Federal Reserve Bulletin, 1917-03

FEDERAL RESERVE BULLETIN ISSUED BY THE FEDERAL RESERVE BOARD AT WASHINGTON MARCH, 1917 WASHINGTON GOVERNMENT FEINTING OFFICE 1917 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BOARD. EX OFfriCIO MEMBER8. W. P. 6. HARDING, Governor. PAUL M. WARBURG, Vice Governor. WILUAM G MOADOO, Secretary of the Treasury, FRBDBRIO A. DELANO. ADOLPH G. MILLER. Chairman. CHARLES S. HAMLIN. JOHN SKELTON WILLIAMS, Comptroller of (he Currency. H. PARKER WILLIS, Secretary. SHERMAN ALLEN, Assistant Secretary and Fiscal Agent. M. 0. ELLIOTT, Counsel. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

SUBSCRIPTION PRICE OF BULLETIN. The Federal Reserve Bulletin is distributed without charge to member banks of the system and to the officers and directors of Federal Reserve Banks. In sending the Bulletin to others the Board feels that a subscription should be required. It has accordingly fixed a subscription price of $2 per annum. Single copies will be sold at 20 cents. Foreign postage should be added when it will be required. Remittances should be made to the Federal Reserve Board. Member banks desiring to have the Bulletin supplied to their directors may have it sent to not less than ten names at a subscription price of $1 per year. in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

TABLE OF CONTENTS. Page. Review of the month 153 Loans on United States bonds or notes : 158 Letter from a Texas banker on operation of the Federal Reserve Act 159 Statements for the press: Message of Gov. Harding to North Carolina business men, bankers, etc 159 Compilation of national bank returns by 'the Comptroller of the Currency 161 Clearing and collection operations at Boston 162 Regulations under which national banks may act as insurance and real estate agents 164 Fiduciary powers granted 167 New national bank charters 167 Commercial failures in January 167 Experience with Reserve Bank agency at Memphis 168 Operation of clearing plan 171 Synopsis of annual report of the Comptroller of the Currency 172 Bank agency at Paris, France 175 Gold settlement fund 175 Amendments to Federal Reserve Act: Comparative Senate and House bills 177 Senate and House reports * - 188 Informal rulings of the Federal Reserve Board 193 Law department 195 Business conditions throughout the Federal Reserve districts 202 Discount operations of Federal Reserve Banks :. 220 Acceptances '. : 222 Resources and liabilities of Federal Reserve Banks 226 Federal Reserve note account of Federal Reserve Banks and agents 228 Gold imports and exports 229 Earnings on investments of Federal Reserve Banks 230 Discount rates in effect 231 Charts: Net deposit liabilities, reserves held in vault and with Federal Reserve Banks 232 Gold holdings of Treasury, national banks. Federal Reserve Banks, and Federal Reserve agents 233 Statement showing condition of four leading European banks of issue 234 IV Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BULLETIN VOL. 3 MARCH 1, 1917. No. 3 REVIEW OF THE MONTH. lems, both domestic and foreign, realize the great importance of seeing these amendments Further discussion and development of pendenacted into law without any delay. ing legislation amendatory of The country's stock of gold has increased by Amendatory ^ne Federal Reserve Act has $43,138,000 through net im- Legislation. received substantial attention Net Gold ports between January 13 and during the month of February. Imports. February 16, 1917, total gold Gov. Harding attended several sessions of the imports for this period amount- Senate Banking and Currency Committee prior ing to $60,766,000 and total gold exports to to the action of that committee in reporting the $17,628,000. The net gain in the country's amendatory measure, and set forth fully the stock of gold through net imports since August views entertained by the Federal Reserve 1, 1914, is shown in the following table: Board with respect to necessary changes in the Act. Elsewhere in this issue are printed in Gold imports and exports of the United States from August 1, 19U, to February 16, 1917. comparative form the House and Senate drafts of the amendatory measure with, the substan- [In thousands of dollars, i.e., 000's omitted.] tial facts regarding each as set forth in the com- Excess of imports mittee reports. The pressure of business Imports, j Exports. over exports. always characteristic of a short session of Congress, and very urgent international affairs Aug. 1 to Dec. 31,1914 23,253 104,972 -81,719 Jan. 1 to Dec. 31,1915 451,955 31,426 420.529 that have occupied the attention of all branches Jan. 1 to Dec. 31,1916 685,745 155.793 529,952 Jan. 1 to Feb. 16,1917 ! 112,467 30,057 82,410 of the Government have naturally retarded the Total il,273,420 ! 323,398 951,172 progress of these amendments. It will be noted that in the House of Representatives a Excess of exports over imports. there have been inserted a number of pro- Larger offerings of commercial and bankvisions additional to those suggested by the ers' bills at favorable rates Board, notable among them one relating to the Operations of account mainly for the conmethod of organizing branches of Federal Reserve Banks. siderable increase in invest- Reserve Banks and of establishing foreign con- ment operations of the Federal nections for such banks. Sundry changes have Reserve Banks during the month of February. also been made in the Senate draft of the bill. Between February 2 and February 23 total In view of the congestion of business it will investments held by the Federal Reserve probably be impossible to secure action upon Banks increased from $169,680,000 to $209,these amendments by the present Congress. 474,000, or 23.5 per cent. Of the total increase, In general the attitude of the public with re- over 77 per cent is represented by the increase spect to the amendments, so far as they have in the amount of purchased acceptances held received serious discussion, has been favorable, in the banks' portfolios. and those mindful of our present economic con- Other classes of investments except United ditions and the impending vast financial prob- i States bonds and notes show moderate gains 153 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

154 FEDERAL BESEEVE BULLETIN. MARCH 1, 1917. during the same period, the increase in dis- Philadelphia Clearing House Association, from counted paper on hand being due chiefly to $44,406,000 for the week ending January 20, the larger amount of member banks7 collateral and $48,543,000 for the week ending January notes held by the Federal Reserve Banks at 27, declined steadily during the remainder of the later date. the period, reaching the low level at $29,910,000 The following table shows the holdings of for the week ending February 17. Like figures bills for each Federal Reserve Bank, and the for the associated 10 national banks and the holdings of other investments for all the banks Old Colony Trust Co., of Boston, all members on February 2 and 23: of the. Federal Reserve System, show an increase of excess reserves from $35,938,000 for the week ending January 27 to $38,697,000 for Feb. 2, Feb. 23, 1917. 1917. Increase. the week ending February 3 and a drop to $23,649,000 for the week ending February 10. Boston $12,709,000 §15,718,000 S3,009,0C0 New York | 27,072,000 35,450,000 8,378,000 The report for the week ending February 17 Philadelphia I 11,845,000 15,434,000 3,589,000 Cleveland j 6.832,000 12,447,000 5,615,000 shows an increase in the total excess reserves Richmond ; 8,023,000 10.391,000 2,368,000 Atlanta, including New Orleans | of these banks to $26,110,000. branch ! 5,708,000 5,663,000 a 45,000 Chicago 8,239,000 11,887,000 3,648,000 Pursuant to its policy of conservatism in St. Louis 5,521,000 9,002,000 3,481,000 Minneapolis ! 7,484,000 9,407,000 1,923,000 the investments of Federal Reserve Banks Kansas City. 3,342,000 5,459,000 2,117,000 Dallas 2,469,000 3,658,000 1,189,000 announced in the last issue of the Bulletin, San Francisco. 8,575,000 9,716,000 1,141,000 the Board has advised the reserve banks that Total bills !l07,819,000 144,232,000 36,413,000 Total municipal warrants 12,664,000 17,124,000 4,460,000 it believes in adherence to a policy of distinct Total United States bonds and notes 49,197,000 48,118,000 a 1,079,000 moderation in connection with the purchase Total investments on hand. 169,680,000 209,474,000 39,794,000 of warrants. Such investments should be encouraged during periods of great ease of a Decrease. money and when rediscounts from member As the result of larger investment operations banks and offers of bankers7 acceptances are during the month under review not expected to be heavy. At a moment, Reserve the reserve position of the however, when indications are that require- Conditions. greater banks in the principal ments for commercial credit may be heavy and eastern cities is less favorable when Federal Reserve Banks must be prepared than at the end of January. Thus the reserve to meet heavy demands upon them by their percentage of the 60 banks forming the New member banks, the Board thinks that it is York Clearing House Association—as indicated inadvisable to invest the funds of Federal by the ratio of their total reserves to their net reserve banks in warrants. demand deposits—declined from 25 on January There have recently been in various parts of 27 to 22.9 on February 10, and February 17. the country slight "flurries," Similarly the reserve percentage of all trust Withdrawals by i i outgrowth of anx- Foreign Depos- drecty the companies in Greater New York, as computed iety with respect to the internaitors. by the State banking department, declined tional situation, or of special during the same period from 27.5 to 25.3. The local conditions. In various eastern districts reserve ratio for the State banks in Greater there were at times considerable withdrawals New York, representing, however, a relatively of deposits from banks in industrial centers small proportion of the greater city's banking where a large foreign population was concenresources, increased during the same period trated. The situation was promptly met by from 26.1 to 29.3 per cent. the Federal Reserve Banks in every case where The average excess reserves of the 41 national aid was asked for, and the Department of banks and trust companies constituting the State relieved the underlying anxiety of foreign Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1017. FEDERAL RESERVE BULLETIN. 155 depositors by giving to the press on February The Federal Reserve Banks to-day possess a 8 the following statement: note-issuing capacity estimated Reserve Banks' in round numbers at about It having been reported to him that there is Note-Issue Power. anxiety in some quarters on the part of per- $1,000,000,000. They hold resons residing in this country who are the sub- serve money to the extent of $512,000,000. jects of foreign states lest their bank deposits Their necessary reserve holdings against deor other property should be seized in the event posits are, roughly speaking, $237,000,000. of war between the United States and a foreign They have thus $275,000,000 of free gold nation, the President authorizes the statement that all such fears are entirely unfounded. which can be used as a 40 per cent reserve The Government of the United States will in against notes, thereby permitting an issue of no circumstances take advantage of a state of $687,500,000. In addition to this they hold war to take possession of property to which into-day over $112,000,000 of free commercial ternational understandings and the recognized paper available as collateral for the issuance law of the land give it no just claim or title. It will scrupulously respect all private rights of Federal Reserve notes over and above the alike of its own citizens and of tie subjects of paper now pledged to protect outstanding foreign states. notes. By withdrawing from Federal Reserve In Seattle, Wash., three small State institu- Agents an equal amount of the gold held by the tions closed their doors Janu- latter and putting this paper in the place of it, they would, after deducting the reserves reary 18>30'and 31 as the result of a temporary "flurry" which quired by law to be held against notes already subjected them to a stress they were not prepared outstanding, be able to issue fully $168,000,000 to meet. There was temporary fear that the more. Inasmuch as there would still remain situation in Seattle might become more serious a sum in gold amounting to nearly $191,000,000 through the spreading of anxiety concerning in the hands of Federal Reserve Agents, a conthe condition of the local banks. Such fears siderable portion of which could be released were promptly set at rest through the action of and used under favorable conditions as a basis the Federal Reserve Bank of San Francisco in for notes, there may safely be added another dispatching a member of its staff to Seattle $250,000,000 to the sum of $687,500,000 and and in letting it be known that an abundant $168,000,000 already enumerated, thus raising supply of gold, credit, or notes was available the potential issue power of the banks to fully and that the entire resources of the Federal one thousand million dollars. Figures such as Reserve Bank were at the disposal of the mem- these have little meaning in and of themselves, ber banks for the purpose of converting their but it may be noted by way of comparison that eligible assets into means of immediate pay- during the year 1914, when the modified Alment. Events in Seattle have tended to drich-Vreeland law was called into active operastrengthen the demands of bankers in the tion, the issue of notes to the banks was less Pacific Northwest for the establishment of a than $400,000,000 for the country as a whole, branch of the Federal Reserve Bank of San while additional issues of clearing-house certifi- Francisco which should be more immediately cates were less than $150,000,000. In round within their reach than the parent office itself numbers we may say that notes available to-day can under existing conditions be. Subsequent are double in amount the total of emergency reports from practically all Federal Reserve issues called for at any single time in the past. districts indicate that such sudden anxiety as The Federal Reserve Board, recognizing the may have been aroused by the development of importance that is being curunexpected international conditions has been Facilitating Note rently attached to the question in very large measure allayed. There appears Distribution. f note issue, has arranged to o to be no general or widespread apprehension in make full use of the provisions any part of the country. of the Federal Reserve Act which facilitate their Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

156 FEDERAL KESEBVE BULLETIN. MARCH 1, 1917. issue. The original Aldrich-Vreeland law made During the past month the Federal Reserve provision for the printing and holding in stock of Board has given careful atten- Foreign Exchange some $500,000,000 of what was called emer- tion to communications re- Problems. gency currency. This was an outgrowth of ceived from various firms and previous experience which had emphasized the corporations engaged in trade with some of the difficulty of getting bank notes under the smaller European countries, particularly with older system with the speed that was required Spain and Sweden. The facts in the exchange in times of emergency, some three weeks or situation as affecting these countries appear to more being necessary for the printing and be that notwithstanding a heavy balance of seasoning of the new circulation before it trade in favor of the United States, exchange could be issued. Therefore, when the Fed- quotations were very decidedly against this eral Reserve Board was first organized, it country, the dollar possessing a smaller purdirected the printing of $500,000,000 of notes. chasing power over local currency than for Later this amount was increased to some many years past. Investigation has shown $700,000,000 because of the large demand for that in some countries a distinct attempt to these notes in exchange for gold. Very re- discourage the importation of gold is evidently cently it has been decided to raise the total note being made. An unfavorable rate for the purissue to $900,000,000, this sum, of course, chase of gold at official establishments is fixed, being in addition to the notes now outstand- while in other cases it would appear that transing. The Bureau of Engraving and Printing portation and insurance companies had been at Washington is working at full speed upon requested not to facilitate the movement of the new currency, so as to keep well abreast gold toward the countries in question. A simiof any conceivable demand that maybe made. lar situation apparently has grown up in cer- There is to-day in the vaults at Washington and tain South American countries, and at sundry in the hands of Federal Reserve Agents and points in the Orient. It would seem to be at- Federal Reserve Banks an accumulated sup- tributable partly to the desire of the Governply of not less than $450,000,000 in notes. ments of the countries affected to avoid the stimulation of exports, the maintenance of a It has also been found in times past that a rate of exchange unfavorable to foreign buyers serious difficulty lay in the time required to being intended to withhold from them encourtransmit notes from Washington. Delays agement to make further purchases. The situwere inevitable, due to the necessity of sendation is also in part the result of the dependence ing the notes under guard or with special preof these countries upon markets other than caution for their safety, or due to the limitatheir own, so that their exchange relationships tions placed by the forwarding companies with the United States can not be studied inupon the transmission of large consignments dividually, but only in the light of their general of notes. For many reasons, therefore, it trade position. While the Federal Reserve has been properly felt that every center of Board has been ready to do all that properly note issue should have its reserve stock readlay within its power to relieve American traders ily available at near-by points and in abundant engaged in business with these countries by supply. This was intended by the framers of holding out the facilities of the Federal Reserve the Federal Reserve Act, who foresaw this ne- Banks as holders of "earmarked" gold, thus cessity, and therefore provided that the notes to enabling foreign banking institutions to receive be printed might be stored in the subtreasand hold at Federal Reserve Banks in this uries or mints nearest the reserve banks at country such payments in gold as they might which they were to be issued, but until rebe willing to accept, it has not seen any way cently it has been deemed wise to keep the by which it could with success bring about the great bulk of this supply in Washington. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDEEAL KESERVE BULLETIN". 157 establishment of better or more favorable quo- appears to have been made. This is the case, tations, and has so advised those who have pre- for instance, in some portions of New England. sented the matter to it. The unfavorable con- Retention of the open-account system and the dition affecting foreign trade with the countries plan of borrowing on single-name notes seems referred to, is part of the general and anomalous to be a phase of the conditions produced by situation in international business which pre- abundance of funds and lack of necessity for vails throughout the world to-day* rediscounting. Elsewhere progressive firms are While it is true that in some directions the introducing the use of the trade acceptance, revariations in foreign exchange are extremely gardless of their own immediate necessities and injurious to the consumer, it is also the case habituating their customers to this form of setthat in other directions these fluctuations tlement. While there has not been a noticeable temporarily favor him. Thus, for example, increase in the volume of trade acceptances in connection with olive oil, an important coming to the Federal Reserve Banks, this fact article of importation from southern Europe, does not indicate that no progress in the matter it is interesting to note that the importations is being made, but merely that acceptance of olive oil from Italy amounted, in the years paper is readily discounted and held by both 1914, 1915, and 1916, to $5,552,098, $6,089,646, member and nonmember banks as a desirable and $6,730,646, respectively, while from Spain element in their portfolios. In bringing about we imported during the same years $370,053, this condition effective work has been done by $487,081, and $1,343,660. We imported in various trade associations, but there has ap- 1915 about ten times as much olive oil from peared of late some tendency to misconception Italy as we did from Spain, and in 1916 about of the true function of the trade acceptance, four times as much. Thus, while the unfa- some persons being inclined to represent it as a vorable quotations of exchange on Spain un- means of settling or adjusting accounts that had doubtedly affect American buyers of oil inju- proved, or were likely to prove, "slow." In riously, it is also true that the fact that the some of the literature that has been circulated lira has fallen from 19.3 cents to 14.6 cents ; with regard to bankers' acceptances, a similar from June, 1914, to December, 1916—that is, ! suggestion has been made. The Board feels 25 per cent—as against a rise of the Spanish | that too much emphasis can scarcely be placed exchange for the same period from 18.6 cents | upon the fact that the trade acceptance, in to 20.9 cents—that is, 11 per cent—would | order to be successful, must be regarded as redound to the benefit of the consumer in a I representative of the more active and liquid much larger degree. I of the commercial accounts of the country, The past month has seen steady progress in I and at no time should be taken as representthe interest generally felt with ing renewal obligations or accounts of long Trade Acceptance » , ° -, , standing. Its principal purpose is that of Situation reference to trade acceptances, substituting a written obligation for an open many new inquiries being reaccount whose goodness is unmistakable, ceived both by the Board and the Federal Rethereby rendering the account available as aserve Banks with reference to the proper form basis for discount. The presence of an element of acceptance to be employed by prospective of undesirable paper among the trade acceptusers, and reports concerning the more general ances of the country could not help giving application of acceptances being received from to the trade acceptance a character entirely time to time. In some parts of the country different from that originally contemplated or where money has been very abundant during from that which is possessed by it in European the past year or more, it is reported that little countries. progress in introducing the trade acceptance 82341—17 2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

158 FEDERAL KESEKVE BULLETIN. MAIICH 1, 1917. Bound Copies of the 1916 Bulletin. cured by staple agricultural products or other goods, wares, or merchandise. The law then A very small number of bound copies of the states that "such definition" of eligible paper Federal Reserve Bulletin for 1916 are available shall not include notes, drafts, or bills of exfor sale at $5 per copy. Except for the num- change drawn for the purpose of " carrying or trading in stocks, bonds, or other investment bers contained in these bound volumes, the securities except bonds and notes of the Governsupply of the January, 1916, number of the ment of the United States." This is equivalent Bulletin is exhausted. Checks should be made to an affirmative declaration that a Federal payable to the Federal Reserve Board, and Reserve Bank may discount a note, draft, or bill of exchange indorsed by a member bank which orders will be filled by mail. is issued or drawn for the purpose of carrying or trading in bonds or notes of the United States. This clause, however, does not permit of the discount for a member bank of one of State Banks Admitted. its own bills pa}rable, since the requirement The Commonwealth Trust Co., of Boston, that the note or bill must be indorsed by a member bank precludes the possibility of Mass., and the Bank of Montclair, Montclair* applying this provision to the discount of any- N. J., were admitted to the Federal Reserve thing but customers' paper. System during the month of February, the The amendment to section 13, approved Sepnumber of State institutions which have now tember 7, 1916, provides, on the other hand, joined the system being 40. that a Federal Reserve Bank may make advances to its member banks on their promissory notes for a period not exceeding 15 days, provided such notes are secured by certain speci- Loans on United States Bonds or Notes. fied classes of paper or " by a deposit or pledge of bonds or notes of the United States." It That Federal Reserve Banks may be fully is evident, therefore, that a member bank may advised as to the methods by which they borrow directly from its Federal Reserve Bank may make advances to member banks for the on the security of Government obligations, but purpose of enabling them or their customers not for a period longer than 15 days. Under the provisions of section 14, subsecto carry or trade in bonds or notes of the tion (b), Federal Reserve Banks are authorized United States, the Governor of the Federal Re- " to buy and sell at home and abroad bonds and serve Board sent out on February 16 the fol- notes of the United States," and under authorlowing letter: ity of this section member banks owning Government obligations may properly sell them to The Board deems it advisable that the Fedany Federal Reserve Bank desiring to make the eral Reserve Banks should understand clearly purchase. what they may and may not do in the way of SUMMARY. rediscounts or loans based upon United States Government bonds or notes. For your infor- I. Any member bank which has loaned mation, therefore, a memorandum which has money to any of its customers for the purbeen prepared by counsel and which has been pose of carrying or trading in bonds or notes approved by the Board is sent to you herewith, of the United States, may rediscount with its as follows: Federal Reserve Bank the bill or note of its Section 13 of the Federal Reserve Act pro- customer, provided, such bill -or note vides two methods whereby Federal Reserve (a) Has a maturity at the time of discount Banks may make advances to their member of not more than 90 days, exclubanks for the purpose of enabling them or their sive of days of grace; and customers to carry or trade in bonds or notes of (&) Has the indorsement of the member the United States. bank. Paragraph 2 of section 13 provides that upon Such bill or note, however, need not necesthe indorsement of a member bank a Federal sarily be secured and need not be drawn for a Reserve Bank may discount notes, drafts, and commercial purpose other than for the purbills of exchange arising out of actual commer- pose of carrying or trading in notes or bonds of cial transactions, which may or may not be se- the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 159 II. Any member bank which lias itselt transactions. Notwithstanding the informapurchased obligations of the United States tion industriously circulated by the Federal may procure advances from its Federal Re- Reserve Banks, very few country merchants serve Bank, for not exceeding 15 days, on its and country bankers have ever given the matown promissory note, provided such note is ter, so far as I am able to judge, any serious secured by a deposit or pledge of bonds or thought or tried to make use of them, and but notes of the United States. few of the wholesalers, jobbers, grain dealers, III. Any member bank owning bonds or oil mills, lumbermen, and manufacturers in the notes of the United States may, under author- State have made general use of either. If they ity of section 14, subsection (b), sell such were in general use I believe a broad market for bonds or notes to any Federal Reserve Bank such bills would soon develop and if coundesiring to make the purchase. try bankers could buy prime bills for, thirty, sixty, and ninety days7 maturity from their FEBRUARY 16, 1917. correspondents in Texas or from brokers in. the principal Texas cities, a lot of these short maturities would be taken by country banks at A Texas Banker's Letter. any rate in advance of the usual 2 per cent on balances. In this way a lot of us fellows could The following letter, received by the gov- loan much closer and at the same time always ernor of the Federal Reserve Bank of Dallas have paper that could be quickly rediscounted and by him forwarded to the Federal Reserve with our Federal Reserve Bank if some emergency should arise. I understand, of course, Board, is given as showing the kind of interest that these bills can be bought at this time in taken by a country banker in Texas in the New York, but I want to see Texas business Federal Reserve Act and its operation: men make use of all the good things going and Texas finance herself in so far as is possible.7' "I have tried to keep in touch with the purposes and objects of the Federal Reserve Act as well as a busy man could who was not charged with the administration of any part of it. Statements for the Press. There is no question in my mind but that the system will eventually prove to be one of the The following message has been sent by very best bank acts in the world, after it has Hon. W. P. G. Harding, Governor of the Federal been seasoned and amended by years of ex- Reserve Board, to the North Carolina State perience. "In view of the fact that the present is an convention of commercial secretaries, farm epoch-making period in the history of our demonstrators, bankers, and other business country (and particularly so in a financial men, held at Gastonia, February 5-8, in lieu of way) I am deeply interested both as a banker an address which Mr. Harding was to have and citizen in making use of every instrument delivered at a meeting held at noon February 6: at command for fortifying ourselves against the coming evil day. "It was with keen regret that I felt obliged ""It occurs to me that just at this time the to telegraph you this morning that I could not thing of most pressing importance is the getting go to Gastonia to-night in order to be present at under the control of the Federal Reserve Banks the most interesting occasion in your city toas large a percentage as possible of all the gold morrow. I had looked forward with much pleasin the United States where it can be advanta- ure to the privilege of meeting and addressing the geously used to protect the Government as well merchants, farmers, and bankers of the Carolmas, as the business interests of the country in an and was particularly anxious to avail myself economic way. The recent amendments to the of the opportunity of pointing out to them the Federal Reserve Act as recommended by the very great value, especially in times like the Federal Reserve Board would materially aid in present, of the Federal Reserve System, which accomplishing this. has enabled the country to withstand without 4 'Another thing which, in my judgment, w^ould the slightest financial tremor all of the shocks help to place the country, and particularly and sensations that it has experienced during Texas, on a sounder, safer basis, m a business the past two years, many of which would way, would be the liberal use of both trade and doubtless, under old conditions, have been folbankers' acceptances in domestic and foreign lowed by serious consequences. Our prepared- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

160 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. ness from a military and naval standpoint is selling at $100 a bale and more. The Colnow engrossing the attention of Congress and lege of Agriculture of the University of Kansas of the Nation, but I wish you would inform the pointed out at the time these prices were audience which I expected to address that, effective that while cotton had advanced in from a financial standpoint, the country is price it advanced merely in terms of gold, and already fully prepared and is ready to meet any it made an interesting comparison as to its contingency that is likely to arise, so that there price in terms of other commodities. It estineed be no uneasiness whatsoever on that score. mated the purchasing power of cotton in an "I. had desired particularly to say a few ordinary year, and on the basis of $100 per words to the farmers by way of urging them bale, and it demonstrated statistically that not to become nervous or alarmed because of even at $100 per bale the southern cotton any threatened temporary interference with planter who had not planted in a manner to ocean transportation. I wished to point out provide for his necessities in the way of foodto them that while in these fateful times, when stuffs was in a sorry plight, for a bale of cotton it is beyond human power to forecast even the will buy, in an average year, with cotton at immediate future, we should remember that from $50 to $60 per bale— after all the only real wealth comes from the 89 bushels of potatoes, at 70 cents. soil. 750 pounds of lard, at 8 cents. CALL FOR LARGE CROPS. 22 barrels of flour, at $4.50. 375 pounds of bacon, at 16 cents. "A character in Greek mythology is Antseus, 6 tons of hay, at $10. of whom it is said that he could not be over- 30 pairs of shoes, at $2. 720 yards of cotton cloth. come in wrestling, for whenever he was brought 100 bushels of corn, at 60 cents. to his knees he received renewed strength and this year, at $100 a bale, it will buy from his mother, Earth, and was enabled thereby to arise in his might and overcome his 44 bushels of potatoes, at $2.25. adversary. Throughout the world millions of 555 pounds of lard, at 18 cents. 10 barrels of flour, at $10. men have been withdrawn from their ordinary 333 pounds of bacon, at 30 cents. avocations and arc devoting themselves entirely 5 tons of hay, at $20. to military duties. It seems to me it is clearly 20 pairs of shoes, at $5. the duty of the farmers of the United States, 666 yards of cotton cloth. 83 bushels of com, at $1.20. in the planting season fast approaching, to prepare for the largest crops of all kinds that DIVERSIFICATION. it is possible to produce. No farmer should devote himself to a single crop alone, but he 1' The subject of nutrition has been reduced to should diversify, with the idea of growing as a science, and the importance of a well-balanced far as possible on his own land everything diet is now well understood. Some foods are necessary for the sustenance of his family and rich in nitrates, others in carbohydrates, and of his domestic animals. Three years have others in proteins. No family can keep itself elapsed since our fertilizers have contained an healthy ii it lives entirely on meat or entirely on adequate supply of potash, and under present potatoes, or entirely on peas, or altogether on conditions it is hardly probable that an exces- eggs and milk. A scientific combination of sive supply of the South/s greatest staple crop, these foods is essential for the best results. So cotton, can be produced. Virginia, North and likewise with farming. No State can prosper South Carolina, Georgia, and Alabama are now if its farmers devote their energies to the cultigreat cotton-manufacturing States, and their vation of a single crop, be it cotton or be it annual consumption of raw cotton approaches grain or hay, and to obtain the best results that of England and is greater than that diversification is necessary. The farmer should of New England and Canada combined. If be impressed with the necessity of rotation of the farmers of the South will practice diversi- crops in order that their soil may not be imfication they need have no fear as to the price poverished, and if they plant several products of cotton, for any condition which will make they are not affected by the price of any one of exports of cotton impossible will likewise render them. It is not possible to advise a farmer inimpracticable exports of foodstuffs. It fol- telligently as to the amount of cotton he should lows, therefore, that if the price of cotton should plant. In some cases live acres to the plow decline, the price of cereals, grain, and hay, would seem best, and there may be other inwill decline also. A few weeks aw cotton was stances where eight or ten acres to the plow Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1, 1017 FI-iPKRAL RESERVE BULLETIN. 161 may be planted; but in no case, particularly in greater than the present aggregate resources times like the present, should the farmer en- of all national banks in the central i^eserye trust all his eggs to one basket and risk his sol- cities of New York, Chicago, and St. Louis, vency upon a single crop. which aggregate $3,946,000,000. "In my opinion, the greatest service that the The following are the principal changes farmers of the South can render their section, shown in the condition of national banks their country, and the world in general is to coax December 27, 1916, as compared with the prefrom the soil during the year 1917 as great an vious call of November 17, 1916, and the abundance as possible of crops of all kinds. corresponding call a year ago. "Please say to the members of the Chamber Resources, 15,333 million dollars, a decrease of Commerce of Gastonia, and to the bankers of of 1S6 million as compared with November 17, your city, that I highly appreciate their kind 1916; and as compared with December 31, invitation, and express to them again my deep 1915, an increase of 1,865 million dollars. regret at being obliged, at the last moment, to Loans and discounts, 8,340 million dollars, forego the pleasure of meeting them.'7 a decrease from November 17, 1916, of 5 million and an increase over December 31, 1915, FEBRUARY 6, 1917. of 982 million. Cash on hand and due from Federal Reserve Banks, $1,493,443,000, an increase over Novem- STATEMENT BY THE OFFICE OF THE COMPTROL- ber 17, 1916, of $55,928,000, and over December 31, 1915, of $281,579,000. LER OF THE CURRENCY. Due from banks and bankers other than The compilation of national bank returns as Federal Reserve Banks, December 27, 1916, of December 27, 1916, just completed, show $1,844,702,000, a decrease from November 17, total resources of 15,333 million dollars, a 1916, of $174,064,000, and an increase over reduction of 186 million dollars from the call December 31, 1915, of $311,389,000. of November 17, 1916, but this decline is Securities other than United States bonds, wholly due to a shrinkage in the resources of 1,725 million dollars, an increase over Novemthe national banks in the central reserve and ber 17, 1916, of 15 million, and over December other reserve cities, for the country banks show 31, 1915, of 350 million. an aggregate growth in resources as compared Deposits, December 27, 1916, $12,264,662,with the November call of $79,(300,000, their 000, a decrease from November 17, 1916, of resources December 27, 1916, being greater $223,227,000, but an increase from December than on any previous call. 31, 1915, of $1,884,971,000. The resources of the country banks on As compared with the November 17, 1916, December 27,1916, amounted to approximately statement, time deposits increased December 7 billion dollars, showing that the country 27, 1916, 38 million, while balances due to banks now hold more than the total resources banks and bankers decreased 87 million, and of all the national banks, including the vast demand deposits shrunk 174 million. Of the accumulations in all the reserve and central 1,884 million dollars increase shown since Dereserve cities, plus the country banks, as late cember 31,1915, 437 million were time deposits, as the year 1904. 924 million demand deposits, and 523 millions Since May 1, 1916, the country banks have in amounts due banks and bankers. increased their resources 759 million dollars, Surplus and profits December 27, 1916, 1,106 or 12 per cent. In the same period the re- million, an increase since November 17, 1916, soxirccs of national banks in the central reserve of 16 million, and since December 31, 1915, of cities declined 77 million dollars, or 2 per cent, | 87 million. and the resources of the national banks in other ! The amount of acceptances based on imports reserve cities increased 455 million dollars, or and exports was 100 million dollars December 11 per cent. 27, 1917, an increase since November 17, 1916, These figures indicate that the tendency, of $2,111,000. noted for some time past, toward a wider dif- Cash letters of credit, 35 million, an increase fusion of the banking resources of the country since November 17, 1916, of $3,637,000. continues. Bills payable and rediscounts, December 27, The figures show that there has been added 1916, 89 million, an increase since November to the resources of the national banks since 17, 1916, of 16 million, but a reduction since January 13, 1914, $4,037,000,000, an amount December 31, 1915, of 8 million. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

162 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. Changes in resources between calls by States I Reserve district were accustomed to the pracand reserve cities: Between the calls of Novem- | tice of direct sending of checks and the coverber 17, 1916, and December 27, 1916, the | ing of same by remittance upon receipt. When national banks in New York City reduced their j the foreign department of the Boston Clearing resources 200 million dollars, in Chicago 15 million, and in St. Louis 5 million. The reduc- House Association was established, a considtion for the same period in Boston was 15 mil- erable percentage of the country banks were lion, Philadelphia 22 million, and San Francisco making a charge when remitting, but by dili- 7 million. gent and persistent efforts these exchange The largest increase for reserve cities was charges were gradually eliminated in the case shown at Louisville, 5 million. Des Moines and Salt Lake City increased about 4 million of most banks, so that in July, 1916, there each. The increases in other reserve cities were in New England 632 banks outside of were for smaller amounts. the Boston Clearing House, 391 of which were Among the country banks Pennsylvania leads national banks and 241 State banks and trust with an increase of 20 million, followed by Iowa companies, and of these all remitted at par with 12 million and Illinois with 10 million. to the Boston Clearing House except 54 na- The country banks in Ohio and New Jersey increased about 8 million dollars each, Kansas tional banks and 35 State banks and trust 7 million; Connecticut, West Virginia, and companies. Florida about 5 million each; Virginia, Kentucky, and California about 4 million each, and RESERVE COLLECTION PLAN. Louisiana, Indiana, and Wisconsin 3 million The check collection plan which the Federal each. The States in which the banks showed a Reserve Bank proposed to put into operation decline between the two calls were New York July 15, 1916, was in most respects so simi- 10 million dollars, Texas 8 million, Georgia 7 lar to that in successful operation in the million, and Oklahoma and North Dakota Boston Clearing House that negotiations about 3 million each. were entered upon with the Clearing House FEBRUARY 9, 1917. Association looking to taking over the operations of their foreign department. The Boston Clearing House Association has from the Clearing and Collection at Boston. first shown the greatest courtesy and interest Clearing and collection at Boston, because in cooperating with the Federal Reserve Bank, of conditions more favorable than those in and an agreement was entered into by which, other Federal Reserve districts, has been of upon the date of the beginning of check collecmore than ordinary interest as a record of tion operations in the Reserve Bank, the Bosprogress. The Boston Clearing House was ton Clearing House should discontinue the optaken over by the Federal Reserve Bank on eration of its foreign department, the Federal July 15, 1916. The cost of collection for the Reserve Bank agreeing to take over the staff last month was 0.0065 cent per item. There of the Boston Clearing House and to assume the follows a report prepared by Alfred L. Aiken, lease of the rooms occupied by it, with the regovernor of the Boston bank, for the Federal sult that, so far as the relations with the banks Reserve Board, which summarizes the clearing in this district outside of Boston were conand collection operations: cerned, there was no break in the already exist- In 1898 the Boston Clearing House Associa- ing methods, except in some minor details, and tion organized its so-called foreign department, the Federal Reserve Bank was immediately and practically ever since that time the mem- provided with suitable rooms for the carrying bers of the Boston Clearing House Association on of its check collection operations and with a thoroughly trained staff. have been collecting checks drawn upon all the New England banks through that agency, with Upon the beginning of the check collection the result that all the banks in this Federal operations through the Federal Reserve Bank, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAECH 1,1917. FEDERAL RESERVE BULLETIN". 163 54 national banks that had previously declined previously handled by the Boston Clearing to remit at par automatically went on the par House Association, as is shown by the following list, and within a few days after that date all table. In this table the figures from July 15, the nonmember banks and trust companies had 1916, to August 31, 1916, are not included, as also agreed to remit to the Federal Reserve they were not analyzed by months, and covered Bank at Boston at par upon receipt for checks a period of about six and a half weeks: sent them drawn upon themselves. The nonpar banks in some of the larger centers were Clearings and collections. advised that if they preferred such an arrange- [000 omitted from all figures.] ment, the Federal Reserve Bank would make arrangements to present checks drawn upon C B he o c s k to s n o . n Ch E B e n o ck g st s l o a n n . d o n o N uts e i w de them at their respective counters for payment in cash, but they all agreed to remit and forego Amount. Number. Amount. their exchange charges. The result has been that practically ever since the opening of ourSept., 1916 $67,668 755 $65,592 Oct.. 1916 86,701 822 76,593 check collection department the Federal Re- Nov., 1916 103,417 813 75,921 Dec, 1916 102,851 864 78,962 serve Bank of Boston has been able to collect Jan., 1917 94,411 885 82,347 at par checks drawn upon all banks both mem- Checks on other districts. ber and nonmember within this Federal Reserve district. Sent by Federal Sent direct. Total. Reserve Banks. CHANGES IN PRACTICE. No. Amount. No. Amount. No. Amount. It had been the practice of the Boston Clearing House Association to make a charge based Sept., 1916.... 27 S18.705 14 $9,007 41 §27,712 Oct., 1916 37 23,520 19 12,378 56 35,898 on the volume in dollars of business handled. Nov., 1916.... 33 22,628 27 13,015 60 35,643 Dec, 1916 39 22,868 36 14,438 75 37,306 The change from the per thousand basis to the Jan., 1917 41 19,925 32 13,790 73 33,715 per item basis caused some criticism at first, but in most instances the change has been The steady increase in the volume of New looked upon favorably and is considered a England items handled by this bank, and also more equitable basis of distribution of the ex-in the volume of collections upon New England pense than the old basis upon the volume in points outside of Boston handled by the forthousands of dollars. eign department of the Boston Clearing House Soon after the Federal Reserve Bank of Association during the preceding year in. the Boston took over the foreign department of months corresponding to those for which the the Boston Clearing House, the Boston Clearing figures are given in the foregoing table, are House Association changed its rules, and put worthy of note, as shown hereunder. upon the discretionary list all points in this Federal Reserve district that could be collected New England checks collected through the foreign department of the Boston Clearing House Association. at par through the Federal Reserve Bank of Boston, with the result that ever since that September, 1915 $35,900,578 date a considerable volume of checks that were October, 1915 39,749,785 previously collected through various collection November, 1915 40,548,772 December, 1915 39,000,679 centers outside of New England have come to January, 1916 40, 303,292 New England banks, and have been collected by them through the Federal Reserve Bank. COOPERATION OF BANKS. The volume of collections through the Fed- The difficulties that we have encountered eral Reserve Bank has shown a marked and have not been many, as most of the banks in steady increase as compared with the volume this district, both member and nonmember, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

164 FEDERAL EESERVE BULLETIN. MARCH 1, 1917. have been disposed to cooperate with us in in the settlement of balances has been entirely every way possible, though we should not have done away with, and the cost of cit}^ clearings received the increasing volume of business had has been greatly reduced. Our local situation not the banks availing themselves of our facili- is apparently giving satisfaction to all the banks ties been satisfied that this method of collection that are parties to it, and for this satisfactory was more economical and satisfactory for them state of affairs, the Federal Reserve Bank of than any other method, and the increasing Boston is greatly indebted to the interest and volume is the best evidence of the growing hearty cooperation of the Boston Clearing favor of the method that we are cany ing on. House Association. The principal obstacle that we have to con- FEBRUARY 20, 1917. tend with arises from the fact that while we receive for collection practically all the checks Banks as Insurance Agents. drawn upon member banks in this district that circulate out of the immediate neighborhood of Regulations under which national banks may the bank, these banks find it difficult to provide act as insurance agents and as brokers or an offset, because of the fact that nonmember agents in making or procuring loans on real banks in other districts have not been willing estate under the amendment covering such to remit for their checks at par to the Federal action passed by Congress in 1916 have been Reserve Banks in their district. When it is issued from the office of the Comptroller of the possible to collect all checks, both member and Currency. They are given below for the infornonmember, through the Federal Reserve mation of Federal Reserve and member banks: Banks, I look for a very rapid increase in the To all National Banks: volume that will come through this Federal An amendment to the Federal Reserve Act approved Reserve Bank. September 7, 1916, provides: The handling cost of our business is approx- "That in addition to the powers now vested by law in imately 0.9 cent per item, although with the national-banking associations organized under the laws of the United States, any such association located and doing exception of one month it has been slightly business in any place, the population of which does not less than this amount. We are confident that exceed five thousand inhabitants, as shown by the last with our increasing volume it is a question of preceding decennial census, may, under such rules and a comparatively short time when we shall be regulations as may be prescribed by the Comptroller of the able to reduce the per item charge. Currency, act as the agent for any fire, life, or other insurance company authorized by the authorities of the State in which said bank is located to do business in said State, MEMBERSHIP 1ST CLEARING HOUSE. j by soliciting and selling insurance and collecting pre- Upon the opening of the Federal Reserve ! miums on policies issued by such company; and may Banks in November, 1914, the Federal Reserve receive for services so rendered such fees or commissions as may be agreed upon between the said association and Bank of Boston was admitted to limited memthe insurance company for which it may act as agent; and bership in the Clearing House Association, and may also act as the broker or agent for others in making or immediately thereafter the Boston Clearing procuring loans on real estate located within one hundred House Association agreed to settle daily bal- miles of the place in which said bank may be located, ances at the clearing house by checks upon the receiving for such services a reasonable fee or commission: Provided, hovjever, That no such bank shall in any case Federal Reserve Bank, which was easily done guarantee either the principal or interest of any such loans because of the fact that all the clearing house or assume or guarantee the payment of any premium on members were members of the Federal Reserve insurance policies issued through its agency by its prin- System. Further than this, at the present cipal: And provided further, That the bank shall not guarantee the truth of any statement made by an assured time all of the operations of the Boston Clearing in filing his application for insurance." House are carried on on the premises and by All national banks acting or proposing to act under the the staff of the Federal Reserve Bank. The provisions of the foregoing law are requested to observe necessity of handling large amounts of money strictly the following regulations: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 165 WHERE A NATIONAL BANK ACTS AS INSURANCE AGENT. bank to act as its agent, setting forth that the bank does not guarantee the payment of any premium on insurance It will be seen from the above that in order to avail policies issued through its agency by its principal, and itself of the provisions of this act relative to acting as agent stating that the bank is not to be held responsible for the for an insurance company: truth of any statement made by an assured in filing his (a) The bank must be located in a place the populaapplication for insurance. tion of which does not exceed 5,000 as shown by the las* (d) Copies of all reports made by the agent bank to each preceding decennial census. insurance company which it represents. (b) The insurance company for which the bank acts as 4. The bank will be required to keep a record as to each agent must have been authorized by the authorities of company for which it acts as agent, showing: For fire inthe State in which the bank is located to do business in surance: The amount of each policy, the rate and premium, that State. date of commencement, term, and date of expiration, as (c) The activities of the bank as such agent must be well as a description of property insured, with name of restricted to the soliciting and selling of insurance and assured, and to whom loss is payable. As to life insurance: the collection of premiums on policies issued by the Amount and date of policy, with premium, and a statement insurance company. as to under what form the insurance is written, giving also (d) The bank may receive for services so rendered such name of assured and beneficiary. As to any and all other lawful fees or commissions as may be agreed upon between forms of insurance: The fullest possible particulars as to the bank and the insurance company for which it may act amounts, dates, rates, premiums, and what is insured by as agent. the policy, and of collection of all premiums collected for (e) The bank is prohibited from assuming or guarantee- account of the company, refunds made, the proportion of ing the payment of any premium on insurance policies premium credited to the profits of the bank under its issued, through its agency, by its principal. agreement with the company, the proportion due the com- (/) The bank is prohibited from guaranteeing the truth pany, the amounts and dates of all remittances made to the of any statement made by an assured in filing his applica- insurance company on account of premiums collected, and tion for insurance. the balance, if any, due from the bank to the insurance (g) The powers conferred are to be exercised under company. such regulations as may be prescribed by the Comptroller 5. The bank will be required to carry on its general of the Currency. ledger an account which will, at all times, show the amount In pursuance of the foregoing amendment the following due to insurance companies for which it is acting as agent, regulations are hereby prescribed for national banks on account of premiums collected but not remitted, and which may undertake to act as agents for insurance this liability must be shown in reports of condition and in companies: the published statements of the bank under the heading 1. Each contract of agency must be formally accepted "Other liabilities—on account of insurance premiums colby the board of directors of the agent bank by a resolulected and not remitted," unless specifically provided for tion spread upon the minutes in the following form: in the report. "Be it resolved that the contract of agency entered 6. The bank should also keep such records as may be into on 191.. between the insurance comrequired by each insurance company in the manner and pany and the national bank of , by under the forms prescribed by the various companies; all president (or vice president) and cashier, a copy of which should be available for inspection by the examiner of which is on file in this bank, is hereby ratified and on request. approved." 7. The agent bank must not assume any responsibility 2. A certified copy of such resolution, attested by the or liability for either the adjustment, settlement, or paypresident or vice president and by the cashier and by a ment of losses under any policy issued by or through its majority of the directors of the bank, must be forwarded agency. to this office on forms to be furnished by this office. 8. The records of all profits derived from the insurance 3. There should be on file in the bank, available for agency should be carried in a separate account on the inspection by the examiner, the following documents: books of the bank, and the records should be so kept as (a) An authoritative statement showing the population to enable the examiner readily to trace to the source all of the town according to the last preceding decennial items of profit derived in this connection. census. (b) A proper certificate from the authorities of the State WHERE A NATIONAL BANK ACTS AS BROKER OR AGENT IN in which the bank is located showing as to each insurance MAKING OR PROCURING LOANS ON REAL ESTATE. company for which the bank is acting as agent that such company has received authority from the said State to In order to avail itself of this privilege: transact business in that State. (a) The bank must be located in a place the population (c) A proper certificate or other writing of each insur- of which does not exceed 5,000 as shown by the last preance company for which the bank acts authorizing the ceding decennial census. 82341—17 3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

166 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. (6) The real estate by which the loans negotiated are (i) Date of such transfer or delivery, secured must be located within 100 miles of the place in (j) Amount of principal of note, which the negotiating bank is located. (£) Kate of interest or discount, (c) The bank may receive for such services a reasonable (I) Rate of commission or brokerage charged by bank fee or commission. for acting as broker or agent, and (d) The bank shall in no case guarantee either the prin- (m) Amount of such commission or brokerage, and cipal or interest of any such loans. whether said commission was paid by borrower of the (e) The powers conferred are to be exercised under such money or by the party for whom it was loaned. regulations as may be prescribed by the Comptroller of 5. A book should be kept showing the date on which the Currency. each mortgage or deed of trust negotiated by the bank has The following regulations are prescribed for national been admitted to record, the court in which the same is banks which may undertake to act as agents or brokers recorded, and the recordation fees paid in each case. in making or procuring loans on real estate. 6. The records of all profits derived from acting as broker 1. A bank intending to avail itself of this provision of or agent in negotiating loans on real estate should be carthe law must adopt by its board of directors a resolution ried in a separate account on the books of the bank, and in the following form: the records should be so kept as to enable the examiner "Be it resolved, That the officers of the Nationalreadily to trace to the source all items of profit derived in Bank of — are hereby authorized and empowered on this connection. behalf of this bank, as broker or agent, to accept from 7. Deposits of money received by the bank as broker or customers of this bank deposits of funds to be invested agent to be invested in loans secured by real estate as prefor account of said customers, in loans secured by real scribed by law, must be treated as trust funds and kept estate, and to procure, as broker or agent, for customers separate and apart from the other assets of the bank. Such of this bank loans which shall be secured by real estate, funds must in no case be permitted to pass from the posunder the provisions of the act approved September 7, session of the bank until the loan for which they are to be 1916: Provided, That the investment of such funds as paid out is formally accepted by or in behalf of the party stated, and all such procuring of loans or lending of funds for whose account negotiated; for clients shall be undertaken only under written instruc- 8. No bank shall advance or use its own funds in contions from the customer for whom this bank, through its nection with real estate loans negotiated as broker or agent. officers, may act as broker or agent," such written instruc- 9. No loans secured by real estate, which the bank has tions in each case to be first delivered to an officer of this negotiated as broker or agent, should become a part of the bank. Such instructions shall, in all cases, state clearly assets of the bank even temporarily, unless such loans conthat the bank in acting as broker or agent in no way form to the provisions of section 24 of the Federal Reserve guarantees payment of either the principal or interest of Act, as amended. any loan so negotiated." 10. There should be available in the bank for inspection 2. A certified copy of such resolution, attested by the by the national-bank examiner— president or vice president and cashier and by a majority (a) An authoritative statement showing the population of the directors of the bank, must be forwarded to this of the town according to the last preceding decennial office, on forms to be furnished by this office. census. 3. No bank shall charge more than one commission or (6) All records pertaining to the negotiation of real brokerage on the making of any loan; that is to say, if it estate loans as broker or agent. shall charge a brokerage or commission to the party bor- National banks acting as broker for the placing of loans rowing the money, it shall not charge a brokerage or com- should prepare blank forms of application to be executed missjon to the party for whom money is so loaned, and by applicants for loans. These applications should show— vice versa. (a) Location of property. 4. Each bank acting under this provision of law will be (6) Acreage. required to keep a record showing as to each loan nego- (c) Assessed valuation. tiated by the bank— (d) Estimated present value. (a) The name and address of the principal for whom (e) Brief descriptions of buildings thereon and estimated the bank is acting, I value of them. (6) Date of written instructions from the principal, (/) Whether buildings are insured, and, if so, for what (c) Name and address of maker of note, amounts and in what companies. (d) Date of note, (g) Whether property is already encumbered, and, if so, (e) Date of maturity of note, for what amount. (/) Brief description of property securing note, showing (h) If property is farm property applicant should state location and distance from place in which bank is located, whether or not the dwelling is provided with sanitary (g) Character of improvements, etc., arrangements approved by the local board of health, and, (h) Name and address of party to whom note was trans, if not. what, sanitary arrangements there are. f erred or delivered by the bank, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

.MARCH 3,1917. FEDERAL RESERVE BULLETIN. 167 At the foot of this application should be printed below Banks. the signature of the applicant a statement to the effect that New charters issued to 13 "The statements in the foregoing application have been With capital of , $575,000 submitted to this bank by the applicant for the loan, but Increase of capital approved for 25 this bank does not undertake to guarantee the correctness With new capital of 3,030,000 of any of the statements made by the applicant." Aggregate number of new charters and If any applicant for a loan makes statements in hie appli- banks increasing capital._.-. 38 cation which any officers of the bank .before whom the With aggregate of new capital authorized 3,605,000 application may come may have reason to think are not correct, the attention of the applicant should be called to Number of banks liquidating (other than the possible discrepancy. those consolidating with other national banks) 5 Capital of same .bank 557,500 Number of banks reducing capital 2 Fiduciary Powers, Reduction of capital. 213,000 The applications of the following banks for Total number of banks going into liquidation or reducing capital (other than those permission to act under section 11-k of the consolidating with other national banks). 7 Federal Reserve Act have been approved since Aggregate capital reduction 770,500 the issue of the February Bulletin: The foregoing statement shows the aggregate of DISTRICT No. 2. increased capital for the period of the banks embraced in statement was 3,605,000 Registrar of stocks and bonds: Against this there was a reduction of capital Mechanics and Metals.National Bank, New York City. owing to liquidations (other than for con- DISTRICT NO. 3. solidation with other national banks) and reductions of capital of. .->, 770,500 Trustee, executor, administrator, and registrar of stocks and bonds: Net increase 2,834,500 National State Bank. Camden, N. J. Second National Bank, Wilkes-Barre, Pa. DISTRICT No. 9. Commercial Failures in January, Trustee, executor, administrator, and registrar of stocks and bonds: Business reverses in the United States dur- First National Bank, Arlington, S. Dak. ing January were more numerous and involved Minnehaha National Bank, Sioux Falls, S. Dak. a larger indebtedness than in December, 1916, DISTRICT NO. 10. yet the increase in both respects was less than in nearly a decade. Commercial defaults last Trustee, executor, administrator, and registrar of stocks and bonds: month, as reported to R. G. Dun & Co., num- First National Bank, Ord, Nebr. bered 1,540, with liabilities of $18,283,120, against 1,252 for §16,745,274 in December, DISTRICT NO. 12. 2,009 last year for $25,863,286, and 2,848 for Registrar of stocks and bonds: $49,640,575 in January, 1915, the maximum First National Bank, Marshfield, Oreg. point on record. The number of January failures was the smallest far the period since 1910, while the sum of money owed was the New National Bank Charters. smallest of any year back to 1909. The Comptroller of the Currency reports the Separation of statistics hy Federal Reserve following increases and reductions in the num- districts discloses fewer insolvencies than last ber of national* banks and the capital of year in every instance, with the single excepnational banks during the period from January tion of the tenth district where there was a 20, 1917, to February 23, 1917, inclusive: ; slight increase. Numerically, the improve-- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

168 FEDERAL RESERVE. BULLETIN. MARCH 1,1917. ment was especially marked in the eleventh, bear the burden of the cotton movement. We eighth, fifth, and third districts, while the were of considerable assistance to some banks liabilities, apart from the'first and third dis- in Arkansas and Mississippi, but the Memphis tricts, were smaller in every case, and notably banks, while getting some aid from us through so in the fifth, ninth, eleventh, sixth, and sec- rediscounts, did not exercise their full priviond districts. leges. During the months of September, The number of commercial failures and liabil- October, and November, 1915, Memphis memities in each district for the month of January, ber banks rediscounted considerable paper with this year and last, are compared below: us, but practically none of it was secured by cotton collateral. The reason of this was that Jan., 1917. Jan., 1916. the board of directors of this bank did not feel Districts. that it was sound banking to rediscount a h! Number. Liabilities.Number. Liabilities. I cotton loan and allow the warehouse receipts to remain in the hands of the borrowing bank. No.l 176 82,201,296 191 81,645,500 No. 2 241 4,446,073 329 8,810,900 The Memphis banks advised us that this was No. 3 77 1,702,861 120 988,240 No. 4 129 990,378 163 1,442,950 the custom of the New York and Boston banks. No. 5 104 549,458 171 1,427,400 No. 6 161 1,486,533 186 2,490,200 We, of course, thoroughly understood that it No. 7 181 2,954,773 209 2,966,600 No. 8 68 1,422,831 141 1,475,000 was impracticable for a bank to rediscount a No. 9 . . . 54 447,077 66 988,400 No. 10 73 310,284 75 350,900 loan secured by cotton warehouse receipts and No.U 58 498,256 129 1,292,696 No. 12 213 •1*, 273,300 1,984,500 send the receipts out of the locality, making it United States 1,540 18,283,120 2,009 25,863,286 difficult to allow substitutions. We, therefore, i suggested that when one bank rediscounted Experience with a Reserve Bank Agency. with us a loan secured by cotton warehouse receipts, it turn over the receipts to another During the past summer the Federal Reserve designated member bank, which would hold Bank of St. Louis established an office at them under a trust agreement with us and Memphis, Tenn., for the purpose of better permit the necessary substitutions. This meeting the convenience of the member banks method was objected to on the ground that the of district No. 8 during the crop-moving season. banks were all competitors, and no bank cared The following report of the experience with to have a competitor, through holding cotton the office at Memphis, prepared by Chairman warehouse receipts, get information in regard Wm. McC. Martin, sets forth the details with to its customers. The same objection was regard to the operation of the Memphis office, made to having a State bank or trust company and furnishes the essential forms which were hold the collateral. This bank felt that, while found necessary there. This experience is it was not necessary for the cotton warehouse likely to prove of distinct help should an receipt collateral to be in its hands in St. Louis, office of the same character be established by it should be either in its possession or in the some other Federal Eeserve Bank in the future. possession of some properly constituted agent Mr. Martin reviews the Memphis experience as who would hold the collateral on its behalf. follows: Those banks in Arkansas and Mississippi that POLICY DURING COTTON MOVEMENT. we helped with their cotton loans during 1915 agreed to an arrangement whereby the cotton In the cotton movement period during the collateral was held in those localities where first year of this bank's existence, it did everythere were two or more member banks, by thing in its power to enable member banks to another member bank and in those localities avail themselves of the rediscount privileges where there was only one member bank by when they were needed. We made especial some State institution in the same town that efforts to help out those banks that had to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 169 the Federal Reserve Bank found satisfactory. REPRESENTATIVE OF THE BONDING COMPANY. Such an arrangement, however, was not satis- So many substitutions of cotton warehouse factory in Memphis. receipts were necessary that it was found con- This was also the situation at the beginning venient to have the bonding company designate of the cotton movement in 1916. Our board a man to represent it, who occupied one of the of directors insisted that the borrowing bank desks in our Memphis office and gave his entire should not retain custod}^ of the collateral to time to this business. While this man was loans rediscounted by it, and the Memphis entirely subject to the orders of the bonding bankers did not consider it wise for them to company, this bank paid his salary. hold each other's cotton receipts. METHOD OF OBTAINING REDISCOUNTS. MEMPHIS AGENCY PLAN. However, the Memphis banks were anxious When a bank desired to rediscount paper to use the rediscount facilities of this bank, and with the Federal Reserve Bank of St. Louis, it as the Federal Reserve Bank always wishes to called up our representative, who promptly be of help to member banks when they desire it, went to the bank. The bank then told him a plan was worked out which was satisfactory that it wanted to rediscount, say, $100,000 of to both the Memphis banks and this bank. We paper secured by cotton warehouse receipts, sent one of our own men from this office to open and frequently discussed with him the basis an agency at Memphis at the request of, and on which the collateral would be acceptable. for the purpose of aiding, member banks in He, of course, had received instructions from handling the cotton situation. On September this bank as to the amount per bale at which 25, 1916, Mr. T. C. Tupper, deputy Federal we would accept the cotton as collateral. Reserve Agent and manager of our credit de- Being on the ground, he knew the general partment, went to Memphis and rented an office standing of the factors and buyers and the and the necessary safe deposit space. Only a character of cotton they handled as a rule. small office was needed with room for two desks, The bank then sent over to our Memphis office and this was found on the fourteenth floor of warehouse receipts covering the cotton prothe Central-State Bank Building. Two large posed to be pledged. There they were counted, boxes in one of the conveniently-located safe and our representative delivered a receipt to deposit vaults were all the other equipment the bank in the following form: necessary. On October 11, 1916, Mr. W. H. No. 101. MEMPHIS, TENN., Glasgow, assistant to the Federal Reserve [Date.] Agent, relieved Mr. Tupper and remained in Received of the National Bank of Prosperity Memphis charge of the office until it was closed on Janu- Terminal Corporation Warehouse Receipts for 1,538 bales of cotton pledged as security for loan to John Doe & Co. ary 20, 1917. for One Hundred Thousand Dollars. Substitution of receipts for cotton of like value to be CONTRACT COVERING SAFE DEPOSIT BOXES. made on order of above-named bank. Receipts to be sur- Such safe deposit boxes as were needed were rendered on payment of loan and delivery of this receipt rented in the name of the Federal Reserve Bank to undersigned. of St. Louis, and instructions given by the bank FEDERAL RESERVE BANK OF ST. LOUIS. By . to the effect that access was to be allowed to our representative only when accompanied The bank then filled out a regular applicaby one of certain designated persons repre- tion for a rediscount with the Federal Reserve senting the bonding company which was on Bank of St. Louis, properly indorsed the note, our employee's bond. The boxes were to be and attached to it the above-described receipt both opened and closed in the presence of these signed by bur representative, and forwarded two persons. the loan to this bank for consideration. If Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

170 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. the loan was accepted, its proceeds were receipts held by you as collateral on paper made by them credited to the Memphis bank, and the col- and rediscounted with you by us. This authorization to remain in force and effect until lateral was in the hands of our representative you are advised by us in writing to the contrary, and in such shape that substitutions could be easily j receipts of acknowledgment from you of such advice. made. If for any reason the note should be j Yours, truly, declined, it was returned to the bank and the i NATIONAL BANK, bank in turn presented the receipt attached to j By , Cashier. our representative, who took up the receipt j MODE OF MAKING SUBSTITUTIONS. and redelivered the collateral. j i By the above plan the cotton buyer was saved RECEIPTS FOR COLLATERAL. the necessity of going to the bank that originally granted the loan each time that he wanted to In order that this bank might be fully ad-i make a substitution. Instead, he went straight vised at the close of each day's business, our to our office in Memphis. Our representative representative wrote a letter covering the and the representative ot the bonding company receipts for collateral he had issued during the then accompanied the representative of the day. The form of this letter was as follows: borrower to the safe-deposit vaults. There, MEMPHIS, TENN., . in the presence of all three, the substitutions of [Date.] i new receipts for those desired occurred and the FEDERAL RESERVE BANK, j proper entries made. This system worked . St. Louis, Mo. GENTLEMEN : I have to-day issued the following receipts smoothly and satisfactorily, and both the to the National Bank of Prosperity: member banks and the Federal Reserve Bank Receipt No. 101, for 1,538 bales, $100,000, loan John were fully protected. Doe & Co.; As above stated, this agency was opened on Receipt No. 102, for 100 bales, $6,000, loan Smith & Co. ; Receipt No. 103, for 215 bales, $15,000, loan John Jones.; September 25, 1916, and closed on January 20, Receipt No. 104, for 700 bales, $42,000, loan Brown & 1917. During that period of time we redis- Co.—2,553 bales, securing $163,000. counted loans for the Memphis banks amount- Yours, truly, ing to $1,782,450. This, however, is not the full measure of help we have given the Memphis SUBSTITUTIONS. banks, since on closing the office, through this As the loan had originally been made by the agency, we succeeded in having the Memphis member bank to a cotton buyer or a factor, and banks agree to allow each other to hold cotton the latter had turned the collateral over to the collateral. Since the closing of this office on bank, which in turn had turned it over to us, January 20 to February 15, 1917, we have in order to be fully protected in any substiturediscounted paper for the Memphis banks tions that we allowed, each of the banks reamounting to $383,920, making a total of discounting with us gave us the following rediscounts from September 25, 1916, to date authority: of $2,146,370. MEMPHIS, TENN., =—. In some accounts the substitutions were [Date.] FEDERAL RESERVE BANK, much more active than in others. The most St. Louis, Mo. active account had pledged in the custody of GENTLEMEN: In order to facilitate the substitution of our representative a daily average of 1,429.2 warehouse receipts held hy our representative in Memphis, bales of cotton. The number of substitutions Tenn., securing loans rediscounted by us with the Federal Reserve Bank of St. Louis, and in.order to relieve the in this account for the period from October 16, owner .of such receipts, desiring to make substitutions, 1916, to January 20, 1917, was 11,021 bales; from presenting same to us, we direct that you accept such that is, the number of bales substituted was receipts bearing the name of the Memphis Terminal Cor- 7.7 times the average cotton on hand daily as poration, issued or purported to be issued by it, when collateral to its loans. Perhaps it will make tendered to you by any of our customers in substitution of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 171 this clearer to say that though during the above System by the cotton interests, the banks, and period 11,021 bales passed through the hands the public in general. Confidence created by of our representative, the collateral at any one the existence of the system was the basis of time to the loans was 1,429.2 bales on the unafraid business activity. average. (4) As for the results accomplished, the fol- The number of substitutions ranged from lowing quotation is given from a letter written this down. The least active account had in it by one of the large cotton factors and commisa daily average of 278 bales, and during the sion merchants in Memphis to our representaperiod from October 26, 1916, to January 20, tive just before the Memphis agency was 1917, there were only 17 changes of collateral. closed: Up to January 20, 1917, when we closed the uWe think that the Federal Reserve Banks Memphis office, there had been deposited as have saved the* day for the South this year. collateral 22,369 bales of cotton. From Under the old monetary system we think it October 16, 1916, the date we commenced would have been an impossibility to maintain keeping a record of the number of substitutions, prices of cotton like has been done this fall. to January 20, 1917, there had been 40,041 Under the old system we think the rates of substitutions. interest would have been very high, and prices EARNINGS. could not have been maintained." For the period from the opening of the office on September 25, 1916, to the time it was closed on January 20, 1917, the statement of Operation of the Clearing Plan. the earnings and expenses of the Memphis The following table shows briefly the clearagency is as follows: ing operations of the Federal Reserve system Discount earned $7, 574.42 for the monthly period ending February 15, Expenses (including salary of our representa- 1917, with comparative figures for each of the tive for the time he was in Memphis) 1, 710.00 six preceding months: Net earnings : 5, 864.42 Operation of the Federal Reserve interdistrict clearing sys- CONCLUSIONS. tem, January 16 to February 15, 1917. (1) Through this agency established at Memphis the Federal Reserve Bank of St. Louis Nonmem- M wa e s m a p b h l i e s to b a t n a k k s e c a a n r d e o t f o a g ll i v o e f t t h h e e m ne e a d s s o q f u i t c h k e Bank. j A n a b u v g e m e e r r - - A a o m f v e d o r a u a i n g ly t e b i M n a b e n e t m h k r e s - w b f a r b h o n e i m r k ch s service as they desired. h o a f n it d e l m ed s clearing. tr d i i c s- t. a c r h e e c c o k l s - (2) At no time during the existence of this daily. lected at par. agency did any need of member banks arise which could have been handled more satisfac- Boston 35,234 811,153,187 402 242 New York 41,342 26,702,153 625 310 torily than through this agency had a branch Philadelphia i 30,416 16,171,405 632 235 Cleveland. 15,239 7,598,641 752 488 bank been established there instead. Offer- Richmond 15,756 7,613,435 521 286 Atlanta... 11,956 3,734,742 389 411 ings put in the mail at night reached us the Chicago j 19J761 • 12,717,528 1,045 1,413 St. Louis ! 10,329 6,553,987 468 87? next morning, were passed on, and the proceeds Minneapolis ! 11,980 5,310,106 715 1,100 Kansas Citv ! 11,387 6,590,800 943 1,405 put to the credit of the bank rediscounting Dallas I ! 11,710 4,539,320 . 618 219 San Francisco .. ,j 5,311 | 1,502,724 520 1,105 generally before noon. We were in daily inti- Total, Jan. 16 to Feb. 15,1917.. 220,421 1110,188,028 7,630 mate contact with not only our member banks, Dec. 16,1916, to Jan. 15, 1917 241,933 |l21,8l4,589 7,622 8,130 but knew the entire situation as it existed in Nov. 16, 1916, to Dec. 15,1916 236,038 il25,603,732 7,627 8,065 their territory. Oct. 16 to Nov. 15, 1916. 227,489 115,061,224 7,623 8,059 Sept. 16 to Oct. 15,1916. 204,891 97,666,107 7,618 7,459 (3) Our representative found the keenest Aug. 16 to Sept. 15,1916. 177,397 78,559,704 7,618 7,449 July 16 to Aug. 15, 1916. 133,113 59,301,696 7,032 interest manifested in the Federal Eeserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

172 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. Synopsis of Report of the Comptroller of the banks increasing their capital was 453 and the new capital Currency. authorized, $43,227,200. Since the opening of the Reserve System, excluding The following is a condensed synopsis or banks consolidating with other national banks, the number summary of some of the main features of the of new banks chartered plus the number of existing Annual Report of the Comptroller of the Cur- national banks which increased their capital exceeds by rency (vol. 1—202 pp.) for the 12 months 257 the number of national banks going into liquidation or reducing their capital, and the capital of the newly ending October 31, 1916, which, in accordance chartered banks plus the increased capital of existing with section 333 of the Revised Statutes, was banks exceeds by $26,514,200 the capital of all national submitted to Congress on February 5. The banks which have gone into liquidation or reduced their synopsis was prepared and given out from the capital during this period, other than those consolidating Comptroller's office. with other national banks. There were on hand on October 31, 1916, 46 additional applications for the organization Unusual Combination of Great Business Activity and of national banks approved by the Comptroller of the Easy Money: Currency, and 87 for new charters under consideration. With the greatest prosperity and business activity the "These facts," the comptroller eays, "furnish a concountry has ever known, requiring the use of many hunclusive reply to suggestions which have been occasionally dreds of millions of additional accommodations from made that there has been any general tendency toward the banks, says the report, the business men of the country withdrawal of banks from the National Banking System." have at the same time enjoyed the most favorable interest rates ever seen. Wider Diffusion of Banking Wealth: Figures showing the decentralization of banking capi- The 100 largest national banks are now shown to be scattal and the wholesome effects of the operations of the Fed- tered through 22 different States and in 33 cities representeral Reserve System in all sections are given. ing every section of the country, and not concentrated in The national banks are described as " the backbone and a few centers as heretofore. substance of the Federal Reserve System," and it is shown Reduction in Number and Liabilities of Banks Failing, that on November 17, 1916, of the 7,614 members of the Since the Opening of Federal Reserve System: Federal Reserve System, 7,577 were national banks and In the fiscal year ending June 30,1916, the first comptlee that of $15,980,000,000 of resources, the resources of fiscal year under the new system there Were 15 national national bank members amounted to $15,513,000,000. bank failures with aggregate liabilities of only $3,838,415, Deposits in National Banks Increasing Faster than in as compared with 19 failures with $39,952,000 liabilities State Institutions: for the year ending June 30, 1914, the last fiscal year pre- In the 10 years preceding the inauguration of the Fed- ceding the opening of the new system—ten times.as large real Reserve System the deposits in State banks and trust as for the past year. companies had shown a greater ratio of increase than the Unprecedented Growth in National Bank Resources: deposits in national banks, but from June, 1913, to June, For the twelve months from November 10, 1915, to 1916, the deposits of the national banks increased 33J per November 17, 1916, as shown by their sworn statements, cent, while the deposits in State banks and trust compa- the resources of the national banks increased $2,326,000,000 nies increased only about 29 per cent. the greatest increase ever shown in a similar period. National Bank Resources Double in 10 Years: Increases in Twenty-Year Period: The resources of the national banks have doubled in 10 Tables presented illustrate the growth of national bank years, growing from 7,670 million dollars in April, 1906, deposits at five-year intervals since 1896, and show that to 15,520 million on November 17, 1916. The resources the deposits November 17, 1916, were 12,489 million of the national banks on November 17, 1916, exceeded dollars, as compared with 6,031 million dollars in Novemthe total resources of all reporting State banks, savings ber, 1906, and only 2,029 million dollars in October, 1896. banks, private banks, and loan and trust companies The deposits of the national banks to-day are therefore throughout the country at the time of the beginning of six times as great as they were only twenty years ago. the Federal Reserve System two years ago. National Banks Increase in Numbers as well as in Capital Reserves: and Resources: The surplus or excess reserves held by the national From the opening of the Reserve Banks November 16, banks November 17, 1916, amounted to 1,016 million dollars, this excess exceeding the total of all reserves held 1914, to November 15, 1916, the Comptroller of the Curas late as September, 1901. rency issued charters to 264 new national banks with an aggregate capital of §16,109,500, and during the same Geographical Location of Excess Reserves: period 189 national banks increased their capital by Reports of November 17, 1916, show, says the Comp- $27,117,700. The aggregate of new charters issued and troller, that the greatest excess of reserves are now held Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDEBAL EESERVE BULLETIN. 173 in those sections of the country which before the institu- To limit investment in bank building. tion of the Federal Reserve System were generally regarded To authorize United States Treasurer to sell bonds seas the borrowing sections. He points out that the Southern curing circulation 30 days after a bank goes into liquida- States held 127 per cent more reserve than they were re- j tion. quired by law to hold; the Western States 158 per cent Riggs National Bank Charter, Etc.: more; Pacific States 127 per cent more than their require- The Riggs National Bank controversy is briefly summed ments, while reserves held in the Eastern States were up and a synopsis of the decision of the Supreme Court of 41 per cent more than necessary, and the Middle States 67 the District of Columbia upholding the comptroller's right per cent more, and the New England States 59 per cent to all the information and reports of every sort demanded more than required. of the bank is included in the report. Cash Reserves and Balances in the Reserve Banks: State Bank and Trust Company Statistics: The banks had cash in their own vaults and in reserve The report also contains the usual statistical tables as to banks amounting to $1,437,515,000, as compared with State banks, loan and trust companies, and savings banks, $1,212,960,000 in November, 1915, and $925,553,000 on both mutual and joint stock, for the past fiscal year, and October 31, 1914. for a period of years. "Acceptances" Aiding Foreign Trade: The aggregate resources of loan and trust companies in- Figures are given showing the growth of "acceptances" creased from $5,873,000,000 June, 1915, to $7,028,000,000 by national banks, based on imports and exports. They June 30, 1916. increased from $13,077,000 September, 1915, to $76,608,000 Banking Power of the United States: September, 1916. The banking power of the United States as expressed Gigantic Growth in Resources of all Reporting Banks and by the input of capital, surplus and profits, deposits, and Trust Companies in One Year: circulation of all banks, amounted on June 30, 1916, to Tables presented show an increase in resources in all $29,353,000,000, an increase over the previous year of banks, National and State, including trust companies, from $3,956,000,000, or 15.57 per cent. June 23, 1915, to June 30, 1916, of 4,710 million dollars. Money in all Reporting Banks: • Between June 30, 1916, and November 17, 1916, the na- The cash in national, State, savings, private banks, tional bank resources increased an additional $1,593,337,and loan and trust companies plus the cash held by the 000, so that the resources of all reporting banks between Federal Reserve Banks on June 30, 1916, was reported at June and November, 1916, assuming that the State banks 81,911,717,000, being an increase over June, 1915, of (whose reports are received only once a year) were the $141,856,000, or 8 per cent. These cash holdings have, same on November 17 that they were on June 30, have of course, been greatly increased since July 1 by large increased to $34,489,531,000. importations of foreign gold. Increase in Total Resources of ail Banks since 1908: Foreign Securities held by National Banks: The total resources of all reporting banks in the United The report shows that the amount of foreign government States June 30, 1916, are given at $32,896,000,000 as comand other foreign securities owned by national banks on pared with $19,583,000,000 in 1908. The number of bank- December 27, 1916, was $321,993,000. The reports reing institutions in the same period increased from 21,346 ceived from national banks in 100 cities, including all to 27,525. Reserve cities and all cities with a population of 75,000 Abatement of Usury: or more, show that the national banks in these cities (ex- The Comptroller shows there has been a material reduc. clusive of about 10 per cent of them still to be heard from) tion in the excessive rates charged by national bankg were lending on December 27, 1916, to merchants and throughout the country. In September, 1915, 1,022 na- other borrowers in foreign countries, on direct loans, the tional banks admitted average rates of 10 per cent or more, sum of S136,669,000. while on November 17, 1916, the total number of such This makes the total investments of our national banks on banks had been reduced to 558. the date mentioned (as far as reported) in foreign Government and other foreign securities and loans placed in for- Legislation Recommended: eign countries by national banks in the cities indicated, The Comptroller repeats all of his recommendations for $458,662,000, and is equal to 42.82 percent of the capital amendments to the national bank act as contained in the of the national banks, 21.22 per cent of their capital, last annual report, and adds several additional ones as surplus, and undivided profits, or 2.96 per cent of their follows: total resources, as reported November 17, 1916. To provide a penalty for making false financial state- Of the money loaned by national banks in foreign counments for the purpose of obtaining credit from national tries, $100,000,000 was loaned by the national banks of banks. New York City, and about 828,000,000 by the national To provide punishment for breaking and entering a na- banks in Chicago, St. Louis, San Francisco, Philadelphia, and Boston. tional bank for the purpose of theft or robbery. 82341—17 4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

174 FEDERAL EESEEVE BULLETIN. MARCH 1, 1917. The report also shows that the national banks held on Financially Prepared. November 17, 1916, $297,236,000 of foreign securities, "From present indications it is probable that we will representing 17.38 per cent of the $1,709,956,000 total be required to finance not only our own enterprises, our securities held by them at that time other than United preparations to make ourselves a formidable and therefore States Government bonds. a respected power, and the commerce which is unfolding for us on this hemisphere, but also the endless complica- Salaries of Bank Officers and Employees. tions and demands of readjustment and reestablishment In September, 1916, there were 66,394 officers and emthat will follow the close of the great war. ployees of national banks, their average salary being $110 "To meet these enormous drafts and strains on our per month. In March, 1916, the national banks with resources, the most tremendous requirements and the widcapital of $50,000 or less, which paid salaries to their est opportunity that any nation in the world's history has presidents, paid their presidents on an average $l,008'per ever faced, we are now strong and ready. annum. National banks with capital of $5,000,000 or more were paying an average of $44,400 per annum to their Six Billion Increase in 16 Months. presidents. "We have gained in a year and four months, from June The comptroller recommends that the national banks 23, 1915, to November 17, 1916, over $6,000,000,000 in the consider furnishing their clerks and other employees re- resources of our banks, counting all banks. This means ceiving small salaries life insurance policies equal to their that we have added to the resources of*our banks in this salaries for one year, so that in the event of death the brief space of time an amount exceeding by a billion dolfamilies of the employees may at least be temporarily lars the entire resources, as recently reported, of those provided for. citadels of financial strength, the Bank of England and the Bank of France combined. As a further comparison the Currency Issued and Redeemed through Comptroller's increase for this period also represents an amount twice Office. as great as the total resources of the Reichsbank of Ger- During the year ending October 31, 1916, the comptrol- many, plus the resources of the Bank of Italy, according ler's office received for cancellation $411,950,890 of national to their latest reports. bank currency, and shipped to the national banks new Fortified by Federal Reserve and Federal Farm Loan Acts: national bank notes amounting to $356,300,750. The stock "We have now the Federal Reserve System, which we of national bank notes in the custody of the Comptroller of believe assures us against panics andf ears such as have in the Currency November 1,1916, amounted to $413,977,860. the past, at intervals, disturbed our commerce and Revenue Derived by Government from Operations of paralyzed our industries. The Rural Credits, or Federal Comptroller's Office. Farm Loan System, will aid in securing permanent com- The report shows that the net revenue derived by the mercial strength and safety based on the sure foundations Government through the operations of the comptroller's of prosperous and thriving communities of farmers, held office for the past fiscal year arising primarily from the | to the soil by ties of ownership and encouraged and aided taxation on bond-secured circulation] after the payment | to secure constantly increasing results per man, per acre, of all expenses, amounted to $3,258,435.10. | and per day. j "In reviewing our banking and fiscal situations we seem Our International Position. ! now to be intrenched financially almost as firmly as it is The report concludes with a reference to this country's j possible for any human government to be. We are well financial preparedness and its readiness to encounter and prepared for preparedness, and ready and able to provide deal with all financial, domestic, and international probfor whatever increases of Army and Navy the Congress lems, as follows: may think to be necessary. "Since the beginning of the European war, a little over A Leading English Newspaper on America's Financial two years ago, our country has passed swiftly and defi- Supremacy: nitely from the ranks of the debtor countries and has be- "Our preponderating power in world finance is fast come the most potential of the creditor nations. Pracbeing recognized in all countries. As an illustration of tically the whole world is in debt to us and steadily the opinions now held abroad as to this country, it may increasing its obligations. not be amiss to quote in conclusion the following extract "Our financial condition in relation to other peoples from an editorial entitled 'American banks and the future/ and the world at large becomes stronger from week to week which appeared recently in one of the leading English and from month to month. As the figures show so connewspapers, the Manchester Guardian: clusively, our wealth is piling up with wonderful rapidity; " 'European financiers in general would be well advised but to do our proper work in the world and to protect and to face the fact that the war has radically transformed the enlarge our own interests we may before long need every relations between the United States and Europe. The dollar of these resources, gigantic and inexhaustible as American Comptroller of Currency in his latest report indithey now seem to be. cates how greatly American banks have developed in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1,1917. FEDERAL RESERVE BULLETIN. 175 recent years. Their resources on November 17, amounted Other Federal Reserve Banks may particito 3,104 million pounds. They have grown by 800 millions pate in the agency relationship with the Bank since 1913 and doubled since 1906. of France, when established, upon the same "'The Federal Reserve Act and other legislation under terms and conditions that will govern the Mr. Wilson's auspices have given them, for the first time Federal Reserve Bank of New York, if they so in their history, a really sound organization. The United desire. States has wiped out, or by the end of this war will have wiped out, most of its debt to foreign investors. It will GOLD-SETTLEMENT FUND. have a currency of unimpeachable soundness, fortified by a gold reserve of unprecedented magnitude. There has been continued growth and activ- "'The American bankers will have acquired the ex- ity in the gold-settlement fund during Febperience they have hitherto lacked in the international ruary, a record clearing having been made on money market. And all this strengthened financial fabric February 8, when the amount of the weekly will rest upon an economic fabric which the war will have much expanded. It can hardly be doubted that under settlement was $287,677,000. There has been these circumstances New York will enter the lists for the more than ordinary activity in transfers and financial leadership of the world.'" payments for banks. The figures given below cover the period from January 26 to February 23, inclusive, Bank Agency at Paris, France. during which period obligations were settled amounting to SI, 117,505,000, with changes in The following statement was issued by the ownership of only 1.90 per cent. The greatest Federal Reserve Board on February 28: relative increase in gold holdings in the fund Pursuant to the policy already made known by settlements and transfers has been by the in connection with the Bank of England on banks of Boston and San Francisco, but New December 26, 1916, at which time it was York and Chicago have also made considerable stated that the Board had had under consideration the advisability of authorizing Federal gains. Reserve Banks to establish correspondents or In order to save space in the Federal Reagencies in Europe, the Federal Reserve Board serve Bulletin, there is given this month a conhas announced that it has passed a resolution solidation of the figures which have heretofore approving the application of the Federal Rebeen printed covering the transactions of each serve Bank of New York for authority to establish an agency with the Bank of France, week: of Paris, France. Amount of clearings and transfers, Federal Reserve Banks, This action is taken under the provisions of from Jan. 26, 1917, to Feb. 23, 1917. section 14, paragraph (e) of the Federal Re- [000 omitted.] serve Act, which authorizes any Federal Res R e e r s v e e r v B e a B nk o , a r w d, i th to t " h o e p e c n o n a se n n d t m o a f in th ta e i n F e b d a e n r k a - l cle T a o ri t n al gs. Balances. Ts I ing accounts in foreign countries, appoint cor- Settlement of— respondents, and establish agencies in such Feb. 1,1917... §265,436 S12,924 i S3,100 countries wheresoever it may deem best for Feb. 8,1917... 287,677 15,474 i 4,200 Feb. 15,1917.. 268,137 12,121 I 12,662 the purpose of purchasing, selling, and collect-, Feb. 23, 1917.. 268,714 13,391 I 7,579 ing bills of exchange, and to buy and sell, with Total 1,089,964 53,910 : 27,541 or without its indorsement, through such cor- Previously reported for 1917. 1,051,104 67,126 | 27,102 respondents or agencies, bills of exchange aris- Total since Jan. 1,1917 2.141,068 121,036 54,643 ing out of actual commercial transactions T T o o t t a a l l t f r o a r n 1 s 9 fe 1 r 6 s , i J n a c n l . u d 1 i ,1 n 9 g 1 t 7 r , a n to s f d er a s te 5 ' , 63 5 3 4 , , 9 6 6 4 6 3 * * * and to open and maintain banking Total for 1915, including transfers 1,052,649 accounts for such foreign correspondents or Total clearings and transfers, agencies." May 20,1915, to Feb. 23,1917. 8,882,326 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

176 FEDERAL RESERVE BULLETIN". MARCH 1, 1917. Changes in ownership of gold. [000 omitted.] Total changes from To Jan. 25,1917. From Jan. 26 i , n 1 c 9 l 1 u 7 s , i v to e. 1 Feb. 23, 1917, M Fe a b y . 2 2 3 0 , , 1 9 1 1 9 7 1 . 5 2 , to Balance Federal Reserve Bank of— to credit, Jan. 25, 1917, plus Balance Decrease. Increase. net de- Feb. 23, Decrease. Increase. Decrease. Increase. posits of 1917. gold since that date. Boston.... $18,802 311,032 $17,825 $6,793 $25,595 New York.... 8308,103 50,897 53,768 2,871 "$360," 232* Philadelphia 69,247 14,667 10,855 $3,812 65,435 Cleveland.... . . 27,682 25,352 26,460 1,108 28,790 Richmond 27,695 21,415 16,826 4,589 23,106 Atlanta 22,182 4,422 5,197 775 22,957 Chicago.... 806 28,934 32,694 3,760 2,954 St. Louis.. 12.668 9,348 1,802 *""7,"546* 5,122 Minneapolis 7,316 6,316 4,457 1,859 5,457 Kansas City 48,627 27,234.5 27,357.5 123 48,750 Dallas... .... 35', 616 11,158.5 7,659.5 3,499 32,117 San Francisco 39,074 2,534 8,409 5,875 44,949 Total 308,909 308,909 213,310 213,310 21,305 21,305 305,232 305,232 1 Changes in ownership of gold during period Jan. 26,1917, to Feb. 23,1917, equal 1.90 per cent of obligations settled. 2 Total changes in ownership of gold equal 3.43 per cent of total obligations settled. Gold settlement fund—Summary of transactions from Jan. 26, 1917, to Feb. 23, 1917, inclusive. [000 omitted.] Weekly settlements from Jan. 26,1917, Gold. Transfers. to Feb. 23,1917. Feb. 23, balance Balance in fund Federal Reserve Bank of— Ja 1 n 91 . 7 2 . 5, d W ra i w th n - . D i e te p d o . s- Debit. Credit. d T e n o b e t i t a ts l . d T e o b t i a ts l . c T re o d t i a t l s. c T re n o d e t i t a t l s. a o t f c b l u o s s i e - Boston §15,032 ;4,000 85,062 S4,641 §90,298 892.029 16,372 $17,825 .New York 50,897 £7,600 12,100 11,715 294,586 292', 957 10,086 53,768 Philadelphia.. 15,117 1,000 §550 10,523 158,109 154,297 6,711 10,855 Cleveland ^5,552 200 3,505 1,000 426 67,906 71,519 4,039 26,460 Richmond 17,965 200 3,650 2,500 2,515 65,807 63,718 426 16,826 Atlanta 2,912 500 2,010 107 40 2,995 36,258 37,100 3,837 5,197 Chicago 33,504 6,300 1, 730 500 6,200 12,606 147,302 145,362 10,666 32,694 St. Louis 3,468 500 6,380 3,600 4,561 94,044 90,098 615 1,802 Minneapolis... 6,316 2,440 734 24,168 24,749 1,315 4,457 Kansas City... 27,054.5 120 i 300 2,850 500 i 906 59,929 62,402 3,379 27,357.5 Dallas 10,628.5 220 i 750 1,739 2,288 28,244 26,484 . 528 7,659.5 San Francisco. 4,904 3,350 I 2,700 2,639" 23,313 29,249 5,936 8,409 Total 213,350 16,390 16,350 27,541 27,541 53,910 1,089,964 jl, 089,964 53,910 213,310 I Federal Reserve Agents' Fund—Summary of transactions, Jan. 26, 1917, to Feb. 23, 1917, inclusive. [000 omitted.] Federal Reserve Agent at— t B J o a a n c la . r e n 2 d c 5 i e , t d W ra i w th n - . po D si e t - ed. B Fe a 1 b 9 l . a 1 7 n . 2 c 3 e , Federal Reserve Agent at— t B J o a a n c la . r e n 2 d c 5 i e , t d W ra i w th n - . po D si e t - ed. F B e 1 a b 9 l . 1 a 7 n 2 . c 3 e , 1917. 1917. Philadelphia I $12,280 SI,150 $1,000 $12,130 Kansas City.., $13,960 $700 $120 $13,380 Richmond 12,900 2.900 10,000 Dallas 10,130 800 9,330 Atlanta ! 13,850 '900 500 13,450 San Francisco. 14,120 580 1,840 15,380 Chicago I 7,010 100 6,300 13,210 St. Louis : 6,510 580 500 6,430 Total... 94,010 7,710 10,260 96,560 Minneapolis ' 3,250 3,250 I Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 177 PROPOSED AMENDMENTS TO FEDERAL RESERVE ACT. SENATE BILL. HOUSE BILL. [Sixty-fourth Congress, second session. Calendar No. 947. S. 8259- [Sixty-fourth Congress, second session. Union Calendar No. 443. H» Report No. 1059. In the Senate of the United States, February 14 R. 20661. Report No. 1406. In the House of Representatives, Jan- (calendar day, February 15), 1917. Mr. Owen introduced the follow- uary 31, 1917. Mr. Glass introduced the following bill; which was ing bill; which was read twice and referred to the Committee on referred to the Committee on Banking and Currency and ordered to Banking and Currency. February 14 (calendar day, February 16), be printed. February 2, 1917. Committed to the Committee of the 1917. Reported by Mr. Owen, without amendment.] Whole House on the state of the Union and ordered to be printed.] A BILL To amend the Act approved December twenty- A BILL To amend the Act approved December twentythird, nineteen hundred and thirteen, known as the third, nineteen hundred and thirteen, known as the Federal reserve Act, as amended by the Acts of August Federal reserve Act, as amended by the Acts of August fourth, nineteen hundred and fourteen; August fifteenth, fourth, nineteen hundred and fourteen, August fifteenth, nineteen hundred and fourteen; March third, nineteen nineteen hundred and fourteen, March third, nineteen hundred and fifteen; and September seventh, nineteen hundred and fifteen, and September seventh, nineteen hundred and sixteen. hundred and sixteen. Be it enacted by the Senate and House of Rep- Be it enacted by the Senate and House of Representatives of the United States of America in resentatives of the United States of America in Congress assembled, That section four of the Congres.s assembled, That section four of the Act approved December twenty-third, nineteen Act approved December twenty-third, nineteen hundred and thirteen, known as the Federal hundred and thirteen, known as the Federal reserve Act, be amended by striking out the reserve Act, be amended in the paragraph sentence reading as follows: "One of the direc- relating to the appointment of class C directors tors of Class C, who shall be a person of tested and prescribing their duties so as to read as banking experience, shall be appointed by the follows: Federal Reserve Board as deputy chairman and " Class C directors shall be appointed by the deputy Federal reserve agent, to exercise the Federal Reserve Board. They snail have been powers of the chairman of the board and Fed- for at least two years residents of the district eral reserve agent in case of absence or dis- for which they are appointed, one of .whom ability of his principal/7 and by adding in place shall be designated by said board as chairman thereof the following: of the board of directors of the Federal reserve "Subject to the approval of the Federal bank and as 'Federal reserve agent.' He shall Reserve Board, the Federal reserve agent shall be a person of tested banking experience, and appoint one or more assistants. Such assist- in addition to his duties as chairman of the ants, who shall be persons of tested banking board of directors of the Federal reserve bank experience, shall assist the Federal reserve he shall be required to maintain under regulaagent in the performance of his duties and shall tions to be established by the Federal Reserve also have power to act in his name and stead Board a local office of said board on the premduring his absence or disability. The Federal ises of the Federal reserve bank. He shall reserve agent may require such bonds of his make regular reports to the Federal Reserve assistants as he may deem necessary for his Board and shall act as its official representative own protection. Assistants to the Federal for the performance of the functions conferred reserve agent shall receive an annual compen- upon it by this Act. He shall receive an sation to be fixed and paid in the same manner annual compensation to be fixed by the Federal as that of the Federal reserve agent. One of Reserve Board and paid monthly by the Fedthe directors of class C shall be appointed by eral reserve bank to which he is designated. the Federal Reserve Board as vice chairman to One of the directors of class C, who shall be a exercise the powers of the chairman of the person of tested banking experience, shall be board in case of the absence or disability of the appointed by the Federal Reserve Board as Federal reserve agent; in case of the absence of deputy chairman' to exercise the powers of the the chairman and vice chairman the third class chairman of the board when necessary. C director shall preside at meetings of the "Subject to the approval of the Federal board." Reserve Board, the Federal reserve agent shall appoint one or more assistants. Such assistants, who shall be persons of tested banking experience, shall assist the Federal reserve agent in the performance of his duties and shall also have power to act in his name and stead Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

178 FEDERAL RESERVE BULLETIN, MARCH 1, 1917 SENATE' BILL. HOUSE BILL. during his absence or disability. The Federal reserve agent may require such bonds of his i assistants as he may deem necessary for his i own protection. Assistants to the Federal I reserve agent shall receive an annual compen- I sation, to be fixed and paid in the same manner j as that of the Federal reserve agent." SEC. 2. That the first paragraph of section SEC. 2. That the first paragraph of section thirteen be amended so as to read as follows: thirteen be further amended so as to read as "Any Federal reserve bank may receive from follows: any of its member banks, and from the United "Any Federal reserve bank may receive from States, deposits of current funds in lawful any of its member banks, and from the United money, national-bank notes, Federal reserve States, deposits of current funds in lawful notes, or checks, and drafts, payable upon money, national-bank notes, Federal reserve presentation, and also, for collection, maturing notes, or checks and drafts, payable upon notes and bills; or, solely for purposes of ex- presentation, and also for collection, maturing change or of collection, may receive from other notes and bills; or, solely for purposes of ex- Federal reserve banks deposits of current funds change or of collection, may receive from other in lawful money, national-bank notes, or checks Federal reserve banks deposits of current funds upon other Federal reserve banks, and checks in lawful money, national-bank notes, or checks and drafts, payable upon* presentation within upon other Federal reserve banks, and checks its district, and maturing notes and bills pay- and drafts, payable upon presentation within able within its district; or, solely for the pur- its district, and maturing notes and bills payposes of exchange or of collection, may receive able within its district; or, solely for the purfrom any nonmember bank or trust company poses of exchange or of collection, may receive deposits of current funds in lawful money, from any nonmember bank or trust company national-bank notes, Federal reserve notes, deposits of current funds in lawful money, checks and drafts payable upon presentation, national-bank notes, Federal reserve notes, or maturing notes and bills: Provided, Such non- checks and drafts payable upon presentation, member bank or trust company maintains with or maturing notes and bills: Provided, That the Federal reserve bank of its district a such nonmember bank or trust company mainbalance in an amount to be determined by the tains with the Federal reserve bank of its Federal Reserve Board under such rules and district a balance in an amount to be deterregulations as it may prescribe." mined by the Federal Reserve Board under such rules and regulations as it may prescribe. SEC. 3. That the fifth paragraph of section SEC. 3. That the fifth paragraph of section thirteen be, and is hereby, amended so as to thirteen be, and is hereby, amended further so read as follows: as to read as follows: "Any member bank may accept drafts or "Any member bank may accept drafts or bills oi exchange drawn upon it having not bills of exchange drawn upon it having not more more than six months sight to run, exclusive than six months sight to run, exclusive of days of days of grace, which grow out of transactions of grace, which grow out of transactions ininvolving the importation or exportation of volving the importation or exportation of goods; or which grow out of transactions in- goods; or which" grow out of transactions involving the domestic shipment of goods pro- volving the domestic shipment of goods provided shipping documents conveying or secur- vided shipping documents conveying or securing title are attached at the time of acceptance; ing title are attached at the time of acceptance; or which are secured at the time of acceptance or which are secured at the time of acceptance by a warehouse receipt or other such document by a warehouse receipt or other such document conveying or securing title covering readily conveying or securing title covering readily marketable staples. No member bank shall marketable staples. No member bank shall accept, whether in a foreign or domestic trans- accept, whether in a foreign or domestic transaction, for any one person, company, firm, or action, for any one person, company, firm, or corporation to an amount equal at^ any time corporation to an amount equal at any time in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 179 SENATE BILL. HOUSE BILL. in the aggregate to more than ten per centum the aggregate to more than ten per centum of of its paid-up and unimpaired capital stock its paid-up and unimpaired capital stock and and surplus, unless the bank is secured either surplus, unless the bank is secured either by by attached documents or by some other actual attached documents or by some other actual security growing out of the same transaction security growing, out of the same transaction as the acceptance; and no bank shall accept as the acceptance; and no bank shall accept such bills to an amount equal at any time in such bills to an amount equal at any time in the the aggregateto more than one-half oi its paid- aggregate to more than one-half oi its paid-up up and unimpaired capital stock and surplus: and unimpaired capital stock and surplus: Provided, however, That the Federal Reserve Provided, however. That the Federal Reserve Board, under such general regulations as it may Board, under such general regulations as it may prescribe, which shall apply to all banks alike prescribe, which shall apply to all banks alike regardless of the amount of capital stock and regardless of the amount of capital stock and surplus, may authorize any member bank to surplus, may authorize any member bank to accept such bills to an amount not exceeding | accept such bills to an amount not exceeding at any time in the aggregate one hundred per at any time in the aggregate one hundred per centum of its paid-up and unimpaired capital centum of its paid-up and unimpaired capital stock and surplus: Provided, however That the stock and surplus: Provided, however, That the 7 aggregate of acceptances growing out of aggregate of acceptances growing out of domestic transactions shall in no event exceed domestic transactions shall in no event exceed fifty per .centum of such capital stock and fifty per centum of such capital stock and surplus: Provided further, That in no event shall surplus." a bank accept for any one person, company, firm, or corporation to an amount equal at any time in the aggregate to more than twenty per centum of its paid-up and unimpaired capital stock and surplus." SEC. 4. That section sixteen, paragraphs two, three, four, five, six, and seven, be amended and reenacted so as to read as follows: "Any Federal reserve bank may make application to the local Federal reserve agent for such amount of the Federal reserve notes hereinbefore provided for as it may require. Such application shall be accompanied with a tender to the local Federal reserve agent of collateral in amount equal to the sum of the Federal reserve notes thus applied for and issued Dursuant to such application. The collateral security thus offered shall be notes, drafts, bills of exchange, or acceptances rediscounted under the provisions of section thirteen of this Act, or bills of exchange indorsed by a member bank of any Federal reserve district and purchased under the provisions of section fourteen of this Act, or bankers' acceptaaces purchased under the provisions of said section fourteen, or gold or gold certificates; but in no event shall such collateral security, whether gold, gold certificates, or eligible paper, be less than the amount of Federal reserve notes applied for. The Federal reserve agent shall each day notify the Federal Reserve Board of all issues and withdrawals of Federal reserve notes to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

180 FEDEEAL RESERVE BULLETIN. MARGH 1, 1917. SENATE BILL. HOUSE BILL. and by the Federal reserve bank to which he is accredited. The said Federal Eeserve Board may at any time call upon a Federal reserve bank for additional security to protect the Federal reserve notes issued to it. " Every Federal reserve bank shall maintain reserves in gold or lawful money of not less than thirty-five per centum against its deposits and reserves in gold of not less than forty per centum against its Federal reserve notes in actual circulation: Provided, however, That when the Federal reserve agent holds gold or gold certificates as collateral for Federal reserve notes issued to the bank such gold or gold certificates shall be counted as part of the gold reserve which such bank is required to maintain against its Federal reserve notes in actual circulation. Notes so paid out shall bear upon their faces a distinctive letter and serial number, which shall be assigned by the Federal Reserve Board to each Federal reserve bank. Whenever Federal reserve notes issued through one Federal reserve bank shall be received by another Federal reserve bank they shall be promptly returned for credit or redemption to the Federal reserve bank through which they were originally issued or, upon direction of such Federal reserve bank, they shall be forwarded direct to the Treasurer of the United States to be retired. No Federal reserve bank shall pay out notes issued through another under penalty of a tax of ten percentum upon the face value of notes so paid out. Notes presented for redemption at the Treasury of the United States shall be paid out of the redemption fund and returned to the Federal reserve banks through which they were originally issued, and thereupon such Federal reserve bank shall, upon demand of the Secretary of the Treasury, reimburse such redemption fund in lawful money or, if such Federal reserve notes have been redeemed by the Treasurer in gold or gold certificates, then such funds shall be reimbursed to the extent deemed necessary by the Secretary of the Treasury in gold or gold certificates, and such Federal reserve bank shall, so long as any of its Federal reserve notes remain outstanding, maintain with the Treasurer in gold an amount sufficient in the judgment of the Secretary to provide for all redemptions to be made by the Treasurer. Federal reserve notes received by the Treasurer otherwise than for redemption may be exchanged for gold out of the redemption fund hereinafter provided Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 181 SENATE BILL. HOUSE BILL. and returned to the reserve bank through which they were originally issued, or they may be returned to such bank for the credit of the United States. Federal reserve notes unfit for circulation shall be returned by the Federal j reserve agents to the Comptroller of the Cur- ! rency for cancellation and destruction. "The Federal Reserve Board shall require each Federal reserve bank to maintain on deposit in the Treasury of the United States a sum in gold sufficient in the judgment of the Secretary of the Treasury for the redemption of the Federal reserve notes issued to such bank, but in no event less than five per centum of the total amount of notes issued less the amount of gold or gold certificates held by the Federal reserve agent as collateral security; but such deposit of gold shall be counted and included as part of the forty per centum reservo hereinbefore required. The board shall have the right, acting through the Federal reserve agent, to grant, in whole or in part, or to reject entirely the application of any Federal reserve bank for Federal reserve notes; but to the extent that such application may be granted the Federal Reserve Board shall, through its local Federal reserve agent, supply Federal reserve notes to the bank so applying, and such bank shall be charged with the amount of notes issued to it and shall pay such rate of interest as may be established by the Federal Reserve Board on only that amount of such notes which equals the total amount of its outstanding Federal reserve notes less the amount of gold or gold certificates held by the Federal reserve agent as collateral security. Federal reserve notes issued to any such bank shall, upon delivery, together with such notes of such Federal reserve bank as may be issued under section eighteen of this Act upon security of United States two per centum Government bonds, become a first and paramount lien on all the assets of such bank. "Any Federal reserve bank may at an^y time reduce its liability for outstanding Federal reserve notes by depositing with the Federal reserve agent its Federal reserve notes, gold, gold certificates, or lawful money of the United States. Federal reserve notes so deposited shall not be reissued, except upon compliance with the conditions of an original issue. "The Federal reserve agent shall hold such gold, gold certificates, or lawful money available exclusively for exchange for the outstanding Federal reserve notes when offered by the 82341—17 5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

182 FEDERAL KESE&VE BULLETIN. MARCH 1, 1917. SENATE BILL. HOUSE BILL. reserve bank of which he is a director. Upon the request of the Secretary of the Treasury the Federal Reserve Board shall require the Federal reserve agent to transmit to the Treasurer of the United States so much of the gold held by him as collateral security for Federal reserve notes as may be required for the exclusive purpose of the redemption of such Federal reserve notes, but such gold when deposited with the Treasurer shall be counted and considered as if collateral security on deposit with the Federal reserve agent. "Any Federal reserve bank may at its discretion withdraw collateral deposited with the local Federal reserve agent for the protection of its Federal reserve notes issued to it and shall at the same time substitute therefor other collateral of equal amount with the approval of the Federal reserve agent under regulations to be prescribed by the Federal Reserve Board. Any Federal reserve bank may retire any of its Federal reserve notes by depositing them with the Federal reserve agent or with the Treasurer of the United. States, and such Federal reserve bank shall thereupon be entitled to receive back the collateral deposited with the Federal reserve agent for the security of such notes. Federal reserve banks shall not be required to maintain the reserve or the redemption fund heretofore provided for against Federal reserve notes which have been retired. Federal reserve notes so deposited shall not be reissued except upon compliance with the conditions of an original issue." SEC. 5. That section sixteen be further amended by adding at the end. of the section the following: "That the. Secretary of the Treasury-is hereby authorized and directed to receive deposits oi: gold coin or of gold certificates with the Treasurer or any Assistant Treasurer of the United States when tendered by any Federal reserve bank or Federal reserve agent for credit to its or his account with the Federal Reserve Board. The Secretary shall prescribe by regulation the form of receipt to be issued by the Treasurer or Assistant Treasurer to the Federal reserve bank or Federal reserve agent making the deposit, and a duplicate of such receipt shall be delivered to the Federal Reserve Board by the Treasurer at Washington upon proper advices from any Assistant Treasurer that such deposit lias been made. Deposits so made shall be held subject to the orders of the Federal Reserve Board and shall Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAIICH 1, 1917. FEDERAL RESERVE BULLETIN". 183 SENATE BILL. HOUSE BILL. be payable in gold coin or gold certificates on the order of the Federal Reserve Board to any Federal reserve bank or Federal reserve agent at the Treasury or at the Sub treasury; of the United States nearest the place of business of such Federal reserve bank or such Federal reserve agent: Provided, however, That any expense incurred in shipping gold to or from the Treasury or Subtreasuries in order to make such payments, or as a result of making such payments, shall be paid by the Federal Reserve Board and assessed against the Federal reserve banks. The order used by the Federal Reserve Board in making such payments-shall be signed by the governor or vice governor, or such other officers or members as the board may by regulation prescribe. The form of such order shall be approved by the Secretary of the Treasury. "The expenses necessarily incurred in carrying out these provisions, including the cost of the certificates or receipts issued for deposits received, and all expenses incident to the handling of such deposits shall be paid by the Federal Reserve Board and included in its assessments against the several Federal reserve banks. j "Gold deposits standing to the credit of any | Federal reserve bank with the Federal Reserve I Board shall, at the option of said bank, be | counted as part of the lawful reserve which il | is required to maintain against outstanding Federal reserve notes, or as a part of the reserve it is required to maintain against deposits. '•'Nothing in this section shall be construed as amending section six of the Act of March fourteenth, nineteen hundred, as amended by the Acts of March fourth, nineteen hundred and seven, March second, nineteen hundred and eleven, and June twelfth, nineteen hundred and sixteen, nor shall the provisions of this section i be construed to apply to the deposits made ; or to the receipts or certificates issued under this section." SEC. 6. That section seventeen be, and 'is SEC. 4. That section seventeen be, and is hereby, amended so as to read as follows: hereby, amended so as to read as follows: . "SEC. 17. So much of the provisions of sec- "SEC. 17. So much of the provisions of section fifty-one hundred and fifty-nine of the tion fifty-one hundred and fifty-nine of the Revised Statutes of the United States and sec- Revised Statutes of the United States and section four of the Act of June twentieth, eighteen tion four of the Act of June twentieth, eighteen hundred and seventy-four, and section eight hundred and seventy-four, and section eight of of the Act of July twelfth, eighteen hundred the Act of July twelfth, eighteen hundred and and eighty- two, and of any other provisions of eighty-two, and of any other provisions of exexisting statutes as require that* before any isting statutes as require that before any national banking associations shall be author- national banking associations shall be authorized to commence banking business it shall ized to commence banking business it shall Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

184 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. SENATE BILL. HOUSE BILL. transfer and deliver to the Treasurer of the transfer and deliver to the Treasurer of the United States a stated amount of United States United States a stated amount of United States registered bonds, and so much of those pro- registered bonds, and so much of those provisions or of any other provisions of existing visions or of any other provisons of existing statutes as require any national banking asso- statutes as require any national banking associations now or hereafter organized to maintain ciations now or hereafter organized to maintain a minimum deposit of such bonds with the a minimum deposit of such bonds with the Treasurer is hereby repealed." Treasurer is hereby repealed/7 SEC. 7. That section nineteen be amended SEC. 5. That section nineteen be further and reenacted so as to read as follows: amended and reenacted so as to read as follows: "SEC. 19. Demand deposits within the mean- " SEC. 19. Demand deposits within the meaning of this Act shall comprise all deposits pay- ing of this Act shall comprise all deposits pay* able within thirty days, and time deposits able within thirty days, and time deposits shall comprise all deposits payable after thirty shall comprise all deposits payable after thirty days, all savings accounts and certificates of days, all savings accounts and certificates of deposit which are subject to not less than deposit which are subject to not less than thirty thirty days' notice before payment, and all days' notice before payment, and all postal postal savings deposits. savings deposits. "Every bank, banking association, or trust "Every bank, banking association, or trust company which is or which becomes a member company which is or which becomes a member of any Federal reserve bank shall establish and of any Federal reserve bank shall establish and maintain with its Federal reserve bank reserves maintain reserve balances with its Federal as follows: reserve bank as follows: " (a) If not in a reserve or central reserve " (a) If not in a reserve or central reserve city, city, as now or hereafter defined, it shall hold as now or hereafter defined, it shall hold and and maintain with the Federal reserve bank of maintain with the Federal reserve bank of its its district actual net reserves equal to not less district an actual net balance equal to not less than six per centum of the aggregate amount than seven per centum of the aggregate amount of its demand deposits and three per centum of its demand deposits and three per centum of of its time deposits. its time deposits. " (b) If in a reserve city, as now or hereafter " (b) If in a reserve city, as now or hereafter defined, it shall hold and maintain with the defined, it shall hold and maintain with the Federal reserve bank of its district actual net Federal reserve bank of its district an actual reserves equal to not less than ten per centum net balance equal to not less than ten per of the aggregate amount of its demand deposits centum of the aggregate amount of its demand and three per centum of its time deposits. deposits and three per centum of its time deposits. " (c) If in a central reserve city, as now or " (c) If in a central reserve city, as now or hereafter defined it shall hold and maintain hereafter defined it shall hold and maintain with the Federal reserve bank of its district an with the Federal reserve bank of its district actual net reserve equal to not less than thir- an actual net balance equal to not less than teen per centum of the aggregate amount of thirteen per centum of the aggregate amount its demand deposits and three per centum of of its demand deposits and three per centum its time deposits. of its time deposits. "Every member bank shall maintain in its own vaults an amount of specie or currency equal to at least four per centum of its demand deposits less the amount of those reserves with the Federal reserve bank which are in excess of the minimum reserves required by this section. " No member bank shall keep on deposit with " No member bank shall keep on deposit with any nonmember bank a sum in excess of ten any nonmember bank a sum in excess of ten per centum of its own paid-up capital and per centum of its own paid-up capital and sursurplus. No member bank shall act as the plus. No member bank shall act as the me- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 185 SENATE BILL. HOUSE BILL. medium or agent of a nonrnember bank in dium or agent of a nonmember bank in applyapplying for or receiving discounts from a ing for or receiving discounts from a Federal Federal reserve bank under the provisions of reserve bank under the provisions of this Act, this Act except by permission of the Federal except by permission of the Federal Reserve Reserve Board. Board. " The reserve carried by a member bank with "The required balance carried by a member a Federal reserve bank may, under the regula- bank with a Federal reserve bank may, under tions and subject to such penalties as may be the regulations and subject to such penalties prescribed by the Federal Reserve Board, be as may be prescribed by the Federal Reserve checked against and withdrawn by such mem- Board, be checked against and withdrawn by ber bank for the purpose of meeting existing such member bank for the purpose of meeting liabilities: Provided, however, That no bank existing liabilities: Provided, however, That no shall at any time make now loans or shall pay bank shall at any time make new loans or shall any dividends unless and until the total reserve pay any dividends unless and until the total required by law is fully restored. balance required by law is fully restored. "In estimating the reserves and the cash in "In estimating the balances required by this vault required by this Act, the net balance of Act, the net difference of amounts due to and amounts due to and from other banks shall be from other banks shall be taken as the basis for taken as the basis for ascertaining the deposits ascertaining the deposits against which reagainst which reserves with Federal reserve quired balances with Federal reserve banks banks and cash in vault shall be determined. shall be determined. "National banks, or banks organized under "National banks, or banks organized under local laws, located in Alaska or in a dependency local laws, located in Alaska or in a dependency or insular possession or any part of the United or insular possession or any part of tho United States outside the continental United States States outside the continental United States may remain nonmember banks, and shall in may remain nonmember banks, and shall in that event maintain reserves and comply with that event maintain reserves and comply with all the conditions now provided by law regu- all the conditions now provided by law regulating them; or said banks except in the Phil- lating them; or said banks may, with the conippine Islands may, with the consent of the sent of the Reserve Board, become member Federal Reserve Board, become member banks banks of any one of the reserve districts, and of any one of the reserve districts, and shall in shall in that event take stock, maintain rethat event take stock, maintain reserves, and serves, and be subject to all the other provisions be subject to all the other provisions of this of this Act," Act," SEC* 8. That that part of section twenty-two SEC, 6. That that part of section twenty-two which reads as follows: "Other than the usual which reads as follows: "Other than the usual salary or director's fees paid to any officer, di- salary or director's fees paid to any officer, rector, or employee of a member bank and director, or employee of a member bank and other than a reasonable fee paid by said bank other than a reasonable fee paid by said bank to to such officer, director, or employee for serv- such officer, director, or employee for services ices rendered to such bank, no officer, director, rendered to such bank, no officer, director, ememployee, or attorney of a member bank shall ployee, or attorney of a member bank shall be be a beneficiary of or receive, directly or indi- a beneficiary of or receive, directly or indirectly, rectly, any fee, commission, gift, or other con- an}r fee, commission, gift, or business of the sideration for or in connection with any transac- bank," be, and hereby is, amended and reention or business of the bank,", be, and hereby acted so as to read as follows: is, amended and reenacted so as to read as follows: "Other than the usual salary or director's "Other than the usual salary or fee paid to fee paid to any officer, director, employee, or | any officer, director, employee, or attorney of a attorney of a member bank, and other than a member bank, and other than a reasonable fee reasonable fee paid by said bank to such officer, paid by said bank to such officer, director, emdirector, employee, or attorney for services ren- ployee, or attorney for services rendered to dered to such bank, no officer, director, em- such bank, no officer, director, employee, or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

186 FEDERAL RESERVE BULLETIN. MARCH 1, 191.7. SENATE BILL. HOUSE BILL. ployee, or attorney of a member bank shall be attorney of a member bank shall be a benea beneficiary of or receive, directly or indirectly, ficiary of or receive, directly or indirectly, any any fee, commission, gift, or other considera- fee, commission, gift, or other consideration fo"r tion-for or in connection with any transaction or in connection with any transaction-or busior business of the bank: Provided, however, ness of the bank: Provided, however, That noth- That nothing in this Act contained shall be con- ing in this Act contained shall be construed to strued to prohibit a director, officer, or em- prohibit a director, officer, or employee from ployee from receiving the same rate of interest receiving the same rate of interest paid to other paid to other depositors for similar deposits depositors for similar deposits made with such' made with such bank: And provided further, bank: And provided further, That notes, drafts, That notes, drafts, bills of exchange, or other bills of exchange, or other evidences of debt evidences of debt executed or indorsed by di- executed or indorsed by directors of a member rectors of a member bank may be discounted bank may be discounted with such member with such member bank on the same terms and bank on the same terms and conditions as other conditions as other notes, drafts, bills of ex- notes, drafts, bills of exchange, or evidences of change, or evidences of debt upon the affirma- debt upon the affirmative vote or written assent tive vote or written assent of at least three- of a* majority of the board of directors of such fourths of the members of the board of directors member bank. of such member bank. SEC. 7. That section three of the Act be amended and reonactcd so as to read as follows : "SEC. 3. The Federal Reserve Board may permit or require any Federal reserve bank to establish branch banks within the Federal reserve district in which it is located or within the district of any Federal reserve bank which may have been suspended. Such branches, subject to such rules and regulations as the Federal Reserve Board may prescribe, shall be operated under the supervision of a board of directors to consist of not more than seven nor loss than three directors, of whom a majority of one shall be appointed by the Federal reserve bank of the district, and the remaining directors by the Federal Reserve Board. Directors of branch banks shall hold office during the pleasure of the Federal Reserve Board." SEC. 8. That section fourteen, subsection (e), of the Act be.amended and reenacted so as to read as follows: " (e) To establish accounts with other Federal reserve banks for exchange purposes and, with the consent or upon the order and direction of the Federal Reserve Board, and, under regulations to be prescribed by said board, to open and maintain accounts in foreign countries, appoint correspondents, and establish agencies in such countries wheresoever it may be deemed best for the purpose of purchasing, selling, and collecting bills of exchange, and to buy and sell, with or without its indorsement, through such correspondents or agencies, bills of exchange (or acceptances) arising out of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1017. FEDERAL RESERVE BULLETIN. 187 SENATE BILL. i ' HOUSE BILL. i actual commercial transactions which have | not more than ninety days to run, exclusive \ of days of grace, and which bear the signature i of two or more responsible parties, and, with the consent of the Federal Reserve Board, to open and maintain banking accounts for such foreign correspondents or agencies. Whenever any such account has been opened or agency or correspondent has been appointed by a Federal reserve bank, with the consent i of or under the order and direction of the I Federal Reserve Board, any other Federal I reserve bank may, with the consent and approval of the Federal Reserve Board, be : • permitted to curry on or conduct, through i the Federal reserve bank opening such account j or appointing such agency or correspondent, i any transact ion authorized by this section ' under rules and regulations to be proscribed • by the board." 1 Sixty-fourth Congress, second session. II. K. 20540. In the House of •: Jie'presoiUatives", January 26, 1917. Mr. Glass introduced the follow- ! ing bill: which was referred'to the Commit,Ice on Banking and Cur- ', rericy and ordered to be printed.] A BILL TO authorize national banking associations to establish branches. ' Be it enacted by the Senate and House of I Representatives of the United States of America I in Congress assembled, That the Act approved i December twenty-third, nineteen hundred and I and thirteen, known as the Federal reserve | Act, be and the same hereby is, amended by ; ! adding a new section as follows: . "DOMESTIC BRANCHES. i "SEC. 25a. That any member bank located ! in a city or incorporated town of more than i one hundred thousand inhabitants and posj sossing a capital and surplus of $1,000,000 or more may, under such rules and regulations ! as the Federal Reserve Board may prescribe, | establish branches, not to exceed ton in I number, within the corporate limits of the i city or town in which it is located: Provided } I That no such branch, shall be established in ! any State in which neither State banks nor trust companies may lawfully establish I branches: And provided further, That the ! number of branches which a member bank ! may establish shall not exceed the number of branches which the laws of the State in ''• which, said bank is situated permit a State \ bank or trust company to establish within i the corporate limits of said city or town." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

188 FEDERAL RESERVE BULLETIN. MARCH I, 1917. SENATE REPORT. man and vice chairman, the third class C director shall preside at meetings of the Board." [Sixty-fourth Congress, second session. Calendar No. 947. Senate Be port No. 1059. FEBRUAKY 14 (calendar day, FEBRUARY 16). 1917.— The first section abolishes the office of deputy Ordered to be printed. Mr. Owen, from the Committee on Banking and Currency, submitted the following report, to accompany S. 8259.J chairman and Deputy Federal Reserve Agent and substitutes therefor an assistant to be The Committee on Banking and Currency, to appointed by the Federal Reserve Agent under which was referred the bill (S. 8259) to amend bond to the agent, at a salary to be fixed and the Federal Reserve Act, having considered the paid in the same manner as that of the Federal same, report it back without amendment and Reserve Agent. Existing law provides that in recommend its passage. the absence of the Federal Reserve Agent, the The amendments to the Federal Reserve Act! Deputy Reserve Agent acts in his place. The contained in this bill are strongly recommended | Board has had much difficulty in obtaining by the Federal Reserve Board, Gov. Harding, j from class C directors men qualified to fill the of the Board, having appeared in person before • the committee to explain the necessity for this ! position of Deputy Reserve Agent. This offiproposed legislation. ! cer is required to have the same qualifications as the Federal Reserve Agent; he must have The several sections of the bill are separately had banking experience and must not be an discussed in the following report, and for the officer, director, or stockholder in any bank. convenience of the Senate each section proposed As a rule, he is not a salaried officer, and his to be amended is printed so as to show existing only compensation is the fees paid directly law and the proposed change in existing law. upon attendance of meetings, although he is The existing law is shown in roman type, that compelled to be prepared at all times to assume portion of existing law which is to be stricken the duties of Federal Reserve Agent in case of out is shown in line type, and new matter is the absence or disability of that officer. This shown by italics. involves a transfer and auditing of securities, and the deputy reserve agent would find it SECTION 1.—ASSISTANTS TO RESERVE AGENTS. most inconvenient to leave his business and re- That section four of the act approved De- port immediately to the bank on short notice. cember twenty-third, nineteen hundred and The adoption of the amendment will more thirteen, known as the Federal Reserve Act, definitely fix the responsibility for the funds be amended by striking out the sentence and operates to give the board more latitude reading as follows: "One of the directors of in the selection of class C directors. class C, who shall be a person of tested banking The amendment in this section further proexperience, shall be appointed by the Federal vides that one of the directors of class C shall Reserve Board as deputy chairman and dep- be appointed by the Reserve Board as vice uty Federal Reserve Agent, to exercise the chairman to exercise the powers of chairman powers of the chairman of the Board and of the Board in case of the absence or disa- Federal Reserve Agent in case of absence or bility of the Federal Reserve Agent. Under disability of his principal," and by adding in existing law the Deputy Reserve Agent is also place thereof the following: deputy chairman. "Subject to the approval of the Federal Reserve Board, the Federal Reserve Agent shall appoint SECTION 2. EXTENDING CLEARING AND COLLECone or more assistants. Such assistants, who TION FACILITIES TO NOXMEMBER BANKS. shall be persons of tested banking experience, shall The following shows the proposed change in assist the Federal Reserve Agent in the performexisting law: ance of his duties and shall also have povjer to act SEC. 2. That the first paragraph of section in his name and stead during his absence or disthirteen be amended so as to read as follows: ability. The Federal Reserve Agent may require * # * # such bonds of his assistants as he may deem necessary for his own protection. Assistants to [See Section 2 of Senate bill, printed above.] the Federal Reserve Agent.shall receive am annual Section 2 proposes to amend the first paragraph compensation to be fixed and paid in the same of section 13 of the Federal Reserve Act so as to manner as that of the Federal Reserve Agent. permit nonmember banks or trust companies to One of the directors of class C shall be appointed deposit funds in Federal Reserve Banks solely by the Federal Reserve Board as vice chairman to for the purposes of exchange or collection. This exercise the powers of the chairman of the Board privilege is to be extended only in the event that in case of the absence or disability of the Federal such nonmember bank or trust company main- Reserve Agent; in case of the absence of the chair- tains with the Federal Reserve Bank of its district Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDEBAL RESERVE BULLETIN. 189 such a balance as in the judgment of the Federal Banks a large amount of gold which now serves Keserve Board may be deemed necessary. no very useful purpose in the pockets of the Any clearing and collection plan to be effect- people or as till money in the member banks. ive must be comprehensive enough to include The adoption of this proposal would result in all checks. The following statement from the causing the gravitation into Federal Reserve members of the Federal Reserve Board is in Banks of probably §200,000,000 of gold. It justification of this proposed amendment: would strengthen the potentiality of the bank in accommodating our national commerce by It is contemplated that the compensating balances vrhich nonmember banks participating in the clearing plan vill giving to these banks the power, in case the be required to keep vdth "Federal Reserve Banks will be exigency should ever arise, and to the extent sufficiently large to protect member banks and justify that this gold should be attracted into the cus- Federal Reserve Banks in undertaking the service. Any tody of the Federal Reserve Banks, to issue clearing and collection j>lan to be effective must be so comprehensive as to include all checks. At present the Federal Reserve notes against qualified compar lists of the Federal Reserve Banks include the names mercial paper at par, and would have- the effect of banks checks on which can be collected in any circum- of magnifying the power of the banks and stances at a minimum of time and expense, but do not strengthening public confidence in the Federal embrace a large number of tov.-ns in every State where there are no member banks; and in order to make col- Reserve System. lections on such points many banks are obliged to maintain The Imperial Bank of Germany has demonaccounts in addition to their reserve accounts with the strated the value of the system of issuing legal- Federal Reserve Banks. A necessary factor in any suctender notes against commercial bills of a qualicessful clearing plan is the offset whereby balances only require settlement instead of the total volume of trans- fied class. It has had a very great stabilizing actions. As long as the clearing system does not embrace effect upon Germany's finance, industry, and all of the banks, this offset is lost in a corresponding degree commerce. and the value of the system diminished in proportion. The Bank of England has on occasion, by a SECTION 3. FOREIGN ACCEPTANCES. ministerial permit, authorized the issuance of legal-tendo/notcs against commercial bills. SEC. 3. That the fifth paragraph of section The Federal Reserve System has been very thirteen be, and is hereby, amended so as to much more conservative than either of these read as follows: plans, requiring as security for Federal Reserve * * * # notes 100 per cent in qualified commercial [See section 3 of Senate bill, printed above.] bills plus 40 per cent gold, besides the security Section 3 proposes to amend the fifth para- of tlie entire banking system of the United graph of section 13 of the Reserve Act so as to States, which is, of course, behind these notes, permit the Federal Reserve Board to authorize with its capital, surplus, and double liability member banks to accept foreign bills of ex- of stockholders. change growing out of transactions involving The effect of the proposed amendment is to the importation or exportation of goods to an permit the Federal Reserve Banks, if the occaamount not exceeding 100 per cent of its paid- sion should ever arise, to issue to the limited up and unimpaired capital and surplus. The extent that it has received gold in lieu of Fedacceptance for any one person, company, or eral Reserve notes—to that extent and to that firm, is restricted, however, to not more than extent only—Federal Reserve notes against 100 20 per cent of the bank's paid-up and unim- per cent of qualified commercial bills of short paired capital and surplus. maturities, underwritten by member banks, as required by statute. SECTION 4. GOLD AND GOLD CERTIFICATES AS Your committee regards this as an impor- COLLATERAL SECURITY FOR THE ISSUANCE OF tant improvement in the system. FEDERAL RESERVE NOTES. SEC. 4. That section sixteen, paragraphs SECTION 5. PERMITTING DEPOSITS OF GOLD two, three, four, five, six, and seven, be further COIN AND GOLD CERTIFICATES WITH THE amended and reenacted so as to read as follows: TREASURER AND SUBTREASURER TO THE CREDIT OF THE FEDERAL RESERVE BOARD. * * * * [See section 4 of Senate bill, printed above.] SEC. 5. That section sixteen be further The amendment to section 16 will permit the amended by adding at the end of the section Federal Reserve Banks to receive gold coin and the following: gold certificates in exchange for Federal Re- * * * * * serve notes, which is now done by indirection. [See section 5 of Senate bill, printed above.] It is of great importance to the Federal Re- This is added for the convenience of the serve System to attract to the Federal Reserve Federal Reserve Board in making its adjust- 82341—17 6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

190 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. ments of gold and gold certificates, so as to banks. The object of the amendment is twopermit these adjustments to be made by a fold. First, to increase the gold holdings of the system of bookkeeping rather than by the Federal Reserve System, and thus strengthen actual physical transfer of the gold and gold the system against any exigency that may recertificates. sult from the European war, and secondly, to decrease the amount of reserves required of SECTION 6. RELIEVING NATIONAL BANKS OF THE member banks. The amendment would add NECESSITY OF KEEPING ON DEPOSIT UNITED approximately §200,000,000 of gold to the pres- STATES BONDS WITH THE TREASURER. ent holdings' of the Federal Reserve Banks. The amendment also proposes to require the SEC. 6. That section seventeen be, and is member banks to maintain in their own vaults, hereby, amended so as to read as follows: for till money, an amount equal at least to 4 per "SEC. 17. So much of the provisions of seccent of its demand deposits. tion fifty-one hundred and lifty-nine of the Revised Statutes of the United States, and section four of the Act of June twentieth, SECTION 8. PERMITTING DIRECTORS, OFFICERS, eighteen hundred and seventy-four, and section OR EMPLOYEES OF MEMBER BANKS TO REeight of the Act of July twelfth, eighteen hun- CEIVE INTEREST ON DEPOSITS AND TO OBTAIN dred and eighty-two, and of any other provi- ACCOMMODATIONS UNDER CERTAIN RESTRICsions of existing statutes as require that before TIONS. any national banking associations shall be SEC. 8. That that part of section twenty-two authorized to commence banking business it which reads as follows: "Other than the usual shall transfer and deliver to the Treasurer of salary or director's fees paid to any officer, the United States a stated amount of United director, or employee of a member bank and States registered bonds, and so much of those other than a reasonable fee paid by said bank provisions or of any other provisions^ of existing to such officer, director, or employee for servstatutes as require any national hanking associa- ices rendered to such bank, no officer, director, tions now or hereafter organized to maintain a employee, or attorney of a member bank shall minimum deposit of such honds with the Treasurer be a beneficiary of or receive, directly or inis hereby repealed." directly, any fee, commission, gift, or other con- This proposed amendment merely obviates a sideration for or in connection with any transpractice no longer required under the Federal action or business of the bank," be, and hereby Reserve Act of compelling national banks to is, amended and reenacted so as to read as keep a minimum deposit of United States follows: bonds with the Treasurer of the United States. "Other than the usual salary or director's National banks are no longer required to fees fee paid to any officer, director, e^ employee, keep outstanding a minimum amount of cir- or attorney of a member bank, and other than a culating notes and a newly organized bank is reasonable fee paid by said bank to such officer, not obliged to purchase or carry any bonds of director, e? employee, or attorney for services the United States; but there are a number of rendered to such bank, no officer, director, emnational banks, organized before the passage ployee, or attorney of a member bank shall be of the Federal Reserve Act, which have retired a beneficiary of or receive, directly or indirectly, their national bank circulation in full, yet they any fee, commission, gift, or other consideraare, under a construction of the old law, re- tion for or in connection with any transaction quired to keep on deposit with the Treasurer or business of the bank: Provided, however. of the United States a certain minimum of That nothing in this Act contained shall he con- United States bonds. The committee believes strued to prohibit a director, officer, or employee that these banks should be relieved of further from receiving the same rate of interest paid to obligation in this matter. other depositors for similar deposits made with such hanlc: And provided, further. That notes, SECTION 7. RESERVES. drafts, hills of exchange, or other evidences of debt executed or indorsed by directors of a member hanlc SEC. 7. That section nineteen be amended may he discounted with such member bank on the and reenacted so as to read as follows: same terms and conditions as other notes, drafts, hills of exchange, or evidences of debt upon the [See section 7 of Senate bill, printed above.] affirmative vote or written assent of at least three- This section provides for a readjustment and fourths of the members of the hoard of directors of decrease in the reserves required of the member such member hank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL EESEEVE BULLETIN. 191 This amendment removes an evident hard- posed change will operate to fix responsibility ship imposed upon directors, officers, and em- more definitely and will give the Board more ployees "of member banks, who, under existing jlatitude in the selection of class C directors. law, are precluded from drawing interest on | Section 2 of the bill proposes an amendment their deposits and prevented from obtaining ito section 13 of the Federal Reserve Act to accommodations in their own bank. The j permit nonmember State banks and trust comamendment very properly provides for restric- jpanies, even though too small to be eligible for tions upon such loans which, in the judgment j membership in the Federal Reserve Banks, to of the Federal Reserve Board and of your com- avail themselves of the clearing and collection mittee, properly insures the bank against fraud facilities of the Federal Reserve System, proand incident loss. vided they cover at par checks on themselves sent for collection by the Federal Reserve Bank, and provided further that they keep a HOUSE REPORT. compensating balance with the Federal Reserve Banks in an amount to be determined [Sixty-fourth Congress, second session. House of Representatives. Report No. 1406. February 2, 1917.—Committed to the Committee under the rules prescribed by the Federal of the Whole House on the state of the Union and ordered to be printed. Reserve Board. On this point the Federal Mr. Glass, from the Committee on Banking and Currency, submitted Reserve Board says: the following Report, to accompany II. R. 20601.] It is contemplated that the compensating balances which The Committee on Banking and Currency, nonmember banks participating in the clearing plan will to which was referred II. It. 20661, to amend be required to keep with Federal Reserve Banks will be the* act approved December 23, 1913, known sufficiently large to protect member banks and justify as the Federal Reserve Act, as amended by the Federal Reserve Banks in undertaking the service. Any clearing and collection plan to be effective must be so acts of August 4, 1914, August 15, 1914, March comprehensive as to include all checks. At present the 3, 1915, and September 7, 1916, report the bill par lists of the Federal Reserve Banks include the names of with the recommendation that it do pass. banks checks on which can be collected in any circum- The modifications of the Federal Reserve stances at a minimum of time and expense, but do not embrace a large number of towns in every State where Act proposed by this bill were all suggested there are no member banks; and in order to make coland are strongly recommended by the Federal lections on such points many banks are obliged to maintain Reserve Board and, in large measure, are ap- accounts in addition to their reserve accounts with the proved by the advisory counsel to the Federal Federal Reserve Banks. A necessary factor in any successful clearing plan is the offset whereby balances only Reserve Board. require settlement instead of the total volume of trans- The suggestion in the first provision of the |actions. As long as the clearing system does not embrace bill to abolish the title and office of Deputy Iall of the banks, this offset is lost in a corresponding degree Federal Reserve Agent and to authorize the j and the value of the system diminished in proportion. Federal Reserve Agent to appoint one or more j Section 3 of the bill is an amendment of secassistants qualified to act for the Federal j tion 13 of the Federal Reserve Act designed to Reserve Agent, when necessary, was suggested restore the provision which was, by error, by the Federal Reserve Board for the reason stricken from the act in the amendments of that the practical administration of the act September 7, 1916, thus restoring to national has developed the fact that there has been banks, with the approval of the Federal much difficulty in filling the office of Deputy Reserve Board, the right to accept up to 100 Federal Reserve Agent from the class C per cent of their capital and surplus m transdirectors. This officer is required to have the actions based upon the exportation and imsame qualifications as the Federal Reserve portation of goods. Agent; lie must have had. banking experience Section 4 of the bill proposes an amendment and must not bo an officer, director, or stock- to section 17 of the Federal Reserve Act to holder in any bank. At the same time lie is make clear the intention of the act to cancel not, as a rule, a salaried officer and receives all provisions of the national-bank act which only tho customary fees paid directly for require national banks to maintain a minimum attendance upon meetings. He is obliged' to be deposit of Government bonds with the Treasprepared to assume the duties of the federal urer of the United States. National banks are Reserve Agent in case of absence or disability no longer required to keep outstanding a miniof that officer, which involve a transfer and mum amount of circulating notes, and a newly audit of securities and accounts. The Federal organized bank is not obliged to purchase or Reserve Board suggests, and the Committee on carry any bonds of the United States; but Banking and Currency believes, that the pro- there are a number of national banks organized Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

192 FEDERAL EESEEVE BULLETIN. MARCH 1, 1917. before the passage of the Federal Reserve Act for an outflow of gold without any disturbances of our own which have retired their national-bank circu- or to the world's business, and without making necessary drastic changes in our interest or discount rates. The lation in full, yet they are, under a construction amendments suggested by the board are designed to enable of the old law, required to keep on deposit with the Federal Keserve Banks to withdraw gold from actual the Treasurer of the United States*a certain circulation while enabling member banks at the same time minimum of United States bonds. The Fed- to release gold which at present is tied up in their own vaults. The amendments are based upon the theory eral Reserve Board feels, and the committee that all of the individual banks should strengthen the gold agrees, that it is just to these banks that they holdings of the Federal Reserve Banks. The country's be relieved of this obligation. holdings of gold are not used most effectively when they Section 5 of the bill proposes to amend and are in the vaults of a large number of banks scattered all over the country, but its greatest use would come from conreenact section 19 of the Federal Reserve Act centrating it to "a greater degree in the vaults of the Federal so as to reduce the statutory reserves of mem- Reserve Banks, where it can be effectively protected when ber banks and to require all of the reserves of not required and effectively used when needed. The these banks to be deposited in the Federal member bank does not require gold with which to supply the ordinary demands of its depositors so much as currency. Reserve Banks. The primary purpose of the proposed change is to increase the gold holdings Section 6 of the bill proposing an amendof the Federal Reserve System so as to enable ment to the penal section of the Federal the system the better to withstand any exig- Reserve Act is intended to define more clearly ency that may ensue by reason of conditions the rights and limitations of directors of member .that might arise out of the European war. The banks in the matter of accepting fees and comamendment suggested would add approxi- pensation other than the ordinary fees paid mately $300,000,000 of gold to the present for legitimate services rendered in the regular holdings of the Federal Reserve Banks, while course of business, the performance of which slightly reducing rather than increasing the service is not incumbent upon them in their reserve requirements of member banks. The capacity of directors, law thus modified would leave to the business Sections 7 and 8 of the bill propose modifijudgment and discretion of member banks the cations of the Federal Reserve Act in the matter determination of the amount of currency they of establishing domestic and foreign branches. should carry in their own vaults to meet their Under existing law Federal Reserve Banks are daily business requirements. Respecting this required to establish domestic branches; secamendment the Federal Reserve Board says: tion 8 of this bill simply empowers the Federal Reserve Board to enforce this provision of The control of gold by Federal Reserve Banks in times existing law. In the matter of foreign branches of abundance, such as at present will decrease the danger of inflation of domestic credits and at the same time will existing law confides the sole discretion to the enable the country when the tide turns to part v;ith large reserve banks, whereas the bill under consums of gold with less inconvenience or shock, thus en- sideration empowers the Federal Reserve abling us more safely and effectively to proceed with the Board to permit or require Federal Reserve development of our foreign trade and to give the necessary credit facilities for its extension. The United States Banks to establish connections abroad. should be in a position to face conditions which may call Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1017. FEDERAL EESEEVE BTJLLEIIK. 193 INFORMAL RULINGS OF THE BOARD. Below are reproduced letters sent out from Acceptances. time to time over the signatures of the officers (To a member bank.) or members of the Federal Reserve Board You ask me for a letter that would guide you in your efforts to finance the cotton busiwhich contain information believed to be of ness of your clients by acceptances, and you general interest to Federal Reserve Banks and wish me to illustrate, step by step, how I would member banks of the system: do it if I were president of your bank, with a capital and surplus of $300^000, in handling Purchase of Nonnegotiablc Warrants. acceptances for a cotton firm to the amount (To a Federal Reserve Bank.) of, say, 8100,000. If the financing of this one firm to the extent The Board has given due consideration to of SI00,000 were your only problem there would your letter of January 17, with which you sent be no difficulty at all. Your customer—let me a copy of your counsel's letter of January 16, call him Smith for the sake of convenience— in reference to warrants issued by the city of would draw upon you at 90 days' sight, securing . I quote below our counsel's opinion, you by the pledge of cotton properly stored in which the Board concurs: in a ware house independent of himself. Smith would then proceed to sell this acceptance, "The Board has heretofore consistently which lie could do either by going to a local adhered to its policy of not undertaking to pass bank in your city or you could send it for him upon the legality of issue of any municipal to & St. Louis bank, or to the Federal Reserve securities. There are so many technical ques- Bank in St. Louis, which would buy your accepttions involved that it would be impossible for ance, provided your bank commands a suffithis office to give an opinion of value as to the cient credit, at the rate for private discounts— legality of any issue. To do so would require at present about 3£ per cent. Inasmuch as a careful analysis of the laws of the State in you accept, for one borrower in excess of 10 each case and an examination of the records of per cent of your capital and surplus you could the city or town issuing such securities in order not yourself buy the paper from your customer, to determine whether the laws had been strictly because, in that case, you would be making and technically complied with. You will recall him a loan and the 10 per cent limit would that for this reason the Board requires the opinapply. (Sec Federal Reserve Bulletin, Decemion of recognized counsel or of counsel for the ber/ 1916, p. 682.) The total limit up to city or town issuing the securities as a condition which your bank can accept is $150,000, and precedent to their purchase by a Federal inasmuch as there are, I suppose, other cus- Reserve Bank. I agree with counsel for the tomers in addition to Smith, for whom you bank that, assuming that these warrants have wish to undertake to finance cotton holdings, been legally issued, it would be necessary for I suggest that you arrange with a bank having the Board to waive that provision of its regulaa greater capital and surplus, either in St. Louis tion which requires taxes to be payable before or elsewhere, to participate with you in any the maturity of the warrant in order for your large acceptance proposition which presents Federal Reserve Bank to purchase any of these itself. For instance, take the case of Smith. warrants." You might properly accept for $30,000 and The Board is further of the opinion that a let the bank with which you have an arrange- Federal Reserve Bank should not buy a non- ment accept for the balance of the $100,000, negotiable warrant, and it would suggest fur- authorizing you to act as its agent in holding ther that in considering the purchase of war- and supervising the collateral security after rants issued by a municipality it would be well acceptance and compensating you for that to ascertain what the sinking fund require- service. ments are with reference to bonded obligations I hope that this letter answers your question of the municipality and whether or not these and shall be glad to give you any further requirements are being complied with. information that you might wish. FEBRUARY 13, 1917. FEBRUARY 19, 1917. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

194 FEDERAL RESERVE BULLETIN. MAECH 1, 1917. Purchases of Warrants. Our attention has been called to section 150 of the act of March 4, 1909, which provides (To Federal Reserve Banks.) in part that— Recently there have come to the Board some "* * * Whoever shall print, photograph, requests of Federal Reserve Banks for ap- • or in any other manner make or execute, or proval of purchases of warrants in excess ofI cause to be printed, photographed, made or the 25 per cent limit. ! executed, or shall aid in printing, photograph-' The object of this letter is to inform you that ; ing, making, or executing any- engraving, phothe Board does not believe that it would be | tograph, print, or impression in the likeness of food policy at this time for Federal Reserve | any such obligation or other security, or any lanks to invest in warrants. Such invest- | part thereof, * * * except by direction ments should be encouraged during periods of ; of some proper officer of the United States great ease of money and when rediscounts i * * * shall be fined not more than $5,000, from member banks and offers of bankers' I or imprisoned not more than 15 years, or both." acceptances are not expected to be heavy. ! The counsel is of the opinion that under a At the moment, however, when indications are I literal interpretation of this act your bank that rates are likely to harden and when ' could not engrave, photograph, print, or inake Federal Reserve Banks must be prepared to j an impression of any part of a Federal Reserve meet heavy demands upon them by their j note, which is an obligation of the United member banks, the Board thinks that it is States, without violating this statute. inadvisable to invest the funds of the Federal It seems, however, that the Secretary of the Reserve Banks in warrants. Treasury has authority under the act to au- FEBRUARY 20, 1917. thorize the use of this emblem, and it is suggested that you communicate with him, making the request specifically, with a reference Use of Note Emblem. at the same time to the correspondence with [To a Federal Reserve Bank.] this office. Your letter of January 19 asking if there is JANUARY 31, 1917. any legal objection to the use on the stationery of your bank of the emblem appearing on your The Secretary of the Treasury, with whom Federal Reserve notes, has been duly consid- the matter was taken up, deemed such use. of ered by the Board and by its counsel the emblem inadvisable. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 195 LAW DEPARTMENT. The following opinions of counsel have been The question to be considered is not whether authorized for publication by the Board since ithe obligation is in form a bill of exchange but the last edition of the Bulletin: whether, under given circumstances, such a Ibill of exchange may be said to have been Bills of Exchange Drawn Against Actually Existing jdrawn against actually existing values. This YaJue. ; is a question of fact to be determined in each A bill of exchange discounted before acceptance may be ! case, and it would seem to be advisable for the said to be drawn against actually existing value, within the meaning of section 13 of the Federal Reserve Act* Board to prescribe by regulation, or to suggest when and only when it is accompanied by shipping by circular to Federal Reserve Banks, what documents, warehouse receipts, or other papers securing factors should be considered in determining title to the goods sold. An accepted bill of exchange, whether a bill of exchange has been drawn unaccompanied by shipping documents or other such against actually existing values. papers, may be considered as drawn against actually existing value if drawn against the drawee at the time of, Section 5200, Revised Statutes, which limits or within a reasonable time after, the shipment or delivery the amount that any one person may become of the goods sold. In this latter case there must be reason- liable to a national bank for money borrowed, able grounds to believe th?t the goods are in existence in contains the following proviso: the hands of the drawee either in their original form or in the shape of the proceeds of their sale. "But the discount of bills of exchange drawn in good faith against actually existing values, NOVEMBER 27, 1916. and the discount of commercial or business Sm: Section 13 of the Federal Reserve Act, paper actually owned by the person negotiating after providing for the rediscount of notes, the same shall not be considered as money drafts, and bills of exchange by Federal Reserve borrowed." Banks for member banks, contains the follow- As commercial or business paper is not ing provision: included in that part of section 13 of the "The aggregate of such notes and bills Federal Reserve Act which is quoted above, it bearing the signature or indorsement of any is evident that Congress intended to permit one person, company, firm, or corporation Federal reserve banks to rediscount without rediscounted for any one bank shall at no time limit "bills of exchange drawn against actually exceed ten per centum of the unimpaired capital and surplus of said bank; but this existing values" acquired by member banks restriction shall not apply to the discount of under section 5200 but did not intend to exempt bills of exchange drawn in good faith against from the limitations of section 13 that more actually existing values." comprehensive class of negotiable paper re- This office has been asked for an opinion on ferred to as "commercial or business paper the question of whether or not a trade accept- actually owned by the person negotiating the ance as defined by the regulations of the Board same." This latter class maybe said to inmay be treated as a bill of exchange drawn clude a note, draft, bill of exchange or other against actually existing values when offered evidence of debt given in a. commercial or for rediscount to a Federal Reserve Bank by a business transaction if the person negotiating member bank. it is the actual owner of the debt evidenced by In Regulation "B," series of 1916, a trade the instrument in question. acceptance is defined as "A bill of exchange Congress, however, authorized Federal drawn by the seller on the purchaser of goods Reserve Banks to discount without limit only sold, and accepted by such purchaser." that class of commercial or business paper It is clear that a bill of exchange does not which consists of bills of exchange drawn lose its characteristics as such when it is against actually existing values. This being accepted by the drawee. true, it is necessary to determine whether the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

196 FEDERAL RESERVE BULLETIN. MARCH 1, 39J7. language "actually existing values" when ap- ! The question to be determined, therefore, is plied to trade acceptances may be said to refer | whether such an instrument may be said to be to the value of the commodity sold and for i drawn against actually existing values. which the bill of exchange is drawn, or can beI While section 5200 has been in force since said to refer to the financial responsibility of ! June 3, 1864, I have been unable to find any the purchaser or drawee. adjudicated case in which the language "actu- The former view has been adopted by the? ally existing values" as used in the statute has office of the Comptroller as the more reasonable been construed by the United States courts. interpretation. This seems clearly justifiable, The question was considered, however, in the (a) since it is unlikely that Congress would case of The Second National Bank of Oswego v. have used the language "existing values" if it Burt, 93 N. Y. 233, when in construing the had intended to refer merely to the financial language of section 5200, under consideration, responsibility of an individual, firm, or corpora- the court said: tion, and (6) because the drawee against whom "We think it entirely immaterial whether the bill is drawn is not legally bound to pay it such bills are accompanied by a specific bill of until the bill is accepted. lading in each case or are drawn against property previously consigned, and existing either In other words, if such bills were excepted in its original form or in the shape of proceeds from the limitations of section 5200 because the of sales in the hands of the consignees. In bank has recourse against some existing values either case the funds have already been proand is not dependent solely upon the responsi- vided by the drawer in the hands of the drawees bility of the drawer or indorsor who discounts to meet the requirements of the obligation. "Tho object of this provision of the Currency it, the bank must be in a position to enforce act was to guard national banks from the hazthis claim legally against whatever constitutes ard of loaning money in improvident amounts the existing value against which the bill is upon speculative and accommodation paper, drawn and must, therefore, have a lien in some but it contemplated and permitted to an unlimform evidenced by a bill of lading, warehouse ited amount the discount of paper used and required in facilitating the transfer of property receipt, or some other documentary evidence and money in the transaction of the legitimate securing the bank if it discounts a "bill of exbusiness of the country." change" before it is accepted and desires to Under this decision the test appears to be treat it as drawn against actually existing value. whether the drawer of the bill has furnished In the case of trade acceptances it is underto the drawee some commodity of value which stood by this office that shipping documents, when converted into money will enable the warehouse receipts, or other similar papers drawee to pay the bill at maturity and whether do not usually accompany the draft or bill this commodity is in existence either in its of exchange. It has been suggested that the original form or in the shape of proceeds of sale principal use of a trade acceptance is to in the hands of the drawee at the time the bill enable the seller of goods to put in negotiable drawn. form a claim against the purchaser for the pur- If this is adopted as the true test the regulachase price of the commodity sold, which claim tions or instructions of the Board should promight otherwise be carried as a balance due on vide that a bill to be treated as drawn against open account, and that it is customary for the | actually existing values must be drawn conseller to make a direct shipment to the pur- ! temporaneously with or within a reasonable chaser of goods sold to him and to draw on him time after the shipment or delivery -of the for the purchase price. When the drawee ac- goods sold and must be for the whole or part cepts such a draft or bill of exchange, the in- of the purchase price. strument, under the regulations of the Board, Drafts for balances due on open accounts becomes a trade acceptance. drawn indiscriminately against debtors and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 197 accepted by the drawees should not be treated existing value, and that part of the opinion just as bills of exchange drawn against "actually above quoted was intended to point out the existing values/7 but only those bills drawn fact that so far as section 5200 is concerned at, or within % reasonable time after, the ship- it is immaterial whether an accepted bill be ment of the goods to the consignee should be treated as a bill of exchange drawn against considered within this class. existing value or commercial or business paper It is manifest that unless drafts or bills of owned by the person negotiating it, since both exchange excopted from the limitations of classes are excepted from the limitations of section 13 of the Federal Reserve Act are section 5200. restricted to those which represent independent As commercial or business paper is not extransactions this form of paper might be used ceptod from the limitations of section 13, unmerely to evade the limitations of section 5200. less it is in form a bill of exchange drawn In discussing section 5200 in an opinion against existing value, it is necessary to conof this office dated October 27, 1916, the follow- sider the effect that acceptance has on such a ing statement was made: bill. It is clear, therefore, that a bill secured by ., °n this Point \Ms office f ot'^ opimonikat shipping documents, or by the pledge of goods u t]lc g°ods or the proceeds of the sale of the actually sold, might be discounted by a mom- goods are in the hands of the drawee, and the ber bank before acceptance without being draft or bill of exchange is drawn by the seller subject to the limitations imposed by section purchaser'for the purchase price, 5200, since this would constitute a bill drawn a!?arast tne s?ch a blll.alter acceptance may be treated as in good faith against actually existing value, When such bill has been accepted by the drawn against existing value. drawee, and the documents attached' have To summarize the conclusions reached: been removed, though the direct obligation (1) A bill of exchange discounted before of the drawee to pay such bill at maturity acceptance must be accompanied by shipping i drawn, nevertheless, when . discounted by a securing title to the goods sold if it is to be bona fide owner for value, its discount would treated as drawn against existing value. not be subject to the limitations of section (2) If the bill is discounted after acceptance 5200 since it would still come within the classiit may be treated as drawn against existing fication of "commercial or business paper value if drawn against the drawee at the time actually owned by the person negotiating the same/'7 of, or within a reasonable time after, the shipment or delivery of the goods sold. There It lias been suggested that according to this must bo reasonable grounds to believe at the opinion no bill of exchange can be treated as time the bill is drawn that the goods are in drawn against "actually existing values;? unexistence in the hands of the drawee either in less it is accompanied by shipping documents; their original form or in the shape of the prowarehouse receipts, or some other documents ceeds of their sale. securing title to the goods sold, and that when Respectfully, such a bill is accepted it ceases to be a bill M. C. ELLIOTT, Counsel. of exchange drawn against actually existing Hon. W. P. G. HARDING, values and becomes subject to the limitations Governor Federal Reserve Board. of section 13 of the Federal Reserve Act, although it is not subject to the limitations of section 5200, Revised Statutes. Secured by or Issued for Purposes of Discounfc of Paper A bill of exchange accompanied by shipping Trading in Bonds or Notes of the United States. documents was referred to in that opinion i Any member bank may rediscount with itB Federa merely as an example of one drawn against Reserve Bank a note, draft, or bill drawn for the purpose Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

198 FEDERAL RESERVE BULLETIN. MARCH 1? 1017. of carrying or trading in bonds or notes of the United j The particular question under consideration States, and may also procure advances from its Federal was whether a branch of a national bank could Reserve Bank on its own promissory note secured "by a ! make loans to one person under authority of deposit of or pledge of bonds or notes of the United States. section 5200, Revised Statutes,, to the extent [The text of this opinion will be found on !of 10 per cent of the capital and surplus of the pages 158-9.] ;parent bank, or only to the extent of 10 per cent of the capital assigned for the business of the branch. The Attorney General held that Branch Banks. j loans could be made by the branch to one per- A foreign branch established by a national bank is not ! son to an amount equal to 10 per cent of the an independent corporation, and the creditors of the ; capital and surplus of the parent bank. branch are general creditors of the parent bank. ! The position taken by the Attorney General FEBRUARY 8, 1917. , as to the status of the branch is in accordance SIR: The following question has been subwith the decisions of State courts in a number mitted to this office for an opinion: "In the! of cases which deal with this subject. For event of the failure of a national bank having : example, it has been held that the principal branches in foreign countries, would the ! bank and branches together constitute but one creditors of the branches become general j corporation, and consequently every contract creditors of the bank or only creditors of the ! entered into by the branch is in contemplation branch with which they were doing business?" ; of law the act of the bank itself. (Brown v. The authority of a national bank to estab- ; Bank of the State, 5 Ark., 235, cited with aplish a foreign branch is contained in section 25 ; proval in Wallace v. State Bank, 7 Ark., 61, 65.) of the Federal Reserve Act. Comparatively j In the case of Brown v. The Bank of the few branches have been established, and there j State, supra, the court said: has been no decision of any court dealing with j "We are, therefore, bound to know judicially their status. Prior to the passage of the Federal j that there is a branch of said bank at Arkansas, Reserve Act national banks were not permitted i and that it is but a portion or integral part of to establish branches, but State banks having ' said corporation; consequently, every thing branches which were converted into national Idone by or to those intrusted with, the management of its business at said branch in respect banks under authority of section 5154, Revised : thereto, must be considered as done by or to Statutes, were authorized to retain and to conthe corporation; because, being but an integral tinue to operate such branches. The status of part of the whole, it can have no existence these branches was considered in an opinion of jseparate from, and independent of, the corthe Attorney General dated September 15, 1909 poration, of which it is a member only, and therefore those who act therein can not act for, (see Op. A. G., 601). In this opinion it was > or as the agents of, that particular branch only, said: ; but must act for, and as agents of, the whole I corporation, notwithstanding their powers may "The branch banks have no separate existbe restricted so that they can only act in reference. * * * The parent bank with its. ence to such portion of the business thereof as branches is one association, as contemplated j shall be transacted at that particular branch in these laws, with one set of directors or stock- \ or place." holders, and all transactions are regarded as ! those of one corporation or institution." j Following out this line of cases, it has also been held that a delivery to a branch is tanta- In another part of the same opinion, he said: j mount to a delivery to the principal institution "'Inasmuch as depositors, including the itself (Murphy v. State Bank, 7 Ark. 57), and United States, in any of the branch banks have j that payment to the mother bank of a debt the protection of the whole capital, surplus, j due to it, though it may have arisen from disand undivided profits of the mother bank, irre- j spective of how it may be divided, there is no j counting a note by a branch bank is a discharge question of public policy involved in the con- jof the debt. (Smith v. Lawson, 18 West Va. straction of the law as here expressed." ;212, 241.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAUCH 1, 1917. FEDERAL RESERVE BULLETIN. 199 Section 25 of the Federal Reserve Act, as SEC. 5236. From time to time, after full proamended by the Act approved September 7, vision has boon first made for refunding to the United States any deficiency in redeeming the 1916, provides that: notes of such association, the comptroller shall Any national banking association possessing make a ratable dividend of the money so paid a capital and surplus of 81,000.000 or more over to him by such receiver onfall such claims may file application with the Federal Reserve as may have been proved to his satisfaction or Board for permission to exercise, upon such adjudicated in a court of competent jurisdicconditions and under such regulations as may tion. * * * be prescribed hj the said Board, either or both It will be observed that in case of insolvency of the following powers: • of a national bank all claims against the estate First. To establish branches in foreign countries or dependencies or insular possessions of of the bank are paid rat ably except the claim the United States for the furtherance of the of the United States for any deficiency in the foreign commerce of the United States, and to security deposited as collateral for the circuact, if required to do so, as fiscal agents of the lating notes of the bank. United States. As no priorities are recognized by the statute >£ * % * % the creditors of a branch of a national bank Such application shall specify the name and would, in the opinion of this office, bo general capital of the banking association filing it, the powers applied for, and the place or places creditors of the parent bank and would be perwhere the banking operations proposed are to mitted to prove their claims in the same mancarried on. * * * ner as local creditors. Every such national banking association Respectfully, shall conduct the accounts of each foreign branch independently of the accounts of other M. C. ELLIOTT, Counsel. foreign branches established hj it and of its Hon. W. P. G. HARDING, home office, and shall at the end of each fiscal Governor Federal Reserve Board. period transfer to its general ledger the profit or loss accrued at each branch as a separate item. Transfer of Federal Reserve Bank Stock. There is nothing in this language to indicate A national bank acquiring assets of another national that branches established in foreign countries bank in liquidation is not entitled to have transferred to it the Federal Reserve Bank stock held by the liquidating are to have a separate existence and constitute bank. separate corporations. On the contrary, it is FEBRUARY 3, 1917. clear that the parent bank is merely to engage SIR: From the attached correspondence it in certain foreign transactions through its appears that a certain national bank A went foreign branch. This viow is substantiated by into voluntary liquidation, and its assets were the fact that the profit and loss accruing to each apparently taken over by the B National Bank, bank is to be entered on the general ledger of the name of the latter bank being changed to the parent bank at the end of each fiscal year. the A-B National Bank. The cash-paid sub- The status of all claims against insolvent scriptions of the A National Bank were returned national banks is fixed by sections 5235 and to the liquidating agent, but claim is now made 5236, Revised Statutes. These sections profor accrued dividends on these subscriptions. vide in part as follows: Counsel for the Federal Reserve Bank has ad- SEC. 5235. The comptroller shall, upon ap- vised that bank that under the law it is not pointing a receiver, cause notice to be given, by authorized to pay an amount in excess of the advertisement in such newspapers as he may book value of the stock held by the A National direct, for throe consecutive months, calling on all persons who may have claims against such Bank at the time that it went into liquidation. association to present the same, and to make This is entirely in accord with the views of legal proof thereof. this office as expressed in numerous opinions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

200 FEDERAL RESERVE BULLETIN". MARCH 1, 1917. The language of the Act is clear and unam- Drafts Payable with Interest. biguous. As pointed out by counsel, it pro- A provision in a draft or bill of exchange that it is payvides that in case of voluntary liquidation— able "with interest at the rate of — per cent per annum after maturity if payment is delayed " does not; affect the "* * * ^ shares surrendered shall be e negotiability of the instrument. cancelled and the member bank shall receive in payment therefor, * * * equal FEBRUARY 19, 1917. a sum to its cash-paid subscriptions * * * and SIR: The attached form of trade acceptance, one-half of 1 per centum a month from the which provides that payment shall be "in period of the last dividend, not to exceed the funds current in or with exchange upon book value thereof." Chicago, 111., or New York, N. Y., and with This statute fixes the cash surrender value interest at the rate of — per cent per annum of stock held by a bank which withdraws from | after maturity if payment is delayed; value the system by going into voluntary liquida- i received out of the purchase of machinery or tion. The status of such bank is changed from | other goods, wares, and merchandise from us; that of stockholder to that of creditor to the j and charge the same to our account," has been extent of this cash surrender value. The stock ; submitted to this office for consideration. in question can not be transferred or hypothe- Apparently the only disputed question is cated. It is not possible, therefore, under the whether the words "with interest at the rate terms of this Act for the National Bank A in of — per cent per annum after maturity if payliquidation to transfer its rights to the A-B : ment is delayed77 destroy the negotiability of National Bank, which is a separate and dis- I the draft on the ground that it would not be tinct corporation. This situation is substanpayable in a sum certain in money as required tially similar to that of a national bank going by section 1 of the Negotiable Instruments into liquidation, its assets being taken over by ! Law. a State bank and the State bank entering the ! Section 2 of that Act provides that "the system. This situation was considered in an I sum payable is a sum certain within the meanopinion filed with the Board and published on ing of this Act, although it is to be paid (1) with page 117 of the February, 1917, Federal interest; * * * (4) with exchange, whether Reserve Bulletin. at a fixed rate or at the current rate/7 etc. It If the National Bank Act provided for the is evident, therefore, that a draft payable in a consolidation of two banks so as to obviate the I definite sum plus interest is a draft payable in necessity of one going into liquidation, a differa sum certain in money, even though the exact ent situation might result but the mere fact amount due at maturity must be figured by an that the assets of the liquidating bank are addition of the amount prescribed on the face taken over by another does not, within the of the bill and the interest based on that terms of the statute, give the liquidating bank amount for the duration of the draft. the right to transfer its stock to the new bank. The acceptance under consideration is even Respectfully, I more definite than that which is thus shown to M. C. ELLIOTT^ Counsel. ; be permissible under the Negotiable Instru- Hon. W. P. G. HARDING, | ments Law, because it is payable at maturity Governor Federal Reserve Board, j in the sum fixed on the face of the instrument, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 201 and the question of interest arises only if thei jectionable than the stipulation concerning draft is not paid when due and applies only to 1 attorney fees, which was considered in the case | of Seaton v. Scovill (18 Kans., 433), for there the time elapsing between the date of maturity 1 the amount was not fixed and named, but the and actual payment. i stipulation was for reasonable attorney fees. It is generally held by the courts that a pro- : (See also 1 Daniel on Neg. Insts., sees. 53, 54, vision in a bill or note that in case of nonpay-: 61, 62: Tholen v. Duffy, 7 Kans., 410: Goulds. ment at maturity a certain specified rate of Bishop Hill Co., 35 HI., 325.)" interest shall be paid from the date of the note I The clause in the acceptance under considdoes not make the amount to be paid at"| eration differs from that discussed above only maturity uncertain. (See Norton on Bills and • in that interest applies from the date of ma- Notes, 4th ed., p. 76, note 17, and cases cited.) turity instead of from the date of the instru- In the case of Parker v. Plymell (23 Kans., : merit. To that extent it would seem to be all 402) the court considered the negotiability of i the less uncertain, and it is, therefore, the a note containing the words "If this iaote is not opinion of this office that the acceptance in paid at maturity the same shall bear 12 per question is not rendered ineligible because of cent interest from date/' and it was said: the provision for the payment of interest if the "Clearly these words do not destroy the acceptance is not paid at maturity. negotiability of the paper. They do not leave In an opinion printed on page 458 of the uncertain either the fact, the time, or the September, 1916, Federal Reserve Bulletin, amount of payment. Indeed, up to and injit was shown that a bill payable "with cxcluding the maturity of the notes, they are entirely without force. They become opera- | change'' is payable in a sum certain within the tive only after the notes are dishonored and meaning of the Negotiable Instruments Law, have ceased to be negotiable, and then there is so that question need not be discussed here. no uncertainty in the manner or extent of their Respectfully, operation. They create, as it were, a penalty for nonpayment at maturity, and a penalty M. C. ELLIOTT, Counsel. the amount of which is definite, certain, and Hon. W. P. G. HARDING, fixed. In this respect they are even less ob- Governor Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

202 FEDERAL RESERVE BULLETIN. MARCH -1, 1.9.17. SUMMARY OF BUSINESS CONDITIONS FEB. 23, 1917. District No. 1— District No. 2— District No. 3— District No. 4 District No. 5— District No. 6— Boston. New York. Philadelphia. Cleveland. Richmond. Atlanta. G eneral business Large volume being Good; larger than Good. . Good, but affected Some slowing up, Good. transacted. a year ago. by embargoes but very satisj and lack of fuel, i tory. Crops: Condition. ! Limited truck Fair. | shipments bring- | ing good prices. Outlook. j Extensive prep- Do. i orations. Industries of the dis- Busy mainly on old Active, but ham- Very busy. As active as trans- i Operating full on Continue above trict, orders. pered by freight portation and j profitable basis. normal. congestion. fuel conditions permit. Construction, build- Busy. Less than a year : Increased cost and Plans for future Interference by- Fair. ing and engineer- ago. ' scarcitjr of labor contemplate in- bad weather, ing. and materials creased activity. but outlook deterrent factors. good. Foreign trade New record. Larger in Janu- i Still very large. No report In good volume, Limited. ary; imports ; Lack of ocean but congested at growing; retard- ! : tonnage contin- ports. ed this month, j ues. Bank clearings. Little change. Increased : Clearings far Substantially in- 13 per cent in- Continue to in- I ahead of last creased. * • crease. crease. year. Money rates Increasing. All higher; very i Hardening tend- Steady, with ! 4 per cent to 6 per Stiffening slightly. firm for time j ency. higher tenden- cent; increasing loans. ! cies. demand for new i crops. Railroad, post-office, .do. Increased ' Increase.. Increased volume.; Continue high, Good. and other receipts. ! with some in- I i creases. Labor conditions .' Fully employed Well employed; ••Scarcity of help in i Good, with active .. Fully employed Fair. scarcity on rail- nearly all lines I demand for all ; at good wage's. Outlook.. I Moderately good, Un ro s a e d tt s l . ed Co o n f s b en u s s u in s e o s f s . o p m in - \ !Ho k p in ef d u s l of skilled, ; j Favorable.. Good. i but much hesita- ion is that out- i | tion. look is good. | Remarks. Business in general Restrained, wait- Embargoes by : General conditions is awaiting out- ing attitude in railroads and hi- ! throughout the come of interna- general business; adequate fuel j district sound. tional situation. good prospects supply have ' for domestic been deterring j spring trade. influence in all i lines. ; i District Mo. 7— j District No. 8— ! District No. 9—! District No. 10— District No. 11— j District No. 12— Chicago. 1 St. Louis. . Minneapolis. j Ksmsas City. ! Pallas. i San Francisco. General business Active; some un- Active ! Quiet but good : Highly satisfactory certainty. Crops: Condition. Uncertain. I Fair Outlook... Good i Must have more Very promising Favorable if suffimoisture. cient rain. Industries of the dis- Busv despite rail- ''• Active... Active. Busv Active ! Hampered by lack trict. road difficulties. : of transportation. Construction, build- Prospects good " Increase.. Quiet.. Ilamperedb y Decrease over 1918:!70 per cent increase ing, and engineer- weather condi- with good wca-' j over corresponding. tions. Iher expected j ing month last above normal, j year. Foreien trade... Less activity. Increase I Large increase in I exports. Bank clearings. Decreasing I Increase • Slight increases.. Increase 38perccntincrease I 50 per cent increase for January over over correspond- 1916. * I ing month in 1916. Money rates. Increasing j Steady to firm Steady Unchanged, Rates easy, no cyi- jEasy. donee of material j change. j Railroad, post-office, Post-office receipts j Increase I About the same... Increase Railroad increase j Increasing. and oilier receipts. increasing. over 1916; post | office, 18 per : cent increase. I Labor conditions Good Fully employed at! Fair to good | Satisfactory. "Well employed; Fairly settled. high wages. j .good demand for laborers. Outlook G eneral 1 y favorable.Favorable ' Favorable I Promising Very promising. Favorable. Spring trade, though early, very good. Remarks. Doubt as to the out- Wheatneedsmois- ' No change in the Business is at a come of the foreign I ture and snow generally good high tide of prossituation is a re- ! protection, business* condi- perity. straining influence. | tion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAECH 1,1917. FEDERAL EESEEVE BULLETIN. 203 GENERAL BUSINESS CONDITIONS. There is given on the preceding page a sum- ! The cotton goods industry is quieter, with mary of business conditions in the United '.new buying orders very limited. Mills are States by Federal Reserve districts. The re- busy on old advance contracts. The demand ports are furnished by the Federal Reserve for goods for future delivery which was so Agents, who are the chairmen of the boards of jurgent a few months ago has practically subdirectors for the Reserve Banks of the several, sided. Buyers are apparently waiting for districts. Below are the detailed reports as of lower prices or clearer general conditions approximately February 23: before entering into new commitments. Money rates in this district are firm. Com- DISTRICT NO. 1—BOSTON. mercial paper handled by brokers is moving While business continues in large volume, so slowly and many merchants who are acmuch uncertainty exists regarding the future customed to sell their paper in the open that merchants and manufacturers are await- market are now going to their own banks. ing further developments before entering into Call money, 4 per cent; time money, 4* per new commitments. Apprehension regarding cent upward for four to six months; year international conditions is the predominant money, 4| per cent; town notes are selling as feature of the present situation. Mills and high as 4 per cent for fall maturities. Notes factories, however, appear to have sold their of Massachusetts municipalities, exempt from output so far ahead that, despite the feeling of Massachusetts taxes and duo soon after April 1 hesitation, they are being run as nearly at (tax day), are selling at 2\ per cent discount capacity as labor and material conditions will upward as compared with par plus a premium permit. at this time last year. Bankers acceptances, There has been much, press comment of late 3J per cent indorsed, 3-| per cent upwards regarding railroad embargoes, but this has unindorsed. applied rather to other lines east of Chicago Loans and deposits of the Boston Clearing than to those entering this district, the em- House banks have within the last two weeks bargoes in force here being but a trifle more reached a new high point, while excess reserves restrictive than last month. It is expected have decreased to a point far below the high that with the advent of warmer weather records made in October, 1915. Loans and. freight conditions will be much improved. discounts on February 17, 1917, amounted to Leather prices are firmer, due partly to the- $472,293,000 as compared with 8449,217,000 fact that inasmuch as our imports of hides are last month and 8397,580,000 on February 12, greater than our exports of leather, any cur- 1916. Deposits on February 17, 1917, totaled tailment of our exports and imports would $366,275,000 as compared with 8366,139,000 tend to cause a shortage in that commodity. on January 20, 1917, and $336,748,000 on The between-seasoiis period in the boot and February 12, 1916. The amount "due to shoe, industry has caused a decrease in the banks" on February 17 was 3146,432,000 as activities of shoe factories. compared with $149,955,000 on January 20. There is little change in the woolen and The excess reserve of these banks decreased worsted industry. Mills continue very bus}" from $42,314,000 on January 20 to $26,110,000 with orders booked well, ahead. Wool prices on February 17. are still advancing. There is little or no Exchanges of the Boston Clearing House for domestic wool in the market and it will be some the week ending February 17, 1917, were months before any considerable part of the $231,906,304, compared with. $217,128,678 for new wool, already contracted for on the sheep's the corresponding week last year and $261,back, will be received. 325,917 for the week ending February 10, 1917. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

204 FEDERAL RESERVE BULLETIN. MARCH 1, 1017. Building and engineering operations in New Uneasiness among the foreign element caused England from January 1 to February 14, 1917, withdrawals of small deposits in isolated inamounted to $20,167,000 as compared with stances, particularly in the larger cities, but that $17,767,000 for the corresponding period of lasted only a few days. 1916 and $21,168,000 for the same period in To meet the increasing demands for cur- 1914, the highest previous year on record. rency, this bank issued Federal reserve notes Imports and exports of the port of Boston for $32,500,000, from February 1 to 19, for January, 1917, established new high rec- inclusive, against §9,800,000 paid out during ords. Exports amounted to $24,193,104 as the preceding month and S6,250,500 in Februcompared with $21,669,660 for December, 1916 ary a year ago. (the largest amount previously recorded) and Low rates for money prevailed in the open $8,322,467 for January, 1916. market from the beginning of the year until Imports amounted to $32,419,881 as com- February 1. The market then became narpared with $19,381,587 for December, 1916, rower and much firmer, particularly for all and $22,258,716 for January, 1916. The pre- time loans and rates generally advanced h to vious high record of imports was $28,581,611 1£ per cent. Prime commercial paper, which made in February, 1916. sold at 3 per cent in January, is now 4J per The principal exports were horses, muni- cent. Bankers7 acceptances, sold in the open tions, wheat, and leather, while the imports market at 2f per cent a few weeks ago, are now consisted to a large extent of wool and hides. offered at 3f per cent. The receipts of the Boston post office for There is a growing demand for commercial January, 1917, show an increase of $80,476 or loans, created in part by borrowers who, in about 11 per cent over January, 1916. For these uncertain times, prefer to anticipate the first 15 days of February, 1917, receipts future requirements, but chiefly the- result of were about 6 per cent, or $21,940 more than continued activity in trade and industry, high for the corresponding period last }^ear. and rising costs of goods and materials, and Boston & Maine Railroad reports net oper- the congestion of freight. ating income, after taxes, for December, 1916, The greatest handicap to domestic and foras $1,078,648 as compared with $917,548 for eign trade is the transportation problem. For the corresponding month of 1915. New York, over a year the railroads have been unable to New Haven & Hartford Railroad reports net handle promptly the enormous movement of operating income, after taxes, for December, merchandise. The situation has been made 1916, as $1,786,359 as compared with $1,463,078 more serious during the last few weeks by for the same month last year. extremely cold weather and postponed sailings of ships. Railway lines and terminals DISTRICT NO. 2—NEW YORK. are crowded with unloaded cars; mills and Business in general manifested but little factories can not get prompt deliveries of fuel disquiet over the recent serious change in and raw materials. American foreign relations. Notwithstanding all the drawbacks and the More conservative tendencies and caution more restrained, waiting attitude of business in making long commitments had been appar- in general, reports indicate a large volume of ent for some time and, thus, commerce and spring trade, satisfactory payments and conindustry were in a measure prepared for the tinued activity in the production and sale of unexpected developments. goods. Sharp declines in prices of listed securities The New York Clearing House banks on were quickly followed by substantial recover- February 17, 1917, reported loans, etc., ies and a dull, comparatively steady market. 83,466,662,000, deposits $3,706,146,000, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 205 excess reserves §165,715,220. Since Decem- good margin on the increased costs of producber 30, 1916, these totals have increased as tion. follows: Goal.—There is a heavy demand for coal at a time of limited output at the mines. Prices Loans, etc $127,212,000 Deposits 212, 089, 000 are extraordinarily high and scarcity in yard Excess reserves 48,379,530 labor, severe weather conditions and abnormal Large additional imports of gold have been demands have caused much embarrassment to received recently, bringing the total inflow, anthracite dealers. Both wholesalers and resince January 1, up to $101,500,000. tailers have been overrun with orders for quick deliveries to fill consumers7 needs. DISTRICT NO. 3.—PHILADELPHIA. Prices of bituminous coal have hardened According to reports received from all parts recently, car shortage still being the disturbing of this district, the difficulties of the railroads factor. There is about a 20 per cent deficiency and steamship companies in moving goods in the supply of coke, due also to car shortage. promptly, the scarcity and inefficiency of Cotton yarns.—Extreme quiet prevails in the labor, and the increased cost and inadequate local cotton-yarn market. The slackening in supply of coal and other materials, are some- the demand for yarns has been due to the dewhat curtailing production. Activity contin- cline in the price of cotton and to the fact that ues in practically all industrial and other lines of manufacturers are well stocked up for three to business, and no difficulty is experienced in dis- five months ahead. posing of products, and orders in hand insure Dry goods and notions.—Good business is rethe operation of mills for months to come. ported by the wholesale dry goods houses, with In some localities, there is much conserva- prices generally remaining firm. Buyers are tism in the placing of new orders. Quite a assuming a conservative attitude. In the dressnumber of important industrial concerns are goods trade fall lines have been entirely sold out enlarging their plants. Collections are gen- in many cases and withdrawn from the market. erally reported to be satisfactory. Glass.—The plants are running at as near There is a general feeling of confidence and capacity as possible. Orders in some cases optimism as to the future, but on account of the have been refused, owing to inability to increase extraordinary conditions and the uncertainty production. The labor situation is serious. of the foreign situation, it appears that busi- Groceries.—Prices of groceries have generally ness is being conducted in a conservative way. advanced. Canned goods are higher and scarce. Automobiles.—The automobile pleasure car Sugar is being shipped from New York and Bosbusiness is usually dull during the winter ton for temporary needs. It is thought that months. This winter, however, business has the strike situation in the refineries in this city been good. Costs of materials have greatly will be satisfactorily adjusted within a short increased, and they are not altogether offset time. There is no famine here. Prices were by increases in selling prices. A leading pro- forced up because all consumers were trying to ducer of trucks reports sales ahead of last year, buy much more than their normal amount bewith prospect for continued heavy demand. No cause of the fear of a shortage. early falling off in the cost of labor and materials Hardware.—Scarcity in many lines continues is expected. Rapid expansion has not been and prices are firm. The volume of business is possible because of the inability to procure suffi- satisfactory. cient labor, machinery, and other materials. Iron and steel.—General conditions among the Cement—The cement plants are reported to ! iron and steel industries are reported to be quite be busy and prospects for the future are good. satisfactory as to prices and volume of business; Selling prices are high enough to return a operating conditions, however, arc not satisfac- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

206 FEDERAL RESERVE BULLETIN. MABCH 1, 1917. tory because of labor conditions in mills and gestion is serious, and the fact that many people mines, scarcity of materials, and the inability prefer to pay demurrage charges rather than of the railroads to handle the business. store the goods in warehouses at higher figures Leather.—The leather market is active; aggravates the situation. prices are firm and rising, although there is Silk.—The broad silk business is active and considerable recent uncertainty. Manufactur- absorbing production as fast as the product ers are proceeding slowly in filling orders, espe- can be delivered. The ribbon business has cially for export business, in order that they revived and is better than for some time. may be in a better position to fill Government Present unsettled international conditions have needs in case of military necessity. Stocks on not affected the supply of raw materials, as hand are small, and raw skins are still scarce. they come chiefly through Japanese sources. Locomotives.—A leading producer of locomo-Mills are being run to capacity and parts of tives reports unprecedentedly favorable condi- some plants are being worked both day andtions as to the future, inasmuch as business in night. Several factories are being enlarged. hand is sufficient to operate the plant to its Textiles.—The textile industries are active, maximum capacity during the greater part of having abundant orders on hand with no finthe year 1917. ished stock and prospects are generally good. Payer.—Paper mills report great difficulty in Operations are somewhat curtailed owing to obtaining wood pulp, and the price is the high- scarcity of operators. Mills manufacturing est ever known. Paper dealers are experienc- lace curtains have been hampered to some ing the usual lull after the first of the year, but degree because of the shortage of certain supat this time it is more pronounced than usual, plies which come from England. Cotton-goods because of the phenomenal business prior to the plants are running at full "capacity. Business first of the year. Stocks are below normal and in the hosiery trade is good, but high prices of no break in prices is expected. yarns and scarcity of labor are disturbing Retail trade.—Retail business is very satis- factors. One large textile mill reports that factory and the general opinion is that war more caution .and conservatism has been noted complications will have no immediate effect among their customers within the past 60 days, on present conditions. Buyers are providing which they attribute partly to the uncertain only for reasonable needs. Manufacturers tell international situation and partly to the them that if they do not place orders now to recognition that prices are very high. This cover requirements throughout the year, no condition has decidedly checked speculative goods will be available; but there is a disposi- buying. Since it is difficult in most localities tion to regard this as an effort to entice them to secure sufficient labor to operate at more to stock up at current high prices. People than 80 per cent of capacity, this condition continue to buy with care and are buying more is automatically tending to restrict overdurable goods. Some of the large stores report production. that they are not making many more trans- Wool.—In the local wool market, prices actions than last year, but the transactions have advanced 7|- to 15 per cent in the last amount to more in dollars. e month. A decrease in imports from abroad, Railroads.—The railroads in the district are the levying of duties on exports from South not buying equipment to any appreciable America, high insurance rates, and the possiextent, but one road is making an effort to bility of a war demand make for an uncertain reserve space in the steel mills for supplies market. There is a shortage in yarns, and which will be needed at the end of the year. orders could be taken in much greater volume Repair shops are very busy. The freight con- if they could be filled. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDEBAL BESEBVE BULLETIN 207 DISTRICT NO. 4—CLEVELAND. to secure proper supplies of raw materials and General embargoes by the railroads car to move out finished products. From nearly all ; shortages, and lack of adequate fuel (gas and sections in which these industries are leading coal) supplies, aggravated by continued ex- ones, the closing down of plants is reported. tremely cold weather, have caused a marked Rubber goods.—In this district all of the faclessening of activities and tempering of op- tories are running to capacity, with continued timism in industrial pursuits throughout the demands greater than their ability to supply. district. From all sections the reports indi- Conditions in this industry appear to be more cate inability to secure fuel to maintain oper- satisfactory than in any other lines. ations, as well as cars to move out finished Automobiles and parts.—As far as reported, products or to bring in raw materials. The the activity in these lines continues unabated, outlook for early improvement of this situa- though somewhat checked by car shortage and tion is. however, now at least hopeful, if not fuel inadequacy. Some factories are receiving promising. freight rather more freely than they would if Iron and steel trades,—The demand for all it were not that they wished the cars for outlands of iron and steel products continues going freight. insistent, and prices are firm to higher. In- Mercantile business.—The reports indicate adequate fuel supply has caused several blast continued activity in all mercantile pursuits, furnaces and mills to cease operations, and money values of sales being greater than ever lack of available cars has seriously impeded and collections normal, or better. Foodstuffs deliveries. Billet, bar, sheet, plate, and rail are at the highest prices ever known throughproduction continues to the fullest extent out the district. Stocks in all lines are low, possible in view of the fuel situation. and the inclination seems to be to pursue the Finished steel.—The embargoes have affected "hand-to-mouth" policy. quite seriously the manufacturers of finished Building operations.—As is to be expected, steel in all branches, and the fuel situation the extremely cold weather has caused a fallhas curtailed operations generally. There does ing off in actual construction work, but the not seen to be any reduction in demand, and reports indicate that the plans for the current the general market tone is good. Factories year show steady enlargement, particularly in are engaged in stocking up nearby customers, respect of business properties. In most of the so as to be better enabled to handle outside communities there is indicated a considerable business when transportation becomes available. increase in residence construction. The fol- Coal and other fuels.—There has been a slight lowing table gives the permits and values for increase in the production of coal at the mines the month of January, 1917, as compared with during the month, but it still is considerably 1916: below normal, due largely to inadequacy of Permits labor. The natural gas supply seems to have issued. Valuations. fallen off materially, and, owing to the ex- _l Increase| Per tremely cold weather, its use in industrial pur- u 1 J a 9 a r 1 n y 7 - , . ; I | u 1 J a 9 a r 1 n y 6 - , . Jan 19 u 1 a 7 r . y, Ja 11 n 09 u 11 a 6 r .f y t , I ; decrease. ! I! cent. suits has been greatly curtailed. In numerous localities there has been some suffering among C A i k n r c o i n n , n a O t h i, i o O hio ! ! 2 o 7 o° 0 8 1 6 5 5 S ! £ 6 5 0 6 9 0 , ,7 1 8 0 5 5 445,895; 52 1 7 6 2 3 , , 3 2 5 1 5 0 ! ; 1 1 3 9 7 4 the people b}7 reason of the lack of fuel, and C C o le l v u e m la b n u d s , , O O h h i i o o 61 7 4 9 , 6 1 2 2 0 9 j ! 1,3 1 8 3 9 7 , , 2 0 4 1 0 0 1,6 2 0 2 0 3 , , 8 4 9 1 5 5 1 | 22 2 1 8 1 6 ,6 ,4 5 0 5 5i 2 2 3 1 9 4 drastic action by municipal authorities, such Dayton. Ohio 92 32 233,104 115,645i 117,459 1101 Erie, Pa 86 63 194,380 116,171' 78,209 as confiscation of coal, has been reported. Pittsburgh, Pa 159: 95 735,123 344,944; 390,179 U13 Toiedo, Ohio 193: 165 1,032,107 560,875 471,232 184 Glass, -pottery and clay products.—Rather Youngstown, Ohio.. .j 67 55 169,980 96,345 73,635 175 t serious curtailments in these industries are re- Total.. 2,443' 2,: 5,060,8341 3,792,615; 1,268,219 38.4 ported by reason of lack of fuel and inability 1 Increase. a Decrease. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

208 FEDERAL RESERVE BULLETIN. MARCH i, 1917. Money and investments.—The general bank- will probably see general business in all lines ing situation is still in the best of condition, in this district resume at high speed. with plenty of loanable funds; rates generally DISTRICT NO. 5—RICHMOND. unchanged—in some communities fractionally General conditions continue sound and proshigher. A scarcity of currency in pay roil perous, and the outlook for the future is redenominations became apparent during the garded as encouraging. There has been some middle of February and was met by issuance | slowing up in exports, although actual figures of Federal Reserve notes to the amount of for last month still show an increase. This $3,200,000. Investment securities markets recession is occasioned by the scarcity of oceanhave recently been marking time only with freight room due to interference with neutral slightly lower prices. Bank clearings show shipping by submarines. But for this condisubstantial increases, as indicated by the foltion the movement of freight to the ports for owing table, giving the figures for the month, export would have resulted in larger increases from January 16 to February 15, as compared in their volume. The accumulation of goods with the same period of last year: intended for export is further evidenced by a very considerable volume of bankers' accept- Jan. 16 to Feb. 15, inclusive. Per ances which are being issued for their financing, Increase. cent in- pending actual export and payment for same. 1917 1916 crease*. Postal revenues, clearing-house returns, and Akron, Ohio 321,520,000 812,664,000 38,856.000 70 railroad earnings continue at or above recent Cincinnati, Ohio 175,044,498 134,911,200 40,133,298 29 Cleveland, Ohio 260,982,067 163,034,294 97,947,773 59 maximums, excepting some railroad returns, Columbus, Ohio 43,918,400 35,058,200 8,860,200 25 Dayton, Ohio 16,116,023 12,694,953 3,421,070 24 which indicate a falling off in revenues from Erie, Pa 6,822,822 5,040,446 1,782,376 35 Pittsburgh, Pa 318,093,345 245,023,356 73,089,989 30 coal traffic. This has been interfered with Toledo, Ohio 46,447,879 34,698,428 11,749,451 34 Youngstown, Ohio 13,984,121 7,991,024 5,993,097 75 particularly by car shortage, and coal is bring- Total 902,929,155 651,115,901 251,833,254 38.6 ing record high prices. Trade in all lines continues good, although a Post-office receipts.—The postal receipts in little slackening in some lines is noted in comthe nine larger cities of the district for the parison with recent months. This is due to month of January as compared with January, high prices, which are inducing conservatism 1916, are as follows: in purchases among dealers and consumers. The increased difficulty in the movement of Per freight and the consequent delay and uncer- January, January, cent 1917. 1916. Increase. in- tainty are additional causes operating in the crease. same direction. Collections, notwithstanding, Akron, Ohio 869,403.55 550,002.44 $19,401.11 are reported as good, and dealers generally are Cincinnati, Ohio 266,261.63 248,450.77 17,810.86 7.1 Cleveland, Ohio 343,313.81 259,935.65 83,378.16 32.7 looking forward to continued good business. Columbus, Ohio 127,961.49 117,360.90 10,600.59 9.0 Dayton, Ohio 60,275.26 52,248.09 8,027.17 15.3 Building is reported in lair volume, some Erie,Pa 26,196.89 22,550.41 3,646.48 16.2 Pittsburgh, Pa 351,991.56 333,504.10 18,487.46 5.5 points showing a very considerable percentage Toledo, Ohio 98,517.95 85,873.53 12,644.42 14.7 Youngstown, Ohio... 31,025.57 25,957.92 5,067.65 19.5 of increase. Manufacturers of vehicles, furni- Total 1,374,947.71 1,195,883.81 179,063.90 14.9 ture, and other lines report stocks of goods as limited and the demand excellent. The lum- Labor conditions.—-There is no disturbance ber business has improved appreciably and is or unrest in the labor situation reported. The apparently only limited by the inadequate demand for all grades of skilled labor is greater freight facilities and consequent congestion. than the supply. Farmers are prosperous from the returns Warmer weather, resumption of foreign of the past season, and preparations for plantshipping, and betterment in the car conditions ing are on a large scale for new crops, but the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN". 209 bad weather has prevented much actual head- no cancellations being reported and prompt way in preparations. Staple crops are in delivery of goods on old orders being urged. contemplation at normal or increased acre-1Most of the mills are reported to have ample ages, and reports indicate a growing extension supplies of cotton on hand to protect sales in the diversification of small crops for home and to meet requirements for some time to supplies. come. The demand for fertilizers has been strong Some banks are still reporting unusual ease and some of the largest manufacturers report in financial conditions, but reports more genbeing oversold and having withdrawn their erally indicate some natural decrease in desalesmen from the market. posits at this season of the year with an in- Boll weevil are reported having advanced creased demand for money, particularly for nearly to the southern border of South Caro- crop preparations. Railroad lines indicate lina. This menace is receiving the attention unprecedented southern travel, some of this of the Government and State authorities, as due to an increasing number of home seekers well as the urgent attention of the business in the district. interests of the territory menaced. It is DISTRICT NO. 6—ATLANTA. hoped that by prompt and efficient attention There is apparently no uneasiness due to the the possible damage from this pest will be at possible entry of the United States into the least reduced to a minimum. war. It is the consensus of opinion that con- While farmers generally have been pros- tinued prosperity will obtain in this district for perous, some reports indicate that tenant the next year, whether our nation is at peace or farmers who raise chiefly staple crops for market war and that unless shipping facilities are furhave suffered by necessity of purchasing ther interrupted business will be extended. family supplies at present high figures. Never in its history has the South been in posi- The recent unprecedented cold weather tion more easily to afford a broadening-out which swept over the Southern Atlantic sea- policy in industrial and agricultural affairs. board did considerable damage to garden Money is plentiful with rates stiffening a little. truck and small crops, but reports of damage Loans indicate a healthy condition, being in such cases are frequently exaggerated, and largely of a commodity nature to carry prodsteps are being taken at once to, as far as possi- ucts, and little, if to any extent, for liquidation ble, remedy this condition. of past indebtedness. The good roads movement is receiving The only anticipated handicap is one of efficient attention in the district, with the labor. With no immigration and a neglible prospect of steady improvement. Labor is migration of labor from other States, a conwell employed; in fact, there is considerable tinued movement of negro laborers to northern scarcity, notwithstanding which many small fields will present a serious shortage of labor new industries are planned and in contempla- not only in agricultural but in industrial and tion throughout the district. public work lines. Much attention continues to be given to Atlanta has just closed the southeastern stock raising, the high prices for hogs and land show, an exhibition of products and adcattle stimulating improved breeding by the vertisement of the advantages of lands in the importation of blooded stock. States in this district. Considerable publicity The reports from cotton mills are somewhat work of this nature has been carried on during mixed, some falling off in new orders being the past year with a view of attracting'settlers reported, while others indicate that the de- from other States. mands have held up remarkably well, consid- Varying reports have been received with ering the uncertainty of our foreign relations, regard to the damage done oats and wheat by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

210 FEDEBAL BESEBVE BULLETIN. 1IA2CH 1, 1917. the freeze during the early part of February. factory and on this account some trouble is Oats planted during January, and which had experienced in shipping spring orders complete. just come up will be almost a total loss, but While sales are good, retail merchants are grain sowed during October, November, and buying rather conservatively. The weather December, while somewhat damaged, is by no ; has been unfavorable for men on the road, means a total loss and the outcome may be I somewhat reducing the volume of orders as better than early reports indicated. compared with January this year. Wholesale The February cold "spell" was unusual for millinery houses in the trade centers have had this section and cost the farmers of the South their openings of spring merchandise and several millions of dollars. Early vegetables of report a healthy trade this season. all kinds were seriously damaged or destroyed. Shoe manufacturers report a slowing-down Fortunately a large per cent of the citrus fruits in the industry, due at first to peace talk and had been picked in Florida, and of the crop of later to the break with Germany. There was a grape fruit and oranges approximately 70 per tendency to overbuy so long as prices continued cent were frozen. The estimated loss is to increase and most factories had sold ahead 1,500,000 boxes of oranges and 500,000 boxes| beyond their ability to procure needful material of grape fruit. I at prices allowing a legitimate profit. The In the coal and iron fields domestic ship- I pause will give manufacturers a chance to ments have been extremely heavy, with high | catch up on orders and tend to check high prices continuing. Coal mines report increased I prices. While prices have not advanced to output. Keen interest is shown in the war | any great extent during the past six weeks there situation, and while iron manufacturers are has likewise been no material decline except in not disturbed they are watching events a few grades of raw material. closely. In the graphite fields of Alabama The season for trapping is now closed in about 20 additional plants or mines are being Tennessee and dealers report a very satisoperated and in course of construction, and j factory fur trade, especially in skunk and within 60 days there will probably be a 40 per | possum pelts. The Tennessee wool markets cent increase of output. are quiet, stocks having been cleaned up, and New Orleans reports the organization of the dealers are now looking forward to the new world's greatest live-stock farm with a capital season. It is thought there will be about a of $1,500,000, its headquarters being at Morgan normal wool clipping, though high prices have City, La., where it owns 16,000 acres of land j tempted many farmers to sell sheep. in pasturage and forage crops. As an indi- Resin exports show a very favorable gain for cation of the widespread interest in the cattle the first eight months of the naval stores seaindustry in Mississippi, as a result of the son. While the trade is seriously missing the State-wide tick-eradication law, recently former shipments with Germany and Hungary, passed, 4,500 dipping vats will be put into which approximated 650,000 barrels annually, commission in that State about March 1, and exports for the first eight months were 18,377 experts predict that Mississippi will be rid of barrels greater than for the same period last the tick at the close of 1917. year. The recent cold "spell" caused con- The retail trade in Atlanta is quiet, at siderable damage in the turpentine fields, and Savannah light. New Orleans and Nashville hundreds of crops of cups were burst. report satisfactory conditions, and Florida and Indications are that the district will use an Gulf Coast towns report trade good as result increased amount of fertilizer for the growing of large tourist travel. of the crops of 1917. Conservative estimates The wholesale houses report deliveries from place this increase at about 15 per cent. An manufacturers and mills still remain unsatis- Atlanta concern recently closed a contract for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 211 fertilizer with the Netherlands Government weather. This fact, together with the heavy involving $2,500,000. demand and the railroad troubles has brought Comparing the fertilizer prices with the sea- about high prices and a serious shortage in son of 1915-16 the advance is about 10-per cent some manufacturing centers. to 15 per cent over the past year, ^hich manu- Some of the distilleries, while reporting good facturers claim does not represent the actual business, feel that the prohibition laws may difference in cost to the manufacturer of the result in destroying the value of their plants materials purchased in operation of the in- and equipment. dustry. Dry goods merchants are finding spring business in excess of a year ago, but recent develop- DISTRICT NO. 7.—CHICAGO. ments give evidence of a more conservative Basic business conditions in this district have buying policy, both on the part of the retailers not changed to any marked degree since last and the public. month. The banks are well supplied with The grain markets have passed through a funds, for which there appears to be a better rather trying period, but a number of authoridemand, and in some instances heavy reserves ties believe that the prices are basically sound are being held to provide against contingencies. and that the foreign demand can be counted From one or two sources it is understood that upon to maintain the values regardless of war minor quantities of gold have been withdrawn or peace. This opinion is predicated on the reby depositors, but the amount has been small ported Argentine shortage and the presumed and the tendency of short duration. Farm requirements of the foreign nations. While loans continue in good demand, with low rates Australia has approximately 100,000,000 to and high valuations, but the bond market has 135,000,000 bushels of wheat for export, and been inactive owing to general uncertainty Argentina about 40,000,000 bushels, shipments and the apparent desire of investors to hold from the Southern Hemisphere are very much their funds liquid. restricted, owing to the difficulties of ocean Railroad embargoes and car shortages have transportation and the length of the trip. It affected almost every line of industry, and is estimated that as high as 60,000,000 bushels country banks are frequently called upon to of wheat have been bought in the United States finance the storage of farm products in ele- by the allies for shipment during February, March, and April, and the Chicago elevators at vators pending shipping facilities. Collections this time are holding approximately 30,000,000 have been unfavorably affected, due to the bushels of grain, a large share of which has same causes. Manufacturers are finding diffibeen sold to go forward, although the movement culty in securing raw materials and coal, and has been delayed owing to the inability of the also in many instances have been compelled to railroads to furnish equipment. warehouse their finished product in large quantities until the railroad situation clears up. The grocery business is fair and hardware The consensus of opinion is that while labor good, although in the latter line one manufacis well employed at this time a further demand turer reports that shortly after the German for help will develop and that a shortage may peace proposals orders fell off 50 per cent within result in the spring. three days. The volume of business at the Agricultural implements are in good demand present is satisfactory. The leather industry at high prices, but the transportation question has been retarded somewhat. Packing houses as affecting deliveries is serious. Coal mines state there is a good demand for their products have been active, but reports indicate some in- at substantial prices. terference with their operations during the past The past winter has been a good one for the month on account of the extremely cold lumbering industry in northern Wisconsin, but Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

212 FEDERAL EESERVE BULLETIN". MAECH 1, 1917. wholesalers and manufacturers are finding The iron and allied interests report heavy business only moderately active, with collec- increases in sales with sufficient contracts on tions fair. Piano concerns report a good volume hand to insure capacity operations for some of orders and active operation in their plants to months. care of the new business, as well as the unfilled Six weeks or two months ago the paper indusorders from last year. tries reported a decrease in business and at that Shipbuilders have their equipment well em- time this was attributed to a feeling that prices ployed. Steel prices are higher than before would be lower. No concessions were granted, with no let-up in demand. Wool is quoted however. Buyers are again in the market and several cents higher than last month, and this has resulted in an increased activity in all woolen manufacturers appear to have a good paper lines in the last 10 days. quantity of business, in fact, are inclined to go The Missouri State Board of Agriculture slow in taking on further orders until the future reports a decrease in the wheat acreage in outlook for this industry is more clearly defined. Missouri of 7^ per cent, the acreage planted Clearings in Chicago for the first 19 days of being smaller than for several years. Reports February were $1,205,000,000, being $236,- indicate that the condition of the crop is not 000,000 more than for the corresponding 19 entirely satisfactory, due to severe weather and days in February, 1916. Clearings reported lack of moisture and snow protection. by 21 cities in the district outside of Chicago Reports from Little Rock and Memphis inamounted to $241,000,000 for the first 15 days dicate exceedingly prosperous conditions in of February, 1917, as compared with $186,- the southern portions of the district. The 000,000 for the first 15 days of February, 1916, stock of factors7 cotton in Memphis is the Deposits in eight central reserve city member largest known in the history of the Memphis banks in Chicago were $743,000,000 at the close Cotton Exchange, and the entire tendency of business February 17, 1917, and loans were seems to be to hold this cotton for prices $510,000,000. Deposits show an increase of approximating the high level of the season. approximately $5,000,000 and loans an in- A month ago it was expected that the high crease of approximately $22,000,000 over last price of cotton would tend largely to increase month. the acreage this season. Reports from private sources in the cotton sections of the dis- DISTRICT NO. 8.—ST. LOUIS. trict indicate that the high price of fodder, Business activity in this district continues | foodstuffs, etc., will tend to limit the cotton unabated. Wholesalers of dry goods, boots acreage, and it is not now expected that the and shoes, hardware, and other necessities acreage this year will exceed that of 1916. report increases in shipments and the outlook for spring is favorable. In general the stocks Provisions generally show an increase in of merchandise in the hands of both whole- price from week to week, and this is reflected salers and retailers are larger than they were in all index figures of the cost of living. The a year ago. This expansion has been noted in increase in potatoes, onions, and cabbage are all lines. Seasonable winter weather through- especially notable, with eggs, which are slightly out the district has stimulated retail distribu- lower, as the exception. tion of wearing apparel, particularly underwear, Reports from the St. Louis National Stock hosiery, and ready to wear clothing for men Yards for January show an increase in the and women. Collections keep pace with sales. receipts of cattle and a decrease in the receipts The January fur sale in St. Louis was approx- of hogs, sheep, horses, and mules. The hog imately three times the January, 1916, sale, market has shown high records from week to while prices realized averaged approximately week, hogs last week selling at $12.65. It is 10 per cent above those of a year ago. reported that foreign buyers have withdrawn Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 213 from the horse and mule market, due to the DISTRICT NO. 9—MINNEAPOLIS. increased difficulties of ocean transportation. Traffic difficulties, due to the severe cold and The St. Louis clearings for January were the to the effects of the car blockade, have had a largest ever recorded in the history of the very serious effect on Northwestern business. clearing house. Clearings in all of the prin- It has been variously estimated that there are cipal cities of the district for the week ending from 14,000,000 to 18,000,000 bushels of wheat February 10 show increases ranging from in storage in Minneapolis alone under contract, 22 % to 46^- per cent. T some of it for November and December de- The gross railroad earnings for December for livery, that can not be moved, together with the roads operating in this district continue to an immense tonnage of flour, feed and mill show the substantial increases which have been stuffs. Manufacturing concerns that are under so noticeable for the past 18 months. Net contract for deliveries in the East are having earnings for this period, however, do not show the greatest difficulty in obtaining cars. The the same percentage of increases, two of the recent car relief measures promise some imroads operating in this district showing an provement in the situation, but expert authoractual decrease in net. It is believed that this ities predict that the difficulties will continue is due to the marked increase in operating ex- throughout the spring, and that it will be well penses and to the high price of all supplies into the summer before conditions can get back and equipment. to normal. Car shortage has had a tendency to hamper Severe cold has prevailed during the month, business activity, and owing to recently im- and the snowfall in the Northwestern States posed embargoes may cause further difficulhas been unusually heavy. Heavy winds have ties. The movement of live stock and perishaccompanied some of the storms, blockading able freight is about normal. There is little railway lines, and seriously interfering with the difficulty in handling shipments of any kind movement of trains on branch lines. to and from the South and West, but the Coal shortages have been avoided, but only movement of freight to the East is seriously because of the vigorous efforts of both the raildelayed. The movement of cotton has been ways and distributing companies. Coal disseriously hampered by embargoes on New tributing concerns in the larger centers have England points and export. These same conhad no difficulty in securing delivery at terminals ditions have made both the receipt and shipof sufficient coal for their local requirements, ment of grain difficult and the grain business but the congestion has been so great that it has has slowed down. The stock of grain in elebeen very difficult to get cars switched to the vators is reported to be about normal. coal docks and to keep the supply available St. Louis, Memphis, and Little Rock show a to the delivery forces. gain in building permits for January, the gain There was a very heavy falling off of shipin St. Louis being especially noticeable. Louisments of flour and mill feed in January, and ville building permits show a decrease for Jan- February shows no improvement. The prouary of this year. St. Louis and Memphis duction has been very sharply curtailed, and postal receipts show gains for January. will not get back to normal until a consider- Money for legitimate business is plentiful, ably larger movement of empty cars from the but banks in the larger cities, particularly in East can be brought about. St. Louis, are careful to . maintain adequate j Business during the month has been rather reserves and remain in a liquid condition. quiet, but still satisfactory. The serious inter- Commercial paper is now quoted at 4 to 4J national situation does not seem to have proper cent as against 3| to 3^ per cent a month duced any perceptible change, either in the ago, with an active demand from country volume of trade or.in the sentiment of business banks. Bank rates to customers show no men, who look for favorable conditions, at least change. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

214 FEDERAL SESERVE BULLETIN. MARCH 1. 1917. into the spring months. Country banks are in More than usual interest attached to the very good shape, and are making no unusual report of the Kansas State Agricultural College demands. Banks at the larger cities show concerning the development of a pure-bred excess reserves, with the prospect that any hard winter wheat designated as P-762, a relief of the car situation will improve their single head having originally been selected figures hj easing the burden of financing, which from a plot planted to Crimean seed imported the congested traffic situation has brought from the Don territory of Russia. Fifty-nine about. The conditions that have prevailed tests on 29 different farms have resulted in the since the first of the year have influenced statement that had this wheat been generally business men in all lines to exercise more than sown in Kansas the past three seasons the value ordinary care and prudence. The general opin- of the production of that State would have been ion is that the Northwest is in a.very good posi- increased by almost $63,000,000. tion to meet any situation that may develop. Live stock.—Top prices for 14 classifications Bank rates at the larger centers are firm at a of stock on the local market for the week ending minimum of 4^ per cent. Kates at country February 10 made an average gain over the points show no change. Collections continue same top prices.a year ago of $2.62 per hundred fairly good. pounds, hogs being $4.10 higher that week than Spring construction will be somewhat cur- the same week a year ago. There has been a tailed by high labor costs and the high price of vigorous midwinter demand for desirable stock steel and of all building materials. While labor cattle and feeding steers at the highest prices conditions are satisfactory at the present time, ever prevailing. The conviction is growing there is a growing prospect of disturbances, and that the heavy cattle receipts at the markets it is considered probable that strikes in several must result in at least a comparative shortage trades will signalize the breaking up of the and that the potential supply of beef makers is winter. being sacrificed in order to take advantage of While the business of this Federal Reserve high prices. The January cattle receipts at Bank shows no evidences of any unusual con- the four largest markets in the district showed dition in the district, the volume of redis- an increase of almost 70,000 over January, counted paper is larger than a month ago and 1916, a considerable increase in the receipt of indicates a substantial increase as compared sheep but a falling off in hogs. Profits now with the same dates a year ago. The currency being realized on short-fed cattle and hogs, demand, although somewhat heavier during despite high-priced corn, are gratifying. There the month, is far short of what may be expected has been a slight decline both in the killing during a period of real apprehension. and packing of hogs. Bank clearings at the chief centers of the Mining.—Record prices for minerals have district show little change, although they ex- caused many large companies to engage serihibit a slight increase as compared with a year ously in reworking old mines, many of which ago. | have been idle since 1893. Colorado fields report January as a record-breaking month in DISTRICT NO. 10—KANSAS CITY. the volume of production. Cold weather has Eeports would indicate that the new winter hampered operations to some extent. Many wheat crop will be cut short owing to the dry I of the larger mines have planned extensive season, though a wet spring may improve the operations at greater depth. Early in Februoutlook. The need of moisture is general in I ary, in the Missouri-Kansas-Oklahoma district, the southwest. Nebraska, Kansas, Missouri, 75 per cent of the mines were either badly and Oklahoma have shown a marked deficiency I crippled or completely frozen up because of in precipitation for the past seven months, below zero weather, but subsequent modera- January being particularly dry. tions have improved this situation. Much Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1,1917. FEDERAL RESERVE BULLETIN. 215 activity is reported from the new potash fields buyers from replenishing stocks which are low. in Nebraska. An early return of activity is anticipated. Oil.—Prices of crude oil remain unchanged The automobile industry is easily surpassing since last month's report. Throughout the this season last year, assembling plants and fields of the mid-continent regions there is a dealers being pushed to capacity. Oklahoma general slump in operations, owing to the fact reports a gain of 116 per cent in automobile that water for steam-making purposes has been I registration for 1916 over the previous year, difficult to obtain. In addition, the shortage surpassed by but one State in the Union. of pipe and casing and the general high cost of The prices of necessities continue upward and materials have had their effects. Cold weather, the situation in this respect is anything but combined with other factors has caused a reassuring. As an instance of this, one point sharp decline in production. The program for in the district reports that wholesalers are offerpipe-line laying during the present year is the ing $2.75 per bushel for Irish potatoes and find greatest in the history of the industry. Much the response scant. interest is manifested in what is known as Freight congestion in the East has resulted "casinghead" gasoline, produced from gas by in embargoes by several railway lines serving forcing it through pipes under heavy pressure, this territory, and, as a consequence, there are heating and cooling and .finally condensing into many reports of congestion in the yards, and a, liquid which, when mixed wTith naphtha, freight officials do not anticipate an immediate results in a high-grade gasoline, the gas itself betterment. It is estimated that there are being sent back to the wells where it serves a 30,000 cars on western roads destined east variety of purposes. which can not be moved. Fortunately these Wholesale and retail.—The volume of springembargoes do not include perishable goods, business in implements is said to have reached food, fuel, live-stock, and oil shipments, but such a point that wholesalers will need no this situation, coupled with the car shortage, second-order business to exceed the total volume is a serious deterrent to business in many lines. of spring business last season. The only con- Lumber.—The car shortage also continues to cern has to do with obtaining cars for delivery. hamper this industry, and has curtailed ship- General retail stores report a steady increase ments anywhere from 25 to 50 per cent, of sales since January 1 over the corresponding depending upon the line on which mills are period last year. located, and this has had a tendency toward The new year has started briskly in whole- higher prices. The steady increase in building sale drugs—one of the largest houses in the permits has been lessened in some quarters district reporting sales during January 33 J per by reason of unfavorable weather, which has cent above those of last year. naturally affected the wholesale and retail In dry goods and clothing the markets are lumber trade. Contract work out for bids has taking on a decidedly market-buying aspect, been favorable in totals, but few large jobs and high prices are evidently not retarding are reported, the greater number being medium freedom in buying. There has been marked sized projects. Much work of importance is activity in staple merchandise, including cotton under contemplation and the future would dress goods, sheetings, and various domestic seem unusually favorable. lines. Wholesalers have taken the precaution Labor.—Very few labor disturbances are to cam' the fullest possible stocks. reported, and those affect but small numbers Flour mills are running at about two-thirds and are strictly local. capacity, and are largely engaged in filling Financial.—If there has been any disturbearlier sales. Current business is reported light ance of the money situation due to existing by reason of the erratic wheat markets and international complications, it is not sufficient violent changes in prices which appear to deter to cause uneasiness. Banks in this district Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

216 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. are in a strong position and well fortified to southwestern section and much damage was meet any unusual development. Discount done to the winter truck crops. Such crops rates remain practically the same. were a total loss. Although replanting will There is doubtless no better indication of be done, it will be some 60 days before congeneral business activities than reports of bank ditions are normal. clearings, and that the year has opened with a Reports vary as to the damage done . to flying start is evidenced by the fact that the citrus fruit. One of our correspondents retotal clearings for January in the 15 most ports that the damage to citrus fruit was important cities in Federal Reserve District fully 90 per cent and the crop was practically No. 10 showed an average increase of 55.5 destroyed. The cabbage crop of the Brownsper cent over the month of January, 1916, the ville country was damaged probably 50 per lowest percentage in the list being 24.4 per cent by the freeze of early February, and the cent and the highest 145.6 per cent. Reports onion crop likewise suffered. All parts of the at hand show further noticeable increases in district report that farmers are giving conpostal receipts as compared with last year. siderable attention to diversification, and the outlook for the- present season, so far as DISTRICT NO. 11—DALLAS. farming interests are concerned, is extremely Wholesale trade particularly has been rather favorable. In the Rio Grande Valley the active during the past 30 days through the planting of potatoes, beans, and tomatoes for inauguration of trade excursions, and the spring shipment is heavy, and the outlook for larger markets of the district have been market conditions is the best the growers ever crowded by out-of-town buyers. Inform achad. In answer to an inquiry, one of our tion is that spring trade up to this time has correspondents in Oklahoma, probably the been unusually good and heavier than last largest wholesale grocery firm in that section, year. Wholesalers advise that there is some replied as follows: disposition among merchants to proceed cautiously on account of European conditions; Business conditions in Oklahoma were never better than they are at present. Farmers are all in good shape. also continued difficulty is experienced in Lots of new land is being put into cultivation in this obtaining satisfactory stocks of goods from section. Farmers generally are planting lots of feedstuffs northern and eastern mills. Manufacturers this year and are not going in so heavy on cotton. We have booked all the orders they can handle, feel much encouraged over the present outlook. and are therefore reluctant to make contracts There is some evidence that demand with very far in advance. Collections continue banks is getting more active, especially in the. very satisfactory and above normal. cattle-raising sections. Rates remain easy There have been no notable changes in and unchanged over a month ago. There has general commercial conditions in the district been some increased activity with this bank in the past 30 days. The lull in trade incident in the way of offerings for rediscount by to the midseason is still apparent, and if any member banks in the past 30 days. Within changes are to be noted they are mainly in the another month seasonal demands of our memmore advanced sale of spring lines and the ber banks will undoubtedly be felt. Bank preparation for the coming season's business. clearings for the cities of Austin, Dallas, Fort Farming operations are well advanced for Worth, Galveston, and Houston for the the season and beyond normal in connection month of January show an increase of 38 per with preparing the soil for the coming season. cent over 1916, the figures for January this During the past 30 days the district experi- jyear being $205,717,950 and for 1916, $149,enced the coldest weather of the winter, which | 064,641, or an increase of $56,653,309. The materially affected agricultural conditions. larger banks of the district still confront the Freezing weather was felt even to the extreme problem of seeking satisfactory investments Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDEBAL RESERVE BULLETIN. 217 for their surplus funds, though conservatism with liabilities of $1,292,696. These figures seems to be the watchword. clearly indicate the general improvement of Notwithstanding the severest weather of the business throughout this district. winter there have been very few losses in There is no diminution in activity in the oil cattle and there is no evidence of unfavorable fields. The daily production in the Humble, conditions among the live-stock interests. Tex., field alone is around 20,000 barrels. Receipts* at the Fort Worth market have Lack of water for drilling operations is still continued heavy and prices for all classes seriously affecting the production, though rehigh. While there is little demand for range lieved to some extent by the rains of the past steers, trading in stock cattle is brisk. The month. The high prices obtained for petropresent is an off season for sheep men and no leum continue and tend to stimulate operations activity is noticeable in that line. However, in the fields. The coal mines of Oklahoma when contracts are made for lambs for fall and the copper mines of Arizona and New delivery it is anticipated that prices will be Mexico worked full time during January. The in line with the top figures of last year. mining companies of Oklahoma report that Activity is noted in lumber, cement, and orders for commercial coal have decreased to other building materials, and, as one dealer some extent in the past two weeks, but that stated, all that is necessary is good open they still have sufficient orders in sight to run weather for the trade. The building permits indefinitely. issued in the six largest cities of the district reporting show, in the aggregate, an increase DISTRICT NO. 12—SAN FRANCISCO. in number but a decrease in valuation, the Reports from all sections of this district figures being: In 1916—number, 651; valua- give evidences of generally prosperous condition, $1,653,032. In 1917—number, 685; tions. This is largely due to unprecedented valuation, $1,311,265. prices for metals, live stock, and many agri- The lumber trade has been stimulated re- cultural products with abundant harvests. cently by the prospects of Government pur- Wages have been increased under the influchases in large amounts along the border. The ence of active demand. There are few reports car situation with building trades continues of labor disturbances. serious. The post-office receipts of five of the Cold weather in the Northwest and a general largest cities in the district for January of this lack of rainfall has hampered planting of many year aggregated $328,290 against $281,193 for crops and retarded the growth of others. In last year, or an increase of $47,097, or 17 per California the precipitation thus far this season cent. has been materially below normal. However, Transportation business has been seriously instead of heavy midwinter rains, with none affected during the latter part of the month during the spring, it is of greater benefit to by the embargo placed on Eastern shipments. have a smaller total precipitation, with spring At the present time, the embargo extends to rains distributed over a considerable period. the Indiana-Illinois State line and threatens There still remains enough of the season to grow quite serious. Congestion at seaboard classed as rainy for adequate precipitation, points through lack of shipping space and but the dry season in California is so long that inability to unload cars has caused this condi- sufficient moisture must be had in the rainy tion. Locally little difficulty is being ex- season to render crops possible. Delayed preperienced. cipitation consequently always tends to rouse Failures in the district for the month of apprehension. Snow has covered the ground Januar}r were 58, with liabilities of $498,256. in Idaho, preventing damage being done to For the same period of 1916 there were 129, fall-sown grain by the cold weather. Except Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

218 FEDERAL RESERVE BULLETIN. MALICII 1, 1917. for unusual cold about the end of December, relations with other liquor interests and en- Arizona reports a mild winter with sufficient deavor to close all saloons in the State, and that precipitation to insure early feed. the liquor dealers in San Francisco are propos- The present indications are for large crops ing to reform liquor selling by reducing the of both wheat and barley in this district, pro- number of saloons one-half and doubling the vided sufficient rains are forthcoming. Due license fee. to the high prices received during 1916, there In 1873 the first Washington navel orange has been a considerable increase in the acre- tree was planted in southern California. The age planted. It is predicted that the berry development of the citrus-fruit industr}^ of the crop of Washington in 1917 will be abundant. State has been chiefly since that time. Now The fall frosts have put the plants in good there are approximately 205,000 acres planted condition to withstand the winter weather. to citrus fruits, of which 130,000 acres are in The prices of onions, cabbage, potatoes, and bearing, representing an investment of probsome other vegetables have advanced extra- ably $200,000,000, with an annual product havordinarily. ing a value of near $50,000,000. During the The present market for apples is unsatisfac- past seven years the amount of California citrus tory. Sales have been recorded at prices as fruit consumed by the people of this country low as $1.10 per box, with transportation has increased more than six times as rapidly as costs of 50 cents per box; there is little profit has the population. At this season shipments from sales at such prices. Stocks on hand are going forward in large quantities and satis- January 1, 1917, were not as large as those factory prices are being received. The damage at a corresponding date last year by approxi- to the fruit by frost in January was slight. mately 1,500,000 barrels. The shortage of cars and high producing costs Final figures for 1916 place the California are the present dominating factors in the lumraisin crop at 126,000 tons, compared with ber industry. Orders are considerably above 124,000 tons in 1915. The prices in 1916 were production and some mills have found it necesfrom $15 to $20 per ton higher than those in sary to refuse further orders until transporta- 1915. The output of sweet wine in 1916 was tion facilities are available. Labor in this five times that of 1915 and aggregated over industry is reported as less efficient than for- 19,000,000 gallons. merly and having a tendency to shift from place Laws prohibiting the sale of alcoholic bever- to place. ages have gone into effect in four of the seven Salmon prices continue to advance as the states of this district, viz: Arizona, Idaho, stocks in the hands of the packers diminish. Oregon, and Washington, and a law of this The supply of the higher grades is entirety sold character has passed both houses of the legis- out. lature in Utah and has recently been signed by Daily production of petroleum for January, the governor, becoming effective August 1, 1917, averaged 261,879 barrels, and shipments 1917. The climate and soil of California are averaged 293,364 barrels. The daily producadmirably adapted to grape culture. In this tion during this month came nearer equalindustry and in the production of wine many ing shipments than at any time since July, millions of dollars are invested and many thou- 1916, the decline in stocks in January being sands of people employed. Constitutional but 31,485 barrels daily, compared with 60,580 amendments looking to prohibition, which were barrels daily in December. Total crude-oil voted upon at the last election, were voted stocks on hand January- 31, 1917, were down by such moderate majorities as to lead the 43,060,154 barrels. The greatest activity in interests concerned to adopt unusual courses. rig building since May, 1911, was reported in It is reported that the wine producers will sever January, when 100 new rigs were constructed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL BESEEVE BULLETIN. 219 Charter rates are reported as slightly firmer. sponding month in 1916, Los Angeles leading During the past month, the organization of the in the percentage of increase. Real estate Pacific Development Corporation has been an- transactions are in increasing volume and nounced, consolidating two companies operat- greater activity is anticipated during 1917. ing in the Orient with the purpose of expand- On January 1, 1917, there was on deposit in ing the scope of their business. both national and State banks in the Twelfth Clearings of 19 principal cities of the district Federal Reserve District approximately during January, 1917, show an increase of 50| $1,688,000,000 or $260 for each inhabitant of per cent over those of January, 1916; Salt the seven States that comprise this district, Lake City led with 63 per cent, followed by San viz, Arizona, California, Idaho, Nevada, Oregon, Francisco with 56 per cent and Seattle with Utah, and Washington. This is $60 per capita, 50 per cent. Building permits of the same 19 more than on January 1, 1915, when there cities increased 70 per cent over the corre- was on deposit approximately $1,265,000,000. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

220 FEDERAL RESERVE BULLETIN". MARCH 1, 1917. DISCOUNT OPERATIONS AT THE FEDERAL RESERVE BANKS. Total discount operations of the Federal Re- sented by the largest-sized bills (of over serve Banks for the month of January, 1917, $10,000 each) and over 40 per cent by amounted to $18,326,286, compared with medium-sized paper (in denominations of over $11,114,900 for January, 1916, and $10,712,800 $1,000 to $5,000). Small notes (in amounts for January, 1915. Nearly 47 per cent of the up to $250) constituted almost 20 per cent of total Federal Reserve discounts for the month the total number, though less than 1 per cent is reported for the Richmond district, where of the total amount rediscounted during the $6,667,000 of advances were made by the re- month. Over one-half of the number of these serve bank on 31 member banks' collateral small bills, practically all trade acceptances, notes secured by commercial paper. As against is reported by the Philadelphia bank. 70 per cent for December, 1916, the three east- Nearly 60 per cent of all the paper, including ern banks report less than 13 per cent of the collateral notes, discounted during January, January discounts, the bulk of their operations was 15-day paper, i. e., maturing within 15 for the month being made up of purchases of days from the date of discount by the Federal acceptances in the open market. Reserve Banks. The share of 30-day paper Of the total discounts for the month $9,517,- was 9.3 per cent, that of 60-day paper 14 per 329 is represented by member banks7 collateral cent, and that of 90-day paper 14.4 per cent, notes, $574,464 by trade acceptances (two- January discounts of agricultural and livename paper) and $1,564,653 by commodity stock paper maturing after 90 days from date paper. The total of these three classes of of rediscount with the Federal Reserve Banks paper, nearly all discounted at preferential (i.e., (six-months' paper) were $591,882, compared lower than ordinary) rates, was $11,656,446, with over 1.5 millions for January, 1916. or over 63 per cent of the total discounts for Discounted paper held on the last Friday the month. Over one-half of the January disof the month aggregated $15,711,000, as against counts is represented by member banks' col- $30,196,700 about the end of December and lateral notes handled by nine banks, Richmond $26,900,500 on the corresponding date the year alone reporting about 70 per cent of this class before. Of the total holdings at the end of of paper. January $2,672,000 were member banks' col- Discounts for the month of trade acceptances lateral notes, $4,291,254 agricultural paper, of reported by 10 banks were much below the various maturities and types, including trade total reported for the immediately preceding acceptances and commodity paper, originally month, though in excess of the average monthly discounted, with member banks to obtain total for the past year. Over 70 per cent of funds for agricultural purposes; $1,136,294, this type of paper was handled by the three live-stock paper; and $7,592,119 industrial and southern banks. On the other hand the commercial paper proper. Over 80 per cent monthly total of commodity (all cotton) paper of the agricultural paper was held by the handled exclusively by the three southern Atlanta, Chicago, Richmond, and Minneapolis banks shows a considerable increase over the banks, while nearly 85 per cent of the live-stock December, 1916, total. paper was held by the Dallas, Kansas City, and The aggregate number of bills discounted Minneapolis banks. Of the 7,631 member during the month, exclusive of 78 collateral notes, was 3,408, while the average size of banks reported at the end of the month only theso bills was about $2,590, compared with 310, or slightly over 4 per cent, availed theman average amount of about $122,000 advanced selves of their discount privileges during the during the month on a collateral note. Nearly month under discussion. The number of re- 30 per cent of the rediscounted paper is repre- discounting institutions in the three southern Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDEKAL RESERVE BULLETIN". 221 districts was 140, compared with 324 in January, the Richmond Federal Reserve district, while 1916. The largest number of member banks the smallest number is shown for the New accommodated during the month is shown for York district. Commercial paper discounted by each Federal Reserve Bank during January, 1917, distributed by sizes. NUMBER OF PIECES AND AMOUNTS. To I O t0 v e S r 2 5 $ 0 1 _ 00 O t v o e $ r 5 S 0 2 0 5 . 0 j i O to v § e 1 r ,0 S 0 5 0 0 . 0 O to v e $ r 2 S ,5 I 0 ,0 0 0 . 0 O to v e $ r 5 $ ,0 2 0 ,5 0 0 . 0 O to v e $ r 1 0 $ , 5 0 , 0 0 0 0 . 0 I I 81 O 0 v ,0 e 0 r 0. Total. Per Banks. ° .! cent ft fa Boston 81001 2222 84L047 89,188 35 §68,516 $259,307 $177,129 10 §200,506 210 8749,763 8.5 New York 916 17 3,517 8,801 56,892 206,737 25,075 1 14,668 142 328,162 3.7 Philadelphia 304 10,673! 8, 075 27,522 86,577 140,208 23,629 550 335,122 3.8 Cleveland 3,850 8,434 13 67,278 55,356 116,620 383,60S 133 644,971 7.3 Richmond L5,008 66,950 165 133; 427 11764 453,669 593,586 338,652 854 1.,915; 38221.8 Atlanta (including New New Orleans branch). 449' 4,764 19,607, 194,548 321,945 475,222 716,307 434 1,793,072 Chicago... 1,551 4,257 16,061 39,458 101,755 241,987 79,094 290,000 "~ 774, Ib3 8*. 8 St. Louis 150 800 1,662 14,186 67,961 98,968 47,000! 97 230,727 2.6 Minneapolis 2,743 13.237 31,437 130,139 357,2841 188,776 503,137 2981,,226,753 13.9 Kansas City 2,154 13:624 46,149 69,1191 42,469] 5,282 12,498 175 191,295 2.2 Dallas 1,719 10,944 72,4201 158,508! 132,245 98.768 180 5.6 San Francisco 2,""" 3,056 22,262j 34,307 2 20,900 123,358 1.4 Total. 369 16,165 292 53,301 514 199,086 568 445 2511.897,965 98 2,579,094 3,408 8,808,957 Per cent 0.2 0.6 2.3 21.5 29.3 100,0 Member banks' collateral notes 55,000 709,462,329 78 9,517,329. Member banks' collateral notes, trade acceptances, and commodity paper discounted during the month of January, 1917, and 1916. i Trade Commod- Commod- Banks. Collateral accept- ity, Total. Banks. ity, Total. notes. ances. paper. notes. | ances paper. 1 Boston 8448,699 862,433 8511,132 St Louis 8375,000 $11,930 $386,930 New York.... 270,000 270,000 Minneapolis 55,678 55,678 Philadelphia 230,000 245,164 Kansas City 75,000 75,000 Cleveland . 1*797 1,797 Dallas . . . 162,630 ""ftL'n'fiV """$4,"i66* 261,293 Richmond 6,667,000 240,283 $598,807 7,508,090 San Francisco ........... ~8",850 8,850 Atlanta (including New Orleans) • 769,000 75,157 961,746 1,805,903 Total Jan. 1917 9,517,329 574,464 11,504,653 11,656,446 Chicago 520,000 8,609 528,609 Total Jan 1916 444,400 1,863,600 2,308,000 'All cotton paper. Amounts of discounted paper, including member banks7 collateral notes, held by each Federal Reserve Bank on Jan. 26, 1917, distributed by classes. A p t g a u r p r ic a e u l r. l- p s L a t i o p v c e e k r - . i C n c p i o d a a m u l p s m a e t r r n e , i d r a - l c M o b n l a e o la m n t t e k e b s s r e . ' a r l Total. A p t g a u r p r i a e c l r u . l- p s L a to p iv c e e k r. i C n c p o d ia a m u l p s m a e tr n r e i . r d a - l c M o b n l e a o la m n t t e k e b s s r e . a ' r l Total. Boston $754,623 835,000 S789,623 I St. Louis 109,179 37,699 332,309 75,000 554,187 New York $19,404 83,329 1,534,249 145,000 1,701,982 ! Minneapolis... 618,389 202,448 784,321 210,000 1,815,158 Philadelphia 60,685 456,564 20,000 527,149 . Kansas Citv... 254,126 208,029 26,462 35,000 523,617 Cleveland 54,358 434,565 488,923 I Dallas....;.... 136,538 549,943 134,237 82,108 902,826 Richmond 923,578 1,734,754 1,'492,'665" 4,150,332 San Francisco. 151,595 2,392 52,260 206,247 Atlanta 1,030,878 84,316 945,222 69,000 2,129,416 Chicago 942.624 48,138 422,424 508,800 1,921,986 Total J4,291,254 1,136,294 J7,611,990 2,671,908 15,711,446 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

222 FEDERAL RESERVE BULLETIN. MARCH 1, 1917. Distribution by sizes of bills bought in the open market by all the Federal Reserve Banks during January, 1917, and 1916. To $5,000. To 510,000. To $25,000. To $50,000. To §100,000. ! Over §100,000. Total. Acceptances bought in open market. I i I | January, 1917: Bankers' accept- ! ances 994,090 474 1,640,256 1292 5,122,294 151 6,868,118 3,891,515 1,859,768 1,356 1120,376,041 98.8 Trade acceptances.. 10 29,120 65,813 I 8 115,912 30,924 28 I 224i;i39 1.2 -I- Total 390 1,023,210 483 1,706,069 1300 5,238,206 152 6,898,412 48 3,891,515 11 1,859,768 1,384 ! 20,617,180 100.0 Total P er a c c e c n e t ptances 5.0 8s .3Q .... 25.4 33.5 18.8 9.0 bought during January, 1916 194 546,959 220 1,720,758 4,113,726 47 1,857,477 1,284,593 695 9,523,513 1 Of the above total, bankers' acceptances totaling 514,834,291 were based on imports and exports, and §5,541,750 on domestic trade transactions. 2 All of the above transactions were drawn abroad on importers in the United States and indorsed by foreign banks. ACCEPTANCES. Acceptances bought in open market and held by Federal Reserve Banks as per schedules on file on dates specified, distributed by classes of accepting institutions. [In thousands of dollars; i. e., 000's omitted.] Bankers' acceptances. Bankers' acceptances. Trade Trade Date. b M a b n e e m k r s - . c T om N ru o p s n a t - me b m S a t b n a e k t r e s . ba P b n a r k i n v s k . a s te . Total. m a b in a c o a n c u r o c e s k p e p r e h e s t t n - t . a a T c n c o c e t e p a s l t . - Date. b M a b n e e m k r s - . c T om N ru p o s a n t - me b m S a t b n a e k t r e s . ba P b n r a k i n v s k . a s t . e Total. m i b a n a c o a n c r u o c k e g p e p e h e s t t t n - . a a T c n c o c e t e p a s l t . nies. nies. 1915. 1916. Feb.22 93 93 93 July3 32,989 18,921 471 11,830 64,211 3,422 67,633 Apr. 5 3,653 7,820 10 110 11,593 11,593 Aug. 7 39,695 19,060 738 13,940 73,433 4,225 77,658 May3 5,038 8,189 10 110 13,347 13,347 Sept. 4 41,413 20,356 726 12,491 74,986 3,673 78,659 June 7 5,242 4,516 10 192 9,960 9,960 Oct. 2 37,798 21,782 712 9,944 70,236 2,306 72,542 July3 4,342 5,267 161 9,770 9,770 Nov. 6 37,770 29,474 1,014 12,147 80,405 2,378 82,783 Aug. 2 5,350 5,407 20* 352 11,129 11,129 Dec. 4 47,748 33,232 1,(530 16,069 98,679 4,487 103,166 Sept. 6 6,087 6,305 20 472 12,884 12,884 Oct. 4 9,000 4,898 132 343 14,373 14,373 1917. Nov. 1 8,477 4,331 253 204 13,265 13,265 Jan. 1 66,803 34,625 1,502 18,224 121,154 4,585 125,739 Dec. 6 12,311 5,172 275 396 18,154 18,154 Jan. 8 60,066 32,467 1,325 16,915 110,773 4,249 115,022 Jan. 15 59,710 30,691 1,245 15,862 107,508 4,386 111,894 1916. Jan. 22 56,334 26,286 1,146 14,119 97,885 4,102 101,987 Jan. 3 15,494 7,160 362 822 23,838 23,838 Jan. 29 52,439 22,744 1,054 12,949 4,041 93,227 Feb. 7 15,681 7,876 336 1,456 25,349 489 25,838 Feb. 5 50,361 *23,511 972 13,775 4,041 192,800 Mar. 6 17,182 8,670 408 1,781 28,041 462 28,503 Feb. 12 54,945 33,473 1,265 17,952 4,896 2113,199 Apr. 3 21,000 13,573 473 3,262 38,308 722 39,030 Feb. 19 59,165 35,745 1,268 21,842 4,982 3123,679 Mavl 24,875 15,400 585 3,430 44,290 1,477 45,767 Feb. 26 59,498 36,478 1,094 20,389 5,068 3123,204 Tune 5 24,680 17,029 644 7,007 49,360 2,208 51,568 1 Includes §140,000 of bills accepted by foreign branches and agencies. 2 Includes 5668,000 of bills accepted by foreign branches and agencies. 3 Includes ,§677,000 of bills accepted by foreign branches and agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1, 1917. FEDERAL RESERVE BULLETIN. 223 Amounts of paper discounted and acceptances and warrants bought by each Federal Reserve Bank during January, 1917, distributed by maturities. 15-day maturities. 30-day maturities. Federal Reserve Banks. Discounts. ! Warrants. Total. Discounts. Total. ! Boston §847,389 $847,389 $102,136 $5,096 $107,232 New York 279,272 279,272 69,457 7,299 76,756 Philadelphia 247,937 .1. 247,937 120,203 106,300 226,503 Cleveland 182,617 ' 182,617 271,658 51,666 323,324 Richmond 6,737,047 I S160,000 !. 6,897,047 382,399 1,308,877 1,691,276 Atlanta (including New Orleans Branch) 963,075 17,411 !. 980,486 142,699 52,000 194,699 Chicago 521,480 ! I. 521,480 337,583 108,333 445,916 St. Louis 406,500 i 406,500 73,000 : 30,000 103,000 Minneapolis 376,428 i. .1. 376,428 179,316 ! 179,316 Kansas City 75,606 L 75,606 5,738 ! 5.738 Dallas 162,630 !. 162,630 11,630 ! 25,000 36.630 San Francisco 4,514 j. 4,514 7,863 ; 48,428 56,291 Total. 10,804,495 ! 177,411 10,981,906 1,703,682 | 1,742,999 3,446,681 Percent 23.5 7.4 60-day maturities. 90-day maturities. Federal Reserve Banks. Discounts. Accept- "Warrants. Total. Discounts. Accept- Warrants. Total. Boston 8126,008 865,720 8191,728 8122,929 82.858,308 $2,981,237 New York 123,129 123,129 126,304 2,598,262 2,724,566 Philadelphia. 184,102 665,906 850,008 12,080 1,074,162 1,086,242 Cleveland 163.128 85,579 248,707 16,690 1,214,534 86,151 1,237,375 Richmond : 626.129 357,083 983,212 815,186 659,400 1,474,586 Atlanta (including Now Orleans Branch) 479,583 822,200 1,301,783 948,064 850,211 1,798,275 Chicago 320,909 105,748 426,657 47,659 796,169 1,020 844,848 St. Louis 31,546 164,450 195,996 67,247 281,631 348,878 Minneapolis 356,354 25,000 381.354 197,410 1,396.725 1,594,135 Kansas City 38,780 62,209 100;;989 49,344 323;179 372,523 Dallas 111,350 111,350 199,020 282,374 48i;394 San Francisco. 25,569 517,949 543,518 37,707 2,312,373 2,350,080 Total..... ! 2,586,587 2,871,844 5,458,431 2,639,640 14,647,328 7,171 17,294,139 Per cent 11.7 37.1 Over 90-day maturities. Totals. Per cent. Federal Reserve Banks. co D u i n s- ts . I A an cc c e e p s. t- r W an ar t - s. Total. co D u i n s- ts. A a c n c c e e p s. t- r W an a t r s - . Total. I ! c D ou is n - ts.a c n A e c p c e t - s - . r W an a t r s - . Total. Boston !. $109,715 8109,715 $1,198,462 L$3,038,839 84,237,301 j 28.3 71.7 100.0 New York i 82,798,013 j 2,798,013 598,162 2,605,561 $2,798,013 6,001,736 ! 1.0 43.4 46.6 100.0 Philadelphia I 8800 260,959 1,268,322 ' 1,530,081 565,122 2,107,327 1,268,322 3,940,771 j 14.3 53.5 32.2 100.0 Cleveland | 10,878 832,063 842,941 644,971 1,351,779 838,214 2,834,964 i 22.7 47.7 29.6 100.0 Richmond ' 21,621 21,621 8,582,382 2,485,360 11,067,742 ! 77.5 82.5 100.0 Atlanta (including New j Orleans Branch) j 28,651 3,000 j 31,65112,562,072 1,741,822 3,000 4,306,894 50.5 40.4 .1 100.0 Chicago i 66,532 1,169,634 ' 1,236,216 I 1,294,163 ; 1,010,250 1,170,704 3,475,117 37.2 29.1 33.7 100.0 St. Louis i 27,434 806,924 465,957 . 1,300,315 ! 605,727 i 1,283,005 465,957 2,354,689 25.7 ! 54.5 19.8 100.0 Minneapolis ! 117,245 151,684 i 268,929 I 1,226; 753 1,421,725 151,684 2,800,162 43.8 ! 50.8 5.4 100.0 Kansas City j 96,827 152,2431 249,070 ! 266,295 385,388 152,243 ! 803,926 33.1 | 47.9 19.0 100.0 Dallas i 174,189 121,718 295,907 ! 658,819 307,374 121,718 i 1,087,911 60.6 I 28.2 11.2 100.0 San Francisco I 47,705 760,645 | 808,350 ! 123,358 2,878,750 760,645 | 3,762,753 3.3 76.5 20.2 100.0 Total j 591,8 1,177,598 j 7,723,329 ; 9,492,809 |18,326,286 :20,617,180 7,730,500 146,673,966 ; 39.2 i 44.2 i 16.6 ! Percent ! ' ; 20.3 ' | 160.0 i Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

224 FEDERAL RESERVE BULLETIN". MARCH 1, 1917. Maturities of bills discounted, acceptances, and municipal warrants held by the Federal Reserve Banks on Friday, January 26, 1917. [In thousands of dollars, i. e., 000's omitted.] 1 to 15 days. 16 to 30 days. 31 to 60 days. 61 to 90 days. Banks. c B d o e i u i d s l - n . ls t- b A a o c n u c c g e e h p s t t . - r w n a M p i n a c a u t r l i s - - - . Total. c B d o e i i u d s l - . n ls t- b A a o c n u c c g e e h p s t t - . r w n a M p i n a a c u t r l i s - - - . Total. c B o d e i u i d s l n - . l s t-! i b A a o c n u c c g e e h p s t t . - r w n a M p i n a c a u t r l i s - - - . Total. c B d o e i i u d s l - . n l s t- 1 b A a o c n u c c g e e h p s t t - . r n w a M p i n a c a u t r l i s - - - . Total. Bosto71 230 3,029 125 3,384 291 2,834 20 3,145 234 4,580 313 5,127 35 3,055 165 3,255 New York 813 7,152 177 8,142 477 5,435 265 6,177 311 12,962 335 13,608 101 1 1,855 45 2,001 Philadelphia 285 2,088 76 2,449 122 1,883 2,005 108 4,144 56 4,308 7 878 5 890 Cleveland 268 1,329 52 1,649 138 1,410 1,548 58 3,730 918 4,706 13 874 82 969 Richmond 2,084 1,217 61 3,362 581 297 878 1,005 1,425 2,430 456 i 749 1,205 Atlanta 563 931 278 1,772 360 414 775 7(59 1,730 117" 2,616 409 826 2 1,237 Chicago 1,041 2^272 57 3,370 170 1,111 25 1,30(5 399 3,898 145 4,442 198 156 436 790 St Louis 263 839 76 1,178 64 758 822 142 3,731 33 3,906 48 217 26 291 Minneapolis 457 997 75 1,529 334 357 15 706 481 3,766 338 4,585 143 845 988 K Da a l n l s a a s s City 1 9 6 4 0 5 6 9 7 5 9 62 8 7 3 5 9 1 4 7 4 5 9 8 3 9 2 1 1 3 6 6 6 2 1 2 0 7 3 2;3 8 2 1 9 3 6 2 1 , ,0 4 4 9 0 8 2 9 3 0 6 9 2 5 7 3 5 0 0 3 14 8 7 1 San Francisco 58 1,958 67 2,083 35 1,421 1,456 54 4,735 129 4,918 10 1,089 50 1,149 i 6,316 23,086 1,106 30,508 2,691 16,102 327 19,120 3,951 47,843 2,390 54,184 1,746 10,666 891 13,303 After 90 days. Total. Percentages. • Bills dis- Acceptances Municipal Banks. c B d o e i i u d s l - l n . s t- b A a o c n u c c g e e p h s t t - . r w n M a p i n a c a u r t i l - - s - . Total. Am c o o im u i nte c d P e . e n r t. Amo b u o m ugh c t P e . e n r t. Am w ou a n r t ran c t e s n . t. Amou T n o t tal c . P e e n r t. c B o e d u i i d s l n - . ls t- b a c o A n e u c c p g - e t h s - t r n w M a p i n a c a u t r l i - s - - . Total. Boston 6 6 790 5.0 13,498 13.8 629 5.1 14,917 11.9 5.3 90.0 4.7 100.0 New York 2,887 2,887 1,702 10.8 27,404 28.1 3,709 30.3 32,815 26.1 5.2 83.5 11.3 100.0 Philadelphia .. . 5 1,345 1,350 527 3.4 8,993 9.2 1,482 12.1 11,002 8.7 4.7 81.7 13.6 100.0 Cleveland 12 754 766 489 3.1 7,342 7.5 1,806 14.8 9,637 7.7 5.0 76.1 18.9 100.0 Richmond 24 24 4,150 26.4 3,688 3.8 61 7,899 6.3 52.7 46.6 .7 100.0 Atlanta 28 5 33 2,129 13.6 3,902 4.0 402 3.3 6,433 5.1 33 0 60.6 6.4 100.0 Chicago 114 1,121 1,235 1,922 12.2 7,436 7.6 1,784 14.6 11,142 8.9 17.2 66.7 16.1 100.0 St. Louis 37 404 441 554 3.5 5,545 5.7 539 4.4 6,638 5.3 8.3 83.5 8.2 100.0 Minneapolis 400 177 577 1,815 11.6 5,966 6.1 605 4.9 8,386 6.7 21.6 71.1 7.3 100.0 Kansas City 133 127 260 524 3.3 3,044 3.1 225 1.8 3,793 3.0 14.1 80.0 5.9 100.0 Dallas 205 126 331 903 5.8 1,676 1.7 178 1.4 2,757 2.2 32.8 (50.8 6.4 100.0 San Francisco 49 583 632 206 1.3 9,203 9.4 829 6.8 10,238 8.1 2.0 89.9 8.1 100.0 1,007 7,535 8,542 15,711 100.0 97,697 100.0 12,249 100.0 125,657 100.0 12.5 77.8 9.7 100.0 Conversion operations of each Federal Reserve Bank for January, 1917. a A llo m tt o e u d n b ts y 2 per cent bonds converted. Co u n r v y e r n si o o t n e s b i o ss n u d e s d a t n o d t 1 h - e y e b a a r n T k r s e . as- B al a l l o a t n m ce e n o t f Bank. R Fe e d se e r r v a e l m w a h y i c b h e Consols of j Panamas Conversion Treasury converted Board. 1930. ! Of 1936-1938. Total. bonds. notes. Total. in 1917. Boston $2,696,200 $1,252,000 880,000 $1,332,000 8666,000 $666,000 $1,332,000 SI 364 200 New York 6,412,900 142,000 900,000 1,042,000 521,000 521,000 1,042,000 5,370,900 Philadelphia 2,814,200 1,651 000 1,651,000 826,000 825,000 1,651,000 1,163,200 Cleveland 3,227,200 903,900 1,500,000 2,403,900 1,201,900 1,202,000 2,403,900 823,300 Richmond 1,799,100 999,100 800,000 1,799,100 900,100 899,000 1,799,100 Atlanta j 1,335,500 1,205,100 120,000 1,325,100 658,100 667,000 1,325,100 10,400 Chicago 3,722,100 2,331,000 559,000 2,890,000 1,445,000 1,445,000 2,890,000 832,100 St. Louis 1,504,600 1,504,600 Minneapolis... 1,281,600 1,010,000 50,000 1,060,000 530,000 530,000 1,060,000 221,600 Kansas City... 1,642,900 1,392,900 250,000 1,642,900 821,900 821,000 1,642,900 Dallas 1,451,200 951,200 500,000 1,451,200 726,200 725,000 1,451,200 San Francisco. 2,112,500 2,000,000 2,000,000 1,000,000 1,000,000 2,000,000 112,500 Total.... 30,000,000 13,838,200 i 4,759,000 18,597.200 9,296,200 9,301,000 18,597,200 11,402,800 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH!, 1917. FEDERAL EESEBVE BULLETIN. 225 Total investment operations of each Federal Reserve Bank during the month of January, 1917. Bills bought in open market. Municipal warrants bought. Bills discounted Federal Reserve Bank. me f m or ber Bankers' Trade banks. accept- accept- Total. City. State. All other. Total. ances. ances. Boston $1,198,462 $3,038,839 $3,038,839 1 New York 598 162 2,556,318 $49,243 2,605,561 i 32,798, 82,798,013 Philadelphia 565,122 2,095,209 12,118 2,107,327 ! "1 ,2"6"8",322 1 268 322 Cleveland 644,971 1,351,779 1,351,779 822,842 §15,372 838,214 Richmond 8,582,382 2485,360 2,485,360 Atlanta , 2,, 562,,072 1 736,622 5,200 1,741,822 3,000 3,000 Chicago I 1,294,163 994,661 15,589 1,010,250 i 660,484 §2,040 508,180 1,170 704 St. Louis 1 605,727 1,283,005 1,283,005 ! 465,957 465,957 Minneapolis | 1,226,753 1,421,725 1,421,725 ! 151,684 151,684 Kansas City | 266,295 385,388 I 385,388 ; 152,243 152,243 Dallas I 658,819 307,374 ! 307,374 i 121,718 121,718 San Francisco 123,358 2,719,761 158,989 2,878,750 i 760,645 760 645 Totals: January, 1917.. 18,326,286 20,376,041 241,139 20,617,180 7,201,908 2,040 526,552 7,730,500 January, 1916. 11,114,900 9,374,500 149,000 9,523,500 9,507,800 236,000 62,500 9,806,300 Total investment United States bonds and Treasury notes. operations. Federal Reserve Bank. 1-year January, January. 2 per cent. 3 per cent. | 4 per cent. notes. Total. 1917. 1916. Boston 34,237,301 $3,411,100 New York 512,500 §60,000 |. 872,500 6,074,236 10,167,700 Philadelphia... 3 940,771 3,012,800 Cleveland 26,400 26,400 2,861 364 1,400,500 Richmond..... 46,250 46,250 11,113,992 3,494,700 Atlanta 525 000 525,000 4,831 894 2,269,000 Chicago 3,475,117 3,838,200 St. Louis 2354,689 1 903,800 Minneapolis 1,240 1,240 2,801,402 853,400 Kansas City... 25,000 25,000 828,926 1,775 200 Dallas 1,087,911 2,270,500 SanjFrancisco.. 'i'735,'666 1,735,000 5,919,680 2674600 Totals: January, 1917. 2,370,150 61,240 ! 2,431,390 49,105,356 January, 1916. 4,393,800 403,000 I 1,830,000 6,626;800 37,071,500 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

226 FEDEEAL EESEBVE BULLETIN. HABCH 1, 1917. RESOURCES AND LIABILITIES. Resources and liabilities of each of the Federal Reserve Banks and of the Federal Reserve System at close of business on Fridays, Jan. 26 to Feb. 23, 1917. RESOURCES. [In thousands of dollars, i. e., 000's omitted.] New Phila- Cleve- Rich- At- Chi- St. Minne-Kansas San Boston. York. delphia. land. mond. lanta. cago. Louis. apolis. City. Dallas. Fran- Total. cisco. L 1 Gold coin and certificates in vault: Jan. 25 14,977 145,136 23,558 16,860 5,434 6,138 33,034 14,473 10,468 6,900 5,833 19,530 302,341 Feb.2 13.983 156,451 23,651 j 16,711 5,296 5,448 33,216 14,724 10,759 6,855 5,940 13,930 306,964 Feb.9 12;838 124,074 27,792 i 16,101 5,280 5; 801 31,042 12,851 11,059 7,295 6,535 13,526 274,194 Feb. 16 12,498 128,155 28,305 15,704 5,291 5,687 28,310 11,081 11,326 7,365 6,717 13,928 274,367 Feb. 23 12,740 138,403 24,070 15,010 5,373 5.736 31,523 9,553 11,410 7,562 6,948 13,027 281,355 Gold settlement fund: Jan. 26 15,132 50,897 15,117 26,552 18,085 2.912 33,504 3,468 6,316 27,355 10,629 3,804 213,771 Feb. 2 15,237 39,182 14,258 28,777 17,701 5,791 38,920 3,583 6,124 29,443 11,067 2,878 212,961 Feb.9 19,901 46,089 8,633 25,251 18,379 7,012 35,298 1,510 5,831 28,363 9,101 7,593 212,961 Feb.16 18,472 56,644 3,944 25,443 18,258 8,002 40,048 437 4,857 25,687 7,854 6,575 216,221 Feb. 23 17; 825 53,768 10;855 26,510 16,826 5,197 32,694 2,302 4,457 27,358 7,660 8,409 213,861 Gold redemption fund: Jan. 26 50 250 100 48 245 495 200 84 125 156 45 15 1,813 Feb. 2 48 250 100 40 257 528 200 68 125 163 41 15 1,835 Feb. 9 50 250 100 27 234 502 200 47 125 156 28 15 1,734 Feb. 16 48 250 100 25 328 493 200 41 125 154 25 15 1,804 Feb. 23 50 250 100 66 448 478 200 19 125 149 22 15 1,922 Legal tender notes, silver, etc.: Jan. 26... 1,270 922 127 1,110 3,054 497 220 572 90 17,579 Feb. 2 1,207 1,350 ! 840 974 102 1,296 1,505 3,376 607 185 648 95 12,185 Feb.9 511 2,158 I 459 536 62 1,225 996 3,176 643 88 755 24 10,633 Feb.16 140 152 158 408 113 1,279 987 2,788 665 90 785 44 7,609 Feb.23 22(5 7,831 I 233 202 121 1,231 927 2,822 711 81 819 45 15,249 Total reserve: Jan. 26 31,429 204.352 39,697 44,420 23,891 10,233 67,848 21,079 17,406 34,631 17,079 23,439 535,504 Feb. 2 30,475 197', 233 38,849 46,502 23,356 13,063 73,841 21,751 17,615 36,646 16,918 533,945 Feb.9 33,300 172 571 36,984 41,915 23,955 14,540 67,536 17,584 17,658 35,902 16,419 21,158 499,522 Feb. 16 31,158 185,201 32,507 41,580 23,990 15,461 69,545 14,347 16,973 33,296 15,381 20,562 500,001 Feb. 23 30,841 200,232 35,258 41,788 22,768 12,642 65,344 14,696 16,703 35,150 15,449 21,496 512,387 5 per cent redemption fund against Federal Reserve Bank notes: I Jan. 26 300 100 400 Feb.2 300 100 400 Feb.9 300 100 400 Feb. 16 300 100 400 Feb. 23 300 100 400 Bills discounted—members: Jan. 26 790 1,702 527 489 4,150 2,129 1,922 554 1,815 524 903 206 15,711 Feb.2 747 1,473 651 428 3,609 2,273 1,159 541 1,795 509 1,310 212 14,707 Feb.9 792 1,345 832 1,068 3,444 2,540 1,700 541 1,949 512 1,278 199 16,200 Feb. 16 2,208 1,988 694 1,478 3,874 2,474 1,616 581 2,570 489 1,375 206 19,553 Feb. 23 2,969 2,066 1,304 1,963 3,710 2,219 1,198 556 2,467 509 1,141 164 20,266 Bills bought in open market: Jan. 26 13,498 27,404 8,993 7,342 3,688 3,902 7,436 5,545 5,966 3,044 1,676 9,203 97,697 Feb.2 11,962 25,599 i 11,194 6,404 4,414 3,435 7,080 4,980 5,689 2,833 1,159 8,363 93,112 Feb.9 13,292 33,615 I 14,815 8,217 4,717 3,538 8,338 6,237 6,384 2,735 1,286 8,918 112,092 Feb.16 13,877 35,544 i 15,166 10,859 5,584 3,484 10,135 7,968 6,735 4,358 2,320 10,024 126,054 Feb. 23 12,749 33,384 14,130 10,484 6,681 3,444 10,689 8,446 6,940 4.950 2,517 9,552 123,966 United States bonds: Jan. 26 232 826 6,117 1,340 1,372 7,413 2,203 1,913 8,518 3,603 1,919 36,122 Feb.2 110 59 136 5,171 587 296 6,203 2,203 1,495 8,518 3,403 2,369 30,550 Feb.9 70 4,985 440 50 5,963 2,203 1,409 8,518 3,403 2,429 29,470 Feb. 16 71 4,985 442 50 5,961 2,203 1,409 8,518 3,403 2,429 29,471 Feb. 23 71 4,985 442 50 5,961 2,203 1,409 8,518 3,403 2,429 29,471 1-year Treasury notes: Jan. 26 1,666 1,726 1,999 1,820 1,969 1,491 2,962 1,230 1,430 1,500 19,647 Feb.2 1,666 726 :,999 1,820 1,969 1,491 2,962 1,230 963 1,430 1,500 18,647 Feb. 9 1,666 726 ,999 1,820 1,969 1,491 2,962 891 1,230 963 1,430 1,500 18,647 Feb.16 1,666 726 1,820 1,969 1,491 2,962 891 1,230 963 1,430 1,500 18,647 Feb. 23 1,666 726 1,820 1,969 1,491 2,962 891 1,230 963 1,430 1,500 18,647 Municipal warrants: Jan. 26 629 3,709 ,482 1,806 61 402 1,784 539 605 225 178 829 12,249 Feb.2 504 4,300 ,406 1,918 124 1,855 600 555 238 199 965 12,664 Feb.9 631 4,631 ,431 2,401 123 2,588 924 530 340 254 965 14,833 Feb.16 621 5,534 ,431 2,910 124 2,842 1,127 515 340 254 965 16,678 Feb. 23 611 5,534 1,431 2,962 124 2,842 1,127 515 492 506 965 17,124 Federal Reserve notes, net: Jan.26 1,069 18,927 1,342 893 1,695 142 I. 2,993 27,061 Feb.2 1,070 18,814 627 934 1,665 155 2,014 25,515 Feb.9 882 16,948 1,018 1,739 220 2,472 23,290 Feb.16 1,390 16,200 775 1,315 439 2,401 22,520 Feb. 23 14,958 859 2,738 2,446 22,076 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1, 1917. FEDERAL RESERVE BULLETIN. 227 Resources and. liabilities of each of the Federal Reserve Banks and of the Federal Reserve System at close of business on Fridays, Jan. 26 to Feb. 23, 1917—Continued. RESOURCES-Continued. [In thousands of dollars, i. e., 000's omitted.] Y N o e r w k , ! d P el h p i h la ia - .i C l l a o n v d e . - Chi- Lo S u t. is. M ap i o n l n is e . - K C a i n ty sa . s Total. Due from other Federal Reserve Banks, net: Jan. 26 1,933 539 377 467 14,123 Feb. 2. 3,687 2,116 1,804 S3 3,594 U2,687 Feb. 9. 3,783 982 460 403 1,102 U3,255 Feb. 16. 3,750 509 193 415 17,840 Feb. 23 159 1,061 10,307 55 1,431 1732 Uncollected items: Jan. 26 11,560 26,997 14,497 9,266 8,575 10,136 15,780 8,137 4,358 8,985 3,917 4,229 126,437 Feb.2 15,482 • 24,292 18,613 8,917 7,212 7,044 15,799 6,019 3,076 6,699 4,032 9,426 126,611 Feb.9 9,387 23,640 18,319 8,823 7,321 8,160 16,270 7,496 3,654 7,359 4,967 5,829 121,225 Feb. 16 13,660 29,918 21,275 12,055 8,261 7,730 :17,735 9,748 3,710 7,996 5,608 6,553 144,249 Feb. 23 15,257 29,590 17,133 11,731 7,969 14.524 9,562 4,063 8,540 4,560 5,034 136,940 All.other resources: Jan. 26 = 701 474 737 227 2,727 1,109 3,616 117 566 1,737 612 13,609 Feb. 2 i 779 621 971 147 2,521 970 3,532 119 497 1,800 304 13,153 Feb. 9 ...I 313 2,343 361 168 137 1,979 516 3,215 85 326 1,240 395 11,078 Feb. 16 j 94 : 407 298 484 128 1,948 769 2,482 81 208 1,289 431 8,619 Feb. 23 1 08 I 313 280 266 102 2,225 668 2.201 108 187 1,510 343 8,271 Total resources: i Jan. 26 |62,293 ! 285,750 69,837 75,489 43,901 33,206 107,949 I 44,497 34,091 57,756 31,000 45,397 880,314 Feb. 2... 62,908 273,275 74,922 73,512 41,294 32,117 115,221 42,633 33,614 57,203 31,367 45,665 881,991 Feb. 9... 60,400 [263,064 74,741 72,772 43,089 33,336 111,395 40,073 33,370 56,955 31,000 44,967 860,012 Feb. 16. 64)674 !275,589 79,101 77,024 44,529 32,762 1116,630 39,347 33,732 56,661 31,599 45,486 894,032 Feb. 23. 66,409 :286,894 73,530 77,017 44,725 31,172 1117,233 ! 39,682 33,435 59,664 30,852 45,360 890,280 LIABILITIES. Capital paid in: Jan. 26 4,990 11,852 .5,230 6,020 3.361 2,410 6,932 ! 2,799 2,402 ! 3,074 2,694 3,930 55,694 Feb. 2 4,990 11,858 i5,230 6,020 3)363 2,417 6,947 . 2,799 2,402 3,074 2,695 3,930 55,725 Feb. 9 4,990 11,860 5,230 6,020 3,363 2,420 6.946 '• 2,799 2,405 3,074 2,693 3,913 55,713 Feb. 16 5,035 11,861 I 5,243 6,020 3,363 2,418 6.947 j 2,799 2,405 3,074 2,693 3,915 55,773 Feb. 23 5,083 11,888 ;5,259 6,087 3,412 2,419 0.950 ' 2,800 2,407 3,074 2,695 3,915 55,989 Government deposits: Jan. 26 325 3,197 ! 2,861 1,157 2,058 2,873 1,592 ! 4,633 2,335 j 441 1,492 2,643 25,607 Feb. 2 2- 38 2,027 :2,778 1,140 1,489 2,577 2,164 3,547 2,287 ! 940 1,578 2,844 23,333 Feb.9 2-108 169 ! 2,077 965 1,472 2,599 1,566 1,844 i 98 1,070 2,042 15,525 Feb. 16 2- 89 1,817 1,616 1,037 1,518 2,032 55 : 2 -441166 923 ;2-670 731 1,197 10,851 Feb. 23 340 1,191 1,079 1.516 1,859 2 -334 632 | 140 1,374 13,407 Due to mombers—Reserve account: j Jan. 26 47,488 ! 246,548 i 46,086 58,582 ! 26,153 14,097 90,500 26,737 26,758 !45,623 23,303 35,966 687,841 Feb.2 49,980 ' 238,015 j48,496 56,804 : 25,778 16,851 94,251 27,760 26,682 !45,246 24,800 35,215 689,878 Feb.9 47,658 229,947 I 46,314 !56,774 ! 26,181 17,059 94,248 26,807 26,986 " 45,461 24,769 35,966 678,170 Feb. 16 49,243 229,110 !50,489 I 58,280 ! 25,206 19,943 95,459 26,680 26,842 44,903 25,146 37,290 688,591 Feb. 23 49,783 233,368 |46,458 j 58,202 ! 20,048 19,972 90,465 27,372 20,079 46,416 25r005 37,007 692,475 Collection items: Jan. 26 7,023 18,875 ; 14,928 9,730 7,324 9,929 8,526 2,596 5,839 3,117 2,784 97,374 Feb.2 7,458 21,242 j 18,300 9,548 ; 6,820 6,806 11,859 5,587 2,243 5,476 2,294 3,599 101,232 Feb.9 7,778 21,088 : 16,349 9,013 : 6,864 8,397 8,470 6,180 2,135 5,502 2,468 2,963 97,207 Feb. 16 10,063 31,140 I 19,770 11,687 ! 8,252 5,138 13,069 6,958 2,836 6,665 2,642 2,998 121,218 Feb. 23 11,107 23,712 : 17,398 11,049 : 7,709 3,235 12,881* 6,699 2,178 7,147 2,130 2,979 108,826 Federal Reserve notes, net: Jan. 26 3,749 3,897 3,645 1,824 394 13,509 Feb.2 3,530 3,466 2,940 1.535 11,471 Feb.9 457 5,209 2,861 2,721 1,845 13,093 Feb. 16 1,847 6,190 3,077 2,560 726 2,689 17,089 Feb. 23 3,086 6,040 2,935 2,827 992 3,181 19,061 Due to other Federal Reserve Banks, net: Jan. 26 2,421 5,199 : 642 i 1,256 399 935 Feb.2 461 33 i 314 932 Feb.9 4,175 975 Feb. 16 331 1,464 154 766 387 Feb. 23 13,885 753 318 547 190 All other liabilities: Jan. 26 46 79 90 ! 74 Feb.2 57 100 118 ; 77 352 Feb.9 82 ! 139 i. 304 Feb. 16 91 197 136 510 Feb. 23 94 205 138 85 522 Total liabilities: Jan. 26 62,293 285,750 69,837 I 75,489 43,901 33,206 107,949 44,497 34,091 57,756 31,000 45,397 880,314 Feb.2 273,275 74,922 I 73,512 | 41,294 32,117 !115,221 42,633 33,614 57,203 31,367 45,665 881,991 Feb.9 ! 0,400 j263,064 74,741 | 72,772 : 43,089 33,336 111,395 40,073 33,370 56,955 31,000 44,967 860,012 Feb. 16 64,674 275,589 79,101 I 77,024 j 44,529 32,762 1116,630 39,347 33,732 56,661. 31,599 45,486 894,032 Feb. 23 6,409 j280,894 73,530 77,017 ! 44,725 31,172 ;117,233 39,682 33,435 59,664 30,852 45,360 890,280 I 1 Difference between net amounts due from and net amounts due to other Federal Reserve Banks. 2 Overdraft. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

228 FEDERAL BESERVE BULLETIN. MARCH 1, 1917. FEDERAL RESERVE NOTES. Federal Reserve note account of each Federal Reserve Agent at close of business on Fridays, Jan. 26 to Feb. 28, 1917. [In thousands of dollars; i. e., 000's omitted.] New Phila- Cleve- Rich- At- Chi- St. Minne-Kansas Boston. York. jdelphia. land. mond. lanta. cago. Louis. apolis. City. Dallas. Fran- I Total. Cisco. I Federal Reserve notes: Received from Comptroller- Jan. 26 28,880 185,400 j 30,480 17,660 29,500 35,380 11,880 22,540 26,500 28,120 35,320 17,720 469,380 Fob. 2 28,880 185,400 i 30,480 17,660 29,500 35,380 11,880 22,540 26,500 28,120 35,320 18,560 470,220 Feb. 9.. 28,880 224,260 30,480 22,660 29,500 36,380 12,680 22,540 26,500 28,120 35,320 18,560 515,880 Feb. 16 33,880 237,680 33,480 23,860 29,500 36,380 13,680 22,540 26,500 28,120 35,320 18,560 I 539,500 Feb. 23 33,880 246,080 37,520 23,860 29,500 36,380 17,680 22,540 32,000 28,720 35,320 18,560 i 562,040 Returned to Comptroller- Jan. 26 7,772 59,890 6,340 4,046 7,402 4,089 1,719 2,737 994 2,313 5,063 1,993 104,358 Feb.2 7,819 60,548 6,790 4,099 i 7,736 4,186 1,724 2,767 1,022 2,366 5,327 2,010 106,394 Feb. 9 8,385 60,813 | 6,830 4,188 j 8,018 4,360 1,734 2,824 1,074 2,448 5,554 2,034 108,262 Feb. 16 8,570 61,274 6,908 4,220 8,235 4,430 1,737 2,844 1,090 2,478 5,706 2,335 109,827 Feb. 23 8,626 61,534 7,144 4,728 8,375 4,580 1,847 3,273 1,136 2,559 5,947 2,352 112,101 Chargeable to Federal Re- \ serve Agent- Jan. 26 21,108 125,510 24,140 13,614 22,098 31,291 10,161 19,803 25,506 25,807 30,257 15,727 365,022 Feb.2 21,061 124,852 23,690 13,561 21,764 31,194 10,156 19,773 25,478 25,754 16,550 363,826 Feb.9 20,495 163,447 23,650 18,472 21,482 32,020 10,946 19,716 25,426 25,672 29,766 16,526 407,618 Feb.16 25,310 176,406 26,572 19,640 21,265 31,950 11,943 19,696 25,410 25,642 29,614 16,225 429,673 Feb. 23 25,254 184,546 30,376 19,132 21,125 31,800 15,833 19,267 30,864 26,161 29,373 16,208 449,939 In hands of Federal Reserve Agent- Jan. 26 7,210* 18,020 7,260 3,100 4,000 8,135 3,000 3,040 5,620 4,958 1,000 73,329 Fob. 2 7,210 18,020 7,260 3,100 4,000 8,635 I 3,000 3,040 5,620 5,108 8,256 73,249 Feb.9 6,710 42,680 4,860 6,800 3,900 9; 935 I2,500 3,040 5,620 4,658 8,567 99,270 Feb. 16 10,560 47,200 5,760 7,600 3,900 10,385 2,500 3,040 5,020 3,688 8,567 108,220 Feb. 23 10,560 50,000 9,240 5,900 3,900 10,385 2,500 3,040 10,520 3,538 8,887 118,470 Issued to Federal Reserve | i Bank, net— j Jan. 26 13,898 107,490 16,880 10,514 18,098 23,156 7,161 16,763 19,886 20.849 I 22,271 14,727 Feb.2 13,851 106,832 16,430 10,461 17,764 22,559 7,156 16,733 19,858 20,646 ! 21,73716,550 290,577 Feb.9 13,785 120,767 18,790 11,672 17,582 22,085 8,446 16,676 19,806 21,014 i 21,199 16,526 308,348 Feb.16 14,750 129,206 20,812 12,040 17,365 21,565 9,443 16,656 20,390 21,954 ! 21,04716,225 321,453 Feb. 23 14,694 134,546 21,136 13,232 17,225 21,415 13,333 16,227 20,344 22,623 ! 20,486 16,208 331,469 Amounts held by Federal Reserve Agent: In reduction of liability on outstanding notes— Gold coin and certificates on hand- Jan. 26 13,150 103,349 3,730 : 9,880 2,960 5,165 13,230 4,370 j 10,340 166,174 Feb.2 13,150 103,349 3,730 ' 9,880 2,960 5,165 13,230 4,370 j 10,540 166,374 Feb.9 12,850 114,949 3,730 10,980 2,960 5,165 13,230 4,370 j 10,110 178,344 Feb. 16 13,850 123,549 3,730 11,380 2,960 5,165 4,370 ! 10,110 188,144 Feb. 23 13,850 121,146 3,730 12,543 2,960 5,165 13,030 4,370 ! 10,110 194,904 Credit balance in gold redemption fund— Jan. 26 748 4,141 870 634 1,715 151 741 1,131 ! 607 13,436 Feb.2 701 3,483 770 ! 581 774 1,618 146 711 878 1,231 i 1,167 ; 590 12,650 Feb.9 935 5,818 930 | 717 1,444 136 854 826 1,149 : 1,059 ! 566 15,126 Feb. 16 900 5,657 1,052 660 615 1,374 133 834 1,010 1,119 ; 1,107 i 545 15,006 Feb. 23 844 5,400 1,216 ! 565 1,224 123 785 96 1,038 ! 1,046 j 14,722 Credit balance with Federal Reserve Board- Jan. 26 12,280 i. 12,900 13,850 7,010 6,510 3,250 13,660 10,130 14,120 93,710 Feb.2 11,930 !. 12,900 13,700 7,010 7,010 3,250 13,260 10,030 15,960 95,050 Feb.9 12,730 l. 11,000 13,900 8,310 6,810 3,250 13,260 10,030 15,960 95,250 Feb. 16 12,530 ' 10,000 13,450 9,310 6,810 3,250 13,260 9,830 15,680 94,120 Feb. 23 12,130 ; 10,000 13,450 13,210 6,430 3,250 13,380 ! 9,330 15,380 96,560 As security for outstanding notes- Commercial paper- Jan. 26... 4,290 4,631 4,347 2,500 1,935 670 18,373 Feb.2 4,090 4,281 3,847 2,500 1,785 16,503 Feb.9 1,400 5,865 3,781 3,847 2,500 2,235 19,628 Feb. 16 3,500 6,750 3,781 3,847 3,100 3,205 24,183 Feb. 23 4,060 3,781 3,847 3,100 3,835 25,283 Total- Jan. 26 13,898 107,490 16,880 10,514 18,098 23,156 7,161 16,763 19,886 20,849 22,271 14,727 291,693 Feb.2 13,851 106,832 16,430 10,461 17,764 22,559 7,156 16,733 19,858 20,646 21,737 16,550 290,577 Feb.9 13,785 120,767 18,790 11,672 17,582 22,085 8,446 16,676 19,806 21,014 21,199 16,526 308,348 Feb.16 14,750 129,206 20,812 12,040 17,365 21,565 9,443 16,656 20,390 21,954 21,047 16,225 321,453 Feb.23 14,694 134,546 21,136 13,232 17,225 21,415 13,333 16,227 20,344 22,623 20,486 16,208 331,469 Memorandum: Total amount of commercial paper delivered to Federal Reserve Agent- Jan. 26 4,649 4,655 1 4,347 2,500 1,941 1,023 19,115 Feb.2 5,953 4,304 1 3,848 2,500 1,939 1,148 19,692 Feb.9 ... 1,401 6,778 3,809 3,848 2,500 2,236 1,143 21,715 Feb. 16 3,502 7,263 3,810 3,850 3,100 3,217 2,004 26,746 Feb.23 4,062 8,119 3,809 3,850 3,100 1,842 28,618 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH l, 1917. FEDERAL BESERVE BULLETIN. 229 Federal Reserve note account of each Federal Reserve Bank at close of business on Fridays, Jan. 26 to Feb. 23, 1917, [In thousands of dollars; i. e., 000's omitted.] ! | Boston. Y N o e r w k. d P el h p i h la ia - . C la lo n v d e . - | ' m R o ic n h d - . la A n t t - a. c C a h g i- o. Lo S u t. is. M ap i o n l n is e . - | K C a i n ty s . as c F S i r s a a c n n o - . Total. Federal Reserve notes issued to banks: Jan. 26 13,898 107,490 16,880 10,514 18,098 23,156 7,161 16,763 19,886 20,849 22,271 14,727 291,693 Feb.2 13,851 106,832 16,430 10^461 17,764 22,559 7,156 16,733 19,858 20,646 21,737 16,550 290,577 Feb.9 13,785 120,767 18,790 11,672 17,582 22,085 8,446 16,676 19,806 21,014 21,199 16,526 308,348 Feb.16 14,750 129,206 20,812 12,040 17,365 21,565 9,443 16,656 20,390 21,954 21.047 16,225 321,453 Feb. 23 14,694 134,536 21,136 13,232 17,225 21,415 13,333 16,227 20,344 22,623 20,486 16,208 331,469 Federal Reserve notes in hands of banks: Jan. 26 1,069 18,927 1,342 893 541 734 1,695 702 2,642 111 276 2,993 31,925 Feb.2 1.070 18,814 627 934 560 815 1,665 907 2,736 250 155 2,014 30,547 Feb.9 , '882 16,948 943 1,018 656 920 1,739 1,126 2,511 390 220 2,472 29,825 Feb. 16 1,390 16,200 1,653 775 5G0 704 1,315 1,287 2,374 516 439 2,401 29,614 Feb. 23 839 14;958 974 859 620 846 2,738 1,020 2,108 654 236 2,446 28,298 Federal Reserve notes in circulation: Jan. 26 , 12,829 88,563 15,538 9,621 17,557 22,422 5,466 16,061 17,244 20,738 21,995 11,734 259,768 Feb.2 12,781 88,018 15,803 9,527 17,204 21,744 5,491 15,826 | 17,122 20,396 21,582 ! 14,536 260,030 Feb.9 12,903 103,819 17,847 10,654 16,926 21,165 6,707 15,550 j 17,295 20,624 20,979 j 14,054 278,523 Feb.16 13.360 113,006 19,159 11,265 16,805 20,861 8,128 15,369 i 18,016 21,438 20,608 I 13,824 291,839 Feb. 23 13;855 119,588 20,162 12,373 16,605 20,569 10,595 15,207 18,236 21,969 20,250 ! 13,762303,171 Gold and lawful money deposited with or to credit of Federal Reserve Agent: j I Jan. 26 13,898 107,490 16,880 10,514 ! 13,808 18,525 7,161 ! 12,416 17,386 18,914 21,601 i 14,727 j 273,320 Feb.2 13,851 106,832 16,430 10,461 ! 13,674 18,278 7,] 56 12,886 17,358 18,861 21,737 ; 16,550 j 274,074 Feb.9 13,785 120,767 17,390 11,672 i 11,717 18,304 8,446 i 12,829 17,306 18,779 21;1"9 9 16,526 : 288,720 Feb. 16 , 14,750 129,206 17,312 12,040 10,615 17,784 9,443 12,809 17,290 18,749 21,047 16,225 : 297,270 Feb. 23 14,694 134,546 17,076 13,232 10,565 17,634 13,333 ! 12,380 17,244 18,788 20,486 16,208 306,186 GOLD IMPORTS AND EXPORTS. Gold imports and exports into and from the United States from Jan. 26 to Feb. 16, 1917. [In thousands of dollars; i. e., 000's omitted.] Total for Total corre- Jan. 26, Feb. 2, Feb. 9, Feb. 16, since sponding 1917.. 1917. 1917. 1917. Jan. 1, period 1917. during 1916. IMPORTS. Ore and base bullion 265 385 269 193 1,681 1,066 United States mint or assay office bars.. 1 2 5 359 Bullion, refined 897 133 707 15 495 18 734 4,198 United States coin.. . . . 500 2 500 3 51,005 45 Foreign coin 36,066 41,042 17,014 Total imports 1,662 521 1,478 51,757 112,467 22,682 EXPORTS. Domestic: Ore and ba^e bullion 1 19 35 57 United States mint or assay office bars. . 11 514 1 1,184 1,303 Bullion refined 114 59 509 233 1,063 714 Coin 4,950 719 2,764 4,054 25,929 6,735 Total 5,076 1,311 3,273 4,288 28,211 8,809 Foreign: Bullion, refined . . 31 31 Coin 159 1,134 1,815 6,130 Total 190 • 1,134 1,840 6,130 Total exports 5,266 1,311 3,273 5,422 30,057 14,939 Excess of gold imports over exports since Jan. 1,1917 882,410 Excess of gold imports over exports since Aug. 1, 1914 951,172 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

230 FEDERAL RESERVE BULLETIN. MAKCH 1, 1917. EARNINGS ON INVESTMENTS OF FEDERAL RESERVE BANKS. amounts of earning assets held by each Federal Reserve Bank during January, 1917, earnings from each class of earning assets, and annual rates of earrings on the basis of January, 1917, returns. Average balances for the month of the several classes of earning assets. Bills United m B co e il u m ls n b t d e e i d r s s , - . b m ou o a p g r e k h n t e t i . n b T o r S n e t d a a s s t e u a s r n y d M wa u r n r i a c n ip ts a . l Total. notes. Boston SI.578,732 $13,443,098 $2,234,484 S755,711 $18,012,025 New York 3;795,495 33,033,475 2,069,437 2,557,181 41,455,588 Philadelphia.. 766,946 10,501,050 2,735,129 928,012 14,931,137 Cleveland 595,783 8,718,124 7,791,699 1,973,427 19,079,033 Richmond 3,873,734 3,663,500 3,145,151 60,750 10,743,135 Atlanta 2,946,127 4,242,304 2,854,467 400,909 10,443,807 Chicago 3,174,927 8,840,944 10,219,358 1,550,655 23,785,884 St. Louis 781,055 6,407,550 3,093,900 614,247 10,896,752 Minneapolis... 1,809,200 6,422,500 3,101,600 550,500 11,883,800 Kansas City.... 492,445 3,354,022 9,463,108 204,054 13,513,629 Dallas 845,821 2,036,426 5,033,250 164,914 8,080,411 San Francisco., 216,537 10,911,610 3,351,072 929,189 15,408,408 Total i 20,876,802 111,574,603 55,092,655 10,689,549 I 198,233,609 Earnings from— Calculated annual rates of earnings from— United United B co m i b l u l e e s n r m t d s e . - i d s , - m i b n o B a u o r il k p g l e s e h n t t . T S b re a o t a a n n s t d d e u s s ry p M r a a l u n n w t i s c a . i r - - Total. B co i m b l u l e e s n r m t d s e . i - d s , - m i b n o B a u o r i k l g p l e s e h n t t . Tr S b e a o t a a n n s t d d e u s s ry p M r a a l u n n w t i s c a . i r - - Total. notes. notes. t Per cent. Per cent. Per cent. Per cent. \ Per cent. Boston $5,128 $32,080 $5,617 $1,985 $44,810 3.82 2.81 2.96 3.09 2.93 New York.... 11,413 77,473 5,314 6,509 100,709 3.54 •2.76 3.00 2.99 I 2.86 Philadelphia. 2,556 24,828 6,981 2,471 36,836 3.92 2.79 3.00 3.13 I 2.90 Cleveland 2,094 20,559 17,693 5,703 46,049 4.14 2.78 2.66 3.40 2.84 Richmond 12,384 9,572 7,815 183 29,954 3.76 3.08 2.93 3.50 3.28 Atlanta 8,815 10,719 1,177 27,649 3.64 3.07 2.96 3.57 3.22 Chicago 12,991 20,777 22,491 4,329 60,588 4.82 2.77 2.59 3.29 3.00 St. Louis 2,540 15,445 6,534 1,699 26,218 3.83 2.83 2.47 3.26 2.83 Minneapolis.. 6,905 15,519 6,804 1,397 30,625 4.49 2.85 2.58 2.99 3.a3 Kansas City.. 2,058 8,128 19,030 427 29,643 4.92 2.85 2.37 2.46 2.58 Dallas........ 3,278 4,834 11,128 458 19,698 4.65 2.85 2.65 3.33 2.93 San Francisco 856 25,641 7,329 2,314 36,140 4.67 2.77 2.63 2.93 2.76 Total... 71,018 265,575 123,674 j 28,652 488,919 4.01 2.80 2.64 3.16 2.90 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MABCH 1,1917. FEDEKAL RESERVE BULLETIN. 231 DISCOUNT RATES. Discount rates of each Federal Reserve Bank in effect Feb. 28, 1917. Maturities, Discounts. Trade acceptances. Comm p o ap d e it r y b P o a u p g e h r t M ba e n m k b s e 1 r Agricul- matur- in open collattural ing market. eral 1 W 0 i d th a i y n s.1 W 5 i d th a i y n s. d c 1 a l 1 u y s t s i o , v i e 3 n , - 0 j e d ; l a u 1 y s 6 s iv , t i e o n . - 3 d c 0 a l u y i s s i 3 , v 1 i e n . t - o d c 6 6 a l 1 u 0 y s s t i o , v i e 9 n . 0 - an p st d a o p c li e k v r e- d c a l T u y o s s i , v 3 i e 0 n . -d c 3 a l 1 u y s s t i o , v i e n 6 , 0 - | j d I e a l 6 u y s 1 s i , v t i o n e. - 9 9 0w 0 i d th a i y n s. loans. over 90 j Boston 31 4 4 New York 3 Philadephia 31 31 Cleveland 3* Richmond 1 31 Atlanta i 31-51 Atlanta (New Orleans 31 branch) Chicago s f St. Louis Minneapolis 34 Kansas City (*> Dallas 3-5 San Francisco 31 4 i Rate for bills of exchange in open-market operations. a Rate for trade acceptances bought in open market without member bank indorsement. * Rate for commodity paper maturing within 30 days, 31 per cent; over 30 to 60 days, 4 per cent; over 60 to 90 days,4$ per cent; over 00 days, 5 per cent. NOTE.—Rate for bankers' acceptances, 2 to 4 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

NET DEPOSIT LIABILITIES, RESERVES HELD IN VAULT AND IV/TH FEDERAL RESERVE BANKS, AND RESERVE PERCENTAGES BY CLASSES OF NATIONAL BANKS, /9/4 TO/9!6. CUrvca / represent J^ee7>ejtoai£9on TvliccfvSfcserycis computed-. GxrrcaZ. represent MtuteJteserpas/tUcs dm0ivi&dcu;/m/7t&dcnilJfoeryvJ8anJlQF. to CurwJ. TCfinescnerJh'ccntagesofJZeservc iTtrkuZt and wUfv JZdcralJZeserycjdanlCs agains&jfc£ -Zkfuxrt6 £uz&CU£Cos. NATIONAL BANKS IN CENTRAL RESERVE CITIES. NATIONAL BANKS IN RESERVE CITIES. COUNTRY BANKS. *> 00 tv w tv - 7 i*X » •47t —i /»V Allw 00 V 3 oo tv 00 4CO —=_ a tot 2 % f 2* e V * 9 tr 4 t! > - — V — y =© f s — - - 2 ....... 0 jmtxJtn.t!ax.» jv/rgjc sen a oc j/m KX4 MmO-/ junta xrrj. /mr./a ate.fr *«-» mm. jttex> sore /IKP *G X SUSHI I9M- I3IS MS a/g t9i6 fteszRwz: F£RC£NTAGES FOR ALL ^AT/ONAL^AW^S. Ar t V 0 t s f jwieJD seme arj/ xv,C3f HOI.4 HiTt. JCIKEO JBTZ MXB r^ST Jtf tm.? tur/. Jv*ija sore ««»* %\t\t\$\tX |||'|J1|1|]1I ll^ll'l^ti|i t9i6 are Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MARCH 1,1917. FEDERAL RESERVE BULLETIN. 233 GOLD HOLDINGS IN MILLIONS OF DOLLARS OF TREASURY, NATIONAL BANKS, FEDERAL RESERVE BANKS,AM? FEDERAL * RESERVE AGE/iTS IN 1314,1915,$/d/6. Curve /. reprcsen&s Gold held, irvJreasary, kwe ofamourtte 7ielda^axnsd6old, Qsrttf(cafes k J ^ ^ S t f ^ d JS #00 Curve 2. represents Gold held, i/njrcasizrif asuC JfatzorialJdctftJcs. Curve 3. represents Gold, held. inJreasury, JfafalJ8Jc d S t ol J lB Curve4, rejvrcsents Aggregate 6otd,JfoZdcru?s 7300 /SCO I2OO I2OO //GO IIOO /ax? 1000 / 300 900 SCO too A-—' POO 6oo 600 SCO SOO 400 4QO 300 300 '••..I •* 200 BOO \ \ _ _ ] ^_ _ SSCJtf f'lCX? M/iY! ^ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

234 FEDERAL RESERVE BULLETIN. MARCH 1,1917. FOREIGN BANK STATEMENTS. Comparative statements shovring condition of the four prin- RUSSIAN STATE BANK. cipal European banks of issue at close of calendar years [From weekly statements of the Russian State Bank.] 1913 to 1916. [Original figures have been converted into United States dollars at the following legal equivaoents: £=$4.8665; franc=19.3 cents; ruble=51.5 Dec. 16/ Dee. 16/ Dec. 16/ Dec. 16/ cents; mark= 23.8 cents.] 29,1913. 29,1914. 29,1915. 29,1916. [In thousands of dollars; 000 omitted.] BANK OF ENGLAND. [Combined data for issue and banking departments.] Gold bullion and specie...... S780,902 $800,124 8830,046 $758,396 In vault 87,097 110,319 139,050 1,107,171 [From the London Economist.] • Gold abroad 31,886 24,678 18,928 59,089 Bills on ha^id ". 318,383 202,325 126,468 Dec. 31, I Dec. 30, Dec. 29, Dec. 27, Shorfcterni bills of the Impe- 1913. I 1914. 1915. 1916. rial Treasury 255,720 11,670,959 3,365,036 Advances on securities 90,790 131,036 340,939 276,749 Advances on merchandiscl.. - 84,604 56,921 I 58,128 23,734 ASSETS. Advances to popular credit in- Gold and silver 170,245 338,191 250,510 264,275 stitutions 35,505 46,988 | 39,802 i 22,171 Government securities: j Advances to farmers 8,440 10,765 ! 11,572 9,247 Held by iss"ue department. 89,787 89,787 89,787 89,787 Advances to manufacturers.. 7,743 5,726 | 4,444 3,892 Held by banking depart- Loans to the Petrograd and ment 64,233 72,061 159,816 278,304 Moscow public pawnshops. 7,932 10,083 : 8,122 6,371 Other securities I 253,729 516,998 545,416 518,094 Protested bills 1,974 6,513 !• 3,162 597 Securities owned 53,774 75,358 I 133,612 70,098 Total | 577,994 |l,017,037 |l,045,529 1,150,460 Due from branches and offices 128,923 160,890 189,011 53,581 7(5,316 67,399 j 70,627 LIABILITIES. j' =i j Proprietors' capital 70,822 : 70,822 i 70,822 70,822 Total.. 1,539,811 2,057,853 :3,689,378 6,088,657 Rest (surplus) 15,827 1 15,978 16,118 16,111 Public deposits 49,913 131,067 241,755 253,624 LIABILITIES. S O e t v h e e n r - d d e a p y o a s n it d s other bills I 297,2 6 8 6 0 ; ! 623, 1 1 1 8 6 2 544,91 8 4 7 616,7 1 1 0 5 7 C C a u p rr i e ta n l t . account of the Impe- 28,325 28,325 28,325 28,325 Notes in circulation | 144,086 ! 175,872 171,833 193,081 rial Treasury 299,476 113,426 105,134 111,247 Current account deposits 111,947 188,425 437,736 804,603 Total | 577,994 1,017,037 1,045,529 j 1,150,460 Special and time deposits 188,814 198,326 217,383 301,002 Drafts and letters of credit unpaid 3,993 8,042 12,424 15,643 BANK OF FRANCE. Notes in circulation 859,293 1,474,880 2,731,879 4,424,512 [From weekly statements of the Bank of France.] Accrued nrofits an operations.! 33,630 33,218 61,053 230,173 SSdu ndry lliibabililiittiies • 1144,333333 13,211 95,444 173,152 [000 omitted.] Total 1,539,811 2,057,853 3,689,378 6,088,677 Dec. 26, Dec. 10, Dec. 30, Dec. 28, 1913. 1914.1 1915. 1916. GERMAN REICHSBANK. ASSETS. Gold in vault 678,856 799,359 967,950 652,885 [From the Deutcher Reichsanzeiger No. 3, 1915, and No. 4, 1917.] Other metallic reserve 123,532 67,750 67,953 56,910 Total vault reserve 802,388 867,109 1,035,903 709,795 326,766 Dec. 31, Dec. 31, Dec. 31, Dec. 30, Foreign credits 203,962 159,380 1913. 1914. 1915. 1916. Government securities: Bonds, consols, and advances to the Governm P e e n m r t m - en a t n s ent invest- 57,900 57,900 57,900 O Go th ld er metallic reserve.. $2 6 7 5 8 , , 8 4 8 5 6 3 t9 8 8 , , 7 0 7 S 4 9 S581 7 , , 9 6 5 3 4 3 $59 3 9 , , 8 8 8 7 4 3 Ad o v u a tb n r c e e a s k m of a w de a r since 694,800 965,000 1,428,200 Imper T ia o l t T al r e m as e u ta ry ll i a c n r d e s L e o rv a e n .. 344,339 I 506,863 589,587 603,757 Treasury bills discounted Bank certificates 10,996 j 208,250 306,531 100,457 A B S L u o i d s l n a e v ls n c d g ( a a s u o r m n y d r v c a i a v e e n t a t i a s r d u s e n n s s r o c m e d , e n e t i d e s e s s t b n c c a u o t n s l u d ) l t n o i o t e s n x , te s fo p n r e d e c e i i g d e n , .. 2 1 9 9 4 3 9 4 , , , 0 0 6 6 7 0 4 4 7 2 7 1 4 0 5 1 2 0 , , , 6 0 1 8 4 6 6 0 5 3 2 1 8 6 2 5 2 0 2 2 4 1 , , , , , 6 8 3 0 5 7 2 3 0 9 4 0 9 2 0 2 2 3 1 8 5 5 4 1 6 4 8 7 9 , , , , , 6 3 3 4 5 2 2 0 9 9 6 7 0 5 9 A S N S B e u i d o T c l n v t l u r e s d a e r , s r n a i c y t o c s i h e u e f a e s s r o s c y t s o k h e n b s e t , i s r c l a l o b s n l a d la n t d k e i s r s a c l ounted 35 2 9 5 4 6 2 3 3 , , , , , 7 0 4 5 0 9 1 8 8 3 8 2 5 2 8 93 5 1 8 6 5 1 , , , , , 2 9 1 4 0 6 0 7 4 8 3 3 4 3 6 1,38 6 1 1 4 3 2 , , , , 1 7 2 7 0 8 2 9 4 7 9 7 0 5 9 2,2 1 8 1 8 7 2 9 6 , , , , 1 3 9 6 3 2 2 2 3 3 4 2 2 2 2 Total 1,397,033 3,145,224 3,789,422 Total 885,250 1,717,1 2,358,130 3.200,546 LIABILITIES. LIABILITIES. Capital 35,223 35,223 35,223 35,223 Surplus incl. special reserves.. 8,206 8,292 8,292 Capital paid in I 42,840 42,840 42,840 42,840 Dividends unpaid 309 4,211 4,853 Surplus... ! 16,671 17,726 19,171 20,342 Government deposits 77,848 34,075 33,562 2,897 Notes in circulation 617,240 1,200,924 1,646,465 1,917,007 Other deposits 111,038 515,687 407,970 436,223 Other liabilities payable on Bank notes in circulation 1,102,715 1,927,306 2,568,801 3,219,012 demand 188,763 418,144 561,445 1,086,281 Sundry liabilities 61,694 87,165 82,922 Sundry liabilities 19,736 38,348 88,209 134,076 Total 1,397,033 3,145,224 3,789,422 Total 885,250 1,717,982 2,358,130 3,200,546 1 No data available as at end of 1914. Incomplete data for Dec. 10, 1914, taken from the annual report of the bank for 1914. 2 Advances on securities only. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

I N D E X. rag0- Page. Informal rulings of the board: Acceptance.?, distribution of, by sizes, maturities. Purchase of nonnegotiable warrants 193 etc * 222-224 Acceptances 193 Amendments to Federal Reserve Act: Purchase of warrants in excess of 25 per cent Comparative Senate and House bills 177-187 limit 194 Senate and House reports 188-192 Use of note emblem 194 Bank of France, agency with 175 Insurance agents, regulations under which national Branch agency at Memphis, experience with 168-171 banks may act as 164-166 Business conditions throughout the Federal Reserve Law department: districts 202-219 Discount of paper secured by United States Charts: bonds or notes 197 Reserves held in vault and with Federal Re- Branch banks 198 serve Banks 232 Transfer of Federal Reserve Bank stock 199 Gold holdings 233 Bills of exchange drawn against actually exist- Clearing and collection: ing values 195-197 Operation of system 171 Drafts payable with interest 200 At Boston, Mass 162-164 National banks: Commercial failures in January 167 Acting as insurance and real estate agents,'regu- Commercial paper, discount of 220 lations governing..." 164-166 Deposits, withdrawals of, by foreign depositors 154 Charters granted to 167 Discount operations of the Federal Reserve Banks.. 220 Real estate agents, regulations under which national Discount rates in effect 231 banks may act as 164-166 Earnings on investments of Federal Reserve Banks. 230 Report, annual, of Comptroller of the Currency, Federal Reserve Agents' fund, summary of transac- 176 synopsis of 172-174 tions Federal Reserve Banks, investments held 153 Reserve conditions 154 Federal Reserve Bulletin, bound copies of 158 Resources and liaoilitios of Federal reserve banks. 226, 227 Federal Reserve note account of agents and banks.. 228 Review of the month 153-157 Federal Reserve note issues 155 State banks admitted to system 158 Federal Reserve system, letter of a Texas banker Statements for the press: regarding operation cr 159 Message of Hon. W. P. G. Harding to North Fiduciary powers granted 167 Carolina business men, bankers, etc 159-161 Foreign banks, statement showing condition of 234 Compilation of national bank returns by office of Foreign exchange problems 156 Comptroller of the Currency 161 Gold imports, increase of 153 Trade acceptance situation 157 Gold imports and exports, statement showing 229 United States bonds: Gold settlement fund 175,176 Conversions of, statement showing 224 Harding, Hon. W. P. G., message of, to North Caro- Loans based upon, memorandum of board relina business men, bankers, etc 159-3 61 garding 158 O Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis