Federal Reserve Bulletin, 1915-06

FEDERAL RESERVE BULLETIN ISSUED BY THE FEDERAL RESERVE BOARD AT WASHINGTON JUNE, 1915 WASHINGTON GOVERNMENT PRINTING OFFICE 1915 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

SUBSCRIPTION PRICE OF BULLETIN, May and June issues of the Federal Reserve Bulletin have been distributed without charge. This distribution will be con­ tinued to member banks of the system and to the officers and directors of Federal Reserve Banks. In sending the Bulletin to others the Federal Reserve Board feels that a subscription price should be required. It has accordingly fixed this^price at $2 per annum. Single copies will be sold at 20 cents. Remittances should be made to the Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

TABLE OF CONTENTS. Page. Work of the Federal Reserve Board............................................................................................................................. 65 Address by Hon. W. P. G. Harding............................................................................................................................... 66 Informal rulings of the Federal Reserve Board............................................................................................................ 72 Imports and exports of gold........................................................................................................................................... 76 Circulars and regulations................................................................................................................................................. 78 Distribution of Aldrich-Vreeland currency.................................................................................................................. 80 Gold settlement fund........................ 82 Acceptances.....................................................................................................................................................................71, 84 Redistricting decision..................................................................................................................................................... 85 Law department......................................................................................................................................................... 91 General business conditions..................................................................................................................... 106 Resources and liabilities of Federal reserve banks........................................................................................................ 112 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BULLETIN Vol. 1 JUNE 1, 1915 No. 2 WORK OF THE BOARD. May 6-7 a conference with governors of Federal Reserve Banks constituting a committee on During the month of May the work of the clearance, who had been interested in the Federal Reserve Board has included four preparation of the plan of settlement and its important elements: going into operation on a satisfactory basis. (1) The development and perfecting of the During this conference further discussion of system of clearance between Federal Reserve the technical details of the settlement plan Banks through the establishment of a gold occurred between members of the Federal settlement fund at Washington. Reserve Board and representatives of the (2) The working out and perfecting of a several banks. The success of the plan was circular relating to the conditions of admission therefore assured, in advance, by reason of the of State banks into the Federal reserve system, hearty cooperation of the governors of the Fed­ shortly to be issued. eral Reserve Banks who had been interested in it. (3) Visits to several of the reserve banks On May 27 the Board, in further develop­ by members of the Board, followed by con­ ment of the plans for the gold settlement fund, ferences with the officers of these institutions adopted a resolution providing as follows: while the visiting members of the Board were on the ground. Whereas Under the provisions of Regula­ (4) Participation in the Pan American Finan­ tion L, series of 1915, adopted by the Federal cial Conference which convened at Washington Reserve Board, it is necessary, in order to transfer title to the gold order certificates deon May 24. osited in the Gold Settlement Fund, that they In addition to these principal lines of e indorsed by the Federal Reserve Board; activity, the Board has, of course, been carry­ Now therefore be it resolved, That this in­ ing on the usual routine work of administration, dorsement by the Federal Reserve Board, to and has been granting applications for the be valid and binding, must have the signatures of two members of said Board, and right to exercise the functions of trustee, Be it further resolved, That the Governor and executor, etc., as well as requests for authority Vice Governor, or in the absence of either or to accept drafts and bills of exchange running both of them, Mr. Warburg, Mr. Harding, or not more than six months, up to an amount Mr. Miller, in their place or stead, be and they not to exceed 100 per cent of the capital and are hereby authorized to indorse such gold order certificates, for and in behalf of the surplus of the applying bank. Federal Reserve Board. An especially interesting feature of the month’s work has been the announcement of The Pan American Conference began on the decision of the Board in the redistricting May 24 and proceeded during the succeeding cases which had been appealed to it from the week. An analysis of the results of this con­ Reserve Bank Organization Committee. The ference will be made in a later number of the work of preparing the decisions in these cases Bulletin. had been accomplished before the beginning During the month the printing of the of May, but the publication of them occurred additional supply of Federal reserve notes, on May 4. authorized some time ago, proceeded rapidly, In the course of carrying to completion the and the stock of such notes in the hands of the work of drafting provisions for the gold settle­ Board is rapidly approaching the prescribed ment fund, there occurred at Washington on figure. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

OPERATION OP FEDERAL RESERVE money order, or by shipments of currency by SYSTEM. express. In those days the rate of exchange was governed to a great extent by express Hon. W. P. G. Harding, a member of the rates, especially when the amount involved Federal Reserve Board, delivered the following was large, for the remitter would not pay a address before the Texas Bankers’ Association bank a higher rate for its check than it would cost him to forward the actual funds by express. Convention, at Waco, Tex., on May 18, 1915: Merchants would go to their local bank and I shall not attempt any discussion of the purchase drafts in favor of their creditors, Federal reserve act from its broadest view­ paying the bank the agreed premium. AlS the points, but shall confine myself to certain business of the country developed, the local phases of its operation that are of paiticular merchant gradually acquired the habit of send­ mterest to member banks, and in endeavoring ing his own check, drawn upon his local bank, to stress some of the benefits of the system, I to his creditor in New York, Chicago, or St. shall not seek to evade a discussion of certain Louis, who would deposit the check in his own features to which objection has been made, bank, which would, in turn, forward it for pay­ particularly*by the smaller banks. ment. The local merchant found that by do­ The profits arising from exchange charges ing this he could avoid paying a premium for a have always been dear to the hearts of bankers, bank draft drawn upon the city where his debt for the reason that transactions against which was due. The city dealer found that he could these charges are made are quickly closed up in most cases, prevail upon his own bank to and involve no long tying up of funds. Profits accept his country checks on deposit without from this source, however, are constantly be­ making any deduction, so he soon became ac­ coming smaller, so that in the case of many customed to this method of settlement. In banks, in the larger towns especially, they have the course of time, when many remittances were so diminished that the exchange account shows being- made in this way, the burden upon the a loss instead of a gain. I can remember the banks in the financial centers became very time when banks in Alabama charged a pre­ Sreat, and to protect themselves, the crediting mium of one-half of 1 per cent for their checks ank would impose a charge on country checks upon financial centers, while they would buy deposited with it, so that the cost of remitting at the same time sight drafts upon the same funds for settlement of goods purchased had cities at the same rate of discount, thus netting been shifted from the local merchant to the a clear 1 per cent. I presume that there was a dealer or jobber in the cities. In many cases, time when rates equally as high prevailed in however, this cost is borne by neither of the Texas. Some of these same banks are, now Ear ties to the transaction, but is Still absorbed glad to make a net profit of one-tenth of 1 per y the city bank which has the dealer’s account, cent, and in many cases this profit is derived although there seems hardly more reason for only from the purchase of bills drawn against it to be taxed with the cost of transfer of funds cotton when that commodity is moving ac­ from the buyer to the seller, than for it to pay tively, or from the collection of and remittance freight upon the goods purchased. for bills-of-lading drafts drawn against ship­ The banker in the smaller towns naturally ments of goods. looks with favor upon this method of settle­ Theoretically, exchange may be defined as ment, as he exacts his exchange charge from the rate at which the documentary transfer of the bank from which he receives the check, funds is made, so that if the debits reciprocally and his bank has enjoyed an increased deposit due by two places be equal, the exchange will during the time the check has been outstand­ be at par, but when greater in one than in the ing. Many abuses have crept in, however, other, the exchange will be against that place and it frequently happens, particularly where which has the larger remittances to make and the drawer knows that his check will be out­ in favor of the other. It is customary for the standing four or five days, that he will forward seller of goods to forward them at the expense it before he actually has funds in bank to of the purchaser, who is supposed 'to pay for meet it, relying upon his ability to make the them in funds current at the place of residence account good by the time the check is returned of the seller. Thirty years ago it was the prac­ for payment. The merchant in the small tice for settlements to be made between parties town, therefore, prefers to continue this method living in different towns, by draft on New York of settlement, as it frequently saves him an or some other financial center, by post office interest charge. It often happens also that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

in cases where the bank in the larger city makes tives of those who have been paying exchange a charge against its depositor more than charges on checks sent them in payment of ample to cover actual cost of collecting a goods sold exerted their influence in favor of country check, that it seeks to retain all or a free check collections, and shortly afterwards part of this as a net profit, and is frequently representatives of more than 2,000 country enabled to do so by taking advantage of banks went to Washington and appeared competitive conditions in an intermediate before the committee having the bill in charge town where it has a reciprocal account, so that and entered a vigorous protest against being the expense is in many cases borne by a deprived of what they regarded as a legitimate bank in some local center which is willing to profit. The result was that this paragraph take business at a loss to prevent a com­ was included in section 16 of the bill as enacted, petitor from getting it. The ideal arrange­ and is now part of the law: ment which the bank in the small town, or u Every Federal Reserve Bank shall receive the real country bank, likes to make, and one on deposit at par from member banks or from which it is frequently able to make, is to charge Federal Reserve Banks checks and drafts its correspondent bank located in a financial drawn upon any of its depositors, and when center of its own State, exchange at the rate remitted by a Federal Reserve Bank checks of 25 cents per hundred on all checks received and drafts drawn by any depositor in any other for collection, at the same time clearing Federal Reserve Bank or member bank upon through the same correspondent all checks funds to the credit of said depositor in said payable outside of is own town without any Reserve Bank or member bank. Nothing here­ expense whatever. I believe, however, that in contained shall be construed as prohibiting arrangements of this kind are becoming harder a member bank from charging its actual ex­ to make, and that the greater part of exchange pense incurred in collecting and remitting charges now being made in this country are funds or for exchange sold to its patrons. borne by the sellers of goods. It may be The Federal Reserve Board shall, by rule, fix that their profits are sufficient to admit of the charges to be collected by the member their bearing this expense, and I have always banks from its patrons whose checks are cleared been impressed with the logic of a contention through the Federal Reserve Bank, and the made by a country merchant when I was a charge which may be imposed for the service bank clerk in Alabama more than 30 years of clearing or collection rendered by the Fed­ ago. eral Reserve Bank.” It seems that on one occasion he sent his It seems to have been the idea in Congress own check on the local bank to a New Orleans that country banks would be appeased by the merchant in payment of some sugar, instead provision that they might make a charge of following what was then the prevailing against those of their patrons whose checks custom of going to the bank and buying its were cleared through the Federal Reserve Bank. draft on New Orleans. This check was In other words, if Mr. Brown, of Abilene, should deposited in a New Orleans bank, who sent it draw his check upon the Citizens National for collection to the rival bank so that the bank Bank of Abilene, in favor of Smith & Co., of on which the check was drawn made no profit Chicago, for $100, and that check should Ipe out of the transaction. The cashier asked returned to the Abilene bank for payment this merchant what he meant by sending his through the Federal Reserve Bank of Dallas, local check as far away as New Orleans, and sug­ it was thought that the Abilene bank could gested that he come in as usual and buy a bank charge Mr. Brown 15 cents for having paid his draft. The merchant replied that whenever check in Chicago funds. The fact, however, the New Orleans merchants would pay the was evidently overlooked that Mr. Brown freight on their goods shipped to him that he would not look with favor upon this charge, would be willing to pay the freight on their which, if persisted in, would result in the loss money. Sellers of goods all over the country by the Citizens National Bank of Mr. Brown’s have for several yeai's past been paying freight account. Neither is the permission given uto on the money paid them for their goods, and charge for exchange sold to patrons” any more the volume of local checks that are transmitted satisfactory to the small bank, for the reason in the mails every day now reaches enormous that their patrons have long since gotten out proportions; certainly $200,000,000 would not of the habit of buying bank drafts and make a be a high estimate. When the Federal reserve practice of remitting their own checks. It act was being debated in Congress, representa­ seems, therefore, in actual practice that the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

only charge allowed is for “ the actual expense one incoming letter from the Federal Reserve ittcufred m collecting and remitting funds,” Bank, instead of perhaps 39. wliich must seem a mere pittance to banks that Parties receiving checks upon any of these have been charging 25 cents per hundred. Yet 40 banks will soon appreciate the fact that the Federal Reserve Banks are required to they are collectible at once, without change, Receive on deposit at par from member banks ana, therefore, are as desirable as checks on or "from Federal Reserve Banks checks and New York, Chicago, or St. Louis have been drafts draWn upon any of its depositors,” and hitherto. There will thus be established a the Federal Reserve Board is charged with the preference for checks drawn on these banks, duty of carrying out the law. and parties remitting in payment of bills It has been the earnest desire of the Board checks on banks not connected with this clear­ to cause as little hardship as possible in making ing plan will soon be brought to realize that these changes, and after a careful study of the checks drawn on banks in the clearing system whole subject, and after many conferences are preferred. If a merchant in Sherman finds with representatives of ail Federal Reserve that by reason of his bank being a member of Banks and officers of member banks, a plan has the clearing system that his checks are received been agreed upon which will, be* gradual in its without question, he will appreciate the facil­ operation, and which will, it is thought, in the ity given him, but if a merchant in Texar­ course of time prove effective. Each Federal kana, for instance, finds that by reason of his Reserve Bank, in accordance with this plan, bank not being a member of the clearing sys­ has notified its member banks that a cneck tem, he is charged exchange upon the checks clearing system will be establishd, but that that he sends out, while his competitor in for the present the system will be a voluntary Sherman or Waco is exempt from such charge, one, and no bank will be required to be a party he will soon, no doubt, exert enough pressure to it except of its own free will and accord. In upon his own bank to induce it to become a order best to describe the workings of this plan, member of the clearing system. If Galveston, I will assume that the member banks in Dallas, Austin, and Fort Wortn, as well as Dallas, Fort Wortn, Waco, Austin, Houston, San should all be members of the clearing system, Antonio, Paris, Galveston, Sherman, and El merchants in all these towns would enjoy the Paso assent, and agree to permit the Federal same advantage, and in the course of time the Reserve Bank of Dallas to charge against their banks in Amarillo; for instance, would find respective accounts as soon as received checks that they would lose business by remaining upon each bank which may come into the out, and would, I think, as a matter of busi­ hands of the reserve bank. Such checks will be ness necessity, finally become members of the immediately forwarded to banks upon which clearing system. The Federal reserve act does drawn, for credit, and any checks not good are not, of course, become entirely effective as far to be returned to the Federal Reserve Bank as its reserve requirements are concerned until and recredited by it. Each of the banks three years from November 16, 1914, or until agreeing to the plan must carry with the November 16, 1917, after which time the entire Federal Reserve Bank, in addition to its re­ reserve of a member bank must be partly in its quired reserve, an amount sufficient to provide own vaults and partly with the Federal reserve for the debiting against its account of these bank of its district. It is thought that during checks. We wifi assume that there are 40 this time there will be a gradual accession to banks which agree to this plan at the start. the number of banks assenting to the new Any one of these 40 banks having checks upon clearing plan, and after the fall of 1917 it is not the other 39 banks will forward them all to the believed that many banks who have customers Federal Reserve Bank of Dallas, and receive sending their checks to distant points will fail immediate credit. It will, of course, have to to become members of the clearing section. As stand an immediate debit on tiie books of the balances with other member banks will then Federal Reserve Bank of all checks drawn no longer count as reserve, surplus funds will upon itself received by the Reserve Bank from be loaned, rather than kept with other banks the other 39 banks, so that the net result to to control collections. any one bank is merely a balance, and it will at We ought to look this matter squarely in the the same time have been convenienced by face, and should realize that we must give and having to write only one remittance letter take, that we could not in any event have ex­ instead of a great many, and by receiving only pected permanently to be able to make a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

charge of from 15 to 25 cents per hundred on year will no longer obtain, nor will there be the checks sent us for collection, at the same time usual demoralization of rates in the early spring collecting all of our out-of-town checks without due to the heavy flow of redundant currency any cost whatever. The banks in the smaller into the great financial centers. Your cotton towns will learn, as the city banks have already drafts can, if you wish, still continue to take learned, to make up losses in exchange by add­ their usual course, and I presume that you will ing to their volume of business, and while at prefer to send them direct in order to avoid first thought many of you may feel that there delays in transit. You can, however, instruct is little chance of increasing the volume of your correspondent bank to make deposit with business in your own towns, I am sure that as the nearest Federal Reserve Bank for the credit the workings of the Federal Reserve System of your Federal Reserve Bank for your use, and become better known, and the safeguards it you can order Federal reserve notes from your offers are more fully appreciated, that any own Federal Reserve Bank against such depos­ money now being hoarded in your communities its as made. Many years will doubtless elapse will come into sight and be deposited with you, before uniform interest rates prevail throughout and with the development of your section the country. Under present conditions money your business will expand in a healthy way. will continue to command higher rates in Hous­ You have been given facilities, whether you ton, Dallas, and Waco than it will in New York, borrow your money from the Federal Reserve Chicago, or Boston, but the rates will certainly Bank or not, of getting all the rediscounts to be stabilized and extreme fluctuations will which you are entitled at lower rates than cease. ever before. You will soon realize that there Section 16 of the Federal reserve act pro­ is no longer occasion for you to hoard money vides that— by carrying abnormally large reserves, and “The Federal Reserve Board shall make and before the new reserve requirements under the promulgate from time to time regulations gov­ act are fully effective I am sure that you will erning the transfer of funds and charges there­ all have found that you can more than recoup for among Federal Reserve Banks and their your losses in the way of exchange profits by branches, and may, at its discretion, exercise the gains derived through a greater volume of the functions of a clearing house for such Fed­ business. eral Reserve Banks, or may designate a Federal What I have just said relates to the clearing Reserve Bank to exercise such functions, and of checks between banks in the same Federal may also require each such bank to exercise reserve district, but the broader question of the functions of a clearing house for its member exchanges between the respective Federal banks.” Reserve Banks has also been considered by the Federal Reserve Board. It is proposed to obvi­ The Board has accordingly, after conferences ate as far as possible the necessity for an actual with the Federal reserve agents and the gov­ transfer of currency from one Federal reserve ernors of the several Federal Reserve Banks, district to another, and I think we have seen for decided to establish a gold settlement fund, to the last time the stringency which has been be carried in the Treasury at Washington, and recurring every fall during the active crop- to which each Federal Reserve Bank shall moving period. Member banks will no longer contribute $1,000,000 in gold, gold certificates, be obliged to undergo the expense of nor to or gold order certificates, in addition to an suffer the inconvenience due to delays attached amount at least equal to the net indebtedness to shipping in currency from the old reserve due to all Federal Reserve Banks as of May 24. cities, but their currency requirements will Each Federal Reserve Bank will be required to instead be abundantly and quickly supplied at keep at all times in this fund a balance of not a minimum cost by their Federal Reserve Bank. less than $1,000,000, and this balance will count The money that you will use in handling the as a part of its lawful reserve. At the close of crop next fall will consist largely of Federal business each Wednesday night (or when reserve notes, which will stay in circulation as Wednesday is a holiday, Tuesday night) each long as needed, and when the crop movement is Federal Reserve Bank will telegraph to the over and the notes become redundant they will Federal Reserve Board the amounts, in'even find their way back to the Federal Reserve thousands, due to the other Federal Reserve Bank, where they will be retired., The abnor­ Banks as of that date, and on each Thursday mally high rates to which we have become the settling agent of the Federal Reserve Board accustomed during the closing months of the will make the proper debits and credits in the 64995—15------2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

