investments
4.6
4.4
3.9
3.9
2.0
1.2
.5
3.3
3.4
3.6

,

4.5
4.6
3.9
3.7
2.5
2.7
1.7
3.5
3.7
3.8

5.1
5.2
4.5
4.7
2.8
1.4
.4
2.5
2.8
3. 6

1 Interest and discount, less net losses or plus net recoveries.
23 Deficit.
Interest and dividends, less net losses or plus net recoveries.
Source of basic figures from which percentages were computed: FEDERAL RESERVE BULLETIN.




5.5