accounts of each Federal Reserve Bank with ity, and that membership, giving as it does full the fund, telegraphing each bank the amounts, access to the facilities and resources of the sys­ in even thousands, of credits to its settlement tem, will add to the prestige of even the strong­ account, giving the names of each bank from est institutions, so that in the course of time whom received, and also giving the net debit the public will, instead of drawing a distinction or credit balance in the weekly settlement. as heretofore between national banks and State Proper debits and credits will tnen be made hanks, will distinguish rather between banks upon the books of each Federal Reserve Bank. which belong to the Federal Reserve System and In case the debit settlement balance of any the banks which do. not belong, so that ulti­ Federal Reserve Bank should be in excess of mately little importance will attach to the the amount to its credit in the gold settlement terms “National banks” and “ State banks,” fund, such deficiency must be immediately and banks will be classified as “member banks” covered either by the deposit of gold, gold or “nonmember banks.” certificates, or gold order certificates in the Section 9 of the Federal reserve act requires Treasury or any subtreasury, or by credit that State banks becoming members of the operations, which term includes rediscounts Federal Reserve System must comply with cer­ with other Federal Reserve Banks which have tain general requirements which now apply an excess balance in the gold settlement fund. to national banks. The minimum capital per­ Excess balances may remain in the fund to mitted is $25,000, and this requirement as to the credit of the banks to whom they are due, capital-is raised according to the population of or they may, if desired, be refunded by the the town in which the bank is located, so that return to the reserve bank of gold order certifi­ in cities of more than 50,000 inhabitants the cates, properly indorsed, or of gold certifi­ minimum capital allowed will be $200,000. cates payable to bearer, and, whenever practi­ State banks becoming members must also con­ cable, payments will be made by the nearest form to the provisions of law governing na­ subtreasury. tional banks regarding the limitation of liabil­ I am violating no confidence when I say that ity which may be incurred by any person, the Federal Reserve Board dosires earnestly to firm, or corporation to such banks, the prohi­ have the State banks become members of the bition of purchases of or loans upon their own Federal Reserve System. The Board feels that stock, the withdrawal or impairment of cap­ the membership of the State institutions is es­ ital, and the payment of unearned dividends. sential to the coordinated banking system that The Board is not disposed to make any hard it wishes to establish, and realizes that there and fast rules respecting loans upon real estate can be but one credit system of nation-wide or mortgages by State banks who wish to be­ extent. It fully appreciates that the strength come members. It will seek rather to provide of the Federal Reserve System must be gauged reasonable limitations, so that loans or invest­ by the quality of its members, rather than by ments of this character will not be so excessive number, and it will use all the broad discre­ in amount as to endanger the bank’s liquid tionary powers vested in it by the Federal re­ condition. serve act to bring about this coordination. It The important question of examinations has seeks to establish only such reasonable stand­ been fully considered by the Board. As ad­ ards of admission as will be generally recog­ mission to the system will be regarded as evi­ nized as necessary to protect the Federal Re­ dence of a bank’s strength, the Board must serve System against the admission of banks necessarily have accurate and reliable informa­ which would be a source of weakness rather tion regarding the condition of an applying than of strength, and it intends to prescribe bank and the character of its management. only such regulations governing their conduct Examinations must, therefore, be under the as members as will insure a reasonable con­ direction of the Board, but it will as far as formity to the fundamental principles deemed possible avoid imposing additional expense essential to the success of the new banking sys­ upon a bank by adopting a method of joint or tem. The banks of this country are beginning supplementary examination in cooperation with to realize that membership in the Federal Re­ State banking authorities. It will use ex­ serve System carries with it privileges and aminers and auditors in the employ of the guaranties of great value, not only to them­ respective Federal Reserve Banks in supple­ selves but to their customers as well. It is menting the examinations conducted by the believed that membership in the system will banking departments of the several States, come to be regarded as a test of banking solid­ and in .passing upon applications for member­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Form for Discount Rates. ship the Board will appreciate the cooperation of the State banking authorities. That the recommendations in connection The membership of State banking institu­ tions in the Federal Reserve System differs with discount rates from the 12 Federal Reserve from that of national banks in being optional, Banks may be uniform, the Federal Reserve and the Board has felt from the start that the Board has prepared the following form for such directors of State banks should be given the recommendations. It is to be forwarded to right to terminate their banks’ membership in reach the Board not later than Thursday morn­ case they should deem it advantageous to do so. The Board does not believe that State ing of each week: banks after becoming members will wish to Date---------, 1915. withdraw from the system which offers so Federal Reserve Board, Washington, D. C. many advantages, but at the same time it recognizes the responsibilities attached to the Sir: I have the honor to forward the recommendation that no change be made in the existing discount rates for management of the State banks, and having the Federal Reserve Bank of---------for the week ending received ample assurances from high legal Thursday---------, 1915. authorities as to its powers it will, I think, Respectfully, reach the conclusion that the State bank mem­ bers may, with reasonable limitations as to the Federal Reserve Agent. maximum withdrawal of capital and reserves I have the honor to request that the following rates be during any one year, surrender their member­ approved by the Federal Reserve Board for the Federal ship should they elect to do so. I am sure Reserve Bank of---------to become effective Friday morn­ that the Board will define its position in this ing, ---------, 1915: matter clearly within a very short time. RECOMMENDED RATES. Permit me, in closing, to impress upon you all the fact that we are living in a critical period Maturities, in days. Agricultural of the world’s history. The sun never sets and live-stock upon the lands that are sending troops to en­ paper over Acceptances. 30. 31 to 60. 61 to 90. 90. gage in the most stupendous conflict of all the ages, and the toll in human lives and in destruc­ tion of property is enormous. The money cost of this war and the indebtedness of the nations PRESENT RATES. party to it are beyond the comprehension of the average mind. No one can predict the duration of this titanic struggle nor its ultimate out­ come, nor can we foretell what readjustments of capital must be made between the nations Respectfully, after the restoration of peace. We were able Federal Reserve Agent. last summer to withstand the shock occasioned by the outbreak of war by putting into circula­ Acceptances to 100 per cent. tion over $300,000,000 of emergency currency, now practically all retired or in process of retire­ Below is given a list of member banks ment. After June 30, however, the law will authorized to accept up to 100 per cent of no longer permit such issues, and such currency their capital and surplus under circular 12, expansion as may be necessary in future will be regulation K: in the form of Federal reserve notes. The First National Bank, Boston, Mass. Federal Reserve Banks can ultimately provide, National Shawmut Bank, Boston, Mass. even without the State banks as members, an American Exchange National Bank, New York City. emergency issue more than three times as large Merchants Exchange National Bank, New York City. as the maximum outstanding last year, but it Bank of New York, N. B. A., New York City. can extend direct aid to member banks only. Merchants National Bank, Richmond, Va. Those of you who control the destinies of State Commercial National Bank, New Orleans, La. banks are earnestly invited to bring your insti­ First National Bank, Chicago, 111. tutions under the protecting aegis of the Federal Anglo and London Paris National Bank, San Francisco, Reserve System, and I confidently believe that Cal. in doing so not only will you promote your own Bank of California, N. A., San Francisco, Cal. interests but you will perform at the same time Crocker National Bank, San Francisco, Cal. a patriotic act by adding to the power of the First National Bank, San Francisco, Cal. world’s strongest banking system. Wells-Fargo Nevada National Bank, San Francisco, Cal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INFORMAL RULINGS OF THE BOARD. • Below are reproduced letters sent out from answer being in the negative, i. e., that such time to time over the signatures of the offi­ direct notes can not be rediscounted. Live stock, the Board thinks, should include cers of the Federal Reserve Board, which con­ not only beef cattle, but horses and mules. tain information believed to be of general January 2, 1915. interest to Federal Reserve Banks and member banks of the system: Agricultural Loan Mortgages. Paper of Financing Companies. You are advised that in the opinion of the In answer to your letter of November 17 Board the Federal reserve act certainly does and subsequent communication of November not require the taking of chattel mortgages as 20, you are advised that the question, how to security for loans based on agricultural opera­ deal with paper issued by finance companies, tions. In the dealings of the Federal Reserve has been carefully considered and that the Banks with member banks, the statement Board is of opinion that collateral trust notes of the member bank that the loan is desired for of the kind you describe ought not to be ac­ agricultural operations must, under ordinary cepted by Federal Reserve Banks as a basis circumstances at least, necessarily be accepted for discounts. as to the purpose for which the funds are The Board feels that paper of the kind acquired. So, also, from the standpoint of the referred to does not afford sufficient evidence member bank itself, it would seem clear that if of the nature of the transaction which gave the act is to be of any real service to the agri­ rise to it, while the obligation itself presented cultural community, it would not seem prac­ by one of these finance companies is cer­ ticable to enter into an exhaustive inquiry tainly not inherently a commercial one. You as to whether any minute part of the loan has are therefore informed that it is not considered been or may be used directly or indirectly for desirable to encourage the offering of such the support of the farmer while preparing the paper by member banks. soil for cultivation or for feeding his cattle. December 18, 1914. It would, on the contrary, seem to be sufficient if the direct primary purpose of the loan is for the purpose of carrying on the ordinary opera­ tions of agriculture. Loans for Agricultural Purposes. You further ask wdiether in section 13 of the You are right in supposing that the 25 per Federal reserve act, in dealing with six-months’ cent limit applies only to the proceeds of loans agricultural paper, the words “based on” used for agricultural purposes or based on live should be considered synonymous with “se­ stock, provided the maturities of these notes ex­ cured by.” The language of the act is— ceed three months. In other words, the limi­ “provided that notes, drafts, and bills drawn tation applies only to paper having maturity or issued for agricultural purposes or based on in excess of 90 days. live stock,” etc. As to the question whether notes bearing the indorsement of nonmember banks are eligible The Board does not understand that such for rediscount, you are advised that the matter agricultural paper must be directly secured by is one that is now under very careful considera­ agricultural products. It would seem to be tion for the purpose of establishing general reg­ sufficient if they are genuinely based upon ulations regarding the relation of State banks transactions entered into for the purposes of to the new system in various connections. agricultural operations. The question you raise as to whether the In conclusion, I would state that these direct note of a member bank can be redis­ questions must be handled with general bank­ counted has already been fully covered in ing prudence, using all the knowledge of local other connections, as I believe that we have conditions which the directors of the bank sent you copies of replies to other Federal must possess. reserve agents dealing with this point—the January 9, 1915. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Cotton-mill Paper. which were accepted by the depositor at the time the account was opened under which the At a meeting of the Board yesterday Mr. depositor may be required by the bank to give ----------brought up the matter of discounts by notice of intended withdrawal not less than your bank, upon the indorsement of member 30 days before the withdrawal is made. banks, of notes made by cotton mills whose The pass book which you inclosed refers to statements do not show an excess of quick as­ accounts which may be classed as savings sets over current liabilities. accounts, provided that such deposits are not I am authorized and directed by the Board subject to check. If, however, the depositor to say that, the new discount regulations were has the privilege of drawing checks on the not intended to reverse the ruling previously account in your interest department, under made by the Board in the matter of discounts regulation E issued by the board, your bank of cotton-mill paper by your bank, and your will be required to carry full 12 per cent directors are authorized to discount such paper reserve against such accounts. If withdrawals as heretofore where general conditions are sat­ can only be made upon the presentation of isfactory, and where the statement of the cot­ pass books, such accounts may be classed as ton mill shows that the plant is not mortgaged, “ time savings accounts” upon which it will be and that the deficiency between capital and necessary to carry but 5 per cent reserve. plant account does not amount to more than $5 per spindle. February 4, 1915. February 11, 1915. Stock Notice to Banks. It is believed that a system of notifying mem­ Time Deposits and Savings Accounts. ber banks of the approval of applications for Receipt is acknowledged of your letter of stock which will be more satisfactory to the February 2, referring to the interpretation of Federal Reserve Banks can be adopted. It has the term “Time deposits.” heretofore been the practice of the Federal Re­ In your letter you quote from Circular No. 6,’ serve Board to send a notice of call for the pay­ series 1915. In this connection your atten­ ment of the first installment of subscription tion is called to regulation E, which was directly to the member bank, and at the same attached to the circular above referred to, and time advising the Federal reserve agent of the in which the distinction between time deposits, district of this action. This system will be time certificates of deposit, and savings more satisfactory to all if the member banks accounts is made clear. receive notice of the approval of their applica­ All deposits are subject to full reserve except tions for stock directly from the Federal Re­ the following: serve Banks, and to accomplish this the follow­ 1. “Time deposits—open accounts.” This ing procedure will in the future be observed: refers to accounts which are subject to check Under the law new banks can be required to but that under written agreement “neither the pay one-half of their subscription at the time whole or any part of such deposit” may be of taking out stock. Upon the receipt of notice withdrawn except on a given date on written from the Board of the allotment of stock to such notice given in advance, in no case less than banks the Federal reserve agents can notify the 30 days. In this connection it will be noted banks and require the necessary payments to that the date of payment must be fixed before place them on the same footing as those which such accounts may be classed as time deposits. originally entered the system, until May 2, 2. “Time certificates of deposits” refers to 1915, when the third installment is payable, those deposits which are evidenced by cer­ and then require payment in full of the required tificates (a) which have a fixed maturity; (6) 3 per cent. which are payable after lapse of specified num­ The Board has been advised that in the issu­ ber of days; (c) or upon written notice given ance of additional stock member banks very at least 30 days before the date of repayment. frequently prefer to pay one-half of their sub­ 3. “Savings accounts.” This item refers to scription at the time the stock is issued, thereby accounts which are evidenced by (a) pass book, avoiding the inconvenience of three small pay­ certificate of deposit, or similar form of receipt, ments. Under the law this can not be re­ which must be presented to the bank whenever quired, but the option should, it would seem, a deposit or withdrawal is made; and (i) which be given. Therefore, upon receipt of notice accounts are subject to printed regulations from the Board of allotment of additional stock, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mortgages Secured by Live Stock. the Federal reserve agents should advise the ap­ plicant banks and extend to them the option The Federal Reserve Board has received a of paying the installment necessary to place it letter under date of March 9 from Mr. R. L. on the same footing as other stock held by them. Van Zandt, in which he asks whether paragraph It is believed if tne foregoing procedure is fol­ 3 of Circular No. 3 covers a bill specifically lowed, so *that all stock will be upon the same secured by a chattel mortgage on cattle. footing as regards payments, the work of keep­ The Board is of the opmion that there is ing accounts will be greatly simplified both for nothing to require a mortgage on cattle, and the Federal Reserve Banks and tor the Federal that the question whether such paper is self- Reserve Board. liquidating when so secured is a matter that March 10, 1915. can be settled very much better at your bank than here, inasmuch as it is a matter of local usage and custom as to which we have no Adjustment of Stock Ledgers. reliable information. The requirement in the case is merely that the general principles of the In order to obviate the necessity for daily regulation referred to Be observed according adjustment of the stock ledger accounts ana to the best judgment of the officers in charge. the consequent confusion which results from continuous changes in the stock holdings of March 17,1915. member banks occasioned by the increase or decrease of their capital or surplus, you will Discount of Renewal Notes. please request all member banks to file their applications quarterly—that is, on the 1st Your letter of March 15 raises a very inter­ day of January, Apnl, July, and October of esting question of principle in the operation each year—in all cases where additional stock of a Reserve Bank, to wit, the question whether is to be applied for, or where member banks it is proper for a Reserve Bank to discount a desire to surrender and cancel a part of the note which is obviously a renewal. Broadly stock held. stated, the question can not be answered by an In making applications for additional stock invariable “yes” or “no.” A renewal as or for surrender of stock, banks should exercise such is neither “ eligible” nor “ineligible.” care to see that the blanks are properly filled There are good renewals and bad renewals; in, using as a basis the total capital and surplus and it is a matter for banking judgment to at the time of their last previous stock allot­ determine the merits of each particular case ment, and stating the total of all increases and by a knowledge of the circumstances in which decreases in capital or surplus, separately, so both the original loan and the renewal have that the total at the date of the prior allotment been made. It is clear that paper successively plus the increases and less the decreases, will jmnftwp.d for the, purpose of pjxmding-~a^perequal the total capital and surplus as of date manenlL addition to^ wxukiag capital^M^ior-the oi application. purpose.of financing jixgd investments is not Those national banks which have increased eligible for rediscount by a Federal Reserve or decreased their surplus since the last report Bank; on the other hand, paper that is_j2Hr of condition to the Comptroller of the Currency, questionably, self-liquidating, even though the should send a certificate to that effect to the 'transaction which gives rise to it does not Comptroller contemporaneously with filingtheir liquidate itself within the limits of a 90-day applications with the Federal Reserve Bank, maturity, might be discounted by a Federal in order that the records of the Comptroller’s Reserve Bank even though it appeared that office may be in accord with those of the Federal it was renewal paper. There are many proc­ Reserve Board. esses of production which take a longer time In the case of changes in capital, this addi­ than 90 days; and while no Federal Reserve tional certificate will be unnecessary, in view Bank should ever enter into an agreement for of the fact that the Comptroller’s approval must the renewal of discounted paper, nevertheless be obtained prior to any such change, and the in cases where the “process oi production and records of his office must necessarily conform distribution ” covers a period longer than 90 in such case. days there is no reason why a borrower should March 13, 1915. not renew his 90-day borrowing; and, in such Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

case, there is no reason why a member bank reserve agent. It is, however, permitted under should not purchase the paper and a Federal the terms of the Federal reserve act to carry Reserve Bank discount it if it is otherwise sat­ part of its required reserve with approved re­ isfactory and at the then prevailing rate. It serve agents; but this is optional with a bank would be a mistake for a Federal Reserve Bank and not mandatory upon it. I quote the fol­ as a matter of principle to refuse to buy paper lowing from an opinion of counsel of the Federal based on transactions of this kind. At the Reserve Board: same time they must be counseled to exercise “ If the laws of South Carolina permit or re­ great care in scrutinizing the paper and trans­ quire State banks to carry a part of their re­ actions that have given rise to it, in order to serve with national banks, reserve so carried in determine whether it is of the character above accordance with the State law may be counted described as legitimate and notjusefLaa^a.scre^u as reserve under the Federal reserve act, and for financing fixed. invesfm pn ts or for the pur­ it is unnecessary for the State bank to have pose of providing additional working capital. such national bank approved as its reserve As the circulars and regulations of the Federal agent unless the laws of South Carolina so re­ Reserve Board have undertaken to state the quire. If the laws of South Carolina do not fundamental principle, it is the liquidity of the permit or require State banks to carry a part paper that must be looked to to determine its of their reserve with national banks a State eligibility, and liquidity should not be tested bank might, under the previous paragraphs of by standards that are too narrow, arbitrary, or section 19, have a national bank in a reserve inflexible. Such mechanical rules must not be or central reserve city approved as its reserve allowed to take the place of a discriminating agent and balances carried with such approved banking judgment. reserve agent might be counted as reserve April 27, 1915. under the Federal reserve act, but might not be treated as reserve by the State authorities. “ It, therefore, seems unnecessary for a State Undivided Interests as Security. bank to have a national bank approved as its reserve agent unless the laws of the State in In answer to your letter of May 3, relative to which it is incorporated make this requirement.” a loan secured by a mortgage upon one share of an undivided interest in a piece of farm May 15, 1915. property, you are advised that the Board agrees with the views you have expressed. — j j The mortgage on such share of an undivided Notes for Commercial Fertilizer. interest would be very hard to reduce to One of the Georgia member banks has made possession in case it should become necessary to the Federal Reserve Board the following to sell out the collateral, and moreover, the suggestion: question would have to be investigated pretty I learn that the Reserve Board has under carefully whether the remaining nine-tenths consideration the question of admitting to of the holders could not mortgage the property, rediscount notes given by farmers for com­ provided that as we take it, it is now un­ mercial fertilizer, and having more than three encumbered. but less than six months to run. These cases must, of course, be judged on I want to suggest that unless a note given their own merits, but looking at the question by a farmer for commercial fertilizer, to be used merely as a matter of principle, as it is brought under his growing crop, constitutes an agri­ before the Board, to lend on this type of paper cultural paper under the terms of the reserve does not appear to be advisable. bank act, I can not understand what character May 7, 1915. of paper would come under such description. Below is the decision of the Board in the matter: Approved Reserve Agents. I inclose you a copy of a letter with the sug­ Replying to your letter of April 20 as to gestion that you transmit to the writer a reply whether or not it is necessary for State banks indicating that the Board’s feeling is that a which are members of a Federal reserve bank farmer’s six-months’ note of the kind herein to have approved reserve agents, I beg to ad­ referred to, discounted and indorsed by a vise you that there is nothing in the Federal member bank, is to be regarded as agricultural reserve act which requires a member bank to paper eligible for rediscount by Federal Re­ carry any part of its reserves with an approved serve Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IMPORTS AND EXPORTS OF GOLD. The Bureau of Foreign and Domestic Com­ merce gives the total gold imports during The Federal Reserve Board since January January-April, 1915, as 61.4 million dollars, 1 of the present year has been in receipt of compared with 25.0 million dollars during the weekly telegraphic reports from collectors of same period in 1914 and 19.9 million dollars in customs showing the imports and exports of 1913. Over 60 per cent (37.7 million dollars) of gold ore, bullion, and coin. The tables below the imported gold came from Canada, about 5.6 show the totals, for the 17 weeks from January millions from European countries, 5.5 millions 1 to April 30 (brought into accord with the figures of the Bureau of Foreign and Domestic from Japan, 5.1 millions from China, and 3.3 Commerce), and in addition for each of the millions from Mexico. three weeks during the month of May, for The exports of gold during the first 20 weeks which telegraphic advices have been received. of the present year are shown to have been less Of the total of about 79.5 million dollars of than 4.5 million dollars in value, almost 95 per gold imported into this country during the first cent leaving the country via New York. Gold 20 weeks of the present year, 39.5 millions are exports for the first 4 months of the present shown to have come by way of Ogdensburg (St. year totaled less than 3.5 million dollars, com­ Lawrence district), 18.7 millions via New York, pared with 19.0 million dollars exported during and 14.5 millions by way of San Francisco, the the corresponding period in 1914 and 50.7 imports through these three gateways consti­ million dollars in 1913. Practically all the tuting almost 92 per cent of the total gold im- 1 gold exported was consigned to Central ports into this country. Comparisons with | America, the West Indies, and South American previous years are possible only for the first ! countries, over two-thirds of the total gold four months of the year. ]exports going to Cuba. Imports of gold, by customs districts, Jan. 1 to May 21,1915. [In thousands of dollars.] ■I§ I f i l l ! a* j .dnalyraM i i j .kroY weN | .ociR otroP j .adirolF 1 .snaelrO weN 1 .anozirA1 1 ! .osaP lE 1 1 .aksalA .ocsicnarF naS ­ilaC nrehtuoS .ainrof .notgnihsaW 1----------- i .olaffuB .atokaD .nagihciM 1 .ecnerwaL .tS .tnomreV| .latoT Jan. 1 to Apr. SO. 1 j 1 Ore and base bullion............. 1 49 141! 45 I 42 42 7 1,297| 1,338 80 524 3,566 Bullion, refined____________ 3,837 ' 289.1,082 490 5,951 288 1,952 13,896 United States coin........................... 3,080 1 7 1 21 6, 5 31,210 3 34,333 Foreign coin_______________1_____ 50 3,616 10 .......i.........1......... , 5,480 i............ 495 9,651 Total............................. I 1 50 10,582 1 24 141j 3341,124 490 11,494 7 1,591 1,343 80 524 33,657 3 61,446 jFr V/mTi WCClw Cfnivrfili i/lnlyn J\jfrJnM*yi 7/• 1 Ore and base bullion............. 2 15 28 3 82 65 56 251 Bullion, refined......................,......... 219 3 2 !........ 40 80 640 984 U Fo n r i e t i e g d n S c t o a i t n e _ s _ c _ o _ i _ n _ . _ .. _ .. _ .. _ . _ .. _ .. _ .. _ .. _ . ! !. _ . _ .. _ .. _ .. _ . 2,501 6 1 498 2,5 5 0 0 1 4 1 1 Total.............................1 2,728 3 15 30 . 3 538 162 65 56 640!......... 4,240 For week ending Mag 14. - = ;=— -■= ===== Ore and base bullion............. 3 731 6 50 192 26 350 U Bu n l i l t i e o d n , S r t e a f t i e n s e c d o .. i . n .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I . . .. . . . . . . . . . . . . . . . 1 2 4 2 0 201 14 184 3 2 5 2 8 Foreign coin..................................... 36 2,246 2,282 Total............................. 198 | 3 93 20 2,430 • • • . 50 192 26 3,012 For week ending May 2t Ore and base bullion............. 9 5 ! I 55 149 54 272 Bullion, refined...................... 167 3 ....1 81 251 United States coin................. 5,030 4 5,223 10,257 Foreign coin........................... i 50 i 1 55 Total............................. 50 5,211 8 ...J 81 ___ 55 153 ___ 54 5,223 10,835 jan. 1 to May %i. Ore and base bullion............. 1 1 60 1 159 146 56 ... 1 42 7 1,484 1,744 80 660 4,439 Bullion, refined...................... ........| 4,363 10 311 1,099 490 ! 6,256 .... 368 2,592 15,489 F U o n r i e t i e g d n S c t o a i t n e . s . . c .. o .. i . n ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __ 1 _ 0 _ 0 1 i 1 1 3 0 , . 6 63 6 3 3 — "*Ai" !! j10 ....j 8,22 2 4 1 6 9 36,4 4 3 9 3 5 1 3 4 1 7 2 , , 1 4 1 3 2 9 Total............................. 1 100 |18,719 27 159 457 1,155 490 14,543 7 1,858 1,753 80 660 39.520 | 3I 79,533 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Exports of gold, by customs districts, Jan. 1 to May 21, 1915. [In thousands of dollars.! Maine Du­ H N a a n e m d w p­ Y N o e r w k. Hawaii. Alaska. F ci S r s a a c n o n . ­ i W ng a t s o h n ­ . Buffalo. M g i a c n h . i­ l a S u n u th d ­ r L e S n a t c w . e ­ . m V o e n r t ­ . Total. shire. perior. Jan. 1 to Apr. SO. 1 118 119 United States mint, nr assav office bars...................... 3 1 4 7 2 2 2 17 1 1 2 6 32 United States coin......................................... 2,328 14 4 31 3 1 4 2,385 ............................................ 935 Foreign coin 5 940 Total ............................................. 2 3,263 14 3 4 151 28 1 1 10 6 3,483 For week ending May 7. United States coin......................................... 646 2 648 For week ending May 14. United States coin.......................................... 175 2 177 For week ending May 21. United States mint or assay office bars....... 1 1 United States coin......................................... 132 10 142 Total ............................................. 132 10 1 143 ' Jan. 1 to May 21. Ore and base bullion..................................... 1 118 119 United States mint or assay office bars........ 3 5 8 "Bullion refined .......................................... 2 2 2 17 1 2 6 32 United States coin _ .................................. 3,281 16 16 31 3 1 4 3,352 Foreign coin ......................... 935 5 940 Total ................................................ 2 4,216 16 3 16 151 28 1 1 11 6 4,451 Standing Committees, Federal Reserve Board. * (1) Committee on Federal Reserve Board Organization and (7) Committee on Issue and Redemption. Expenditures. Mr. Delano, Chairman; Mr. Williams, Mr. Miller. Mr. Delano, Chairman; Mr. Harding, Mr. Miller. (8) Executive Committee. (a) Subcommittee, Organization and Staff: The Governor, the Vice Governor, Mr. Warburg. Mr. Delano, Mr. Harding. (b) Subcommittee, Budget and Expenditures: Government Rate for Official Telegrams. Mr. Delano, Mr. Miller. (2) Committee on Audit and Examination. Both the Postal Telegraph Cable Co. and Mr. Williams, Chairman; Mr. Delano, Mr. Warburg. (3) Committee on Operation of Federal Reserve Banks. the Western Union Telegraph Co. will accept Mr. Hamlin, Chairman; Mr. Warburg, Mr. Harding, telegrams from Federal reserve agents when Mr. Delano, Mr. Miller. they relate to the official business of the Fed­ (a) Subcommittee on Operation: Mr. Hamlin, Mr. eral Reserve Board. Such telegrams should Warburg, Mr. Harding, Mr. Miller,Mr. Delano. be indorsed “ Official business, Government (b) Subcommittee on Discount Operations: Mr. rate, charge Federal Reserve Board.” Warburg, Mr. Delano, Mr. Harding, Mr. Miller. (4) Committee on Reports and Statistics. Messages from Federal Reserve Banks will Mr. Miller, Chairman; Mr. Delano, Mr. Williams. be accepted by the telegraph companies at (5) Committee on Legal Matters. Government rates when indorsed “Official Mr. Hamlin, Chairman; Mr. Warburg, Mr. Harding. business, Government rate, collect.” Such (6) Committee on Admission of State Banks. messages will be billed to the Federal Reserve Mr. Harding, Chairman; Mr. Williams, Mr. War­ burg. Board at Washington, D. C. 94995—15------3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CIRCULARS AND REGULATIONS. The circular and regulation given below certificates, and, in addition, an amount at least equal to were issued by the Board on May 8. its net indebtedness due to all Federal Reserve Banks. (h) The Treasurer of the United States or Assistant CIRCULAR NO. 13, SERIES OF 1915. Treasurer will, in accordance with arrangements made with the Treasury Department, advise the Federal Reserve Washington, May 8,1915, Board, by mail or telegraph, of the receipt of all funds deposited on account of the gold settlement fund, and the CLEARINGS BETWEEN FEDERAL RESERVE BANES. Treasurer will issue and deliver to the Federal Reserve Section 16 of the Federal reserve act authorizes the Board gold order certificates made “payable to the order Federal Reserve Board, at its discretion, to exercise the of the Federal Reserve Board” covering the sum so functions of a clearing house for the Federal Reserve deposited. Banks. (c) Each Federal Reserve Bank shall maintain a balance Pursuant to the authority of this section the Federal in the gold settlement fund of not less than $1,000,000. Reserve Board has dev'sed a plan for the establishment (d) Excess balances may, at the convenience of each of a gold fund for the weekly settlement of balances arising Federal Reserve Bank, remain deposited with the gold out of transactions among the 12 Federal Reserve Banks, settlement fund. to be operated under the direction of the Federal Reserve IV. Custody of funds. Board with the cooperation of the Treasury Department. The regulation governing the establishment and opera­ (a) A safe in the Treasury vault will be set apart for the tion of this fund is issued herewith. exclusive use of the Federal Reserve Board. (b) To open the Treasury vault, the presence of two per­ sons designated by the Secretary of the Treasury is REGULATION L, SERIES OF 1915. required. The combination of the safe-set apart for the use of the Board will be controlled by two persons desig­ Washington, May 8, 1915. nated by the Board. CLEARINGS BETWEEN FEDERAL RESERVE BANKS. (c) A vault record shall be kept, giving a memorandum of all entrances to the safe, by whom made, for what pur­ I. Statutory provisions under section 16. pose, and the certificates deposited or withdrawn. Each entry on the vault record book shall be signed by the “The Federal Reserve Board shall make and promul­ persons having access to the safe. gate from time to time regulations governing the transfer of funds and charges therefor among Federal Reserve V. Accounts. Banks and their branches, and may at its discretion exer­ cise the functions of a clearing house for such Federal In its relations with other Federal Reserve Banks each Reserve Banks, or may designate a Federal Reserve Bank Federal Reserve Bank shall keep an account showing to exercise such functions, and may also require each balances “due to” other Federal Reserve Banks repre­ such bank to exercise the functions of a clearing house for senting the proceeds of items which it has actually col­ its member banks.” lected, and payments and transfers which have been made to it for the account of such other Federal Reserve Banks; II. General provisions. and an account showing balances “due from” other Fed­ eral Reserve Banks representing the proceeds of items In the exercise of the functions of the clearing house which it has sent to such other Federal Reserve Banks, authorized under the provisions of section 16, quoted and payments and transfers which have been made to such above, the Federal Reserve Board and the Federal Re­ other Federal Reserve Banks for it account. serve Banks will be governed by and subject to the fol­ lowing regulations and the Federal Reserve Board will be VI. Procedure. the custodian of the funds hereinafter termed the “gold (a) At the close of business each Wednesday night, each settlement fund.’’ The Board will appoint a settling Federal Reserve Bank shall telegraph to the Federal agent, who shall keep the necessary records and accounts. Reserve Board, confirming such telegram by mail, the III. Deposits in the gold settlement fund. amounts in even thousands due to each other Federal Reserve Bank as of that date, as indicated by its “due to” (a) Each Federal Reser\e Bank shall, not later thana ccount provided for in Rule V. If Wednesday is a May 24, 1915, forward to the Treasury or the nearest sub- holiday in the State in which a Federal Reserve Bank is treasury, for credit to the account of the gold settlement located, then such bank shall telegraph as herein provided fund, $1,000,000 in gold, gold certificates, or gold order on Tuesday, at the close of business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

(6) The settling agent shall, on each Thursday, make to ship from one point to another in order to have the gold the proper debits and credits in the accounts of each or gold certificates available at the sub treasury to which Federal Reserve Bank with the gold settlement fund, such gold order certificates are presented, the Federal and shall telegraph to each bank the amounts, in even Reserve Board will, for the account of the gold settlement thousands, of credits to its settlement account, giving the fund, refund any expense incurred by the Treasury in name of each Federal Reserve Bank from which each of making such shipments. its credits was received and also its net debit or credit balance in the weekly settlement. IX. Reserve. (c) Each Federal Reserve Bank shall, on receipt of the Each Federal Reserve Bank shall count as a part of its telegram from the settling agent, debit the “due to” legal reserve the funds standing to the credit of its account Federal Reserve Banks’ accounts, and shall credit the on the books of the gold settlement fund. gold settlement fund; and shall credit the “due from” Federal Reserve Banks’ accounts and charge the gold X. Expenses. settlement fund. The difference between the total debits and credits shall equal the net debit or credit to the gold Cost of operation of and shipment of currency by the settlement fund, as advised in the telegram from the gold settlement fund shall be apportioned by a semiannual settling agent. accounting among the 12 Federal Reserve Banks on a basis VII. Deficits. to be hereafter determined by the Board after consultation with the Federal Reserve Banks. (a) Should the debit settlement balance of any Federal Reserve Bank be in excess of the amount of its credit in XI. Audit. the gold settlement fund, such deficit must be immediately covered either by the deposit of gold, gold certificates, or At least once in each three months an audit shall be made gold order certificates in the Treasury or nearest sub­ of the gold settlement fund by a representative of the ' treasury, or by credit operations with other Federal Federal Reserve Board and a representative appointed Reserve Banks which have an excess balance with the by the Federal Reserve Banks. gold settlement fund. Any delay in covering such deficit XII. shall be subject to such charge as the Federal Reserve Board may impose. The Federal Reserve Board reserves the right to add to, (b) As required in III (c) of this regulation, each Federal alter, or amend these regulations. Reserve Bank shall maintain a balance in the gold settle­ ment fund of not less than $1,000,000. Should the credit balance of any Federal Reserve Bank in such fund fall Aldrich-Vreeland Currency Outstanding. below $1,000,000, such bank shall restore its balance to that amount in either manner indicated under VII (a) of this regulation on or before Tuesday of the following There was on May 20 Aldrich-Vreeland cur­ week. rency outstanding to the amount of $3,539,- VIII. Excess balances. 600.78. States in which the currency is held, with the amounts, are as follows: Any excess balance shall, on request, either by telegraph or letter, of the Federal Reserve Bank to which it is due, Alabama.......... $214, 250.00 be refunded by the return to the Reserve Bank of the California........ 361.140.00 gold order certificates held by the gold settlement fund, Florida............ 264, 000.00 properly indorsed, or by the indorsement and delivery Iowa................. 433.150.00 to the Treasurer of a like amount of such certificates, for Kentucky....... 25, 000.00 which he will give in exchange bearer gold certificates, Louisiana........ 245, 450.00 which the Federal Reserve Board may send by registered Missouri........... 30, 000.00 mail, insured, to the banks, if they want funds other than New Jersey___ 35, 000.00 gold order certificates, or in lieu of such payment, the New Mexico... 85, 950.00 Treasurer may by wire or mail direct payment to be made North Carolina, 72, 500. 00 by a subtreasury office through the medium of the general Pennsylvania.. 413, 872. 98 account, provided funds are held in such office available South Carolina 308, 787.80 for the purpose. Gold order certificates will, when pre­ Tennessee....... 150, 000.00 sented at the office of the Treasurer of the United States Texas............... 875, 500.00 or any sub treasury, bearing the signatures of duly author­ Wisconsin........ 25, 000.00 ized officers of the Federal Reserve Bank, be payable in gold or gold certificates. If the Treasury finds it necessary Total 3, 539, 600. 78 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

DISTRIBUTION OF ALDRICH-VREELAND CURRENCY. (Compiled by the Comptroller of the Currency.) Aldrich- Vreeland Act circulation approved, classified as to kind of security—Original applications. Portions secured by- States. Circulation Per State and Per Miscellaneous Per Commercial Per Warehouse Per approved. cent. county bonds. cent. securities. cent. paper. cent. receipts. cent. Maine................... New Hampshire.. 9352,000 986,500 9175,500 990,000 27 Vermont.............. Massachusetts.... ’28,’674’506' *3,’338,* 266' i2,324,050 *i3‘6i2,*256 46 C R o h n o n d e e c I t s ic la u n t. d .. . . . . . . . . . . . . ”i*25i'666' **”645*666' ” * 606,’666' 49 Total New England States. 30,277,500 3,424,700 13,144,550 12,708,250 New Yetk.......... 11,564,000 1,408,230 5,088,050 5,067,720 New York City., 144,975,960 24,458,176 55,294,153 65,223,631 New Jersey............... 1,980,000 854,000 810,000 316.000 Pennsylvania. 24,451,730 944,845 13,351,905 10,155,000 M De a l r a y w la a n re d . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . ”*M6i,oo6' *’i*446*766' **5,*i6i,'i6o' District of Columbia___ 637,000 268,000 364.000 Total Eastern States.. 191,777,710 29,297,451 15 76,252,808 40 86,227,451 45 Virginia............ 6.458.100 937,950 14 708,100 12 4,707,050 72 $105,000 2 West Virginia .. 323.000 323,000 100 North Carolina. 4,037,450 1,166,565 41,625 2,315,535 57 513,725 13 South Carolina. 3,285,380 111,900 69,350 2,596,230 79 507,900 16 Georgia............. 6,289,625 355.000 6,200 5.478.650 87 449,775 8 Florida.............. 1,368,500 296.000 10,500 778.875 58 283,125 21 Alabama........... 4.662.400 892,650 181,000 3,486,150 75 102,600 2 Mississippi........ 1.572.000 838,125 129,000 580.875 37 24,000 2 Louisiana.......... 4.155.000 518,765 414,750 2,830,485 69 391,000 9 Texas................ 18,136,300 1,068,950 346,0.50 16,477,200 91 244,100 1 Arkansas........... 624.000 43,750 464,250 74 116,000 19 Kentucky......... 5.150.400 732,600 1,214,200 3,203,600 63 Tennessee......... 4.968.100 410,750 607,200 3.943.650 80 6,500 Total Southern States. 61,030,255 7,329,255 3,771,725 47,185,550 80 2,743,725 Ohio......... 16.984.500 3.669.000 1,965,600 11,349,900 Indiana___ 719,500 121,334 225.000 373,166 Illinois.... 27.825.000 5,114,500 3,996,500 18.714.000 Michigan... 2.414.000 1.310.000 6,000 1.098.000 Wisconsin. 4.864.000 720,100 1,195,900 2.948.000 Minnesota. 12.416.500 737.500 5,805,000 5.874.000 Iowa......... 3,018,400 143.500 45,000 2,829,900 Missouri... 13.173.000 448,000 562.000 12.163.000 Total Middle States. 81,414,900 12,263,934 13,801,000 16 55,349,966 North Dakota. 150,000 150,000 100 South Dakota. Nebraska......... 2,083,000 54.000 2,029,000 Kansas............ 842,000 63.000 10,000 769,000 92 Montana......... Wyoming........ Colorado......... 1,395,000 325,875 23 746,700 322,425 23 N O e k w la h M om ex a i . c .. o .. . . . . . 1,3 2 1 9 3 7 , , 7 5 0 0 0 0 *ii9,’666' ”i6*206' 1,1 2 4 9 6 7 , , 5 5 0 0 0 0 1 8 0 8 0 32,000 Total Western States. 6,081,200 561,875 772,900 12 4,714,425 80 32,000 Washington. 530,000 245.000 285,000 Oregon......... 2,053,000 895,904 1,157,096 California___ 13,110,250 212.000 1,186,750 11,711,500 Idaho........... Utah............ 127,500 127,500 100 Nevada........ Arizona........ ”4i*906' 41,900 100 Alaska......... Total Pacific States.. 15,862,650 1,352,904 1,228,650 13,281,096 Total United States. 386,444,215 54,230,119 14 109,386,633 28 220,466,678 57* 2,360,785 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Aldrich- Vreeland Act circulation approved., by States and reserve cities. States. b b n T a e u o n r t m k a o s ­ l f . l r B c a e i i a t c r n i n e c o g u i k n v ­ s . ­ By States. By c i r t e ie se s. rve States. b b n T a e u o n r m t k a o s ­ l f . r l B c a e i i a t c r n i n e c o g i u k n v ­ s . ­ By States. By c i r t e ie s s e . rve Maine.................................. 69 Ohio.................................... 377 57 $16,984,500 $11,834,000 56 6 $352,000 Indiana............................... 254 9 719,500 Vermont _ ............ 48 Illinois................................. 465 20 27,825,000 27.070.000 Massachusetts..................... 172 47 28,674,500 $24,944,500 ,Michigan............................. 100 7 2.414.000 1.926.000 19 Wisconsin........................... 131 16 4.864.000 3.960.000 Connecticut.. .................... 76 10 1,251,000 Minnesota........................... 274 18 12,416,500 11.861.000 Iowa.................................... 343 56 3,018,400 1.410.000 Total Northeastern Missouri.............................. 130 24 13,173,000 12,976,000 States..................... 440 63 30,277,500 24,944,500 Total Middle States.. 2,074 207 81,414,900 71,037,000 New York City................... 38 32 144,975,960 144,975,960 New York........................... 441 39 11,564,000 3,045,000 North Dakota..................... 149 1 150,000 New Jersey......................... 202 7 1,980,000 South Dakota ................... 106 Pennsylvania...................... 837 54 24,451,750 21,957,750 Nebraska............................ 220 12 2,083,000 1,994,000 Delaware............................ 25 Kansas................................ 213 13 842,000 469,500 Maryland............................. 101 18 8,169,000 7,888,000 Montana.............................. 61 District of Columbia.......... 13 12 637,000 637,000 Wyoming............................ 32 Colorado.............................. 125 5 i, 395,000 1,395,000 Total Eastern New Mexico....................... 38 7 297,500 States..................... 1,657 162 191,777,710 178,503,710 Oklahoma........................... 346 52 1,313,700 182,500 Virginia............................... 135 40 6,458,100 3,271,000 Total Western States... 1,290 90 6,081,200 4,041,000 West Virginia..................... 118 3 323,000 North Carolina................... 75 48 4,037,450 Washington........................ 78 2 530,000 490,000 South Carolina.................... 55 52 3,285,380 Oregon................................ 84 9 2,053,000 1,770,000 Georgia................................ 114 79 6,289,625 3,150,000 California............................ 262 48; 13,110,250 10,435,000 Florida................................ 53 13 1,368,500 Idaho................................... 55 Alabama............................. 90 65 4,662,400 Utah................................... 23 2 127,500 Mississippi........................... 38 18 1.572.000 Nevada................................ 10 Louisiana............................ 32 19 4.155.000 2.370.000 Arizona............................... 13 1 41,900 Texas................................... 519 353 18,136,300 6.349.000 Alaska................................. 2 Arkansas............................. 58 8 624,000 Kentucky........................... 142 41 5,150,400 2,947,000 Total Pacific States.. 527 62 15,862,650 12,695,000 Tennessee............................ 116 40 4,968,100 Hawaii............................... 5 Total Southern States..................... 1,545 779 61,030,255 18,087,000 Total United States.. 7,538 1,363 386,444,215 309,308,210 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Gold Settlement Fund. (3) Each bank will be expected to forward to the nearest subtreasury not later than Mon­ The operation of the gold settlement fund day, May 24, 1915, in gold, gold certificates, or in Washington became an actuality with set­ {fold order certificates properly indorsed, at east $1,000,000, and in addition an amount tlements between the twelve Federal Reserve equal to its net debit balance as telegraphed Banks made on Thursday, May 27. At this by the settling agent. Transfers of gold or time the gold deposits, as represented by gold certificates should be credited to the ac­ receipts from the Treasurer of the United count of “Gold bullion and U. S. coin” and States for the fund, were $18,450,000. “U. S.jgold certificates,” and charged to the item “Gold settlement fund” on the books of Earlier in the month the Federal Reserve the Federal Reserve Banks. Board had sent out to the twelve banks the (4) As soon as all transfers have been effected following letter: each Federal Reserve Bank will be advised by The Board herewith encloses a regulation telegraph, at which time the transfer entries concerning the operation of the gold settle­ should be made on the books of the bank. ment fund, and also instructions containing Each Federal Reserve Bank will then debit the a list of dates on which the various steps are to due to Federal Reserve Banks’ accounts and be taken leading up to the establishment and credit the settlement fund, and will credit the the beginning of the operations of this fund. due from Federal Reserve Banks’ accounts and The question of transfers between Federal charge the settlement fund. Reserve Banks has been fully discussed with a (5) The second settlement will be made on committee of governors on “clearings” and the May 27 and figures telegraphed as at close of report of that committee, dated May 6, 1915, business on May 26, and at weekly intervals isnereto appended. The Board is in accord thereafter. with the prmciples and recommendations con­ May 8, 1915. tained in this report and suggests that each bank proceed promptly to prepare the nec­ REPORT OF THE COMMITTEE OF GOVERNORS. essary schedules and whatever instructions may be thought appropriate for its own W ashington, D. C., May 6, 1915. member banks. To the Federal Reserve Board: Forms to be used for the transfers are in The committee of governors, appointed to course of preparation by the above-named consider collection matters, believes that, in committee ana will be transmitted to you in the interest of sound banking practice, trans­ due course. fers of funds by member banks through the Inclosed, herewith, is a revised time schedule Federal Reserve Banks should be encouraged, regulating the time allowance to be applied in and that it will both induce and facilitate such crediting or debiting accounts in connection transfers if standard forms be prepared by all with transfers between member banks. the Federal Reserve Banks and distributed The documents referred to in the letter among their members for general use. They follow:— recommend that such forms be prepared, and, Instructions to Federal Reserve Banks rela­ if desired, suggestions for these forms will be tive to the establishment of the gold settlement submitted by the committee.1 fund: The committee on clearing further recom­ (1) At close of business Wednesday, May 19, mends that no stated charge be fixed for inter­ 1915, each Federal Reserve Bank will telegraph district mail transfers to be made by Federal to the Federal Reserve Board the amounts in Reserve Banks for their members, but that, even thousands due to each other Federal inasmuch as conditions vary greatly in the Reserve Bank as of that date. several districts, and will fluctuate with the (2) Thursday, May 20, settling agent will seasons, each Federal Reserve Bank be allowed telegraph to each bank the amounts of credits to arrange its own schedule of charges to be to its settlement account, giving the name of based upon the cost of the service rendered, each bank from which such credits were re­ and adequate to protect it in its dealings with ceived, also net debit or credit balance in its members. The cost of such transfers should settlement. A confirmation will be sent bv mail. i A joint committee of the Board and the Federal Reserve Banks has since prepared a set of forms which will be sent out shortly. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

not exceed the expense of shipping currency to the nearest subtreasury city. It further recommends that a protective charge is advisable upon all telegraphic trans­ fers for members, and that such charge, when made, shall include cost of telegraphing and the interest on the sum transferred at a minimum rate of 2 per cent, for the time required by a Reserve Bank to make the transfer by mail in accordance with the schedule hereto annexed. Whenever a charge for mail transfers is im­ posed, the protective charge for telegraphic transfer shall be in addition thereto. (Signed) J. B. McDoCuhgaailr , man. Average time (in days) to destination between Federal Re­ serve Banks. .notsoB .kroY weN .aihpledalihP .dnalevelC .dnomhciR .atnaltA .ogacihC .siuoL .tS .silopaenniM .ytiC sasnaK .sallaD [ .ocsicnarF naS district no. 6. First National Bank, Anniston, Ala. LaGrange National Bank, LaGrange, Ga. National City Bank, Mobile, Ala. district no. 7. Rockford National Bank, Rockford, 111. Farmers National Bank, Valparaiso, Ind. district no. 8. Henderson National Bank, Henderson, Ky. Morganfield National Bank, Morganfield, Ky. Citizens National Bank, Tell City, Ind. district no. 10. Colorado National Bank, Denver, Colo. New England National Bank, Kansas City, Mo. Trustee. district no. 1. Old Lowell National Bank, Lowell, Mass. district no. 6. Colquitt National Bank, Colquitt, Ga. (Trustee for sinking fund of City of Colquitt, Ga.) Boston................ il il 2 2 3 2 2 3 3 3 6 Trustee, executor, and administrator. New York.......... il U 2 1 2 2 2 2 2 3 6 Philadelphia....... U ‘ii’ 1 1 2 2 2 2 2 3 6 DISTRICT NO. 1. Cleveland............ 12 12 ‘ii* 2 2 il 12 2 2 3 6 Richmond.......... 12 il il • ‘2* 2 2 2 2 2 3 6 Indian Head National Bank, Nashua, N. H. Atlanta............... 13 12 12 2 *2* 12 12 2 2 2 6 C St h . i L ca o g u o i .. s .. . . . . . . . . . . . . . . . . . . . . . . . 1 1 2 2 1 1 2 2 1 1 2 2 2 1 2 2 ”2 2 i*i‘ il 2 1 1 1 2 2 4 4 district no. 6. M Ka in ns n a e s a p C o i l t i y s. . . . . . . . . . . . . . 1 1 3 3 1 1 2 2 1 1 2 2 2 2 2 2 2 2 i i l l ” il 2 "2 2 3 2 4 4 First National Bank, Quitman, Ga. S D a a n l la F s r . a ... n .. c .. i . s .. c . o .. . . . .. . 13 6 1 1 3 6 13 6 3 5 6 3 2 5 1 1 2 4 1 1 4 2 4 3 12 4 * *4 ....4 district no. 7. First National Bank, Boyne City, Mich. i Indicates that items on the point at the top of the column may, at the option of the Federal Reserve Bank, be taken for immediate credit district no. 8. at par or at the market rate of exchange. Nokomis National Bank, Nokomis, 111. Trustee Powers. Registrar of stocks and bonds. Applications from the following banks for district no. 2. permission to act under section 11 (k) of the First National Bank, Albany, N. Y. Federal reserve act have been approved since Nassau National Bank, Brooklyn, N. Y. Bank of New York, N. B. A., New York City. the May issue of this Bulletin, as follows: Chase National Bank, New York City. Trustee, executor, administrator, and registrar of stocks and First National Bank, Saratoga Springs, N. Y. bonds. National Newark Banking Co., Newark, N. J. DISTRICT NO. 1. Trustee and registrar of stocks and bonds. Merchants National Bank, New Haven, Conn. National Tradesmens Bank, New Haven, Conn. DISTRICT NO. 4. Massasoit-Pocasset Bank, Fall River, Mass. Huntington National Bank, Columbus, Ohio. Peoples National Bank, Marlborough, Mass. Mechanics National Bank, New Bedford, Mass. Trustee and executor. Agricultural National Bank, Pittsfield, Mass. DISTRICT NO. 11. Peoples National Bank, Brattleboro, Vt. First National Bank, Bonham, Tex. Citizens National Bank, Poultney, Vt. First National Bank, Granger, Tex. district no. 5. Trustee, executor, and registrar of stocks and bonds. Peoples National Bank, Charleston, S. C. National Bank of Charlottesville, Charlottesville, Va. DISTRICT NO. 11. Citizens National Bank, Covington, Va. First National Bank, Mexia, Tex. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ACCEPTANCES. Acceptances, by classes, held by the Federal reserve banks each week. Nonmember banks' Member acceptances. Date. a b c a c n e k p s t ' ­ b P a r n iv k a er te s. - Total. ances. Trust State companies. banks. 1915. May 3.............................................................................................................................. $5,038,000 $8,189,000 $10,000 $110,000 $13,347,000 May 10........................................................................................................................... 5.226.000 5.367.000 10,000 110,000 10.713.000 May 17........:.......................................................................................................... 5.784.000 5.601.000 10,000 110,000 11.485.000 May 24.............................................................................................................. 5.144.000 4.022.000 10,000 110,000 9,286,000 Acceptances indorsed by member banks: Member bank acceptances, $596,000; trust company acceptances, $52,000; total, 1648,000. Distribution of acceptances held by Federal reserve banks, as per schedules received by (he Federal Reserve Board, on May 17, 1915, by classes of acceptors and sizes. To $5,000. O to v e $ r 1 0 $ , 5 0 , 0 0 0 0 . 0 O t v o e $ r 2 $ o, 1 0 0 0 ,0 0 0 . 0 O t v o e $ r 5 $ 0 2 ,0 5 0 ,0 0 0 . 0 O t v o e $ r 1 0 $ 0 5 , 0 0 , 0 0 0 0 . 0 Over $100,000. Total. Class of acceptors. fo rebmuN .seceip .tnuomA fo rebmuN .seceip .tnuomA fo rebmuN .seceip .tnuomA 1 fo rebmuN | .seceip 1 .tnuomA fo rebmuN .seceip 1 .tnuomA fo rebmuN .seceip .tnuomA* fo rebmuN .seceip .tnuomA .latot fo tnec reP Member banks........................... 45 $173,174‘ 62 $494,054 137$2,272,041 44$1,619,468 11 $943,172 2 $272,000 301 $5,773,909 50. 27 Trust companies....................'.. 61 208,135 88 638,933 119 2,188,451 35 1,296,196 13 962,064 2 298,130 318 5,591,909 48.68 State banks................................ l 10,046 1 10,046 .09 Private banks....................*.___ 2 20,000 6 89,896 1 s 109,896 .96 1 V * Grand total...................... 106 381,309| 152 1.152,987 263 4,560,434 79| 2,915,664 24 1,905,236 4 570,130 628 11,485,760 Per cent of total............... 3.32;r...1 10.04 39.70....[ 25.39...J 16.59 4.96 100.00 Amounts of acceptances held by the several Federal reserve banks at close of business on the following Fridays: Apr. SO, May 7, May 14, and May 21, 1915. [In thousands of dollars.] Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

THE REDISTRICTING DECISION. time being. This left the following cases pending before the Board. Shortly after its organization, the" Federal (1) The petition of certain banks in northern Reserve Board received petitions from banks New Jersey for transfer from district No. 3 to located in several of the Federal reserve dis­ district No. 2. tricts, asking the transfer of designated por­ (2) The petition of certain banks in West tions thereof to other districts. These peti­ Virginia for the transfer of the counties of Wettions were filed under section 1 of the Federal zb\ and Tyler from district No. 5 to No. 4. reserve act, which provides for an appeal from (3) The petition of certain banks in Okla­ the decision of the Organization Committee to homa for transfer from district No. 11 to dis­ the Board, in the following language: trict No. 10. As soon as practicable * * * the Re­ (4) The petition of certain banks in Ne­ serve Bank Organization Committee shall desig­ braska and Wyoming for transfer from district nate not less than eight nor more than twelve cities to be known as Federal reserve cities, No. 10 to No. 7. and shall divide the continental United States, (5) The petition of the city of Baltimore to excluding Alaska, into districts, each district be designated as the headquarters of district to contain only one of such Federal reserve No. 5 in place of Richmond, Va. cities. The determination of said organization (6) The petition of the city of Pittsburgh to committee shall not be subject to review ex­ cept by the Federal Reserve Board when be designated as the headquarters of district organized: Provided, That the districts shall No. 4 in place of Cleveland, Ohio. be apportioned with due regard to the con­ Meantime, on March 13, certain banks in venience and customary course of business and southern Wisconsin had filed a petition for shall not necessarily be coterminous with any transfer from district No. 9 to district No. 7, State or States. The districts thus created may be readjusted and new districts may from and still more recently, on May 10, certain time to time be created by the Federal Reserve banks in Connecticut filed a petition for trans­ Board, not to exceed twelve in all. * * * fer from district No. 1 to district No. 2. These The Board, recognizing the general desire for last two petitions, however, were received at a the establishment of the Federal reserve banks time when the Board had either decided or was at as early a date as practicable, determined to on the point of deciding the cases already pre­ defer the investigation and hearing of these sented. They were consequently not included petitions until a later date, announcing, how­ in the action finally taken, but were reserved for ever, that the action taken with reference to later hearing and adjudication. the banks would not prejudice the decision to When the arguments and briefs relating to be arrived at later, when the petitions should the petitions already enumerated were in hand, come up for definite determination. they were apportioned to committees of the When the first pressure of work attending Board. These committees reviewed the testi­ the organization of the banks was over, dates mony and filed reports making recommenda­ were set for the hearing of the petitions, and tions with regard to the best method of dis­ during the months of January and February, posing of the subjects referred to them. 1915, all that had then been filed wire heard Action would then have been taken had it not by counsel. A detailed list of the dates set for been for the necessary absence of some mem­ the hearings and a statement of other facts bers of the Board. This necessitated a post­ relating to the proceedings were printed in ponement of action during the latter part of the First Annual Report of the Board (p. 192). March and the whole of April. It was then Subsequently the petition of certain banks in voted to take definite action respecting the Tennessee for transfer from district No. 6 to pending cases which had been heard at some district No. 5 was withdrawn, at least for the time during the week beginning May 3. In 94995—15------4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

accordance with this determination the Board NEW JERSEY. on May 4 passed the following resolution: Counties transferred to district No. 2. Beit resolved, That the recommendations of Bergen. Morris. the respective committees be adopted and Essex. Passaic. approved, and that the petitions of the banks Hudson. Somerset. in southern Oklahoma, northern New Jersey, Hunterdon. Sussex. Tyler and Wetzel Counties, West Virginia, be Middlesex. Union. granted; and, Monmouth. Warren. Be it also resolved, That the petition of tKe banks of Wyoming and Nebraska be denied; Counties remaining in district No, and, Atlantic* Gloucester. Be it further resolved, That action on other Burlington. Mercer. pending petitions be deferred until further ex­ Camden. Ocean. perience m the actual operation of the several Cape May. Salem. districts, especially in the light of the new Cumberland. clearing system which is about to go into effect, and of the extent to which State banks take OKLAHOMA. membership in the Federal reserve system, Counties transferred to district No. shall have provided the Board with the neces­ sary data for a conclusion, it being the opinion Beckham. Kiowa. of the Board that action on petitions relating Caddo. Latimer. to changes in cities designated as the location Carter. Le Flore. of Federal reserve banks should be deferred Comanche. Love. until the Board shall have reached a conclu­ Custer. McClain. sion from experience as to any further read­ Garvin. Murray. justments in the boundaries of the several dis­ Grady. Pittsburg. tricts, or in the number of districts, which may Greer. Pontotoc. be desirable in the operation and development Harmon. Roger Mills. of the Federal reserve system. Haskell. Stephens. Hughes. Tillman. It will be seen that the Board in this decision Jackson. Washita. denied one of the petitions—that of Nebraska Jefferson. and Wyoming—deferred action on two, those Counties remaining in district No. of the cities of Baltimore and Pittsburgh, for Atoka. Johnston. future consideration, and granted three, those Bryan. McCurtain. of the banks of New Jersey, West Virginia, and Choctaw. Marshall. Oklahoma. Coal. Pushmataha. In order to make plain exactly what changes WEST VIRGINIA. in the previous districts were made effective In West Virginia the counties of Wetzel and Tyler were by the granting of these three petitions, the transferred from district No. 5 to district No. 4. accompanying map has been drawn, and is herewith presented for the purpose of showing NEW JERSEY. the boundaries of the twelve districts as they List of banks transferred to district No. 2. stand to-day. Inasmuch as the map is drawn upon too small a scale to admit of the clear Name of bank. Location. C s a u p r it p a l l u a s. nd representation of counties, there is hereto appended a list of counties in each of the States F F a ir r s m t e N rs a t N io a n t a io l. n .. a .. l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A A l r l l e in n g to to w n n .. . . . . . . . . . . . . . . . . . . . . . . . . . . . $1 8 0 1 0 , , 0 0 0 0 0 0 affected by the redistricting. A Se t a la co n a t s ic t H N i a g t h io la n n a d l. s . .. N ... a .. t . i . o .. n .. a .. l A At s l b a u n r t y ic P H a i r g k h . l . a .. n .. d ... s . 117050..000000 The names and capitalization of the banks in Firs D t N o. a .. t . i .. o . n ... a .. l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B B e e l l e m v a il r l . e .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7 2 5 5 , . 0 0 0 00 0 these transferred territories are likewise given. W Be a l r v r i e d n er C e o N u a n t t i y o n N a a l. t . i . o .. n .. a .. l . — ..... .. B .. e .. ll d v o id .. e .. r .. e . . . . . . .. .. .. .. . . . . .. .. .. .. . . . 1 10 7 0 5 . . 0 0 0 0 0 0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

new jersey—continued. new jersey—continued. List of banks transferred to district No. 2—Continued. List of banks transferred to district No. 2—Continued. Name of bank. Location. C s a u p r it p a l l u a s n . d Name of bank. Location. Ca s p u i r t p a l l u a s. nd Bernardsville National................... Bernardsville.. $50,000 Passaic National............................ Passaic....................... $550,000 First National................................ Blairstown...... 50.000 First National................................ Paterson...................... 1,100,000 Peoples National............................ .......do.............. 75.000 Paterson National......................... .......do.......................... 600,000 Bloomfield National...................... Bloomfield...... 150.000 Second National............................. .......do.......................... 350.000 Citizens National............................ Bloomsbury... 25.000 First National................................ Perth Amboy............. 300.000 Boonton National........................... Boonton.......... 200.000 Phillipsburg National.................... Phillipsburg............... 500.000 Bound Brook National.................. Bound Brook.. 60.000 Second National............................. .......do.......................... 150.000 First National................................ .......do.............. 125.000 City National................................. Plainfield.................... 300.000 Do............................................. Bradley Beach. 27.500 First National................................ .......do.......................... 300.000 Do............................................ Branchville__ 50.000 Rahway National........................... Rahway...................... 150.000 Do............................................. Butler............. 110.000 First National................................ Ramsey...................... 45.000 Citizens National............................ Caldwell.......... 41.000 Second National............................. Red Bank.................. 225.000 Caldwell National........................... .......do.............. 50.000 First National................................ Ridgefield Park 60.000 Califon National............................. Califon............. 31.000 Do............................................ Ridgewood... 110.000 Carlstadt National......................... Carlstadt......... 60.000 Do............................................. Rockaway.. 30.000 Clinton National............................ Clinton............ 150.000 Do............................................. Roosevelt.. . 50.000 First National................................. ___do.............. 70.000 Do............................................. Roselle.......... 65.000 Do............................................ Cranbury........ 150.000 Rutherford National...................... Rutherford............... 150.000 Closter National............................. Closter............. 50.000 First National................................ Sea Bright__ 32,500 National Union.............................. Dover.............. 375.000 Do............................................. Secaucus____ 25.000 First National................................. Dunellen......... 40.000 Do............................................. Somerville__ 250.000 Do............................................. East Newark... 35.000 Second National............................. .......do............ 100.000 Do............................................. Eatontown...... 33.000 First National................................ South Amboy. 125.000 Do............................................. Edgew ater....... 50.000 Do............................................. South River.T._ 125.000 National State................................ Elizabeth........ 1,000,000 Do............................................. Spring Lake... 75.000 Citizens National............................ Englewood___ 150.000 Do............................................. Summit.. .. 100.000 First National................................. Englishtown... 58.500 Farmers National........................... Sussex....................... 200,000 Flemington National...................... Flemington___ 200.000 First National................................. Tenafly....................... 50.000 Hunterton County National.......... ___do.............. 200,000 Do............................................. Town of Union. . 125.000 First National................................ Fort Lee.......... 49.000 Do............................................. Washington.. 250.000 Central National............................. Freehold.......... 100,000 National Bank............................... Westfield.................... 123,948 First National................................ ___do.............. 150.000 Peoples National............................ .......do_____________ 80.000 National Freehold Banking Co___ ___do.............. 100.000 National Bank of North Hudson.. West Hoboken............ 115.000 Union National.............................. Frenchtown.... 160,doo First National................................ West Orange. . . 120.000 First National................................ Garfield........... 64.000 Do............................................. Westwood................. 47.000 Do............................................. Guttenburg.. 75.000 Do............................................. Whitehouse Station... 47.000 Hackensack National..................... Hackensack., 200,000 Do............................................. Woodbridge... . 40.000 Peoples National............................ .do. 300,000 Hackettstown National................. Hackettstown.. 250.000 Total..................................... 32,071,448 Peoples National............................ .......do.............. 100.000 Hardyston National....................... Hamburg........ 85.000 First National................................ High Bridge... 30.000 Do............................................. Hoboken......... 660,000 OKLAHOMA. Second National............................. .......do.............. 400.000 First National................................ Hope............... 32.000 Irvington National......................... Irvington........ 145.000 List of banks transferred to district No. 10. First National................................ Jamesburg....... 75.000 Do............................................. Jersey City___ 1,200,000 Hudson County National.............. 750.000 Merchants National....................... . .do................. 250.000 Name of bank. Location. Capital and Keansburg National....................... Keansburg.......... 27.500 surplus. Peoples National........................... Keyport............. 60.000 Amwell National............................ Lambertville...... 157.000 Lambertville National................... ..do................. 200.000 The First National Bank............... Ada.............................. $60,000 Little Falls National...................... Little Falls......... 30.000 Merchants & Planters National__ .......do........................... 60,000 First National................................ Lodi.................... 35.000 First National.............1.................. Addington.................. 26,722 Citizens National............................ Long Branch___ 250.000 Do............................................. Alex............................ 45.000 First National................................ 150.000 Do............................................ Allen..................... 30.000 Do............................................. Lyndhurst.......... 55.000 City National................................. Altus.............. 54.500 Do............................................. Madison.............. 85.000 First National................................ .......do.......... 67,250 Manasquan National...................... Manasquan......... 75.000 Do............................................ Anadarko__ 60.000 Farmers & Merchants National__ Matawan............ 150.000 National Bank of............................ ... .do.......... 30.000 Metuchen National......................... Metuchen........... 55.000 First National..:............................ Apache.. 30.000 First National................................ Milford............... 45.000 Do............................................ Aranaho.. 30.000 Do............................................ Milburn.............. 87.000 Ardmore National......................... Ardmore........ 120,000 Essex National............................... Montclair............ 187,500 First National................................. .......do............. 200.000 First National................................ ..do................. 150.000 State National................................ .......do....................... 110,000 National Iron................................. Morristown......... 250.000 First National................................. Berwyn............. 30.000 First National................................ ..do................. 400.000 Do............................................ Bterir....................... 29.000 Citizens National............................ Netcong.............. 50.000 Do............................................ Blanchard................ 50.000 American National......................... Newark............... 375.000 Calvin National.............................. Calvin...................... 28.000 E Br s o s a ex d - C M o a u r n k t e y t N N a a t t i i o o n n a a l l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . d d o o. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,0 2 0 7 0 0 , . 0 0 0 0 0 0 T F h ir e s t C N h a ic t k io a n sh a a l. . N ... a .. t . i .. o . n ... a . l .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. C .. h .. i . c d k o a . s .. h .. a .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3 1 0 3 . , 0 5 0 0 0 0 Manufacturers National................. ..do................. 750.000 Citizens National............................ .......do....................... 90.000 Merchants National...................... .do................. 1,000,000 First National................................. .......do....................... 260,000 National Newark Banking Co....... . .do................. 2,000,000 Oklahoma National....................... .......do.......................... 125,000 National State Bank...................... ..do................. 750.000 First National................................ Clinton........................ 35.000 North Ward National.................... ..do................. 500.000 Oklahoma State National.............. .......do.......................... 27,750 Union National.............................. .do................. 3,000,000' First National................................. Comanche............ 30.000 National Bank of New Jersey....... New Brunswick.. 500.000 Cordell National........................... Cordell.................. 35.000 Peoples National............................ ..do................. 250.000 Farmers National........................... .......do.......................... 28.500 Merchants National........................ Newton............... 190.000 State National................................ ........do.......................... 33.500 Sussex National.............................. ..do.................. 400.000 First Natipnal.........;................... Custer City............... 30.000 Ocean Grove National.................... Ocean Grove....... 50.000 Peoples State National............,___ .......do.......................... 30.000 Orange National............................. Orange................ 300.000 First National................................ Davis....................... 60.000 Second National............................. . .do................. 300.000 Citv National................................. Duncan....................... 42,000 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

llA*’ J MINN. 'N i^-W s ..L - L bost0'* wis. I ° v INEAPOLIS \ MICHrX*1z&'j¥ \ 9": IOWA CHlQA^0 oAn '° jf'. r v :P"NW,5.\Vot'-- „ / (. W. VAy- \ *■"""" 1 'pST.LOjlMS / ; v p .g c^ o * 10 MO. \ / ~ ' yv ' 5 " ' 8 y N.C tenn X \ s. c. \ M ’LANTA^ \ GA. %s. I ALA.g \. Lllas ______A ______ S ; / ---------? AC FUA. MAP SHOWING FEDERAL RESERVE DISTRIC JTH CHANGES BY FEDERAL RESERVE BOARD. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Oklahoma—continued, Oklahoma—continued. List of banks transferred to district No. 10—Continued, List of banks transferred to district No. 10—Continued. Name of bank. Location. C s a u p r i p ta lu l s a . nd Name of bank. Location. C s a u p r it p a lu l a s. nd Dunaan National............................ Duncan. ........... $50,000 First National................................. Weatherford............... $28,500 First National................................. .:...do................ 60,000 German National........................... .......do.......................... 60,000 Do............................................. Eldorado........... 40.000 American National......................... Wetumka.................... 30.000 Do............................................ Elk City............ 56.000 First National................................. .......do.......................... 35,500 Francis National............................. Francis.............. 30.000 Latimer County National.............. Wilburton................... 29.000 First National................................. Frederick.......... 72.000 First National................................. Wvnnewood............... 100,000 National Bank of Commerce......... .......do................ 90.000 Southern National:___*................ ............... 80.000 First NationrfL.............................. Gotedo............... 27,700 Do............................................ Grandfield......... 30.000 Total..................................... 5,994,873 Fanners National........................... Hammon........... 27,650 First National................................. Hartshorne........ 75.000 National Bank of........................... Hastings............ 28.500 First National................................. Heav oner........... 31.000 I WEST VIRGINIA. State National................................ .....do................ 25.000 City National.................................. Hobart............... 33.500 List of banks transferred to district No. 4. Fanners & Merchants National.... .....do................ 60.000 First National................................. -----do....*......... 30.000 A Fa m n e n r e ic r a s n N N at a i t o i n on a a l. l . . . . . . . . . . . . . . . . . . . . . . . . . . .. ... . . . . . . . . . .... > H .-. o . l . d d e o n . v * i * ll , e .. .. . . . .. . . . . 2 3 7 0 . . 5 0 0 0 0 0 Name of bank. Location. Ca s p u i r t p a l l u a s. nd First National................................ ....do............ City National.........'...................... Hollis............. National Bank of Commerce....... ___do................ 31 State National................................ ___do................ 25.000 First National................................ Middleboume............. $39,500 Farmers National........................... Hydro............... 25,050 Do............................................. New Martinsville 75,000 First National................................ ___do................ 27.500 Farmers and Producers National.. Sistersville................... 136.000 Keota National............................... Keota................. 28.500 First National................................. .......do.......................... 165.000 First National................................ Kiowa............... 36.000 Peoples National............................ .......do.......................... 115.000 Peoples National............................ — do................ 27.500 City National.................................. Lawton............. 100,000 Total..................................... 530,500 First National................................ — do................ 110,000 First National................................ Lindsay............. 50.000 Do............................................. Lone Wolf......... 34.000 The pending cases divide themselves into Do............................................. Mangum............ 75.000 Mangum National.......................... ___do................ 80.000 two broadly distinguishable classes, the one First National........T....................... Marietta............ 75.000 Marietta National........................... ___do................ 100,000 involving extensive revision of the work al­ The National Bank of.................... Marlow.............. 29,200 State National................................ — do................ 26,750 ready done and requiring for its elucidation and Farmers National........................... Maysville.......... 27.500 First National................................ ___do................ 32.500 proper determination knowledge which could American National......................... McAlester.......... 125.000 City National.................................. ___do................ 55.000 come only from experience and observation of First National................................ ___do................ 135.000 Do............................................. Minco................. 30.000 the actual working of the several Federal re­ Do............................................. Mountain View. 30.000 Do............................................. New Wilson___ 25.000 serve banks; the other involving simpler and Do............................................. Olustee.............. 30.000 Do............................................. Pauls Valley___ 150.000 less extensive interests and requiring less de­ National Bank of Commerce......... ___do................ 60.000 Pauls Valley National................... — do................ 30.000 tailed information as to the whole problem First National................................ Poteau............... 42.500 National Bank of........................... — do................ 60.000 of districting. The Chickasaw National............... Percell............... 75.000 Union National.............................. — do................ 33.000 The Board's announcement on the whole First National................................ Quinton............ 30.000 Do............................................. Ringing............ 50,400 subject, while going as far as it has been deemed Farmers & Merchants National.... 37.500 First National................................. ___do................ 36.000 practicable under existing conditions to take Do............................................. Rush Springs... 36.000 Do............................................. Ryan................. 60.000 action, is not at all to be regarded as final and Beckham County National............ Sayre................. 27.500 First National................................ ___do................ 32.500 was not intended to be so. The right to act Do............................................. Sentinel............. 27.500 Do............................................. Snyder............... 27.500 further on the matter is reserved for future ex­ Do............................................. Spiro................. 29.000 30.000 ercise as that may be necessary and at any First National................................ .......do.......................... 60.000 Do............................................. Stonewall.................... 42.000 time. Although there has been no express Do............................................. Stratford...................... 27.500 Do............................................. Stuart.......................... 29.000 statement to that effect, it is a clear inference Park National................................. Sulphur....................... 30.000 First National................................. Talmina...................... 26,250 from the opinion handed down that future action Temple National............................ Temple........................ 27.500 First National................................. Thomas....................... 30.000 will depend very much upon the course of First National................................. Verden........................ 26.500 National Bank of. ___do........... 30.000 events in the districts as they are now made First National........ Walters........ 30.000 Walters National.. ___do........... 40.000 up, and will be determined by the conditions First National........ Washington. 26.000 Do................... Waurika....... 27,650 that are disclosed in the operations of the banks. Waurika National. ___do........... 25.500 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LAW DEPARTMENT. The following opinions of counsel for the out of the context, expressly, or by necessary Federal Reserve Board have been authorized implication. The words are to be taken in for publication by the Board since the last their natural and obvious sense, and not in a edition of the Bulletin. sense unreasonably restricted or enlarged.” In accordance with the decisions in these and Discount of Acceptances “ Based on the Importation or other cases, unless such a result is absurd or Exportation of Goods.” obviously contrary to the intent of Congress, Federal reserve banks may, under section 13 of the Federal reserve act, discount acceptances based on the as shown by other parts of the act, the natural shipment of goods (a) between the United States and and usual significance must be attached to the any foreign country, (b) between any two or more foreign words “ importation ” and “ exportation.” The countries, and (c) between the continental United States question, therefore, arises, what is their ordi­ and Porto Rico, the Philippines, or the Canal Zone; but nary and popular meaning ? not acceptances based on the shipment of goods between the continental United States and Hawaii or between any In discussing this subject the corelative two parts.of the continental United States. terms, “ export,” “ exportation,” “import,” Sir: I have been asked for an opinion on the “importation,” and the like will be treated as proper interpretation of that part of section 13 synonymous. of the Federal reserve act which reads: “Any The Century Dictionary and Cyclopedia de­ Federal reserve bank may discount accept­ fines “ export” as “That which is exported, a ances which are based on the importation or commodity carried from one place or country exportation of goods,” with a view to deter­ to another,” and “ exportation” as, “The act mining whether the words “importation or of conveying or sending to a distance, especially exportation of goods” include (1) shipments to another state or country commodities in the between countries other than the United course of commerce.” The same authority de­ States, and (2) shipments between the con­ fines “ exporter” as, “ One who ships goods, tinental United States and possessions of the wares, and merchandise of any kind to a for­ United States. eign country or distant place for sale.” The The first principles of statutory construction New Standard Dictionary defines “ export” as, require that language which is clear and un­ “ That which is exported; in general, goods or ambiguous be given its ordinary and natural any article of trade or merchandise sent from significance. The legislative meaning is first one country to another; properly, as used in to be sought in the words used and if they are the United States Constitution, goods sent to clear, the letter of the law controls, unless in a foreign country.” extraordinary cases such a natural construction If these broad definitions are applied, it is would result in an obvious or absurd error. manifest that the words “ importation” and United States v. Goldenberg, 168 U. S. 95, 102; “ exportation” will include shipments between United States v. Union Pacific Railroad Co., countries other than the United States. It is 91 U. S. 72, 79; Lake County v. Rollins, 130 necessary, therefore, to determine whether the U. S. 662. “The legislature must be presumed natural significance of these terms must be re­ to use words in the known and ordinary signi­ stricted because of the judicial construction of fication, unless that sense be repelled by the similar words as used in the Federal Constitu­ context,” Levy v. McCartee, 6 Peters, 102, 110- tion and in various acts of Congress. In Martin v. Hunter, 1 Wheat. 304, 326, it is The word “import,” as used in tariff stat­ said that “where a power is expressly given, utes of the United States, invariably refers to in general terms, it is not to be restrained to imports to the United States from a foreign particular cases unless that construction grow country, and it might be argued that when the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

words “ exportation” and “importation” are State. The Constitution gives to Congress the used in the Federal reserve act they must be general power “ to levy and collect taxes, du­ given a corresponding significance—that is, ties, imposts, and exercises,” but “imposts” they must be held to refer only to exports from has been construed in Woodruff v. Parham, 8 and imports into the United States from a for­ Wall., 123, to mean a duty, custom, or tax eign country, and not also to shipments be­ levied on articles brought into the United States tween countries other than the United States. and the words “ imports” and “ exports” as This argument, however, is not convincing, used in the Constitution, are uniformly held to because of the fact that the word “import” as refer only to goods imported from foreign used in tariff laws must necessarily refer to countries into the United States, and not to ar­ shipments into the United States. “ The power ticles carried from one State to another. Pitts­ of Congress to levy and collect taxes, duties, burgh Coal Co. v.’ Louisiana, 156, U. S. 590, and excises is co-extensive with the United 600; Brown v. Houston, 114 U. S. 622, 628. States,” Loughborough v. Blake, 5 Wheat, 317. It seems clear, therefore, that “import” or To levy a duty or tax of any sort, a soverign “export” as used in Federal tariff statutes must have jurisdiction over the article taxed. must of necessity refer to transactions to or This narrower construction of the word “im­ from the United States. port” was, therefore, necessary, in order to On the other hand, in the Federal reserve give the tariff laws any effective operation. act—which is not a tariff measure, but wdiich The United States could have no possible juris­ is, on the contrary, a law in which the words diction over a transaction between Buenos Aires “importation” and “ exportation” could con­ and London, for instance, and to attempt to sistently refer to transactions between two for­ tax such an import would be ineffectual. eign countries other than the United States— But even in these tariff laws where the mean­ Congress has failed to put any restrictive limi­ ing of “import” must necessarily be limited to tation, evidently intending that the words used imports into the United States, Congress has be given their normal and natural significance, almost invariably provided in terms that the the meaning generally * understood when used imports be from a foreign country into the in ordinary commercial parlance. The lexicons United States. In the first tariff act, passed all agree in defining “ export” as an article or by Congress on July 4, 1789, it was enacted, commodity carried from one country to an­ “That * * * duties * * * be other, and nowhere except in cases construing levied on the following goods, wares, and mer­ the Constitution and the tariff laws is there any chandise imported into the United States from suggestion that “import” necessarily means any foreign port or place,” and it is to be noted an article shipped from a foreign country to that practically every tariff law passed by Con­ the country or jurisdiction of the person or gress since that time has contained some simi­ legislature using the word. lar provision. When used in the Federal Constitution or in It might be contended that this restriction, the tariff laws made in pursuance thereof, the limiting dutiable imports to articles brought words “import” and “ export” must neces­ from a foreign country , to the United States sarily be given the narrower construction, for was intended to preclude any consideration of the reason already stated; that is, the United articles imported into one State from another States has no jurisdiction to impose a tax or State of the Union. But such intention is re­ impost on any article not within the confines butted by the fact that the Constitution as of the United States. But in the case of a Fed­ construed by the Supreme Court of the United eral banking law, where there is nothing in the States, does not give Congress the power to context nor in the spirit of the act to demand lay an impost on goods imported from another a narrower or limited interpretation, the words Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

should be given their full significance. All the domestic shipments could not have been in­ cases previously cited on the laws of statutory tended to restrict or limit the field of accept­ construction demand this result. ances based on the “ importation or exporta­ But even if the literal meaning of the phrase tion of goods,” that phrase remaining precisely “importation or exportation” be considered the same as it was prior to the elimination of doubtful, a liberal construction in accordance domestic acceptances and just as it read when with the general intent of Congress would neces­ the intent was to include acceptances based on sitate this same result. It must be remembered shipments of any kind. that the Federal reserve act is remedial and It seems, therefore, that by all the ordinary constructive legislation by which Congress rules of statutory construction, giving to the clearly intended to eliminate certain patent words the natural and ordinary import, which evils in conditions as they existed at the time is strongly corroborated by the purposes, spirit, of enactment, and to establish on a broad, and history of the act, this portion of section 13 comprehensive, and firm basis a unified system was intended to, and actually does, permit the of banking. The language “ to furnish an elas­ discount of acceptances based on the impor­ tic currency, to afford means of rediscounting tation and exportation of goods, not only to commercial paper, to establish a more effective and from the United States, but also between supervision of banking in the United States, other countries, separate and apart therefrom. and for other purposes,” contained in the title of the act, shows that it is remedial, and as such SHIPMENTS BETWEEN THE CONTINENTAL UNITED STATES AND ITS POSSESSIONS. should be broadly and liberally construed in order to accomplish the advancement of the The second question raised is whether the remedies contemplated. (24 Am. and Eng. clause “ acceptances which are based on the Enel. 887, and cases cited.) importation or exportation of goods,” should It may be reasonably assumed that Congress include acceptances based on shipments be­ not only wanted to create a discount market for tween the continental United States and its acceptances, but at the same time intended to possessions, viz, Porto Rico, Hawaii, Canal establish a system which would facilitate the Zone, and the Philippines. trade and commerce of the people of the United It is, of course, not to be disputed that if, as States, no matter where that trade or com­ contended above, imports and exports to and merce originated or what its destination. from countries other than the United States are Acceptances having become a recognized inci­ a satisfactory basis for acceptances, then dent of trade as between nations the establish­ acceptances based on shipments between any of ment of a wider market in this country for such these possessions and another country, other paper was apparently one of the objects of the than the United States are eligible, a fortiori. act. This leaves to be considered the one question Both the Senate bill and the conference just stated. agreement permitted the discount of accept­ The definitions given in the standard dic­ ances, based not only on foreign but also on tionaries refer to shipments from one country domestic shipments. The latter, however, to another country or to a “ distant place,” and were struck out on the floor, probably because such a general understanding of the words in of the fear that a general domestic acceptance question would certainly seem to be sufficiently business might be abused by the smaller banks comprehensive to include transactions between which were unfamiliar with this class of invest­ the United States and any of its island posses­ ment and that for the present at least, such sions, though they are not foreign territory in a investments might prove a detriment not only political sense. to such banks but to the entire system. The To permit the discount of acceptances based elimination, however, of acceptances based on on the importation or exportation of goods Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

from and to the possessions of the United or duties on imports or exports,” was held in States, it must be shown (1) that these words, Woodruff v. Parham, 8 Wall. 123, to apply only to articles imported from foreign countries into as generally known and understood and as the United States, intended by the Federal reserve act, do not thus implying that they are used in other necessarily refer to shipments to and from a than the constitutional sense. As previously foreign country, and (2) that shipments to and explained, there is no necessity for forcing a from these possessions are not domestic restricted construction on this phrase as used shipments. in the Federal reserve act, and in consequence As already shown, the word “import” as there would seem to be no justification for used in the Constitution and tariff laws, has reading the word “foreign” into its definition been construed by the Supreme Court to refer as applied to this act. to imports from foreign countries. In the It might be contended that to follow out this tariff laws this has necessarily been so because argument logically would lead to the conclusion these laws specifically require that the imports that a shipment of goods from one State of the be from a foreign country. The word as used United States to another State of the United in the Constitution, however, not being ex­ States would be an “importation or exporta­ pressly limited, has been construed to refer to tion of goods,” a result clearly not contem­ imports from a foreign country and not to arti­ plated by Congress. The answer is found in the cles shipped from one State to another, for history and development of the act before its various reasons. A study of the discussions in passage. the Constitutional Conventions and of the his­ The House bill provided for the discount of tory of the formation of the Constitution acceptances based on the “exportation or im­ showed that there was no intention in the portation of goods.” The Senate bill amended minds of the framers of that instrument to this provision to read “importation or expor­ refer to anything but foreign imports and tation or domestic shipment of goods,” evi­ exports, and the Supreme Court has, in various dently intending to cover shipments to and decisions reciting the history and development from any points wherever located. As the act of the Constitution and the evils to be obviated read when finally passed, “domestic shipments” by it, decided that “export” and “import” were eliminated. It is evident, therefore, that mean exports and imports to and from foreign Congress intended to make eligible acceptances countries and not between States. But in all based on all except domestic shipment of those cases the particular circumstances under goods. which the words were used were stated at length to show why this narrower interpreta­ This raises the second point: Is a shipment tion was necessary in each instance. Wood­ from the Continental United States to one of ruff v. Parham 8 Wall. 123; Brown v. Houston, the island possessions of the United States a 114 U. S. 622. In other words, the burden of domestic shipment? The Century Dictionary limiting the natural meaning of the words was and Cyclopedia defines “ domestic commerce” clearly recognized by the court. Justice as “commercial transactions within the limits Brown in referring to this well-settled construc­ of one nation or State,” and in 14 Cyc. 829, tion of the words as used in the Constitution, quoting In re Roofing Contractors Association, said, in Dooley v. United States, 183 U. S. 151, 9 Pa. Dist. 569, 570, domestic trade is referred 153: to as, “ the exchange or buying or selling of goods within a country.” The difficulty, how­ While the words “import” and “export” are sometimes used to denote goods passing ever, is that the term “United States” has from one State to another, the word “import,” various different meanings dependent upon in connection with the provision of the Con­ whether it is used in a geographical, commercial, stitution that “no State shall levy any imports or governmental sense, or whether it is in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

tended to describe the States of the Union as does not follow the flag, ipso facto, seems well such. settled now by numerous cases of the Supreme The term uUnited States” as used in the Court. See Downes v. Bidwell, supra; Hawaii uniformity clause of the Constitution has been v. Mankichi, 190 U. S. 197. It is, of course, held in the insular cases not to extend to the admitted in all these cases that Congress may, unorganized territorial possessions of the if it chooses, incorporate into the Union any United States. On the other hand, in dealing Territories belonging to the United States. with foreign sovereignties it is generally under­ Until it does so, however, it seems', from the stood to have a broader meaning than when cases cited, that Territories of the United used in the Constitution. It then includes all States, though subject to the jurisdiction of territories subject to the jurisdiction of the Congress, are not domestic in a national sense, Federal Government, whether it is merely ter­ and that shipments to and from such Territo­ ritory appurtenant to the United States or ries are not to be considered domestic ship­ whether it is an incorporated part of the ments within the meaning of the Federal United States. reserve act. It may be well to consider, separately and This question of the status of our territorial briefly, the cases of Porto Rico, the Philip­ possessions has been the subject of extended pines, Canal Zone, and Hawaii to determine discussions before the Supreme Court, and whether Congress has so acted as to make though it is now generally admitted that these them an integral part of the United States. possessions are not foreign in an international sense, nevertheless they may be foreign to the Porto Rico.—Porto Rico is not foreign terri­ United States in a domestic sense. Downes v. tory within the meaning of the Dingley Tariff Bidwell, 182 U. S. 244. In the case of Dorr v. Act, approved July 24, 1897, taxing articles United States, 195 U. S. 138, 143, the Supreme imported into the United States from “foreign Court, in speaking of the extent and limitations countries.” De Lima v. Bidwell, 182 U. S. 1, of the Constitution as applied to our posses­ decided May 27, 1901. In another case— sions, said: Downes v. Bidwell—decided the same day, The limitations which are to be applied in the Supreme Court held that the Foraker Act any given case involving territorial government of April 12, 1900, which levied certain duties must depend upon the relation of the particular territory to the United States concerning on articles coming into the United States from which Congress is exercising the power con­ Porto Rico, and on goods shipped from the ferred by the Constitution. That the United United States to Porto Rico, was valid—even States may have territory which is not incor­ though a tax or burden on shipments between porated into the United States as a body politic different parts of the United States is uncon­ we think was recognized by the framers of the Constitution in enacting the article already stitutional—because “Porto Rico is a terri­ considered, giving power over the Territories, tory appurtenant and belonging to the United and is sanctioned by the opinions of the justices States, but not a part of the United States concurring in the judgment in Downes Bidv. within the revenue clauses of the Constitution.” well, supra. The duties in question are no longer levied; In other words, the United States may own they were only a temporary assessment, but territory which is subject to the control of the status of Porto Rico remains the same, no act Congress under the territorial clause of the of Congress having been passed since then to make Constitution but which is not an integral part it an integral part of the Union. Inasmuch, of the United States until Congress sees fit to therefore, as Porto Rico is not a part of the make it such and to extend to it the operation United States, it does not seem, for the rea­ of the Constitution and laws of the United sons considered above, that a shipment be­ States. The doctrine that the Constitution tween Porto Rico and the United States is a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

domestic shipment in the generally accepted incorporated. By |this act (the Constitution meaning of that term^-a shipment from one and Jail Federal laws were given “ the s&me part of the country to another. force and effect in Hawaii as;elsewherd in the Philippine Islands.—In the case of Four­ United States,” and Justice White, in the case teen Diamond Rings v. United States, 183 U. cited, said that by this act “ the islands iyere S. 176, it was held that the Philippines are not undoubtedly made a part of, the United States a “foreign country” in the meaning of the in the fullest sense.” tariff act of 1897, imposing a duty on imports This distinction between Hawaii and the from foreign countries. The court went on to Philippines and Porto Rico is recognized by say that “ In this respect there is no distinc­ all the branches of the Government. Porto tion between the Philippines and the Islands Rico and the Philippines are under the juris­ of Porto Rico. Neither of them is a foreign diction 4f:th# Bureau of Insular Affairs in the country within the terms of that act.” War Department, but Hawaii is not. Hawaii, In the later case of Dorr v. United States, like Alaska^ is represented in Congress by a supra, it was held that the Philippines were Territorial Delegate, whereas the Philippines not incorporated into the United States by and Porto Rico merely send ‘ ‘ Resident Com­ the mere treaty of cession, and, as the court missioners” to Washington. said: . Under all the facts, therefore, Hawaii must The legislation upon the subject shows that be considered as an integral part of the United not only has Congress hitherto refrained from States. Consequently any shipment between incorporating the Philippines into the United Hawaii and the continental United States States, but m the act of 1902, providing for must be considered a domestic shipment, and temporary civil government (32 Stat. 691), as such can not form the basis of an acceptance there is express provision that section eighteen hundred and ninety-one of the Revised Stat­ eligible for discount by Federal Reserve utes of 1878 shall not apply to the Philippine Banks. In other words, it does not seem pos­ Islands. This is the section giving force and sible to differentiate transactions with Hawaii effect to the Constitution and laws of the from those with any part of the continental United States, not locally inapplicable, within United States. Hawaii’s relation to the United all the organized Territories, and every Terri­ tory thereafter organized, as elsewhere within States seems precisely analogous to that of the United States. Alaska. The Philippines, like Porto Rico, are there­ Canal Zone.—The status of the Canal Zone fore not an integral part of the United States, is unique. The United States has, in effect, and, as Justice White said in Downes v. Bid- an easement 10 miles wide across the Republic well, supra, “it is foreign to the United States of Panama. It is foreign territory, subject to in a domestic sense because not incorporated the control and supervision of this Govern­ into the United States.” Being generally ment. The tariff act of 1913, imposing duties understood to be foreign to the United States on imports “into the United States or into any in every sense except an international one, of its possessions (except the Philippine Is­ there is no justification for the conclusion that lands and the islands of Guam and Tutuila)” shipments to and from the Philippines are does not apply to the Panama Canal, even domestic. though it is not expressly excepted from the Hawaii.—Though the Hawaiian Islands were term “possessions,” as is the case with the not made an integral part of the United States Philippines. By an act dated March 2, 1905, by the mere act of Congress annexing them 33 Stat. 843, Congress specifically stated that (30 Stat. 750, Hawaii v. Mankichi, supra), “ all laws affecting imports of articles, goods, nevertheless, by the act of Congress of June wares, and merchandise, and entry of persons 14, 1900, 31 Stat. 141, they were formally into the United States from foreign countries, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

shall apply to articles, etc., coming from the of Federal Reserve Banks to establish discount Canal Zone and seeking entry into any State or rates, subject to review by the Federal Reserve Territory of the United States or the District Board, was considered at some length. of Columbia/7 showing that in no way is the It is not deemed necessary to review in Canal Zone considered an integral part of the detail the conclusions reached in that opinion, United States. Indeed it is not even terri­ but so far as pertinent to the question now tory owned by the United States, but rather under consideration authorities were cited to territory merely under its jurisdiction and show that Congress has the power to delegate control. Strictly speaking, it is a depend­ the right to fix discount rates to an adminis­ ency. As such it is less a part of the United trative body and that this right has been vested States than Porto Rico, and shipments to and in the Federal Reserve Banks subject to review from it could hardly be considered domestic and determination by the Federal Reserve shipments in the light of the previous discus­ Board. sion. The provisions of law which it is necessary To summarize, it would seem that the Fed­ to consider in determining the question under eral Reserve Banks may, under section 13, consideration are as follows : discount acceptances based on the shipment Section 14, subsection (d), in defining o^^ A of goods (a) between the United States and the powers of Federal Reserve BanU, provides any foreign country, (6) between any two or as follows: more foreign countries, and (c) between the To establish from time to time, subject to continental United States and Porto Rico, the review and determination of the Federal Reserve Board, rates of discount to be charged Philippines, or the Canal Zone; but not accept­ by the Federal Reserve Bank for each class of ances based on the shipment of goods between paper, which shall be fixed with a view of the continental United States and Hawaii or accommodating commerce and business. between any two parts of the continental Section 4 provides in part as follows: United States. Respectfully, Every Federal Reserve Bank shall be con­ M. C. . ducted under the supervision and control of a Elliott, Counsel To Hon. C. S. board of directors. The board of directors Hamlin, . shall perform the duties usually appertaining Governor Federal Reserve Board to the office of directors of banking associations and all such duties as are prescribed by law. Said board shall administer the affairs of said Forward Discount Rates. bank fairly and impartially and without dis­ Federal Reserve Banks may, under the established right crimination in favor of or against any member to fix discount rates for acceptances or other eligible paper, bank or banks, and shall, subject to the provi­ fix a forward rate; that is, a rate to apply at a future time. sions of law and the orders oi the Federal Re­ Such a rate is calculated to accommodate trade and com­ serve Board, extend to each member bank such merce as required by the act, and will tend to obviate discounts, advancements and accommodations speculation due to fluctuating rates. as may be safely and reasonably made with due regard for the claims and demands of other May 18, 1915. member banks. Sir: The question of the right of Federal Analyzing these provisions, it appears that Reserve Banks to establish forward discount the only limitations to which discount rates are rates to cover acceptances or other eligible subject are as follows: paper has been duly considered by this office, (a) That they shall be fixed by the Federal as requested. Reserve Bank with the view of accommodating In an opiniona filed with the Board dated trade and commerce. November 19, 1914, the question of the right (&) That there shall be no discrimination as aSee Federal Reserve Bulletin, May 1, 1915. between member banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

(c) That they shall be subject to review and ber bank. It is immaterial whether this member bank is determination by the Federal Reserve Board. located in the district of the Federal Reserve Bank which is making the discount or in any other district, the term Considering the question submitted in the “member bank” being broad enough to include member light of these restrictions, it appears— banks wherever located. (1) That the purpose of fixing a forward rate, Such discounts, being made under the provisions of that is, a rate to apply at softie future date, is section 13, are eligible as collateral security for Federal primarily to accommodate trade and commerce reserve notes issued under the provisions of section 16. and to prevent those dealing in legitimate trans­ April 30, 1915. actions from being subject to the speculative Sir: The question has been raised whether a influence of fluctuating rates. For example, Federal Reserve Bank may, under section 13 a commercial transaction may be safely en­ of the Federal reserve act, discount acceptances gaged in if the purchaser, or one who is assisting indorsed by a member bank located in a dis­ the purchaser to finance such a transaction, trict other than that of such reserve bank; and, can have the assurance that an acceptance or if so, is the paper thus discounted eligible to be other eligible paper possessing the necessary used as collateral security for Federal reserve qualifications can be discounted or sold at a fu­ notes issued under section 16. ture date at a fixed rate, whereas if the rate The act provides that— is undetermined the element of speculation Any Federal Reserve Bank may discount necessarily enters into the transaction. acceptances which are based on the importa­ tion or exportation of goods and which have a (2) If the rate is so fixed as to be equally ap­ maturity at time of discount of not more than plicable to all member banks, no element of three months, and indorsed by at least one discrimination is involved. member bank. (3) If the Federal Reserve Bank fixes a rate It is to be noted that an acceptance to be at which it will discount or purchase various eligible for discount under this provision, of the classes of paper at the present time and in so act must (1) be based on the importation or doing announces that the rate on any particular exportation of goods, (2) have a maturity at class of paper will not be increased beyond a time of discount of not more than three months, fixed maximum for a specified number of days, and (3) be indorsed by at least one member and if the Board approves such rate, or if the bank. maximum thus fixed by the Federal Reserve The third requirement is the one to be Bank is no greater than the maximum rate pre­ specially considered in this connection. Does viously approved by the Board, it will have “member bank” mean a member of the par­ exercised its right of review and the rates will ticular Federal Reserve Bank, or does it thereupon become definitely established in ac­ import a more general significance and mean a cordance with the provisions of law applicable bank which is a member of the Federal reserve thereto. system ? If it is the latter, then no doubt any Respectfully, Federal Reserve Bank may discount accept­ M. C. Elliott, Counsel. ances for any member bank, irrespective of the To Hon. Charles S. Hamlin, district in which it is located. Governor Federal Reserve Board. Section 1 of the Federal reserve act states that— The term “member bank” shall be held to Discount of Acceptances Indorsed by Member Banks mean any national bank, State bank, or bank Located in Another District. or trust company which has become a member Federal Reserve Banks may, Under the provisions of of one of the reserve banks created by this section 13, discount acceptances based on the importation act, or exportation of goods, provided they have a maturity at and, ‘ applying this definition to the . section in time of discount of not more than three months, and pro­ vided further, that they are indorsed by a least one mem­ question, it would seem clear that in consider­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ing the eligibility of acceptances for discount that the same paper might have been purchased by a particular Federal Reserve Bank, it is in the open market, with or without the in­ immaterial in what district the indorsing mem­ dorsement of a member bank, is immaterial ber bank is located. As long as it is a member if in fact the paper was accepted for discount of some one Federal Reserve Bank, it is a under section 13. “ member bank” as defined by the act itself. As previously’ indicated, acceptances in­ This conclusion is further supported by the dorsed by a member bank of another district fact that Congress, in defining eligible paper may be so discounted, and if so they may be other than acceptances, required specifically put up as collateral security under the terms that the indorsement must be by “ any of its of section 16, which define eligible collateral. member banks,” thus expressly referring to Respectfully, M. C. the members of a certain Federal Reserve Bank. Elliott, Counsel. To Hon. C. S. The fact that this restriction was omitted in Hamlin, fixing the qualities of eligible acceptances indi­ Governor Federal Reserve Board. cates that Congress intended that there should be a broad market for this class of paper and Purchase of United States Bonds by Federal Reserve that a Federal Reserve Bank should not be Banks. limited to acceptances indorsed by its own Federal Reserve Banks have an unlimited right to pur­ member banks. chase United States bonds in the open market. They may The same construction of the term “mem­ also, under the provisions of section 18, be permitted or ber bank” has been accepted by the Board in required, after December 23, 1915, to purchase bonds bearing the circulation privilege, up to an amount not relation to the power of a Federal Reserve Bank exceeding $25,000,000 a year, from member banks which to receive deposits of “ checks and drafts upon make proper application to the Treasurer of the United solvent member banks.” States. In order to determine the amount any one reserve Granting, therefore, that a Federal Reserve bank shall buy under section 18 in any one year, it is nec­ Bank may, under the provisions of section 13, essary to allot to each bank its own proportionate share of discount acceptances indorsed by a member the entire sum offered for sale through the Treasurer and deduct therefrom the amount of bonds bearing the circu­ bank of another district, may such paper be lation privilege bought by such bank in the open market put up as collateral for Federal reserve notes ? within that year. It is clear that paper bought in the open mar­ April 22, 1915. ket under the provisions of section 14 is not There are two separate and distinct Sir: eligible as collateral security unless it conforms methods provided in the Federal reserve act to the provisions of section 16, defining eligi­ for the purchase by Federal Reserve Banks of ble collateral. That section provides in part Government bonds. that— Under paragraph of section of the b 14 reserve act such banks are authorized to buy The collateral security thus offered shall be notes and bills accepted for rediscount under and sell bonds and notes of the United States the provisions of section 13 of this act. in the open market. There is no restriction placed in that section upon the kind or amount If, therefore, a Federal Reserve Bank receives of bonds eligible for purchase in that manner. acceptances for discount under the provisions of The authority is absolute and unlimited except section 13 in the manner indicated above, such in so far as the Federal Reserve Board may make paper may be used as collateral for Federal restrictions under its powers to regulate such reserve notes. The sole requirement is that purchases. the collateral shall be notes and bills—terms which are broad enough to include acceptances Under the provisions of section 18 the Board in this connection—accepted for rediscount may, in its discretion, require the Federal under the provisions of section 13. The fact Reserve Banks to purchase United States bonds Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

bearing the circulation privilege up to an elements in determining the amount of bonds amount not to exceed $25,000,000 a year from which Federal Reserve Banks may be required member banks which have made application or permitted to buy under section 18. for such sale with the Treasurer of the United It might be noted that there is no specific States. This section becomes effective Decem­ provision in section 4 for the purchase of any ber 23, 1915. Government bonds, but, in enumerating the When bonds are offered for sale in this man­ powers of a Federal Reserve Bank, under para­ ner each Federal Reserve Bank may be re­ graph 7, it is provided that it has authority— quired or permitted to purchase such propor­ To exercise by its board of directors, or duly tion thereof as its capital and surplus bears authorized officers or agents, all powers spe­ to the aggregate capital and surplus of all Fed­ cifically granted by the provisions of this act eral Reserve Banks: Provided, however, That and such incidental powers as shall be neces­ sary to carry on the business of banking within if a Federal Reserve Bank has acquired bonds the limitations prescribed by this act, under section 4 within the same year then such bank shall deduct the amount thus acquired and the reference in section 18 to bonds ac­ from its proportionate share of the allotment quired under, section 4 evidently contemplated in order to determine the actual amount to be bonds purchased in the open market under this purchased by such bank. general authority to exercise the powers specif­ Should the bonds acquired by a Federal ically conferred by section 14, since there is no Reserve Bank under the general authority of other provision in section 4 which can be said section 4 to exercise powers prescribed in the to relate to the purchase of bonds. act—-or, more specifically, bonds acquired in This might raise the question whether 3 per the open market under section 14—-exceed the cent bonds, or bonds not bearing the circula­ amount to which such bank would be entitled tion privilege, bought under section 14, should under the proportionate allotment, then it can be included in determining the amount of bonds not be required or permitted to purchase any of to be purchased by each bank under section 18. the bonds offered for sale undfcr section 18. This conclusion does not seem necessary, The disqualification of this particular bank because it is not believed that bonds not bear­ however, would have no effect on the rights ing the circulation privilege were intended to and obligations of the other Federal Reserve be considered in making the deduction which Banks. Each bank is apportioned a certain is to determine this amount. Section 18 is definite percentage, determined by the propor­ intended only to afford a market for bonds tion which its capital and surplus bears to the bearing the circulation privilege, and the pur­ aggregate capital and surplus of all the Federal pose there manifested is to provide a means Reserve Banks, and each individual bank for the absorption of such bonds by Federal must, if directed by the Board, purchase this, Reserve Banks. The fact that a Reserve amount, no more and no less, unless it can be Bank may have bought 3 per cent bonds not shown that it has acquired bonds under sec­ bearing the circulation privilege in the open tion 4 in the manner previously indicated. market has no relation to and could not be It is clear that this $25,000,000 limitation intended to be considered in connection with imposed by section 18 refers only to those this question of the absorption or concentra­ bonds offered for sale by member banks through tion of bonds having that privilege. the Treasurer and has no effect whatever on To summarize: In order to determine the the continuing power of the Federal Reserve amount any one reserve bank may be required Banks to purchase bonds up to any amount in or permitted to buy under section 18, take the open market. The only consideration to be entire sum offered for sale in this manner, given in this connection to bonds bought in the allot to each bank its proportionate share, and open market is that they are merely one of the deduct therefrom the amount of bonds bearing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

the circulation privilege bought by such bank provide a method for gradually refunding bonds in the open market within the year. held at the time by the various national banks. Let X equal the amount to be bought by This matter was very carefully considered by Reserve Bank A, the committee of the House and the committee then of the Senate and a number of plans were sub­ rCapital and' Amount of bonds mitted having for their object the ultimate re­ surplus of A. bearing circula­ [Total X { Aggr egate tion privilege tirement of national bank circulation and the = [f a o m r o sa u l n e t . X < capital and bought in open substitution of other notes. At the time of the surplus of all market by A . banks. . within the year. passage of the act there was approximately Respectfully, $750,000,000 in national bank circulation out­ M. C. Elliott, Counsel. standing. The bonds securing this circulation To Hon. C. S. mature at the pleasure of the United States Hamlin, Governor Federal Reserve Board. Government after 30 years from the date of issue, and it was accordingly estimated that if the Federal Reserve Banks could acquire a Exchange of two per cent bonds for one-year gold notes minimum of $25,000,000 a year, they would and three per cent bonds. have in their possession at the maturity of That part of section 18 which provides that the Secre­ these bonds approximately the entire issue, and tary of the Treasury may, upon application of any Federal the Government would have to deal only with Reserve Bank approved by the Board, issue, in exchange for 2 per cent bonds, one-year gold notes and 3 per cent the Federal Reserve Banks instead of with the bonds, the gold notes not to exceed one-half of the 2 per several thousand national banks in refunding cent bonds offered for exchange, becomes effective at such bonds. once and not after two years from the passage of the act, as It was recognized, however, that unless the is provided for other paragraphs of section 18. national banks desired to retire their circu­ January 4, 1915. lation the Federal Reserve Banks would be Sir : I have your letter of January 2 and have unable to procure the bonds, and this method carefully examined that part of section 18 of was provided of having those national banks the Federal reserve act which relates to the desiring to retire the whole or any part of their exchange of United States bonds with the cir­ circulation make application through the culating privilege for one-year gold notes of the Treasurer to sell the bonds for their account, United States and 30-year 3 per cent gold and the Federal Reserve Board was empowered bonds without the circulating privilege. to require Federal Reserve Banks to purchase After analyzing this whole section and after bonds so offered, and, as suggested by you, it considering all the circumstances I am inclined was originally contemplated that the Federal to the view that technically the Federal Re­ Reserve Banks should thereupon be required serve Board has the right at this time to author­ to issue Federal Reserve Bank notes against ize this exchange and that the opening sentence such bonds. of this section making certain provisions effect-, In view of the arguments presented to the ive only after two years from the passage of the committee that this circulation becomes re­ act, does not relate to the provision under con­ dundant at certain times, it was later deter­ sideration. mined to permit the exchange of bonds thus As heretofore advised the power to purchase acquired with the circulating privilege for ob­ bonds having the circulation privilege and to ligations of the United States without the cir­ issue national currency against such bonds is culating privilege. specifically given to the Federal Reserve Banks As stated, this section was originally in­ by other sections of the act. tended to deal only with the bonds acquired When section 18 was incorporated in the act from national banks desiring to retire in whole it was originally intended, as its title implies, to or in part their national-bank circulation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The section was amended, however, in con­ States bonds with the circulating privilege, ference, so that it now provider— against which no circulation is outstanding, (a) For the issuance of Federal Reserve would seem to indicate that the Federal Re­ Brink notes against bonds acquired under other serve Board may, in its discretion, authorize provisions of the act as well as against bonds the exchange of any such bonds bearing this acquired under this section; and privilege acquired in any manner by the (i) For the exchange of . any United States Federal Reserve Banks, provided such bonds 2 per cent gold bonds bearing the circulation are not deposited as security for circulating privilege, but against which no circulation is notes. outstanding for one-year gold notes of the Respectfully, United States without the circulation privi­ M. C. Elliott, Counsel. lege to an amount not to exceed one-half of the To Hon. Charles S. Hamlin, 2 per cent bonds so tendered for exchange and .Governor Federal Reserve Board. the 30-year 3 per cent gold bonds, without the circulating privilege, for the remainder of the Rights of Member Banks in Northern New Jersey. bonds so tendered. Member blanks located in that part of New Jersey which It is significant that in the first two para­ is to be transferred from the Philadelphia district to the graphs of this section in referring to the bonds New York district not later than July 1,1915, remain mem­ bers of the Federal Reserve Bank of Philadelphia until the which the Federal Reserve Banks may be re­ transfer is actually effected, and as such are entitled to quired to purchase, Congress uses-the words' all the privileges extended other members of that bank. “such bonds,” manifestly referring to bonds All rediscounts made for member banks located in the which a national bank desires to sell through region to be transferred may be held by the Federal Reserve the Treasurer in order to reduce its circulation. Bank of Philadelphia until they mature, even though the date of maturity is subsequent to July 1,1915, or they may In the fifth paragraph of this section, how­ be rediscounted with the Federal Reserve Bank of New ever, it is provided: York. Upon the deposit with the Treasurer of the May 21, 1915. United States of bonds so purchased or any Sir: As requested, I have read and consid­ bonds with the circulating privilege acquired ered the attached letter from the Federal Re­ under section 4 of this act, any Federal reserve serve Bank of Philadelphia, dated May 5, 1915, bank * * * shall be entitled to re­ submitting the following inquiry: ceive * * * circulating notes * * * equal in amount to the par value of the bonds so de­ In case any banks in northern New Jersey posited. apply to us for rediscounts between now and July 1,1 would inquire whether, in your judg­ In this paragraph the section for the first ment, we should accommodate them, and I time refers to bonds other than those acquired would also inquire whether it would be satis­ from banks desiring to reduce their circulation, factory to let us carry any rediscounts which and in the following paragraph the language of we may have for northern New Jersey banks which mature after July 1 until the notes the act is— run off. Upon application of any Federal reserve While the order has not yet been formally bank, approved by the Federal Reserve Board, entered, it is my understanding that the trans­ the Secretary of the Treasury may issue in exchange for United States 2 per cent gold fer of membership from Philadelphia to New bonds bearing the circulation privilege, but York of those banks located in the district to against which no circulation is outstanding be assigned to New York is to be made not later one-year gold notes, etc. than July 1. This being true, the banks in The failure, therefore, to restrict this para­ northern New Jersey will continue to be mem­ graph by any qualifying clause as to the bonds bers of the Federal Reserve Bank of Philadel­ which may be exchanged other than the quali­ phia until that time and will be entitled to any fication that they shall be 2 per cent United privileges extended to other members. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

As to the rediscounts carried at the time by a change in the geographical limits of his district which that such banks cease to be members of the results in making him a resident of another district. Federal Reserve Bank of Philadelphia, while May 11, 1915. the act makes no specific provision in regard Sir: This office has been requested to give to this situation, I can see no legal objection an opinion on the question of whether or not to the Federal Reserve Bank of Philadelphia Mr. La Monte, one of the class C directors ap­ continuing to hold such rediscounts until they pointed by the Board for the Federal Reserve mature. Where a member bank rediscounts Bank of Philadelphia, may continue to serve with a Federal Reserve Bank eligible paper after that part of New Jersey in which he re­ held by it, the Federal Reserve Bank becomes sides has been transferred to district No. 2. the owner of such paper and the member bank Section 4 of the Federal reserve act provides is contingently liable as indorser. This being in part that— true, there would seem to be no justification for Class C directors shall be appointed by the assuming that a change in the status of a mem­ Federal Reserve Board. They shall have been ber bank in its relation to the Federal Reserve for at least two years residents of the district for which they are appointed. Bank should in any way affect the legality of such rediscounts. For example, if a member Mr. La Monte had been for Wo years a resi­ bank should go into liquidation, the Federal dent of district No. 3 at the time he was ap­ Reserve Bank would have the right to hold pointed. The question, therefore, arises whether and collect any rediscounts held by it and the fact that after July 1 he will be a resident would have a claim against the estate of such of district No. 2 renders him ineligible to com­ liquidating bank for any loss suffered, under plete his term of office which expires January 1, the contract of the indorser. 1915. I am of the opinion, therefore, that the Fed­ The term “residence” is not synonomous eral Reserve Bank of Philadelphia will be fully with that of “ domicile” or “ citizenship.” It justified under the law in extending the privi­ has been defined by the courts as “ the abiding lege of rediscount to the banks referred to as or dwelling in a place for some continuance of long as they remain members of that bank, and time. There must be a settled, fixed abode or intention to remain permanently at least for a that any rediscounts held at the time when they time, for business or other purposes, to consti­ cease to be members may be retained until col­ tute a residence.” (See American and English lected, or they may be rediscounted by the Federal Reserve Bank of New York for the Encyclopedia, vol. 24, p. 693, for collec­ tion of cases.) It is, however, susceptible of Federal Reserve Bank of Philadelphia. This latter course would from many aspects seem various meanings which depend largely upon circumstances under which the term is used. to be the more desirable since in this case ad­ Its definition has been held to be a mixed ques­ justment at maturity by payment or by sub­ tion of law and fact. (Munroe v. Williams, 37 stitution of other paper could be arranged S. C. 81.) The term “ to reside” was held in directly with the Federal Reserve Bank of New the case of People v. Owens, 29 Colo. 535, to York and it would be unnecessary for the Fed­ have different meanings as used in different eral Reserve Bank of Philadelphia to send on parts of the same instrument. for collection any rediscounts held. In order, therefore, to determine the sig­ Respectfully, nificance to be given to that part of the act M. C. Elliott, Counsel. above quoted, it is necessary to consider the To Hon. Charles S. Hamlin, context and the purpose of this requirement. Governor Federal Reserve Board. The class C directors are selected by the Qualifications of Federal Reserve Bank Directors. Federal Reserve Board but as directors have A director possessing necessary qualifications at the time the same powers and duties as directors of of his election is not made ineligible to serve out his term classes A and B. The qualification that such Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

of the act by the Federal Reserve Bank, which directors “ shall have been for two years resi­ items are payable within the district of the dents of the district for which they are ap­ Federal Reserve Bank to which they are sent. pointed” was manifestly incorporated in order that those selected should be familiar with the The exercise of this power would require local conditions of such district. Mr. La Monte the collecting bank to act as agent for the having been qualified in this respect at the time forwarding bank in the collection of the items of his election there would seem to be no reason mentioned in your letter sinfce, in such case for declaring him ineligible to serve out his under the uniform decisions of the court, the term because his residence after July 1 may agency continues until the items are collected. be technically said to be in district No. 2 This right is not specifically included in the instead of district No. 3. powers oHihe Federal Reserve Banks enumer­ The act does not provide in terms nor by ated in the Federal reserve act. Section 13, in necessary implication that a director shall con­ dealing with the subject of collections, pro­ tinue throughout his term of office to be a vides: resident of the district in which the Federal Any Federal Reserve Bank may receive from Reserve Bank is located, and there does not any of its member banks, and from the United appear to be any reason for,assuming that this States, deposits of current funds in lawful technical change in Mr. La Monte’s residence money, national-bank notes, Federal reserve notes, or checks and drafts upon solvent mem­ can in any way prove prejudicial to the inter­ ber banks, payable upon presentation; or, ests of the Federal Reserve Bank of Philadel­ solely for exchange purposes, may receive phia. from other Federal Reserve Banks deposits of I am, therefore, of the opinion that he may current funds in lawful money, national-bank legally continue to serve as a class C director notes, or checks and drafts upon solvent mem­ ber of other Federal Reserve Banks, payable until January 1, 1916. upon presentation. Respectfully, M. C. Elliott, Counsel. It will be observed that the language used To Hon. Charles S. Hamlin, in the section above qu6ted does not specifically Governor Federal Reserve Board. include notes, drafts and bills of exchange but Federal Reserve Banks are authorized to re­ ceive deposits of current funds in lawful money, national-bank notes, or checks and Federal Reserve Banks as Collecting Agents. Although there is no express provision in the Federal drafts upon solvent member or other Federal reserve act authorizing a Federal Reserve Bank to act as Reserve Banks, payable upon presentation. agent for another Federal Reserve Bank in the collection The question therefore arises, whether or not of bills, notes, etc., nevertheless section 4, subsection 7, such notes, drafts, and bills of exchange may in granting the right to exercise “incidental powers,” be accepted by Federal Reserve Banks in the impliedly authorizes this power, the collection of bills, notes, etc., being incidental to the power to receive de­ capacity of agent for other Federal Reserve posits, as authorized by section 13. Banks and the determination of this question is dependent upon whether or not this power December 30, 1914. may be said to be incidental to those powers Sir: I have your letter of the 30th instant, which are specifically granted. Section 4, sub­ in which you ask for an opinion on the followsection 7, of the Federal reserve act, in defining inp questions: some of the corporate powers of Federal Re­ Whether or not a Federal Reserve Bank is serve Banks, reads as follows: empowered under the provision of the Federal reserve act to act as agent for another Federal To exercise by its board of directors, or duly Reserve Bank in the collection of maturing authorized officers or agents, all powers spe­ notes, drafts, bills of exchange and other evi­ cifically granted by the provisions of this act, dences of debt purchased under the provisions and such incidental powers as shall be neces­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

sary to carry on the business of banking within items are to collect and credit, then the collect­ the limitations prescribed by this act. ing bank collects from the drawee of the draft This language is substantially similar to the or the obligor of the note funds which it may re­ language used in section 5136 of the Revised ceive on deposit, and, consequently, when its Statutes which deals with the corporate powers agency terminates it exercises a power spe­ of national banks. Section 7 of this section cifically granted to it, namely, the power to re­ reads as follows: ceive deposits. Accordingly, it seems clear To exercise by its board of directors or duly that the collection of items referred to by you authorized officers or agents, subject to law, all may be said to be incidental to the power to re­ such incidental powers as shall be necessary to ceive deposits. carry on the business of banking; by discount­ Banks very generally act as agents for other ing and negotiating promissory notes, drafts, banks in making collections of this sort and the bins of exchange, and other evidences of debt; by receiving deposits; by buying and selling right of national banks to perform this duty exchange, coin, and bullion; by loaning money has, so far as I have been able to learn, never on personal security; and by obtaining, issuing, been questioned; on the contrary, there are a and circulating notes according to the pro­ number of cases holding that in the matter of visions of this title. collection of items banks, as stated, act only as It will be observed that in defining the powers agents until the item has been actually col­ of national banks, as well as in defining the lected. powers^ of Federal Reserve Banks, Congress This is true even in the case of deposit of has not specifically authorized such banks to act checks by individuals with national banks. as agent for other banks. The powers enum­ The courts have held that even though credit erated, however, in both instances, are what may be given in the pass book for the check may be termed contractural powers of a Fed­ upon its deposit, the bank continues as the eral Reserve Bank or a national bank; that is agent of the depositor until the check has been to say, the act defines and limits under what collected. conditions such banks may become indebted to It seems to me, therefore, that unless as a others or may permit others to become indebted matter of policy the Board determines that the to such banks. Federal Reserve Banks are not ready to act as In the matter of collection of items mentioned collecting agents for other Federal Reserve in your letter, however, the relation of debtor Banks in the collection of the items enumerated and creditor is not established as between the by you, there is no reason why this power forwarding bank and the collecting bank until should not be exercised without exceeding the the item sent for collection is actually collected; corporate powers granted jby statute, and those and where the instructions of the forwarding incidental to the specific powers granted. bank are to collect and remit the bank receiving Respectfully, such items has this single duty to perform and M. C. Elliott, Counsel. the proceeds are not credited to the forwarding bank after collection but are remitted to such To Hon. Charles S. Hamlin, bank. If the instructions accompanying such Governor Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

GENERAL BUSINESS CONDITIONS. trades directly influenced are doing a good business. General business and banking conditions are The situation in the shoe and leather trade described in reports made by Federal reserve has not improved to any noticeable extent agents for the 12 Federal reserve districts. since last month. In all sections, very limited Below are given in detail digests of condi­ trade is reported from regular domestic sources tions in the various districts substantially as and while the general outlook is for improve­ reported by Federal reserve agents. ment, no marked improvement has yet mani­ fested itself. In this trade war orders are still DISTRICT NO. 1—BOSTON. the principal factor. Since the 1st of the month there has been a There has been considerable improvement in slight hardening tendency in the money market, the wool and woolen industries over the past but this is largely due to the hesitation of month and, in fact, even apart from war orders banks to invest their money too closely rather the general situation seems to be improved than to any appreciable decrease in the supply. somewhat, both from the mill end as well as in A comparison, however, of the statements of goods, and the general situation in this line is the Boston Clearing House shows an increase ahead of a year ago. This is noticeably so in in loans over the previous month and a decrease worsteds, which have been dull for several in due from reserve agents. The country bank months. situation is much the same, and those banks The cotton-mill situation seems to be^lightly are still rediscounting to a considerable extent but steadily improving. Most of the mills are and show very little change in their condition running on full time and while the volume of from the previous month. The savings-bank business is reported to be satisfactory there is deposits in this district continue showing in­ still room for an improvement in profits, creases, which is an evidence of better business although many mills are reporting a satis­ conditions. factory profit, having purchased their raw Money rates are as follows: Banks commer­ material at lower rates than the present market. cial customers up to six months, 4 to 4J per cent, with some exceptions below 4 per cent; DISTRICT NO. 2—NEW YORK. demand loans to brokers, 3 per cent; note Throughout New York State farmers, fruit brokers’ commercial paper, 3J to 4J per cent, growers, and dairymen anticipate a good largely 4 per cent; year notes, 4J per cent; season. Factories producing goods for do­ savings-bank mortgages, 4£ to 5 per cent; 90mestic use are not busy and new orders come day bank acceptances, 2J to per cent; town in slowly. The manufacture of war supplies notes, 3 to 3J per cent; Boston bank rates to continues above capacity and is extending to country banks, 4 per cent; Federal Reserve plants normally engaged otherwise, thus partly Bank of Boston rates, 4 per cent up to 60 days, offsetting slack domestic trade. 4J per cent 60 to 90 days. Shipments from the port of New York since Exports and imports for the port of Boston January 1 are $112,000,000 ahead of the corre­ for the month of April are as follows: Imports, sponding period last year. Builders, realfree, $15,219,245; dutiable, $2,786,559. Ex­ estate and renting agents find business better. ports, domestic, $10,577,596; foreign, $12,586. There is a general feeling of optimism in all Textiles, dry goods, and mercantile lines gener­ lines of business in this district, and a slight ally are in better demand, but it is evident that improvement in most lines, with the possible domestic markets of nearly all kinds, while exception of the shoe and leather trade. improving in tendency, are subject to the ups Foreign government orders are reported to be and downs in sentiment as the European war coming into this market almost daily and continues. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The number of unemployed is substantially business by the railroads, the placing of fair­ reduced, but many are still out of work. sized railroad equipment orders) and the ready Figures of new incorporations compared with sale under unfavorable conditions of the Argen­ recent years show a considerable falling off. tine loan and a large bond issue for the Penn­ Failures in this district since the first of the sylvania Railroad. year compared with the same period last year The effect of the war is most conspicuous in havfc increased 50 per cent in number and 56 the iron and steel industries, and improvement per cent in amount. There is less activity in continues. The Delaware River shipyards are the stock market. running at full capacity. The automobile trade Excess reserves of the New York Clearing is brisk. The anthracite coal output is slightly House banks on May 15 were $173,000,000, an under last month’s record production, while increase of $3,000,000 since May 1. During the the bituminous output is not up to normal. same period deposits decreased $4,000,000 and Building operations are increasing, but the loans $2,000,000. Demand for loans is gener­ lumber business has fallen off. Paints, chem­ ally light. Rates continue at 3 J to 4 per cent icals, drugs, and wall-paper industries are good for the best commercial paper. and improving. The hardware business and sales of electrical DISTRICT NO. 3—PHILADELPHIA. supplies continue to increase. Leather is quiet, with prices high and firm; footwear is very War orders and their influence are un­ quiet, with small sales. In wearing apparel (in­ doubtedly helping many industries. General cluding knit goods, underwear, and dress goods) trade, however, upon which in the long run we manufacturers are fairly busy, with the excep­ must depend for our prosperity, is still dull and tion of men’s and boys’ clothing. much below normal. Collections are fair. Re­ The dyestuffs situation is still critical with tail trade is picking up in some lines, due to less cloth, carpet, and rug mills, and business in unemployment and to increasing working hours giving increased purchasing power to labor, and these lines is poor. Cotton-trade conditions are unsettled, while also to favorable weather conditions. On the cotton spinners report increased business. whole, in district No. 3, business is hesitating Wool and woolen yarns are much below normal. and concerned over the outlook. Some lines, Silk mills are running full. producing for domestic consumption, are im­ Crop conditions are reported good and the proving very slowly. outlook satisfactory. Rates for money are easy and loanable funds are plentiful, both call and time money being DISTRICT NO. 4—CLEVELAND quoted at from 3J to 4 per cent; the supply of Improvement of conditions in district No. 4, commercial paper is limited, and a moderate as reported in April, is being held, but no addi­ amount is being sold at from 3£ to 4J per cent. tional advance is noted. While our advices The outlook is so uncertain there seems to be a seem to indicate no recession in business, disposition on the part of financial institutions there is a slight pause, with fewer orders for not to lock up their funds in long-time invest­ new business. Pay rolls are approximately ments. Short maturities are readily taken, but the same as a month ago. Steel mills are there is little demand for longer dates. Be­ running about 5 per cent increase of ingot cause of trade conditions and depression a large capacity over 30 days ago. Now that the excess of reserves is reported \fy the banks. A transportation companies, which consume onegeneral spirit of caution and economy still per­ third of the total tonnage of finished iron and sists on the part of producers and consumers of steel in the United States, have come back into goods and of investors. the market, the indications are that a normal Evidence of recovery is given by the decrease degree of activity should continue in that trade in the number of idle cars and increasing freight for some months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The lake season opened a little later than conditions show material improvement over usual, and now that the accumulation of grain those of three months ago. in the Northwest has been brought on, it is The demand for bank credit is very quiet found there are more vessels than can be sup­ and modest in amount, with the result that plied with grain, ore, and coal tonnage. Some local institutions are apparently comfortably independent lake carriers will be compelled to able to care for it without recourse to borrow­ dock a number of their vessels unless these ing. Bank loans as a whole reflect mofe a conditions improve. desire to shift transactions already open than The settlement of the coal strike in eastern a demand for fresh credit. Ohio, permitting the return to work of 14,000 Manufacturers and exporters of goods for miners, is a favorable item in the coal trade, war purposes are, of course, an exception to but prices are still unsatisfactory. the general rule. Diplomatic developments, The marked decrease in idle cars and the in­ apparently, have had no effect either upon creased volume of railroad traffic, east of Chi­ credit conditions or the; demand for funds, for cago are items of improvement in the railroad which fact it is possible the presence of the situation. Federal reserve act may in large measure be The business situation in the extreme south­ responsible. ern part of this district is not participating in the general improvement throughout the dis­ DISTRICT NO. 6—ATLANTA. trict, except in certain lines having war orders. Conditions in the sixth district are generally Weather conditions still continue to favor a good. The outlook is brighter than at any normal crop of farm products. time since the European war began. Money has a firmer tendency, but there has Collections are good over the district and the been no increase in rates. banks report a considerable decrease in re­ newal of paper. The city banks have ample DISTRICT NO. 5—RICHMOND. loanable funds and are seeking loans. In the There has been very little change in general mercantile lines, owing to the fact that jobbers business conditions in the fifth reserve district and wholesalers did a small volume of business during May. Agriculturally, the month was during the past fall and winter, it has had a one of preparation. Hope for the future has marked effect on the decreased demand for been increased in the presence of timely rains loans. However, commercial men report trade and the knowledge that the close of the plant­ good; that the merchants’ stocks are somewhat ing season shows that there is material diversi­ depleted, and jobbers and wholesalers are look­ fication, especially in sections heretofore al­ ing forward to heavy buying in the summer and most entirely given over to cotton. The recent fall. The clearings in Atlanta show, for the softening in the price of this staple has some­ first time this year, a slight increase over the what checked liquidation, which however had same time one year ago. proceeded far enough to be of great help not The cotton mills of the district are running only to the debtors themselves but to their full force, and many overtime, with heavy or­ creditor jobbers and merchants. Economy ders on hand. Reports indicate conditions seems to be the watchword, and its practice, rapidly assuming normal in the Birmingham while ultimately most beneficial to consumers, iron district. has not contributed to the profits of those min­ The naval-stores line appears rather slow in istering to their wants. regaining former prices, although the move­ In consequence, most lines, including re­ ment is very good. Railroad conditions are im­ tailers, report in comparison with last year this proving, but rather slowly. Pay rolls of the time, a materially diminished volume of busi­ various industrial and manufacturing concerns ness, although from almost every direction are, generally speaking, normal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Agricultural conditions appear exceedingly was below the average and added to the de­ bright, but with a decreased cotton acreage ficiency for the }^ear. There was enough, and quite a large reduction in the use of ferti­ however, to allow the breaking of ground and lizers. Seasonable weather is now prevailing the planting of crops, so that, given sufficient following an unusually dry spring. rainfall during the next two months, there is every indication that the harvest will be DISTRICTJNO. 7—CHICAGO. abundant. Wheat acreage has been mate­ Trade development in the seventh district rially increased, especially in the cotton in May has been favorable. Moderate im­ States; in some districts more than 100 per provement is jnoticed in the leading industries, cent. The fruit crop is reported for the most especially iron and steel and the [metal-working part in excellent shape. branches, and at more satisfactory prices. There is still little demand for money. This The continuation jof the serious (labor troubles district, particularly the Southern States, has in the building trades at Chicago is a depressing gone through a period of enforced liquidation, factor there. Movements of crude materials and it seems there will be no great demand for and finished products of factories]show^steady funds until after the harvest. Banks as a gain. The outlook for manufacturers, as a general rule, hold reserves largely in excess of whole, is regarded as improved. their legal requirements and are seeking outlets Distributive operations maintain their re­ for their surplus funds. There is little com­ cent advance. The jobbing centers report mercial paper of the best names available in increasing orders, with dry goods and collateral St. Louis, but what there is is quoted at 3J to lines most active at Chicago. Retail trade'Jhas 4 per cent. The bank loan rate in St. Louis is responded to more settled weather conditions about 5 per cent. Bank loans are quoted out­ at interior points. side of St. Louis and Louisville at 6J to 8 per Winter wheat now promises a record-break­ cent. ing crop, with widespread rainfall improving DISTRICT NO. 9—MINNEAPOLIS. soil conditions over a large area of the grain belt. All agricultural products continue in Cold and rainy weather, with a snowstorm demand at unusually profitable prices to grow­ on May 17, provoked some reports of damage ers, despite lessened spot demands (from to the Northwestern grain crop. Careful in­ Europe. A portion of the fruit district in vestigations in Minnesota and North and South Michigan was injured by a few nights of low Dakota indicate that the wheat crop has temperature, grapes suffering most. suffered no damage whatever and that injury Money conditions remain easy. Commer­ from frost is confined to winter rye, flax just cial paper rates range from to 4 per cent, coming out of the ground, barley, and oats. with offerings readily absorbed. Bank clear­ On the whole the frost and snow is considered ings indicate slight gains. beneficial, as it has killed many of the weeds which are common to the grain fields, and it DISTRICT NO. 8—ST. LOUIS. is not believed that the crop as a whole General business conditions in this district, has suffered any appreciable injury. A small especially in the larger cities and manufactur­ amount of seeding remains to be done in oats, ing centers, while still below normal, indicate a barley, and flax. The last half of May will be continued though slow improvement. The mainly devoted to corn planting, which has manufacturing industries, except those affected been delayed by the rains and the cold weather. by war orders, show less improvement than Weather conditions have been unusual, but the general jobbing interests. have had an excellent effect in giving grain Crop conditions throughout the district con­ crops good root. Moisture conditions of the tinue favorable, although the rainfall for April entire ninth district are excellent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Underlying business conditions of the entire surplus funds, whereas in times past they have Northwest are sound. Manufacturing is some­ experienced difficulty in meeting local de­ what below normal, and the lumber business is mands. off as compared with previous years. Mer­ "Crop conditions are promising, with an in­ chandising conditions in the local communities creased acreage of wheat and other cereals. are normal and the distributing houses of the The recent ravages of the Hessian fly are likely large cities are doing about the same business to sharply reduce the yield of wheat, and may as in former years. There is no evidence of make a difference of millions of dollars. This any real business depression, except in the loss, however, may be substantially offset by northern Michigan iron-mining districts and prices ruling higher than normal. Corn is now on the iron ranges of northern Minnesota where being planted, with weather and soil in perfect conditions in the steel business have reflected condition. Horticultural prospects are almost themselves in a slowing down of mining opera­ perfect, with every promise of an abundant tion^. Northern Minnesota prospects are con­ yield. The live-stock market is active, with siderably better this season than a year ago, prices steady to strong, as is also the hog and and there is some improvement in the outlook sheep market. due to an increase in development work which The lead and zinc mining industry, on ac­ results from the action of the steel corporation count of record prices, is enjoying an unprece­ in resuming construction on the large steel dented activity, while the coal-mining industry plant which is soon to be opened near Duluth. is normal for this season of the year. Banks are in good condition and are meeting The retail and wholesale trade is not quite the demands upon them without difficulty. up to normal. Collections are slightly better Business houses report that collections are fair than normal, except such small bills as are de­ to good throughout the entire district. There pendent upon wages. Building operations are is considerable activity in the stock business not as extensive as a year ago, and, as a conse­ of western North and South Dakota and Mon­ quence, labor is not so fully employed. The tana, the noticeable feature of which is the harvest season now approaching will probably heavy buying of horses for export to Europe give employment to many who are now idle, by English agents and heavy purchases of a and the present conditions, insofar as they are somewhat lighter grade of horses by agents of dependent upon wage earners, will undoubtedly the Italian Government. Quarantine condi­ improve. tions, due to the hoof-and-mouth disease, have improved, permitting more active ship­ DISTRICT No. 11—DALLAS. ments from local points to Omaha and Chicago This section of the country appears to have markets. entered upon a period of lighter demand for A healthy spirit of optimism prevails through funds. There is little evidence of the pressure out the district, and business men generally which existed last fall. Wheat and oats will are looking forward to a period of good business. soon be coming into the market and the agri­ cultural promise is good. Higher prices for DISTRICT NO. 10—KANSAS CITY. cotton and' sales of cattle, horses, and mules This district probably was never in better have brought large credits. These Jtiave liqui­ condition so far as purely financial matters are dated outstanding liabilities and in many cases concerned than at the present time. Banks left balances. throughout the district have an excess of loan­ In the extreme northeastern portion of Texas able funds, and interest rates, generally speak­ and lower Oklahoma agriculture is very prom­ ing, are below normal; in fact, many banks are ising. Bank deposits are large and grain crops resorting to the purchase of outside commercial will be heavy. Abundant rains have kept the paper in order to find employment for their pastures and live stock in good condition. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Local commercial interests are fully up to nor­ shortly. Cattle and sheep interests are pros­ mal, but industrial plants are more or less af­ pering. Wool sales are being contracted for at fected by adverse conditions. good prices. The lumber industry shows no Eastern Texas, aside from that portion al­ improvement, and it is much depressed. The ready covered, has had some crop damage from petroleum industry is at least no more depressed too much rain. Crops here are rather back­ than a few months ago. Copper mining is very ward and there is demand for money. The active, and exports through Pacific coast ports lumber conditions are improving. Oil produc­ are at record figures. An interesting incident ers report a very low price for crude oil. Con­ has been the arrival of a 22,000-ton steamship ditions are on the whole improving. from New York with a first-cabin list of 400 Bermuda onions are being shipped in large passengers. quantities from southern Texas. Oats are Credit conditions are easy throughout the being harvested under ideal conditions. Corn district. From March 4 to May 1 deposits of promises a large yield, and cotton, while a national banks in the seven reserve cities little late, is growing rapidly. gained $12,000,000. Savings bank deposits, There is a rather active demand for money likewise, show important gains. San Francisco in western Texas. Alfalfa has just been cut hotels report exceptional bookings throughout for the first time, yielding a good crop. There the summer, indicating continuance of heavy is again activity in the mining section. travel. The general feeling seems to be one of Central Texas has suffered from too much mild optimism*. rain, but on the whole agricultural conditions are promising. The wheat outlook is excel­ Discount Rates. lent. Corn and cotton are in a favorable posi­ Discount rate of each Federal reserve hank in effect on May tion. 26, 1915. DISTRICT NO. 12—SAN FRANCISCO. Maturi­ Maturi­ Date of Maturi­ ties of ties of Agricul­ Agricultural prospects throughout the twelfth Fede b ra a l n r k e . serve ch l a a n st g e d ti a e y s s o a f n 3 d 0 d ov a e y r s 3 t 0 o d o a ve y r s 6 t 0 o l t i u v r e a -s l t a o n c d k district are exceptionally bright. Unusually of rate. less. in 60 c l d u a s y iv s e , . i 9 n 0 c l d u a s y iv s e , . pa 9 p 0 e d r a o y v s. er late rains in California, while interfering to some extent with early fruits, have been of Boston................. Feb. 3 4 4 4| 5 New York........... Feb. 18 4 4 4 5 great benefit and assure large crops. In gen­ Philadelphia....... Jan. 28 4 4 43f 5 Cleveland............ Feb. 6 4 4 5 eral, a large increase in grain acreage has been Richmond........... Feb. 19 4£ 4£ 5 stimulated by the exceptional prices. A fine A C t h l i a c n ag ta o . . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. . J A a p n r . . 3 23 0 4 4 4 4 4 4 £ i 55 5 St. Louis............. Apr. 22 4 4 4£ barley crop, estimated at 1,000,000 bags, is M Ka in n n sa e s a p C o i l t i y s. . . . . . . . . . . . . . . M Ja a n y . 2 1 8 8 4 4 4 4 5 4* 5 5 5 i now being harvested in the Imperial Valley. Dallas.................. Feb. 4 4 4 4£ San Francisco___ May 8 3^ 4 4£ 6 Early fruits, berries, and vegetables are going to market in steadily increasing volume. A An thorized rate for acceptances 2 to 4 per cent. On March 10 the Federal Reserve Board fixed the fol­ considerable balance of the navel orange crop lowing rates for rediscounts between Federal reserve is being marketed at advancing prices, and the banks: 3£ per cent for maturities of 30 days and less; 4 per Valencia orange crop will begin to move cent for maturities of over 30 days to 90 days, inclusive. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Resources and liabilities of each of the 12 Federal Reserve Banks and of the Federal Reserve System at close of business on Fridays, Apr. SO to May 21. [In thousands of dollars.] RESOURCES: San Boston. Y N o e r w k. d P el h p i h la ia ­ . C la le n v d e . ­ m R o ic n h d ­ . Atlanta. Chicago. Lo S u t. is. M ap i o n l n is e . ­ K C a i n ty sa . s Dallas. F ci r s a c n o. ­ T sy o s ta te l m fo . r Gold coin and certificates: Apr. 30....................... $15,935 $91,940 $16,865 $16,170 $8,399 $4,745 $34,607 $10,382 $7,535 $10,715 $7,885 $13,050 $238,228 May 7......................... 17,148 95,804 16,904 17,532 8,026 5,027 34,360 10,905 7,608 11,214 8,372 11,134 244,034 May 14....................... 16,548 96,824 16,589 17,303 7,708 4,705 34,567 10,905 7,618 11,043 8,538 8,715 241,063 May 21....................... 16,025 98,643 18,430 17,329 7,172 4,485 35,858 10,912 7,426 11,050 8,233 7,813 243,376 Legal tender notes, silver certificates, and subsid­ iary coin: Apr. 30..................... 1,269 15,321 3,944 729 53 470 2,288 1,214 7 517 701 5 26,518 May 7......................... 1,106 21,239 3,651 746 75 245 4,570 1,178 8 476 708 19 34,021 May 14....................... 1,130 24,726 3,579 742 79 197 3,712 1,183 4 477 713 19 36,561 May 21.................... 1,238 25,487 3,247 741 96 211 3,516 1,215 6 478 575 22 36,832 Bills discounted, and ! loans: a Apr. 30.*.................... 2,213 6,118 2,104 1,934 6,943 4,780 2,297 730 814 981 5,229 2,443 i 36,586 May 7......................... 2,383 5,501 1,907 1,369 6,775 4,661 2,131 787 860 1,032 5,432 2,602 ! 35,440 May 14....................... 2,536 4,851 1,655 1,116 6,877 4,447 1,845 825 758 1,046 5,963 2,816 j 34,735 May 21....................... 2,359 4,189 1,443 1,043 7,191 4,361 1,750 1,016 758 1,292 6,030 3,194 ! 34,626 Investments: & Apr. 30....................... 1,899 8,130 2,129 1,980 1 6,457 953 1,659 1,041 1,211 25,469 May 7......................... 1,844 9,360 2,354 2.329 1 6,637 998 1,689 1,076 1,996 28,284 May 14...-.................. 2,050 9,408 2,359 2.329 1 6,766 998 1,689 1,076 2,045 28,721 May 21....................... 2,195 9,666 2,403 2,424 1 6,806 1,012 1,689 1,076 2,070 29,342 Due from other Federal Reserve Banks, net: Apr. 30....................... 15,792 667 481 739 1,109 165 9,468 May 7......................... 8,494 852 790 1,020 1,386 535 1,532 671 10,139 May 14....................... 531 4,045 1,667 i 976 1,392 1,715 3,713 1,855 747 1,100 1 13,215 May 21....................... 459 928 1,465 1,960 1,613 1,262 1,220 1,648 | 6,650 All other resources: Apr. 30....................... 550 3,148 199 443 37 349 2,609 1,423 665 650 572 689 j 11,334 May 7......................... 453 2,006 246 : 229 33 281 2,595 1,284 477. 669 225 677 9,175 May 14....................... 781 3,098 409 . 462 49 291 2,596 1,763 367 647 52 1,456 ! 11,971 May 21....................... 1,079 2,102 424 371 52 382 2,601 2,505 294 306 84 1,448 ; 11,648 Total resources: Apr. 30....................... 21,866 140,458 25,908 21,737 15,433 11,083 48,258 15,811 10,845 13,904 14,387 17,398 347,603 May 7......................... 22,934 142,404 25,914 22,995 15,930 11,600 50,828 16,684 11,313 14,467 14,737 16,428 , 361,093 May 14....................... 23,576 142,952 26,258 22,928 16,106 11,355 53,199 17,529 11,183 14,289 15,266 16,151 ■ 366,266 May 21....................... 22,896 140,956 26,406 22,836 15,977 11,399 52,144 17,922 11,393 14,202 14,922 16,195 362,474 a The amounts of bills discounted for member banks exclusive of acceptances were as follows: [In thousands of dollars.] Boston. Y N o e r w k. d P el h p i h la ia - . : C la le n v d e . ­ m R o ic n h d ­ . Atlanta. Chicago. Lo S u t i . s. M ap i o n l n is e . ­ K C a i n ty sa . sDallas. F c S i r s a a c n o n . ­ T sy o s ta te l m fo . r . j 1i Apr. 30............................. $377 $382 $622 i $735 $6,943 $4,780 $760 $605 $419 $665 $5,229 $1,257 ! $22,774 May 7................................ 421 408 642 i 729 6,775 4,661 747 662 506 683 5,432 1,416 23,082 May 14.............................. 413 403 592 ! 696 6,877 4,447 798 700 504 668 5,963 1,774 23,835 May 21.............................. 281 422 579 | 705 7,191 4,361 865 673 536 623 6,030 2,036 24,302 For amounts of acceptances held by the several Federal Reserve Banks, see p. 84. 6 “Investments” comprise “United States 2 per cent and 3 per cent bonds on hand,” also “Other investments” (municipal warrants and kindred short term securities), as follows: [In thousands of dollars.] Boston. Y N o e r w k. d P el h p i h la ia ­ . C la le n v d e . - i m R o ic n h d ­ . Atlanta. Chicago. Lo S u t. i s, . M ap i o n l n is e . - j 1 K C a i n ty s . as Dallas.; i ! F c S i r s a a c n n o . - T sy o s ta te l m fo . r i : United States 2 per cent Un b i o t n e d d s S .. t .. a .. t . e .. s . . 3 .. .. p .. e . r .. . c .. e .. n .. t . i $2,525 $242 j $1,025 j $930 .............. $991 $5,713 bonds............................ $100 1,000 i 1,100 Total United States bonds on hand1__ Iftft : 3,525 242 ! 1,025 : 930 .............. 991 6,813 Other investments (mu­ nicipal warrants): Apr. 30............................ $1,899 $8,139 $2,129 1,880 $1 2,932 711 634 ! Ill ............ 220 18,656 M M a ay y 7 14 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1 , , 0 84 5 4 0 9 9 , , 3 4 6 0 0 8 2 2 , , 3 3 5 5 4 9 2 2 . . 2 2 2 2 9 9 1 1 1 3 3 , , 1 24 1 1 2 7 7 5 5 6 6 j ; 6 6 6 6 4 4 1 1 1 4 4 6 6 . . . . . . . . . . . . . . . . . . . . . . . . ; 1 1 ,0 ,0 5 0 4 5 2 2 1 1, , 4 9 7 0 1 8 May 21....................... 2,195 9,666 2,403 2,324 1 3,281 770 | 664 146 ............ 1,079 22,529 1 No change in figures between April 9 and May 21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Resources and liabilities of each of the 12 Federal Reserve Banks and of the Federal Reserve System at close of business on Fridays, Apr. SO to May 21—Continued. LIABILITIES. i f Reserve deposits: Apr. 30...................... $16,105 $131,472 $21,410 $17,102 $7,927 $5,742 $43,280 $13,726 $8,951 $9,379 $7,618 $12,120 $294,832 May 7......................... 17,801 129,444 19,726 17,036 7,755 5,554 44,269 13,910 8,968 9,786 6,848 12,219 293,316 May 14....................... 18,501 127,864 20,034 16,958 7,928 5,584 46,598 14,746 8,809 9,352 6,913 12,236 295,523 May 21....................... 16,876 128,962 20,179 16,859 8,249 5,704 45,536 15,134 9,010 9,538 6,722 12,269 295,038 Due to other Federal re­ serve banks—net: Apr. 30.........!........... 2,312 99 78 2,373 2,385 2,238 May 7........................ 352 1,886 2,588 315 May 14....................... : j 2,155 2,371 Fede M ra a l y r 2 e 1 s . e .. r . v .. e .. .. n .. o . t .. e .. s . .. i . n .. 916 ________________1i... 1 . . 1,689 2,169 circulation—net liabil­ ity: Apr. 30...................... 5,077 3,647 37 2,277 11,038 May 7........................ 4,875 3,763 41 2,518 11,197 May 14....................... 4,807 3,348 3,069 11,224 May 21....................... 4,320 3,255 185 3,099 10,859 Capital paid in: Apr. 30...................... 3,449 6,985 4,498 4,635 2,288 1,673 4,900 2,085 1,894 2,115 2,107 3,040 39,669 May 7........................ 4,781 9,944 6,188 5,959 3,252 2,257 6,559 2,774 2,345 2,754 2,780 3,894 53,487 May 14....................... 4,800 9,959 6,224 5,970 3,316 2,396 6,601 2,783 2,374 2,782 2,903 3,915 54,023 May 21....................... 4,804 9,962 6,227 5,977 3,344 2,410 6,608 2,788 2,383 2,790 2,916 3,926 54,135 All other liabilities: Apr. 30...................... 2,001 42 21 2,064 May 7........................ 3,016 48 26 3 3,093 May 14....................... 275 5,129 55 27 10 5,496 May 21....................... 300 2,032 64 30 16 2,442 Total liabilities: Apr. 30..................... 21,866 140,458 25,908 21,737 15,433 11,083 48,258 15,811 10,845 13,904 14,387 17,398 347,603 May 7........................ 22,934 142,404 25,914 22,995 15,930 11,600 50,828 16,684 11,313 14,467 14,737 16,428 361,093 May 14...................... 23,576 142,952 26,258 22,928 16,106 11,355 53,199 17,529 11,183 14,289 15,266 16,157 366,266 May 21....................... 22,896 140,956 26,406 22,836 15,977 11,399 52,144 17,922 11,393 14,202 14,922 16,195 362,474 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX Acceptances: Page. Opinions of counsel of Federal Reserve Board— Page- BankB authorized to accept up to 100 per cent. 71 Continued. Amounts held by Federal reserve banks........... 84 Exchange of 2 per cent bonds for one-year Distribution of, by classes of acceptors and gold notes and 3 per cent bonds........................ 101 sizes.............................................................................. 84 Right of member banks in northern New Address by Hon. W. P. G. Harding...............................66-71 Jersey.......................................................................... 102 Business conditions, general...........................106-112 Qualifications of Federal reserve bank direc­ Circulars and regulations.....................................................78-79 tors................................................................................ 103 Committees of the Board................................................ 77 Federal reserve banks as collecting agents------ 104 Discount rates: Redistricting decision.......................................... 85-91 Form for......................................................................... 71 In effect April 26........................................................ Ill Counties in New Jersey transferred to district Emergency currency: No. 2 ............................................................................ 86 Amount outstanding.................................. 79 Banks in New Jersey transferred to district Distribution of..............................................................80-81 No. 2 ...................................1...................................... 86 Gold imports and exports ................................................ 76-77 Counties in Oklahoma transferred to district Gold settlement fund................... 82-83 No. 10.......................................................................... 86 Government rate for telegrams....................................... 77 Banks in Oklahoma transferred to district Informal rulings of the board...........................................72-75 No. 10.............. 87 Opinions of counsel of Federal Reserve Board... 91-105 Counties in West Virginia transferred to dis­ Discount of acceptances based on importation trict No. 4................................................................. 86 or exportation of goods......................................... 91 Banks in West Virginia transferred to district Forward discount rates............................................. 97 No. 4............................................................................ 90 Discount of acceptances indorsed by member banks located in another district......................* 98 Resources and liabilities of Federal reserve banka. 112-113 Purchase of United States bonds by Federal Trustee powers, applications for, approved.............. 83 reserve banks............................................................. 99 Work of the Board............................................................... 65 o Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis