Federal Reserve Bulletin, 1918-04

FEDERAL RESERVE BULLETIN ISSUED BY THE FEDERAL RESERVE BOARD AT WASHINGTON APRIL, 1918 WASHINGTON GOVERNMENT PRINTING OFFICE 1918 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BOARD. BX OFF1CIO MEMBERS. W. P. G. HARDING, Governor. PAUL M, WAKBURQ, Vice Governor WILLIAM G. MCADOO, FREDERIC A. DELANO. Secretary of the Treasury, ADOLFH 0. MILLER. 0hdir7na.fi. CHARLES S. HAMLIN. JOHN SKELTON WILLIAMS, Comptroller of the Currency. H. PARKER WILLIS, Secretary. SHERMAN ALLEN, Assistant Secretary and Finca! 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 officers and directors may have it sent to not less than ten names at a subscription price of $1 per annum. No complete sets of the Bulletin for 1915 are available. Bound copies of the Bulletin for 1916 and 1917 may be had at $5 per copy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

TABLE OF CONTENTS. Review of the month 247 Bankers' acceptance policy 257 Curtailment of unnecessary credit 260 Bank holdings of foreign securities . ,. 263 Capital Issues Committee statements 263 The Government Official Bulletin 266 War expenditures, war debts, and increase in note circulation of principal countries 267 Interest rates on deposits 285 State banks and trust companies admitted to the system during the month 294 Commercial failures reported 295 Charters issued to national banks during the month 295 Banks granted authority to accept up to 100 per cent of capital and surplus 296 Fiduciary powers granted to national banks 296 Act providing for operation of railroads while under Federal control 296 War finance corporation act 300 Third Liberty Loan bond act 306 Informal rulings of the Federal Reserve Board 309 Law department 311 Business conditions throughout the Federal Reserve districts 318 Deposits and investments of national banks •. 337 Chart showing „ ... 337 Gold settlement fund 338 Operation of the Federal Reserve interdistrict collection system 340 Discount operations of the Federal Reserve Banks 341 Acceptances 343 r Resources and liabilities of Federal Reserve Banks 347 Federal Reserve note account of Federal Reserve Banks and agents 350 Member bank condition statement 352 Earnings on investments of Federal Reserve Banks 356 Gold imports and exports 357 Discount rates in effect 357 .Foreign exchange rates 358 IV Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BULLETIN VOL. 4 APRIL 1, 1918. No. 4 like 12 billions of dollars. The estimated tax REVIEW OF THE MONTH. revenues of the Government for the fiscal year As this issue of the Bulletin goes to press, the 1918 are $3,886,800,000, leaving, therefore, date (April &) which marks the some 8J billions of dollars of outlay to be other- OUT first year of r wise provided for ana presenting the Nation first anniversary or our lormat with the greatest fiscal problem it has ever had war. ;- . to face. The deficit has thus far occasioned entrance -into the war. is close two loans, for which bonds in an aggregate of at 'hand and suggests a look backward to see $5,894,000,000 have been issued, leaving, as the what has been accomplished and a look forward minimum amount to be provided out of the to see what is ahead of us in the way of further third Liberty loan, some three billions of dolneeded preparation. lars. In placing these vast loans extensive use The twelve months that have thus far elapsed has been made of successive offerings of Treashave been one of the most notable periods in ury certificates, negotiated as the current rethe financial and economic history of the counquirements of the Treasury necessitated, and try and, not least of all. in that of the Federal with the certainty that they would after a brief Reserve System. On the economic side, the interval be funded into long-term bonds as year has witnessed extensive efforts to compass these wore offered to the public. the difficult problem of readjusting our indus- Both the financing of the long-term bonds trial system, to meet the exacting economic exigencies of the war. On the financial side, Sen fee of Fed- aii(^ ^le certificates of indebtedit has witnessed the rapid and successful ad- eral Reserve Sys~ ness called for extensive and justment of our credit and financial system to iem' hearty cooperation on the part meet the succeeding necessities of the Public of the banks of the country and that, in turn, Treasury. The financial transactions of the was largely, if not mainly, conditioned upon Government have been projected on a scale of the extent of the support they were permitted magnitude never equaled by any Government to feel could and would be accorded them by and have subjected our financial and banking the Federal Keserve system. How extensive systems to severer tests than ever would have the support of the Federal Reserve system has been, thought probable. That our system of been is disclosed in the growth of the investcredit has thus far so successfully been able to ment holdings of the Federal Reserve Banks, stand the strain imposed upon it is due to an consisting of bills discounted and bought, from extent, which it would be difficult to exagger- $100,663,000 at the beginning of the war to ate, to the Federal Reserve System, which has $971,452,000 when these attained their highhad not only an important but a reassuring est point (Dec. 21, 1917), while the second part to play in every stage of the process of war Liberty loan was in process of flotation. In financing. addition to extending reserve credit to their National expenditures for the fiscal year members and engaging in open-market oper- 1918, including therein advances of credit to ations in the purchase of acceptances from the belligerent Governments associated with both member and n on member banks, the us, may be expected to amount to something- 247 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

248 FEDEUAL RESERVE BULLETIN. ?, LOIS. Federal Reserve Banks have supplied the \ Reports received by the Federal Reserve country with its growing need of currency, ;Board from member banks in about 100 lead- Federal Reserve notes issued having increased , ing cities indicate an increase, between January from $376,510,000 at the beginning of April, 4 and March 15, from 1,013.8 to 1,635.8 1917, to $1,452,838,000 at the present time. millions in United States securities held. On ; Whether accommodation to the hanks and the latter date the 682 banks heard from held public could have been extended with so about 1 billion of certificates of indebtedness, much of safety and liberality by the Federal or about 38 per cent of the certificates, and ; Reserve system, had the system not been much \ 367 millions of Liberty bonds, or 6 per cent strengthened by the amendments proposed by \ of the total Liberty bonds then outstanding. the Board and adopted by Congress and ap- While comparisons of partial March 15 data : proved by the President June 21, 1917, may with the complete December 31 data do not be doubted. Gold holdings of the system, justify any definite conclusions regarding the which were $943,552,000 at the opening of ;present holdings of national banks, and mani- April, 1917, are now «1,815,704,000. Figuring festly throw even less light upon the amount the percentage of the gold holdings against of United States war obligations held at prestotal liabilities—notes and net deposits—for ent by all the banks of the country, the figthe two dates (April 6, 1917, and March 29, ures are thought to be, however, indicative 1918) yields a percentage for April 6 of 83 and of a considerable reduction in the amount of for March 29 of 60.8. Heavy drafts have thus Liberty bonds held by the commercial banks been made, it appears,, upon the credit-extend- in the larger cities of the country. ing power of Federal Reserve Banks, but the It further appears that the total of bans Federal Reserve system stands to-day not only secured by Government war obligations C lendas the greatest holder of gold hi the world, ing by borrowing"), as reported by member but also as possessing a reserve position banks in the 100 large cities, has decreased stronger than that occupied by any of the from 423.8 millions on January 4 to 302.7 milgreat central banks of Europe prior to the war. lions on March 15 of the present year. Between March 5, 1917, the date of call Government deposits, which stood at 34,7 preceding the entrance of the millions on March 5, increased to 517.3 millions a i i d ? ^^ United States int0 the War> on December 31, the major portion of the and December 31, 1917, the larger total representing deposits on account date of the latest call, for which data have of sales of certificates of indebtedness and been made public, loans and discounts of Liberty bonds. Aggregate net deposits on national banks increased from 8,712.9 to which reserve is computed (inclusive of Gov- 9,390.8 millions dollars, their holdings of United ernment deposits on the earlier date but ex- States securities from 714.5 to 1,624.5 millions, clusive of these deposits on the latter date) and their oilier investments from 2,335.3 show an increase from 10,489.2 to 10,556.5 milto 2,572.3 millions. The difference between lions, as against an increase from 8,712.8 to the totals of United States securities held on 9,390.8 millions in loans and discounts, and the two dates, 910 millions, represents approxi- from 11,365.1 to 13,179.6 millions in total, exmately the amount of United States war clusive of permanent, investments. obligations held by national banks at the end Between January 4 and March 15 of the of 1917. Of the total, 610 millions were present year net deposits (including Govern- Liberty bonds and about 300 millions were ment deposits) of member banks in the larger certificates of indebtedness, i. e., over 11 per cities show an increase from 9,898.4 to 10,044.3 cent of the Liberty bonds and 43 per cent of millions, while loans and investments rose from the certificates outstanding on that date. 11,205.9 to 11,924.8 millions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1. 1918. FEDERAL .RESERVE BULLETIN. 249 Although extravagance and waste have to The credit situation at present confronts as some extent interfered with the its principal danger the possibility of an undue ^The credit situ- pi] prosecution of our war reliance on the banking institutions of the ra ( program, there are hopeful country as the means of sustaining long-period symptoms which tend to offset these unfavor- financing. Such reliance necessarily results in able aspects of the situation. The war sav- the development of bank credits which are notings certificate campaign has met with success, backed or protected by short-term self-liquithe total of such stamps and certificates already dating paper, but whose protection is found in disposeci of being tentatively reported as securities or paper protected by them. The $124,000,000, while its educational effects have consequences of the creation of banking credit been of utmost value. Important forward steps on this basis are too well known to require have been taker in the control of long-term extended discussion, but it may suffice to say credits through the creation of the Capital that this enlargement of credits, if unaccom- Issues Committee of the Board, and, as a con- panied by a corresponding curtailing of consequence of the work of this committee, in cur- sumption in an equal amount, is the principal tailing the issue of shares and bonds intended to cause of the advance of prices and the cause provide for the undertaking of new and unessen- of an enlargement of obligations against which tial enterprises. Curtailment of commercial there is no corresponding liquid protection. credits has not yet been so effectively brought It will only be through the practice of the about, although the increase in the current most rigid economy in the saving of goods, rate of interest from about 4 to 4J per cent to services, and general productive power that about of to 6 per cent for prime commercial the financing of the Government can be sucpaper to-day in itself affords evidences of the cessfully carried on and the balance of safety automatic check that has been imposed upon be satisfactorily maintained. unnecessary enterprises through the natural The financing of the war is only in part a increase in the charge for the use of capital. monetary problem; in very large part it is an The passage of the war finance bill providing economic problem—a problem of conserving for a recognized and legally constituted body the economic as well as the financial strength charged with the control of long-term issues of of the Nation and developing our resources paper, and understanding the needs of the situ- and productive power to the point where they ation which is effectively permeating the bank- will be able to sustain the great military operaing community, will contribute materially to tions which are in prospect and all that is a wise ami conservative reduction in unneces- incident to them. No one should, therefore, sary banking credits. Some suggestions as to consume goods except to the extent that their the way in which this reduction can be brought consumption is necessary to maintain health about and the methods that may under exist- and vigor. No one should draw upon the ing conditions safely be employed to that end credit resources of the country except to finance may be found in a memorandum on economy transactions which are essential for a nation and credit curtailment published elsewhere in at war. Credit, like goods, should be saved. this issue (p. 260). Conservation of credit as regards nonessential On the whole, the year's experience in bank- enterprises is necessary in order to provide, ing and finance may be regarded as reassuring without undue expansion, the credit required and as exhibiting a latent financial strength by the Government and by business essential far in excess of what the country had been to the success of the war and the well-being of thought to possess. the country. The Board most earnestly in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

250 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. vites serious consideration of a program of na- the new bonds, but the holders of Liberty bonds tional economy as an imperative necessity as of all existing issues will be given an opporwe enter upon another year of war, and be- tunity to convert their bonds into the new 4| speaks the cooperation of all the banks in per cent bonds. behalf of its fulfillment in their several com- In addition to the foregoing principal items munities as well as their continued cooperation of the proposed program, Congress will be in the further concentration of gold in the asked for authorit}7 to issue bonds to the Federal Reserve banks. amount of $4,500,000,000 besides those now The Secretary of the Treasury, in an an- authorized, in order to provide for future nourj cement made March 2, des- issues; for authority to issue additional Treas- The third Lib- .. j ^ A ag & d f ury certificates of indebtedness up to a erty loan. f ., „ maximum amount of $8,000,000,000 outstandthe opening of the campaign ing at any time; for authority to make addifor the third Liberty loan, and on March 26 he, tional loans to the Allied Governments durin a conference with Mr. Kitchin, chairman of ing the summer; and for authority to deposit the Ways and Means Committee, outlined his income and excess profits taxes with national plan for this loan. Actual expenditures of the banks, State banks, and trust companies United States Government and of the Allied throughout the United States in the same Governments having been much less than had manner as the proceeds of the Liberty loans. been indicated by the earlier estimates, the Appreciation of the necessity of distributing amount of the next loan will be only $3,000,000,the new bonds as far as possible into the hands 000, the right being reserved to allot overof bona fide investors, and consequently presubscriptions. The Secretary has asked authorventing them from accumulating in the hands ity from Congress to issue bonds bearing interest of banks, is now much more general than at the rate of 4J per cent per annum, acceptable heretofore. A feature of the campaign about at par and accrued interest in payment of United to open will be the effort to secure as large States inheritance taxes taxable in the same a permanent absorption of the bonds as is manner as the bonds of the second Liberty loan, possible, thereby proportionately relieving the and having the benefit of a sinking fund of 5 per banks of the necessity of continuing to hold cent per annum during the period of the war and cany the securities beyond the time when and for one year thereafter. The sinking fund the}7 should be paid off through the redempis stated as a percentage of the maximum aggretion of their Treasury certificates by the use of gate amount outstanding of all 4J per cent subscriptions to bonds obtained through the Liberty loan bonds, its operations embracing investors of the country. both the new issues now contemplated and the The issue of a minimum of $500,000,000 bonds to be issued upon conversion into 4J per United States Treasury certificent bonds of the previous issues. It is the ° cates' subscriptions for which belief of the Secretary that the rate proposed is closed on March 22, was overadequate and that by restricting unnecessary subscribed. The Federal Reserve districts of capital issues, and by inducing the people who Boston, New York, Cleveland, Chicago, Minnesubscribe for Liberty bonds to save, and to apolis, and Kansas City all exceeded their keep the bonds for investment, and by purtentative quota, while the following districts chases with the sinking fund from those who failed to reach their quota: Philadelphia, Richfind themselves compelled to sell, further inmond, Atlanta, St. Louis, Dallas, and San creases in the interest rate may be avoided. Francisco. The following is a list of the tenta- In order to put an end to the expectation of tive quota by districts, and a list of the subhigher interest rates, it is proposed that the scriptions allotted: conversion privilege shall be eliminated from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

AL>RIL 1, 1918. FEDERAL RESERVE BULLETIN, 251 into permanent private ownership and will 'Subscrip- Tentative tions restore to the banks their fluid assets for use as quota. allotted. a revolving1 fund in carrying through to success further financing. Boston S33,000,000 S53,690,000 New York j 173,000,000 193,700,500 The number of subscriptions, by districts, for Philadelphia j 40,000,000 38,000,000 Cleveland ! 45,000,000 48,400,000 the issues dated January 22, February 8, and Richmond • -! 18,000,000 16,234,500 Atlanta j 15,000,000 14,557,000 February 27 were as follows: Chicago. 60,000,000 84,414,000 St. Louis 25,000,000 i 22,842,000 Minneapolis... 15,000,000 i 16,000,000 D K a a l n l s a a s s .. City... 2 1 5 8 , , 0 0 0 0 0 0 , , 0 0 0 0 0 0 ! j 2 1 6 5 , , 1 0 1 0 6 0 , , 5 0 0 0 0 0 Jan. 22. San Francisco !. 3.3. ,000,000 30,250,000 Treasury Department ! 3,828,000 Boston 212 471 554 500,000,000 ! 543,032,500 Now York.... 275 786 1,192 Philadelphia. 415 800 730 Cleveland. 770 1,200 1,396 Richmond 158 479 558 Filial results of the sale of Treasury certifi- Atlanta 216 755 717 Chicago 910 2,424 2,832 cates undertaken February 27 and in progress St.. Louis L 054 1,034 1,401 Minneapolis... 375 1,193 1,436 at the time of issue of the March Bulletin and Kansas Citv... 515 1,547 1,653 Dallas....;.... 480 951 955 briefly referred to therein, have since been San Francisco. 384 930 1,048 made available and furnish an interesting Total. 6.364 12,550 14,472 comparative showing when contrasted with the The conference committee appointed March results of the issues of February 8 and January 21 reported to the Senate on 22, There has been throughout a progressive War Finance April 1 and to the House on increase in the number of participating banks, Corporation. April 2 its agreement on the this number advancing from 6,364 subscribers war finance corporation bill. The bill as agreed to the certificate issue of January 22 to 12,550 upon differs in a number of important particufor the second and 14,472 for the third, while lars from the original draft and is reprinted in every case, including the fourth issue, the elsewhere in the Bulletin. The provision of offering has been fully taken or oversubscribed. the bill as thus revised which is of greatest An especially interesting aspect of the operaimmediate significance for the Federal Reserve tion has been the success attained in securing system is found in section 13. This prescribes a wider distribution of the certificates among the conditions under which paper collateraled the banks of the interior, which during the by obligations. of the new corporation may be period preceding the second Liberty loan had admitted to discount at the Federal Reserve hardly sustained their full share of the bur- Banks. The essential language on this subject den, leaving the bulk of the load to be carried is as follows: by institutions on the eastern seaboard. The banks and trust companies throughout the SEC. 13. That the Federal Reserve banks shall be authorized, subject to the maturity limitations of the Federal country are now definitely enlisted in the task Reserve act and to regulations of the Federal Reserve of carrying through the financial operations Board, to discount the direct obligations of member banks of the Government, and a correspondingly secured by such bonds of the corporation and to redisgreater degree of strength is thereby imparted count eligible paper secured by such bonds and indorsed to the financial machinery. General public by a member bank. No discount or rediscount under this section shall be granted at a less interest charge than one cooperation will be necessary in order to enable per centum per annum above the prevailing rates for the banks successfully to continue this service eligible commercial paper of corresponding maturity. and to provide for the current needs of the Any Federal Reserve bank may, with the approval of Public Treasury by relieving them of their cer-j the Federal Reserve Board, use any obligation or paper so tificates from time to time as new loans are | acquired for any purpose for which it is authorized to use | obligations or paper secured by bonds or notes of the offered and the funding of the certificates is United States not bearing the circulation privilege: undertaken. This process will shift such bonds Provided, however. That whenever Federal Reserve notes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

252 FEDERAL RESERVE BULLETIN. APRIL I, 1918. are issued against the security of such obligations or paper their depositors to buy Treasury certificates the Federal Reserve Board may make a special interest and Government bonds, even though there be charge on such notes, which, in the discretion, of the some shrinkage in their deposits as a conse- Federal Reserve Board, need not; be applicable to other quence.. Banks should remember that when Federal Reserve notes which may from time to time be issued and outstanding. .All provisions of law, not incon- deposits are reduced reserves are released. sistent herewith, in respect to the acquisition by any Reckless competition for deposits supported Federal Reserve Bank of obligations or paper secured by by high interest rates will tend to force the such bonds or notes of the United States, and in respect to Government to pay higher rates, thereby im- Federal Reserve notes issued against the security of such posing additional burdens on the people; and obligations or paper, shall extend, in so far as applicable to the acquisition of obligations or paper secured by the any forced and artificial expansion of banking bonds of the corporation and to the Federal Reserve notes credits will promote rather than check inflaissued against the security of such obligations or paper. tionary tendencies, which should be guarded During the past month there have been de- against at the present time. There does not, cided indications of a disposi- seem to be any demand on the part of de- •SSE tm cie- tion on the part of banks in positors for increased rates of interest on their posits. some parts of the country to balances, and the Board wishes it understood increase the rates of interest allowed by them that it does not favor any movement to increase on deposits. The continued demand for bank- these rates and that it will do all in its power ing loan funds and the rising rates of interest to discourage it. It sincerely hopes that those obtainable for loans have led some bankers banks which have unduly advanced their rates to the belief that it would be necessary for will consider well the consequences involved them to increase the inducements offered and that they will as far as possible do their to depositors in order to maintain their existing part toward restoring rates to the former line of deposits and possibly obtain additions level." thereto. The Board has felt it was unlikely It was pointed out that the objects aimed the inducements offered by higher rates of at by the Board would be imperiled if any interest would bring about any healthy growth bank or group of banks should embark upon a of the deposit lines of the banks, while on the policy of increasing their deposits by offering other hand it has been of the opinion that the unusual inducements other than interest, inasgeneral result of an increase in interest rates much as aggressive steps taken by any bank in would operate to increase the burden of bor- this way would doubtless lead to the need of rowers generally, due to the consequent higher protective measures on the part of banks interest and discount rates or else development whose business might be subjected to attack. of conditions which would produce an un- In past years the interest rates allowed at sound basis for banking, and thus weaken New York banks upon the de- The situation .,, ,, u i T_ the whole banking structure. This belief led in New York posit s 0£1 other banks have the Board to make a careful inquiry into the afforded a tentative standard or whole matter. As a result of the prelimi- basis for such rates in other parts of the counnary investigation, Governor Harding on try. At this time, therefore, there has been February 26 said in a public statement that special interest in the New York interest rate "the loans and deposits of banks have in- situation, and when competitive bidding for creased enormously during the past three deposits began during the latter part of Febyears, and it would seem to be the part of ruary and the first half of March, the Board wisdom for the banks to undertake to place was necessarily interested in the character themselves in a position to continue to aid the of the policy to be adopted. Several .large Government in its financial operations by cur- banks had already advanced interest rates on tailing unnecessary credits and by encouraging bank balances with the resulting probability Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

iP.rL 3, 1S3 8. FEB.EEAL EESERVE BULLETIN. 253 that should the competition continue, espe- their rates to 3 per cent or in some cases to an cially between the trust companies and com- even higher level. The new agreement promercial banks, interest rates might be advanced vides for a uniform interest rate based on a to a level which would involve danger and minimum of 3. per cent Mid a maximum of invite retaliatory tactics on the part of banks 8 per cent, the minimum rate of 1 per cent outside New York which would think them- corresponding to the theoretical 2 per cent rate selves under the necessity of protecting their for 90-day commercial paper at the New York deposit lines. The outcome of the situation Federal Reserve Bank, with an advance of was an effort on the part of the New York oiie-loirrth. of 1 per cent on deposits for every banks to reach, an agreement based upon a fixed advance of one-naif of 1 per cent in the bank relationship between the 90-day rate estab- rate up to a maximum of 3 per cent on deposits. lished by the Federal 'Reserve Bank of New Upon this basis a 5 per cent rate at the Federal York for commercial paper and the regular Reserve Bank of New York would be paralleled interest rate to be granted by the banks to by a maximum 2| per cent rate on deposits, their depositors. The theory of trie proposal while a 4| per cent rate at the Federal Reserve was that inasmuch as there should be some Bank would correspond to a 2\ per cent rate relationship between the yield to be obtained on bank deposits. Less interest will be paid in the bill market and. the earning to be realized in the aggregate and the possibility of unrethrough the placing of deposits with other stricted competition is eliminated. The Board, banks, there should be a schedule of advances therefore, felt warranted in informing the New to be automatically made as a maximum in the York Clearing House of its feeling that every deposit rate as the standard discount rate effort had been made to reach an accommodaincreased. Opposed to this view was the con- tion affecting interest along sound lines and sideration that the payment of interest by that in the circumstances it would make no banks upon, deposits of other banks has long objection to the final adjustments as announced been recognized as an undesirable practice, by the clearing house on. March 19. Its genadmitted to be such by the New York Clearing eral position on this whole matter was indicated House Association in years past. Those who to the Federal Reserve Banks in a telegram of hold this view believe that any advance in Maxell 12. printed elsewhere in this issue, in interest rates upon the level established, in which it asked them to keep close watch of past years must be looked upon as undesirable, the situation with respect to competition for the preferable trend of development, accord- deposits through the advancing of interest ing to them, being in the direction of reduction rates, suggesting that wherever possible they or elimination of such rates rather than of induce banks which, were contemplating adincrease, even when such increase might be vances to defer such action and further to carefully regulated with reference to the pre- induce those who were already paying more vailing rate of discount. than previously existing rates to reduce them. The agreement among clearing-house banks As the Board learns the names of cities in Agreem en t of New York arrived at on which, the tendency toward an undue increase among clearing- March 19 with respect to the in the rate of interest is manifested by local house banks. payment of interest on deposits banks, it is planning to take the question up not only relates their maximum amount to the with clearing-house organizations in those 90-day discount rates in the way already cities, believing that the vast majority of described but also, in effect, brings about an banks will be glad to be relieved from excessive average reduction. In times past commercial burdens of interest, which in many cases they banks of New York have paid 2 per cent, while have been led to assume through fear that of late various trust companies have increased competing banks, by offering a higher rate, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

254 FEDERAL RESERVE BULLETIN. AraiL 1, 3 918. would be able to draw business away from In the following table are shown the changes them. between February 21 and March 22, 191.7, For the four weeks between February 23 and in the totals of discounted and purchased bills Operations March 22, the Federal Reserve held by each of the Federal Reserve Banks, of the Reserve Banks increased their bill hold- also changes in the aggregate holdings of other Banks, ings by 6(5.3 millions. Opera- classes of investments: tions were heaviest during the first and third [In thousands of dollars, i. e., 000's omU-Led.] weeks in March in connection with the issue by the Government of the two issues of certifi- Federal reserve bank. ' Fob. 21. '. Mar. 22. .; .Not; Net ; increase, i decrease. cates of indebtedness of 500 and 543 million dollars, respectively. During the period under Boston i 75.723 j 68,304 ;. 7,419 review the banks increased their holdings of N I ' e h w ii a Y de o i r p k. h _ i a ! 35 4 4 3 \ , 0 1 6 1 7 3 : 4 4 2 7 9 ,4 ,1 3 8 7 5 : ; 7 4 5 , , 3 1 2 1 4 8 Cle vela nd : 44,330 54,033 9,703 discounted paper by 33.6 millions and those of R ichmond 38,613 39,915 ! 1,302 Atlanta • 16,181 19,589 3,408 purchased paper by 32.7 millions, those of Chicago : 94,037 61,202 32,835 Government short-term securities, largely cer- S M t. i n L n o e u ap is o lis ! ! 2 1 7 2 , , 7 7 9 6 3 1 3 8 3 , , 8 0 5 26 0 5,233 Kansas City I 20,300 30,220 9,920 tificates of indebtedness, by 56.3 millions, and Dallas ". I 18,275 20,223 1,948 San Francisco ! 60,511 60,015 their total investments by 131.5 millions. Of the total discounts on hand at the earlier date, Total bills i 805,704 i 871,999 66,295 United States long-term se- I 509.5 millions, paper directly traceable to war Un cu it r e i d ti c S s tates short-term se- ! j 52,950 61,039 8,089 finance operations, viz, member banks' own curitics 169,707 226,036 : 56,329 O ther earning assets j 3,436 4,240 : 804 notes and customers7 paper secured by Govern- Total investments held.jl,031,797 1,163,314 ; 131,517 ment war obligations constituted 263.9 millions, or about 52 per cent. By March 22 total Between February 15 and March 15 member discounts had increased to 543.1 millions, of banks in about 100 leading Condition of ... . , ,, . which war loan paper constituted over 51 per member banks Cltles greased their investcent. For the latter date the banks report ments in Government securiamong their investments also 187.1 millions ties, largely certificates of indebtedness, by of certificates of indebtedness and 21.2 millions over 225 million dollars. On the latter date of Liberty bonds purchased for the temporary 682 reporting member banks show a total of accommodation of their members, the New 1,635.8 millions of Government securities on York bank alone holding 150.8 millions of these hand, of which 268.8 millions were United States securities. bonds to secure circulation and 367 millions other Acceptances on hand show a continuous United States bonds, chiefly Liberty bonds, increase from 296.2 to 328.9 millions, the while 999.8 millions were certificates of in- Cleveland and Chicago banks showing the debtedness. In addition the banks report largest additions to their holdings of this class loans of 302.7 millions as against 355.1 milof paper. Total earning assets increased from lions on February 15, secured by Liberty 1,031.8 to 1,163.3 millions and constituted bonds and certificates. Comparative figures 77.2 per cent of net deposits on March 22, as for the 112 member banks in the three central against 70.5 per cent on February 21. During reserve cities indicate an increase of 132.3 milthe period under review the banks' gold lions in the holdings of Government securities, reserves increased from 1,772.4 to 1,802.8 but a decrease of about 44 millions in loans millions, their net deposits from 1,462.6 to secured by Government war obligations. 1,505.8 millions, and Federal Reserve notes Of the total circulation bonds held by all in circulation from 1,314.6 to 1,429.5 millions, reporting banks on March 15 only about 18 resulting in a decline of the ratio of total reper cent are held by the banks in the central serves to aggregate net deposit and note reserve cities as against 50 per cent of all other liabilities from 66 to 63.4 per cent. United States bonds and over 75 per cent of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ATliiL 1. FEDERAL KESEBVE BULLETIN. 255 all certificates shown by reporting banks. Of | of all reporting banks, in the calculation of the total United States bonds other than cir- ; which no account is taken of Government deculation bonds shown for March 15, the 58| posits, declined from 61.6 millions February 15 member banks in Greater New York hold ! to 25.1 millions on March 1 and stood at about about 44 per cent and of the total certificatesI 72 millions on March 15. For the central rereported under that date, about 71 per cent, serve city banks a decline in excess reserves Other loans and investments of all reporting from 33.6 millions to 6.6 millions on March 1 banks show a decrease of 42.1 millions, the is shown, the figure for March 15 being 39.5 decrease for the central reserve city banks of millions. 137 millions being offset in part by gains of A point of special interest in the acceptance 94.9 millions shown for the other banks. situation is the undertaking of Reserves of all reporting banks (held with larSe new credits hJ groups of the Federal Reserve Banks) show an increase banks for the purpose of fiof 12.9 millions, as against a slight decrease in- nancing important movements of food products. dicated for the New York City banks. Cash in Requirements growing out of present extraorvault shows a loss of about 7 millions, the banks dinary circumstances have made it necessary to in both central and other reserve cities report- develop a suitable policy for dealings in acceping smaller cash holdings. On the other hand, tances of this kind at Federal Reserve Banks. total demand deposits went up about 32 mil- The Board has accordingly expressed its genlions, the larger loss of 35.7 millions in demand eral views on the acceptance situation in a letter deposits shown for the central reserve city and memorandum, copies of which have been banks being more than offset by considreable distributed to all Federal Reserve Banks and gains under this head at banks in the other which are reprinted elsewhere in this issue. In reserve cities, largely in the Chicago, Kansas this letter and memorandum it has been called City, Richmond, and Atlanta districts. Time to the attention of the several Federal Reserve deposits show an increase of 11.4 millions, an Banks that acceptance credits should not be increase of 29.2 millions at the banks in the allowed to run for more than a moderate period reserve cities being offset by reductions at the and that where groups of banks open such central reserve city banks. credits the members of such groups should not Government deposits gradually increased as a matter of habit adopt the practice of buyfrom 621.9 millions on February 15 to 796.9 ing their own acceptances, except, as previously millions on March 8 but show a large decline ruled, when necessary to keep their outstanding for the following week, the total for March 15 acceptances within the limits prescribed by the being 103.4 millions below the total for the law. It was also emphasized that the rate at corresponding date in February. Central re- which renewal acceptances should be disserve city banks show a total decrease of 123.1 counted for the drawer should not be a fixed millions in Government deposits since February one, but should be based upon the rate ruling 15, while other reporting banks show a gain of at the time of renewal. It is understood that 19.7 millions. transactions covered by acceptance credits The ratio of combined cash and reserve to must be of a legitimate commercial nature and total deposits including Government deposits that the paper growing out of them must be continued fairly steady around 13.7 per cent eligible according to existing rules and reguexcept for March 1 when the rate declined to lations. The several banks have been re- 13 per cent. For the central reserve city quested to call to the attention of the Board banks this rate works out at 14.4 per cent on the facts in each case where acceptance syndi- February 15, at 13.4 per cent on March 1, and cates are formed for more than moderate at 14.9 per cent on March 15. Excess reserves amounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

256 FEDERAL BE SERVE BULLETIN", APRIL 1, 1918. The successful application of these principles jhave given the directors of a branch bank a necessarily depends upon the general spirit of |broader discretion as to internal management cooperation of the banks. Acceptances of this jof the branch and as to discount operations kind must not be permitted to constitute the j than other Federal Reserve Banks have done greater proportion of the acceptances outstand- |with their branches, this circumstance does not ing at any given date, the quantity of the ac- interfere with the theory and the fact that the ceptances of this character being placed upon assets, liabilities, and operations of a branch. the market having as important a bearing as the are actually the assets, liabilities, and operaquality, and the Board therefore will exercise tions of the head office—the Federal Reserve the power from time to time to declare the j Bank, purchase of such acceptances by Federal Re- I The Federal Reserve Board on March 12 serve Banks undesirable, even though they j telegraphed the governors of Meeting with may be based upon exactly similar transactions, Federal Reserve Banks asking governors. whenever the total amount of acceptances them to come to Washington already outstanding seems unduly large. for a conference on Friday morning, March 22. At a meeting on that date the Secretary of the During the past month the Federal Reserve Treasury having further matured his plans for Board has authorized the es- the next Liberty loan, discussed with the i.ew or nciieb. ^^lig^^TQ^ o f branches at El Board and with the governors some features of Paso (eleventh district) and at Salt Lake City, the next campaign which will begin early in Utah (twelfth district). The El Paso branch April. There were present also representais the first to be established in the Dallas dis- tives of various Liberty loan organizations. trict, while the Salt Lake City branch is the The conference afforded an opportunity also fourth to be established in the San Francisco for discussion of interest rates both from the district. The branches at Baltimore and standpoint of the general situation and with Detroit already authorized and announced, respect to Treasury financing. At a conferhave been actually opened. This raises the ence between the Board and governors held on total number of branches either actually opened Saturday, March 23, there was general discusor shortly to be organized, to 13. While sion of questions of organization affecting the there are some differences in the by-laws and Federal Reserve Banks. Methods of extendconditions of organization of Federal Reserve ing the par list were considered and there was branches, a branch of a Reserve Bank has no an expression of views with reference to posseparate corporate entity and its operations sible changes in discount rates on paper of are in effect the operations of the Federal Re- various maturities. serve Bank. Reserve deposits carried by j For the four weeks ending March 15 the member banks upon the books of a branch are j net outward gold movement Movement of actual reserve carried with the Federal Re- j totaled about $2,743,000, comgold, serve Bank, and where deposits are made in a pared with a net inward movebranch by an agent of the Government and are ment of about $99,000 for the preceding four charged to that branch on the books of the jweeks. Gold imports for the four weeks total- Treasurer of the United States, the Board jing $2,838,000 came largely from Canada, understands that this is done merely as a mat- Mexico, and Colombia, while gold exports ter of bookkeeping convenience. The deposit totaling about $5,379,000 were "consigned liability rests with the Federal Reserve Bank. chiefly to Chile, Mexico, and Colombia. There is no difference in this respect in the The gain in the country's stock of gold since status of any branch of any Federal Reserve August 1, 1914, was $1,048,187,000, as may Bank. While some Federal Reserve Banks be seen from the following exhibit: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

.A:»aiL 1. 1918. i'EDEEAL RESERVE BULLETIN. 251 an agreement is made with the drawer for purchase of acceptances for future delivery, the rate should not be a fixed Excess of one, but should be based upon the rate ruling at the time imports Expor!;•.>. over of the sale. exports. (3) Transactions covered by these credits should be of a legitimate commercial nature, and acceptances must be k-.ii. 1 to Bee. :*l, 1914... 823,2.53 : S 10-1,972 ' 331,719 eligible according to the rules and regulations of the Board. •fan. I to Doe. 31, 1915 451.955 •' :J1,426 420,529 Jan. .1 to Dec. 31, 1936 685,745 : 1,55,793 529,952 (4) Whenever syndicates are formed for the purpose of •fan. 1 to Dec. 31, 1917 o->3',7J.3 ' 372,171 1.81,542 Tan. 1 to Mar. 15, 1918. 7^907 : 12, mr granting acceptance credits for more than moderate amounts. Federal Reserve Banks should be consulted with Total 1,722.563 ; 474,190 L948,107 regard to the transaction. The question of eligibility, 1 Excess of exports over imports, both from the standpoint of the character of the bill and of the amount involved, will be passed upon by the Federal Reserve Bank subject to the approval in each case of Bankers' Acceptance Policy. Ithe Federal Reserve Board. As stated in the memorandum, die Board will rely During the past two months the attention of . upon the fair spirit of cooperation on the part of the Mew the Federal Reserve Board has been directed to ;York banks, but it must be understood in passing upon various questions with respect to the making j these transactions that not only quality but also quantity of bankers' acceptances in New York and else- jmust be the controlling factors. The aggregate of these acceptances should not be permitted to constitute the where. Discussion of the matter has resulted j greater proportion of outstanding acceptances at any time, in the transmission to all Federal Reserve jand it must be understood that while the Federal Reserve Banks of letters dealing with certain phases of jBanks and the Federal Reserve Board might look with the situation. The Board has prepared and Iravor upon a transaction as long as the total amount involved is not excessive, transactions of exactly the same distributed a memorandum on the subject, in i character may be ruled out whenever the aggregate which its views in respect to the existing acceptamount of outstanding acceptances of this character beance situation have been set forth. Informa- j comes, in the opinion of the Federal Reserve Board, untion has also been asked with respect to the |duly large. methods pursued by the several banks in ascer- j You are authorized to communicate the contents of taining the origin of the acceptances they this letter to the accepting banks of your district, and the Board will advise the other Federal Reserve Banks of the purchase. policy which has been agreed upon. SYNDICATE ACCEPTANCE CREDITS. GENERAL ACCEPTANCE POLICY. The following letter was transmitted by The memorandum, already referred to, pre- Governor Harding, viz: pared by the Board with 'a view to outlining FayauAKY 7, 1918. its general acceptance policy, reads as follows: Receipt is acknowledged of your letter of January 29 in In dealing with the question of'acceptances, which you ask for a statement of the Board's policy in dealit is desirable that the Board should not be ing with acceptances drawn under credits extending over obliged to adopt inflexible regulations unless a period of one or two years. After a very full discussion absolutely necessary. It should be borne in of the matter, the Board has decided to authorize this exmind that we are competing in the acceptance pression of its views in accordance with the principles outfield with other countries which have no legal lined in the memorandum attached hereto. The banks of restrictions in which sound business judgment, New York may, during a period which can be declared guided from time to time by the central banks ended at any time, proceed upon the basis of this memoof these countries, constitutes the unwritten, randum in accordance with your letter of January 23. but none the less rigid law. The banks of the The essential principles may be summed up as follows: United States would greatly assist the Board •• (1) Acceptance credits opened for periods in excess of in its work of developing a modern and efficient 90 days should only, in exceptional cases, extend over a system of American bankers' acceptances—and period of more than one year, and in no case for a time they would best serve their own purposes—if exceeding two years. they would study and assimilate the underlying (2) Banks which are members of groups opening these principles which must guide the Board, and credits should not buy their own acceptances, and where Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

258 FEDERAL RESERVE BULLETIN. APKIL 1, 1918. observe these principles voluntarily without contraction because the commitment is a definrequiring inflexible rules. Unless the bankers ite one for two years. cooperate with the Board in this manner, many Another flaw in this method of financing is transactions—unobjectionable as long as they that there is practically no limit to the amount are engaged in for legitimate purposes and of acceptances which may be created in this within reasonable limits—will have to be barred manner. because strict regulations do not admit of In addition, the rate guaranteed the corporadiscrimination. tion by the banker would likely be so high as to Proper regard for conservation of the tempt the accepting bank (having exchanged strength of the Federal Reserve system re- its acceptance with another bank associated quires that it must be possessed of short paper in this business) to rediscount the acceptance well scattered in its maturities (not exceeding with the Federal Reserve Bank or to sell it in 90 days), that when this paper matures it can the open market. For the accepting bank this be actually collected and that the supply of transaction would not involve the investment new paper coming into the market can be of money as long as the market is able to absorb controlled to a certain degree b}^ an advance the acceptances offered. The unavoidable or decline in the rate of interest at which consequence of this process must be in order to bankers' acceptances are bought. Higher rates prevent an avalanche of these acceptances; the will exert a restraining influence on the pro- discount rate would have to be advanced so as ducer and the dealer and will thereby reduce to reduce the tempting margin and thereby borrowings and bring about a certain degree lessen the supply. These syndicate or accomof contraction. modation acceptances would therefore tend By keeping these principles in mind, upon to raise the rate to the detriment of the legitiwhich the strength of our structure depends mate business of the country—particularly the we can readily understand the hazardous con- import and export business. When, three ditions which would be created if, for example, years ago, we began our campaign to establish $300,000,000 of acceptance credits should be American bankers' acceptances, our rate was opened for the purpose of financing corpora- 2-2 £ per cent and the English rate was about tions for a period of two or three years, the 5 per cent. Our rate has now moved up to corporations having secured from the acceptors 4-41 per cent while the English rate is about (directly or by a trading process) a fixed and 3| per cent. This signifies that we have reached definite rate of interest for the entire term of a point where American houses find it to their the credit. This rate would necessarily be advantage again to draw on English banks, much higher than the current rate for bankers' as they did some years ago, rather than upon acceptances. Let us assume that $300,000,000 banks of the United States. It is certain that had been loaned to corporations at 8 per cent if syndicate acceptances of this character were for two years, plus the acceptance commissions. offered in European countries the market would If during these two years the bank rate should at once discriminate against them and put an advance to 20 per cent, the corporations would end to such transactions. It is the application not be affected thereby; they would renew from of this rigid principle of keeping the acceptance time to time as though money rates had re- market primarily reserved for strictly commained unchanged; and consequently, the mercial uses that has kept the acceptance bank rate, as far as they are concerned, would business in England in a sound condition and lose its power to bring about contraction. has made the English acceptance market so Thus the acceptance would cease to serve important an adjunct of the money fharket. the purpose of financing the borrower; it If in the light of these considerations we seek would be for the purpose of financing the ac- to apply these principles to actual operations cepting bank. It would really become an we must reach these conclusions: accommodation draft for the benefit of the There is no reason wiry a bank should not banker, regardless of the current rate and agree that for legitimate commercial purposes regardless of general conditions, and whether and for transactions complying with the rules these conditions demand contraction or expan- and regulations of the Federal Reserve Board, sion, the bankers would have to rediscount it would commit itself for two years to accept these acceptances, at a profit or at a loss, if for a customer for importations or exportation is. their own position so required. Here, too, or for the purpose of carrying staples properly the bank rate would lose its power to produce warehoused. There is no reason'whv a bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1. 1918. FEDERAL RESERVE BULLETIN. 259 should not say to a tobacco manufacturer, viz, the indorsement of a bank, banker, or 6'Whenever you have tobacco properly stored responsible firm. and for which you will give me proper ware- It is true that the banks accepting in the house receipts, I am willing to accept for you present syndicate transactions make an addiand charge you a commission of per cent/7 tional profit in the interest rate which they Whether it would be wise to make a commit- guarantee to the borrower. It is suggested, ment which would force the bank to accept | however, for their consideration that it would for a customer even when convinced that tlie | be a sounder policy if the^ would charge a borrower is carrying too large a supply of raw j higher acceptance commission for domestic material, or that the transaction is speculative, i transactions of this kind, for larger commisis a question of banking judgment. It would sions would be justified for credits extending be safer, of course, if the banker could qualify over a considerable period. This would be his obligation to accept. But this is an in- | sounder than to adopt a policy which, if perstance where it would be a mistake to lay down | mitted freely to develop, would undermine the a rule and where reliance must be placed upon safety of our acceptance system and our money the business sagacity of the banker, for, in such market. a case, the borrower would remain subject to The principles governing the acceptance are the hazards of the money market and any equally applicable to single-name paper. A advance in rate would have an effect upon his bank may agree to carry a customer over a own commitments. period of a year and to buy from time to time However, the manufacturer should not feel I his single-name paper. If this paper, according that, in dealing with a bankers' acceptance he | to the statements submitted, should be eligible is taking any other risk than that of the inter- in other respects, Federal Reserve Banks est rate. He should be trained—and this is might discount it, provided the paper is not an important matter—to understand that ho j part of a loan whicli has been negotiated at a can at"J- any t.a ime se"• "l1 l— h• is accep. tance, no.t. .t•o•* they* fixe™S d r.a tetn for a~ * dif*e fi• n. ite pem rio-a d, "a" year or two, acceptor but to other banks, or through for example. A 90-day note made under a brokers in the market, or to the federal Re- j definite renewal agreement in this way is a serve Banks. It is much to be desired that the j camouflage for the convenience of the banker American banks and banking firms should to enable him to finance himself by using the follow the European practice of freely indorsing 90-day form as a mask to conceal what is, in first class bankers' acceptances. No drawer of j effect, an ineligible 1-year note. But if the bankers' acceptances in Europe, in normal I interest rate should remain open between bortim.es, would expect to encounter any difficulty j rower and lender subject to adjustment to IT i • :____ TT n •,_ ^ J: i. k ]r t rate, a different aspect would be in selling his paper. He can sell it to discount t e mar e companies or to private banks or bankers, to presented, and the Federal Reserve Banks be rediscounted at rates a fraction above the might discount such notes within reasonable ruling interest rate (in England for as little as J limits. per cent above the discount rate and often When a credit is required for two years it less). The manufacturer, after having his bill should be regarded as an unsound basis for accepted, should feel quite safe in keeping the j commercial borrowings on 90-day paper. acceptance in his portfolio, being confident Without a guaranty for renewals it would be that, without any further negotiation, he could dangerous for the borrower. With such a sell it at any time that he would be in need of guaranty it would be an unsound banking cash. Instead of forming syndicates guaran- credit. A demand for one or two year money, teeing the interest rate to the acceptor, banks except for special contracts, indicates a need should make agreements with manufacturing for greater working capital which ought to be concerns to buy acceptances, from time to obtained by increase of capital or sale of oblitime, from the drawees at, say, \ per cent in gations in the investment market. excess of whatever might be the ruling interest It may be argued that there is at present no rate for bankers' acceptances. In this way a investment market, and therefore these rereal discount market would be developed in newal transactions are necessary. But does this country. Federal Reserve Banks will, the abrogation of the investment market afford sooner or later, have to adopt the European a reason for the destruction of the commercial rule of buying only paper bearing a third name, paper market also? Some plan must, and 49615—18 3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

260. FEDERAL RESERVE BULLETIN. APRIL 1, 1918. 7. will be developed to restore to a certain extent, Curtailment of Unnecessary Credits. at least, the security market. But even if The request which the Secretary of the Treasthis restoration can not be effected, should we not look upon credit as a commodity of which ury made on February 6, 1918, to every bank only a limited supply is available? If we have and trust company of the country that it approached the limit, would it not be wise to should set aside 1 per cent of its resources conserve credit and apply it only in those each week for investment in the Treasury cerdirections where its use will most greatly benefit tificates of indebtedness, has brought to the the country? In the case of the Tobacco Co., if it had not secured the full credit it sought it Federal Reserve Banks many inquiries as to would in that event have bought less tobacco how the banks could make available so large a and possibly might have advanced its selling sum for the use of the Government and at the prices. What if it had reduced its inventories same time maintain their usual business with and the consumption of tobacco ? Would not their depositors and customers. There is welthis have been just what is at present required ? come evidence that the bankers of the country The corollary is that business must adjust itself to credit; not credit to business at this are giving thoughtful consideration to the time. question of conserving credit for the Govern- To recapitulate: Agreements to grant credits ment, and the Federal Reserve Board thinks for an extended period by the purchase of it the appropriate time to issue a statement 90-day paper or by 90-day acceptances ought expressing its views upon the principles which to be based upon transactions connected should guide the action of the banks. directly with the purchase and sale of goods and the intermediate process of manufacturing. It is clear that if the war requirements of the Credits so extended should relate to the re- Government arc to be financed without undue sources of the borrowing concern and should expansion of banking credits, not only must not be granted for the purpose of furnishing working capital or for the temporary financing there be some reduction of existing credits, of permanent investments. | but there will have to be applied a rigid check These transactions should be of an individual; upon the further expansion of credit in direccharacter; they call for direct contact between | tions not cleanly essential for the prosecution banker and borrower, and syndicate credits i of the war, and for the health and necessary should be avoided. Agreements by bankers ! comfort of the people. It is no more possible to furnish one or two year money at a definite rate of interest against 90-day paper or ac-j to superimpose upon the volume of prewar ceptances to be used to finance themselves ; credits the immense volume of additional should not be countenanced either openly credit required by the Government for war or in the form of exchange of paper between purposes than to superimpose upon the volbankers. ume of prewar production of goods the im- These are the principles which the Federal reserve system must apply. It would be mense volume of additional goods required by inexpedient to attempt more than to establish | the Government to prosecute the war. Our the principles. It would be detrimental to | problem is to convert less essential into more formulate definite regulations dealing in minute essential credit, and to convert less essential to detail with the various phases of the problem. more essential production and distribution of It would be far better to give some latitude to the banks in dealing with these matters. goods. The saving of credit and money goes But this will depend entirely upon the wisdom hand in hand with the saving of labor and maand discretion of the member banks. The terials in the program of adjusting the busibanks will best serve their own interests if, ness of the Nation to a war basis, and our best following the example of European instituhope of avoiding competition between the tions, they will adopt these principles as selfimposed, well-tried rules of business prudence Government and its citizens for credit, money, rather than by abusing their freedom of action labor, and materials, which can only result in to force the Board to tie their hands by rigid credit and price inflation and higher costs of regulations. living, is saving. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 261 As far as expenditures arc financed by the LOANS FOR NONPRODUCTIVE OR NONDISTRIBITsale of new securities they are scrutinized un- TIVE PURPOSES. der the leadership of the Capital Issues Com- Loans for nonproductive or nondistributive mittee of the Federal Reserve Board; as truspurposes are usually loans for nonessential tees of the individual banking credit of the purposes. The following are types of this country, however, the bankers are charged class of loans: with the duty of studying and understanding Loans for purchasing or carrying property, the program in order that each and every one whether real estate or personal securities. may in turn educate his borrowers and the Loans for additions to or improvements of people of his community to the necessity of property not used in production or distribusaving credit as well as food and other mation. terials, and may thereby conserve the credit Loans to States or municipalities for imof his bank for the use of the Government as provements. far as may be practicable. It will be clear to By inquiring the purpose for which each bankers, also, that credit conservation is necesnew loan is required, and declining wherever sary not only for Government financing, but practicable to grant loans of these classes, and also for the protection and preservation of the by gradually causing existing loans of these banks themselves, individually and collectclasses to be reduced or eliminated, bankers ively, since undue expansion of bank credits? could conserve credit without causing hardleads inevitably to unsafe and unsound ecoship and also give many people an impetus to nomic conditions, and no stone should be left save at -a time when saving is of vital imporunturned to keep our banking institutions tance to the Nation. But discretion must be sound and strong. used in not forcing borrowers to reduce loans It is not the purpose of the Board to sugto an extent that is unreasonable or would gest the specific ways in which credit should be cause avoidable hardship or embarrassment; conserved, or unnecessary expenditures curmuch can be accomplished by sound advice tailed: each banker must determine this for and the exertion of moral pressure. himself. The Board can only discuss the subject in general terms, with emphasis on the LOANS TO FACILITATE PRODUCTION OH DISTRInecessity that while credit conservation should BUTION. be undertaken promptly it should be carried out gradually, with reasonable discretion and The three main groups of borrowers for prowith the least possible avoidable embarrass- ductive or distributive purposes are farmers, ment to the business of individuals and indus- manufacturers, and merchants. tries. Proper education of borrowers and custo- 1. Farmers.—The farmers are being asked mers to the needs of the situation will accomplish to produce more than ever before and loans for far more than abrupt discrimination or pressure. productive purposes must have the right of In the absence of any official classification ofI way. But the kind of loans which should be the more essential and the less essential things | discouraged or declined are: and enterprises it will be necessary for each j (a) Loans for the acquisition of additional banker in determining how he may do his | property, unless the area under production is share in the conservation of credit to use his | to be increased thereby and immediate results own judgment. There seem to be, however, j may be expected; two clearly defined groups of loans: (6) Loans for any construction not necessary (a) Loans to facilitate production or distri- to the productiveness of the farm within the bution. year; and (b) Loans for nonproductive or nondistribu- (c) Loans for the purchase of articles of comtive purposes. fort and luxury. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

262 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. In sections where farming profits have been (a) By studying and understanding the ecolarge, an endeavor should be made to induce nomic necessity for the conservation of credit. farmers to apply a good portion of them to the (&) By a careful analysis of each loan in his reduction of long-standing loans or to the institution to ascertain those which are the financing of their seasonal requirements, there- least essential to the prosecution of tho war. by conserving bank credit. (c) By applying to each, application for a now 2. Manufacturers,—Manufacturers who are loan the test "Is it necessary for the prosecution making large profits should be urged to reduce of the war or the health and safety of our civilor extinguish their debts rather than increase ian population?77 capacity and output unless the industry is one (d) By discussion with other bankers in the which is clearly necessary to the prosecution of same place or neighborhood as to methods of the war. All manufacturers should be urged credit conservation which it may be practicable to carry as small inventories as practicable; for them to undertake. to eliminate from their products elements (e) By urging his local trade organizations which add to its cost but not to its intrinsic and board of trade to study the subject and value &3id serviceability, or which are intro- make definite recommendations for the conduced simply for fashion or appearance; and servation of credit and the conversion of loss to avoid as far as practicable introducing new essential to more essential production and disstyles during the period of the war. tribution. Manufacturers whose product is not clearly (/) By discussing the matter with, his custorequired either for the prosecution! of the war, mers with a view to educating them to the or to maintain the health and efficiency of our necessity of keeping their demands for credit civilian population, should be urged to assist at a minimum. the Government by adapting at least a part of (g) By exerting his influence upon his neightheir plants to the manufacture of articles bors and his municipality to reduce expendiclearly required for these purposes. Bankers tures for improvements to a minimum during would do well to scrutinize carefully the credits the period of the war. Postponement of every of those engaged in industries not clearly improvement not absolutelynecessaryforhealth essential for these purposes since such industries and safety should become a national policy. are likely to be the first ones to suffer inter- Qi) By acting always with discretion and ruption from transportation, fuel, or power reasonableness. embargoes. Tho conservation of credit and money will 3. Merchants.—Almost tho same suggestions result in tho saving of labor and materials that have been made with regard to the pro- which the Government needs for the prosecuduction of goods by manufacturers may be tion of the war; and every improvement or applied to tho distribution of goods by mer- expenditure which an individual, a corporation, chants, namely, reduction of stock carried, or a municipality refrains from making during reduction or elimination of that portion of their the war represents a requirement to be fulfilled stock consisting of articles of mere fashion or when the war is over. luxury and the substitution of plainer and more Merchants and manufacturers will readily serviceable articles, and the avoidance of the understand that present saving is laying up introduction of new styles in clothing, articles for the future an important reserve purchasing of personal comfort, etc. power which they may count on during what- The Board feels that it would be impracti- ever period of readjustment may follow the end cable to deal with the subject more specifically of the war; and it must be apparent to every at the present time, but urges that every banker banker that the larger the savings his custoassist in the movement, to the best of his mers make the larger the deposits such savings ability. will inevitably create. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1. 1918. FEDERAL RESERVE BULLETIN. 263 It is hoped by the Board, that the Federal tional banks in the New England States, Reserve Banks will make themselves the lead- $182,854,947 by national banks in the eastern ers in this campaign by organizing in their States, $15,294,128 in the southern States, respective districts committees of bankers, $42,057,311 in the middle States, $8,101,292 merchants, and manufacturers so that results in the western States, and $11,742,292 in the may be reached by a mutual understanding Pacific States. and a united effort for the public good rather The banks of the central reserve cities owned than by a policy of enforcing hard and fast $99,549,562 foreign Government bonds. Narules. If at any time the assistance or advice tional banks in other reserve cities held of the Board should be desired it will be given $59,488,751, while the amount held by all gladly. It is realized that each industry and country banks was $121,614,995. branch of business must be taken upon its own The State in which the country banks held merits and that proper treatment involves in the largest amount of foreign Government a great many cases a redirection of industries bonds was Pennsylvania—$31,260,866. Counand redistribution of labor. This is a problem try banks in New York State came next with which has been actively studied and in many $23,701,435, followed by Now Jersey with cases comprehensively dealt with by various $8,312,698, Ohio with $7,719,036, Massachudepartments and boards of the Government. setts with $5,898,144, Michigan with $4,266,- Wherever }^our committees desire the advice 262, Virginia with $3,411,536, Connecticut with or cooperation of these Government agencies $3,305,188. In no other State did the amount the Board will be glad to act as intermediary of foreign Government bonds held by country and advisor in such cases. national banks amount to as much as $3,000,000. Bank Holdings of Foreign Securities, Capita! Issues Committee Statements. Interesting figures as to the holdings of bonds 'Following are statements for the press issued and other securities of foreign Governments by during March by the Capital Issues Committee national banks in the United States on Decemof the Federal Reserve Board: ber 31, 1917, have been compiled by the Comptroller of the Currency from bank reports, The MARCH 9, 1918, The Capital Issues Committee has received total held was found to be $350,644,161, of copies of the following resolutions, which are which amount but $709,613 were those of Gertypical of the spirit with which it meets in its man-Austrian Governments. efforts to restrict or to curtail as far as possible The reports of condition for December 31, issues not absolutely essential at this time: 1917, show that the total amount of bonds of [By the Investment 'Bankers' Association of America.] foreign Governments held by the national banks Whereas the board of governors of the Investment Bankof the country on the elate named was $280,- ers' Association of America has already heartily indorsed the plan for the supervision of capita! issues which is now 653,308, of which only $709,613 were bonds of ; in operation; resolved, that it is the sense of this board that the German-Austrian Governments. O ther ; no member of this association should buy or sell or oiTer | for sale, except subject to the final approval of the Capital foreign securities held by the national banks on Issues Committee, any securities which come within the the same date aggregated $69,990,853, making scope of the Capital Issues Committee regulations, unless the issuance of such securities first shall have been aptotal of all foreign securities $350,644,161, proved by that committee. against $297,236,000 foreign securities held I [By the American Bankers' Association.]? November 17, 1916, and $158,500,000 on May | Whereas the Secretary of the Treasury requested the 1, 1916. | Federal Reserve Board to take up the question of a iimita- Of the total amount of foreign Government| tion of the issues of new securities throughout the United | States along the lines of the conservation of capita! for the bonds owned, $20,603,338 were held by na- ; prosecution of the war—that is to say, to limit so far as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

264 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. possible the issue of new securities for nonessential pur- written a letter to Mr. Gompers further ampliposes, in order that essential financing, including the fying his view. This letter reads as follows: Government financing itself, can be made possible; and Whereas pursuant thereto the Federal Reserve Board has named Mr. 'Warburg, Mr. Delano, and Mr. Hamlin on OFFICE OF THE SECRETARY OF THE TREASURY, a committee to be known as the Capital Issues Committee: Washington, March 15, 1918. Now, therefore be it resolved, that we, the administrative MY DEAR MR. GOMPERS: I have your letter of February committee of the American Bankers' Association, are in 18, inclosing copy of a resolution adopted by the Building full accord with this movement and give it our hearty and Trades Council of San Francisco, in which it is stated that unqualified support; and, further, that we recommend to I have been reported in the public press as having "apthe members of the American Bankers' Association that pealed to property owners not to construct any homes or they also extend their hearty support in carrying out the buildings during the war." This is entirely erroneous. purposes for which the Capital Issues Committee was I have said that building operations which are not required appointed. to protect the health or provide for the comfortable needs of our people, or to supply facilities necessary for the The chairman stated that the committee had proper conduct of business essential to the successful been asked to consider applications with re- prosecution of the war, should be postponed. spect to the issue by municipalities of notes As you know, I have no authority to direct that building operations be curtailed. I have merely suggested that running for one year or less issued for current unnecessary work of that kind be postponed until the end expenses in anticipation of tax payments, and of the war. Such postponement would, I am sure, help that the committee does not consider that such win the war, but every patriotic man must be determined issues come within its purview. by his own conscience in the matter and must decide for himself if he can postpone the erection of a contemplated building until the war is over. Compliance with this suggestion may cause some inconveniences which are to be greatly deplored, but such inconveniences are an unavoidable incident to war. The situation must be MARCH 16, 1918. viewed from a national and not from a local standpoint. The chairman of the Capital Issues Commit- We are engaged in a colossal war, in which the safety of tee stated that the work of the committee dur- America is seriously imperiled. We can not win the war ing the week had been particularly heavy, a unless every resource of the Nation is carefully husbanded and used with the utmost intelligence. The great finanvery large number of applications having been cial operations of the Government, greater than those ever received. He stated that the total number of undertaken by any government in the history of civilizaapplications received up to date and disposed tion, make it essential that every unnecessary expenditure of by the committee was 96, aggregating by the Government, by the States and municipalities, and by private corporations and individuals, be avoided while $232,868,918. The majority of the approvals the war is in progress. Unless this is done, it will be imgiven by the committee covered renewals and possible for the people of the United States to furnish the refunding operations. Approvals of new issues, money which the Government must have to support its municipal or otherwise, represented in many soldiors and sailors who are shedding their blood for us cases reductions of the amounts originally ap-j UDQTI the battlefield. ! The issue at s(:alee is world freedoin and world deinocracy. plied for. The number of cases formally de- | Germany, drunk with the lust for power, would rule the clined is comparatively small for the reason j world. We are coming to recognize that whether the war that a great many of the applications are being is to bo won or lost depends upon whether we are willing suppressed at the source either because the to make the sacrifice of blood, treasure, and service necessary to enable us and our allies to achieve the honorable applicants realized that the purposes for which and lasting peace to which we aspire. We are increasingly they would desire to issue securities were not coming to'appreciate that to make possible such a victory, compatible with the national interests or be- every man, woman, and child must be willing to do their cause the local committees were able to impress utmost. There must be no slackers in Wall Street, none in , the homes, none on the farms, none in our industries. upon would-be applicants this point of view I Capital and labor alike must do their utmost. There must before the applications reached the central be no waste, no extravagance, no unnecessary expendicommittee at Washington. ture. The Nation has need of all its man power, of all its A great deal of doubt and, in some cases, wealth, of all its resources. protest has been elicited hy Secretary McAdoo's The successful financing of the war depends in large part upon the current savings of the people, upon the earlier statements with respect to the desiradifference between what is made and what is spent. bility of restricting unnecessary building opera- Habits of thrift must be stimulated, and, if need be, every tions. Some letters have been received, par- dollar of savings should be lent to the Government. There ticularly from the Pacific coast, from, building is no better investment for the poor and rich alike, than a United States Government loan bearing interest. Those associations and carpenters unions, protesting who fail to save what they should, and to lend their savings against what they considered an embargo upon as needed to the Government, will fail to do their full duty. their activities. Some of these letters were Those who wish to treasure the remembrance of patriotic transmitted to Secretary McAdoo by Mr. service can have no choice. They must do their utmost to serve and their utmost to save and be willing to lend Samuel Gorapers, and Secretary McAdoo has the Government all they save. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

AI-RIM, 15)18. FEDERAL RESERVE BULLETIN. 265 I hope you will use your influence to persuade the badly in need of hundreds of thousands of workers. This members of the Building Trades Council of San Francisco is quite true. But the Emergency Fleet Corporation could that the Government has need of all the money, all the presently give employment "to only about 10,000. This labor, all the material, and all the transportation facilities wide variance between needs and employment capacity that can be made available. I should like them to know is caused by the inability of the shipyards to house the that men are needed to build ships, to build houses to armies of shipbuilders necessary for the production of the house men working in the shipyards, to erect plants to tonnage of which our "Nation is so badly in need, and to produce war material, to run our railroads, to operate our which it is entitled. Where carpenters,1 for instance, find industries, and to produce food required by the allies and that the policy of economy guiding your committee curourselves. These needs are already great and will increase, tails or halts their work, they can find plenty of vitally not lessen, as the war progresses. If our wage-earners are necessary work, and a patriotic work, in building homes for unable to find employment for which they are best fitted those who are building our ships—if not on the ships themand which they would prefer, or if they are unable to find selves. employment where it would be most convenient for them Of course, it is understood that change of domicile by to work, the opportunity is presented to render a most workers entails sacrifice and expense. But you will not patriotic service in this period of national stress by seeking find the laboring man of America hesitating about the sacriother kinds of employment, and, if need be, moving to fice of his comfort and convenience when the Nation calls. other districts where work is to be had. To transfer labor from surplused to depleted sections, the No one knows better than you the need of the hour. Employment Service will shortly have a revolving travel- Save in exceptional cases, to expend money or to use ing fund of 8259,000. This may be used to advance material or employ labor in the production of what is transportation, to be later reimbursed by the intended not needed to win the war. as I view it. would be an un- employee. For the rush work of the Emergency Fleet pardonable waste and would, in effect, be lending aid to Corporation on the Pacific coast, and in certain Army the enemy. construction, funds for transportation are being provided I am sure that you are in accord with the principle under- by the departments affected, for the use of the Employlying the views 1 have expressed and that you will, in that ment Service. splendid spirit of patriotism, and service which has Carpenters, shipbuilders, structural ironworkers, and characterized, so strikingly your every action and utterance in fact every kind of mechanic, in large numbers, could during this war, join with me in appealing to every good find assistance in reaching ready and remunerative emcitizen to help the Government by conserving and using ployment upon application to the United States Employto their best advantage those invaluable resources of the ment Service, a branch of which can be found in every Nation, labor and materials, without which freedom and large city. democracy can not be saved for the world. Respectfully, Very truly, yours, (Signed) J. B. DENSMORE, (Signed) W. G. MCADOO. Director United States Employment Service. SAMUEL GOMPERS, ESQ., President, American Federation of Labor, Washington,]). C. MARCH 30, 1918. In addition to this letter, a communication Public and private organizations throughout has been received by the chairman of the the country are fast allying themselves with Capital Issues Committee from Mr. J. B. the Capital Issues Committee in its work of Densmore, director of the United States confining to essential purposes present capital Employment Service of the Department of expenditures. During the course of the week Labor, containing some very practical sugges- just passed the committee had a conference tions concerning this problem. The letter with the mayor, the comptroller, and the reads as follows: solicitor of the city of Philadelphia. These DEPARTMENT OF LAB on, officers expressed themselves as in hearty UXITED STATES EMPLOYMENT SERVICE, sympathy with the aims of the committee and Washington, March 14, 1918. stated that, at a mutually convenient date, Hon. PAUL M. WARBURG, they would return to Washington and go over Chairman Capital Issues Committee, with the committee, item by item, the entire Washington, ]). C. city budget of many millions, with a view to SIR: In response to your inquiry, growing out of the bringing the city's capital expenditures into protest of carpenters' unions against the policy of your comicittec of restricting, as far as practicable, the use in line with the committee/s policy. Philadelbuilding construction of capital, credit, and materials, I phia contributes a further aid to the commitbeg to say: tee's endeavors by the following resolution of While it is true that the labor situation in the United its stock exchange: States is comparatively satisfactory, it is equally true that conditions could be greatly improved through a more Whereas the Federal Reserve Board has, upon the rescientific distribution of labor. In many instances men quest of the Hon. W. G. McAdoo, Secretary of the are engaged in new lines of endeavor at advanced wages, Treasury, appointed a committee of its members to act leaving unfilled their original fields. For example, in the as a Capital, Issues Committee authorized to pass upon vicinity of munition plants one finds farm hands at work such proposals as may be submitted to them in respect in the factories, while the farmer cries in vain for help, etc. to capital expenditures or issues of new securities, The unions are quite correct in their statement that they Resolved, That the committee on stock list will require were told work awaited them at the shipyards only to as a condition to the listing of such new capital issues learn upon application there that such was not the case. the presentation of the approval of such committee of It has been" stated probably quite frequently that the the Federal Reserve Board. Emergency Fleet Corporation (Shipping Board) was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

266 FEDERAL RESERVE BULLETIN. Ami 1.1, 1918. One of the very largest public-service cor- The issues aggregated ,386,752.17, diporations of the Nation, whose activities reach vided: every village, city, and town in the country, and whose expenditures are of huge propor- Municipal. Public util- Industrial. tions, has informed the committee of its inten- ity. tion to submit its budget for careful scrutiny. Total applications 838,039,452 3144,296,400 §118,050,900 Disapproved 6,379,000 3,000,000 11,350,000 The Associated Advertising Clubs of the World are cooperating also by discouraging Approved 31,660,452 141,296,400 106,700,900 Less "refunding" 15,831,912 118,640,000 98,850,900 advertisements that would be apt to interfere New issues 15,828,540 22,656,400 7,850,000 with the general purposes of the committee. New issues same period last year, excluding refunding... 47,444,365 86,099,075 212,670,900 An arrangement has been perfected whereby Analysis of new issues: Dr. J. A. C. Chandler, superintendent of Amount of issue 22,057,540 25,656,400 19,200,000 Amount approved 15,828,540 22,656,400 7,850,000 schools of Richmond, Va., will spend half of Curtailment effected 6,229,000 3,000,000 11,350,000 each week in Washington for the purpose of So that, out of a total submitted (exclusive advising the committee with respect to appliof refunding operations) of $66,913,940, apcations involving the issue of securities for the proval was expressed by the committee as to purpose of erecting school buildings. Dr. $46,334,940 (69.3 per cent), and disapproval Chandler, whose work in this connection will was expressed with respect to $20,579,000 be under the supervision of Commissioner of (30.7 per cent). In addition, three applica- Education Claxton, will have the advice of tions for a total of $2,800,000 were submitted Dr. George D. Strayer, of the faculty of ColuminformaUy to the committee and postponed bia University, New York, who is serving on for the period of the war. The committee is the War Savings Committee at Washington, collecting data from the various districts with and also that of Lieut. Col. L. P. Ayers, a respect to applications upon which postponemember of the General Education Board, who ment has been secured locally. is now serving as statistician of the General Staff of tho Arxny. This central body will have at its disposal the facilities of the Bureau of The Government Official Bulletin. Education throughout the country. The Federal Reserve Bulletin has been requested to call attention to the Official United This specialized organization is created be- States Bulletin, a daily paper published in cause of the ver}" large number of school Washington, containing all of the more imissues and the necessity of dealing with them portant rulings, decisions, regulations, proclaalso from the educational angle. The commations, orders, etc., as they are promulgated mittee is most anxious to avoid, as far as it can by the several departments and the many be done consistently with a policy of reduction special committees and agencies now in operaof capital expenditures, the impairment of the tion in the National Capital. This bulletin is facilities for mental training of the growing posted each day in every post office in the generation. United States, and may also be found on file A report given out by the committee shows at all libraries, boards of trade, chambers of that from January 12 to March 28, inclusive commerce, the offices of mayors, governors, (although its organization was not perfected and Federal officials. It will be found useful until early in February), it has given final disin answering the many questions coming up position to some 157 issues, divided as follows: daily concerning the war, and by consulting it n M ic u i - - li P c u u b ti - l- Indus- To- Per many inquiries about which letters are being pal. ity. trial, tal. cent. written to Washington may be obviated. Unnecessary letters encumber the mails and Approved 5 47 32.00 Approved "refunding 22 86 54.70 occupy labor in Washington, where they are Disapproved 5 I 15 Curtailed 1 I 9 5.00 answered, which is needed for work in connec- Total 42 33 i 157 100.00 tion with the war. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

iL i. mis. FEDEBAL RESERVE BULLETIN. 267 War Finance: War Expenditures, War Debts, in the comparative table, by far the larger and Increase in Note Circulation of Principal portion represents inter-ally credit transactions Countries. affecting the debt figures shown in the table, During the first three and one-half years | and thus unduly swelling the total debts of the war the public debts of the 12 warringI shown for the allied group. On the other hand, countries, treated below, show an aggregate the war debts of Germany and Austriaincrease of approximately 111.7 billion dollars, Hungary likewise include advances to Bulgaria of which about 72.4 billions represent the and Turkey. These advances, so far as known, increase in the public debts of the 9 countries cover by far the larger portion of the war (including the four self-governing British expenditures of these two countries. colonies) in the allied group and 39.3 billions Total debt figures shown pertain to the printhe increase in the public debts of Germany cipal belligerent countries only and do not inand Austria-Hungary. Aggregate war costs clude the public debts of neutral countries, in addition include large amounts raised by which have also risen considerably during the increased or new taxation introduced by all war, though of course not in the same proporthe warring countries, though it would be quite tion as those of the countries taking an active difficult to segregate the amounts thus obtained part in the conflict. To cite one instance, the from the total estimated or actual revenue indebtedness of Switzerland increased by 812.2 shown in the estimates or budget reports of million francs between August, 1914, and the respective countries. January, 1918, the Government having issued Among the European nations Great Britain eight interior loans to defray the expenses of shows the largest increase of indebtedness, mobilization, besides borrowing 15 millions in viz, by 24,178 millions of dollars. This total the United States early in 1915. includes 7,027 million dollars advanced to allies With the spread of the war over wider and and dominions up to February 9, 1918. On the wider areas and the continuous rise of prices, other hand, the total increase is inclusive of the cost of the war is constantly increasing, advances received from the United States since calling for larger and larger borrowings by April, 191.7, which totaled $1,370,000,000 the Governments. In floating the huge public by March 18, 1918. Russia's public debt loans the Governments have had the assistance shows an increase of 20,291 millions between of the banks, cooperation between the Govern- January 1, 1914 and September 1, 1.917. ments and the central banks of issue being This total includes the amounts advanced by particularly close. Loans of a permanent the allies and in addition about 7,800 million I character are as a rule preceded by issues dollars received by the Treasury in the shape in large volume of Treasury bills or certificates, of notes from the State Bank, whose stock is a large proportion of which is discounted owned exclusively by the Government. To by the central banks. The amounts of Treasury the 7,027 millions advanced by the British bills and other short-term obligations dis- Government, largely to Russia and Italy, counted by the European Governments with should be added advances of the United States their central banks have been constantly to the allies, totaling about 4,582 millions on rising partly accounting for the inflation of March 21, while like advances of the French currenc}^ and prices, which in turn cause Government through the bank of France, increased borrowing. In Great Britain tempototaled about 642 million dollars on March 7 rary borrowings of the Government from the of the present year. Bank of England as a rule do not cause any While some of the advances were made to the increase in note circulation, the Government Balkan countries, viz, Serbia, Roumania, and receiving deposit credit for the amounts Montenegro, whose public debts are not shown borrowed. Whatever addition to note cir- 49615—18 4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

268 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. dilation took place there is due to issues of bined gold reserves of the first two banks were currency notes by the Government to the 235,000,000 lire ($45,355,000), and silver rebanks, largely against the deposit of Govern- serves to the extent of 40,000,000 lire ($7,ment and other securities, as distinct from the 720,000), against a combined note circulation practice on the European continent, where, of 1,781,000,000 lire ($343,733,000). On the in most cases, notes are primarily issued same date the Italian Treasury held 167,000,000 by the central banks to the Governments. lire ($32,231,000) of metallic reserve against its Table on page 269 shows the effect of the war Treasury note issue of 1,684,000,000 lire upon the status of the principal banks of ($325,012,000). issue both in the warring and neutral countries. Figures of gold reserves relating to the Bank It is seen that while the amounts of metallic of France, the Reichsbank, and the Austrocover at the banks in the warring countries of Hungarian Bank are more closely representa- Europe have changed but little in the aggre- tive of the total monetary stock of gold in those gate, the ratio of these amounts to their liabil- countries. All the gold in circulation that ities has gone down since July, 1914, from could possibly be gathered was concentrated in 54.3 to 9.4 per cent. the vaults of the central banks. Some increase Amounts of gold held in the vaults of the in the gold reserve of the Reichsbank is probacentral banks of issue do not represent in every bly due to the transfer to its vaults of part of instance the total monetary stocks of gold in the gold reserve held by the Austro-Iiungarian any given country. Great Britain maintains a Bank at the outbreak of the war. On July 23, metallic cover of £28,500,000 ($138,695,250) 1914, the latter hold 1,337,879,000 crowns against currency notes which amounted ($271,589,437) in gold coin and bars, and this to £43,519,019 ($211,785,306) on May 12, sum had gone down to 264,190,000 crowns 1915, and £212,782,295 ($1,035,505,039) on ($53,630,570) on December 7, 1917. December 26, 1917. The Irish banks held on Public debt of the principal belligerent countries. an average for the four weeks ending November 3, 1917, £16,504,786 ($80,320,541) in gold [In millions of dollars.] against an average note circulation of £22,166,- A. ALLIED POWERS. 439 ($167,872,975), and the Scotch banks re- Before entering war. At most recent date. ported as of the same date average gold hold- Increase. ings of £16,989,360 ($82,678,720) against an Date. Amount, Date. Amount. average amount of notes in circulation of Great Britain Aug. 1,1914 3,458 Feb. 16,1918 27,636 24,178 £18,104,676 ($88,106,406). There should also Australia June 30,1914 93 Mar. , 1918 942 84.9 Canada Mar. 31,1914 336 Feb. 28,1918 1,011 675 be included small amounts of reserve and circu- New Zealand.Mar. 31,1914 446 Mar. 31,1917 611 155 Union of South lation of six private banks and three joint stock Africa iMar. 31,1914 579 Mar. 31,1916 734 155 France July 31,1914 598 Dec. 31,1917 22,227 15,029 banks in England proper. The larger com- Italy June 30,1914 792 Dec. 31,1917 6,676 3,884 Russia Jan. 1,1914 092 Sept. 1,1917 25,383 20,291 mercial banks in England also hold as part of United States iMar. 31,1917 1,208 Jan. 31,1918 7,758 6,550 their vault cash considerable amounts of gold, Total 20,602 92,978 72,376 the London City and Midland Bank alone B. CENTRAL POWERS. showing £7,000,000 in gold ($34,065,500) on December 31, 1917. Germany. Oct. 1.1913 1,165 Dec. —,1917 125,408! 24,243 In the case of Italy, there are notes in circu- Austria... July 1.1914 2,640 Dec. —,1917 113,3141 10,674 Hungary., July 1,1913 1,345 -, 1917 15,704! 4,359 lation of the Banco di Napoli and Banco di Total 5,150 44,426 39,276 Sicilia, in addition to the issues of the Banca Grand total. 25,752 137,404111,652 d'ltalia. On November 30, 1917, the comi Partial estimates. All other statistics are official. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 269 Comparative table showing total note circulation, deposits, and gold and silver holdings of principal hanks ojissue, at the outbreak of the war and at the end of 1917. [Rates of conversion: 1 lira, franc, or peseta=19.3 cents; 1 mark=23.8 cents; 1 pound=$4.8665; 1 ruble=51.5 cents; 1 Aust. crown=20.3 cents; 1 Dutch florin=40.2 cents; 1 Scandinavian crown ==26.8 cents; 1 yen=49.85 cents.] A. ALLIED POWERS. [In thousands of dollars.] At outbreak of the war. At end of 1917. Ratio of Ratio of gold and gold and c T ir o c t u a l l a n ti o o t n e . de T p o o t s a it l s. • h G o o s l i l d l d v i n e a g r n s d . t s o a il t n v a d l e r d n e o to - te c T ir o c t u a l l a n ti o o t n e . Trttal "GOoKldI adJn1d t s o a il n t v a d l e r n d o t e o - te posit lia- posit liabilities. Per cent. Per cent. France 1,289,855 256,716 919,968 59.5 4,311,000 610,961 687,480 13.7 Great Britain. 144 566 326,699 185,567 39.4 1223,586 808,671 283,899 27.5 Japan2 212,342 61,367 112,296 41.0 410,816 291,341 326,982 46.6 Italy 324.824 37,403 232,965 64.3 81,243,574 309,579 178,188 11.5 Russia 841,174 592,522 863,371 60.2 4 9,456,516 U,780,088 4 758,798 6.8 Total 2,812,761 1,274,707 2,314,167 56.6 15,645,492 ! 3,800,640 i 2,235.377 I 11.4 United States 5 1,246,488 I 1,457,994 I 1,668; 268 ; 61.7 B. CENTRAL POWERS. Austria-Hungary ; 432,341 , 59,419 311,963 ! 63.4 3,594,156 424,004 64,657 1.1 Germany I 692,442 ! 299,515 363,670 ! 36.7 6 2,729,324 1,915,993 615,929 13.3 Total i 1,124,783 ; 358,934 675,633 j 45.6 6,323,480 2,339,997 680,586 7.8 I C. NEUTRAL POWERS. Denmark I 39.525 5,496 24,410 512 90,546 14,771 46,610 44.2 Netherlands 124; 796 1,904 68,477 54.0 357,889 21,5fiO 283,515 74.7 Norway 32,859 j 3,859 14,405 39.2 87,524 59,269 31,214 21.3 Spain 370,372 j 96,104 245,747 I 52.7 537,085 185,232 518,729 71.5 Sweden 54,367 i 18,440 26,151 35.9 7149,722 49,600 65,943 33.1 Switzerland 51,708 ' 9,777 38,409 62.5 135,825 26,555 79,029 48.7 Total. 673,627 135,580 417,602 51.6 1,358,591 356,987 j 1,023,040 59.6 1 In addition, there wore outstanding currency notes to the extent of £212,782.295, or $1,035,505,039, secured by £28,500,000 in gold. 2 Figures for Dec. 31, 1913 and 1917. 3 These figures refer to the Bank of Italy. On Nov. 10, 1917, there were also in circulation notes of the Bank of Sicily, 274,666,650 lire; notes of the Bank of Naples, 1,413,103,400 lire, and treasury bills (Nov. 30), 1,684,000.000 lire (metallic reserve, 167,000,000 lire)—a total of 3.371.770,050 lire, or §650,751,620, as against ,15197,053,400 on July 20, 1914. 4 Figures for Oct. 16/29, 1917. o Figures for the Federal Reserve Banks, as of Dec. 28, 1917, exclusive of gold with foreign agencies. e There were also outstanding on Dee. 31, 1917, the following issues: Million marks. Treasury notes 350.0 Loan bank certificates 6,265.0 Notes of Bank of Bavaria 68.5 Notes of Bank of Saxony 44.1 Notes of Bank of Wiirttemberg 24.6 Notes of Bank of Baden 26.0 6,779.2 or $1,013,450,000. On July 31, 1914, tho issues of the latter four banks amounted to 810,590,900, as against 838,844,500 on Dec. 31, 1917. 7 Figures for Dec. 22, 1917. GREAT BRITAIN. of the excess-profits duty, the effects of which "Revenue receipts of Great Britain yielded a were not materially felt until 1917. In the surplus over expenditures prior to 1914, but latter year the ratio of receipts to expenditures with the opening of hostilities the ratio of rose to 26.1 per cent. Owing to a considerable receipts to expenditures commenced to fall increase in expenditures in the fiscal year 1918, until in 1916 it had gone down to 21.6 per which were unforeseen at the time when the cent. The year 1916 marked the introduction budget was in preparation, the ratio has again Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

270 FEDERAL RESERVE BULLETIN. APRIL 1, I9IS. dropped somewhat. The outstanding feature PUBLIC DEBT. is, however, that for the whole period of the The London Economist (Feb. 23, 1918) war one-fourth of the entire amount of expenplaces the total gross indebtedness of Great ditures has been met by receipts and the Britain a! £5,878,600,000 on February 16, remainder by loans and other means. If 1918, as compared with £710,500,000 on loans to the allies and dominions, reported as August 1, 1914, an increase of £4,968,100,000, £1,444,000,000 by February 9, 1918, are or 699. 2 por cent. From the total present deducted, the ratio is considerably higher— debt there should be deducted the advances 27.8 per cent for the entire period of the war. to the Allies and Dominions which had reached In the following table, net tax receipts and £1,444,000,000 on February 9,1918, making the total revenue receipts arc related to expendinet debt on February 16, 1918, approximately tures, beginning with the year 1913 to date. £4,430,000,000' or 121,558,600,000. Details of [Sources: London Gazette, Feb. 19, 1918; Statesman's Yearbook, 1917, the public debt are given in the following table, pp. 42-48; 60th Report of the Commissioners ol His Majesty's Inland Revenue, 1917.] taken from the London Economist of February [In thousands of £.1 23, 1918: Ratio Ratio Net re T v o e t n a u l e Total of tax of total (Millions of £'s.) Y M ea a r r c e h n d 3 i 1 n . g t r a e x f c r a o e t i m i p o t n s . ex r c e q h c l e e t i q h p u e t e s r. ex t p u e r n e. di- r p t t e o u e c n r e e e i d x p . i - t - s r p e t t o v e u n e r e n d e x . u i - - e Aug. 1, Mar. 31, Mar. 31, Mar. 31. Fob. 16, 1914. 1915. 1916. 1917. 1918. 1913 154,854 188,802 J83,622 i 82.1 100.1 1914 163,035 198,21:3 197,493 I 82.6 100.4 Funded debt 586.7 583.3 318.5 317.8 317.8 1915 190,054 226,694 530,474 I 33.9 40.4 Terminable annuities 29.6 28.0 26.1 24.0 24.0 1916 290; 873 336,707 1,559,158 | 18.7 21.6 Unfunded debt: A 19 p 1 r 7 . 1, 1917, to 1 516,255 573,428 2,198,113 23.5 26.1 3 4 J J p o e e r r c c e e n n t t w w a a r r s s t t o o c c k k * 349.1 9 6 0 2 0 . . 8 0 6 2 2 0 . . 7 0 6 2 2 0 . . 7 0 I'ob. 16, 1918... 2 483,096 563,811 2,348,330 i 20.6 24.0 4 and 5 T)er cent war stock 1 1,962.4 2,086.9 Aug. 1, 1914, to National war bonds i 363.9 Fol). 16, 1918... 1,436,473 1,615,764 6,801,981 21.8 24.9 Treasury bills 15.5 1 77.2 556.8 463.7 1,054.8 Exchequer bonds 20. f> | 67.4 177.0 320.3 402.6 War-savings certificates. 1.4 74.5 120.3 1 Includes exchequer receipts from customs and excise and net receipts War-expenditure cortififrom all other sources. 23.6 23.5 2 Exchequer receipts only. Other debt 9.2 318.5 861.9 3 Exchequer receipts from Apr. 1, 1914, to Aug. 1, 1914, were deducted American loans 51.4 51. 4 51.4 from the total net receipts for the financial year, in order to arrive at the Temporary a«3 vances 1.0 19.9 217.5 237.8 net tax. receipts for the period between Aug. 1,1914, and Apr. 1,1915. Other capital liabilities 57. 2 56.7 52.2 51.2 "•«•'<>" From statements made by the chancellor of Total liabilities 710.5 1,162.0 2,189.8 3,90G. 6 5,678. 8 * the exchequer upon the occasion of moving votes of credit, it appears that average daily National war bonds, subscriptions to which expenditure for the eight months of the fiscal are continuous, are issued in two forms: (1) year 1914 was £2,050,864, whereas for ihe Bonds bearing 5 per cent interest, subject to period between April 1, 1917, to February 9, the income tax and repayable at 102, 103, and 1918, it had risen to £6,557,000, representing 105 on October 1, 1922, 1924, and 1927, an increase of 219. 8 per cent.1 A comparison respectively, and (2) bonds bearing 4 per cent of average daily expenditures follows: interest, with income tax compounded, repay- August 1, 1914-Aprii 1, 1915 £2, 050, 884 able at par in 1927. Holders of old exchequer Fiscal year 1916 4, 271, 888 bonds maturing in 1919, 1920, and 1921, and Fiscal year 19J7 6, 022, 227 of 44 per cent war-loan stock may convert their April 1, 1917, to February 9, 1918 6, 557, 000 The total credits voted by Parliament up obligations into either form. Bonds are acto March 7, 1918, amount to £6,842,000,000, cepted at their face value in payment of death or about $33,300,000. duties, excess profits duty, and munitions levy, and are convertible into any long-term loans i Parliamentary debates June 25, July 24, and Dec. 12,1917, and Jan. that may be issued during the war. 83,1918. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 271 FIDUCIARY CIRCULATION. External loans: 4J per cent loan from Great Britain in On August 26, 1914, currency notes to the March, 1915, issued at 99J and running extent of £21,535,065 were issued, and their for 5 and 10 years $23, 332. 500 increase since that date has been marked and 5 per cent loan floated in the United almost unbroken. During the same period the States in March, 1916, extending for 5, 10, and 15 years, issue price of 99.56, notes of the Bank of England in circulation 97.13, and 94.94 respectively 75, 000, 000 show a moderate increase, the additional issues 5 per cent two-year notes floated in the of bank notes being fully secured by metallic United States, issued at 98, during reserves with the issue department. The August, 1917 ! 100, 000, 000 following table shows the amounts of currency Total 198,332,500 notes outstanding and Bank of England notes War-savings certificates, to date 12, 000,000 in circulation at selected dates since the out- Grand total 960, 332, 500 break of the war: DETAILS OF CANADIAN WAR LOANS. [Source: Monetary Times, Jan. 4,1918, p. 126.] Currency Ban!- of Engn s o ta t n es d i o n u g t . - la c n ir d c u n l o a t t e io s n i . n N F o ir v s 1 e t 9 m 1 l 5 o b . a e n r , , Se S p l 1 e o t 9 c e a 1 o m n 6 n , b . d er, Third loan, j N f o o 1 t 9 u n 1 r 7 b t . h er, July 29,1914 i £29,708,350 Aug. 26, 1914 j £21,535,065 35,571,435 Amount of loan | 1850,000,000 S100,000,000 $150,000,000 2,3150,000,000 Dec. 30, 1914 1 38,478,164 °-^' - — -•--—- - — ' 800 4200,708,000 5 418,000,000 Dec. 29, 1915 ! 103,125,099 60,000,000 D D Fe e e b c c . . . 2 2 2 6 7 0 , , , 1 1 1 9 9 9 1 1 1 6 7 8 | ' | 2 2 1 1 1 5 6 2 0 , , , 1 7 1 3 8 4 4 2 4 , , , 8 2 1 9 7 9 3 7 5 4 4 3 6 5 9 ^ . , 9 6 2 4 7 0 3 5 7 , , , 9 5 3 6 3 4 5 5 0 To t t i i t o o a n n l b o y v p e u rs b u l b ic s crip . - . .j i ; 2 5 8 3 , , 7 7 2 2 9 8 , , 5 5 0 0 0 0 1 5 0 1 1 , , 4 4 4 4 4 4 , , 8 8 0 0 0 0 1 5 1 0 0, , 0 0 0 0 0 0 ,0 ,0 0 0 0 0.. 2 . 88,000,000 Number of sub- i i scribcrs ; 24,802 34,526 40.800 802,000 DOMINION OF CANADA. 1 Ultimately increased to 3100,000,000. 2 Ultimately increased to approximately $400,000,000. a Includes £3.073,800 of the first loan converted. [Sources: Canada Yearbook, 1914, p. 548; Canada Gazette, Mar. G, 1918, 4 Includes 318,131,000 of the first loan and $5,983,000 debenture stock p. 3077.] j converted. | 5 Approximately $400,000,000 was allotted. Net debt on March 31, 1914 $335, 998, 850| NOTES IN CIRCULATION. Net debt en February 28, 1918 1, 010, 780,470! On January 31, 1917, the circulation of the Dominion | of Canada was composed of $381,500,046 Dominion notes I and chartered-bank notes. A. total of $267,185,582 Domin- CANADA'S WAR DEBT TO END OF FINANCIAL YEAR 1918. ion notes was issued, of which $57,360,000 were held in the central gold reserve and §184,949,958 by the chartered [Sources: Monetary Times of Canada, Nov. 9, 1917, p. 12, and Feb. 15, banks. The amount of Dominion notes in the hands of 1918, p. 10; Statesman's Yearbook, 1917; Canadian Annual Review, , the public was thus $24,875,624. 1916, pp. 330-302. J i The total of bank notes in circulation on January 31, 1918, is given as $171,674,464, of which $18,251,206 are Internal loans: reported held by chartered banks other than issuing banks, First war loan issued at 97-|, bearing 5 per the amount of bank notes in the hands of the public being cent interest, for a term of 10 years thus 1153,423,258. The total amount of notes in circulation according to (floated November, 1915) §100,000,000 the method of calculation used by the United States Second war loan issued at 97J, interest Treasury was, therefore, as follows: at 5 per cent, running for 15 years [Sources: Canada Gazette, Jan. 19,1918, p. 2443. and Mar. 2,1918, p. 2981; (floated in September, 1916) 100,000,000 Canada Yearbook, 1914, p. 587.] Third war loan issued at 98, interest at Jan. 31, 5 per cent, for a term of 20 years Mar. 31,1914. 1918. (floated March, 1917) 150,000,000 Dominion notes issued $117,795,719 §267,185,582 Victory loan issued at 100, with interest Held by the Government 3,500,000 | 57,300,000 rate of 5£, running for 5, 10, and 20 Total net issued 114,295,719 209,825,582 years (floated November, 1917) 2 400,000,000 Chartered-bank notes in circulation. 90,848,384 171,674,464 Total notes in circulation 211,144,103 381,500,046 Total 750,000,000 Dominion notes held by the public 18,068,398 "li, 875,624 Chartered-bank notes held by the public... ...83,97M89_ 153.423,258 Total notes held by the public j 102,045,287 178,2987882 'Monetary Times, Jan. 4,1918, p. 126. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

272 FEDERAL RESERVE BULLETIN". APRIL 1, 1918. AUSTRALIA. Particulars of Australian war loam. [Sources: Commonwealth of Australia Gazette, Oct. 30, 1917, p. 2789; [Monthly Summary of Australian Statistics, Bulletin No. 68, Aug., Monthly Summary of Australian Statistics, Aug., 1917, p. 41; 1917, p. 41.] Monetary Times of Canada, Feb. 1, 1918, p. 8.J PUBLIC DEBT. First loan. S l e o c a o n n . d Third loan. F l o o u a r n t . h Net debt of the Commonwealth: June 30, 1914 £19,182, 333 Number of applications: June 30, 1917 169,177, 767 Inscribed stock 8,603 12,450 13,660 13,657 Sept 30, 1917 177. 385, 855 Treasury bonds 10,145 16,495 88,382 53,303 Dec. 31,1917 200, 501, 018 Total 18,748 28,945 102,042 66,690 Amounts allotted: War debt. ' Inscribed stock £9,581,120 £16,271,710 £15,417,650 £14,565,190 Treasury bonds 3,808,320 5,383,970 8,169,770 7,011,880 A. Internal war loans, all at par, bearing 4J Total 13,389,4-10 21,655,680 23,587,420 21,577,070 per cent interest: First loan, issued in August, 1915 £13, 389,440 Accrued interest 221,502 321,170 326,881 254,778 Second loan, issued in February, 1916... 21, 655, 680 Expenses of flotation... 34,659 50,382 50,688 45,900 Third loan, issued in September, 1916... 23,587,420 Total deductions. 256,161 374,552 377,569 300,678 Fourth loan, issued in April, 1917 21, 577,070 Fifth loan, issued in November, 1917 .... 20,281,160 Net proceeds of loans...13,389,440 21,281,128 23,209,851 21,276,392 Sixth loan, issued in February, 1918 240,000,000 Total 140,490, 770 FIDUCIARY CIRCULATION. B. War savings certificates, to December, 1917 2, 719,474 [Sources: Official Year Book of the Commonwealth of Australia, 1901- War savings certificates, December, 1917- 1915, pp. 773 and 739; Monthly Summary of Australian Statistics, Bulle- • Apr. 1, 1918 (estimated) 2,500,000 tin No. 68, August, 1917, p. 29; Australasian Insurance and Banking C. War advances by British Government to Record, November and December, 1917, and January and February, June 30, 1917 247, 774,269 1918; Commonwealth of Australia Gazette, January 2,1918.1 Australian notes made their first appearance Total 193,484.513 in December, 1910. The Australian notes act Australian war expenditure to December 31, 1917, of 1910 authorized the Commonwealth Treasamounted to $149,896,128. The charges against revenue urer to issue notes which were to be legal tender and against loans were distributed as follows: throughout the Commonwealth and redeemable at the seat of the Federal Government. These Against Against Year or period. revenue. loans. Total. notes were to be issued in denominations of 10 shillings,£l,£5,£10,£20,£50,and£100. The 1914-1915 £540,217 £14,471,118 £15,011,335 1915-1916 3,778,378 37,423,568 41,201,946 act prohibited issuance of notes by any State 1916-1917 8,406,970 53,099,841 61,506,811 Half-year ended Dec. 30,1917.. 4,850,286 27,325,750 32,176,036 six months after the date of its enforcement and Total 17,575,851 132,320,277 149,896,128 on the same date all such notes ceased to be legal tender a tax of 10 per cent was placed on In his budget speech of August 8, 1917, the all bank notes issued or reissued by any bank Commonwealth treasurer, Sir John Forrest, in the Commonwealth and not redeemed. estimated the total Australian expenditure for The act also directed the Treasurer to hold the four years ending June 30, 1918, at £214,as a reserve against notes gold coin, with the 880,673; of which £25,834,916 will have to following stipulations: (1) Not less than 25 be charged against revenue and £189,045,757 per cent of gold coin against notes issued up to against loans.3 On December 31, 1917, the seven million pounds and (2) 100 per cent re- Commonwealth debt stood at £200,501,018. serve of gold coin against any amount in ex- Further details as* to the Australian war cess of seven million pounds. In 1911 an loans arc given in the table below: amendment was passed, altering the percentages in force and requiring a flat rate of 25 per i Preliminary figures; no details available. a As reported in Budget speech of Sir John Forrest, on Aug. 8, 1917; cent of gold coin against all issues. The latcf. London Economist, Oct. 6,1917, p. 497. ter regulation was to go into effect July 1, 3 From London Economist, Jan. 12,1918, p. 49, and Oct. 6,1917, p. 497. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1,1918. FEDERAL RESERVE BULLETIN, 273 1912, but the Treasurer deemed it wise to total increase of the public debt between 1913 defer putting it into operation until after the and 1916. Since 1910 the absolute increase in elections of 1913. the public debt was £53,793,935 and to this The elections of 1913 resulted in a change of sum the last three financial years contributed administration and the new Treasurer, Sir 62.9 per cent. The subjoined table shows the John Forrest, announced that he would retain development of the debt from 1910 to 1917: the gold reserve at the rate provided in the original act. This condition was maintained [Source: Statistics of New Zealand, 1915, p. 144; New Zealand official yearbook, 1916, p. 594.] until September, 1914, when a change of policy was necessitated by the progress of events Interest occasioned by the war. On December 24, Net debt. charge. 1912, the ratio of gold coin to notes issued Mar. 31: was 44.6 per cent; on December 27, 1913, it 1910 £71,778,580 £2,282,182 1911 77,688,396 2,381,000 was 45.22 per cent; and by December 30, 1914, 1912 82,193,310 2,446,493 1913 i 87,457,121 2,506,025 it had fallen to 40.27 per cent. Since then the 1914 91,689,835 2,649,786 1915 ! 96,644,455 2,788,513 ratio has declined still further, reaching about 1916 ! 105,957,433 2,888,533 1917 125,572,515 36 per cent on January 30, 1918. In 1911 a Commonwealth Bank was estab- On the total gross debt outstanding on March lished. It has no power to issue notes but 31, 1916, the following rates of interest were aside from this prohibition it possesses all the paid: characteristics of other central State banks. The following table gives the average 6 per cent on £5,500 amount of Australian notes held by the banks 5 per cent on 2,682,500 4J per cent on 5,257,548 and the public since August, 1914: 4J per cent on 52,100 4 per cent on 59,173, 595 Held by Held by Total note the banks. the public. issues. 3| per cent on 3,459,866 3£ per cent on 29,260,058 1914 (August to December) £7,743,210 £6,589,798 £14,333,008 3 per cent on 9,746,230 1915 (average for year) 22,420,558 9,416,292 31,836,850 1916 (average for year) 30,902,866 13,481,173 44,384,039 1917 (actual December 26,1917). 47,901,269 Total 109,637,397 Increasing proportions of the new loans were NEW ZEALAND. placed in the domestic market, as may be seen PUBLIC DEBT. from the following table, showing amounts During the financial year 1917 the increase raised in the London, Australian, and New in the net debt of New Zealand equaled the Zealand markets: Markets for the New Zealand public loans. Inscribed stock. Debentures. Percentage of total Total gross gross debt London. Ze N al e a w nd. London. Australia. Ze N al e a w nd. debt. rai N se e d w in Zealand. 1910 £50,954,744 £410,124 £6,778,914 £4,113,985 £12,632,878 £74,890,645 17.4 1913 59,484,214 475,891 9,445,250 4,213,985 16,441,423 90,060,763 18.7 1914 65,600,259 475,991 13,024,050 4,286,800 16,343,327 99,730,427 16.8 1915 67,532,398 475,991 8,877,603 3,979,000 19,194,918 100,059,910 19.6 1916 68,213,639 475,991 13,251,109 3,520,650 24,176,008 109,637,397 22.4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

274 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. FIDUCIARY CIRCULATION. FRANCE. [Source: Monthly Statistics of New Zealand.] [Sources: Journal OfTieiel de la Ilepublique frangaisc; Le Rentier, Feb. Average amounts of bank notes in circulation. 7,1918; Bulletin de Statistique et de Legislation Comparee, Decem- 1913 <£1, 674, 333 ber, 1917; L'Economiste European, Feb. 1,1918.] 1914 1,998,386 In his Expos6 des Motifs on the occasion of 1915 2, 846,277 1916 4,049, 527 presenting the budget for 1918, M. Klotz, the March quarter, 1917 4, 637,451 French minister of finance, estimated ordinary June quarter, 1917 4,890, 803 expenses for the year at 7,808,907,439 francs September quarter, 1917 5, 650,880 and receipts at 6,542,513,930 francs, leaving a UNION OF SOUTH AFRICA. deficit of 1,266,393,509 francs. To offset this [Sources: Statistical Yearbook of the Union of South Africa, 1914-15, impending deficit, the adoption of certain tax p. 232; Statesman's Yearbook, 1917, p. 218.] measures was urged, designed to yield 1,226.5 Between 1910, when the union between Cape million francs in 1918 and 1,774 millions of Good Hope, Natal, the Transvaal, and annually thereafter. The total revenue re- Orange River Colony was effected, and March ceipts from the beginning of the war to Septem- 31, 1916, the common debt of the Union in- ber 30, 1917, were stated as 13,816 million creased 41.9 per cent and interest charges francs, compared with an estimate of 1.4,967 thereon 46.6 per cent. Increases for the year millions for a normal period of the same dura- 1915-16 constituted by far the larger share of tion—a decline of 7.69 per cent. During the the total increase for the entire period, as may last five months of 1914 the loss was 38.6 per be seen from the following table: cent: in 1915 revenue receipts fell off about 19 per cent; in 1916 the rate of decline was 3.46 Public debt. I per cent; and for the three quarters ending September 30, 1917, there was an increase of Mar. 31, 1911 £106,291,534 £4,256,172 ! 19.79 per cent. Mar. 31, 1914 118,987,625 4,770,291 Mar. 31, 1915. 122,319,705 4,848,437 The following table indicates the amount of Mar. 31, 1916 150,832,743 6,239,389 credits granted by the chambers or asked by The expenditures out of the loan funds for the Government since the beginning of the war war services during 1914-15 and 1915-16 was and the uses to which the funds were assigned. £9,258,959 and £10,970,186, respectively. For j Of the total credits to the end of 1917, 82.9 the year 1916-17 a deficit of £536,821 was fore- per cent was used to defray the expenses of seen, the revenue b 3ing estimated at £ 18,726,58 0 war, 9.7 per cent to cover the debt service, and and expenditures at £19,263,401. 7.4 per cent for other purposes: TABLE I.—Credits voted or ashed for 1914 to 1918. All other pur- War purposes. Debt service. Total. Francs. Francs. Francs. Francs. August, 1914, to Deo. 31,1914. 6,400,925,761 59,620,763 128,881,725 6,589,434,249 Calendar year 1915 18,455,406,750 1,899,393,673 2,449,686,102 22,804,486,525 Calendar year 191(5 27,191,308,985 3,333,015,879 2,371,725,031 32,896,049,895 Calendar year 1917 34,471,588,701 4,863,384,400 2,786,895,430 42,121,868,531 Total 86,519,230,197 10,155,420,715 7,737,188,288 104,411,839,200 Estimate for 1918. 4,899,042,759 2,909,864,680 ! 7,808,907,439 Grand total.. 86,519,230,197 15,054,463,474 10,647,052,968 | 112,220,746,639 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN". 275 TABLE II.—Receipts. Floating debt. Sho d r e t- b t t e . rm Perpetual debt. Advances. Tota lo l a in n t s e . rior Foreign loans. B r u e d ce g i e p t t a s r . y Total receipts. Francs. Francs. Francs. Francs. Francs. Francs. Francs. Francs. 1915 5,331,573,000 384,445,000 10,967,000,000 1,175,000,000 17,858,018,000 1,462,055,000 3,770,516,000 23,091,089,000 1916 5,643,787,000 299,632,000 10,786,536,000 2,450,000,000 18.580.691.000 6,287,078,000 4,640,811,000 29,508,580,000 1917 (10 months) 9,400,459,000 414,549,000 '262,12i;000 4,755,000,000 14; 832', 129', 000 9,360,070,000 4,526,905,000 28,719,104,000 Total I 20,375,819,000 i499,362,000 22,015,657,000 j 8,380,000,000 i 51,270,838,000 | 17,109,703,000 12,938,232,000 j 81,318,773,000 ! Up to the OK] of 1917, the total receipts According to the report of the budget comfrom advances a<ul loa^s were as follows: mittee, the expenses of war from its inception Francs. to December 31, 1917, totaled 106,519,144,979 Advances of the Bank of France 12, 500,000,000 francs, of which sum 85,545,153,000 francs Advances of the Bank of Algeria 85, 000, 000 were used for military and other purposes occa- National defense treasury bills (to Nov. 15). 22, 966,157,100 sioned by the war. The details run as follows: National defense short-term bonds 294, 798, 000 5 per cent loan of 1915 11, 719, 504, 714 Expenses of war: Francs. 5 per cent loan of 1916 10, 074, 674,156 («) Military 76,000,000, 000 5 per cent loan of 1917 5, 221, 405, 462 (b) Assistance to families affected by 4 per cent loan of 1917 at 68$ (not redeem- mobilization orders 7, 730, 000, 000 able until 1943) 10, 276, 522, 000 (c) Aid to orphans 30, 000,000 Total 83,134, 061,432 (d) Assistance to invaded departments 10,000,000 (e) Urgent relief 128, 000, 000 The total rational debt was estimated by M. (/) Assistance to refugees 919,982, 000 Klotz at 115,166,058,269 francs on December (g) Rehabilitation of invaded regions.. 467,535,000 31, 1917, as compared with 34,188,147,969 Reconstruction of francs on July 31, 1914. Of the former | landed property. .. 267, 400,000 amount, 18.3 per cent was held abroad, Dur- j Reconstruction of industrial property. 100,075,000 ing the same period debt charges rose 355.7 j Reconstruction of per cent, as against an increase in the capital agricultural propamounts of the debt of 236.9 per cent. De- erty 100,060,000 tails of the debt on the two dates are given as (h) Repair of harbors and construction follows: of means of communication 329, 386, 000 (i) Cultivation of abandoned areas 30, 000, 000 July 31, 1914. (j) Credits opened for reparation for damages incurred through the Capital Annual debt j 900, 000, 000 amount. charges. | A. Domestic: ! Francs. Franc*. \ Total 86, 545,153, 000 Funded 32,579,362,769 1,020.483,406 ' Extraordinary expenses of the civil serv- Floating— I interest bearing 1,394.584,900 17,131,500 | ice ... 672, 881, 727 Xonuiterest bearing 2Vi, 200,300 B. F F o u r n e d ig e n d : Total expenses of war 87, 218,034, 727 Floating Public debt service 10, 699, 831,149 Total 3-1,18S. 147,9B9 i 1,037.614,90(5 Ordinary expenses of the civil service 8, 601, 278, 212 Dec. 31, 1917. ; Grand total 106, 519,144, 979 Capital Annual debt Average monthly expenses rose from 1,318 amount. : charges. million francs in the last five months of 1914 to A. Domestic: Francs. • Francs. Funded : 56,451, 725,669 , . 2,285,549,531 1,900 millions in 1915 and 2-,743 millions in Floating— I Interest bearing j 37,19J, 865.600 : 1,329,867,200 1916. For the ten mouths ending September Xomnterest bearing ; 439; 050,700 ; 1$. Foreign: i 30, 1917, the average rose to 3,360 million "Funded ' 9.914.200.000 451,237.000 Floating li\ 166;2101300 ; 658,604.200 • francs, or to two and one-half times the average Total 115,166,058,269 | 4,725.257,9 ! monthly expense incurred in 1914. 49(515—18 5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

276 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. BANK NOTE CIRCULATION. of 17,303,102,655 francs, or 286.2 per cent. On July 30, 1914 the amount of notes of the The growth of the fiduciary circulation and the ; Bank of France in circulation amounted to ratio of the metallic reserve to combine deposit 6,683,184,785 francs and on February 21, 1918, and note liabilities during the war period is seen it reached 23,986,287,440 francs—an increase from the following table: Ratio of Metallic I reserve to Notes in reserve I combined circulation. Deposits. in vaults | note and of bank. ; deposit I liabilities. _L Francs. Francs. Francs. Per cent. Dec. 24, 1913. 5,713,551,290 978,683,642 157,454,630 62.12 July 30, 1914 6,683,184,785 1,330,133,678 766.674,306 59.48 Dec. 24, 1914. 10,042.899,720 3,101,063,014 514', 412,872 34.35 Dec. 30, 1915. 13,309:850,045 2,287,728,887 367,375,464 | 34.41 Dec. 28, 1916. 16,678,817,915 2,275,232,984 677,696,015 | 19.40 Dec. 27, 1917. 22,336,798,710 3,114,325,199 562,073,569 ! 13.97 Mar. 7,1918., 24,650,026,960 2,659,791,658 588,477,815 " 13.27 According to the report of the Banque de Li a review of war finance operations pub- France for 1917, about two and one-half lished, in the official Viostnik. Finansov, the war billions of francs of its cash reserves were expenses are given as follows: exported in 1915 and 1916, whereas in 1917 Rubles. this sum reached only 450 million francs, of Aug. 1, 1914, to Dec. 31, 1914 2. 546, 000, 000 which 20 millions were shipped to neutral Calendar year 1915 9, 374, 900, 000 Calendar year 1916 15, 267, 000,000 countries, the remainder representing gold Jan. 1, 1917, to Sept. 1, 1917 14, 204 815, 000 loaned to the British Treasury in accordance : with the articles of agreement entered into by Total Aug. 1, 1914, to Sept, 1, 1917. 41, 392, 715, 000 both Governments. Special credit arrange- Total war expenditures to the end of 1917 are ments since the entrance of the United States estimated at 51,470,700,000 rubles. In 1914 into the conflict necessitated no further outflow the receipts were 2,898 million rubles; in of gold to that country. During the year the 1915 they declined to 2,828 millions (the gold reserves of the Bank of France increased | deficit occasioned by the "vodka" monopoly by 288,000,000 francs, bringing the total | being greatly offset by receipts from new taxes); amount of gold secured from the public since and in 1916 State revenues exceeded pre-war the beginning of the war to 2,227,000,000 francs. proportions, reaching 3,975 million rubles as RUSSIA. I the result of new tax measures. [Sources: L'Economisto Europeen, Dec. 14, 1917; Le Rentier, Oct. 17, | The Viestnik Finansov (No. 39, Oct. 14, , 1917; Viostnik Finansov, No. 39, Oct. 14, 1917; Torgovo-Promyshlennaya Gazeta, Sept. 25,1917.] 1917) states that on September 1, 1917, there War loans. were outstanding foreign loans to the extent [Statesman's Yearbook for 1917, introduction.] of 8,461 million rubles (nominal) and short- Equiv- Millions alent in term obligations to the amount of 16,918,of pounds sterling. millions 700,000 rubles (nominal). If to these items of dollars. are added 2,611,600,000 rubles, representing o per cent State Joan of 1011. issued November, 1914, at 95 . ..../ 43 209.3 balances of the three budget years 1914-1917, First 5 per cent loan of 1915, issued March, 1915, at 94 ...... .. . . 43 209.3 and the internal war loans, 11,408,200,000 Second loan of 1915, at oj- per cent, issued May, 1915, at 99 . 86 418.5 rubles, the total war debt at that date was Short-term loan or 1915, at 5.\ per cent, issued December, 1915, at 95 ". 86 418.5 39,399,500,000 rubles. First war loan of 1916. at 5.1, per cent, issued March, 1916, at 95 212 1,031.7 The progress of the national debt is indicated Second war loan of 1916, at 5£ per cent, issued December, 1916, at 95 319 1,552.4 in the subjoined table. In the eight months Total.... .... 789 3,839.7 Liberty loan of 1917 2,035.5 ending August 31, 1917, it almost doubled, Grand total 5.875.2 due largely to the enormous increase in ex- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 277 pcnditures and increasing depreciation of the lire on December 31, 1917, an increase of 139.10 currency: per cent, while interest charges on the debt Rubles. rose from 494,244,020 lire to 1,465,284,043 Jan. 1, 1914 9, 888, 309, 698 lire, representing an increase of 196.5 per cent. Jan. 1, 1915 10,473, 572,000 The following table exhibits the growth of net Jan. I, 1916 18,876,731,000 indebtedness and interest charges since 1914: Jan. 1, 1917 25, 220, 937,000 Sept. 1, 1.917 x 49, 287, 809, 698 The note circulation and advances of the Amount of Interest on public debt. public debt. State Bank to the Russian Government on various dates are outlined in the following Lire. Lire. table: June 30, 1914 14,466,870.162 494,244,020 June 30, 1915 16.368,717; 302 549,991,184 Russian State Bank. June 30, 1916 22', 065; 232.424 871.293,455 June 30, 1917 29.961,030; 959 1,274; 094,459 Dec. 31, 1917. 34 .'590,163,814 1,465,284,043 [In thousands of dollars.] Details of the public debt on December 31, Ratio of metallic 1917, are given below, including interest rates: Bank Advances reserves notes in to the Metallic to comcircula- Deposits. Govern- reserves. bined tion. ment. note and deposit Amount of Amount of liabilities. debt. interest. Doc. 16-29,1913. 859.293 600,237 : 812,788 55.7 I. FUNDED DEBT. D D e e c c . . : 1 ! 6 6 - - 2 2 8 0 , , 1 19 9 1 1 5 4 . . 2 1 ' , , 47 7 - 3 * 1 ; , 8 8 8 7 0 9 5 7 0 6 0 0 , , 1 2 7 5 7 3 ; : l,6 2 7 5 0 5 ! . 9 7 5 2 9 0 8 84 2 8 4 ; . 9 8 7 0 4 2 - 2 U 4 . . 7 3 A. "Consolidated" (perpetual) debt: Lire. Lire. O De c c t . . 1 1 6 6 - - 2 2 9 9 , , 1 1 9 9 1 1 7 6 . . 4 V ,4 6 2 ; 4 5 .5 1 1 6 2 |1 1 , , 7 2 8 1 0 6 , , 0 8 8 5 8 2 17 3 , , 8 3 3 0 9 5 , , 0 0 8 3 9 6 7 8 5 17 8 . ; 4 7 8 9 5 8 1 G 4. . 5 8 R R R c e e n n n t t t o e e s s s a a a t t t 3 3 3 J 1 p - p e p e r e r c r c e e n e n e t. r t . / i ( t . e . x. 3J) 8,0 9 1 4 9 8 3 7 0 ', , . 7 0 4 2 7 5 4 0 5 . ; , 4 8 8 3 0 6 8 6 3 i | ' • 28 3 3 3 4 , , 4 0 ,8 2 2 0 0 1 2 , , 3 3 ,1 5 0 2 5 3 6 Rentes at 4% per cent. 721447; 81.3 I 32,451,653 3 Exclusive of S6f>S,?-7-J ,000 advanced to the Treasury account food- Rentes at 5 "per cent.. 7,153,894,600 I 357:694,730 distribution vserv ice. Total consolidated, debt 17,076,303,550 711,390,167 ITALY. B. Redeemable obligations: 3 per cent and 31"'per cent, maturing INTERNAL WAR LOANS. in 1930 ' .'. 467,3-10,000 14,725,700 41 per cent and 5 per cent, maturing in 1940 .'. 1,504,147,300 73,958,652 [Sources: JJankvcrein Snisso Bulletin, February, 1917; Statesman's Yearbook", 1917, introduction.] 1,971,487,300 88,684,352 Millions of lire. C. Permanent annuity to Holy See: Loans for military preparation, issued Jan. 4—11, 3 per cent and 3/ per cent.' 64,500,000 3,225,000 I). Debts separately inscribed: 11915, redeemable between 1925 and 1940, sold (a) 3 per cent to 5 per cent, redeem- ' at 97, yielding 4 J per cent interest 1, 000 able, 1917 to 1961 173,853,000 ,0,524,670 (6) Perpetual (feudal) 3 per cent 465,446 13,983 First Avar loan of 4-J per cent, issued July 1-1.8, E. Various debts: (a) 3 per cent to 5 per cent, redeem- 19J 5. at 93 and 95, redeemable 1925-1940 1,146 able in 1934 to 1985, 1,269,322,100 42.205,593 Second war loan of 5 per cent, issued Jan. 10-Mar. (b) 3 per cent to 5 per cent, perpetual. 63,713,554 2;726,389 1, 1916, at 97J, redeemable 1926-1941 3, 014 Total funded debt 20,619645,919 854,770,135 Third war loan of 5 per cent, issued Feb. 5--25,1917, IJ. FLOATING I)j-:«T. at 90 (rente). not redeemable till 1931 3, 512 Long-term treasury bonds at 3£- per cent.. 17,125,000 j 599,375 Fourth war loan of 5 per cent, issued February, Three and five-vear bonds 3,238,180,600 : 156,461,790 1918. at 86.5 (consols) 2 5, 000I ! C Sp re e d c i i t a s l o tr p e e a n s e u d ry 'b y b o U nd n s i te p d la c S e t d a te a s b rr 'T o r a e d as .. - . 6,548,746,600 j 300.967,196 2,590,000,000 103.276.250 Total 13,672 Miscellaneous : 1,576,456,665 49; 209', 207 Total floating debt ' 13,970,508,865 j 610,513,908 PUBLIC DEBT. Total public debt ! 34,590,163,814 j 1,465,284,043 [Sources: Anniiario StatisticoItaliano, Anno 1915, p. 340; Gazcta UfGcialc del Regno D'lialia, September, 1917, and January, 1918.] | Over one-third of Italy's public debt is The public debt of Italy rose from 14,466,-! unfunded, the growth of the floating debt for 870,162 lire on June 30, 1914, to 34,590,163,814 the six months ending December 31, 1917, being almost 4 billions of lire. 1 This figure was arrived at by adding the total war debt to Sept. 1, In presenting the budget for 1918-19, the 1917, to the debt on Jan. 1, 1914. minister of finance, Sig. Nitti, stated that all 2 Preliminary figures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

278 FEDERAL RESERVE BULLETIN. APRIL 1. 1918. expectations pointed to an increase in State j On November 10, 1917, the total advances receipts by 705 million lire and an increase ! made by the three banks of issue to the State of ordinary expenditures of 1,017 millions., 3 as follows: Bank of Italy, 2,996,428,529 Between November 1, 1916, and October 31, ; Bank of Naples, 901,848,482 lire; and 1917, expenditures totaled 15,722 million lire.1 Bank of Sicily, 211,944,443—a total of 3,110,221,554 lire. FIDUCIARY CIRCULATION. On November 10, 1917, the Gazetta Ufficiale UNITED STATES. de Regno D'Xtalia (Jan. 7, 1918) reports the total amount of bank notes in circulation as PUBLIC DEBT. 7,673,642, 300 lire, distributed among the three banks of issue as follows: 5,985,872,250 lire Between March 31, 1917, when the first 50 issued by the Bank of Italy; 1,413,103,400 lire million dollars of 2 per cent certificates of issued by the Bank of Naples, and 274,666,650 indebtedness were sold to the Federal Reserve issued by the Bank of Sicily. Against these Banks, and March 28, 1918, the gross war debt notes in circulation there was a reserve cover, of the United States has increased by approxipartly of gold, of 23.2 per cent, 22.4 per cent, mately 9,121 millions of dollars. This debt is arid 20.5 per cent, respectively. On December made up as follows: 31, 1917, the circulation of the Bank of Italy 1. First 3£ per cent Liberty Loan, dated had risen to 6,539.200,000 lire, secured by 21.5 June 15, 1917, maturing June 15, per cent of total reserve, including 12.8 per 1947, redeemable on or after June 15, cent of gold, as against an outstanding note 1932 $1,986, 774, 655 circulation of 3,040,175,850 lire on December 2. Second 4 per cent Liberty Loan, dated 31, 1915, secured by 43.8 per cent of total Nov. 15, 1917, maturing Nov. 15, reserve, including 35.4 per cent of gold. There 1942, redeemable on or after Nov. 15, 1927 3,807,551, 806 were also treasury notes issued to the extent 3. Treasury certificates of indebtedness: of 1,684 million lire on November 30, 1917, At 4 per cent, dated Jan. 22, 1918, covered by 167 million lire of me Gallic reserve. payable Apr. 22, 1918 400,000,000 The annual reports of the Bank of Italy At 4 per cent, dated Feb. 8, 1918, segregate the total amount of notes issued to payable Mar. 9, 1918 500,000,000 At 4$ per cent, dated Feb. 27, 1918, satisfy commercial needs and amounts issued payable Mar. 28, 1918 500,000,000 on account of the State. The following At 4J per cent, dated Mar. 20, 1918, table 'gives the total classified note circula- payable June 18, 1918 543,032, 500 tion of the three banks of issue at the close In anticipation of income and other of calendar years, and the like circulation of taxes: At 4 per cent, dated Nov. 30, 1917, Bank of Italy notes, in millions of lire: payable June 25 691, 872,000 At 4 per cent, dated Jan. 2, 1918, Total bank note circulation.! Xote circul I»t a i 1°y n of Bank of payable June 25 491, 822, 500 At 4 per cent, dated Feb. 15, 1918, For For ! For payable June 25 74,100, 000 ne c e o d m s - o f G ne o e v ds e r o n f - Tlooltaa lI . II nc c o o d m s _Of n G e o e v d e s r n o - f Total. 4. War Savings and Thrift Stamps 126, 318, 678 rnorce. I merit. ! merce. ment. Comparative figures of the total public Dec. 31,1914.. 2,201.1 734.9 i 2,936.0 1,643.8 518.7 2.162.3 debt of the United States under date of March Dec. 31,1915.. 1, 898.6 2,069.5 i 3,968.1 1,431.6 1.608 6 3'. 010.2 Dec. 31,1916.. 2,458.0 ' 2,555.0 I 5,013.0 2,0!o.O 1', 830. 7 3,876.7 31, 1917, and January 31, 1918, the date Nov. 30, 1917. 2,997.0 i 5,122.0 ! 8,119.0 i 2,560.0 3, 778.0 6,338.0 Dec. 31,1917 j ! i 2.212.1 •1,32*7.1 j 6;539.2 of the latest public-debt statement, are as f ollows: 1 London Economist, Jan. 19, 1918, pp. 85-80. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

279 AI»RII. 1, 1918. FEDERAL RESERVE BULLETIN". Source: Financial statement of tho United States Government, Mar. 31, taxation of 3.9 billions, we may estimate that 1917, and Ian. 31, 1918.1 of the total net expenditures of the United States for the fiscal year 1918, exclusive of r. 3'J, 1917. i Jan. 31, 1918. advances to Allied Governments, more than A. Debt bearing no interest -S257,227,466 ' 8238,019,016 50 per cent will he defrayed by taxation. B. Debt on which interest, has ceased '• since maturity ." 1,459.630 •; 1,639,200 C. Interest-bearing debt: NATIONAL BANK NOTE AND FEDERAL RESERVE NOTE 2 per cent consols of 1930, payable CIRCULATIO N, 1914-1918. after Apr. 1, 1930 ." 600,288,850 j 599,724,050 3 per cent loan of 1908-1918, redeemable after Aug. 1, 1908, and j The outbreak of the European war caused payable Aug. 1,1918 63,9-15,400 ; 63,945,460 4 per cent loan of 1925, payable the issue by the national banks of "emergency" after Feb. 1,1925 '..'. 118,489,900 ! 118,489,900 2 per cent Panama Canal loan, currency, secured by miscellaneous securities series 1906, redeemable after Aug. 1, 1915, and payable A.ug. other than United States bonds under the 1, 1936 •..". 49.817,480 j 48,954,180 2 per cenf: Panama Canal loan, authority of the Aldrich-Vreoland Act of May s X e o ri v e . s 1, 1 1 9 9 0 1 8 8 , , a r n e d d e p e a m y a a b b l l e e N af o i: v e . r ! 30, 1908. During the week ending August 1, 1938 ". 20,178,600 ! 25,947,400 3 per cent Panama Canal loan, 8, 1914. over 8100,000,000 of this currency was series 1911, payable June 1,1861.. 50,000,000 I 50,000,000 3 per cent conversion bonds, pav- put into circulation, and by the end of August able 1946-47 "..'. . 25,057.200 ! 28.894,500 3 per cent 1-year Treasury notes... 23)o40)000 j 27)362,000 this amount was more thai? doubled. On Certificates "of indebtedness Tat 3 per cent and 3£ per cent on Juno October 24,1914, the maximum of 8368,616,990 30, 1917, and at 4 per cent on Jan. 31, 1918) 50,000,000 1,383,873,000 was reached. Retirement of these notes was First Liberty loan of 1917, at 31 per cent, redeemable after June completed by June 30, 1915. 15,1932, and payable June 15,1947. 1,986,771,655 Second Liberty loan of 191.7, at •! Simultaneously with the issue of emergency per cent, redeemable after Z\ ov. 15,1927, and payable Nov. 15,1942. 3,806,493,790 currency clearing-house certificates were used 2\ per cent Postal Savings bonds, redeemable 1 yea'1 after date of to the extent of $211,778,000. The date of issue, and redeemable 20 years thereafter " 9?151,800 10,758,560 first issue was August 3; and the last cancel- 21 per cent Postal Savings bonds, "redeemable after Tan. 1, 1918. lation took place on December 14, 1914. The and payable Jan. 1, 1937.'. 887,960 302,140 War Savings and Thrift Stamps... 4't, 802,191 actual circulation of national-bank notes is Total interest-bearing debi 1.023.357.250 I 8,196,3?1.S26 given below for various "call" dates - i. e., Total gross debt O28L\0-;t',34f) , 8,435.980; 042 Total net debt 1,207'. 827.886 ; 7, 758', 070") 696amounts of notes issued by the Comptroller of the Currency, less amounts held by the Of the total war loans realized to the middle national banks: of March, 1913, credits opened to the Allied 1000 omitted.] Governments totaled §4,960,600,000, while actual advances made to the Allies aggregated Central Other . reserve reserve Country $4,506,829,750, distributed as follows: 1 city city "banks." Total. i banks. banks. : Commitments Actual I Pec. 31,1913 • 876,978 jS163,9o9 S488,142 8727,079 ! on Mar. 18, advances to ct. 31.'J9J.4 203.578 ! 273,578 511,038 1,018,194 | 191.8. Mar. 18, 1918. Dec. 31,1914 S7',S44 i 222.655 538,308 848,807 Nov. 10.1915 Cvi',S34 ; 172)078 177)754 713,466 D...e.vc., 27/,1^91,6+, -lo'.977 i 153,987 463,445 665,409 Great iJritain ! S2,520,000,000 82,390.000,000 I Dec. 31,1917 : 49'. 4^8 i 161,389 453.117 674,254 France i 1,440,000,000 1,370)000,000 i : Italy 550,000,000 470,000,000 1 " " •" " -- " : Russia.. 825,000,0(50 187.720,750 ' Belgium 104,600,000 i 84'. 900,000 j Federal Reserve notes began to be issued Serbia.. 6.000,000 ! -J-)200',000 Cuba... 15)000,000 i immediately after the new banks began opera- Total ; 4,960,000,000 ! 4,506,820,750 tions. These issues, moderate during the first two years of the banks' existence, assumed Assuming total payments to the Allies elur- ' larger proportions in 1917, as may be seen ing the current fiscal year of 5 billions, total jfrom the following table giving the actual disbursements of 12 billions, and receipts from !circulation of Federal Reserve notes and of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

280 FEDERAL RESERVE BULLETIN. APRIL 1,1918. total gold holdings of the system about the end Second loan issued February 27-March 15, 1915, of the calendar years 1914 to 1917 and — at 98J: on (1) 5 per cent treasury bills (no amount fixed) March 16 of the present year. not redeemable before October 1, 1924. [000 omitted.] (2) 5 per cent imperial loan, not redeemable 9,106 before October 1, 1924 Gold hold- R Fe e d se e r r v a e l in F gs e d o e f r a t l he Third loan issued September 4-22, 1915 at 99: notes Reserve 5 per cent imperial loan, not redeemable! 12,162 before October 1, 1924 J Fourth loan issued March 4-22, 1916: Dec. 31,1914. SIC.60S 8241,321 (1) 4J per cent treasury bills (no amount" Dec. 30, 1915 189)026 542,413 fixed), falling due on July 1, 1932, Dec. 29,1916. 275,353 736,236 Dec. 28, 1917 1,246,488 1,671,133 issued at 95 10, 767 Mar. 16,1918. 1,406,228 1,793,243 (2) 5 per cent imperial loan, falling due on October 1, 1924, issued at 98J GERMANY. Fifth loan issued September 4-October 5, 1916: Between August, 1914, and December, 1917, (1) 4$ per cent treasury bills (no amount] war credits, totaling 109 billion marks, were fixed), falling due between 1923 and] 1932, issued at 95 10, 699 voted by the Reichstag. (2) 5 per cent imperial loan, not redeemable [Economists Europe'en, Dec. 7,1917.] before October, 1924, issued at 98.... August, 1914 5 billion marks. Sixth loan issued March 15-April 16, 1917, at 98: December, 1914 5 billion marks. (1) 4-J per cent bond, redeemable in drawings' March, 1915 10 billion marks. at 110 to 120, according to date of draw- August, 1915 10 billion marks. ing 12,979 December, 1915 10 billion marks. (2) 5 per cent imperial loan, not redeemable June, 1916 12 billion marks. before October, 1924 October, 1916 12 billion marks. Seventh loan issued September 19-October 18, February, 1917 15 billion marks. 1917, at 98: July, 1917 15 billion marks. (1) 4J per cent bond, redeemable in drawings December, 1917 15 billion marks. at 110 to 120, according to date of draw- Total 109 billion marks. ing 12,626 (2) 5 per cent imperial loan, not redeemable During the same interval seven war loans before October, 1924 were issued by the Imperial Government, aggregating approximately 73 billion marks, Total 1 72,819 distributed as follows: Below is given an analysis of the subscrip- [Sources: Reports of Imperial Bank of Germany for 1915 and for 1916 tions to each of the seven German war loans. Berliner Tagcblalt, Dec. 23, 1917; Frankfurter Zeitung, Sept. 6, 1917 and London Economist, May 19, 1917.] It will be observed that the ratio which the [In millions of marks.] larger subscriptions bear to the total amounts First loan issued September 10-19, 1914, at 97J: subscribed has been increasing while the ratio (1) 5 per cent treasury bills falling due Octoof the smaller subscriptions has been deber 1, 1920 (2) 5 per cent imperial loan, not redeemable 4,480 clining. before October 1, 1924 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 281 [Millions of marks.] First loan. Second loan. Third loan. Fourth loan. Fifth loan. Sixth loan.i Subscriptions. IS P I Up to 200 marks 231,112 36 452,113 71 984,35S 130 2,406,118 201 1,794,084 154 300 to 500 marks I 241, 804 111 581,470 254 858,259 369 967,929 407 681,027 293 6 1, 0 1 0 00 to to 1 , 2 0 , 0 0 0 0 m 0 m ark a s r ks I \ f - o4 , > , :5> ,, 1 . 4 , d 587 | 6 41 6 8 0 , , 8 7 6 7 1 6 6 7 0 3 4 3 9 5 1 3 8 0 , , 5 1 9 7 5 6 9 8 2 4 8 4 4 8 6 8 8 5 . , 7 9 2 4 4 1 7 7 9 9 4 2 3 6 0 0 1 5, , 5 8 9 6 4 3 5 5 2 5 0 2 I i 2,100 to 5,000 marks | 157,591 579; 361,459 1,354 422,626 1,563 347.725 1,247 245,873 911 I 5,100 to 10,000 marks \ 56,438 450 ! 130,903 1,057 147,593 1.202 113,927 907 93,189 763 ! 10,100 to 20,000 marks 19,913 307 : 46,105 745 53,445 '858 42,158 666 40,571 651 I 20,100 to 50,000 marks ! 11,584 410 i 26,407 926 32,840 1,167 30,361 ; 980 28,500 982 50,100 to 100,000 marks.... I 3,629 315 7,742 648 10,090 850 9,100 i 734 9,748 810 100,100 to 500,000 marks... 2,050 509 ; 4 361 1,066 7,074 1,766 6,308 i 1,531 7,870 1,710 500,100 to 1,000,000 marks. 361 287 ! 538 440 832 695 780 ! 641 i 1,032 853 Over 1,000,000 marks 210 325 1,162 530 1,729 574 : 1,812 j 725 2,448 Total 1,267,235 4,460 2,691,060 9,060 3,966,418 12,101 ! 5,279,645 I 10,712 | 3,809,976 10,6467,768,082 12,979 Further subscriptions : from battle field and for- • eign countries beyond ! the sea brought' the total to ! 9,106 12,162 i 10,767 i 10,699 j 12,979 evonth loan. First loan. ' Second loan, j Third loan, j Fourth loan. | Fifth loan. Sixth loan.i Seventh loan. Subscriptions. 11 g 1 J.. ! Par ci. Perct.\ Perct. Per ct.\ Perct. Perct. Perct. Perct. Perct. Perct. Perct A Perct. Perct. Per ct. Up to 200 marks 3.233,472 208 18.2 0.9 i 16.8 0.8 ' 24.8 j 1.1 45.5 1.9 47.1 1.4 61.9 1.6 300 to 500 marks '693,729 295 19.1 2.5 i 21.6 2.8 21.6 | 3.1 18.2 3.8 17.9 2.8 13.2 2.4 6 1 0 ,1 0 0 0 to t o 1, 0 2 0 ,0 0 0 0 m m ar a k r s k . s . . . 2 5 6 8 - 6 1 . , 6 8 2 7 3 1 5 4 3 6 1 1 1 42.9 13.1 1 \ /2 1 4 5 . . 5 6 8 6. . 7 1 i 2 1 3 3 . . 2 4; 7 7 . . 7 0 1 8 6 . . 9 7 7 7 . . 4 4 1 7 5 . . 9 9 5 4 . . 2 9 1 5 1 . . 1 6 3 4 . . 7 3 2,100 to 5,000 marks. 23al542 868 12.4 13.0 13.4 14.9 10.7 12.9 6.6 11.6 6.5 8.5 4.5 7.0 5 1 , 0 1 , 0 10 0 0 t o to 1 2 0 0 ,0 ,0 0 0 0 0 m m a a rk rk s. s. 1 4 0 2 0 , , 7 7 3 8 2 1 8 6 1 9 8 7 4 1 . . 5 6 1 6 0 . . 7 1 4 1. . 7 9 1 8 1 . . 2 7 ! 3 1 . . 7 3 I 9 7 . . 9 1 2 1 . . 2 0 8 6. . 2 5 2 1 . . 4 1 6 7 . . 1 2 1.9 5 6 . . 6 6 20,100 to 50,000 marks. 33,914 1,189 .9 9.2 10.2 9.6 9.1 .7 9.2 9.5 50,100 to 100,000 1.0 marks 12,169 1,024 ! .3 I 7.2 7.2 .3 j 7.0 .2 6.9 .3 8.2 100,100 to 500,000 .3 marks 9,145 2,092 | .1 | 11.4 11.7 .2 ! 14.6 .1 ; 14.3 .2 16.1 16.8 500,100 to 1,000,000 .2 marks 1,363 ! 1.130 | 6.4 4.9 5.7 6.0 8,0 | 9.1 Over 1,000,000 marks. 1,032 | 3,145 | j 19.5 12.8 14.3 16.9 23.0 I 25.2 Total...: 5,213,373 ! 12,458 100.0 100.0 I 100.0 j 100.0 100.0 • 100.0 100.0 j 100.0 100.0 100.0 : 100.0 100.0 Further subscriptions from battle field and i foreign countries beyond the sea brought the total to. 12,626 1 Data not available. The London Economist (Feb. 23, 1918) bills). The debt on October 1, 1913, was 4,897 reports the total funded and unfunded war million marks, and if to this amount are added debt of the Empire as 84,981,720,000 marks 72,819 millions of internal loans, 29 billions repon September 30, 1917, at the following rates resenting estimated amount of the floating debt and 42 millions loans floated in the United of interest: 51,044,540,000 marks at 5 per cent; States, the total debt at the end of 1917 would 1,129,820,000 marks at 4 per cent; 1,971,020,000 be about 106,758 million marks.1 marks at 3| per cent; 1,630,980,000 marks at 3 per cent; 2,158,730,000 marks at 5 per cent 1 Cf. Statistisches Jahrbuch fur das deutsche Reich, 1915, p. 359, and speech by Sir Edward H. Holden, in Statist Feb. 2,1918. Inasmuch as (Treasury bonds); 4,028,980,000 marks at 4£ the debt was being gradually reduced before the war, the figure for October, 1913, may safely be taken as the maximum indebtedness on per cent; and 23,017,630,000 marks (Treasury July 31,1914. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

282 FEDEKAL RESERVE BULLETIN. APRIL 1, 1918. In the budget for 1918-19 the estimates of War-loan advances comprised 54 per cent of income and ordinary expenditures balance at the total in January, 47.6 per cent in February, 7,332 million marks, as compared with 4,941 and 33.7 per cent in March, 1916, after which million marks for the preceding financial }rear. a rise set in, the June percentage being 64.6. The chief cause for this increase is the rise in Lower percentages are shown for the later the debt charges. For 1918-19 it will amount months—war-loan advances in August falling to 5,907 million marks, whereas in 1917-18 it | to 46.4 per cent of the total; m October, to 37.7 was 3,561 million marks. The difference of per cent; and in December to 32 per cent. 1,625 million marks is expected to be met by Loan-bank notes put into circulation by the increased taxation.1 Reichsbank up to the end of 1916 were distributed as follows: 233.65 million marks in FIDUCIARY CIRCULATION. Before the war the Imperial Treasury had 1-mark denominations, 328.67 millions in 2issued a total of over 200 millions of its ownmark denominations, and 940.57 millions in notes, the so-called Reichskassenscheine. Dur- 5-mark denominations. Many of the Reichsing the war the authorized amount of these bank 20- and 50-mark notes were replaced by legal-tender notes was raised to 360 million loan-bank certificates. On December 30, 1916, marks, nearly all of which are in circulation. of the total amount of certificates in circula- On February 7, 1918, the Reichsbank notes in tion, 649.9 millions were in 20-mark denominacirculation amounted to 11,122 million marks. tions and 720.14 millions in 50-mark denomina- (London Economist, Feb. 23, 1918.) tions. In addition, there are in circulation certifi- As reported in the London Economist (Feb. cates of the war-loan banks, the so-called 16, 1918), operations of the loan banks during Darlehnskassenscheine. The total issued by 1918 were as follows: December 31, 1914, according to the Statis- [In millions of marks.] tisches Jahrbuch fur das deutsche Reich (1915 edition, p. 295), was 1,317 million marks, I Dec. I Jan. Jan. Jan. Feb. I31,1917.i 7,1918. 15,1918.|31,1918. 7,1918. of which 445.8 millions were in actual circulation and the remainder in the vaults of the ! In Reichsbank ! 1,304 ! 1,338 1,256 ! 1,252 1,236 Treasury note cover 120 ! 120 120 I 120 120 Reichsbank. At the end of 1915 the total In circulation 6,260 6,196 6,114 ! 6,288 6,306 actual circulation of these certificates in 20-, 5-, Loans outstanding I 7,690 . 7,654 7,490 I 7,660 I 7,662 2-, and 1-mark denominations is shown in the Some idea of the progressive expansion of 1915 Reichsbank report as 972.2 millions, while note circulation in Germany during the most the amount of certificates held by the Reichsrecent period may be had from the following bank on that date was 1,254.8 million marks. | table showing the amounts of the several classes The annual report of the German Loan I of notes outstanding on the last day of each Banks for 19162 shows total gross issues of ; month in 1917 and weekly in January and loan-bank certificates since September, 1914, I February, 1918. It is seen that the volume as 38.9 billions of marks, the Loan Bank of ! of Reichsbank notes in circulation has in- Berlin alone having issued an aggregate of j creased by about 3.4 billions during the year, 29.06 billions. On December 31, 1917, the | from 7,858 to 11,138 million marks, or about sum of 3.41 billions of marks of these certifi- 42 per cent. For the loan bank certificates an cates was outstanding, of which amount the increase from 3,070 to 6,288 millions is shown, Bank of Berlin had issued 2.37 billions. Of the or at the rate of about 105 per cent. No loans outstanding at the close of the calendar increase is shown in the circulation of Treasury year 1916, 3.27 billions were advanced on notes, while the amount of gold cover, following stocks, shares, and book claims and only 138.18 a decrease by 132 millions between May and millions on merchandise. July, 1917, remained practically stationary at i L'Economiste Europdcn, Feb. 22,191S. slightly over 2,400 million marks. 2"Konjunktur" July 5, 1917. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN". 283 Note circulation in Germany. [Compilation of weekly figures given in London Economist.] [Millions of marks.] Dec. ! Jan. Feb. Mar. Apr. May June July j Aug. i Sept. 31, i 31, 28, 31, 30, 31, 30, 3"1 , ' 31, : 29, 1916. i 1917. 1917. 1917. 1917. 1917. 1917. j 1917. : 1917. Reichsbank notes. 8,054 i 7,858 8,108 8,616 8,316 8,286 8,852 9,338 ! 10,204 j 10,400 110,622 Treasury notes 352 ! 350 348 348 344 344 344 344 O3 4A 4A O 4 O ! OiO . O Aa Loan-bank certificates 2,874 I 3,070 3,376 3,754 | 3,898 | 4,110 4,522 4,724 4,984 i 5,430 | 5,606 j 5,860 Total. 11,280 ill, 278 11,832 ,12,718 il2,558 '12,740 il3,564 13,920 14,666 15,982 116,354 ' 16,830 18,084 j 17,888 ,17,504 17,774 17,776 Gold. 2,520 j 2,524 2,526 { 2,532 j 2,532 ! 2,534 I 2,456 2,402 2,404 : 2,404 ! 2,404 i 2,406 2,406 j 2,406 : 2,406 | 2,406 2,406 AUSTRIA. j Million crowns. j (6) Second loan, issued May, 1915, at 95J (5J per The first Austrian budget to be presented j cent stock, not redeemable before 1925) 2, 688 to Parliament Since the outbreak of the war j (c) Third loan, issued October, 1915, at 93.6 (5J is for the fiscal year 1917-18. Discussion of! per cent treasury bills not redeemable this budget reported in the Neue Freie Presse I before Oct. 1, 1930) 4, 203 of September 26, 1917, shows estimated ex-I (d) Fourth loan, issued May, 191.6: j 5-J per cent treasury bills repayable at penditures for the financial year 1917—18 I par in June, 1923, issued at 93 as 22,169,662,326 crowns, of which sum 4,520 | 5-J per cent bonds to run for 40 years, issued 5,359,937,606 crowns are considered ordinaryi at S95^ civil expenditures and 16,809,724,720 extraor- ! (e) Fifth loan, issued in December, 1916: dinary expenditures. The total ordinary rev- I 5J per cent treasury bills at 92 J- \ enue is estimated at 3,890,475,536 crowns and i 5J t per cent bonds, at 96$ J ' • (/) Sixth loan 5, 289 temporary sources of revenue are expected (g) Seventh loan, issued in December, 1917: to yield in addition 303,606,000 crowns, or a 5$ per cent loan redeemable at par by"J total of 4,194,081,536 crowns. The deficit of drawing between 1923 and 1957, issued 17,975,580,790 crowns is to be covered by I at 91 \ 5, 802 credit operations. ! 5J per cent bonds redeemable at par in A comparison of expenditures incurred dur-; 1926, issued at 93 J ing previous years affords some idea of the Total 32,073 growth of the national debt since 1914. In Advances by the Austro-IIungarian Bank to 1914-15 the ordinary budget and expenses I the Austrian Government totaled 9,040 million incurred directly for war purposes totaled ! crowns on December 7, 1917, according to the 10,705,847,000 crowns. During 1915-16, this ! first report submitted to the bank's board of sum rose to 15,725,970,000 crowns; during | directors since the beginning of the war. Ac- 1916-17, to 18,787,726,000 crowns, and the | cording to the Economiste Europeen these estimate for 1917-18, as reported above, places it at 22,169,662,000 crowns.1 advances were given as 13,130 millions by the budget commission of the Reichsrat. It is WAR LOANS. likely, however, that the larger figure includes Seven war loans were floated in Austria, the advances of the bank to the Hungarian yielding a total of 32,073 million crowns, Government. The total war debt of Austria described as follows: is stated by the same authority as 52,580 million crowns, equivalent to $10,673,740,000, [Sources: Statesman's Yearbook 1917; Fromden-Blatt, Dec. 16, 1917; Frankfurter Zeitung, Oct. 24, 1917; and Kolnische Zeitung, Nov. 6, composed as follows: Million crowns. Receipts from loans, 29,270 million crowns; (a) First loan, issued November, 1914, at 97$ advances of Austro-Hungarian Bank, 13,130 (5J per cent treasury bills, falling due at millions; advances of Austrian banks, 7,230 par on Apr. 1, 1920) 2, 201 million; and advances of German banks, 2,950 i L'Economiste frangais, Jan. 5,1918, p. 30. 49615—18 6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

284 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. million crowns. It is not clear whether amounts was 22.9 per cent; at the end of 1915 it fell to advanced by the banks are for Austria only or 9.4 per cent; in 1916, to 2.8 per cent, and in for the Dual Monarchy. 1917, to 1.6 per cent. Simultaneously with this decline in gold cover, the advances of the FIDUCIARY CIRCULATION. Austro-Hungarian Bank to the government have increased prodigiously. From 625 million According to the Nieuwe Rotterdamsche crowns in 1915 they rose to 13,690 millions Courant (Nov. 26, 1917), the total advances of at the end of 1917. the Austrian War Loan Bank were 247,354,220 crowns up to October 31,1917. Of this amount, HUNGARY. 145,068,730 crowns were repaid, leaving 102,- [Sources: Statesman's Year-Book, 1917; Bankverein Suisse, Bulletin 285,490 still outstanding at the time. Of the mensuel No. 2, February, 1917; Neue Freie Presse, Oct. 28,1917.] latter sum 100,512,890 crowns, or 98.3 per Loans issued during the period 1914 to 1917. cent, represented advances upon securities or savings-bank accounts; 122,070 crowns, or one- Million crowns. tenth of 1 per cent, on merchandise, and the First loan, issued Nov. 16-23, 1914, at 97-J, 6 per remainder of 1,650,530 crowns advances onI cent rente, not redeemable until Nov. 1, 1920... 1,175 ! Second loan, issued May 12-26, 1915, 6 per cent mortgage securities. j stock, at 97.5, not redeemable before 1921, and Excerpts from the Frankfurter Zeitung (De- 5J per cent rente at 90.8, not redeemable before cember 22, 1917) and the Fremden-Blatt (De- 1925 1,132 cember 19, 1917, and January 18, 1918) de- Third loan, issued Oct. 18-Nov. 17,1915, 6 per cent scribe the report of the Austro-Hungarian Bank rente at 97.1, not redeemable before 1921 1,985 I Fourth loan, issued Apr. 19-May 23, 1916, 6 per as presented to the board of directors, which ' cent rente at 96.7, not redeemable before Nov. 1, throws considerable light on the note circula- | 1921, and 5J- per cent treasury bills at 91.4, not tion and the general condition of the bank. j redeemable before June 1, 1926 2,025 Notes in circulation increased from 2,160 mil- | Fifth loan, issued Nov. 23-Dec. 22,1916, 6 per cent lion crowns on July 23, 1914, to 18,440 millions j rente at 97.2, not redeemable before 1920, and '5J | per cent treasury bills at 95.5, redeemable at 105 on December 31, 1917, an increase of 15,580 I between 1922 and 1942 2,415 million crowns. About two-fifths of this in- | Sixth loan, issued in 1917, 6 per cent rente and 5J crease took place in 1917, as the following table i per cent treasury bills (unofficial returns) 2,532 indicates : Seventh loan, issued in 1917, 6 per cent rente at 96.1 and 5J per cent treasury bills at 91.25, con- Million crowns. vertible at option of Government after Aug. 1, Dec. 31, 1913 2,490 1922 ^,000 July 23, 1914... 2,160 Total 14, 264 Dec. 31, 1914 5,200 Dec. 31, 1915 7,200 Advances of the Austro-Hungarian Bank to Dec. 31, 1916 10,890 the Hungarian Government amounted to 4,158 June 30, 1917 12,000 Oct. 19, 1917 15,600million crowns on December 7, 1917, and by Dec. 7, 1917 17,740 adding 1,050 million crowns, representing "va- Dec. 31, 1917 18,440 luta" loans in Germany up to the end of 1916, and current account advances by various banks In 1915, the average monthly increase was to the extent of two billion crowns, the total war 166 million crowns and in 1917 it rose to 640 debt of Hungary may be estimated at 21,472 million crowns. The gold cover has meanmillion crowns. while been constantly dwindling. At the end of 1914 the ratio of gold to note circulation 1 Proliraiaary uao'Bcial ostimate . Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 285 Interest on Deposits, provisions of this section shall report their findings to the association, and if approved by a majority vote of all the After a discussion of the situation as to rates members of the association the offending member or nonof interest on deposits, which lasted for several member shall be fined $5,000. On the second offense the weeks, the New York Clearing House Associa- member, or such nonmember, shall be subject to expulsion tion at a special meeting held on Tuesday, from the Clearing House Association, and the committee will proceed to act as the constitution provides for the March 19, arrived at an adjustment of the expulsion of a member. pending issues. The by-laws of the Clearing House Association were amended by adopting The substance of the proposed amendment a provision covering maximum rates. This had previously been considered by the Federal action was nearly unanimous,, only three out of I Reserve Board, and in a letter dated Monday, the 58 banks and trust companies voting on the March 18, and addressed to Mr. Walter E. amendment being recorded in opposition. The ! Frew, president of the New York Clearing amendment, which fixes the schedule of rates House Association, Governor Harding said: of interest effective April 1, 1918, is as follows: "I acknowledge receipt of your letter of the No member of this association, or bank, or trust company, 15th instant inclosing copy of the proposed or others clearing through any member, shall agree to pay amendment to the constitution of the New or shall pay. directly or indirectly, on any credit balance York clearing house which, I understand, has payable on demand or within 30 days, or certificate of been agreed upon by the clearing-house comdeposit so payable, by its terms, issued to or for the account mittee and by the committee of trust comof any bank (other than a mutual savings bank located in panies including both members of the clearing the second Federal Reserve district), trust company, or house and those not members. other institution conducting a banking business, or private "The proposed amendment to your by-laws banker or bankers, located in the United States or Dominion has been considered by the Federal Reserve of Canada, interest at a rate in excess of 1 per cent per Board, and while the Board regrets that it has annum when the then 90-day discount rate for commercial not proved practicable to reach an agreement paper at the Federal Reserve Bank of New York is 2 per providing for an interest schedule based on a cent or less, and an additional one-fourth of 1 per cent for maximum of 2 per cent for bank balances, it every one-half of 1 per cent that such discount rate shall appreciates the difficulties which have been in exceed 2 per cent, except that the maximum rate paid or the way of reaching such an agreement. The agreed to be paid on any such credit balance or certificate Board understands that no bank or trust comof deposit shall not in any case be higher than 3 per cent pany will be obliged to increase any lower per annum; nor shall any member or nonmember clearing existing rates, but that the rates proposed are through a member, pay or agree to pay on any like cr-.-dit maximum rates, to which level any higher balance of, or like certificate of deposit issued to, any rates now obtaining must be reduced, and it is mutual savings bank located in the second Federal Re- gratified to know that the plan proposed will, serve district, or any person, persons, copartnership, cor- if adopted, materially reduce the average rates poration, or association, other than those specified and of interest now being paid by banks and trust included above, interest at a higher rate than 3 per cent companies on the various classes of accounts, per annum; nor on any time deposit, or certificate of de- namely, bank balances, open accounts, cerposit payable by its terms later than 30 days from, the date tificates of deposit payable on demand, and thereof, at a higher rate than 3£ per cent per annum. The time deposits and certificates. foregoing provisions are not intended to apply to the ac- "The schedule, therefore, is a revision downcount of, or any certificate of deposit issued to, any person ward instead of upward, and while the Board or persons residing and transacting business in any foreign fears that, unless thoroughly explained and country other than the Dominion of Canada, or to any cor- understood, its adoption may result in an adporation, association, or copartnership organized and lo- vance of rates by some of the interior banks, it cated in any foreign country other than the Dominion of feels that a distinct gain has been made in the Canada, or to any corporation, asssociation, or copartner- promotion of a spirit of harmony and unanimity ship organized and located therein, nor .to affect such among the New York City institutions which interest rates as are or may be fixed or regulated by law. ought to be instrumental in preventing any runaway competition throughout the country, The clearing-house committee upon ascertaining to the which the Board will use every effort to foresatisfaction of a majority of its members that a member, or stall. nonmember clearing through a member, has violated the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

286 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. "In view of all the circumstances, therefore, j each to keep on hand at all times an amount of coin equivthe Board will make no objection to the revised j alent to not less than 20 per cent of our net deposits of every plan proposed, and it sincerely hopes that your kind, which shall be made to include certified checks and committee's view of the results will prove cor- all other liabilities (except circulating notes), deducting rect. I wish, on behalf of the Board, to thank •the daily exchanges received from the clearing house. you and the other members of your committee This agreement may be annulled by a majority of all the for your constant and unremitting efforts to members to the same, at a meeting called by request of five bring about a satisfactory solution of this ex- members, on written notice to each stating the object of ceedingly difficult problem, and to express; the meeting. sincere appreciation of the spirit of cooperation, j Mr. Booth, of the American Exchange Bank, concession, and conciliation which has been | manifested by your banks and trust com- | offered the following as a substitute for a part panies." of the above preamble and first resolution, viz: HISTORY OF INTEREST QUESTION. Whereas the almost unanimous sentiment of the banks in ! New York has been expressed against the principle of One of the earliest expressions on the matter | paying interest, on current deposits as unsafe to themby the New York banks, with respect to the selves and to the community; and whereas, we believe question of interest on deposits, was furnished that the present is a peculiarly auspicious time to correct the evil: Therefore by the preamble and resolutions adopted by the j Resolve, That we, on behalf of our respective institutions, 46 banks belonging to the New York Clearing j do agree that we will not hereafter consent to receive an House Association on March 15, 1858, reading account and allow interest on the same. substantially as follows, viz: The amendment was accepted by Mr. Taylor, Whereas 40 of the 46 banks belonging to the New York and the preamble and resolutions as amended, Clearing House Association have signed an agreement were then upon motion laid on the table, for the no longer to allow interest on deposits directly or indipurpose of receiving the report of the committee rectly, providing all the banks composing such association shall concur in said agreement; and whereas, entire appointed to consider "the measure of each bank unanimity has thus been so nearly expressed as to render holding at all times not less than a certain fixed it in our opinion desirable to carry that agreement into percentage of coin to its liabilities.77 practical operation; therefore Mr. Silliman presented the following report, Resolve, That we on behalf of our respective institutions, viz: do agree to waive the condition which requires the concurrence of all the banks to said agreement, and we bind The committee to whom was referred the subject of the ourselves to adhere to the same in all respects as if it were "proper ratio of specie to be hereafter held by the banks so signed by every member of the Clearing House Asso- in the city of New York, in regard to their liabilities" ciation. respectfully report that they do not propose to go into an Resolve, That in order more effectually to accomplish a elaborate examination of the expediency of an increased reform, which we believe is demanded alike by the best and equal ratio of specie, deeming that the experience interests of the commercial community and our own, we of the past year has sufficiently demonstrated the neceshereby appoint a committee of five members, to whom shall sity of both; but intend to confine themselves to the be communicated all information touching the practical statistics bearing upon the subject, prepared with much working of this agreement, and who shall be required to labor from the records of the clearing house by Mr. Lyman, convene the parties hereto for mutual counsel and protec- j the manager. tion, by written notice, whenever in their opinion the oper- ; It would appear from these records that after deducting ations of any bank or other causes makes it necessary; and | exchanges the average net amount of the liabilities, con- Whereas in the opinion of this association, it is impracti- sisting of deposits and circulation, for the year ending ' cable for any institution in this city, engaged in the busi- July 28, 1855, was 863,032,146, and the average amount ness of legitimate banking, to pay interest on deposits, of specie thereon was 22J per cent, or $14,144,527. and at the same time carry the relative proportion of specie reserve, which experience has proved to be re- For the year ending July 26, 1856, net liabiliquired, for its own safety and public good: Therefore ties $71, 254,052 Resolve, That, in furtherance of the end proposed, by our Average of specie, 18J per cent 13, 390,193 agreement to discontinue the payment of interest on For the year ending July 25, 1857, net liabilideposits, and in accordance with the recommendation of ties 74, 354, 345 the report of the committee on that subject, we also agree, Average of specie, 16 per cent 11, 885,647 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

AI-RII, 1. 1918. FEDERAL RESERVE BULLETIN. 287 As the ratio of specie held by the different banks has . which is not yet ready to be consolidated into lixed capital been by no means equal, the committee have deemed it i or immovable forms. The custodians of such funds are expedient to separate three of the banks holding the largest consequently bound by the very nature of their trust to reserves from the rest, not with any invidious intent, but ! preserve them in their integrity and to apply them only simply that the ratio held by the banks in general, may ; in such ways as will prevent them from falling into inbe more fairly indicated. i activity and also to hold such proportion in ready cash Of the above sum in 1855, three banks held on their net in hand, as -ong experience has proved to be necessary, liabilities §3,942,178, or 36 per cent; while all the remaining ! to meet immediate demands in every possible emergency, banks held 810,202,349, or 19J per cent; in 1856, the same > And it may be confidently affirmed that a bank or banker three banks held 83,777,331, or 30 J per cent; the remaining . who faithfully meets all these obligations renders a full banks held 89,612,862 or 10-J- per cent; year ending July, j equivalent for any benefits which can be honorably 1857, the same three banks held 83,208,874, or 27f per ! derived from the custody of such a trust. cent; the remaining banks held 88,610,773, or 131- per cent; No institution can, in the long run, purchase deposits of and from that period to March 6, 1858, the same three ! money payable on demand of the owners, and at the same banks have held on their net liabilities $5,634,358, or 44J j time secure to itself a just and proper compensation for the per cent; while the remaining have held §14,867, 268, or \ business, without violating some of the conditions indis- 261- per cent. j pensable to the public safety. It must either use them in It would be easy for the committee to demonstrate the | ways that are illegitimate and perilous, or use them in necessity of a larger reserve of gold than that heretofore \ excess. This has been abundantly proved by innumerable held, but they conceive that the rapid transit of the pre- : instances in years past, and the practice of paying interest cious metals from their depositories, through the influence for such deposits was unanimously condemned by the bank of steam conveyance, under telegraphic instructions, will, officers in 1857 as one of the principal causes of the panic of itself alone, present to the minds of bank officers suffi- at that period, for the reasons given in a printed report, of cient reasons for the requisition of a stronger base than that which a copy is annexed hereto, and to which, with the conon which they have hitherto rested. sequent resolutions of the associated banks then adopted, The committee propose that on and after the day of : your committee most respectfully invite attention. April next the banks in the city of New York shall by a The creation of many new institutions since the late written instrument, under the sanction of their various Civil War began which have considered it expedient to boards of directors, bind themselves to hold at all times " purchase public favor and thus divert to themselves : a ratio of not- less than 20 per cent in specie upon their net | business from established channels, has revived the cusdeposits arid circulation, the dictinct meaning of the . torn of paying interest upon deposits, and has also led term ''deposits7' to be denned by a committee duly ap- i some o.f the older banks in self-defense to yield more or pointed for that purpose to insure uniformity thereon. ! less to the pressure in the same direction, while it has Tho committee further recommend that at an adjourned ! induced others to adopt newer methods of obtaining meeting, aiter duly considering tho subject, the bank patronage equally pernicious. officers shall come fully prepared to sign such instrument. And thus a sharp and degrading competition has not ; only prevailed among banks in this city, but has been ACTIOX OF 1873, i excited as a necessary consequence in other places, where In 1878 a committe appointed by the New ! York Clearing House Association "to carefully i ^i-oughout the country from all claBSefl of society< Banks consider and report what reforms are required have been aroused to enlist in the same destructive prac- : in the practical operations of banks with each tices toward each other and in defense of their various other and with the public to increase the localities. A premium has been unnecessarily given for business which, left to itself, would fall without cost into security of their business/' reported in part as its natural channels and adjust itself to such localities as follows, viz: | the convenience of the people and the best interests of the That in order to reach the object sought by the resolu- country require. tion it is necessary briefly to review the condition and Without such rivalry the resources of the Nation would practical working of the banking system in this city before be so di ffused among the banks as to give increased finanthe commencement of the late panic. cial strength and stability to every part, and not only Banks are the natural depositories of the current capital remove a great cause of irritation, but add to the comfort, of the Nation, passing into and out of active industry and efficiency, and profit of all. commerce. The balances held by them are for the time The evil results of paying interest upon current deposits, specially reserved by their owners from permanent invest- avowed when the internal commerce of the Nation was ment and kept subject to immediate command. They conducted upon a specie basis, are greatly aggravated constitute a main portion of the wealth of the community ; when it is carried on by an irredeemable currency, which Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

288 FEDERAL EESEEVE BULLETIN. APRIL 1, 1918. has a fixed and invariable volume, and which flows to and and were it not for the fact that several of the 48 banks are from the commercial center with the changes of the seasons. more or less involved in the same practice, this disparity Such a currency is superabundant in summer, and instead would be still more apparent. of being then naturally absorbed and diminished by re- When the late panic commenced, the 60 banks composdemption, it accumulates in banks, which can not keep it ing the New York Clearing House were indebted for about idle without loss of the interest paid to its owners. Legiti- two hundred millions of deposits. Of this amount three mate commerce does not then demand it. It is still subject institutions (paying interest to their country depositors) to instant call. There is consequently no resource but to owed about fifty millions, and including these, 12 banks loan it in Wall Street upon stocks and bonds, in doing of similar character owed about one hundred millions; which so much of the Nation's movable capital passes for that is to say, 12 institutions held one half of the aggregate the time into fixed and immovable forms of investment, deposits, and the other 48, their associates, the other half. and its essential character is instantly changed. Loans are The proportionate reserve of legal-tender notes in the made with facility upon securities which have no strictly associated banks was also greatly in favor of the latter commercial quality, new and unnecessary enterprises are number for the obvious reason that banks which pay encouraged, wild speculations are stimulated, and the interest upon money can least bear to have any amount of thoughtless and unwary are betrayed into ruinous opera- it idle. The active demand first came, as it usually comes, tions. The autumnal demand finds the resources of the Na- for that portion of deposits due to country banks, who, in tion unnaturally diverted from their legitimate channels, addition to their annual necessities, had been disturbed by and they can only be turned back with difficulty and public failures of several city bankers, holding large balances of embarrassment. Such has been our well-known experience money due to the interior. These deposits were to a great year after year. Interest upon money has, as a conse- extent loaned upon stocks and bonds in Wall Street, quence, fluctuated widely from 3 and 4 per cent per annum payable "on call," with the confident belief that they in summer to 15 and 20 per cent in the fall and winter upon were there earning more than the interest paid for securing commercial paper, and aipon stocks at times to one-half them, and were available as promised. But, from the and even 1 per cent a day. Vicissitudes like these are very nature of the case, the rapid withdrawal of deposits utterly destructive to all legitimate commerce, and insti- from the banks made the "call" from every direction tutions whose operations tend to such results are enemies simultaneous, and closed every resource from which the to the public welfare. "Street" derived its power to respond. Borrowers upon Deposits which are derived from strictly commercial stocks were deprived both of their facilities of borrowing operations can not fluctuate so widely from time to time and of all power to sell their securities. The necessary as to produce disturbance in the community, and banks result occurred. Banks which found themselves in this which confine their business to them, as they naturally dilemma had no alternative but to ask the assistance of arise, are always reliable and regular in their treatment of their associates, and the conflagration was so rapid and their dealers, and can be conducted with ease and com- violent that every consideration of fraternal sympathy, fort to their managers and safety to the public. On the self-preservation, and public safety compelled a general contrary, deposits which] are purchased by payment of and earnest cooperation; and the majority, who had for interest, or otherwise, and which must therefore of neces- long years conducted their business upon sound principles, sity be largely loaned uon demand," are the cause of and who had patiently submitted to the loss of valuable continual agitation and solicitude to those who hold them accounts, drawn from them by their associates, by pracin charge. They are certain to be withdrawn at the tices against which they had continually protested, inseason of the year and at the moment most inconvenient stantly responded to the call by placing their resources at to the banks and to their dealers. This fact is best command of those who had done so much toward producillustrated by the following figures: ing the calamity, making common cause, the weak with The average deposits of the 60 clearing-house the strong, to avert a universal catastrophe. banks for 10 weeks from 5th July to 6th An expedient was found by which the stronger banks placed themselves under the unequal burthen, and equal- September were $232, 228, 000 ized the pressure, by gathering in their resources and The lowest amount reached since the panic placing them at the disposal of the weaker, who were thus was 143,170,000 furnished with means to meet the demands of their deposi- Showing a total reduction of 89,058,000 tors and to save themselves from public exposure and Of the above amount during their dealers in city and country from disaster and ruin. the 10 weeks, 12 interest- Meanwhile the public confidence in institutions had paying banks held §111, 585,000 become so greatly impaired that the "legal-tender reserve" The lowest total reached by was reduced from thirty-four millions, on the 20th Septemthem since the panic 52, 669, 000 ber, to five millions eight hundred thousand on the 14th October, an amount of ready money never before paid out Showing a loss in 12 banks of 58, 916, 000 in the same time. Interior banks, whose ready means in And in the other 48 banks of 30,142, 000 hand had always been merely nominal, but whose re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 289 sources consisted chiefly of credits upon the books of sudden contingencies, and which is, therefore, in its very interest-paying banks in the principal cities, were under nature, a variable quantity. It is impossible clearly to the necessity of calling back their deposits in a medium prescribe by statute the circumstances or the exact periods never before required, and to these the associated banks during which the reserve should be increased or diminished. were asked to respond, as well as to the demands of timid There seems an intrinsic absurdity in a law requiring that dealers at home. a "reserve" must be always kept, which was created on Your committee take this occasion to congratulate the purpose to be used, or that a bank officer who draws upon associated banks upon the liberal and excellent spirit in his reserve, under circumstances for which it was intended, which this crisis has been met, and upon the happy escape is false to the oath which he takes to obey the law. But the from a most imminent danger which threatened them, and j fact that a military commander can not be definitely inwith them, the country at large. It is not too much to say ! structed when he may employ his reserve force is not re* that had it been less boldy, promptly, or unanimously en- ! garded as a reason why that important portion of an army countered, the results must have been more disastrous j organization should be abandoned or be reduced in number and widespread than any that have occurred during the i or efficiency. So long as bank debts are subject to cash present generation, | payments, so long must the obligation be either imposed While the banks have intelligently recognized the errors or assumed of keeping sufficient cash in hand to pay whatof their associates, by which the late financial complica- ever portion can possibly be presented. It must always tions were aggravated and the community imperiled, there be remembered that, in the absence of any important cenhas been no disposition whatever to deal in harsh re- tral institution, such as exists in other commercial nations, proaches. On the contrary, the magnitude of the trust is the associated banks are the last resort in this country, in deeply felt, and the utmost good feeling prevails; an times of financial extremity, and upon their stability and earnest desire and a unanimous determination are ex- sound conduct the national propspeity greatly depends. pressed on every side to reform existing abuses and to In claiming for them that, in taking faithful care of the reorganize the clearing house upon a basis of mutual active capital of the Nation with which they are intrusted, support and uniformity of business. they render a full and equitable compensation for its proper Late experience has again demonstrated the fact that use, your committee point to the consequent and parathe banks in the association are necessarily dependent mount duty of the banks to hold such proportion of that one upon the other in times of peril, as well as in fund in actual possession in cash as the extremest needs the trusts which the large operations of the clearing may demand. house daily impose, and that the entire body inevitably It has been suggested that the Federal principle which suffers from the errors and indiscretions of a single member. our association has applied to banking, through the use of No institution, therefore, has a moral right to conduct its "loan certificates" in two important crises, might be used affairs with the public in defiance of the general conviction effectively in regular business, by keeping two separate of its associates, or to introduce private terms of dealing accounts, /iz, "cash" and "bank credit," each payable with its customers which are in conflict with the best in kind, to avoid a "run " upon banks in time of panic; and interest of all. Bank officers have no right to be sharp, much speculati /e study throughout the world is gi /en to personal competitors for public patronage, nor merely the question how the idea of "clearing" as used through laborers for dividends on behalf of a limited constituency. banks may be indefinitely extended to effect the smaller They are in a most important sense trustees for the whole exchanges of the community so as to dispense in a great community, and public administrators of great interests, measure with large reserves of ready money. But in the which forbid the least departure from principles which present condition of economic science, and especially in long experience has sanctified. this important exigency, your committee recommend that With these general considerations your committee we accept the teachings of practical experience, and purproceed to the more practical questions submitted to sue the well beaten track which trade and commerce unithem, viz, "What reforms are required in the operations versally recognize. of banks with each other and the public to increase the | Experience of older commercial nations has shown that security of their business?" and, first and most prominent, jthe volume of "reserve>? should be in the proportion of onethey recommend that the banks entirely discontinue the | fourth to one-third the direct liabilities of a bank, and payment of interest upon deposits, whether directly or jwhenever it is there found receding from this amount, reindirectly. | strictive measures are taken to replenish it. Our own THE 11ESSRVE. ' association in 1857 established a minimum ratio of 20 per The requirement of a "legal reserve" is now engaging cent in coin, which was for the time carefully observed, special public attention, and much impatience is expressed and again in 1860 increased this minimum to 25 per cent. at the lav/ which compels banks to hold a definite ratio of jThe present abnormal condition of the currency increases legal-tender notes to liabilities. The practical difficulty : the difficulty inherent in this subject. The law permit? consists in attaching a rigid and inflexible rule of law to a the reserve to consist of coin and legal-tender notes, and mobile fund, which is held for "the purpose of meeting jat the same time compels banks to receive as money the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

290 FEDERAL RESERVE BULLETIN. APRIL 3, 191.8. notes of national banks, which in legal payments are not If the legal or financial necessity exists to maintain a money; so that, for practical uses as "reserve," we are certain reserve, it is manifestly the duty of every institutroubled by a species of money which is above, and by tion to carry its just proportion, and no bank, whether another which is below the standard quality. And it incorporated under national or State law, can honorably affords a striking commentary upon our present anomalous ;evade its full share of this burthen. condition, that the money of the world, which is now freely ; Your committee therefore recommend that all the coming into the country from legitimate commerce, can not associated banks, while they strictly follow the require- ; be absorbed into our banking system, but is necessarily ments of the national currency act by keeping on hand, repelled as a cause of serious embarrassment. The opinion either in coin or legal-tender notes,'an amount not less than that has largely prevailed, that because the business of , 25 per cent of their total liabilities to the public, be this country is now conducted upon a basis of irredeemable ,required always to hold at 15 least per cent in legal-tender paper, that therefore there can be no suspension of pay- notes, subject only to such modifications as the clearingments, has been most effectually dispelled, and the con- house committee may, from time to time, unanimously trary is established, that a currency from its nature limited determine. in volume is subject to sudden and special dangers, and A suggestion has been made, which your committee therefore requires special protection. Recent experience consider worthy of notice, because it has heretofore proved has shown how rapidly thirty-four millions may be with- an important restriction to excessive expansion, and drawn from our associated institutions, and. for practical because it may assist in preventing many of the evils uses, how inadequate is the reserve held by country banks. referred to—that no institution be allowed to loan more That reserve, as fixed by law, is 15 per cent of liabilities, than two and a half times its capital and surplus. and three-fifths of it may consist of deposits in banks in the larger cities, who may subdivide it by placing one-half COMMITTEE OF 1884. their own reserves in banks in the city of New York, where again it is subject to a further reduction, form the fact that On July 29, 1884, a special committee of the these last are only required to hold 25 per cent of their own Now York Clearing House Association, after liabilities, of which these deposits form part. The very careful investigation of the deposit aggregate held by all the national banks of the United question, prepared the following majority States does not finally much exceed 10 per cent of their direct liabilities, without reference to the large amount of report, viz: debt which is otherwise dependent upon the same reserves. That while they substantially concur in the recom- When we consider that a portion of this final reser te may mendations of the committee in its previous report, they consist of coin, which, under present circumstances, has have endeavored to remove some of the objections made no practical power in an extremity, and a further fact that during the discussion, so as to secure what they consider the interest-paying banks, which have always held the very desirable—a cordial and unanimous adoption of larger part of those reserves, have been forced by their these reforms by the whole association. position continually to disregard the law, it is manifest The most important and, in fact, the special reform that the requirement, in its real operation, has not worked which is essential to the-efficient and harmonious union against the public welfare or against the true interests of ; and cooperation of the banks in one association is the total the. banks themselves. abolition of the payment of interest upon current deposits. The abandonment of the practice of paying interest This reform has been urged upon the banks from time upon deposits will remove a great inducement to divide to time for more than 25 years and it has always received these reserves between cash in hand and deposits in cities, the most favorable consideration. Upon two special and make the banks throughout the country what they occasions after violent financial revulsions throughout should always be. financial outposts, to strengthen the the country, like the present, it was adopted by almost general situation. The associated banks of New York, the unanimous agreement, and in each instance it failed .of ultimate resource in financial emergencies, are deprived by becoming a binding obligation only by the dissent of two usury laws of the power, which is so effectively used by the or three members whose active opposition was unfortuprincipal banks in Europe, of protecting or augmenting nately permitted to defeat the wishes of the very large their resources by adjusting the rate of interest to the majority. necessities of the occasion, a power which, if practicable, Your committee believe that the careful custody of Congress might safely confer upon the clearing-house com- money held in such a manner as to be always responsive mittee, in consultation with the Secretary of the Treasury, to call is itself sufficient compensation to its owners and with great advantage to the country; as also the power of depositors, and that banks which carry their full propordeciding when the time or the emergency has arisen in tion of the reserve cash of the Nation and at the same time which the public interest requires a relaxation of the rigid preserve their assets in legitimate commercial securities legal requirement in respect to the reserve to be held by render a just equivalent and furnish a perfect guarantee banks in New York City. for the trust committed to their care; and that any further Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1, 1918. FEDERAL BESEB-VE BULLETIN. 291 consideration or compensation than this must be given Although this has been the practical experience of the either at the expense of the needful reserve or of the safety New York Clearing House Association, and although in of the investments. The proportion of cash to deposits, every great emergency since its organization it has proved which from long experience} conservative institutions in itself possessed of vast capacity to benefit the country national commercial centers find it expedient to hold, and protect its own members, yet it must ever be kept is at least from one-quarter to one-third the amount. It in mind that this is simply a voluntary association, submust be evident that at the average rate of interest this ject to dissolution by a vote of the majority, and subject ratio can not be maintained by any bank where com- also to the withdrawal of members at their own pleasure. pensation is given for its deposits. From the nature of the business, no bank, however pros- The responsible duty of holding and maintaining the perous, is so independent of all circumstances that it may ultimate cash reserve of this great Nation is especially not on some special occasion find it convenient to seek imposed upon the associated banks in New York, and the aid or the consideration of its colleagues. A solemn from doing its full part of this imperative duty no one can obligation, therefore, rests upon everyone to concede honorably escape. They are all so inextricably bound something to the common good. If the measure not together by the daily transfer of portions of the Nation's proposed should, upon trial, prove erroneous, it may be deposits from one bank to another, by the difficulty of revoked as readily as it is adopted. recovering checks upon defaulting members after they With the rapid growth of this Nation it is more and more pass through the clearing house, by the universal distrust important that this commercial depository be always kept which one failing institution casts upon its associates, specially strong in cash reserves, and be prepared to meet and by the urgent demand made upon the stronger in any sudden exigency that may arise within our vast time of trouble to combine their resources for the protec- domain. When the intention to do this is distinctly detion of the weaker to avert public disaster, that an iden- clared by the associated banks, by their abolishing the tity of interest is created by the very existence and neces- payment of interest upon deposits and by thus removing a sities of this association. This organization can therefore great cause of weakness and of alienation among them, no longer be regarded as a simple place of meeting of bank your committee believe that capital will be attracted to officers, without responsibility for and utterly independent this city and to this associated body as a place of special of and indifferent to each other's welfare and habits of security. Thus it has proved with those members who business. These banks, as custodians of an interchange- have tried it. If a small proportion of the deposits hitherto able public trust, have practically and within certain secured by purchase be consequently drawn away to limits become a federative community, with mutual other institutions within this city, or to other places withresponsibilities and obligations, and it is no less the out it, that which remains will be more permanent and privilege than the duty of the members to conduct their reliable, and will be sufficient to make our business safer own business and the scrutinize the practices of others and more profitable than before. with a view to the stability of this association and the If it results in the retention of a larger cash reserve by welfare of the Nation. interior banks, or in the withdrawal oi those funds which This view of the mutual relation of members was fully are particularly subject to alarm and which betray the recognized in the recent action of the association, when depositaries into questionable temporary loans, it can be they took possession of one of the largest institutions and no cause of regret to the banks nor to the Nation. discharged its liabilities to the public of some $8,000,000, The present occasion seems to your committee most and when they further agreed to participate in any loss opportune for this reform. The subject has been ripening by the issue of loan certificates to that and to other banks; in this association for more than a quarter of the century. and also when they so changed the constitution as to per- | The business of the Nation requires the financial support mit official visitation and examination into the condition i which this united and compact body can give it, and the of members, and gave power to demand security for their experiment, if it be an experiment, ought now to be exchanges. fairly and honorably tried. Powers so great and so important as these, which have To their special and important recommendation of been exercised and concurred in by every member, are ceasing to pay interests upon deposits your committee sufficient to show that this association no longer regards have added but one more, viz: itself as a simple meeting place for the exchange of papers, That of confining the use of the clearing house excluswithout further responsibility, but that it has become an ively to its own members. institution of national significance and value, competent Hitherto the practice of permitting exchanges through to consider any question vital to its own interests. members of the association of checks drawn upon parties If the association can thus promptly meet the necessi- not members has freely given every facility enjoyed by ties of a great financial crisis, it may certainly venture to those who carry the burthens of the banking business to urge upon its members the importance of such reform in those who do not, and who neither fairly participate in its their modes of business as they believe will tend to pre- expense nor in its responsibilities. Such parties, therevent such a crisis, and will enable them the better to meet fore, possess advantages superior even to banks who <me if it comes. created and v.rho sustain the institution. 40615—18 T Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

292 FEDERAL RESERVE BULLETIN. APRIL 1, 19 IS. In order effectually to secure the object of strengthening ; "There are three special abuses to which I desire for a the association as proposed in the first recommendation of I moment to call your attention. your committee it is manifestly necessary to witnhold ; "First. The payment of interest upon deposits oi: gratuitous facilities from active outside competitors, : money payable on demand. This subject has upon who would otherwise use our own appointed instrument ; several occasions in years past been under consideration, to subvert the object we have in view. If desired, every and its total abolition has been almost unanimously legitimate depository possessed of the needed requisites• agreed to among our banks by written contract. Yet by and responsibility may find entrance into the clearing i the refusal of one or more members it has failed to become house subject to the same conditions and restrictions as j a binding obligation. Like some other great reforms, are imposed upon existing members. More than this ; this one does not admit of partial application or of comcan not be justly required, and less will not afford adequate | promise. Any attempt to make exceptions to the proprotection. 1 hibition among partners mutually dependent can only In respect to the subject of receiving upon deposit as result in entirely releasing them all from any obligation cask checks drawn upon places out of the city, your com- . respecting it. Yet every banker will freely admit that mittee have thought it inexpedient now to make special the purchase of deposits payable on demand operates, in recommendation, but they suggest that a separate and some degree, as an absolution of the obligation to be special committee be appointed to investigate this ques- ; always in condition to meet the contract. Both the giver tion, and also to advise whether an arrangement could : and receiver of interest on such deposits, by the nature of not be made through the clearing house to secure some i the business, substantially, though not expressly, agree safe and prompt clearing of such checks, which willi to such use of the money as may prevent its immediate accrue to the benefit of all banks in the association. ; return. Finally, your committee can not disregard the just ; "What, Mr. Chairman, is the nature of bank deposits? complaint of the banks respecting the large volume of j Every responsible person in regulating his own affairs checks which arise from transactions in the stock exchange, ! must withhold from permanent investment and keep in and which embarrass them in their dealings with each I ready money enough for his current wants. This is his other and greatly increase the risks of the clearing house. i reserve. When such sums, for greater safety, arc placed The committee, however, content themselves by the i in charge of another person, they do not lose their essential simple expression, of the wish generally entertained j character; and when they become further aggregated and among the banks that some arrangements may be made j pass into the possession of a bank or banker they are still by the parties interested to establish a special clearing- subject to the same immediate wants of every original house for stocks, so that these large checks may be abated. owner for the very purpose for which he set them aside. With these general remarks your committee present And when these rivulets of capital, become streams, and the following summary: | streams gather into rivers and flow toward the ocean First. That no member of the New York Clearing House j until they reach this city, where they come into financial Association shall pay interest upon or allow compensation relations with other men in other continents, the parties tor deposits after January 1, 1885. who here take them in charge assume new and accumu- Second. That to secure uniformity in the business of the lated responsibilities. They are subject not only to the banks no checks shall pass through the clearing house necessities of the people at home but also to the worldexcept those drawn upon members of the association. | wide influences of commerce. Third. That any infraction of the above rules shall be "Now, there is a constant and irrepressible conflict regarded as a forfeiture of membership of the association, going on in the mind of every intelligent man or woman subject on complaint of any member to investigation by between the desire to invest their own capital so that it the clearing-house committee, in the manner provided in may earn them the utmost revenue and the necessity oi the constitution. retaining enough of it in ready cash to meet their current Fourth. That the association recommend that some necessities. This question decided, each for himself, that mode of settlement of transactions at the New York Stock portion of the total which is thus reserved becomes charged Exchange be adopted, whereby the large volume of with peculiar functions. It is the national reserve, and checks which now pass through the clearing house from the chief cause of financial disturbances arises from tresthat business may be diminished or avoided. passing upon it. Fifth. If these measures be adopted by the association, "Is it not evident, Air. Chairman, that when these that the committee recommend the same to clearing- reserves are attracted by banks and bankers who pay houses in Boston, Philadelphia, Chicago, and other cities. interest for them, they immediately lose their peculiar character and become, so far, at once changed from In urging the adoption of some action similar reserves into investments, and that their original purto that contemplated in this report, Mr. George pose is greatly reversed? The people's ready cash, by S. Coc, president of the American Exchange the very condition of receiving interest for it, necessarily National Bank, said in part: passes through the banker into fixed forms never intended. 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APRIL 15 1918. FEDERAL RESERVE BULLETIN. 293 Keserve and investment! Idleness and work! They are their colleagues in business, while at the same time they adverse and irreconcilable conditions. It is true that in are continually held up as patterns of enterprise and as the hands of sound commercial banks some of these models for imitation. Differing so widely from their deposit funds may be legitimately used for the best in- associates in principle and in practice the two can not terests of society, in the negotiation of business notes work harmoniously together, nor equally and honorably representing articles of human want and subsistence, share the burdens of a national financial system, whose passing from production into consumption. This is using stability requires the New York banks voluntarily to the fund hy promoting the very object for which each stand firmly and compactly together as one united body. person originally provided it. But such, we all know, "Experience among ourselves has again and again is not the tendency nor the operation of the practice now proved that the interest-paying banks are the first to in question, Money payable on demand with interest become embarrassed by any kind of financial disturbance, is chiefly loaned here upon fixed property intended for even if they themselves are not the means of producing permanent investment and upon bonds, stocks, and it, and that they are then almost alone in being compelled other obligations made for the construction of public to sopk protection from the loan committee, by a pledge enterprises and works of established purpose, whose large of their securities. expenditures are not again resolvable into money. They | "Will a few members of this association, on the one are in their nature fixed, and they demand, not their hand, longer continue a practice that subjects them to ready cash reserve, but the permanent savings of the this humiliation? And is it just, on the other, for a large people to construct them. So that temporary loans of majority to tacitly submit to having their business thus reserved capital upon such securities are certain to be drawn away, and the community periodically disturbed called in when they are hardest to pay. because the by associates whom, in the hour of peril, they are comready-money reserves so injudiciously absorbed by them pelled for their own protection to support? are called back by their owners in apprehension or for "There is no necessity whatever, as there is certainly no the supply of their own needs. profit, for the banks in the New York Clearing House to "We all know by experience that those deposits upon continue this practice. Public safety, business conveniwhich interest is paid are the most fugitive and evanes- ence, and social needs all absolutely require the service cent of all. Those who placed them with us well under- which these banks perform. The commanding position of stand their danger. While they receive interest, they do this metropolis will constantly bring to it all the capital so with doubt and suspicion of those who allow it, and that healthful commerce and trade can safely employ, and with the consciousness that they themselves are partially any fictitious attractions only tend to false estimates of compromising principle in placing them with those who wealth and betray the community into unprofitable and are willing to pay the price. dangerous enterprises. "From the very start the vicious practice of paying "If the banks composing this body should unanimously interest for the custody of the people's cash reserves agree to totally abolish this practice, the business of each pursues such funds like an enemy from place to place would not seriously diminish, because no dealer could and impairs their integrity at every point. And when secure better terms by changing from one member to those deposits have at last concentrated in New York another, and even if in the course of time the disparity banks, the same evil overtakes them there, all tending between the banks in deposits should consequently not to the reduction of tangible cash assets to the lowest continue as great as now, the loss by any one in volume point, and to the weakness and impoverishment of the would be more than compensated by a gain in terms and whole country. Arrest this practice here, at the termina- by diminished risk, labor, and expenses. tion of the line, and the reform will, of necessity, run "Taken as a whole, whatever the banks composing this back through every link of the chain in other cities, adding association pay to their dealers and correspondents as strength to the whole to the incalculable benefit of the interest is a totally unnecessary and gratuitous payment. nation. Every institution that accepts the reserves of It is worse than money thrown away so far as and because the community, agreeing to return them upon instant it tends to divert the current of capital of the country demand, gives a full equivalent in their faithful care. from its natural flow. If it be expedient for one member It is in duty bound to retain so large proportion of such to practice it, it is expedient for all, and then the special deposits, in actual cash, that no other compensation can and selfish advantage to any single one is lost. If it should be safely allowed. Any such payment should be taken be continued after our recent experience, it must be disat once as a confession that the fund is to be used in some tinctly recognized as a defect in our financial system and manner inconsistent with its real nature and is to be a standing cause of contention and of sharper competition placed more or less in peril. Deposits so unnaturally among banks in their pursuit of public favor which must, attracted are necessarily capricious and transitory. They separate the two classes of institutions into known and fly away at the first whisper of danger, to the detriment irreconcilable divisions. of the many who have touched them. Those banks "In the business indirectly done through the New York which so purchase them are objects of special dread to Clearing House there enters another element which it is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

294 FEDEBAL RESERVE BULLETIN. APRIL .1, 19;8. also proper for us to consider as affecting the stability of and accounting for their money value in detail, thus the whole system. The trust companies and other de- making it necessary to draw upon banks the immense positaries of funds, very much of which are payable on total that is passed from hand to hand. They give rise demand and bear interest, are receiving the full benefit to checks in sums greatly disproportioned to the capital of this association through the medium of one or another of banks which keep such accounts, and are the occasion of our members, and so they successfully compete with of constant embarrassment to bank officers, who desire us all. They thus secure every facility of exchanging to treat their associates in the clearing house and their their checks with all the banks and are hj that means own dealers with generous confidence, and mean at the enabled to divert to themselves a large proportion of the same time to avoid extraordinary risks. The effort has current deposits of the city and country, which have been partially made to conduct this business by a clearingalways been regarded as a special function of banking house arrangement where shares, not money or checks, institutions. Instead of being trust companies in the real and only balances resulting from them are thus paid; meaning of the term, many of them are banks of deposit and it is the earnest desire of bank oflicers that this effort paying interest. This large volume of deposits is not only should be accomplished. I believe that the experiment, in much greater ratio to capital than are the deposits in if seriously attempted, can be made successful to the banks, but it is supported by no special cash reserve of satisfaction of brokers, the relief and safety of the banks, its own whatever. The only ready means it has consist and the good of the community." in keeping current balances at credit in banks like other dealers. It thus leans upon the same reserve as do the banks themselves. If such institutions are to enjoy the State Banks and Trust Companies Admitted. privileges of the clearing house, they should certainly at least bear the same burdens which rest upon its members, The following list shows the State banks and and also contribute their full share of the reserve funds in trust companies which have been admitted to cash by which the stability of the business is maintained. membership in the Federal Eeserve system By a strange generosity on the part of the Clearing House during the month of March: Association it enables these lively competitors to do their business with the public upon better terms than they can do their own, while they do not contribute to the public Capital. ; Surplus, Total safety. rosources. "Second. Another abuse to which I invite your attention is that of receiving and crediting to dealers as cash Security Trust & Savings Bank, ! ; Billings,Mont ". ; 8100,000 $791,749 in hand checks drawn upon banks out of the city. The Rhode Island Hospital Trust Co., • ; Providence, R. I 3,000,000 j 33,500,000 57,503,575 aggregate amount of such checks in progress of collection Harvard Trust Co., Cambridge, ! ! by all the members of this body is not less than ten mil- 200,000 ; 100,000 3.963,641 First State Bank, Canyon, Tex. ..'< 25,000 | 2,500 '235,702 lions, and may average fifteen or twenty millions. Union Bank & Trust Co., Baton i Rouge, La j 150,000 |. 150,000 "These checks can not be converted into cash here in First Territorial Bank. Lovington, less time than one week, and for that period they remain N.Mox .i 30.000 ; 20,000 580,225 Walker Bros., IB ankers .Salt Lake ! as dead assets to the banks. How did this absurd prac- City, Utah : 500,000 j 100,000 8,720,163 The Peoples State Bank, Imlay : tice arise? Simply by the eagerness of one bank to draw City, Mich I 50,000 ; 10,000 619,337 to itself the business of others by superior inducements, Peoples Trust Co., Binghampton, ! 500,000 ! 100,000 4,787,550 an advantage which, in the nature of the case, could be Merrill Trust Co.,"Bangor/Me.."..I 300,000 ! 400,000 5]453,820 Saline Savings Bank, Saline,Mich.! 25,000 I but temporary. Others, in self defense, were necessarily Farmers Loan & Trust Co., Tip- 20,000 387,725 compelled to follow the pernicious example, until the ton, Ind 50,000 j State Bank of Madoh'a, Madolia, 45,000 719,866 practice became general. But for this practice this Minn ; 50,000 large sum would naturally lie as deposits in New York Al P le a g heny Trust Co., Pittsburgh, ! , 700,000 50 1 0 0 , , 0 0 0 0 0 0 688,705 banks from their correspondents throughout the country, Liberty Trust Co., Boston, Mass, .j 200,000 300,000 1,261,620 held here for the purposes of exchange. They are not S F t i e rs w t a S r t t a S te ta B te a B nk a n o k f . P S c t t , o C s h k a e r y le , s P ,1 e 1 - 1 i .! 100,000 ' 40,000 j 4,853,405 toskey, Mich ! 50,000 10,000 ] 153,605 expelled from their natural commercial resting place, and Fidelity Trust Co., Portland, Me.. 400,000 400,000 76,337 their true position is actually reversed. First Wellington Bank, Welling- 13,397,469 ton, Ohio 85,000 70,000 j 170,920 "Third. There is still another subject of solicitude with Illinois State Bank, East St. i Louis, 111 400,000 3,149,355 which we are all daily familiar. I allude to the reception Anson State Bank, Anson, Tex... 35,000 10,000 270,110 of checks of large amounts, drawn upon banks which Merchants & Planters Bank, Texarkana, Ark j 200,000 10,000 1,130,085 particularly deal with brokers and operators in bonds and Bank of Ellsworth, Ellsworth, j Wis : 50,000 15,000 914,576 stocks. The sums represented in such transactions by Commercial Trust Co. of N. J., the nature of the business are of great magnitude. The Jersey City, N. J 1,000,000 1,500,000 | 29,996,271 South Texas State Bank, Galvescustom has become established, of pivoting the operations ton, Tex 100,000 1,322,217 of the brokers' board through the banks by expressing Ri p tt h e i n a, h o P u a se Trust Co., Philadel- 250,000 50,000 I 2,000,231 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ArniL • FEDERAL KESERVE BULLETIN. 295 increase, and particularly large reductions are Capital. Surplus. ; res T o o u t r a c l es. shown by the sixth, ninth, tenth, and twelfth districts. In. respect to the liabilities, the Ballinger State Bank & Trust Co., Ballinger, Tex 860,000 ••512,000 ! 8229,644 amounts are smaller than in February, 1917, Bank of Fergus County, Lewistown, Mont 250,000 250,000 : 3,294,317 in all of the 12 districts, except the first and Depositors Savings & Trust Co., ; M • '• a r A in k e r o B n a . n O k h i & o Trust Co., New 300.000 250,000 : 4,242,085 third. Orleans, La 400,000 100,000 , 506,207 Failures during February. American Trust & Savings Bank, Albuquerque, N. Mox.~ 100,000 40,000 j 601,196 | High land Park State Bank of De- Number. Liabilities. troit, Siich 500,000 100,000 ' 9,725,519 F B i a r t s t t e r S y t at P e a B rk a nk B , a F n r k a , n k A li s n h , e v T il e i x e, .. 30,000 7,500 • 213,996 Districts. N.C. 100,000 100,000 2,648,586 1918 1917 1918 1917 Manistco County Savings Bank, Fi M rst a ii S is t t a e t e e , M B i a c n li k & Trust Co., 100,000 100,000 2,069,897 | Hrst 139 93 538,100 $657,828 Hereford, Tex 50,000 25,000 j 868,611 j ff°f... 153 204 685,010 3,891,882 State Savings Bank & Trust Co., 65 65 839,038 470,444 M M oli o n l e in e T ,f r f u l' s . t & Savings Bank, 300,000 100,000 o6 ,9Q9Q0n,4 A4 A7n ! ' F F if o t u h_rth... 5 9 1 3 9 5 0 8 6 9 3 0 4 3 , , 5 6 0 2 9 5 1,4 9 6 3 1 4 , , 6 9 5 23 4 Molinc,Iil 225,000 85,000 3,316,953 Sixth.... 43 114 279,989 1.098,938 Farmers Guaranty State Bank, Seventh.. 161 141 814,311 1,871,188 W Pe J C i o a l o l p c . i . l a k e m s M s o s n o S V v l a i i n v a ll e l i e l n . e , g I y T l s l B e B x a a n n k k , W & il l T ia r m us s t - 25 5 0 0 , , 0 0 0 0 0 0 15 7 0 , , 5 0 0 0 0 0 ! i | 4,3 3 2 7 5 3 , , 4 4 6 5 8 5 N T E E l e i i e g n n v h t t h e h t n h . - . t . h .. .. 6 3 3 4 7 0 2 1 5 9 5 5 1 0 1 0 2 2 3 4 8 9 0 2 8 8 3 8 , , , , 3 2 0 9 8 2 0 8 6 7 0 7 3 6 5 7 7 8 1 7 0 5 0 8 . , , ; 4 0 7 0 7 1 9 4 1 3 0 2 town, Pa 50,000 429,815 Twelfth... 105 152 016,000 3,886;680 Nassau Comity Trust Co. Min- 44,000 i eola,N.Y 100,000 75,000 1,981,862 Total. 980 1,165 12,829,182 16,617,883 Total: 11,415,000 8,658,500 181,916,215 New National Bank Charters. Change cA name: The Alliance Trust & Guaranty Co., of Hackonsack, N. J., a member institution, has changed its name to the Peoples Trust & The Comptroller of the Currency reports the Guaranty Co. of liackensaek. following increases and reductions in the num- Three hundred and eighty-five State instiber of national banks and the capital of tutions are now members of the system, national banks during the period from February having a total capital of $255,224,800, total 23, 1918, to March 22, 1918, inclusive: surplus of $337,611,576, and total resources Banks. of $6,248,072,077. New charters issued to 12 With capital of $625,000 Increase of capital approved for 21 Commercial Failures Reported. With new capital of 1,385,000 While commercial failures in the United Aggregate number of new charters and banks States last year were comparatively moderate, increasing capital 33 the returns this year make a still better exhibit, With aggregate of new cap ital authorized 2, 010, 000 only 747 defaults being reported to R. G. Number of banks liquidating (other than Dun & Co., in three weeks of March, against 861 those consolidating with other national banks) 4 in the same period of 1917. The record for Capital of same banks 500,000 February, the latest month for which complete Number of banks reducing capital 0 statistics are available, is the most favorable Reduction of capital 0 of any February since 1907, insolvencies num- Total number of banks going into liquidabering 980 and involving $12,829,182 of tion or reducing capital (other than those consolidating with other national banks).. 4 liabilities. These figures compare with 1,165 Aggregate capital reduction 500,000 reverses for $16,617,883 in February, 1917, and, according to the statement specially com- The foregoing statement shows the aggregate of increased capital for the period of the banks piled for the Federal Reserve Board, fewer embraced in statement waa 2,010,000 failures than last year appear in 8 of the 12 Against this there was a reduction of capital Federal Reserve districts, with no change owing to liquidations (other than for consolioccurring in the number of defaults in the dation with other national banks) and reducthird district. Only in the first, fourth, and tions of capital of 500,000 seventh districts was there any numerical Net increase 1, 510, 000 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

296 FEDERAL, RESERVE BULLETIN. APRIL ' Acceptances to 100 Per Cent. Government Control of Railroads. Since the issue of the March Bulletin the The act providing for the operation of railfollowing banks have been authorized to accept roads while under Federal control was signed drafts and bills of exchange up to 100 per cent by the President and became law on March 21. of their capital and surplus: Below is printed the text of the act in mil: United States Mortgage & Trust Co., New York City. [S. 3752.] Bank of New York, N. B. A., New York City. An Act To provide for the operation of transportation systems while Citizens Bank of Norfolk, Norfolk, Va. under Federal control, for the just compensation of their ovrnors, and Mercantile Trust Co., St. Louis, Mo. for other purposes. Bank of North America, Philadelphia, Pa. Be it enacted by the Senate and Bouse of Representatives of United States National Bank, Portland, Greg. the United States of America in Congress assembled, That Canal Bank & Trust Co., New Orleans, La. the President, having in time of war taken over the posses- National City Bank, Chicago, 111. sion, use, control, and operation (called herein Federal Fort Dearborn National Bank, Chicago, 111. control) of certain railroads and systems of transportation Drovers National Bank, Chicago, 111. (called herein carriers), is hereby authorized to agree with National Bank of Commerce, Baltimore, Md. and to guarantee to any such carrier making operating Citizens and Peoples National Bank, Pensacola, Fla. returns to the Interstate Commerce Com mission, that during the period of such Federal control it shall receive as just compensation an annual sum, payable from time to time in reasonable installments, for each year and pro rata Fiduciary Powers. for any fractional year of such Federal control, not exceed- The applications of the following banks for ing a sum equivalent a3 nearly as may be to its average annual railway operating income for the three years ended permission to act under section 11-k of the June thirtieth, nineteen hundred and seventeen. That Federal Reserve Act have been approved since any railway operating income accruing during the period the issue of the March Bulletin: of Federal control in excess of such just compensation shall remain the property of the United States. In the com- DISTRICT NO. 2. putation of such income, debits and credits arising from the accounts called in the monthly reports to the Inter- Trustee and registrar of stocks and bonds:' state Commerce Commission equipment rents and joint Union National Bank, French town, N. J. facility rents shall be included, but debits and credits arising from the operation of such street electric passenger DISTRICT NO. 4. railways, including railways commonly called interurbaus, Registrar of stocks and bonds: as are at the time of the agreement not under Federal con- Peoples National Bank, Pittsburgh, Pa. trol, shall be excluded. If any lines were acquired by, leased to, or consolidated with such railroad or system between July first, nineteen hundred and fourteen, and DISTRICT NO. 5. December thirty-first, nineteen hundred and seventeen, Registrar of stocks and bonds: both inclusive, and separate operating returns to the Inter- Madison National Bank, Madison, W. Va. state Commerce Commission were not made for such lines after such acquisition, lease, or consolidation, there shall DISTRICT NO. 7. (before the average is computed) be added to the total railway operating income of such railroad or system for Trustee, executor, and administrator: the three years ended June thirtieth, nineteen hundred First National Bank, Dana, Ind. and seventeen, the total railway operating income of the lines so acquired, leased, or consolidated, for the period DISTRICT NO. 10. beginning July first, nineteen hundred and fourteen, and Trustee, executor, administrator, and registrar of stocks ending on the date of such acquisition, lease, or consolidaand bonds: tion, or on December thirty-first, nineteen hundred and Central National Bank, Tulsa, Okla. seventeen, whichever is the earlier. The average annual Trustee, executor, and administrator: railway operating income shall be ascertained by the First National Bank, Troy, Kans. Interstate Commerce Commission and certified by it to First National Bank, Cameron, Mo. the President. Its certificate shall, for the purpose of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1918. FEDEKAL BESBKVE BULLETIN. 297 such agreement, be taken as conclusive of the amount of If the President shall find that the condition of any such average annual railway operating income. carrier was during all or a substantial portion of the period Every such agreement shall provide that any Federal of three years ended June 30, 1917, because of nonoperataxes under the act of October third, nineteen hundred tion, receivership, or where recent expenditures for addiand seventeen, or acts in addition thereto or in amend- tions or improvements or equipment were not fully rement thereof, commonly called war taxes, assessed for the flected in the operating railway income of said three years period of Federal control beginning January first, nine- or a substantial portion thereof, or because of any undeteen hundred and eighteen, or any part or such period, veloped or abnormal conditions, so exceptional as to make shall be paid by the carrier out of its own funds, or shall the basis of earnings hereinabove provided for plainly be charged against or deducted from the just compensa- inequitable as a fair measure of just compensation, then tion; that other taxes assessed under Federal or any other the President may make with the carrier such agreement governmental authority for the period of Federal control for such amount as just compensation as under the ciror any part thereof, either on the property used under cumstances of the particular case he shall find just. such Federal control or on the right to operate as a carrier, That every railroad not owned, controlled, or operated or on the revenues or any part th ereof derived from oper- by another carrier company, and which has heretofore ation (not including, however, assessments for public im- competed for traffic with a railroad or railroads of which provements or taxes assessed on property under construc- the President has taken the possession, use, and control, tion, and chargeable under the classification of the Inter- or which connects with such railroads and is engaged as a state Commerce Commission to investment in road and common carrier in general transportation, shall be held equipment), shall bo paid out of revenues derived from and considered as within "Federal control," as herein railway operation while under Federal control; that all defined, and necessary for the prosecution of the war, and taxes assessed under Federal or any other governmental shall be entitled to the benefit of all the provisions of this authority for the period prior to January first, nineteen act: Provided, however, That nothing in this paragraph hundred and eighteen, whenever levied or payable, shall shall be construed as including any street or interurban be paid by the carrier out of its own funds, or shall be electric railway which has as its principal source of opercharged against or deducted from the just compensation. ating revenue, urban, suburban, or interurban passenger Every such agreement shall also contain adequate and traffic, or sale of power, heat and light, or both. appropriate provisions for the maintenance, repair, The agreement shall also provide that the carrier shall renewals, and depreciation of the property, for the crea- accept all the terms and conditions of this act and any tion of any reserves or reserve funds found necessary in regulation or order made by or through the President under connection therewith, and for such accounting and adjust- authority of this act or of that portion of the act entitled ments of charges and payments, both during and at the "An act making appropriations for the support of the Army end of Federal control as may be requisite in order that for the fiscal year ending June 30, 1917, and for other purthe property of each carrier may be returned to it in sub- poses," approved August 29, 1916, which authorizes the stantially as good repair and in substantially as complete President in time of war to take possession, assume conequipment as it was in at the beginning of Federal con- trol, and utilize systems of transportation. trol, and also that the United States may, by deductions Sec. 2. That if no such agreement is made, or pending from the just compensations or by other proper means and the execution of an agreement, the President may nevercharges, be reimbursed for the cost oi; any additions, theless pay to any carrier while under Federal control repairs, renewals, and betterments to such property not an annual amount, payable in reasonable installments, justly chargeable to the United States; in. making such not exceeding ninety per centum of the estimated annual accounting and adjustments, due consideration shall be amount of just compensation, remitting such carrier, in given to the amounts expended or reserved, by each case where no agreement :1s made, to its iogal rights for carrier for maintenance, repairs, renewals, and deprecia- any balance claimed to tho remedies provided in section tion during the three years ended June thirtieth, nineteen three hereof. Any amount thereafter found due such hundred and seventeen, to the condition of the property carrier above the amount paid shall bear interest at at the beginning and at the end of Federal control and to the rate of six per centum per ar.num. The acceptance any other pertinent facts and circumstances. of any benefits under this section shall constitute an The President is further authorized in such agreement acceptance by the carrier of all the provisions of this Act to make all other reasonable provisions, not inconsistent and shall obligate the carrier to pay to the United States, with the provisions of this act or of the act entitled "An with interest at the rate of six per centum per annum from act making appropriations for the support of the Army for a date or dates fixed in proceedings under section three, the nscal year ending June 30, 1917, and for other pur- the amount by which the sums received under this section poses/' approved August 29,1916, that he may deem neces- exceed the sum found due in such proceedings. sary or proper for such Federal control or for the determina- Sec. 3. That all claims for just compensation not adtion of the mutual rights and obligations of the parties to justed (as provided in section one) shall, on the applicathe agreement arising from or out of such Federal control. tion of the President or of any carrier, be submitted to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

298 FEDERAL RESERVE BULLETIN. APRIL 1,1918, boards, each consisting of three referees to be appointed ; dends during the three years ended June thirtieth, nineby the Interstate Commerce Commission, members of i teen hundred and seventeen: Provided, however, That which and the official force thereof being eligible for j such carriers as have paid no regular dividends or no service on such boards without additional compensation. ! dividends during said period may, with the prior approval Such boards of referees are hereby authorized to summon i of the President, pay dividends at such rate as the Presiwitnesses, require the production of records, books, cor- i dent may determine. respondence, documents, memoranda, and other papers, j; Sec. 6..;That the sum of $500,000,000 is hereby- approview properties, administer oaths, and may hold hearings jlpriated, out of any moneys in the Treasury not otherwise in Washington and elsewhere, as their duties and the con- appropriated, which, together with any funds available venience of the parties may require. In case of disobe- from any operating income of said carriers, may bo used dience to a subpoena the board may invoke the aid of any by the President as a revolving fund for the purpose of district court of the United States in requiring the attend- paying the expenses of the Federal control, and so far as ance and testimony of witnesses and the production of necessary the amount of just compensation, and to prodocumentary evidence, and such court within the juris- vide terminals, motive power, cars, and other necessary diction of which such inquiry is carried on may, in case equipment, such terminals, motive power, cars, and equipof contumacy or refusal to obey a subpoena issued to any ment to be used and accounted for as the President may person, corporation, partnership, or association, issue an direct and to be disposed of as Congress may hereafter by order requiring appearance before the board, or the pro- law provide. duction of documentary evidence if so ordered, or the The President may also make or order any carrier to giving of evidence touching the matter in question; and i make any additions, betterments, or road extensions, and any failure to obey such order of the court may be pun- to provide terminals, motive power, cars, and other ished by such court as a contempt thereof. Such cases equipment necessary or desirable for war purposes or in may be heard separately or together or by classes, by such the public interest on or in connection with the property boards as the Interstate Commerce Commission in the first of any carrier. He may from said revolving fund advance instance, or any board of referees to which any such cases to such carrier all or any part of the expense of such addishall be referred may determine. Said boards shall give tions, betterments, or road extensions, and to provide full hearings to such carriers and to the Unite.d States; terminals, motive power, cars, and other necessary equipshall consider all the facts and circumstances, and shall ment so ordered and constructed by such carrier or hy the report as soon as practicable in each case to the President President, such advances to be charged against such carthe just compensation, calculated on an annual basis and rier and to bear interest at such rate and be payable on otherwise, in such form as to be convenient and available I such terms as may be determined by the President, to the for the making of such agreement as is authorized in sec- end that the United States may be fuiiy reimbursed for tion one. The President is authorized to enter into an any sums so advanced. ••—•,.' agreement with such carrier for just compensation upon a Any loss claimed by any carrier by reason of any such basis not in excess of that reported by such board, and may additions, betterments, or road extensions so ordered and include therein provisions similar to those authorized un- constructed may be determined by agreement between der section one. Failing such agreement, either the the President and such carrier; failing such agreement the United States or such carrier may file a petition in the amount of such loss shall be ascertained as provided in Court of Claims for the purpose of determining the amount section three hereof. of such just compensation, and in the proceedings in said From said revolving fund the President may expend court the report of said referees shall be prima facie evi- such an amount as he may deem necessary or desirable dence of the amount of just compensation and of the facts j for the utilization and operation of canals, or for the purtherein stated. Proceedings in the Court of Claims under chase, construction, or utilization and operation of boats, this section shall be given precedence and expedited in barges, tugs, and other transportation facilities on the every practicable way. inland, canal, and coastwise waterways, and may in the Sec. 4. That the just compensation that may be deter- j operation and use of such facilities create or employ such mined as hereinbefore provided by agreement or that may j agencies and enter into such contracts and agreements as be adjudicated by the Court of Claims, shall be increased j he shall deem in the public interest. by an amount reckoned at a reasonable rate per centum to Sec. 7. That for the purpose of providing funds requisite be fixed by the President upon the cost of any additions | for maturing obligations or for other legal and proper exand betterments, less retirements, and upon the cost of penditures, or for reorganizing railroads in receivership, road extensions to the property of such carrier made by carriers may, during the period of Federal control, issue such carrier with the approval of or hy order of the Presi- such bonds, notes, equipment trust certificates, stock, and dent while such property is under Federal control. other forms of securities, secured or unsecured by mort- Sec. 5. That no carrier while under Federal control gage, as the President may first approve as consistent with shall, without the prior approval of the President, declare the public interest. The President may, out of the revolvor pay any dividend in excess of its regular rate of divi- ! ing fund created by this Act, purchase for the United Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL t, 1918. FEDEEAL BESEBVB BULLETIN. 299 States all or any part of such securities at prices not exceed- which it was originally instituted., But no process, inesne ing par, and :oiay sell such securities whenever in Ms or final, shall be levied against any property under such judgment it is desirable at prices not less than the cost Federal control. thereof. Any securities so purchased shall be held by That during the period of Federal control, whenever in the Secretary ox the Treasury, who shall, under the direc- his opinion the public interest req uires, the President may tion of the President, represent the United States in all initiate rates, fares, charges, classifications, regulations, matters in connection therewith in the same manner as a -and practices by filing the same with the Interstate Comprivate holder thereof. The President shall each year as merce Commission, which said rates, fares, charges, classisoon as practicable after January first, cause a detailed. fications, regulations, and practices shall not be suspended report to be submitted to tho Congress of all receipts and Ihy the commission pending final determination. expenditures made under this section and section six \ Said rates, fares, charges, classifications, regulations, during the preceding calendar year. and practices shall be reasonable and. just and shall take Bee. S. That, the President may execute any 01 the effect at such time and upon such notice as he may direct, powers herein and heretofore granted him with relation to Ibut the Interstate Commerce Commission shall, upon Federal control, through, such agencies as he may deter- \ complaint, enter upon a bearing concerning the justness mine, and may fix the reasonable compensation for the arid reasonableness of so much, of any order cf the Presiperformance of services in connection therewith, and may dent as establishes or changes any rate, fare, charge, classiavail himself of 'the advice, assistance, and cooperation of fication, regulation, or practice of any carrier under Fedthe Interstate Commerce Commission and of *h.e members era! control, and. may consider all the facts a-ncl circumand employees thereof, and may also call upon any depart- stances existing at the time of the making of i'he same. ment, commission, or board of the Government for such In determining any question concerning any such rates, services as he may deem expedient. But no such official fares, charges, classifications, regulations, or practices or or employee of the United States shall receive any addi- changes therein, the Interstate Commerce Commission tional compensation for suck services except as now per- shall give (hie consideration to the fact that the transpormitted by law. tation systems are being operated under a unified and Sec. d. That the provisions of the Act entitled "An Act i coordinated national control and not in competition. making appropriations for the support of the Army for the j After full hearing the cominissiori may make such findfiscal year ending June thirtieth, nineteen hundred and ings and orders as are authorized by the Act to regulate seventeen, and for other purposes/'' approved August commerce as amended, and said findings and orders shall twenty-ninth, nineteen hundred and sixteen, shall remain be enforce;! as provided in said Act: Provided, however, in force and effect except, as expressly modified and That when the President shall find and certify to the restricted by this Act: and the President, in addition to Interstate Commerce Commission that in order to defray the powers "conferred, by this Act, shall have and is hereby the expenses of Federal control and operation fairly given such, other and further powers necessary or appro- chargeable to railway operating expenses, and also to pay priate to give effect to the powers herein and heretofore railway tax accruals other than war taxes, net rents for conferred. The provisions of this Act shall also apply to joint facilities arid equipment, arid compensation to the any carriers to winch Federal control may be hereafter carriers, operating as a unit, it is necessary to increase the extend ecL jrailway operating revenues, the Interstate Commerce Sec. 10. That carriers while under Federal control shall j Commission in determining the justness and reasonablebe subject to all laws and liabilities as common carriers, j ness of any rate, fare, change, classification, regulation, or whether arising under State or Federal laws or at common | practice shall take into consideration said finding and law, except in sc> far as may be inconsistent with the pro-1certificate by the President, together with such recomvisions ox this Act or any other Act, applicable to such Fed- jmendations as he may make. eral control or with any order of the President. Actions at \ SEC. 11. That every person or corporation, whether law or suits in equity may be brought hy and against such • carrier or shipper, or any receiver, trustee, lessee, agent, carriers and judgments rendered as now provided by law; j or person acting for or employed by a carrier or shipper, and in any action at law or suit in equity against the car-1 or other person, who shall knowingly violate or MI to rier, no defense shall be made thereto upon the ground that j observe any of the provisions of this act, or shall knowthe carrier is an instrumentality or agency of the Federal "ingly interfere with or impede the possession, use. opera- Government. Nor shall any such carrier be entitled to j tion, or control of any railroad property, railroad, or transhave transferred to a Federal court any action heretofore or j portation system hitherto or hereafter taken over by the hereafter instituted by cr against it. which action was not j President, or shall knowingly violate any of the provisions so transferable prior to the Federal control of such carrier;!of any order or regulation made in pursuance of this act. and any action which has heretofore beer, so transferred jshall be guilty of a misdemeanor, and shall, upon conbecause of such Federal control or of any Act of Congress or jviction, be punished by a fine of not more than So,GOO, official order or proclamation relating thereto shall upon or, if a person, by imprisonment for not more than two motion of either party be retransferred to the court in years, or both. Each independent transaction constitut- 49815- 18— 8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

300 FEDEEAL BESEBVE 3T7IXET1N. APBIL Is 1918. ing a -violation of, or a failure to observe, any of the pro- under the act to protect trade and commerce against visions of this act, or any order entered in pursuance unlawful restraints and monopolies, approved July 2,1890, hereof, shall constitute a separate offense. For the taking ar\d amendments thereto, shall proceed to final determinaor conversion, to Ms own use or the embezzlement of| tion as soon, as may be, as if the United States had not money or property derived from or used in connection | assumed control of transportation systems; but in any with the possession, uso, or operation of said railroads or such case the court having jurisdiction, may, upon the transportation systems, the criminal statutes of the United application of the United States, stay execution of final States, as well as the criminal statutes of the radons judgment or decree until such, time as it shall deem, proper. States where applicable, shall apply to all officers, agents, Sec. 14. That the Federal control of railroads and and employees engaged in said railroad and transporta- transportation systems herein and heretofore provided for tion service, while the same is under Federal control, to shall continue for and during the period of the war and for the same extent as to persons employed in the regular a reasonable time thereafter, which shall not exceed one service of the United States. Prosecutions for violations year and nine months next following the date of the of this act or of any order entered hereunder shall be in proclamation by the President of the exchange of ratificathe district courts of the United States, under the direc- tions of the treaty of peace: Provided, koiuever, That the tion, of the Attorney General, in accordance •with the President may, prior to July 1, 1918, relinquish control of procedure for the collection and imposing of fines and all or any part of a.ny railroad or system of transportation, penalties now existing in. said courts. further Federal control of which the President shall deem See. 12, That moneys and other property derived from not needful or desirable; and the President may at any the operation of the carriers daring Federal control are time during the period of Federal control agree with the hereby declared to be the property of the United States. owners thereof to relinquish all or any part of any railroad Unless otherwise directed, by the President, such moneys or system of transportation. The President may reshall not be covered into the Treasury, but such moneys linquish all railroads and systems of transportation under and property shall remain in the custody of the same Federal control at any time he shall deem such action of8.cers, and the accounting thereof shall be in the same needful or desirable.. No right to compensation shall manner and form as before Federal control. Disburse- accrue to such owners from and after the date o! relinments therefrom shall, "without further appropriation, be quishment for the property so relinquished. made in the same manner as before Federal control and for Sec. 15. That nothing in. this act shall be construed to such, purposes as under the Interstate Commerce Com- amend, repeal, impair, or affect the existing laws or powers mission classification of accounts in force on December 27, of the States in relation to taxation or the lawful police 1317, are chargeable to operating expenses or to railway regulations of the several States, except wherein such laws, tax accruals and. for such other purposes in connection powers, or regulations may affect the transportation of with Federal control as the President may direct, except troops, war materials. Government supplies, or the issue that taxes under Titles 1 and 2 oi the act entitled "An of stocks and bonds. act to provide revenue to defray war expenses, and for Sec, 18. That this act is expressly declared to be emerother purposes." approved October 3, 191.7. or any act-in gency legislation enacted to meet conditions growing out addition thereto or in amendment thereof, shall be paid of war; and nothing herein is to be construed as expressing by the carrier out of its own. funds. It Federal control or prejudicing the future policy of the Federal Government begins or ends during the tax year for which, any taxes so concerning tb.e ownership, control, or regulation of carriers chargeable to railway tax accruals are assessed, the taxes or the method or basis of the capitalization thereof. for such year shall be apportioned to the date of the Approved March 21, 1918. beginning or ending of such Federal control, and disbursements shall be made only for that portion, of such, taxes as is due for the part of such tax year which falls within the War Fm&siee Corporation. Act, period of Federal control. At such periods as the President may direct, the books Th.e committee of conference on the disshall be closed and the balance of revenues over disburse- agreeing votes of the two Houses on the amendments shall be covered into the Treasury of 'the United ment of the House to the bill (S. 3714.) to pro- States to the credit of the revolving fund created by this vide further for the national security and act. If such revenues are insufficient to meet such clisburseinents, the deficit shall be paid out of such revolving defense, and, for the purpose of assisting fond in such, manner as the President may direct. in the prosecution of the war, to provide Sec. 13. That all pending cases in the courts of the credits for industries and enterprises in the United States affecting railroads or other transportation United States necessary or contributory to the systems brought under the act to regulate commerce, prosecution of the war, and for other purposes, approved February 4. 1887, as amended and supplemented, including the commodities clause, so called, or after conference, agreed, on April 1 to recom- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

I, 1918. FEDERAL RESERVE BUJLLEXLBF. 801 mend to the respective Houses tlio following Of the four directors sc appointed, the President of the measure and its report was subsequently United States shall designate two to serve for two years and two for four years, and thereafter each, director so apadopted by both: pointed shall serve for four years. Whenever a vacancy shall occur among the directors so appointed, the person AN ACT To provide further for tlio national socuriSy y.nd dofcnso, and, for tlio purpose of assisting in the prosecution of tks wsi. to provide appointed director to fill, any such vacancy shall hold credits for Industries and enterprises in ths United States necessary ofll.ee for the unexpired term of the member whose place 0? contributory to ztm prosecution of tlio war, !HK5 to suporriss tlio lie is selected to fill. Any director shall be subject to reissuance of seeiirities, &nti for other purposes. moval by the President of the United States. Three mem- TITLE L—WA.R, FINANCE CORPORATION7. bers of the board ox directors shall constitute a quorum for the transaction of business. Be it enacted by the Senate and House of Representatives of SEC, 4. That the four directors of the corporation apthe United Slates of ..America in Congress assembled, That the Secretary of the Treasury and four additional persons pointed as hereinbefore provided shall receive annual (who shall be the directors firet appointed as hereinafter salaries, payable monthly, of 812,000. Any director reprovided), are hereby created a bedy corporate and politic ceiving from, the United States any salary or compensation In. deed and in law by the name, style, and title of tho for services shall not receive as salary from the corpora- ''War Finance Corporation" (herein called tho corpora- tion any amount which, together with any salary or comtion), and. shall have succession for a period of tan years: pensation received from the United States, would make Provided, That in no event shall the corporation, exercise the total amount paid to him by tlie United States and by &,n:y of the powers conferred by this acL except si; eh as arothe corporation exceed $12,000. incidental to the liquidation of its assets aim the winding SEC, 5. That ih.o principal office of the corporation shall up of its affairs, after six months alter tho termination of be located in the District of Columbia, but there may be the "war, the date of such termination to he fixed by proc- established agencies or branch, offices in any city or cities iamatioH of the President of the Uni.tod States, of the United States under rules and regulations prescribed by the board of directors. SEC. 2. That the capital stock of the corporation shall be $600,000,000, all of which shall be subscribed by the "United SEC. 8, That the corporation shall be empowered and States of America; and such subscription shall be subject authorized to adopt, alter, and use a corporate seal; to r.o call upon the vote of three-fifths of the board of directors make contracts; to purchase or lease and hold or dispose of the corporation, vvith the approval of the Secretary of of such real estate as may be necessary for the prosecution the Treasury,^at such, time or times as inay be deemed ad- of its business; to sue and be sued; to complain and defend visable: and there is hereby appropriated, out of any in any court of competent jurisdiction, State or Federal; money in the Treasury not otherwise appropriated, the to appoint, by its board of directors, and fix the compenffiim of $500,000,000, or so much thereof as may be neces-sation of such officers, employees, attorneys, and agents sary for the purpose of making payment upon such sub- as are necessary for the transaction of the business of the scription 'when and as cs,!Ied. 'Receipts for payments by corporation, to define their duties, require bonds of them the United States of America for or on account of such and Ox the penalties thereof, and to dismiss at pleasure stock shall be issued hj tho corporation to the Secretary such officers, employees, attorneys;, and agents; and to of the Treasury, and shall be evidence of stock ownership. prescribe, amend, and repeal, by its board of directors, subject to the approval of tlio Secretary of the Treasury, SEO. 3. That the management of the corporation shali by-laws regulating the manner in which its general busibe 'vested in. a board of directors, consisting of tho Secreness may be conducted and the privileges granted to it tary of the Treasury, "who shall be chairman of the board; hj law may bo exercised and enjoyed, and prescribing the &n& four other persons, to be appointed by the President powers and duties of its officers and agents. of the United. States, by and with the advice and consent SEC. 7. That ihB corporation shall be empowered, and of the Senate. No director, officer, attorney, agent, or emauthorized to make advances, upon such terms, not inconployee of the corporation shall in any manner, directly or sistent herewith, as it may prescribe, for periods not exmdireeth\ participate in the determination of any quesceeding five years from the respective dates of such adtion affecting his personal interests, or the interests of any vances: corporation, partnership, or association, in which, he is (1) To any bank, banker, or trust company, in the directly or indirectly interested; and each director shall United States, which shali have made after April sixth, devote his time, not otherwise required by the business of nineteen hundred and seventeen, and -which, shall have the United States, principally to the business of the coroutstanding, any loan or loans to any person, firm, corporaporation. Before entering upon, his duties, each of the tion, or association, conducting an established and going four directors so appointed, and each officer, shall take an business in the United States, whose operations shall be oath faithfully to discharge the duties of his eflke. Nothnecessary or contributory to the prosecution of the war, ing contained in this or any other act shall be construed to and evidenced by a note or notes, but no such advance prevent the appointment as a director of the corporation shall exceed seventy-five per centum of the face value of of any officer or employee under the United States or of a such loan or loans; and director of a Federal reserve bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

302 FEDEiiAL RESERVE BULLETIN. AritiL .1, 191S. (2) To any bank, banker, or trust company, in the borrowing institution is located, but such rate of interest United States, which shall have rendered financial assist- shall in no case be greater than the average rate receivable ance, directly or indirectly, to any such person, firm, cor- by the borrowing institution on its loans and investments poration, or association by the purchase after April sixth, made during the six. months prior to the date of the adnineteen hundred and seventeen, of its bonds or other vance, except that where the average rate so receivable obligations, but no such advance shall exceed seventy- by the borrowing institution is loss than such rate of disfive per centum of the value of such bonds or other obliga- count for ninety-day commercial paper the rate of interest tions at the time of such advance, as estimated and deter- on such advance shall be equal to such rate of discount. mined by the board of directors of the corporation. The corporation shall retain power to require additional All advances shall be made upon the promissory note or security at any time. notes of such bank, banker, or trust company, secured by . SEC. 9. [That the corporation shall be empowered and the notes, bonds, or other ob!igations,which are the basis of I authorized, in exceptional cases, to make advances directly any such advance by the corporation, together with all the I to any person, firm, corporation, or association, conducting securities, if any, which such bank, banker, or trust com- I an established and going business in theUnited States, whose pany may hold as collateral for such notes, bonds, or other j operations shall be necessary or contributory to the proseobligations. cution of the war (but only for the purpose of conducting The corporation shall, however, have power to make such business in the United States and only when in the advances (a) up to one hundred per centum of the face opinion of the beard of directors of the corporation such value of any such loan made by any such bank, banker, or person, Srm, corporation, or association is unable to obtrust company to any such person, firm, corporation, or tain funds: upon reasonable terms through banking chanassociation, and (b) up to one hundred per centum of the nels or from the general public), for periods not exceeding value at the time of any such advance (as estimated and five years from the respective dates of such advances, upon determined by the board of directors of the corporation) such terms, and subject to such rules and regulations as of such bonds or other obligations by the purchase of which may be prescribed by the board of directors oi the corporafinancial assistance shall have been rendered to such per- tion. In no case shall the aggregate amount of the adson, firm, corporation, or association: Provided, That every vances made under this section exceed at any one time such advance shall be secured in the manner described in an amount equal to twelve and one-half per- centum of the the preceding part of this section, and in addition thereto sum of (1) the authorized capital stock of the corporation by collateral security, to be furnished by the bank, banker, plus (2) the aggregate amount of bonds of the corporation or trust company, of such character as shall "be prescribed authorized to be outstanding at any one time when the by the board of directors, of a value, at the time of such capital stock is fully paid in. Every such'advance shall advance (as estimated and determined by the board of be secured by adequate security of such character as shall directors of the corporation), equal to at least thirty-three be prescribed by the board of directors of a value at the per centum of the amount advanced by the corporation. time of such advance (as estimated and determined, by the? The corporation shall retain power to require additional board of directors), equal to (except in case of an advance security at any time. made to a railroad in the possession and control of the SEC, 8. That the corporation shall be empowered and President, for the purpose of making additions, bet-torauthorized to make advances from time to time, upon ments or road extensions to such railroad) at least ono such terms, not inconsistent herewith, as it may prescribe, hundred and twenty-five per centum of the amount adfor periods not exceeding one year, to any savings bank, vanced by the corporation. The corporation shall reti-ib banking institution or trust company, in the United power to require additional security at any time. The States, which receives savings deposits, or to any building rate of interest charged on any such advance shall not be and loan association in the United States, on the promis- less than one per centum per annum in excess of the rate sory note or notes of the borrowing institution, whenever of discount for ninety-day commercial paper prevailing the corporation shall deem such advances to be necessary at the time of such advance nt the Federal reserve bank or contributory to the prosecution of the war or important of the district in which the borrower is located. in the public interest: .Provided,, That such note or notes SEC. 10. That in no case shall the aggregate amount oi1 shall be secured by the pledge of securities of such the advances made under this title to any one person, firm, character as shall bo prescribed by the board of directors | corporation, or association exceed at any one time an of the corporation, the value of which, at the time of such amount equal to ten per centum of the authorized capital advance (as estimated and determined hy the board of stock of the corporation, but this section shall not apply directors of the corporation) shall be equal in amount to in the case of an advance made to a railroad, in the posat least one hundred and thirty-three per centum of the session and control of the President, for the purpose of amount of such, advance. The rate of interest charged on making additions, betterments, or road extensions to such any such advance shall not be less than one per centum railroad. per annum in excess of the rate of discount for ninety-day SEC. 11. That the corporation shall be empowered, and commercial paper prevailing at the time of such advance authorized to subscribe for, acquire, and own, buy, sell, at, the Federal reserve bank of the district in which the and deal m bonds and obligations of the United States Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL HESEBVK BULLETIN. 808 issued or converted after September twenty-fourth, nine- Federal Reserve Board may make a special interest charge teen hundred and seventeen, to such extent as the board on such notes, which, in the discretion of the Federal Reof directors, with the approval of the Secretary of the serve Board, need not be applicable to other Federal re- Treasury, may from time to time determine. serve notes which may from time to time be issued and out- SEC. 12. That the corporation shall be empowered and standing. All provisions of law. not inconsistent hereauthorized to issue and have outstanding at any one time with, in respect to the acquisition by any Federal reserve its bonds in an amount aggregating not more than six times bank of obligations or paper secured, hy such bonds or its paid-in capital, such bonds to mature not less than one notes of the United States, and in respect to Federal reyear nor more than five years from the respective dates of serve notes issued against the security of such obligations issue, and to bear such rate or rates of interest, and may be or paper, shall extend, in so far as applicable, to the redeemable before maturity at the option of the corpora- acquisition of obligations or paper secured by the bonds of tion, as may be determined by the board of directors, but the corporation and to the Federal reserve notes issued such rate or rates of interest shall be subject to the approval against the security of such obligations or paper. of the Secretary of the Treasury. Such bonds shall have SEC. 14. That the corporation shall not exercise any of a first and paramount floating charge on. all the assets of the i;he powers granted by this title or perform any business corporation, and the corporation, shall not at any time except such as is incidental and necessarily preliminary mortgage or pledge any of its assets. Such bonds may be to its organization until it has bee** authorized by the issued at not less than par in payment oi any advances President of the United States w commence business under authorized by this title, or niay be offered for sale publicly | the provisions of this title. or to any individual, firm, corporation, or association; at j SEC. 15. That all net; earnings of the corporation not resuch, price or prices as the board oi directors, with the quired for its operations shall be accumulated as a reserve approval of the Secretary oi the Treasury, may determine. fund until such, time as the corporation liquidates under Upon such terms not inconsistent herewith as may be the terms of this title. Such, reserve fund shall, upon the determined from time to time by the board of directors, direction of the board, of directors, with the approval of thv with the approval oi the Secretary of the Treasury, at or Secretary of the Treasury, be invested in. bonds and oblibefore the issue thereof, any of such bonds may be issued gations of the United States, issued or converted after payable in any foreign money or foreign moneys, or issued September twenty-fourth, nineteen .hundred and sevenpayable at the option of the respective holders thereof teen, or upon like direction and approval may be deposited either in dollars or in any foreign money or foreign moneys in member banks of the Federal Reserve System, or in at such fixed rate of exchange as may be stated in any such any of the Federal reserve banks, or be used from, time to bonds. For the purpose of determining the amount of time, as well as any other funds of the corporation, in the bonds issued payable in any foreign money or foreign purchase or redemption of any bonds issued by the cormoneys the dollar equivalent shall be determined by the poration. The Federal reserve banks are hereby authorpar of exchange at the date of issue thereof, as estimated ized to act as depositaries for and as fiscal agents of the by the Director of the Mint and proclaimed by the Secre- corporation in the general performance of the powers contary of the Treasury in pursuance of the provisions of ferred by this title. Beginning six months after the termsection twenty-five of the act entitled "An act to reduce ination of the war. the date of such, termination to be lixed taxation, to provide revenue for the Government, and for by a. proclamation of the President of the United States, other purposes," approved August; twenty-seventh, eight- the directors of the corporation shall proceed to liquidate een hundred and ninety-four. its assets and to wiod up its affairs, but the directors of the SEC. 13. That the Federal reserve banks shall be author- corporation, in their discretion, may, from time to time, ized, subject to the maturity limitations of the Federal prior to such date, sell and dispose of any securities or other reserve act and to regulations of the Federal Reserve Board, property acquired by the corporation. Any balance reto discount the direct obligations of member banks secured maining after the payment of all its debts shall be paid by such, bonds of the corporation and to rediscount eligible into the Treasury of the United States as miscellaneous paper secured by such bonds and indorsed by a member receipts, and thereupon the corporation shall be dissolved. bank. No discount or rediscount under this section shall SEC. 16. That any and all bonds issued by the corporabe granted at a less interest charge than one per centum tion shall be exempt., both as to principal and interest, per annum, above the prevailing rates for el igible commer- |from all taxation, now or hereafter imposed by the United cial paper of corresponding maturity. I States, any State, or any of the possessions of the United Any Federal reserve bank may. with the approval of the \ States, or by any local taxing authority, except (a) estate Federal Reserve Board, use any obligation or paper so or inheritance taxes, and (b) graduated additional income acquired for any purpose for which it is authorized to use taxes, commonly known as surtaxes, and excess-profits obligations or paper secured by bonds or notes of the and war-profits taxes, now or hereafter imposed by the United States not bearing the circulation privilege: Pro- United States, upon ih& income or profits of individuals, vided, however, That whenever Federal reserve notes are partnerships, corporations, or associations. The interest issued against the security of such obligations or paper the OB an amount of such bonds the principal of which does Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

804 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. not exceed in the aggregate §5,000, owned by any indi- person committing any of the offenses punishable under vidual, partnership, corporation, or association, shall be this section. exempt from tho taxes referred to in clause (b). The cor- SEC. 19. That the corporation shall file quarterly reports poration, including its franchise &n.d the capital and re-with the Secretary of the Senate and with the Clerk of the serve or surplus thereof, and the income derived there- House of Representatives, stating as of the fjrsi; day of from., shall be exempt from all taxation now or hereafter each month of the quarter just ended (1) the total amount imposed by the United States, any State, or any of the of capital paid in, (2) the total amount of bonds issued, possessions of the United States, or by any local taxing (3) the total amount of bonds outstanding, (4) the total authority, except that any real property of the corporation amount of advances made under each of sections seven, shall be subject to State, county, or municipal taxes to the eight, and nine, (5) a list of the classes and amount of same extent, according to its value, as other real property securities taken under each of such sections, (6) the total is taxed. amount of advances outstanding insider each of sections SEC, 17. That the united States shall not be liable for seven, eight, and nine, and (7) such other information a* fcb.e payment of any bond or other obligation or the interestmay be hereafter required by either Ho use of Congress. thereon issued or incurred by the corporation, nor shall it The corporation shall make a report to Congress on the incur any liability ia respect of any act or omission of the first day of each, regular session, including a detailed statecorporation. ment of receipts and expenditures. BEG, 1.8. That whoever (I) makes any statement, know- SEC. 20. Section fifty-two hundred and two of the Reing it to be false, for the purpose of obtaining for himself vised Statutes of the United States is hereby amended BO or for any other person, firm, corporation, or association as to read as follows: "Sec. 5202, No national banking any advance under this title, shall be punished by a line association shall at any time be indebted, or in any way of not more than §10,000, or by imprisonment for not more liable, to an amount exceeding the amount of its capital than five years, or both. stock at such time actually paid in and remaining undi- Whoever willfully overvalues any security by which any minighed by losses or otherwise, except on account of such advance is secured, shall be punished by a tine of not demands of the nature following: more than $5,000, or by imprisonment for not more than "First. Notes of circulation. two years, or both, ''•'Second. Moneys deposited with or collected by the Whoever (1) falsely makes, forges, or counterfeits any association. bond, coupon, or paper in imitation of or purporting to be "Third. Bills of exchange or drafts drawn s\gain?T, in imitation of a bond or coupon issued by the corpora- money actually on deposit to the credit of the association, tion; or (2) passes, utters, or publishes, or attempts to pass.I or due thereto. utter, or publish, any false, forged, or counterfeited bond, I "Fourth. Liabilities to the stockholders of the associacoupon, or paper purporting to be issued by the corpora- | tion for dividends and reserve profits. tion, knowing1 the same to be falsely made, forged, or 1 "Fifth. Liabilities incurred under the provisions of the counterfeited; or (3) falsely alters any such bond, coupon, | Federal Reserve Act, or paper; or (4) passes, utters, or publishes as true any "Sixth.. Liabilities incurred under the provisions of falsely altered or spurious bond, coupon, or paper issued the War Finance Corporation Act." or purporting to have been issued by the corporation, knowing the same to be faslely altered or spurious, shall ; TITLE II. OAPTTAL L-SUE* COMMITTEE. be punished hj a fine of not more than 810,000, or by im-! prisonment for not more than five years, or both, i SEC. 200. That there is hereby created a committee to Whoever, being connected in any capacity with the be known as the "Capital Issues Committee," hereinafter corporation, (I) embezzles, abstracts, or willfully mis- called the committee, and to be composed of seven memapplies any moneys, funds, or credits thereof, or (2) with bers to be appointed by the President of the United States. ID tent to defraud the corporation or any other company, by and with the advice and consent of the Senate. At body politic or corporate, or any individual, or to deceive least three of the members shall be members of the Federal &rcy oBicer of the corporation, (a) makes any false entryReserve 'Board. in any book, report, or statement of the corporation or No member officer, attorney, agent, or employee of the ; (b) without authority from the directors draws any order committee shall in any manner, directly or indirectly, or assigns any note, bond, draft, mortgage, judgment, or participate in the determination of any question affecting decree thereof, shall be punished by a fine of not more his personal interests, or the interest of any corporation, than §10,000, or by imprisonment, for not more than five partnership, or association in which he is directly or inyears, or both. directly interested. Before entering upon his duties, each The Secretary of the Treasury is hereby authorized to member and officer shall take an oath faithfully to disdirect and use the Secret Service Division of the Treasury charge the duties of his office. Nothing contained in this Department to detect, arreat. and deliver into custody or any other act shall be construed to prevent the appointo? the United States marshal having jurisdiction any ment as a member of the committee, of any officer or em- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APBII, 1.191S. FEDERAL RESERVE BULLETIN. 80o ployee under the United States or of a director of a Federal \ or face value of which. Issue and sny other securities Issued reserve bank, by the same person, firm, corporation, or association sinco The terms during which the several members of the the passage of this a-ct is In excess of $100,000. Shares of committee shall respectively hold oGiee shall bo deter- stock oi any corporation or association without nominal or mined by the. President of the "United States, ami the par value shall for the purpose of this section be deemed compensation of the several members of the committee to be of 'the par value of flOO each. Any securities which. who are not members of the Federal [Reserve Board shall upon the date oi tho passage of this act are in the possession be 87.500 per annum, payable monthly, but ii any such or control of the corporation, association, or obHs'or issumember receives any other compensation from any office (ing the same shall be deemed to h.a;ve been issued After or employment under the United States tho amount BO j the passage of this act within the moaning' hereof, received shall be deducted, from such salary, and ii such ; Nothing in this title shall be construed to authorize such other compensation is 37,500 or more, such member shall j committee to pass upon (1) any borrowing by any person, receive no salary as a member of the committee. .Any | firm, corporation, or association in the ordinary COIU'SG of member sha-ll be subject to removal hj the President of business as distinguished from borrowing for capital purthe United States. The President sha-H designate one of poses, (2) fche rorowing or refunding of indebtedness existthe members as'chairman, but any subsequent vacancy in ing at the time of the passage oi this act, (3) the resale A the chairmanship shall be filled by the committee. Four any securities the sale or offering of which, the coniTnittoe n.? embers of the committee shall constitute a quorum i'or'has determined to be compatible with the national intarthe transaction of business. (4) any securities }.*me6 by av.y rsih-oad corporation SBC. 201,, That the committee may employ and fix the j the property of which, may be in the possession si\d concompensatiozi of such officers, attorneys, agents, and other j trol of the President of the 'United States, or (o) any bonds employees as may be deemed necessary to conduct its I issued by the War Finance Corporation, business, who shall be appointed •without regard, to the j Nothing done or omitted by the coumviittee 'hereuncier provisions of the act entitled "An zcz TO regulate and im- shall be eor^tmed :-:s eaiTy.bg the* approval of the prove the civil service of the United States,J} approved zoittee or of the united States of the legality, validity, January sixteenth, eighteen hundred and eighty-three worth, or security of any securities. (volume twenty-two, United States Statutes at Large, page j SEC. 204. That there k hereby appropriated, out cJ. any four hundred &nd three), and amendments thereto or any j money in tlit- Tre<wary not otherwise ftppropii&tad, for rules or regulations made hi pursuance thereof. No such | the remainder of the fiscal ye.&v ending June fchiitieth, officer, attorney, agent, or employee shall receive more -nineteen hundred eight won, ami the ftsc^I coznpensauon than persons performing services of like ov ing June thirtieth, nineteen Imndred and nineteen, the «imi3ar character under the Federal Reserve Board. I sum o! 8200,000 for the purpose of defraying the expenses SEC. 202, That all the expenses of the committee, in- of the establishment and maintenance q£ the committee. eluding all necessary expenses for transportation incurred including zhe payment of. the salaries and rents heroin by the members or by its officers, attorneys, agents, or authorized. employees under its orders in mailing an investigation or SEC. 205. That the committee shall inake % report to upon official business in any ether places than at their Congress on the first day of each regular session, m respective headquarters, shall be a'Oowed and paid on a detailed statement of receipt:? find expenditures, >md the presentation of itemized vouchers therefor approved. also including the na-mca oi all officers and cvir?p3oycu;^ a-7id by the chairman. the salary paid to each. The committee may rent suitable oillees for its use, and SEC. 206. That this title shall continue in e.;Yect until, purchase such furniture, equipment, and supplies as may but not aiter, the expiration of six months after the terbo necessary, but shall not- expend more than §10,000 mination of the war, the date of such, termination to b« annually for offices in the District of Columbia. determined by a proclamation of the Preddeirfc of the The principal office of the committee shall be in the United States, but the President may at any time by Di.strict of Columbia, but it may meet and exercise all proclamation declare that this title .Is no longer 7-.ecessa.ry, its powers at any other place. The committee may; by and thereupon it shall cease to be in effect. one or more ox its members, or by such, agents as it may j designate, prosecute any inquiry necessary to its duties ! TITLE TIT. MISCEL-.-AXEOUfc. in any part of the United States. SEC. 203, That the committee may, under rides ><m& \ SEC. 300. That whoever willfully viol ales any of the proregulations to be prescribed by it from, time to time, in- | visions of this act, except where a different penalty is provestigate, pass upon, and determine whether it is compati- j videdinthis act, shall, upon conviction in any court of ble with the national interest that there should be sold or the United States of competent jurisdiction, ha lined not offered for sale or for subscription any issue, or any part more than $10,000 or imprisoned fov not more than one of any issue, of securities hereafter issued by any person, ! year, or both; and whoever knowingly participates in &ny firm, corporation, or association, the total or aggregate pax j auch violation, except where a, different penalty is pro- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

306 FEDERAL EESE.KVE BULLETIN. APRIL 1. 1.918. vided in this act, shall be punished by a like fine or im- poses of this act, and to meet expenditures authorized for prisonment, or both. the national security and defense and other public pur- SEC. 301. That no stamp tax shall be required or imposed poses authorized by law, not exceeding in the aggregate upon a promissory note secured by the pledge of bonds or $12,000,000,000, and to issue therefor bonds of the United obligations of the United States issued after April twenty- States, in addition to the $2,000,000,000 bonds already fourth, nineteen hundred and seventeen, or secured by the issued or offered for subscription under authority of the pledge of a promissory note, which itself is secured by act approved April twenty-fourth, nineteen hundred ard the pledge of such bonds or obligations: Provided, That in seventeen, entitled 'An act to authorize an issue of bonds either case the par value of such bonds or obligations shall to meet expenditures for the national security and defense equal the amount of such note. and, for the purpose of assisting in the prosecution of the Ssc, 302. That if any clause, sentence, paragraph, or war, to extend credit to foreign governments, and for part of this act shall, for any reason, be adjudged by any other purposes': Provided, That of this sum £3,063.945.4f;0 court, of competent jurisdiction to be invalid, or. in case shall be in lieu of that amount of the unissued bonds any court of competent jurisdiction shall adjudge to be in- authorized by sections one and four of the act approved valid any provisions hereof in respect of any class or classes April twenty-fourth, nineteen hundred and seventeen, of securities, such judgment shall not affect, impair or in- $225,000,000 shall be in lieu of that amount of the unissued bonds authorized by section thirty-nine of the act approved validate the remainder of this act, but shall be confined in August fifth, nineteen Imndred and Dine, SI50.000.CCO its operation to the clause, sentence, paragraph, part, or shall be in lieu of che unissued bonds authorized by the subject matter of this act directly involved in the controjoint resolution approved. March, fourth, nineteen hundred versy in which such judgment shall have been rendered. SEC. 308. Thax the term "securities,'5 as used in this act. and seventeen, and ^100.000,000 shall be in lieu of the unissued bonds authorized by section four hundred of the includes stocks, shares of stock, bonds, debentures, notes, act approved March third, nineteen hundred <in<! sevencertificates of indebtedness, and other obligations. teen . Ssc. 304. That the right; to amend, alter, or repeal this act is hereby expressly reserved. "The bonds herein authorize-1"! shall be in such form or SEC. 305. That the short title of this act shall be the forms and denomination or denominations and subject xo ''War Finance Corporation Act." such terms and conditions of issue, conversion, redemption, •SjiC. 306. That all provisions of any act or acts inconsist- maturities, payment. %,rid rate or rates of interest, not exent with the provisions of this act are 'hereby repealed. ceeding four and one-quarter per oentum per annum, and time or times of payment of interest, as the Secretary of the Treasury from time U> time at or before the issue thereof may prescribe. The principal and interest thereof Third Liberty Bond Act. shall be payable in United States gold coin of the present standard of value. Following is the text of the act providing for "The bonds herein authorize:\ shall from lime to rime an. additional issue of bonds, as approved, by first, be offered at not less than par as a x>opular loan, under the President on April 4. such regulations, prescribed by the Secretary of the Treasury from time to time, as will in his opi nion give the people [H. E. 11323.) of the United States as nearly as .may be an equal opportunity to participate therein, but he may make allotment AN ACT To amend an act approved September twenty-fourth, ninotcen hundred and seventeen, entitled "An act to authorize an additional in full upon applications for smaller amounts of bonds in issue of bonds to meet expenditures for the national security and advance of auy date which he may set for the closing ot for the purpose of assisting in the prosecution of the , ssuubbssccrriippttiioonnss aanndd mmaayy rreejjeecctt oorr rreedduuccee- aalllloottmmeennttss uuppoonn r. to extend additional credit to i'oreien troveniments, and for other i , , -s • • • i * i. .. , n ' I later applications and applications lor larger amounts, and Be it enacted by ike Senate and House of Representatives o;f m ! ainyc roerjpecotr;a toerd rebdaunckes aallnodtm terunstst ucopomnp aanpipesli cfaotiro nths eifrro omwn the '(Mud Slates of America in Congress assembled That \j account and make allotment in full or larger allotments f ihe fa'st section of the act approved September twenty- j to others, and may establish a graduated scale of allotfourth, nineteen hundred and seventeen, entitled "An act I ments, and may from time to time adopt any or all of to authorize an additional -issue of bonds to meet expend!- ! said methods, should any such action be deemed by him toes for the national security and defense, and. for the j to be in the public Interest: Provided, That such reduction purpose of assisting in the prosecution of the war. to extend j or increase of allotments of such bonds shall be made under additional credit to foreign governments, and for other j general rules to be prescribed by said Secretary and shall purposes/1 be, and is hereby, amended to read as follows: apply to all subscribers similarly situated. And any por- "That the Secretary of the Treasury, with the approval tion of the bonds so offered and not taken may be otherwise of the President, is hereby authorized to borrow, from disposed of by the Secretary of the Treasury in such manner time to time, on the credit of the united States for the pur- and at such price or prices, not less than par, as he mar Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

.1, 1918, FEDERAL KBSEBVE BULLETIN. 807 determine. The Secretary may make special arrange- SEC. 5. That section eight of said act approved Sepments for subscriptions at not less than par from persons tember twenty-fourth, nineteen hundred and seventeen, in the military or naval forces of the United States, but bo, and is hereby, amended to read as follows: any bonds issued to such persons shall be in all respects "SEC. 8. That the Secretary of the Treasury, in his the same as other bonds of the sine issue," discretion, is hereby authorized to deposit in such incor- SEC. 2. That the last sentence of section two of said porated banks and trust companies as he may designate, act approved September twenty-fourth, nineteen hundred the proceeds, or any part thereof, arising from the sale of and seventeen, be, and is hereby, amended to read as the bonds and certificates of indebtedness and war-savings follows: certificates authorized by this act, and arising from the "For the purposes of this section there is appropriated, payment of income and excess profits taxes, and such out of any money in the Treasury not otherwise appro- deposits shall bear such rate or rates of interest, and shall priated, the sum of §5,500,000,000, and in addition thereto be secured in such manner, and shall be made upon and the unexpended balance of the appropriations made by subject to such terms and conditions as the Secretary of section two or said act approved April twenty-fourth, the Treasury may from time to time prescribe: Provided, nineteen hundred and seventeen, or so much thereof as That the provisions of section fifty-one hundred and may be necessary: Provided, That the authority granted ninety-one of the .Revised Statutes, as amended by the by this section to the Secretary of the Treasury to estab- Federal reserve act, and the amandinents thereof, with lish credits for foreign Governments, as aforesaid, shall reference to the reserves required to be kept by national cease upon the termination of the war between the United banking associations and other member banks of the States and the Imperial German Government." Federal Reserve System, shall not apply to deposits of SEC. 3. That section four of said act approved Septem- public moneys by the United States in designated deposiber twenty-fourth, nineteen hundred and seventeen, is taries. The Secretary of the Treasury is hereby authorhereby amended by adding two new paragraphs, as ized to designate depositaries in foreign countries with follows: which shall be deposited all public money which it may "That holders of bonds bearing interest at a higher be necessary or desirable to have on deposit in such rate than four per centum per annum, whether issued countries to provide for current disbursements to the (a) under section one, or (b) upon conversion of four military and naval forces of the United States and to the per centum bonds issued under section one, or (c) upon diplomatic and consular and other representatives of the conversion of three and one-half per centum bonds issued United States in and about such countries until six months under said act approved April twenty-fourth, nineteen after the termination of the war between the United hundred and seventeen, or (d) upon conversion of four States and the Imperial German Government, and to per centum bonds issued upon conversion of such three prescribe the terms and conditions of such deposits." and one-half per centum bonds, shall not be entitled to SEC. 6. That said act approved September twentyany privilege of conversion under or pursuant to this fourth, nineteen hundred and seventeen, is hereby section or otherwise. The provisions of section seven amended by adding four new sections, to read as follows: shall extend to all such bonds. •'SEC. 14. That any bonds of the United States bearing 'If bonds bearing interest at a higher rate than four interest at a higher rate than four per centum per annum per centum per annum shall be issued before July first, (whether issued under section one of this act or upon nineteen hundred and eighteen, then any bonds bearing conversion of bonds issued under this act or under said interest at the rate of four per centum per annum which act approved April twenty-fourth, nineteen hundred and shall, alter July first, nineteen hundred and eighteen, seventeen), which have been owned by any person conand before the expiration of the six months' conversion tinuously for at least six months prior to the date of his period prescribed by the Secretary of the Treasury, be pre- death, and which upon such date constitute part of his sented for conversion into bonds bearing interest at such estate, shall, under rules and regulations prescribed by the higher rate, shall, for the purpose of computing the amount Secretary of the Treasury, be receivable by the United of interest payable, be deemed to have been converted on States at par and accrued interest, in payment of any the dates for the payment of the semiannual interest on the estate or inheritance taxes imposed hy the United States, respective bonds so presented for conversion, last preced- under or by virtue of any present or future law, upon such ing the date of such presentation." estate or the inheritance thereof. SEC. 4. That the last sentence of section five of said "SEC. 15. That the Secretary of the Treasury is authoract approved September twenty-fourth, nineteen hundred ized, from time to time, until the expiration of one year and seventeen, be, and ia hereby, amended to read as after the termination of the war, to purchase bonds issued follows: under authority of this act, including bonds issued upon "The sum of such certificates outstanding hereunder conversion of bonds issued under this act or said act apand under section six of said act approved April twenty- proved April twenty-fourth, nineteen hundred and sevenfourth, nineteen hundred and seventeen, shall not at any teen, at such prices and upon such terms and conditions one time exceed in the aggregate $8,000,000,000." as he may prescribe. The par amount of bonds of any Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

308 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. such series which may be purchased in the twelve months' j such bonds or certificates, but not also in United States period beginning on the date of issue, shall not exceed !gold coin, and he may dispose of such bonds or certificates one-twentieth of the par amount of bonds of such series Iin such manner and at such prices, not less than par, as he originally issued, and in each twelve months' period ! may determine, without compliance with the provisions thereafter, shall not exceed one-twentieth of the amount! of the third paragraph of section one. In determining the of the bonds of such series outstanding at the beginning amount of bonds and certificates issuable under this act of such twelve months' period. The average cost of the ithe dollar equivalent of the amount of any bonds or certibonds of any series purchased in any such twelve months' ficates payable in foreign money or foreign moneys shall period shall not exceed par and accrued interest. : be determined by the par of exchange at the date of issue "For the purposes of this section the Secretary of the thereof, as estimated by the Director of the Mint, and pro- Treasury shall set aside, out of any money in the Treasury j claimed by the Secretary of the Treasury, in pursuance of not otherwise appropriated, a sum not exceeding one- the provisions of section twenty-five of the act approved twentieth of the amount of such bonds issued before April August twenty-seventh, eighteen hundred and ninetyfirst, nineteen hundred and eighteen, and as and when any four, entitled 'An act to reduce taxation, to provide revemore such bonds are issued he shall set aside a sum not ex- jnue for the Government, and for other purposes.' The ceeding one-twentieth thereof. Whenever, by reason of Secretary of the Treasury may designate depositaries in purchases of bonds, as provided in this section, the amount foreign countries, with which may be deposited as he may so 8e\aside falls below the sum which he deems necessary determine all or any part of the proceeds of any bonds or for the purposes of this section, the Secretary of the certificates authorized by this act, payable in foreign Treasury shall set aside such amount as he shall deem money or foreign moneys. necessary, but not more than enough to bring the entire "SEC. 17. That the short title of this act shall be {Secamount so set aside at such time up to one-twentieth of the Liberty Bond Act.1 " amount of such bonds then outstanding. The amount so SEC. 7. That the act entitled "An act to authorize an set aside by the Secretary of the Treasury is hereby appro- |issue of bonds to meet expenditures for the national priated for the purposes of this section, to be available security and defense, and, for the purpose of assisting in until the expiration of one year after the termination of the the prosecution of the war, to extend credits to foreign war. Governments, and for other purposes," approved April "The Secretary of the Treasury shall make to Congress 24, 1917, is hereby amended by adding a new section to at the beginning of each regular session a report including read as follows: a detailed statement of the operations under this section. "SEC. 9. That the short title of this act shall be 'First "SEC. 16. That any of the bonds or certificates of in- Liberty Bond Act.'" debtedness authorized by this act may be issued by the SEC. 8. That the short title of this act shall be "Third Secretary of the Treasury payable, principal and interest, Liberty Bond Act.» in any foreign money or foreign moneys, as expressed in Approved, April 4, 1918. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

AMBIT- 1, 1918. FEDERAL RESERVE BULLETIN. 309 INFORMAL RULINGS OF THE BOARD. Below are reproduced letters sent out from gage. As the language of the ruling is, howtime to time over the signatures of the officers ever, susceptible of this interpretation the Board desires to correct any misapprehension or members of the Federal Reserve Board on the subject and has ruled that drafts or bills which contain information believed to be of of exchange drawn in domestic transactions general interest to Federal Reserve Banks and against a national bank can not, under authormember banks of the system: ity of section 13, be accepted when secured by a chattel mortgage on cattle, but only when Draft Drawn for Insurance Premium as a Trade Accept- accompanied by shipping documents or when ance. secured by a warehouse receipt or other similar [To a Federal Reserve Bank.] documents conveying or securing title to The Board has considered carefully the ques- readily marketable staples. tion raised in your letter of March 1. and I am While cattle may be treated as readily marinstructed to say to you that a draft drawn by ketable staples, a chattel mortgage is not cona casualty company against a policy holder for sidered a document similar to a warehouse premiums could hardly be said to be a draft by receipt, since the borrower retains the possesthe seller on the purchaser of goods sold and sion of the goods and conveys to the bank only would not, in the opinion of the Board, come the legal title. within the Board's present definition of a trade The .Board having reached the conclusion acceptance. that national banks are not authorized to accept It is, of course, within the power of the Board, bills secured by chattel mortgages on cattle, to extend this definition so as to include drafts deems it advisable that Federal Reserve Banks drawn for insurance, services rendered, etc., if should consider as ineligible bills drawn against it determines this to be advisable. It would, the security of such chattel mortgages, whether however, require rather a forced construction accepted by member or nonmember banks. to treat a draft drawn for an insurance premium as a trade acceptance under the present defini- MARCH 29, 1918. tion of the Board. MARCH 6, 1918. Tractors Used in Agricultural Operations. (To Federal Re-serve Banks.) Cattle as Readily Marketable Commodity. The Board has received many inquiries of late (To Federal Reserve Banks.) as to the eligibility of notes given by farmers in An informal ruling of the Board is published payment of tractors used by them in agricultural on page 65, volume 2, of the Federal Reserve operations. The Board has already ruled that Bulletin to the effect that it is the view of the notes given for the purchase price of farm imple- Board that cattle should be considered as a ments which are to be resoldf may be discounted readily marketable commodity and that a as commercial paper, and, if the implements are Federal Reserve Bank may consider as eligible not to be resold but are to be used for an agria bankers' acceptance secured by chattel mort- cultural purpose notes given in payment ma}' gage on cattle.' be discounted as agricultural paper. The This has apparently been, construed to mean Board has considered the question whether a that a national bank may accept drafts if se- tractor can be regarded as a farming implement cured at the time of acceptance by a chattel or whether it must be treated as a permanent mortgage on cattle. fixed investment. While it is expected that In. the particular instance in. which this ruling the use of a tractor will be extended, over was made the drafts were drawn against a trust several seasons, this circumstance does not company which was not a member of the make necessary the classification of a tractor Federal Reserve system, and. the question before as a fixed investment. Horses and mules the Board was whether or not" this banker's bought for farm work are purchased with acceptance was eligible for discount by a several years7 use in viewT, yet there can be no Federal Reserve Bank and not whether a question that a note given by a farmer in paynational bank was authorized to accept drafts ment of a pair of mules to be used in farm or bills of exchange secured by a chattel mort- work, maturing within six months, is eligible Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

810 FEDERAL RESERVE BULLETIN, APRIL 1, 1918. as agricultural paper. Where tractors are used J tion. The capacity of the Bureau of Engraving to supplement the work of horses or mules or j and Printing is strained to the utmost, and the are used altogether instead of these animals, it | Board feels that the banks and the public can seems to the Board that notes given by farmers ; render a public service by acting upon this for the purchase price of tractors, and maturing i suggestion. within six months, should be admitted to dis- : MARCH 30, 1918. count as agricultural paper, and you are requested to advise your member banks accordingly. Notes of Farmers for Commodities Used in Farming. ; (To a Federal Reserve Bank.) MARCH 27, 1918. Receipt is acknowledged of your letter of February 23, asking for a ruling of the Board Bank Examination Forms. . on the right of a, Federal Reserve Bank to : discount as agricultural paper notes of farmers (To Federal Reserve'Banks.) i executed for the purchase price of commodities A suggestion has been made by one of the | used for farming purposes. Federal .Reserve agents that an effort should ! In reply you are advised that in the opinion be made to induce the banking departments of ! of the Board where a farmer makes his note the various States to adopt for use of exam- | payable to the seller of a commodity and actuiners in making reports of examination a form | ally uses the commodity for agricultural purused by the Federal Reserve Boards' Division | poses, such a note may be treated as agricultural of Audit and Examination (Form 103). It is paper, whether discounted with the member realized, of course, that it will probably be very bank by the farmer as the maker or by the difficult to accomplish this, and that many seller as the indorser. bank commissioners may flatly decline to Where the farmer makes his note payable to change their forms. On the other hand, some the member bank and uses the proceeds for an of them may be willing, after consulting with agricultural purpose, such note may likewise their examiners, to adopt the Board's form, in be discounted by a Federal Reserve Bank as which case a step toward uniformity will have agricultural paper. If, however, under either been attained. The Board has never comof the foregoing cases the farmer does not use municated with any of the bank commissioners or intend to use the commodity purchased for regarding this matter, but would be pleased if an agricultural purpose, although it is capable each Federal Reserve agent would ascertain of being so used, the note in question should the views upon this subject of the bank combe treated as commercial paper and not as missioners or superintendents of the States in agricultural paper and should not be redishis own district. counted by the Federal Reserve Bank if it has MARCH 29, 1918. a maturity in excess of 90 days. MARCH 6, 1918. Redemption of Federal Reserve Notes. Drafts for Purchase of Electrical Goods, Including Cost of (To Federal Reserve -Banks.) Installation, as Trade Acceptance. The Board is advised by the Division of Issue and Redemption that redemptions of Federal (To a Federal Reserve Bank.) Reserve notes are running in very large amount ! Receipt is acknowledged of your letter of and that in many instances notes are sent in February 19, submitting for consideration of which are fit for circulation. the Board the question whether drafts drawn The Board understands, of course, that there for the purchase price of electrical and mechanis a strong preference and demand for new bills, ical goods, whicn include the cost of installabut in times like the present, when it is neces- tion, may be treated as trade acceptances when sary to economize in all directions, it seems that such drafts are accepted by the purchaser. the spirit of economy should be extended also It appears that it is customary for the seller to the use of currency. It is suggested, there- of such goods to contract for their installation fore, that Federal Reserve Banks ask their and to include the cost of installation in the member banks to continue to pay out Federal selling price. Reserve notes as long as they are reasonably In the opinion of the Board such an acceptfit for use, and to refrain from sending notes to ance would come within the Board's definition Washington for redemption unless they are so of a trade acceptance. worn or soiled as to be actually unfit for circula- FEBRUARY 23, 1918. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

, 1918. TEDEBAL BESEBVE BULLETIN. 311 LAW DEPARTMENT. The following opinions of counsel have been Reserve Act on the acceptance power of naauthorized for publication by the Board since tional banks. the last edition of the Bulletin: As an alternative the national bank might treat this as a loan to its customer and might Acceptances by Correspondents at Request and under show its liability to its correspondent, in its Guarantee of National Banks. report of condition, as money borrowed, in Drafts accepted by foreign correspondents at the rewhich case it would of course be subject to quest, and under the guarantee of a national bank in the the limitations of section 5202, Revised Stat- United States, should be reported as a direct liability of such national bank, and should be treated as subject to utes. the limitations imposed by the Fedora] Reserve Act on A different situation is presented where a the acceptance power of national bauks. | national bank in the United States arranges | with its foreign correspondent to accept drafts MABCH 7, 191.8. j for the account of one of its customers under SIR: In the accompanying letter your office j an agreement that if the'Customer does not is asked whether drafts or bills of exchange ac- | provide funds before the maturity of the accepted by foreign correspondents at the inceptance with which to pay it the national stance and request, and under guarantee of bank will do so. In such case the national national banks in the United States, should bank would be only contingently liable on the be reported as acceptances of the national bank acceptance and need not show this as an acmaking such guarantee, in its report of conceptance liability. dition. It has been suggested that such, ac- Respectfully, ceptances should be shown as contingent liabilities of the bank. I am unable to agree M. C. ELLIOTT, Counsel. with this conclusion. To Hon. JOHN SKELTON WILLIAMS, Comptroller of the Currency. A national bank which arranges with its correspondent to accept a bill or draft, under the circumstances recited, undertakes and agrees Acceptances Wiikout Documents Attached. with its correspondents to furnish funds with The acceptance of a draft by a member bank against an which to pay the acceptance at maturity. Its acceptance agreement which purports to assign to the liability, therefore, is to all intents and pur- bank certain collateral security, but which does not speposes the same liability that is assumed where cifically mention any security as assigned is an ordinary accommodation acceptance, and is not authorized by law. the national bank itself accepts the draft. It is true that the acceptance in the ease MARCH 22, 1918. under consideration is not negotiated at an | SIR: From the accompanying letter it apacceptance of the national bank but rather as an pears that a certain bank has entered into an acceptance of its correspondent. The. author- arrangement with a firm of brokers, under ity of the national bank:, however, to guarantee which it accepts drafts drawn by the brokers such an acceptance is an incident of its author-i against an acceptance agreement which purity to accept. In other words, the national ports to assign to the bank collateral security, bank in such case is exercising this power but which does not specifically mention any through an agent. j security as assigned. In the opinion of this office, all such accept- In the opinion of this office, this is an orances should be reported as acceptances of the dinary accommodation acceptance which is not national bank and should be treated as sub- authorized by law. The drafts are apparently ject to the limitations imposed by the Federal drawn in a domestic transaction and can be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

312 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. properly accepted under the terms of the act provided the commodity is used for an agriculonly when shipping documents conveying or tural purpose or must it be treated as comsecuring title are attached at the time of ac- mercial paper eligible for rediscount only in the ceptance, or when such drafts are secured at event that it has a maturity not exceeding the time of acceptance by a warehouse receipt | 90 days. or other such document conveying or securing i In my opinion it should be treated as agrititle covering readily marketable staples. I cultural paper if the maker of the note is to The acceptance agreement submitted does ! use the commodity purchased for an agriculnot in the opinion of this office, constitute a ! tural purpose regardless of the fact of whether warehouse receipt or other similar document, ; the note is discounted by the maker or by the conveying or securing title to readily marketa- indorser. ble staples, and does not, of course, come• It will be observed that in dealing with comwithin the classification of shipping documents. ; mercial paper the act provides that— Kespectfully, * * * any Federal Reserve Bank may M. G. ELLIOTT, Counsel. discount notes * * * arising out of actual | commercial transactions; that is, notes * * * To Hon. JOHN SKELTON WILLIAMS, issued or drawn for agricultural, industrial, or Comptroller of the Currency. j commercial pruposes, or the proceeds of i which have been used, or are to be used, for such purposes. Note for Purchase Price of Commodities Used for Agricultural Purpose. Under this language a note executed by the purchaser and delivered to the seller would be A note given for the purchase price of a commodity can be classed as agricultural paper eligible for rediscount eligible for rediscount as a "note drawn or iswhen having a maturity in excess of 90 days, if the maker sued for a commercial purpose," or a note is to use the commodity for an agricultural purpose, re- 1 drawn by the purchaser payable to a bank the gardless of whether the note is discounted by the maker ! proceeds of which were used for a commercial or by the indorser. purpose would likewise be eligible under the MARCH 5, 1913. \ terms of the act. SIR: AS I understand it the case submitted 1 The act further provides that— in the accompanying letter is as follows: If a farmer makes his note payable to a | Notes * * * drawn or issued for agri- I cultural purposes * * * j having mamember bank and discounts it with the bank, anc | turity not exceeding six months * * * may using the proceeds for an agricultural purpose, : be discounted in an amount to be limited to a this note is eligible for rediscount under section percentage of the assets of the Federal Reserve 13 because the proceeds have been used for an Bank to be ascertained and fixed by the Fedagricultural purpose. • eral Reserve Board. If, instead of discounting his own note withi The language of this proviso is similar to the bank, the farmer makes his note payable : that used in connection with commercial paper; to the seller of a commodity to cover the pur- ! that is to say, the notes referred to are dechase price of the commodity and uses the scribed as those "drawn or issued" for a specommodity purchased for an agricultural pur- " cific purpose. By analogy, therefore, a note pose, can this note when discounted by the : executed by the purchaser to the seller for a seller or holder with the member bank be i commodity used by the purchaser for an agritreated as agricultural paper and rediscounted ; cultural purpose should be considered as drawn with the Federal Reserve Bank when it has a 1 or issued for an agricultural purpose within the maturity in excess of 90 days ? • meaning of the act. In other words, the question raised is whether If, however, the purchaser who executes the a note given for the purchase price of a com-; note did not intend to use the commodity for modity can be classed as agricultural paper an agricultural purpose but for a commercial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

i. T. 1918. FEDEEAL RESERVE BULLETIN. 818 purpose it would not be eligible as agricultural subject that while Congress might have a paper although the commodity purchased is right to create a Federal or Government susceptible of use for an agricultural purpose. bank to be used in the conduct of the fiscal Respectfully, affairs of the Government it did not have the M. C. ELLIOTT, Counsel, right to vest such a corporation with the To Hon. W. P. G. HARDING, power to engage in the banking business gen- Governor Federal Beserve Board. erally. In discussing this question Chief Justice Marshall, in the case of Osborn v. U. S. Bank, 9 Wheat. 738, 861 (p. 860) said: Duty of National Banks to Assist in Financing the Government. The whole opinion of the court, in the case National banks were created primarily to assist the of McCulloch v. The State of Maryland, is Government in the conduct of its fiscal affairs, and in founded on, a:nd sustained by, the idea that performing the various services incident to the marketing the bank is an instrument which is "necessary of Liberty bonds, war-savinga stamps, thrift stamps, and and proper for carrying into effect the powers any other obligations of the Government, they are carry- vested in the Government of the United ing out one of the fundamental purposes for which they States.7' It is not an instrument which the Government found ready made, and has supwere created. posed to be adapted to "its purposes; but one FEBRUARY 2, 1918. which was created in the form in which it now SIR: YOU have asked for an expression of appears for national purposes only. It is, opinion of this office on the question' of how undoubtedly, capable of transacting private as far national banks should bo expected to assist well as public business. While it is the great in financing the Government, and particularly instrument by which the fiscal operations of the Government are effected, it is also trading in marketing Liberty bonds, war-savings with individuals for its own. advantage. stamps, thrift stamps, etc. I am advised that, except in a few isolated In answer to the argument that banks cases, the question is more or less academic, should not be permitted to engage in private since banks, as a rule, have shown a very business, the court said, on page 863: patriotic desire to aid the Government with- The operations of the bank are believed not out, question in every possible way. only to yield the compensation for its services To properly answer your inquiry it is neces- to the Government, but to be essential to the sary to review very briefly the history of performance of those services. Those operations give its value to the currency in which all Federal legislation on the subject of banking. the transactions of the Government are con- As you know, when the first bank of the ducted. They are, therefore, inseparably con- United States was created by Congress the nected with those transactions. They enable constitutionality of the act was bitterly con- the bank to render those services to the Nation for which it was created, and are, therefore, tested. The Supreme Court, speaking through of the very essence of its character as national Chief Justice Marshall, sustained its constiinstruments. The business of the bank contutionality on the ground that a bank "is stitutes its capacity to perform its functions, an instrument which is necessary and proper as a machine for the money transactions of the for carrying on the fiscal operations of the Government. Its corporate character is merely incident, which enables it to transact that Government." business more beneficially. In other words, the fundamental purpose of the creation of banks by Congress was to pro- It is obvious, therefore, that services pervide an instrument which could be used by the formed for the Government hj a bank created Government in the conduct of its fiscal affairs. by Congress are not merely incidental to the The private capacity of the bank is purely private operations of the bank, but the conincidental to its public capacity. It was con- verse is a more accurate statement of the true tended in the earlier cases dealing with this situation; that is to say, the private operations Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

814 FEDERAL RESERVE BULLETIN. APRIL I, 1918. of the bank are merely incidental to the funda- employ agencies or instrumentalities in different mental purpose for which such bank was parts of the United States, and national banks created, namely, to assist the Government in performing such services are clearly carrying the conduct of its fiscal affairs. out one of the fundamental purposes for which This is, of course, true of national banks they were created. created b}^ the act of 1864. In Farmers' Respectfully, National Bank v. Dearing, 91 U. S. 29, 33. the M. C. ELLIOTT, Counsel. court says: To Hon. JOHN SKELTON WILLIAMS, The constitutionality of the act of 1864 is Comptroller of the Currency. not questioned. It rests on the same principle as the act creating the second bank of the United States. The reasoning of Secretary Bankers Acceptances Growing Out of Export Transactions. Hamilton and of this court in McCuiioch v. Where a dealer is engaged in purchasing the same char- Maryland (4 Wheat. 316) and in Osborne v. acter of goods for export and for domestic use, a member The" Bank of the United States (9 id. 708) bank accepting his draft drawn to finance an export transtherefore applies. The national banks organaction should require proper assurances that proceeds of ized under the act are instruments designed draft are, to be used in connection with such export transto be used to aid the Government in the adaction and that the acceptance will be paid out of proministration of an important branch of the ceeds of sale of goods exported. public service. APRIL 1, 1918. It is entirely consistent with the purposes of SIR: It appears that certain dealers in stathe act creating such banks, therefore, for the ples who have a large domestic business are Secretary of the Treasury to call upon such under contract to export food to the allies. banks to perform any reasonable service that The question has arisen, to what extent and may be required of them in financing the under what circumstances,member banks may Government's needs. accept drafts or bills of exchange drawn by The act of June 30, 1864, specifically pro- such dealers. vides that such banks "may be employed as (1) Where the drafts are drawn in a domestic financial agents of the Government and shall transaction, under section 13 they must be perform all such reasonable duties * * * accompanied by shipping documents or the as may be required of them." bank must be secured at the time of acceptance The marketing of Liberty bonds, war-sav- by a warehouse receipt or other similar docuings stamps, and thrift stamps, and of any ment conveying or securing title to the goods other obligations of the Government, involves— involved. (a) The receipt of applications for subscrip- (2) Where the draft grows out of a particular tions. transaction involving the export of goods, the (6) The allotment of subscriptions. regulations of the Board require that the bill (c) The collection of the purchase price of must have been drawn under a credit opened obligations subscribed for and sold. for the purpose of conducting or settling ac- (d) The delivery of such obligations. counts resulting from such transaction. (e) The conversion into other forms of obli- In other words, it must appear that the bill gations when permitted by law. is drawn and the proceeds are used in connec- (/) The deposit of funds realized, from the tion with the export transaction. The Fedsale of such obligations. eral Reserve Bank must be satisfied, either by (g) The disbursement of such funds. reference to the acceptance itself or otherwise, (h) The payment of maturing United States that it is eligible for rediscount. Satisfactory obligations. evidence of the eligibility may consist of a In conducting these fiscal operations it is stamp or certificate affixed by the acceptor in necessary for the Secretary of the Treasury to form satisfactory to the Federal Reserve Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 315 In the case under consideration it is assumed State Bank Membership, that the dealer is engaged in the purchase of The Mississippi Legislature has recently goods for export and is purchasing the same enacted the following law authorizing State character and class of goods for domestic use. banks and trust companies to become member Some difficulty may be encountered, therefore, !banks: in ascertaining whether the goods purchased I SECTION 1. Be it enacted by the Legislature of the Slate of in any particular transaction are to be used I Mississippi, and it is hereby enacted by the authority of for export or for domestic consumption. i the same, that any bank or trust company incorporated ! under the laws of ^Mississippi shall have the power to sub- You have asked that consideration be given i scribe to the capital stock and become a member of the to the question of what evidence the accepting Federal reserve bank created and organized under an bank should require if the acceptance grows j act of Congress of the United States approved the twentyout of a transaction involving the export of | third day of December, anno Domini one thousand nine goods and what form this evidence should take. ! hundred and thirteen, and known as the Federal reserve 1 act. It is respectfully suggested that where the I SEC. 2. Any such bank or trust company shall comply dealer desires to finance the purchase and sale i with the reserve requirements of the Federal reserve act of goods to be exported his contract with theI and its amendments and the compliance of such bank or bank should provide (a) that he has entered 1 trust company therewith shall be in lieu of, and shall into a contract for the export of the goods of aI relieve such bank or trust company from, compliance I with the provisions of the laws of this State relating to the fixed amount; (b) that the total amount of 1 maintenance of reserves. drafts drawn by him under the credit opened to finance the export of such goods shall at no! The Kentucky Legislature also recently time exceed the aggregate amount of the im-j amended certain sections of the banking laws port or export transactions contracted for and \ of that State so as to authorize State banks in process of execution; (c) that the proceeds! and trust companies to pledge any portion of of drafts drawn against the accepting bank ! their assets as security for deposits of the under this credit are to be used in connection '. United States Government; to provide that I State banks and trust companies becoming with the export contracts referred to, and that : members of the r ederal reserve bank shall be the proceeds of the sale of the goods exported : subject to all the provisions of, and have all the will be applied in payment of the acceptances : powers com erred by, the Federal Reserve Act, unless the dealer has in. the meantime placed and may conform to the reserve requirements the bank in funds to meet them at maturity or I of the iVederal Keserve Act in lieu cf the reserve has secured such acceptances by shipping docurequirements of the State laws; and to authorments, warehouse receipt, or other similar docize the State banking commissioner to accept ument conveying and securing title to readii}- | examinations made by the 1 ederal reserve marketable staples. ! authorities in lieu of his official examinations Unless the dealer can and will assure the ! and to furnish to the Federal reserve agent bank that the proceeds of the credit are to be : copies of examinations and. reports of member used in an export transaction, and that the i banks. proceeds of the goods exported are to be used i Section 579 of Carroll's Kentucky Statutes, to liquidate the acceptances, the dealer should . as so amended, provides in part as follows: be required to treat the bills as drawn in domestic transactions and the bank should i In addition to the powers heretofore conferred upon require security provided by section 13. ; and now possessed by banks, trust companies, and com- ; bined banks and trust companies doing business under the Respectfully, ! laws of this State, they are hereby authorized and empow- M. C. ELLIOTT, Counsel. ered subject to existing statutory or charter limitations to To Hon. W. P. G. HARDING, pledge such portion of their assets as may be required by Governor Federal Reserve Bank. law7 as collateral security for Government deposits made Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

316 FEDERAL RESERVE BULLETIN. APRIL 1,1918. with them, or any of them, by or under the authority of the than at sight or on demand." By section 800 of the act United States. the tax is payable in respect of such drafts and checks, or in respect of the paper upon which they are written, Section 584 now reads, in part, as follows: by any person who makes, signs, or issues the same, or Any bank or trust company, incorporated under the for whose use or benefit the same are made, signed, or laws of this Commonwealth, which shall become a member issued. By section 802 anyone is guilty of a misdemeanor of a Federal reserve bank shall be subject to all the pro- who "(a) makes, signs, issues, or accepts, or causes to be visions of the Federal Reserve Act and its amendments made, signed, issued, or accepted, any instrument, docuand to the regulations of the Federal Reserve Board ap- ment, or paper of any kind or description whatsoever plicable to such bank or trust company and shall have all without the full amount of tax thereon being duly paid." the powers and assume all liabilities conferred and imposed (1) The general rule is that a taxable draft or check by said act in regard to State member banks, and any such becomes subject to the tax concurrently with its delivery. bank or trust company shall comply with the reserve re- In the case of a draft the rule means that the tax attaches, quirements of the Federal Reserve Act and its amend- not when it is signed by the drawer, or presented to the ments, and the compliance of such bank or trust company drawee for acceptance, or accepted by him, but when it therewith shall be in lieu of and shall relieve such bank is delivered to the payee, if drawn to a third person, or or trust company from compliance with the provisions of negotiated by the drawer, if drawn to his order, whether the laws of this Commonwealth relating to the maintenance such delivery or negotiation takes place before or after of reserves. acceptance. If a draft was drawn and accepted before the passage of Section 165 now reads, in part, as follows: the act, but not delivered or negotiated until afterwards, the tax is payable. If a draft is presented to the drawee Provided that any bank or trust company or combined for acceptance and discount by him, stamps must first bank and trust company which shall become a member of be affixed by the drawer, for the acceptance and delivery a Federal reserve bank created and organized under the are simultaneous. act of Congress known as the Federal Reserve Act shall be The payee or the indorsee from the drawer must see to subject to the examination required under the terms of the it that the drawer, as the person "who makes, signs, or said Federal Reserve Act, and the banking commissioner issues" the draft, pays the tax before delivery. "Acmay, in his discretion, accept examinations made by the cept" is used in the penal provision in section 802 in the Federal reserve authorities in lieu of examinations made general sense of "receive," not in the special sense peunder the laws of this Commonwealth; and the banking culiar to drafts. No drawee accepting an unstamped uncommissioner is further authorized and directed to furnish delivered draft would violate the law; but if the draft has to the Federal reserve agent of the district in which such already become taxable because of a prior delivery, the member bank may be situated copies of reports and examacceptor must be sure that stamps are affixed. inations made of such member bank. (2) The general rule is that a taxable draft or check becomes subject to the tax if delivered within the territorial jurisdiction of the United States. The rule means War Stamp Taxes. that the tax does not attach to a draft drawn and accepted Following is a reprint of Treasury degision here, but delivered abroad, whether before or after ac- (T. D. 2682) relating to war stamp taxes on ceptance, but does attach to a draft delivered here, whether before or after acceptance, although drawn and negotiable instruments: accepted abroad. In general, a draft sent through the TREASURY DEPARTMENT, mail is delivered when and where deposited in the mail OFFICE OF COMMISSIONER OF INTERNAL REVENUE, addressed to the payee or the indorsee from the drawer. Washington. If a draft drawn abroad, on a foreign drawee, with a To Collectors of Internal Revenue: foreign payee, passes through a bank here in the course The stamp tax on drafts and checks imposed by Schedule of collection, no tax is payable, unless it should be de- A of Title VIII of the act of October 3, 1917, attaches to livered by an agent of the drawer to an agent of the payee drafts or checks (1) at the time of delivery, if (2) delivered within the United States. Because of the constitutional within the territorial jurisdiction of the United States restriction that no tax or duty shall be laid on articles and (3) expressed to be payable otherwise than at sight or exported from any State, drafts with bill of lading aton demand, but not to drafts or checks not yet delivered, tached covering goods in the course of exportation are or delivered in a foreign country, or expressed to be pay- not subject to the tax. able at sight or on demand. (3) The general rule is that a draft or check delivered Schedule A of Title VIII of the act of October 3, 1917, within the United States is subject to the tax if expressed imposes a tax on " 6. Drafts or checks payable otherwise to be payable otherwise than at sight or on demand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1,1918. FEDERAL RESERVE BULLETIN. 317 __ Accordingly, an ordinary sight draft with bill of lading I or delivered before acceptance the holder would be attached is not taxable, but a draft expressed to be pay-! obliged to stamp it on acceptance, in default of which able at sight "on arrival of car," or containing a memo- ! both he and the acceptor would be liable for the statutory randum to hold until arrival of car, is. A sight draft, | penalty. accompanied by instructions outside the instrument, as i For the purposes of the tax there is no difference in the "Do not present until arrival of car," or some such memo- I treatment of ordinary bills of exchange, trade acceptances, randum, is not taxable. A sight draft accepted and paid \ and bankers' acceptances, as defined by the regulations for the drawee by the collecting bank, which holds it I of the Federal Reserve Board, and charges interest until the drawee takes it up, is not' , DANIEL C. ROPER, taxable. \ Commissioner of Internal Revenue. A draft might be drawn stating no time for payment, j Approved March 26, 1918. which would class it as a sight draft, and be accepted at j W. G. MCADOO, 90 days, which would change its nature. If negotiated ' Secretary of the Treasury. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

318 FEDEKAL RESERVE BULLETIN. APRIL 1, 1918. SUMMARY OF BUSINESS CONDITIONS, MAR. 23, 1918. District No. 1— District No. 2— District No. 3— District No. 4- District No. o- District No. 6— Boston. New York. Philadelphia, Cleveland. Richmond. Atlanta. General business Active i Good Good Active Active j Above normal. Crops: Condition Satisfactory. Prosperous ' Good. Outlook , frair Good Satisfactory, ex- | Do. cept labour. i Industries of the dis- Busy Active. Very busy.. Necessary lines Active Busy. trict. busy. Construction, build- Below normal Building light; Decreasing. Very limited Private building i Very light. ing, and engineer- shipbuilding ac- negligible; Gov- ' ing. tive. eminent work \ active. • Foreign trade... General trade re- do.... Limited by freight) Unsatisfactory. stricted. room. i Bank clearings.. I Increase.. Slight increase over Decrease. Increase.. Increase ! Increase. i same time last year. Money rates : Steady at 6 per cent. Increasing Very firm.. .do.. Good demand, 6 Firmer. per cent. Railroad, post office, Kailroad, decrease; Heavy. Decreasing. .do.. Kailroad, irregu- Stationary. and oilier receipts. post office, in- i lar; post office, crease. ! volume large. Labor conditions Scarce and well Demand for skilled Strong demand, Unsettled j In demand, much Unsettled. paid. labor greater than high wages. j complaint. supply. i G Improving j Satisfactory and Generally favorj encouraging. able. ' Weather condi- ! tions very favorj able, stimulat- ! ing activities in all'lines. District No. 7— District No. 8— District No. 9— District No. 10— District No. 11— District No. 12— Chicago. St. Louis. "Minneapolis. Kansas City. Dallas. San Francisco. General business Good General]j' active | Good j Good Good Active. Crops: Condition Good, except corn .! Good i i Fair to good Fair Good. Outlook | Promising. ! Favorable ! Sp r i ng outlook \ More favorable Generally favor- Favorable. j i able. Industries of the dis- j Essential Indus- j Busy i Active | Aetivie Active Vorv active. tric-t. i tries fuJlv cm- i ' : ployed. Const•i;ie1 Ixi, build- Xoitclivity worthy ! Quiet ' Slow. Operations gener- Building inactive; | 13 per cent de- Lug, and engineer- of mention. Iillv curtaiied. some revival; be-j crease over year iievod will soon | ago. bo fit-live. j Satisfactory; lack j Large increase. of shipping has ! Iiic-i-er-sc *. Increase • Increasing ' Great.lv increased.j Increase of 3i.3 per Largely increasing. ! | " ! cant. ' ! Money rotes Firm Firm j Firm j Slight increase | Firm: demand in- ! Finn. creasing. \'niiro.$d. pc.si o'Vioo Increase in postal j Little change ' ; Increase I Increasing. and olhcr rc-coipls receipts. j I I^abor cosidiiions.. Labor general! v Unsettled i Good I Very unsettled j Scarcity in many I Unsettled, but imsasisfled. lines, even with : proving. advancingwages.i Outlook. No misgivings Eneouniglrig do Favorable Favorable Favorable. Remarks "Weather condi- Favorable features tions have im- obtain in all proved farm out- branches of buslook; wholesale iness: some raintrade is very ac- fall in drouth tive; mid-conti- sections, and nent oil field conditions improduction is proved, Though increasing. far from normal; where rains have fallen, conditions are normal, and prospects good: mercantile lines active; industries generally busy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APBIL 1, 1918. FEKEBAL EESEEVE BULLETIN. 319 GENERAL BUSINESS CONDITIONS. There is given on the preceding page a sum- certificates of indebtedness have been very mary of business conditions in the United large and have been widely distributed over the States by Federal Reserve districts. These district. This, however, is due more largely to reports are furnished by the Federal Reserve the nontaxable feature than to any marked agents, who are the chairmen of the boards of change in the money situation. While money directors for the Federal Reserve Banks of the has continued to be well loaned up and banks several districts. Below are the detailed re- are taking care of practically none but their ports as of approximately March 23: own customers, some out-of-town banks have been small buyers of commercial paper. The DISTRICT NO. I—BOSTON. tension in the money market of the past few Reports of increased business activity are weeks has been relieved, however, to some being received from all parts of the district. extent by the decrease in the demand for loans Cities outside of Boston having war orders are from the cotton and wool industries, the deexperiencing good retail trade through the mand for carrying these commodities* having purchasing power of well paid workmen, who decreased through Government and seasonable apparently are saving but a small part of their conditions. Time collateral money has been increased wages. particularly hard to obtain. Call money rules Retail stores in Boston report heavy Satur- at 5£ to 6 per cent. Time collateral loans are day sales which they explain by the presence of quoted nominally 6 per cent for dates not over large numbers of week-end visitors going to four months. Commercial paper is 6 per cent Army and Navy cantonments and also through almost regardless of the character of the name, the demand already outlined. although in very exceptional cases that rate has Cities and towns not having war industries been shaded. are complaining that their inhabitants are The wool trade has been unsettled by the being attracted to other places by offers of more action of the Government in executing its lucrative employment. In some localities this option on Argentine wools and there is practimovement is assuming large proportions.' cally no trading between dealers. The supply The approach of spring and warm weather on hand is small, and prices are firm. For the should accentuate good trade, and both manu- first time in years dealers are not contracting facturers and dealers are optimistic as to the for western wool on the sheeps' back, but are future, but their tendency is to so conduct their proceeding on conservative lines and waiting business as to further the conduct of the war. to see if there will be any Government regula- Some domestic industries have been directly tions in regard to it. Wool released from Ausbenefited by war conditions and this is partic- tralia by the English Government continues to ularly true of the fish trade which is an im- arrive. Woolen and worsted mills are almost portant industry in this section. Dealers and all running to capacity. fishermen alike have prospered because of the Retail shoe trade is much better than excessive demand and high prices. during January and February, the increase in New England is whole-heartedly in the war. business having started about March 1, and Income taxes and Government regulations are it is felt that with the approach of Easter, if being recognized more generally as necessities the weather is good, business will be large. to its successful conclusion and, therefore, are This is helping collections, which are showing accepted cheerfully. a decided improvement. It is reported that In spite of the fact that money has been domestic business of manufacturers is only scarce, the subscriptions to the recent issues of about 65 per cent of normal, but with Govern- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

320 FEDEEAL RESERVE BULLETIN. APRIL 1, 1918. ment orders factories are running at about 90 pared with $22,787,000 on February 16, 1918, per cent of capacity. Leather prices are soft, and $33,319,000 on March 17, 1917. The except in those lines that are used for army amount "due to banks" on March 16, 1918, shoes. was $125,296,000, as compared with $129,- Cotton mills are running at capacity, with 913,000 on February 16, 1918. advance orders booked well into next summer. DISTRICT NO. 2—NEW YORE. It is a seller's market and mills are reticent about accepting too large an amount of busi- Business activity and sentiment show further ness for future delivery. This is true of both recovery from the disturbed conditions and fine and coarse goods mills. Prices are ad- uncertainty prevailing during the early part vancing but are being paid willingly, the main of the year. A number of railroad freight question on contracts being date of delivery. embargoes have been removed, but a new The fixing of a price on the Government order embargo has been placed on shipments of lessthat has been pending in Pall River for some than-carload lots to the port of New York. time has tended to make the manufacturers Traffic is moving more freely, though there is even more reluctant to take additional do- still much congestion of goods and shortage mestic orders. of cars. Continued mild weather has lessened The exchanges of the Boston Clearing House the pinch of fuel shortage. for the week ending March 16, 1918, were Reports of increased production come from $254,899,211, compared with $221,114,491 for the steel industry, upon which so many other the corresponding week last year and $234,- war industries depend, indicating substantial 616,383 for the week ending March 9, 1918. increase in the rate of output of steel ingots and Building and engineering operations in New more favorable conditions as to transportation England from January 1 to March 21, 1918, and coke supply. Sales of pig iron for future amounted to $27,622,000, as compared with delivery have been very light, as difficulty is $32,201,000 for the corresponding period of experienced in producing material already 1917. contracted for. The receipts of the Boston post office for Industries devoting a considerable portion February, 1918 show an increase of $115,- of their capacity to Government orders are 625.42, or about 17 per cent more than Febru- very'active, though hampered by difficulty in ary, 1917. For the first 15 days of March, obtaining and holding skilled labor and obtain- 1918, receipts were about 19 per cent, or ing the necessary transportation accommoda- $90,558.01 more than for the corresponding tion and supplies. The necessity for anticipatperiod of last year. ing needs for raw material, in order to avoid Boston & Maine Railroad reports a loss from delays due to transportation difficulties and operation, after taxes, for January, 1918, of other causes, has led to the acquisition of heavy $669,780, as compared with net operating in- stocks and the reporting of large inventories, come taxes of $816,694 for the corresponding but efforts are being made to pursue a conservamonth of 1917. tive course in buying and to keep inventories Loans and discounts of the Boston Clearing within reasonable bounds. House banks on March 16, 1918, amounted to General retail business in New York City is $475,039,000, as compared with $476,410,000 reported as fairly active. Country merchants last month and $465,298,000 on March 17, are having more active trade and are purchas- 1917. Demand deposits on March 16, 1918, ing more freely. Chain stores report, good amounted to $400,246,000, as compared with business in February and March. Business in $392,771,000 on February 16, 1918, and $371,- the shoe trade continues quiet. Watches are 143,000 on March 17, 1917. Time deposits on selling freely with demand greater than supply. March 16, 1918 totaled $20,745,000, as com- Other jewelry lines are reported quiet. Furni- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1,1918. FEDERAL RESERVE BULLETIN. 321 ture business is also quiet. Cloak and suit ment of funds in considerable amounts to other sales are above those for the same period last districts, through the gold settlement fund, year, and buying is fairly active, notwith- have led to heavier borrowing from this Federal standing continued advances in prices. Silk Reserve Bank. production is estimated to be at about 75 per The ruling rate for call money, with an cent of normal, silk prices having advanced occasional temporary easing, was 6 per cent proportionately less than either cotton or up to February 18, when an easing tendency woolen prices, while sales are about normal and became apparent. The time mone}^ rate of 6 stimulated by seasonable weather and the per cent has been nominal, as loans of this approach of Easter. Textile and knitting class have been scarce. The rate for commills are very busy and demand for their mercial paper has been steady at 6 per cent, products is very keen. though-some sales have been made at a higher Building operations continue light, while rate. Commercial paper is being sold in good demand for space for business and residence volume with wide distribution, though borrowpurposes is resulting in an upward trend in ing needs have extended to such a degree as to rentals. render difficult their complete satisfaction. In the foreign-exchange market a strengthen- The market rates on bankers' acceptances have ing in lire exchange has followed measures shown a steady upward tendency, and are taken by the Italian Government to license all quoted at 4f to 4-J- per cent, or about one-half dealings in lire at Italian centers. Spanish per cent higher than a month ago. exchange, on the other hand, has reached a new high point. DISTRICT NO. 3—PHILADELPHIA. Stock market average prices have continued Favorable weather conditions and conto move upward, especially for the railroad siderable improvement in the fuel situation stocks, with trading, however, in small volume. have resulted in increased activity in most Bond prices have eased off slightly. Several lines of business. new issues of short-term notes have sold readily The milder weather has benefited some retail at prices to yield the public between 7 and 8 linos, the stores reporting business running per cent, and New York City has placed ahead of last year. Considerable difficulty is $20,000,000 short-term corporation stock on a experienced in obtaining adequate help, and 4.79 per cent basis. necessary increases in wages have added to the During the month the banks haVe continued already greatly increased cost of conducting to absorb a large volume of United States cer- business. tificates of indebtedness, the amount outstand- Wholesalers report the receipt of more ing in this district having increased from about inquiries for spring and summer requirements. $1,200,000,000 on February 15 to over $1,550,- Jobbers of dry goods state that there is much 000,000 on March 21. The request of the Sec- complaint regarding the scarcity of merchanretary of the Treasury that every bank sub- dise and the high level of prices, but business scribe for a stipulated proportion of its re- continues in well-maintained volume. Jobbers sources has brought about a very much wider of hosiery, underwear, and knit goods have had distribution of the certificates in this district a very satisfactory season. than before. New York City institutions have The demand for all kinds of silk goods has made substantial sales to customers. been very good, but production is much Excess reserves of New York Clearing House hampered by the restricted labor supply and banks touched a low point on March 1 of the congested conditions of traffic. $12,500,000, but made prompt recovery in the Business in cotton yarns has been very following week to $55,000,000. The issuance active. The Government is buying large of certificates of indebtedness and the move- quantities of cotton goods. Labor is scarce. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

322 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. There has been an unusually large and discounted in considerable volume, borrowings steady consumption of wool. Mills have large by out-of-town banks being comparatively orders and are running full. Prices have been small. uniformly strong. Supplies on hand are not large, and goods are being sold at the price DISTRICT NO. 4—CLEVELAND. ruling at the time of delivery. Government requirements indicated in many The production of coal has responded to the different ways have given merchants and manugeneral improvement in business. Steam coal, facturers a new understanding of Government however, is available only in small quantities. needs and led them to rearrange their business The United States Geological Survey estimated accordingly. Some readjustments have been production for the week ended March 9, 1918, radical; many lines have been cut out and as 11,228,000 tons, which is the largest since others enlarged and developed. Business, benethe week ended November 24, 1917. fited by the many experiences of the past The iron and steel mills have recovered months, is gradually gaining added momentum, slowly from the conditions which curtailed and promises, if unhampered by fresh difficulproduction, and are now running 60 to 75 per ties, to regain its former pace. cent of capacity. Manufacturing.—Rumors of new prices on The railroads have boon enabled to increase iron and steel about to be put into effect by the their service and furnish transportation for the Government have had the effect of holding materials Yvrhich have been tied up in various future contracts in abeyance. All steel mills sections of the country. The number of cars are believed to have large quantities of Governmoved over the Pennsylvania Railroad at ment orders ahead and for the most part are Lewistown Junction during February exceeded operating on a brisk scale. Steel business is tho figures for January by 15 per cent. The being more closely confined to Government continuance of mild weather during March needs. Unprecedented orders and consequent should result in a steady improvement in the activity is the general judgment of steel men. movement of cars. Small companies handling articles of necessity There is no material change in the grocery are being organized, indicating investing power situation. The continuance of embargoes still on the part of the public. Pig iron is scarce in renders deliveries of commodities very irregu- the district and buyers are compelled to go lar. The supply of sugar has increased. Flour South for supplies. The expected large orders and its substitutes are in scant supply. Tho for freight ears and locomotives will give the demand for canned goods continues large. steel business added impetus. Money rates have remained high, the market The clay and brick industry is still very much in Philadelphia being on a 6 per cent basis. hampered through lack of transportation fa- Not very much choice commercial paper has cilities, and in consequence prpduction is very been offered, but there has been a liberal sup- much decreased. ply of the medium grade. The renewal of The coal trade shows considerable improvenotes by the customers of the banks continues. ment, but is still under normal. In one large Financial institutions are getting their houses manufacturing coal-producing district the supin order for the forthcoming Liberty loan ply of cars has been the best in months. Addicampaign. tions to coke ovens operating is reported, and Discount operations at the Federal Reserve more decided activity in this line is expected. Bank during the month of February amounted For the purpose of coal conservation, and as to $31,868,000, compared with $36,200,000 the agreed to by window-glass manufacturers, 45 preceding month, and $1,682,000 in February, plants, practically all located in this district, 1917. The Philadelphia institutions have re- shut down on March 19 and 15 plants resumed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 323 to continue until July 1. it is estimated that Labor.—There is a keen demand for labor at production for the year will be about 50 per increasing wages. Large advances are the cent of the usual output. order of the day and finishing mills in the Mercantile lines.—The dry goods jobbing wrought-iron trade are said to be paying the business continues to be healthy and substan- highest wages ever paid in the history of the tial, and is increasing in volume. Merchants xron business. In the smaller factories women buy readily even though the prices are high, are employed to do the lighter forms of work. which shows a healthy confidence. an}" complaints are made of the shortage of Retailers report exceptionally active business farm labor, and as the situation is fully realized in both men's and women's ready-to-wear it is believed that means to relieve same will clothing; and departments catering exclusively be effected. to women customers are enjoying an unusually Money and investments.—Loans are largely brisk business. confined to borrowers who are engaged in lines Agriculture.—Winter wheat, except in few to help win the war. The demand is very instances, and then in restricted areas, is re- strong. Reports of banks that have increased ported in good condition, and the prospects for rates on deposits are for the most part una bumper yield are very fair. In some localities founded. Bankers generally frown on this there is still a large acreage of last year's corn in practice and. are inclined to follow the request the fields. This will delay spring plowing and of the Federal Reserve Board. Investments may somewhat reduce new acreage. Farm are largely confined to Government and bureaus are importing and distributing seed kindred issues. corn tested for germination, and while the Building.—Building operations are pracprice is high, it is expected that there will be tically at a standstill, which is an unusual consufficient for the spring planting. Never be- dition for this time of year. fore has the farmer given so much attention to The few instances of increase in valuation of the selection of seeds, and it is believed that it permits granted are occasioned by the erection will result in a banner year in the production of large factories in connection with Governof foodstuffs. The tobacco crop has been ment work, and the houses required for the marketed at high prices, and the farmers in workingmen. In many of the steel and manuthe tobacco districts are said to be in excellent facturing centers the grave need of additional financial condition. On account of the high houses convenient to the plants is daily beprice of raw cattle, hogs and sheep are re- coming more apparent and rents in those loplacing them to some extent. calities are increasing rapidly as a result. Collections.—Collections are uniformly reported good, with a larger volume of cash than DISTRICT NO. &—RICHMOND. heretofore and in excess of increased business. The return of good weather has renewed and Transportation.—Transportation has im- stimulated activities in every direction. All proved decidedly, but in many cases is still lines of business are still feeling the benefit of considered unsatisfactory and unreliable, and the prosperous results to the farmers from last apparently has not made the advance it should season's crops and, with very few exceptions, have made under the favorable weather con- all industries are enjoying exceptional prosditions. However, delayed freight is reported perity. These conditions are, of course, espebeing forwarded and congestion at many points cially stimulated by war conditions. The relieved. Lack of men and equipment still volume of trade is limited by inadequate labor continues to embarrass the situation. It is and transportation and the difficulty of obtainthought that lake navigation will be late in ing raw materials. Financial statements for opening on account of the ice. the past year, as a rule, disclose very satisfac- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

324 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. tory returns, the high cost of production being Some sales of farm land are reported. Wide fully offset by the prices obtained for finished publicity has been given by circulars and newsproducts. papers throughout the district to the efforts of Complaints as to the shortage of fuel have the Federal Reserve Board, through its Capital ceased, and it is being suggested to private con- Issues Committee, to limit investments and sumers that they obtain this summer their sup- capital requirements to undertakings and plies for next winter in order to equalize during activities necessary to win the war. All other the year the demands for transportation and improvements, including nonessential building, avoid an abnormal demand for transportation are at this time regarded as undesirable. The in tins direction next fall and winter. Efforts Board's efforts in this direction are meeting to increase the supply of oil in West Virginia with hearty cooperation, both by the people are being nullified to a considerable extent by and commercial, civic, and other organizations the difficulty in securing deliveries of the nec- throughout the district. essary piping and machinery. Complaints as The almost abnormally prosperous condito transportation are still made. This is tions in the agricultural districts, which have especially the case at points where Government been heretofore referred to, have left the operations are most active, and are reported farmers even at the close of the past season especially acute at Norfolk and other Chesa- with more money on hand than ever before. peake Bay points. Some crops are not yet entirely marketed, and The past month has been favorable for agri- farmers are reported as still making deposits cultural purposes, and wheat is reported to in the banks. These conditions arc still have come through the winter in good condi- reflected in large deposits, and the banks have tion. Lands are in excellent condition owing not yet been fully subjected to the usual heavy to the hard freeze and numerous snows during spring drain, due to withdrawals for making the past winter. Plowing is going on actively new crops. A large volume of cotton is still and preparations are being made for as early being carried at our ports, awaiting shipment planting as the weather will permit, a full acre- abroad or to northern mills. In addition, age being anticipated of corn, cotton, spring southern mills have secured and are carrying oats, and other crops. Fertilizers are in good the necessaiy raw cotton to supply them until demand, the supply especially limited by lack the next crop. While the banks of the district of transportation facilities, and an output of are meeting these demands largely out of their not over 80 per cent is anticipated. Dealers in own resources, the abnormal volume of such agricultural implements complain of inability demands is reflected in $35,000,000 to to secure sufficient transportation to make $40,000,000 of rediscounts being carried by the deliveries of goods which they have sold. It is Federal Reserve Bank. A considerable numto be hoped that the efforts of the Government ber of member banks apparently invested last to protect and supply farm labor will relieve fall and winter, when their resources were at the situation in this direction, as otherwise it high water, in outside commercial paper which will be impossible to produce and harvest any- is now maturing and being collected or rething like adequate crops. discounted for the purpose of meeting the Manufacturers, particularly cotton mills, are natural decline (less than normal, however) in continuing to find their products in urgent de- ideposits at this time of the year. The redismand, running as nearly on full time as labor icount of new paper for agricultural purconditions will permit, and output sold ahead ! poses is not relatively large, and the normal for several months. i liquidation in the lines referred to above may Sales of real estate are very limited, particu- Ibe expected to reasonably supply the increaslarly in the cities, as investors are not disposed ing agricultural demand which may now be at this time to tie up resources in this direction. anticipated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 325 Banking operations have been on an enlarged | per cent. Probably 20 per cent more fertilizer scale with a corresponding gross profit, but will be used this year than last year. Labor with relatively smaller net profits. Clearings conditions upon the farms in Georgia are are still on an ascending scale. This is attrib- quite unsatisfactory, labor being scarce, wages uted by some bankers to the engagement of high, and in many cases help unreliable. their organizations and resources in coopera- This condition will have a tendency to decrease tion in Government financing, which has in- the production of cotton. Georgia live-stock creased expenses and reduced their margin of interests are expanding rapidly. More cattle profit. There is, however, no complaint on than ever before are being placed on the this score. On the contrary, the banks are market, principally from the velvet-bean secearnest and patriotic in their desire to serve tion of the State. the Government to the utmost limit possible* The agricultural conditions in Alabama are Notwithstanding our being at war, the seri- reported very favorable. The farmers appear ousness of which seems to be gradually coming to have more money of their own than usual, to the realization of our people, the}7" are facing and farm credit easy to obtain. There has the situation with equanimity and a determina- been sold in Alabama 61 per cent more fertion to win. tilizer up to date, as compared with the same There is a general looking forward with con- date 1917. Reports indicate a 10 per cent fidence to increased activities and to the main- j increase in acreage planted in cotton, as comtaining of present favorable conditions, par- pared with last year. The acreage in corn to ticularly if farmers are enabled to secure the | be planted appears to be about the same as help necessary for raising and harvesting croi>s. j last year, with increased planting of peanuts I and velvet beans. Farm labor appears to be DISTRICT NO. 6—ATLANTA. very scarce and wages higher than the farmers Business conditions, as evidenced by bank | feel justified in paying. clearings, appear to be slightly above normal In Mississippi a great deal of corn has been for this season of the year. This is probably j planted, and much of the cotton land has been due to the large food and feed crops produced "bedded/' awaiting the planting season time. last year and the good prices for which these All work appears to be well advanced. Oats products sold. Active propaganda for in- promise a fair yield. A considerable acreage creased food and feed crops is being properly of spring oats was planted and this crop apcarried on all over the district, and recently pears in good condition. Wheat withstood at a meeting held in Macon, Ga., approximately I the winter and is doing well, with splendid 2,000 representative citizens attended. reports from the alfalfa field. Seasonable weather prevailed during March In Louisiana the farmers are further adfor farming operations, and the work is fairly vanced with their operations this season than well advanced. Agricultural reports from Geor- any season for the past 10 years. Reports gia show approximately 40,000,000 bushels of I show preparations have been made for an corn reserve as of March 1, with little wheat• increase of about 25 to 30 per cent in everyand oats on hand. Indications are that there thing except sugar cane, the acreage of sugar will be another short crop of oats. The ; cane being about the same as last year. wheat crop is doing well and the outlook ! In Tennessee splendid weather has greatly is for a slight increase over last year's pro- i enhanced prospects, and the farmers have duction. Indications are that all food and ! already made preparatory progress. Labor is feed crops will be increased. Cotton will be• reported very scarce, due largely to the Govplanted on a smaller scale than last year, ; eminent work being carried on at Nashville though the reduction will slightly exceed 10 ; and at Mussel Shoals, close to the Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

326 FKDEKAL KESERVE BULLETIN. APRIL 1, 1918. border. Cotton and food crops will be largely ; ever known, from $300 to $450, and even increased in the State, if labor can be obtained. | higher. The demand has been unusually good, A recent survey shows that Tennessee has j and with high prices obtained for cotton about an average supply of live stock, except j farmers have been willing to pa}^ high prices horses. Wheat looks fine, with a large acreage for their stock. The heavy demand for war reported. purposes has served to cut down the supply. Figures on Florida's crops of last year's pro- Banking.—The compilation of annual reduction, as compared with 1916 show— ports for the State banking departments show a large increase in individual and savings 1917 1916 deposits: Corn bushels.. i 13,875,000 12,300,000 Potatoes do : 2.275,000 1.332,000 1916 Increase. Peanuts do | 1,400,000 '300,000 Oranges boxes..: 4,200,000 6,933,000 Alabama: j Individual deposits !S41,837,024 S31,038,819 S10,798,204 In general the agriculture conditions are Flor S id a a y : i ng " s dep " o sits I i 12,021,583 11,018,895 1,002,688 exceedingly bright, and more modern farm Individual deposits I 30,497,835 27,727,597 2,770,238 Savings deposits j 14,205,538 12,120,211 2,087,327 implements are being used by the farmers. Louisiana: | Individual deposits '114,407,207 71,345,603 43,061,664 This is not due altogether to a progressive Savings deposits j 32,813,431 28,368,748 •i, 444,683 Mississippi: ! tendency, but brought about by the scarcity Individual deposits ! 74,454,165 49,812,905 I 24,641,260 Savings deposits j 11]819,768 11,027,105 : 792,663 of labor, and the necessity of improved ma- Tennessee: { Individual deposits i 73,001,014 58,145,584 ' 14,855,430 chinery to make up for the loss. Savings deposits ! 29,294,051i 27,559,742 1,734,309 Georgia: Individual and savings j Tobacco.—The tobacco market shows con- de(ppoossiittss 1.. !!l89,103,420 '1-1-2,193,161 | 4fi. 910, 259 _ _ I __i _ siderable improvement; and, notwithstanding Money in the cotton belt is easier than in high prices, sales show an increase at all loosethe large financial centers. The demand for floor houses and heavy purchases are being money is not excessive, though rates are made by the buyers at the market. Owing to stiffening some. the lack of warehouse facilities and shortage Industrial.—Increased developments conof bottoms for foreign shipments, tobacco tinue in the shipbuilding plants at all port crops arc being stored with some difficulty. cities. The New Orleans dock board proposes On account of the shortage of labor, it is not to sell $3,500,000 to 84,000,000 in bonds for expected that over 60 per cent of the 1917 developments looking to the establishment of crop will bo planted this year. additional shipbuilding facilities in New The final census of cotton ginnings for the Orleans. year 1918, recently issued by the Government, Labor troubles in the coal-mining sections show a yield in— in Alabama appear to be at an end, and increased outputs may be looked for. Pig-iron State. 1917-18 1916-17 production in February, 207,075 tons, showed Bales, j Bales. a decrease as compared with 218,410 tons Georgia 1,882,544 ! 1,852,104 Florida 48,131 50,979 during January. Alabama 520J292 '. 552,676 Mississippi 884,020 800,190 With the improvements in the labor situa- Louisiana 626,388 • 441,121 Tennessee , 237,917 378,064 tion in the coal-mining section, the coke ovens expect a large supply of coal, with encourage- The Georgia crops, based on 30 cents a pound ment for better production. The present pigstaple, is worth about $282,000,000. against iron situation has produced a strong market, $181,000,000 in 1916. and the manufacturers are only selling to regu- Live stock.—The live-stock market has been lar customers. Some predictions are made very active, mules selling at the highest prices that a shortage is liable to occur before the year Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

AiMti h I, 1918. FEDERAL KESEKVE BULLETIN. 327 is out, as there is a scarcity of coke in the there is some interest manifested in long-term industrial sections of the South. While un- bonds. The market is expected to narrow as filled tonnage of the steel plants shows a de- the Liberty loan campaign draws near. crease of 2,000 tons during the period of It is too early to forecast with any degree of February, compared with January, it is not accuracy the condition and prospects of winter looked upon as a decrease in orders/but due to wheat. There are some reports of damage to weather and shipping conditions. the crop by freezing weather in the States of Business conditions in and around Nash- Iowa and Michigan. Illinois and Indiana ville are especially bright, owing to the con- wheat stood the severe weather well and struction of the big powder plants about 4 the crop is promising. Increased acreage is miles from that city. Work is being rapidly observed throughout the district. Efforts are pushed on the construction of the Government being made to save as much as possible of the nitrate plants at Mussel Shoals, near Sheffield, corn and through cooperation by the roads Ala., and an experimental plant is being con- this grain is being moved rapidly, taxing the structed at a cost of $12,000,000. Work has capacity of the dryers. been started on an additional nitrate plant, to Automobile manufacturers have restricted cost approximately $30,000,000, and plans are output of pleasure cars in line with Governbeing formulated to build Dam No. 2, at a ment requirements. Many are employing their cost of about $16,000,000. This Government facilities to capacity on truck orders and aerowork has created unusual activity in northern plane parts. Alabama. It is said that owing to difficulty in securing The early Easter trade is reported active and raw materials, implement manufacturers will prospects bright for spring and summer. Very not be able to supply in full the acute needs of little of the past season's goods are visible, agriculture. Delivery is uncertain on account indicating conservative buying and excellent of car shortage. Attractive offers held out to marketing. There has been no building of any labor in other fields cause restlessness. Collecconsequence. In fact, ordinary repairs are tions are good. being put off on account of high prices of There is no change to report in building and materials and inability to get labor. The construction which have been practically at a labor situation will probably prove serious not standstill for six months. What building there only to the building lines, but may cause a is, is quite generally restricted to war requirecurtailment of production of cotton, corn, and ments. general foodstuffs. Candy manufacturers report steady increase in amount of sales, although this volume is DISTRICT NO. 7—CHICAGO. | due to the advance of from 10 to 25 per cent Confidence in the stability of the business ! in prices. Tonnage is limited by sugar restricand banking situation is the tenor of reports I tions. It is reported that consumption of received from all parts of this district. De- candy and chocolate by cantonment and trainposits and loans are working toward a more ing stations is large. easy condition, and the open weather is per- Prices in dry goods continue to advance, mitting farm operations as well as enabling the with no appreciable effect on buying. The railroads to recover from the state of paralysis comment is made that speculation is a big induced by the severe weather. Worthy ! factor in volume and that as a result some borrowers are able to secure accommodation 1 small merchants arc overbought and ovorwithout difficulty. Interest rates hold firm. ! extended with their banks. Collections are Short-term public utilities, industrial notes, I satisfactory. and municipal obligations are bought rather Though distinct improvement is observed in freely on account of the attractive }deld andI the transportation of grain, there is room for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

328 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. still further improvement. The latest Gov- The lumber business is in, a spotty condition. ernment report reveals the fact that farm re- But as a general thing the volume is decidedly serves of corn and oats are record breaking subnormal. This is, of course, attributed to with wheat holdings considerably more than the falling off in construction. Some sections expected. The situation is, therefore, con- report an active demand which they are unable trolled by the adequacy of transportation, to supply through inability to secure transthough some wheat is held for higher prices. portation. Collections are fair to good. Sales among representative houses in the Mail order volume is well maintained. Regrocery line show a good increase in articles ports are that business shows a satisfactory that are obtainable. Much difficulty, how- increase for the past month over a like period ever, is experienced in securing the two great last year. staples, sugar and flour, though the former is The piano industry reports highly satisfacbecoming more plentiful. Canners are now tory collections and a good volume of new placing contracts with farmers for sweet corn, orders. Freight congestion, heatless Mondays, tomatoes, and the like. The release of grain and scarcity of raw materials are now reflected and live stock through the improved railroad in output which is inadequate. Labor is still situation has resulted in better collections. in short supply. The situation in the hardware line is fair. Limitations imposed upon steel output by Builders' supplies are not in great demand on transportation and fuel scarcity have relaxed account of the general cessation of building to some extent. Production is approaching activity. Authorities look forward to a good normal. Government orders are the feature, demand from farmers within the next few while domestic demand is subsiding except in weeks. Collections are said to drag a little. the farm implement business, which promises Shoe manufacturers, except those employed activity. Collections have been good, but on Government orders, have been reticent in it is suggested that heavy inventories carried regard to commitments for hides due to a de- jby certain small manufacturers may affect recline in prices* Increasing strength in buying, ceivables. however, indicates that some concerns believe Jewelry houses experienced a slight slackenthe low price has been reached. Houses ing in volume during February which some favored with Government contracts are work- | attribute to unfavorable weather and heatless ing to capacity. No immediate labor trouble j Mondays. The outlook for an early resumpis in prospect. tion of normal activity is said to be promising. Live stock have been coming to market in There is no complaint about collections. increased volume owing to a marked relief in Government demand for woolens has adthe traffic blockade. Export demand forms vanced prices of raw material to the highest the basis of a good business in packing-house ever known. The general feeling seems to be that Government control will eventually be products, while domestic consumption has applied to maximum prices. Retail clothiers slackened due to the Lenten season, meatless are buying rapidly for fall delivery. Sharp addays, and organized economy. Beef cattle and vances will be made in overcoats and suits. sheep have been fairly well shipped. Hogs The usual sacrifice sale of winter clothing is not will no doubt be in good supply for some time in evidence. It is said collections will have to come. The receipts of live stock at Chicago close scrutiny of credit men on account of for the four weeks ending March 16 were: the tendency toward excessive, high priced inventories on the part of retailers who control Cattle. Calves. Hogs. Sheep. small capital. 1918 276,546 49,197 919,079 245,338 Clearings in Chicago for the first 17 business 1917 185,556 45,091 681,834 282,023 days of March were $1,495,000,000, being Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 329 $28,000,000 more than for the corresponding been a number of strikes and threats to strike 17 business days in March, 1917. Clearings recently. The Government has intervened in reported by 21 cities in the district outside of several cases which affected the production of Chicago amounted to $306,000,000 for the first war articles, resulting in settlements. While 15 days of March, 1918, as compared with the situation is improving, it may sti1? be said $290,000,000 for the first 15 days of March, to be unsettled. 1917. Deposits in the 12 central reserve The winter wheat is reported to be in good city member banks in Chicago were $897,000,- condition throughout the district, though rain 000 at the close of business March 20, 1918, is needed in some quarters. Spring plowing and loans were $582,000,000. Deposits show for oats, corn, etc., is underway, and preparaan increase of approximately $63,000,000 over tions for gardening have also begun. A great last month, and loans an increase of approxi- many in the cities are arranging for gardens, mately 82,000,000. as well as those in the country, in order to help the food supply. A movement has been DISTRICT NO. 8—ST. LOUIS. started in some of the States in this district to In general, business has been active in this get each farmer to test his seed corn before district during the past month, some lines re- planting, so as to insure a bumper corn crop, porting greater volume than last year. How- which is so much needed. ever, more conservatism is noted, and the The report of the St. Louis National Stock production of nonessentials is more and more Yards for February indicates an increase in the giving way to those things necessary for the receipts of cattle, hogs, horses, and mules over prosecution of the war. the corresponding month last year and a de- The continued mild weather has further im- crease in the receipts of sheep. It shows proved the fuel and transportation situation, decreases in the sales of cattle and hogs and and this has greatly benefited business. It has increases in the sales of sheep, horses, and brought about a rather free movement of all mules in comparison with February of last kinds of commodities, which has helped both year. However, comparing the first two the producer and the distributor. months of this year with the same period last The approach of spring is causing farmers to year, the report shows decreases in both the buy implements and other supplies, and this receipts and sales of all live stock excepting has stimulated the country trade. Manufac- horses and mules, in which there have been turers of farm implements generally report a substantial increases. better business than at this period last year. The postal receipts for February in St. Louis, The demand for tractors is said to be unusually Louisville, Memphis, and Little Rook all show heavy. slight decreases from the previous month, but Wholesale millinery houses report a good substantial increases over February of last trade for the coming spring. Distributors of ! year, due no doubt in large measure to the shoes and wearing apparel state that the vol- | increased postal rates. ume of orders for spring delivery surpasses that ! Reports for February from the leading cities of last year. Many are having difficulty in| in this district show slight increases in the replenishing their stocks to meet the require- ! number of building permits issued and the estiments. Retail merchants also report a good I mated cost of construction as compared with business. There seems to be a general demand the previous month, but material decreases in for the better class of merchandise. comparison with February a year ago. There Collections, as a rule, are reported to be | is little building going on in this district except satisfactory. I that which is absolutely necessary. A disturbing factor to business in this dis- The demand for money has continued steady trict has been the labor situation. There have during the past month, especially in the large Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

330 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. centers. The bank rate to customers continues have been encouraged to test their seed much at 6 per cent in the centers, and slightly more thoroughly and on a much more extenhigher in the outlying districts. sive scale than ever before. Through the Yeiy few of the banks in the large centers patriotic action of a county agricultural agent are in the market for commercial paper, though in Minnesota a newly invented seed-corn tester, there is a fair demand from country banks. capable of testing the germination of 600 ears The rate is now practically 6 per cent for all of corn at one time, has been made available maturities. Many of the commercial paper to the farmers of the district at the cost of brokers are now encouraging the issuance of manufacture, and many hundreds of these paper maturing within three or four months. improved testers are being sent daily into the This is said to attract the banks more at this rural districts, where they will substantially time, because it enables them to be more liquid aid in determining the seed value of available and paper maturing within 90 days is immedi- corn. atory available for rediscount at the Federal A number of counties in western North Reserve Bank. Dakota and eastern Montana, which were hard The attention of bankers, brokers, and others hit by the failure of the 1917 crop, have taken is now being directed to the third Liberty loan, advantage of special legislative enactments in which will be launched on April 6, and prepara- those States and have issued seed grain bonds tions are well under way in this district to help for the purchase of seed supplies, with which make it a grand success. to relieve needy farmers. It may be assumed that the acreage outlook is very much improved DISTRICT NO. 9—MINNEAPOLIS. as compared with 30 days ago, but there is Farmers are actively preparing for the spring still some doubt as to whether the wheat planting and for early entry into the fields. acreage will be up to a normal year, and there There is every evidence of an early spring. is still much question as to whether, even with There has been benefit to the agricultural sec- the very active work that has been done, a tions by the heavy winter snows. decrease in corn planting can be prevented. Business conditions throughout the district A large amount of spring work is necessary remain normal. Trade is active. Labor is because of the deficiency of fall plowing due fully employed. Banking conditions show to dry weather. Good moisture conditions are little change, with rates still very firm. promised during spring plowing and planting, The acreage prospects of the ninth district and should the present favorable weather conare still considerably in doubt. Agitation over ditions continue, the farmers will be able to the question of prices on small grain will have, offset the lack of fall work by an unusual in the opinion of many experts, an adverse amount of early spring cultivation. influence on the planting of spring wheat. DISTRICT NO. 10—KANSAS CITY. This is due to the fact that other grains than wheat have climbed to such high levels on the j Agriculture.—There is a continued and inmarket that the much-needed wheat is placed | creasing demand for corn as a substitute for at a strong disadvantage, both from the stand- !wheat flour, and both the export and milling point of the return per acre and because of the |demand effect the maintenance of unusually fact that the earlier grains are more certain ! high prices. The average quality is better in and less liable to suffer from plant diseases. | this district than in the central States and Extremely active work over the entire dis- jmany flour mills have now turned to corn trict has relieved the corn situation appre-! grinding. February was a record month in ciahly. Available stocks of seed have been iboth receipts and shipments on the local marlocated, and well distributed, and the farmers j ket, which were nearly four times as great as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 33.1 for the same month last year. Visible supplies the corresponding period last year. Hog reat the principal district markets increased over ceipts showed a slight gain of 3 per cent. The 90 per cent during the month. By Govern- movement of sheep to market decreased 30 ment estimates, corn stocks on the farms in per cent. Hog packing at district centers was the States of this district, on March 1, were 123 heavy, with slaughterings one-tenth greater per cent greater than on the same date last than for February, 1917. year. Mining.—The zinc and lead ore markets in The wheat movement continues very small, the Missouri-Kansas-Oklahoma district for with local receipts for the month only one-fifth February were in sharp contrast. Prices for and shipments one-twentieth of those a year zinc ores continue to decline, while lead prices ago. All mills are running on reduced opera- hold firm, with a strong demand from buyers tions, owing to the scarcity of grain, and 85 for all the lead ore they can secure. Surplus mills in this district for the past month were stocks of both metals increased during the grinding at only a little over half capacity, month, attributed chiefly to inability of securwith a resultant decrease under last year's out- ing cars for shipments. The zinc output for the put. The Food Administration, however, is month decreased 18 per cent under the same hopeful regarding wheat supplies for the re- month last year and the valuation declined 46 mainder of the crop year, although present per cent. The load output gained 7 per cent indications show wheat will be very scarce over February, 1917, but the valuation of it between now and the harvest. District mar- decreased one-fourth. A general dissatisfacket wheat stocks decreased two-fifths during tion is reported among the operators, in view of the month, and supplies on the farms, March the low prices paid for their output, as com- 1, were only one-half of those last year. pared with the fairly satisfactory prices paid Enough rain and snow fell over the entire to the smelters for their product. district to supply a fair amount of moisture to Metal mining in Colorado continues very the ground. The wheat crop prospects are dull, with the exception of the now mines now better than in the early winter, with the pres- producing molybdenum ores. Tho predicted ent crop condition in all States reported as silver revival has resulted in a considerable fair to good. slump and the State's zinc production has Live stock,—The live-stock markets are in a shown a steady decline. somewhat unsettled condition, because of the Oil.—Indications show that operations in the conflict in the effort to keep prices high enough mid-Continent oil field are active. Although to encourage producers and at the same time during February there were but 2 more wells low enough to make meats reasonable to con- completed in Oklahoma and 20 fewer wells sum, ers. Protests that the minimum price completed in Kansas than in January, the new set on hogs is too low have been made by the production increased 38 per cent in Oklahoma feeders of this district. Because of the high and 42 per cent in Kansas. In both States the cost of feeding operations these producers total oil production for the past month showed claim they do not profit by the fattening of an increase over the preceding month. As hogs, cattle, or sheep, with the prevalent mar- compared with February a year ago, Kansas ket prices. However, the weight of hogs nearly doubled its production, while Oklareceived at four markets of the district for the homa's production decreased 12 per cent. past month average 227 pounds, or 18 pounds Though no producing wells were completed in heavier than for the same month last year, Wyoming during February, it is reported that indicating that farmers are still feeding hogs operators are hopeful over the prospect of an freely, notwithstanding high prices of corn. increased production for this year. The scar- Cattle receipts at the six principal markets city of all drilling materials and casing is evifor February increased about one-fourth over dent, and inability to secure these supplies Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

332 FEDERAL KESEEVE BULLETIN. APRIL 1, 1918. continues to curtail field operations in some in the States wholly or partially within this parts of the district. district, gained 2 and 4 per cent, respectively, Lumber and construction.—It is predicted over the corresponding period a year ago, while that retail lumber dealers will have trouble in indebtedness decreased over 3 per cent. securing supplies, because of the scarcity of Trade in all wholesale and manufacturing labor at the camps, bad transportation facil- lines continues active. The demand for farm ities, and the large Government demands on tractors and attachments is heavy, and the the production. Prices on all kinds of lumber interest in automobiles and accessory supplies are high, with present tendency toward even is pronounced. Spring goods are beginning higher levels. Therefore, dealers are not to show more activity and the general retail stocking up on the present market. A good trade gradually improves. Collections are demand is expected from country districts, reported prompt in almost all lines. especially in the event of good crops, but the Financial.—AH except one of the 17 cities cities look forward to quiet conditions in all of this district, for which bank clearings during lines of construction. February were reported, showed a marked Building permits issued during February in increase over February of last year. The 10 of the largest cities of this district continue largest gain recorded was 61.4 per cent, while to decline in volume, showing a 31 per cent the average gain for all the cities was 52 per decrease under the same month last year. cent. The estimated cost of such constructions, how- While rates have increased slightly during the ever, increased nearly 8 per cent over February, month, the demand has not lessened. Bor- 1917, compared with a 44 per cent loss from rowers seem to realize that with the extensive reports of 110 principal cities of the entire financing for Government purposes, which the United States. banks are called upon to undertake, normal Labor.—Labor conditions have been very time rates could hardly prevail. unsettled in this district and over a dozen small The organization of the campaign for the strikes have been reported during the past flotation of the third Liberty loan in this tenth month. The strike of the southern Kansas district has been perfected. All efforts are coal miners has been satisfactorily settled. being extended to push the sale of this forth- Interurban car men in Kansas and Missouri, coming issue, the exact amount of which has who have been out for over a month, have not yet been announced. again returned to work. A local strike of laundry drivers has been in effect since the DISTRICT NO. 11—DALLAS. middle of last month, and this may lead to a Further improvement in agricultural condisympathetic strike threatened by all union tions, the result of fairly good rains over a large labor in this city. section of the district early in the month and Government and State agents are exerting open weather during the greater part of March, all energies to successfully meet the threatened both of which were favorable for crop preparashortage of farm labor. Labor and seed sur- tion, constitute the principal changes in the veys are being carried on in several States, agricultural situation. Commercial activities and every effort is being extended to secure the in all lines are seasonable and well maintained. requisite number of farm hands. The volume of wholesale and retail trade is all Mercantile.—Although the number of business that could be expected for the season, considerfailures in this district during January decreased ing the tendencies in every quarter to restrict one-fifth under the same month last year, the purchases to necessities only, and conform to liabilities of such failures were 12 times greater. the regulatory war measures. Collections are Purchase and payment activity for February, good. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 333 While it is too early to accurately forecast Liberty loan campaign, and organizations are crop returns, the outlook is favorable. As being completed in every community. We farming conditions rather determine the pros- believe that the district will subscribe its full perity of the district, the agricultural situation allotment, whatever that may be, and that the is one that commands more than passing in- banks will do their full part, as they have in terest. In portions of the west and southwest the past. Bond dealers report a good demand sections rainfall early in the month relieved for municipals of long maturity. conditions to an extent. It has not been suf- A large number of applications from State ficient, however, to give permanent improve- banks are being received, and it is believed ment to the situation, and conditions there that in a short time practically all of the best will not return to normal until a good rain institutions in this district will be members. falls. Demand for rediscount with this bank during Prospects for the small grain crop are im- the past month has been unusually heavy, proved in some sections, though the general bills discounted having increased over $3,500,outlook is far from satisfactory. In the north- 000 within that period. Interest rates are central and Panhandle sections, where the steady and no change is noted. acreage planted in wheat and oats was large, Clearings at the principal cities of the the farmers have given up hope of any return district—Austin, Beaumont, Dallas, El Paso, whatever from those crops. Where the ground Fort Worth, Galveston, Houston, and Shreveis in condition, as a result of recent rains, they port—show an increase of 31.3 per cent over are preparing it for other feed crops, such as February, 1917. Kafir corn, maize, and sorghum. The past There is evidence of a revival in building month has brought renewed activity in the operations, and spring promises a further planting of home gardens, and campaigns for improvement in the industry. There is unincreased food crops. The acreage planted to questionably a tendency to subordinate buildfoodstuffs will be unusually large. Prospects ing activities to the Government's requireare excellent for a large apple crop in the Ros- ments, and ordinary operations have been weil section. Cold nights have kept the trees below normal since war was declared. The from sprouting, which is much desired at this demand for all kinds of lumber is greater than season. The onion crop at Laredo is about can be supplied. Some mills have been comready for marketing, and promises to be un- | pelled to withdraw from the market entirely. usually large, probably up to last year's ship- The supply of cars is sufficient to keep mills ments of some 4,000 cars. operating as fully as they are able to secure This district is approaching the season when labor for their needs. The congestion in the member banks expect a material falling off in East has necessitated an embargo by the deposits, with a corresponding increase in their Director General of Eailroads against shiploans. An early analysis of reports of condi- ments for points east of the Indiana-Illinois tion, on the Comptroller's call of March 4, State line, except where the material is conindicates reduced deposits and increased loans. signed to Government officials. Collections in There is unquestionably a tendency on the the lumber trade are good, and more accounts part of banks to restrict the granting of new are being discounted at the present time than credits and to conserve their funds to help is usually the case at this season. Manuthe Government in its war financing. The facturers of brick and tile report that, although subscriptions to issues of certificates of in- activities in that line have been quite dull for debtedness during the past month have been the past six weeks, they expect a revival of liberal, and, each issue has shown a considerable activities as the season advances, and anticiincrease in the number of banks participating. pate sufficient orders to keep their plants Preparations are being made for the third running full time. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

334 FEDERAL RESERVE BULLETIN. APRIL 1, 191S. Collections are good. Building permits at DISTRICT NO. 12—SAN FRANCISCO. the principal cities of the district—Austin, The first year of participation in the war, by Beaumont, Dallas, El Paso, Fort Worth, reason of increased Government requirements, Galveston, Houston, San Antonio, and Shreve- for men and materials, has resulted in practical port—taken as a whole, show a decrease of 26.3 elimination of unemployment in this district per cent over February, 1917, while Dallas, and in general and important advances in" Fort Worth, and Houston show a slight in- wages, with consequent increased purchasing crease, with San Antonio showing an increase power on the part of industrial workers. It of 260 per cent. would aid the country in greatest measure The labor situation is unchanged over 30 if this enlarged buying power were exercised days ago. A recent strike among the street-car only to the extent necessary for essential employees at Yfaco, which for a time threatened things and if the remainder were loaned in serious trouble, was settled satisfactorily. some form to the Government. Reports from There will be an active demand for men for throughout this district, however, indicate farm work. increased sales of luxuries and nonessentials. With the opening of spring, and rains in a The need of curtailing nonessential consumppart of the cattle-raising sections, there is some tion has not been comprehended. The limited improvement in the live-stock situation. Grass volume of sales of Thrift Stamps and War has started over parts of the range country and Savings Certificates indicates likewise a failure the situation as to stock water has also been to realize the necessity that savings should be relieved, though not sufficient to answer re- loaned to the Government to aid in the successquirements for any considerable time. At ful prosecution of the war. On the basis of Albuquerque cattle are being contracted for $20 per capita each year, this district should at from $2 to $5 per head over last year's buy $8,750,000 of War Savings Certificates and prices. Thrift Stamps per month. The actual sales, Developments in the oil fields in the vicinit}^ however, from December 3, 1917 to March 1, of Coleman have made business unusually good 1918, had been only as follows: there. Some 8 or 10 wells flowing from 80 to Arizona $40,395.00 100 barrels per day have been brought in. California: Quite a good deal of lease money has been put I\ orthem $785, 001. 25 in circulation, which has been a material help Southern 417, 272. 50 to farmers, particularly as that section has 1, 202, 273. 75 suffered heavily from the drouth. Idaho 50, 483. 25 Xevada 12, 825.00 Reports from Galveston indicate that pros- Oregon (incomplete) 38, 600.00 pects for an increase in exports from that port Utah 112,440.00 are excellent. It is expected that large Washington 247, 404.00 shipments of barley and rye from the Pacific Total 1,704,181.00 coast for export will be ordered to Galveston in the very near future. Lack of facilities has The lumber situation has been complicated curtailed exports for sometime past. by labor troubles, but the industry is strongly There seems to be a tone of optimism as to supporting the Government. Demand for the immediate future, and while conservatism lumber for private buildings continues light, prevails, and all interests of the district are building permits in 19 principal cities of the subordinated to war plans, yet the situation is district being 13 per cent less in February, 1918, sound, and business should continue without than in the corresponding month in 1917, but undue disturbance. Government requirements for shipbuilding, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 335 aeroplanes, and cantonments consume all avail- so general that there now seems every reason able lumber. In spite of the great need for to expect abundant crops of every description. lumber, strict adherence to 8-hour labor This is a complete reversal of the situation of would restrict production 20 per cent. In a few weeks ago, when California was suffering contrast with this situation the output of aero- I from an unparalleled drought. plane spruce, under control of the Army, has j Fall sown wheat in the Northwest has come been increased 400 per cent since October, 1917.i through the winter with minimum loss and The organization of a "Loyal Legion of Loggers! promises maximum yield per acre. Sowing of and Lumbermen " has facilitated settlement of | spring wheat in Washington will not be comlabor disputes in this field and resulted in a pleted for three weeks. Though large, this quickened spirit of patriotism, evinced by bet-I acreage may be seriously curtailed by sowing ter work and increased production. j of barley and oats, now quoted at $74 per ton. An event in shipping causing a great deal of The Oregon wheat acreage is estimated at 25 comment was the successful launching on March per cent over that of last year. 14 near San Francisco of the 5,000 ton steamer| The hop industry furnishes an interesting Faith, built of reinforced concrete. This! example of transition from nonessential to experimental concrete ship was built at a cost essential production, many hop growers having of $125 per ton compared with the Govern- planted other crops, some to the extent of threement price of $210 per ton for steel ships, and fourths of last year's acreage. The Food in a period of 4 months as compared with a Administration is attempting to secure reducperiod of from 6| to 9 months for steel ships j tion of hop acreage by one-third. Hop kilns of similar tonnage. A plant for building steelI in the northwest are being used to dry vegeships of the same size would cost $1,000,000 as| tables, which are sold to the Government for against 875,000 for such concrete ships. j overseas use. War needs have greatly stimulated rice pro- | General business is active. February clearduction in California, which in 1917 produced | ings in. 20 principal cities of the district exone-sixth of the rice crop of the United States.! ceeded those of the same month in 1917 by 20 Production and acreage for the last two years, per cent. Foreign trade continues to expand, with estimates for 1918, arc as follows: January, 1918, imports and exports increasing 85 per cent over the corresponding month last 1918 year, as shown by the following table: 1917 (estimated). [000 omitted.] 82,000 120,000-130,000 I Production pounds.. 280,000,000 400,000,000 ! i ; ; ! January, 1917. January, 1918. Rice screenings, hitherto used largely for j animal feed, are now being used for flour. p I o m rt - s. p E or x t - s. Total. p I o m rt - s. ports. Total. Demand is so great, however, that indications are that, in less than 30 days, there will bo no San Francisco 810,169 313,427 623,596 $24,314 826,509 850,823 supply available for California mills. Los Angeles 788 587 1,375 1,849 625 2,474 Oregon 171 765 936 189 115 304 Demands for California petroleum caused a Washington 12,531 15,761 28,292 24,529 21,954 46,483 further decrease of 412,087 barrels in stored Total 23,659 30,540 54,199 i 50,881 49,203 100,084 stock during February. Production amounted to 7,634,671 barrels and shipments to 8,046,758 Due to advantageous freight rates, San barrels. Stored stocks on February 28 were Francisco has become a coffee distributing 31,360,378 barrels. center of the United States, second only in Sains throughout California in late February importance to New York and New Orleans. and during March have been so abundant and Imports at at this port, which have doubled in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

336 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. the past three years, have been as follows Comparative statement of condition of national banks in (receipts in 150-pound bags): Twelfth Federal Reserve district. 1913 399,896 Dec. 27,1916. Dec. 31,1917. 1914 383,361 1915 397,852 RESOURCES. 1916 615,276 Cash and exchange 3309,527,000 $318,568,000 1917 868,301 Loans and discounts 555,911,000 650,812,000 Bonds and securities 172,067,000 223,634,000 Banking house and equipment.. 22,268,000 25,239,000 Charter rates in trans-Pacific trade continue Other real estate 6,443,000 5,721,000 Other resources 12,379,000 10,364,000 firm, averaging 50 per cent higher than in the Total 1,078,595,000 1,234,338,000 spring of 1917. LIABILITIES. About April 1 the Federal Reserve Bank Capital 89,622,000 89,841,000 will open a branch in Salt Lake City, Utah, for Surplus and undivided profits... 65,319,000 65,745,000 Duo to banks 195,627,000 181,334,000 member banks in Utah and Southern Idaho. Demand deposits 507,783,000 621,379,000 Time deposits 147,220,000 182,374,000 This will be its fourth branch, others having Money and bonds borrowed 632,000 10,964,000 Circulation 60,883,000 61,315,000 been established, in the order named, at Acceptances 3,901,000 6,774,000 Other liabilities 7,622,000 11,944,000 Spokane, Seattle, and Portland. Total 1,078,595,000 1,234,338,000 The increase in resources of national banks Rediscounts: of this district during the past year is shown With Federal Reserve Bank 324,000 20,361,000 With other banks 74,000 577,000 in the following: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 337 i DEPOSITS AND INVESTMENTS OF NA- officers. Net deposits up to October 31, 1914, TIONAL BANKS, 1913-1917. represent amounts subject to reserve require- In the following table and attached diagram ments; in subsequent abstracts up to and inare traced the changes in the several classes of cluding May 1, 1917, amounts on which reserve deposits, also in loans and investments of na- is computed, and for subsequent dates include tional banks, between June 4, 1913, and De- also Government deposits, which are disrecember 31, 1917. To the end of 1914 figures in garded at present by the Comptroller's Office in the first column include Individual deposits, computing reserves. Loans and investments Dividends unpaid, and Postal savings deposits, are shown exclusive of permanent investments, since then Demand deposits, Time deposits, such as bank building and other real estate, furand Postal savings deposits. Bank deposits niture and fixtures, and stock of Federal Reare exclusive of amounts due to Federal Re- serve Banks. Percentages have been computed serve Banks, while United States deposits in- showing for each call date the ratios of loans clude also deposits of United States disbursing and investments to both gross and net deposits. Movement of principal classes of deposits, also of loans and investments of national banks since June, 1913. [From abstracts of the Comptroller of the Currency.] [000's omitted.] | 8 Deposits n. s, in s p c a o l v u s i d n ta i g n l s g de B p a o n s k its. 1 + 2. d U e S p n ta o i t t s e e i s d ts. de T g p r o o o t s s a i s t s i . : ; ; de T p n o o e t s t a i t l s .1 \ Lo m in a e n v n s e t s s a t . - n 2 d P 7 e - r J c -5 en . t P 7 e - r 6 c . ent deposits. June 4,1913... $5,974 $2,120 88,094 150 §8,144 S7,125 | $8,052 98.8 Aug. 9,1913... 5,783 2,108 7 891 57 7,948 7,097 i 8,062 101.4 113.6 Oct. 21, 1913... 6,074 2,180 8,254 90 8,344 7,172 8,180 93.7 114.1 Jan. 13,1914... 6,098 2,211 ! 81309 84 8,393 7,226 8,072 j 93.8 111.7 Mar. 4,1914... 6,136 2,471 8,607 66 8,673 7,505 8,266 j 95.3 110.1 June 30,1914.. 6,130 2,185 8,315 " 67 8,382 7,495 8,347 99.5 111.4 Sept. 12,1914.. 6,168 1,950 8,118 70 8,188 7,293 8,637 ! 105.4 118.4 Oct. 31,1914... 6,115 1,891 8,006 ! 70 8,076 7,167 8,635 j 106.9 120.5 Dec. 31,1914.. 6,294 1,869 8,163 72 8,235 6,668 8,437 102.4 126.6 Mar. 4,1915... 6,291 2,243 8,534 59 8,593 7,066 8,471 i 98.2 119.9 May 1,1915.... 6.618 2,226 8,844 47 8,891 7,198 ! 8,600 ! 96.7 119.5 June 23,1915.. 6; 504 2,208 8,772 • 49 8,821 7,283 ! 8,639 97.9 . 118.6 Sept. 2,1915... 6,718 2,466 9,184 45 9,229 7 523 ! 8,823 95.6 i 117.3 N D o ec v . . 3 1 1 0 , , 1 1 9 9 1 1 5 5 . . . . 7 7 , . 4 6 0 2 7 8 2 2 , , 7 7 0 3 9 8 1 1 0 0 , , 1 3 1 6 6 6 4 3 1 6 1 1 0 0 , , 1 4 5 0 7 2 8 8 , , 2 3 5 6 7 6 { 9 9 , , 4 6 7 5 1 1 !, 9 9 3 2 . . 2 7 1 1 1 1 4 5 . . 7 4 Mar. 7,1916... 7,685 3,074 i 10,759 : 33 10,792 8,783 j 9,869 I 91.4 312.4 May 1, 1916.... 8,105 2,995 ' 11,100 ! 35 11,135 8,782 i 10,046 ! 90.0 114.4 June 30,1916.. 8.125 2,713 10,838 ! 39 10,877 8,702 10,101 92.8 116.1 Sept. 12,1916.. 8; 412 2,916 11,328 i 35 11,363 9,202 10,417 91.6 113.2 Nov. 17,1916.. 9,105 3,349 12,454 35 12,489 9,977 10,958 87.7 109.8 Dec. 27,1916.. 8,970 3,261 12,231 35 I 12,266 9,929 I 10,963 89.3 110.4 Mar. 5,1917... 9,240 3,683 12,923 35 12,958 10,4.89 11,365 87.7 108.4 May 1,1917.... 9,665 3,379 13,044 36 13,080 10,283 11,550 88.3 112.3 June 20,1917.. 9,613 3,026 12,639 133 12,772 10,306 ! 11,9-16 93.5 115.9 Sept. 11,1917.. 9,975 3,045 13,020 210 13.230 10,293 j 12,292 92.9 119.4 Nov. 20,1917.. 10,339 3,103 13,412 1,352 14;794 11,701 14,029 94.8 119.9 Dec. 31,1917.. 10,735 3,190 13,925 517 14,442 11,074 13,180 91.2 119.0 1 Including Government deposits. 2 Exclusive of fixed investments, viz, banking house, real estate, furniture and fixtures, also stock of Federal Reserve Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

338 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. GOLD SETTLEMENT FUND. Operations through the gold settlement fund decreased 38.8 millions, and the balance to the for the four-week period from February 21 to credit of the agent 35 millions, making a total March 21, 1918, continued on a large scale, decrease of 73.8 millions. Chicago's balance mainly on account of the heavy movement of in the banks' fund shows the largest gain, viz, funds between Federal Reserve Banks result- 24.7 millions, while the balance to the credit ing from banks in the interior drawing oh their of the Chicago agent gained 21.5 millions, New York correspondents in payment for cer- making a total gain of 46.2 millions. Boston's tificates of indebtedness issued in anticipation and Richmond's balances also show considerof the third Liberty loan. Clearings and trans- able increases, while aggregate banks' and fers combined, effected through the fund during agents' balances in the fund show a gain of the four weeks ended March 21, amounted 26.6 millions for the four-week period under to $2,885,286,000, averaging $721,321,500 per review. week, compared with a like average of $760,- A revised form of statement showing the 629,800 for the preceding five-week period. transactions through the banks' and agents' Net changes in ownership of gold in the funds, which has been is use for several weeks, banks' fund through transfers and settlements is published for the first time in the present amounted to 3.31 per cent of the total obliga- number of the BULLETIN. It is designed to tions settled as against 1.90 per cent for the set forth more clearly transfers of credits bepreceding period. This increase of 1.41 per tween the two funds. The banks' statement cent is due chiefly to a net loss of $80,283,000 now shows actual withdrawals of gold from the by New York resulting from net payments fund and payments of gold into the fund; also through settlements of $159,783,000 against total withdrawals, including transfers to the net receipts of $79,500,000 from transfers. Federal Reserve agents and total deposits, Changes in the ownership of gold since the including transfers from the Federal Reserve commencement of the operation of the fund, agents. The new form of statement of the May 20, 1915, to March 21, 1918, amount to agents' fund shows withdrawals for transfers 1.52 per cent of the total obligations settled. to the banks and deposits through transfers Chicago, Boston, and Richmond show the from the banks and in addition all other withlargest gains through the shifting of credits in drawals and deposits. the fund, while New York, Atlanta, and Dallas Below are given figures showing changes in show decreases. the fund between February 21 and March 21, During the four-week period the balance in inclusive: the fund to the credit of the New York bank Amounts of clearings and transfers through the gold settlement fund by Federal Reserve Banks, from Fe2b, . 1,918, to Mar. 21, 1918, both inclusive. [In thousands of dollars.] Total Balances Transfers. Clearings clearings. adjusted. and transfers Settlement of— Total for 1918 to date 8,797,757 Feb. 28,1918 587,027 45,181 35,000 Totp] for 1917 27,154,704.5 Mar. 7.1918 771,168 45,825 85,000 Total for 1916 . .. 5,533,966 Mar. 14,1918 601,936 78,953 11,330 Total for 1915 1,052,649 Mar. 21,1918 695,825 34,225 37,000 Total clearings and transfers, May 20,1915, to Mar. 21,1918. 42,539,076.5 Total 2,716,956 204,184 168,330 Previously reported for 1918 5,277,069 426,135 635,402 Total since Jan. 1,1918... 7,994,025 630,319 803,732 Total for 1917 24,319,200 2,154,721 2,835,504.5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 339 Changes in ownership of gold. [In thousands of dollars.] Total to Feb. 21, 1918. From Feb. 22, 1918 c , l t u o s i M ve a . r. 21, 1918, both in- T 20 o , t 1 a 9 l 1 c 5 h , a t n o g M es a f r r . o 2 m 1 ,1 M 91 a 8 y . Balance to Federal Reserve Bank of— credit Feb. 21, 1918, Balance Decrease. Increase. plus net Mar. 21, Decrease. Increase. Decrease. Increase. deposits of 1918. gold since that date. Boston . . .. 24,935 30,666 44,544 13,878 38,813 New York 568,118 105,107 24,824 80," 283" *""648,'40i* Philadelphia 80,485 43,423 51,270 7*847* 88,332 Cleveland 103,414 . 36,711.5 44,564.5 7,853 111,267 Richmond i,47i 7,541. 7 18,965.7 11,424 9,953 Atlanta . 56,853 20,149 12,099 8,050 48,803 Chicago 55,912 32,376 74,895 42,519 98,431 St Louis 35,760 25,480.9 33 169.9 7,689 43,449 Minneapolis . . . .. 20,553 3,311 4,114 803 21 356 Kansas City 69 433 5 36,420 * 38 643.4 2 223 71 656 5 Dallas * . . .. 40,366.5 18,662 11,432 7,230 33,136.5 San Francisco 81,877 20,356 21,683 1,327 83,204 Total 569,589 569,589 380,204.5 380,204.5 95,563 95,563 648,401 648,401 Gold settlement fund—Summary of transactions from Feb. 22, 1918, to Mar. 21, 1918, both inclusive. [In thousands of dollars.] Balance Ag w g i r t e h g - ate Aggregate Transfers. Week M ly a r s . e 2 t 1 tl , e 1 m 91 e 8 n , t b s, o t F h e i b n . c 2 lu 8 s , i 1 v 9 e 1 . 8, to Balance Federal Reserve las m t e s n ta t, te- w G i o th ld - Gold a d nd ra t w ra a n ls s- a d n e d p t o r s a i n ts s- at i n c l f o u s n e d of Bank of— Feb. 21, drawals. Deposits. fers to fers from business, 1918. a f g u e n n d t . 's a f g u e n n d t . 's Debit. Credit. de N b e it t s. d T e o b t i a ts l . ! j c T re o d t i a t l s. cr N ed et its. M 1 a 9 r 1 . 8 . 2 1, ' l Boston I 2,460 2,460 9,500 9.911 186,118 190,496 14,289 44,544 New York ! 63)667 6,440 41,440 33,500 113,000 159,783 871,210 711,427 24,824 Philadelphia...) 49,663 500 4,425 13,100 6,860 18,000 310,296 336,143 25,847 51,270 Cleveland.. 52,897.9 1,311.4 5,125 21,311.4 5,125 5,730 220,099 227,952 13,583 44,564.5 Richmond ! 11,214.8 203.1 530 4,203.1 530 330 7,000 5,008 133,361 138,115 9,762 18,965.7 Atlanta 1'4,~59'4 2,005 850 6,405 10,244 95,489 87,439 2,194 12,099 Chicago 50,144.3 , 840 5,021. 63,680 45,911.7 "37," 666' "26," 666"! 377,961 437,480 59,519 74,895 St. Louis 26) 776.4 I 200 79. 2,200 904.5 1,636 186,136 193,825 9,325 33,169.9 Minneapolis 8.011 i. 1,300 8,000 3,300 2,500 8,531 93,191 96,494 11,834 4,114 Kansas City 85)700.9 !. 719. 719.5 23,000 330 111,451 136,314 24,893 38,643.4 Dallas 16.042.2 409.9 3,969.9 6,589. 7 13,000 752 57,874 63,644 6,522 11,432 San Francisco.. 4,460 5,080 4,680 41,000 ' 18," 066' 73,770 97,597 23,827 21,683 Total 377,673.5 i 3,544.4 13,155.4 122,394.4 124,925.4 168,330 ; 168,330 201,595 2,716,956 2,716,956 201,595 380,204.5 Federal Reserve agents'fund—Summary of transactions from Feb. 22, 1918, to 'Mar. 21, 1918, both inclusive. [Tn thousands of dollars.] Balance With- Deposits Balance Federal Reserve agent at— m la 2 e s 1 n t , t 1 s , 9 t F a 1 t 8 e e . b - . G d o r l a d w w a i l t s h . - Gold dr t t o a r a w b n a a s ! n f s e k f r , o r j j | fr t t o r h m a r n o s u b f g a e h r n s k. dr T w a o w it t h a a - l ls. de T p o o t s a i l ts. a b M t u c a s l r i o n . s e e 2 s 1 o s , f , 1918. Boston 11,500 11,500 New York 40,000 35,000 35,000 5,000 Philadelphia.. 65,354 500 ! 2,435 12,600 2,935 12,600 75,019 Cleveland 50,000 20,000 20,000 70,000 Richmond 25,000 4,000 4,000 29,000 Atlanta 41,270 1,000 ! 4,400 850 5,400 850 36,720 Chicago 140.484.5 500 j 40,890 62,840 41,390 62,840 16i;934.5 St. Louis 37)737.6 825 2,000 825 2,000 38,912.6 Minneapolis... 25.500 : 2,000 8,000 2,000 8,000 31,500 Kansas City... 52,860 500 j. 500 52,360 Dallas 7,624 6,000 3,560 6,000 3,560 5,184 San Francisco. 36,616 220 5,000 720 5,000 40,896 Total.... 533,946.1 3,000 ! 91,770 118,850 94,770 118,850 558,026.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

340 FEDERAL RESERVE BULLETIN. 1918. OPERATION OF THE FEDERAL RESERVE CLEARING SYSTEM, FEB. 16, 1918, TO MAR. 15, 1918. Items drawn on F It e e d c m a e b i s t v r a y a e n d l r k r a ( s a d R g w a e e i i ) n n s l . y e r o v n e F d e is d c t a b e i r t v r a i y a c e n l t r ( k a d R o s g a u e e i i n t s ) l s . y e i r d v e e I ( o d te t a h m i b l e y s a r n d a d k r v i s a s e w t r i r n a n i g c e t o s ) n . I b a t y e n m d a b v ( s o b d e t h r r a h a a i a l g n n b y e c d a ) h l n . e e k s d T ( o o U d o n f a n t i i T a t i l l e t y r e m e ( d a a e s v s x S u e d c t r r l r a u a e a t r g s e w i e s o v n ) ) f e . I ( t d U e T a m n i r l i e s y t a e d s d a r u v a r S e w e r t r a a n o g t e f o e s n ). b N b m a e b u e r n e m m r k o - s - f N b m n e b u o e r e m n m r o - - - f in banks N£?" Amount. ^ Amount, fe'Amount.| ^m" Amount. N b u e m r. - I Amount. tr d i i c s t - . l p i o s a n t r . Boston 730-S12, 35,865; S5,283,9201 4,307 S4,965,755; 43,902 S23,053,139 9,966 $4,379,491 410 252 New York 558| 65,217, 43,780135,676,64123,32414,563,1581 73,662115,457,300 26,32710,295,729 678 425 Philadelphia 095 16,796, 22; 946! 3,145,05711,02211,365,162! 49,063 31,306,922 3,922 757,025 628 315 Cleveland 990044 3,916,742| 21.620:11,848,014 366i 3,013,201! 555 $3,681,846' 27,445 22,459,803 1)134 029,704 769 619 A C R h i t c l i a c h a n m g ta o ond 7 71 3 9 7 ; j 1 3 4 4 2 9 ,, , ,4 5 7 1 9 4 9 8 3 ! , ,5 0 OO 0 0 A 0 0 "2 1 2 *r3 3 t 7 , , ' f0 5 0 \f*3 9 6 3 4 4 A\ ; 1i c\ 2 5 8 , , , r4 6 7 *5 3 f 0 \f1 6 5 * , , , 0 9 4 n0 6 2 ow0 7 9 : : 9 2 88 3 1 0 9 8 ; | 2 3 , , 3 8 7 2 3 3 4 0 3 , , , 0 0 4 4 0 1 2 0 6 ! ! | 542 225,387' ! 3 1 3 3 7 1 , , , 6 2 1 7 2 0 0 3 2 2 1 7 5 7 , , , 9 6 1 8 0 4 5 3 5 , , , 2 0 3 3 0 4 0 0 5 55 1 1, , ,77 2 8 33 4 3 99 1 2 7 2 8 1 3 6 6 1 8 , , , 0 1 6 0 8 5 0 4 2 1, 5 4 1 3 3 0 ( 7 6 5 2,2 3 2 2 2 6 3 2 1 St. Louis 434' - 12,876122,037,450j 16oi 1,218,557| 8i 3,357 15,483: 30,915,290 138,220 485 1,002 Minneapolis 848 •; 912; 13,257 1,245,116! 923! 1,653,822! 17; 028;' 8,811,143 91,550 795 1,077 Kansas City !, 875, 16,190 9,448,663] 1,082; 2,992.675! 2,423:1,815.483 21,984 23,132,336 1,773 293,430 960 1,535 D Sa a n ll a F s rancisco 5 2 2 4 l 4 ! j 3,873 # ,901 1 1 5 3 , , 3 9 5 5 6 0 2 5 , , 2 3 3 6 5 0, , 7 1 5 4 9 6 ; ' 5 4 8 4 8 5 ; 1 ' . 6 2 8 09 1 , , 0 8 7 4 7 4 j 4,172J ! 686,998 2 1w 3 5, , ,7 7 8 , , 4 4 7 57 7 , , 9 8 2 8 0 9 l 1 , , 7 5 4 0 5 5 j ! 4,0 3 5 7 2 4 , , 4 3 3 3 8 4 6 57 3 1 8 1,1 2 3 5 9 5 Totals: F Ja e n b . . 1 1 6 6 t t o o F M eb a . r . 1 1 5 5 ,1 ,1 9 9 1 1 8 8 .. ." 1 5 4 1 6 , , 4 2 0 0 8 7 ! 1 1 5 5 3 3 , , 8 7 4 0 7 1 , ,3 56 7 8 5 2 2 2 5 7 9 , , 3 5 1 3 2 1 J 1 8 1 0 3 ,2 ,l 4 3 8 4 ,l4 1 6 6 6 2 ; 4 5 4 1 , , 6 2 5 5 4 9 ; ; 4 4 2 8 , , 8 5 5 5 2 6 , , 3 7 7 0 2 9 ! |7 7, , 1 7 2 0 8 0 !6 5 , , 4 8 1 3 3 6 , , 0 9 7 5 1 8 3 3 6 2 9 5 , , 8 3 9 0 8 1 ! 3 2 2 8 1 2 , , 8 7 0 8 5 5 , , 3 3 1 6 7 4 i ! 5 4 8 8 , , 9 2 9 2 1 4 2 2 5 1 , , 8 3 2 1 7 6 , , 7 0 5 3 7 3 8 7 , , 0 9 1 7 3 2 1 9 0 , , 4 5 2 1 5 9 Dec. 16,1917, to Jan. 15, i ! ! No 1 v 91 . 8 16 to Dec. 15,1917.; 4 4 8 7 , , 5 6 4 7 9 8 1 1 4 7 8 1 , , 0 7 3 2 3 3 , ,4 10 3 8 9 2 2 5 4 3 0 , , 4 7 5 5 8 6 . 1 8 8 9 4 ,0 ,4 6 4 5 0 , , 1 7 3 6 5 1 ! : 4 4 . 6 9 , , 3 3 5 4 3 2 : 5 5 8 2 , , 4 1 5 7 8 5 , , 9 5 5 7 2 8 ; | 7,718' I 3,402: .0353 3 5 3 9 4 , , 0 7 6 8 7 7 .2 9 3 2 1 , 4 5 , 8 6 5 2 , 3 8 , 5 1 6 5 , 2 ! ! 3 33 8 , , 8 1 0 3 6 0 ! 2 2 1 7 , , 1 1 1 7 6 9, , 0 2 5 9 3 3 7 7 , , 8 9 2 0 3 9 9,321 Oct. 16 to Nov. 15,1917.•47,574=166,552,773 232,723,64,296,21045,393 53,089,827j ! 325,690 283,938,810 30,426". 17,496,9741 7,826 9,210 Sept. 16 to Oct. 15,1917.140,591128,271,466 212,935147,476,204 40,21644,984,581 i , 293,742 220,732,251 26,79713,518,5661 7,747 9,052 Aug. 16 to Sept. 15,1917.:'36,305!100,331,694 182,191'41.323,62132,564 40,648,168S! i 251,061 |182,3O3,483 23,492Jll,006,515 7 718 8,934 July 16 to Aug. 15,1917.>36,727| 98,075,919 175,625 40; 353,278 31,273,37,981,022: 243,625:176,410,2191 19,533! 9,701,569 7,683 8,837 June 16 to July 15,1917.38,476!.109,722,256; 182,622'41,004.720 33,94146,762,698 255,039197,489,674! 19,100! 11,637,899| 7,666 8,805 May 16 to June 15,1917.;37,898| 97,322,883 179,193:38,599', 461 33,150 38,314,393 250,241 !174,236,737|16,344! 4,414,5081 7,651 8,789 Apr. 16 to May 15,1917.i33,767! 87,370,859 171,093:36,473,163 33,428136,836,934 238,288160.680,956 15,925 3,597,865! 7,634 8,926 Mar. 16 to Apr. 15.1917.31,162' 60.288,002 168,607:32,666,959 32,008 34,693,542 231,777127; 648,503!12,582 2,643,408! 7,625 8,607 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APKIL 1, ISIS. FEDERAL EESEKVE BULLETIN. 341 DISCOUNT OPERATIONS OF THE FEDERAL RESERVE BANKS. Discount operations of the Federal Reserve bonds and certificates are shown for the New Banks during February totaled $762,439,698, York bank. New York, Chicago, Cleveland, compared with $868,421,473 for January. and Richmond each report total discount trans- These figures, except for the Chicago bank, are actions, including temporary purchase of United exclusive of the purchases with resale agreement States war obligations, in excess of 100 millions, of United States Liberty bonds and certificates Over 70 per cent of the month's discounts of indebtedness, which totaled $363,675,200 and all the temporary purchases of United during February and $405,029,450 during Jan- States war obligations were for 15 days or less; uary. Of the total discounts reported for the over 5 per cent each was 30-day and 60-day month, 261.8 millions, as against 351.7 millions paper, and nearly 18 per cent was 90-day for the month before, represents the total dis- paper. Six-month paper, i. e., agricultural counts of member banks collateral notes secured and live-stock paper maturing after 90 days, by United States war obligations and 137.3 mil- totaled 6.2 millions, about 40 per cent being the lions, as against 40.4 millions, the discounts for share of the Kansas City bank. the month of customers' paper thus secured. On the last Friday of the month the Federal Over 52 per cent of the banks' reported discount Reserve banks held a total of 509.5 millions transactions, as against 45 per cent in January, in addition to 100.9 millions of certificates of are thus directly traceable to war finance oper- indebtedness, all of which were held tempoations, the New York, Chicago, and Boston rarily under repurchase agreements for the banks showing the largest activities in this | accommodation of member banks. Correfield. Discounts of collateral notes secured by | spending figures for the end of January were commercial paper aggregated 44.9 millions 627.6 millions of discounts and 46.2 millions compared with a total of 130.3 millions for of certificates. Of the total discounts on January, 1918, and an average monthly total hand 269.2 millions, or about 53 per cent, was of 154.9 millions for 1917. Customers7 paper, made up of paper secured by Government war other than Liberty loan paper, rediscountod obligations, 22.3 millions, or over 4 per cent with the Federal Eeserve Banks totaled 298 by member banks' collateral loans secured by millions as against 332.6 millions the month commercial paper, and 178.1 millions, or about before, the total including 3.3 millions of bank 35 per cent, by customers' paper thus secured acceptances and 4.7 millions of nonmember or unsecured, the remainder being agricultural banks' paper rediscounted during the month and live stock paper largely carried by the under review. Of the total of this class of western banks. paper about 60 per cent was reported by the During the month the number of member Kichmond and New York banks. Total dis- banks increased from 7,980 to 8,031, mainly counts for the month include, in addition, 20.5 the result of admission to membership of 50 millions of trade acceptances, of which 10.3 State banks and trust companies. The total millions were in the domestic trade and 10.2 in number of members discounting during Febthe foreign trade, the latter all discounted by ruary was 1,353, Chicago and New York with the New York bank. About 35 per cent of the 251 and 219 member banks accommodated total discounts and over 75 per cent of the during the month leading all other Federal purchases with resale agreement of Liberty Reserve districts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

342 FEDERAL RESERVE BULLETIN. APRIL 1, 1918. Bills discounted during the months of February, 1918 and 1917, distributed by classes. Member banks'"collateral notes. Customers' paper secured Federal Reserve Banks. U b n b y i o t e L n d d ib s S e o t r a t r y tes Li S b o e e r c r u U t r y n e b d it o e b n d y ds Otherwise Trade ac- d A is l c l o o u th n e ts r . Total. certificates of States certifi- secured. indebtedness. cates of indebtedness. Boston §40,049,332 SO,783,000 S780,000 $623,541 812,591,161 §60,827,034 New York 55,772,061 99,726,403 13,581,356 Hl.487,566 87,233,994 267,801,380 Philadelphia... 17,371,856 3,311,200 '120,612 11,064,700 31,868,368 Cleveland 3,432,227 23,125,500 3,096,981 17,893,893 47,548,601 Richmond 17,952,994 11,419,060 45,000 547,899 90,843,090 120,808,043 Atlanta 100 3,131,500 243,500 573,167 6,639,710 10,587,977 Chicago 2,154,554 2 84,764.114 23.776,881 128,167 16,858,492 127,682,208 St. Louis 9,594,883 ' 75,000 1,754,783 18,926,295 30,350,961 Minneapolis... 124,668 307,000 175,000 33,394 6,613,178 7,253,240 Kansas City... 105,948 3,428,900 3,475,000 1,397,180 13,171,519 21,578,547 Dallas 306 5,481,500 2,755,000 2,095,924 10,332,730 San Francisco. 286,655 10,732,600 714,672 14,066,682 25,800,609 Total, February, 1918.. 137,250,701 261,805,660 44,906,737 120,477,962 j 3 297,998,638 2762,439,698 Total, February, 1917.. 1.1,443,362 858,078 j 10,109,164 22,408,604 1 Including 310,230,115 in the foreign trade. 32 I Innccluluddeess S U3,2n8it2e,5d1 S9 toatfe bsa snekceurrsit' iaecsc peuprtcahnacseesd, afnrodm $ 4b,6a9n7k,2s0 u0n odfe nr o1n5m-deamy breepru brachnaksse' paagpreeer mreednistsc.ounted for member banks, but excludes 84,291,395 of bills of lading-drafts. Amounts of discounted paper, including member banks' collateral notes, held by each Federal Reserve Bank on the last Friday in February, 1918, distributed by classes. [In thousands of dollars; i. e., 000 omitted.] Ivletnber banks' col- Customers' lateral notes. paper secured by Liberty Secured by Banks. tu A ra g l r p ic a u p l e - r. Li p v a e p s e to r. ck b U on n d it s e d or b L o i n b d e s r t o y r c T e r p a t d an e c a e c s - . d A is l c l o o u th n e ts r . Total. States cer- United Otherwise tificates of States cer- secured. indebted- tificates of indobtcd- Boston 44,006 4,561 365 2,495 8,009 59,436 New York 129 66,433 I 43,575 7,754 3,893 55,546 177,330 Philadelphia... 78 13,748 2,501 195 8,327 24,849 Cleveland 12 5,318 9,721 3,518 16,823 35,392 Richmond 593 5 ! 5,433 8,059 15 1,259 19,752 35,116 Atlanta 142 184 i 5,116 1,928 55 967 1,070 9,462 Chicago 4,294 38,731 11,400 350 23,335 78,110 St. Louis 63 85 , 1,378 4,255 2,162 13.527 21,470 Minneapolis. . 1,197 1,804 ! 168 202 175 68 7; 251 10,865 Kansas City... 555 9,534 ! 488 1,192 1,385 1,096 4,561 18,811 Dallas 319 2,576 : 7 2,381 1, 188 1,853 8,304 San Francisco. 647 3,314 I 449 5,246 2,675 18,058 30,389 Perce T nt otal. 3,7 0 3 .7 5 17,5 3 0 .4 2 ; ' 146 2 ,8 8 3 .8 8 122 2 ,3 4 3 .0 2 22,3 4 3 .4 7 18, 3 6 . 7 7 8 178 3 ,1 5 1 .0 2 509 1 , 0 5 0 3 . 4 0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

343 APRIL 1, 1918. FEDERAL RESERVE BULLETIN. Acceptances bought in open market and held by Federal Reserve Banks as per schedules on file with the Federal Reserve Board9 or as reported by the Federal Reserve Banks on dales specified, distributed by classes of accepting institutions. Bankers' acceptances. Trade ac- Foreign Total ac- Date. M ba e n m k b s e . r N co o m n t m r p u e a s m n t i b es e . r N be b o r a n n m S k t e a s m . te - P b r a i n v k a s te . a b n r d b a a n a n d g k i e e n s - Total. b m o o u a p g r e k h n e t t i , n j j ceptances. cies. 1915. Feb. 22 • 893,000 S93,000 • $93,000 Apr. 5 ' 3,653,000 §7,820,000 810,000 i SI10,000 11,593.000 11,503,000 July 3 4,312,000 5,267,000 161,000 9,770;000 9,770,000 Oct. 4 ; 9,000,000 4,898,000 "132," 666" j 313,000 14,373,000 14,373,000 1916. I Jan.3 ! 15,494,000 7.160,000 352,000 822,000 23,838,000 23,838,000 Apprr.. 33 : 21,000 000 13,573,000 473,000 3,262,000 j 38,308,000 8722,000 39,030,000 JJuiviS S 3 2 9 8 9 0 3020,989,000 18,921,000 471,000 11,830,000 I 64,211,000 3,422,000 67,633,000 Oct. 2 37,798,000 21,782,000 712,000 9,914,000 ! 70,236,000 2,306,000 72,542,000 1917. Jan.l 66,803,000 i 34,625,000 1,502,000 18,224,000 :. 121,151,000 4,585,000 125,739,000 Apr. 2 43,979,000 i 20,328,000 689,000 16,830,000 j 8200,000 82,026,000 1,144,000 83,170,000 July 14-15. 108,597,000 | 30,390,000 3,333,000 33,082,000 i 3,805,000 184,785,000 4,660,000 189,4.45,000 Sept. 29... 131,997,000 14,987,000 2,193,000 21,708,000 ! 2.286,000 173,171,000 6,942,000 180,113,000 Dee. 31.... 227,717,000 ! 8,163,000 3,179,000 20,137,000 | 7;657,000 266,853,000 6,383,000 273,236,000 j 1918. Jan. 31.. 240,259,000 j 5,547,000 | 3,522,000 22,099,000 ! 6,947,000 !278,374,000 6,363,000 284,737,000 Feb. 28. 252,747,000 I 1,648,000 j 3,856,000 28,419,000 7,097,000 I 293,767,000 5,456,000 299,223,000 Amounts of bills discounted and acceptances and warrants bought by each Federal Reserve Bank during February, 1918, distributed by maturities. 15-da;r maturities. 30-day maturities. Discounts. Acceptances. Warrants. Total. Discounts. Acceptances.. Warrants. Total. Boston $17,336,789 8110,800 817,447.589 82.079,497 $507,944 $2,587,441 New York 184,353,362 4 807,910 189.161.272 16.666.842 8,535.838 25,202,680 Philadelphia 19,928,502 454,112 20,382,614 '947,311 2,047,171 2,994,482 Cleveland 32,780,753 7,243 32,787,996 5,577,311 36,304 5,613,615 Richmond 112,407,480 111,000 112,518.480 1,665,904 754,571 2,420.475 Atlanta 7,214,858 82,000 7,240,858 967,249 255,934 1,228,183 Chicago 110,547,775 110,547,775 4,163:561 1,414,840 5.578,401 MSti nLnoeaupisolis 2 2 0 , , 1 3 8 3 1 4, , 2 1 7 0 8 8 25,000*' 2 2 0 , , 1 3 8 5 1 9, , 2 1 7 0 8 8 3,4 8 0 9 9 0 , , 1 4 8 30 9 '2 3 8 9 4 0 , . 7 0 0 0 9 0 3 1 , ,2 6 8 9 0 3 , , 4 8 3 9 0 8 Kansas Gitv 6,972,509 6,972,509 3,314,014 353,500 3,667,514 Dallas 8,291,075 256,666 "• "" 8,541,075 369,242 3,809 710 4,178,952 San '''rancisco 16,419,862 355,143 16,775,005 680,389 935,889 1,616,278 Total 538,768,351 6,153 208 544 921 559 40,730,939 19,326 410 60 057,349 Per cent 58.6 6.5 60-day maturities. 90-day maturities. Discounts. Acceptances. Warrants. Total. Discounts. Acceptances. Warrants. Total. Boston $3,290,795 81,595.595 84,886,390 838,044,153 88,290.197 846,334,350 New York 11,486,011 21,817,113 33,303.124 54.355.875 56,809,974 111,165,849 Philadelphia 522 238 2,515.448 3,037.686 9,794,125 4,056.470 13,850,595 Cleveland 3,037,379 2,453,575 5,490^954 6,090,053 5.567,665 11,657,718 Richmond 2,064,584 1,929,571 3,994,155 4,634,846 2j556,450 7,191.296 Atlanta 1,731.687 1,475,452 3,207,139 648,698 835,749 $1,500 1,485,947 Chicago 6,523,682 1,296,600 7,820,282 6,130,524 8,306,081 14,436,605 St. Louis 3,793,150 312.350 4,105.500 2,797,380 2,004,956 4,802,336 Minneapolis 2,682,452 773,001 3,455,453 1,092,185 392,500 1,484,685 Kansas City - 3,493,354 475,135 3,968,489 5,301,576 644,263 5,945.839 Dallas 683,803 1,466,815 2,150,618 500,540 100,000 600,540 San Francisco 2,441,573 4,396,453 6,838,026 5,643,500 6,482,495 """"*""""•**"" 12,125,995 Total 41,750,708 40,507,108 82,257,816 135,033,455 96,046,800 j 1,500 231,081,755 Per cent 8.9 24.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

344 FEDERAL RESERVE BULLETIN. APBIL 1, 1918. Amounts of bills discounted and acceptancs and warrants bought by each Federal Reserve Banlc during February, 1918 r distributed by maturities—Continued. Over 90-day maturities. Total. Per cent. co D u i n s- t s. A an ec c e a p s t . - r W an a t r 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. co D u i n s- ts. A an cc c e e p s t . - r W an a t r s - . Total. Boston $75,800 SI,219,342 ! $1,295,142 £60,827,034 §511,723,878 §72,550,912 83.8 16.2 100.0 New York... 939,290 939,290 267,801,380 91,970,835 359,772,215 74.4 25.6 100.0 Philadelphia 678,192 98,000 774,192 31,868,368 9,171,201 41,039,569 77.7 22.3 100.0 Cleveland.... 63,105 52,846 115,951 47,548,601 8,117,633 55,688,234 85.4 14.6 100.0 Richmond... 35,229 190,000 225,229 120,808,043 5,541,592 126,349,635 95.6 4.4 100.0 Atlanta 25,485 25,485 10,587,977 2,599,135 $1,500 13,188,612 80.3 19.7 100.0 Chicago 316,666 871,909 1,188,575 127,682,208 11,889,430 139,571,638 91.5 8.5 100.0 St. Louis 16,964 1,03.8,136 1,055,100 30,350,961 3,665,151 34,016,112 89.2 10.8 100.0 Minneapolis.. 407,065 407,065 7,253,240 1,555,501 8,808,741 82.3 17.7 100.0 Kansas City.. 2,497,094 2,497,094 21,578,547 1,472,898 23,051,445 93.6 6.4 100.0 Dallas 488,070 $132,000 620,070 10,332,730 5,626,525 132,000 16,091,255 64.2 35.0 0.8 100.0 San Francisco 615,285 294,902 910,187 25,800,609 12,464,882 38,265,491 67.4 32.6 100.0 Total... 6,156,245 3,765,135 132,000 10,053,380 762,439,698 165,798,661 133,500 928,371,859 i Percent.. 1.1 i1n0n0 .0n j! 82.1 ; 17.9 100.0- Maturities of discounts, acceptances, and municipal warrants held by each Federal Reserve Banlc on Thursday, Feb. 21,1918. [In thousands of dollars; i. e., 000 omitted.] 1 to 15 days. 16 to 30 days. B co il u ls n t d e i d s . - Ac b c o e u p g ta h n t c . es M wa u r n r i a c n ip ts a . l Total. B co il u l n s t d e i d s . - Ac b c o e u p g ta h n t c . es M wa u r n r i a c n ip ts a . l Total. Boston 11,815 1,311 13,126 7,639 3,277 ! 10,916 New York 96,395 68,620 165,015 8,893 15,047 23. 940 Philadelphia . . . .. 9,322 5,235 10 14,567 2,274 2,783 5,057 Cleveland 19,857 4 003 24,460 4,856 746 5 802 Rich niond 24,118 577 24,695 3,179 486 3,665 Atlanta 4,928 1,504 123 6,555 1,669 1,549 3,218 Chicago 43,651 1,281 44,932 23,312 5 151 28,463 St Louis 12,112 790 12,902 3,225 1,083 4,308 Minneapolis 2,649 340 2,989 2, 766 390 3,156 Kansas City 4,490 4,498 1,947 353 2,300 Dallas 4,363 4, 437 8,800 763 2,348 3, 111 San Francisco 11,025 4,856 15,881 5,012 6,337 11,349 Total . . .. 2*4,725 93,562 133 338.420 65,535 39,5oO 105,08f> Per cent 42.0 13.0 i 31 to 60 days. 61 to 90 days. TJiils dis- j Acceptances Municipal Bills dis- j Acceptances \ Municipal counted. | bought. warrants. Total. counted. j bought. | warrants. Total. i Boston 6,239 j. 13,298 32,9X9 ! 5,460 ! 38,370 New York 25, 55,683 i. 80,905 40,813 j 37,387 ! 84,200 Philadelphia.. 7,121 i. 10,329 10,044 j 3,125 ! 13,169 Cleveland IJ2 | 2,288 :. 8,600 4,367 ! 1,301 : 5,838 Richmond 1 867 ;. 6.345 3,322 ! 587 ! 3,880 Atlanta 2,811 ; 5; 181 420 ; 855 | 1 1,276 Chicago 4,292 :. 8,008 4,500 : 5,203 ' 9,763 St. Louis 1,761 !. 6,363 i 1,470 : 2.689 ! 4,159 Minneapolis... 773 1. 3,610 j 1,255 ". '393 : 1,648 Kansas City... 726 !. 5,308 5,065 i 402 5,487 Dallas 31 3,086 !. 4,339 800 ! .100 I 9G0 San Francisco. 13,725 i. 22,182 4,760 ! 5,204 • 9,984 Total. 74,087 ; 100,372 | 174,406 115,795 ; 82,688 j 1 Per cent 21.7 22.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. FEDERAL RESERVE BULLETIN. 345 Maturities of discounts, acceptances, and municipal warrants held by each Federal Reserve Bank on Thursday, Feb. 21, 1918—Continued. [In thousands of dollars; i. c, 000 omitted.] Over 90 days. Total. Percentages. B co il u l n s t d e i d s . - b A a o c n u c c g e e p h s t t - . M w u a n rr i a ci n p t a s l . Total. c B o il u l n s t d e i d s . - bought. Municipal Total. B co il u l n s t d e i d s . - A b a o c n u c c g e e p h s t t - . M w u ar n r i a c n ip t a s. l Total. Boston 59,436 16,287 75,723 78.5 21.5 100.0 New York 177,330 176,737 354,067 50.1 49.9 100.0 Philadelphia 24,849 18,264 10 43,123 57.6 42,4 100.0 Cleveland 35,392 8,938 44,330 79.8 20.2 100.0 Richmond 19 ! 19 35,116 3,497 38,613 90.9 9.1 100.0 Atlanta 3| 85 9,462 6,719 ; 134 16,315 58.0 41.2 0.8 100.0 Chicago... 2,871 ! 2,871 78,110 15,927 94,037 83.1 16.9 100. .0 St. Louis 61 i 61 21,470 6,323 : 27,793 77.2 22.8 100.0 Minneapolis 1,358, 1,358 10,865 1,896 ' 12,761 85.1 14.9 100.0 Kansas City 2,727 ! 2,727 18,811 1,489 j 20,300 92.7 7.3 100.0 Dallas 1,125 i 458 1,593 8,304 9,971 468 i 18,743 44.3 53,2 100.0 San Francisco 1,135 ! 1,135 30,389 30,122 60,511 50.2 49.8 100.0 Total. 9,392 |. 471 9,863 509,534 296,170 612 806,31(5 j 63.2 6.7 .1 100.0 Percent — 1.2 Liberty loan bonds and United States certificates of indebtedness purchased during the months of January and February, 1918, under 15-day repurchase agreements. January.1 February.* L b i o b n e d r s ty . o C f e in r n t d i e f e s i b c s. a t e te d s -i i Total, L b i o b n e d r s ty . o C f e i r n n ti d e f s e ic s b . a t t e e d s - Total. Boston §1,985,000 $165,000 §2,150,000 82,280, SI, 000,000 §3,280,000 New York 306,350,000 306,350,000 18, 265,610,000 265,628,000 Philadelphia.. 5,752,450 4,034,000 9,786,450 3,445, 3,126,000 6,571,000 Cleveland 79,600,000 79,600,000 52,830,000 52,830,000 Atlanta 4,305,000 700,000 5,005,000 5,53S, 3,144,000 8,682,900 Minneapolis.. 2,013,000 75,000 2,088,000 3,693, 22,990,000 26,683,300 Dallas 50,000 50,000 Total. 14,105,450 390,924,000 I 4.05,029,450 14,975,200 348,700,000 363,675,200 1 Figures are exclusive of repurchase agreements of the Chicago bank, wlrioh are included with discounted bills under caption "Member banks collateral notes secured by Liberty bonds and certificates." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

346 FEDERAL RESERVE BULLETIN. APRIL 1,1918. Total investment operations, exclusive of purchases of United States certificates of indebtedness, of each Federal Reserve Bank during the months of February, 1918 and 1917. Bills dis- : Bills bought in open market. Municipal warrants. counted for !... Federal Reserve Bank. members and! Trade Total. City. State. All other. Total. Banks? ! acceptances. acceptances. Boston 827,034 !311,198,677 ,'5525,201 311,723,878 New York 267,801,380 I 91,718,282 252,553 91,970,835 Philadelphia. 8:868,368 ! 9,171,201 9,171,201 Cleveland 548,601 ! 8,117,633 8,117,633 Richmond 808,043 ! 5,541,592 5,541 "~~ Atlanta... 120,587,977 ' 2,599,135 2,599,135 ,500 SI, 500 Chicago 10,682,208: 11,889,430 11,889,430 St. Louis [ 127,350,951 i 3,665,151 3,665,151 Minneapolis 30 253,240 i 1,555,501 1,555,501 Kansas City 7,578,547 ! 1,472,898 1,472,898 Dallas 21,332,730 > 5,626,525 5,626,525 3132,000 |- 132,000 San Francisco 10,800,609 : 10,705,769 1,759,113 12,464,882 25, Total, February, 1918... 782,439,698 i 163,261,794 i 2,538,867 165,798,661 132,000 I 1,500 133,500 Total, February, 1917... 22,408,604 ! 68,990,791 j 1,646,388 70,637,179 5,798,677 | 53,985 5,852,662 United States bonds and Treasury notes. Total investment operations. Federal Reserve Bank. 2 per cent. 3 per cent. 3J per cent. 4 per cent. | : 1- u y r e y a r n o T t r e e s a . s- Total. Feb 19 r 1 u 8. ary, Feb 19 r 1 u 7. ary, Boston $20,000 82,010,000 i. $2,030,000 $74, 580,912 $9,322,187 New York 18,000 !. 18,000 359, 790,215 24,684,930 Philadelphia.. 75,000 3,370,000 !. 3,445,000 44,484,569 11,786,311 Cleveland 1,250 I. 1,250 55,667,484 9,771,303 Richmond 2,350 -,. 2,350 126, 351,985 12,463,798 Atlanta 1,070,000 4,486,800 :. 5,558,800 18,745,412 2,097,817 Chicago 139, 571,638 9,728,315 St. Louis 34,016,112 5,774,492 Minneapolis... 514,300 3,179,000 : 3,693,300 12,502,041 4,362,900 Kansas City... 23,051,445 3,122,342 Dallas 16,091,255 2,749,591 San Francisco. 38,265,491 3,655,409 Total, February, 1918... 1,879,300 13,067,400 ;. 14,746,700 943,118,559 Total, February, 1917... $144,500 1 S200 250 i §456,000 600,950 99,499,395 United States securities held by each Federal Reserve Bank on Feb. 28, 1918, distributed by maturities. United States bonds with circulation privilege. United States securities without circulation privilege. Federal Reserve Bank. 2 co p n 1 e s 9 r 3 o 0 l c . s e o n f t 1936-1938. 1918> 4 l p o 1 e 9 a r 2 n 5 c . o e f nt- 1 3 b 9 c p o 4 o s 6 n e n i r - d o v 1 s c n e 9 e r o 4 - n 7 f t . 3 T p r n 1 e e o -y a r t e s e c u a s e . r r n y t 3 p lo 1 e a 9 r 6 n c 1 . o en f t 3£ L l o p 1 i e a b 9 r 4 n e 7 r . c o t e f y nt 4 1 L 9 l p o 4 i e 2 b a r - n e 1 c r 9 o e t 4 y f n 7 t . c o e U e f r d t i n i n n f i i e d t c s e e a s d b t . e t s - Total. Boston $750 $529,000 $2,194, $80,000 2,3333,014 SI,250,000 $4,391,764 New York 50 850,000 1,255,400 5,013, 329,850 3,152,900 66,429,000 76,230,200 Philadelphia 3100 549,200 2,548, 86,850 5,152,850 3,119,000 11,456,000 Cleveland 6,400 467,200 2,653,660 82,378,200 414,800 3,221, 1,966,900 375,000 16,584,000 28,067,160 Richmond 915,100 237,000 1 — 42,900 38,250 25,000 3,227,250 Atlanta 610,600 21,000 10,300 1,491, 418,250 3,215,100 1,605,000 7,401,250 Chicago 1,862,500 367,300 2,581,000 1,768,000 427,400 3,378, $400 1,185,500 311,570,100 St. Louis 100 1,080,000 1,153,300 1,444, 3,677,400 Minneapolis 323,050 i6,260 1,199,180 '""206," 250* 114,800 1,340, 500 219,300 1,262,450 6,752,500 11,434,290 Kansas'City 7,155,850 22,240 825,000 838,500 1,784, 7,500 13,100 2,584,500 13,230,690 Dallas 2,450,900 281,500 1,233,600 1,430, 1,900 52,800 1,300,000 6,750,700 San Francisco 2,428,750 1,500. 28,250 52,000 4,009,000 Total. 15,784,050 1,412,600 7,563,840 5,177,450 6,526,300 |27,312,000 900 13,181,700 13,600,464 100,886,500181,445,804 1 Includes United Stales securities purchased from banks under 15-day repurchase agreements. 2 Includes unpaid portion of Liberty loan bonds sold to individual subscribers. s Exclusive of 342,404,830 of United States securities purchased from banks under 15-day repurchase agreements. Total United States bonds with circulation privilege, 529,937,940. Total United States securities without circulation privilege, $151,507,864. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APBJL 1, 1918. FEDERAL RESERVE BULLETIN. 347 RESOURCES AND LIABILITIES OF FEDERAL RESERVE BANKS. Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system, at dose of business on Mar. 1 to Mar. 22, 1918. RESOURCES. [In thousands of dollars; i. e., 000 omitted.] Min- Boston. Chicago. neap- Total. olis. Gold coin and certificates in vault: Mar.l 10,575 I 316,059 10,700 26,349 6,326 6,026 j 28,718 j 4,313 15,696 192 ! 8,695 27,966 461,615 Mar. 8. 10,129 | 318,676 11,038 24,473 i 6,444 6,696 i 29,290 i 3,847 15,785 316 8,835 28,615 464,144 Mar, Jo 10,856 324,577 11,282 31,298 I 6,430 6,807 ; 28,907 l 3,578 15,819 204 8,982 28,781 477.521 >vlar. 22 10.370 ! 324,997 9,379 26,427 I 6,460 6,547 ! 28.708 i 3,324 15,988 267 9,120 28,942 470,529 0<>]d settlement fund— Federal Reserve Hoard: , i Mar. 1 20,668 I 50,673 47,011 51,234 I 20,196 13,926 | 49,767 I 30,527 \ 2,167 40,203 14,821 16,106 357,299 Mar. 8 40,359 j 42,770 50,645 51,332 I 23,381 10,993 ! 44,873 i 30,270 | 5.676 i 29,629 12,278 12,379 354,585 Mar. If:.. 39,986 ! 18,219 47,792 47,839 ! 27,974 13,637 i 69,930 I 34,466 10'801 i 36,113 11,390 14,361 372,508 M*vr. 22 45,782 47,824 51,432 ! 44,980 j 19,046 12,599 i 59,685 33,170 4,114 ! 30,764 11,437 19,033 379,866 '"old with agencies: MOT. 18,112 3,675 4,725 j 1,837 j1,575 ! 7,350 2,100 | 2,100 2,625 1,838 2,888 52,500 M;ir. 18,112 3,675 4,725 ! 1,837 jl'. 575 : 7,350 2,100 2,100 2,625 1,838 2,888 52,500 18,112 3,675 4,725 ! 1,837 !lj 575 ! 7,350 2,100 2,100 2,625 1,838 2,888 52,500 M:.:r.'22."."!!!;!!!;;!;;i 18,112 3,675 4,725 J 1,837 \1.575 ! 7,350 2.100 2,100 2,625 1,838 2,888 52,500 :ohi with i-YdfI-;-",1 lie- i serve agents: i M-.r. I ! 249,784 74,388 i 84.549 i 25,888 ! 46,734 151,407 40,004 43,989 55,634 2.1,156 43,133 885,346 Mar. S I 249,226 75,247 j 86; 568 25,646 I 44,402 159)474 41,471 43,858 55,54.4 21,118 45,547 896,702 M-r =••• ! 209,028 76,580 90,306 25,577 i 44,423 ! 165.472 41,445 45,761 55,498 21,496 45,496 869,628 Mr. 22 , 208,514 77,396 94,978 j 29,429 " ~ 162,806 4.1,077 46.652 55,446 21,985 50,128 878,805 M r.l..:. 2,000 ! 10,000 2,000 309 351 944 ! 993 1,039 j 1,492 | 406 941 94 i 20,569 Mar. 8 1,989 I 10,000 2,000 147 ; 427 1,162 ; 1,053 1,204 j 798 ; 390 1,061 36 I 20,267 Mar.l* 1,994 ! 10,000 2,000 388 376 812 : 1,166 1,396 ! 892 : 882 1,108 72 i 21,086 Mar.22 1,994 | 10,000 2,000 311 331 1,190 1,388 ! 947 878 1,130 55 21,114 T;.t:-I cold reserves: Mar.l 85,598 644,628 137,774 |167,166 ; 54,598 09,205 238,235 77,983 j 65,444 99,060 47,451 90,187• ii 1•,777,329 Mar. 8 104,753 638,784 142,605 1167,245 ! 57,735 64,828 242,040 78,892 I 68,217 88,504 45,130 89,465 ! 1,788,198 Mar. IS 105,057 579,936 141,329 1174,556 : 62,194 67,254 272,825 82,985 i 75,373 95,322 44,814 91,598 i 1,793,243 110,323 609,447 143,882 !l71,421 ; 57,103 63,504 259,738 81,059 i 69,801 89,980 45,510 101,046 I 1,802,814 ij^.itil-ten U)v\ tes,-diver, • etc. : 5,857 : 39,910 1,115 i 1,476 : 359 2.007 5,404 1,299 | 601 84 1,984 348 60.444 Msr. 1 • 5,744 ! 39,921 1,017; 1,154 ! 357 1)875 5,171 1,374 j 605 2,114 277 59,685 M Ma a r r . . 8 1 5 : : 4 4 , , 9 3 4 8 8 3 ! j 4 40 0 , , 6 1 4 7 4 0 1,0 7 5 6 2 6 ; | 1 1 , , 1 0 2 5 6 0 ! : 3 38 1 3 1 1 1 , , 8 7 2 9 1 1 . 5 , 5 2 , ' 4 $ 56 1 1 , , 4 3 7 7 1 7 ! 6 6 4 1 1 2 r '4 6 : i 2 2 , , 2 2 5 2 8 2 2 38 8 4 3 5 5 8 9 , , 9 5 5 5 0 8 Mar. 22 ; Total cash reserves: i 91,455 684,538 138,889 168,642 j 54,957 71.212 243,639 79,282 ! 66,045 I 99,144 . 49,435 90,535 1,837,773 Mar. 1 j 110,497 678,705 143,622 168,399 . 58,092 66,703 247,211 80,2 6 j 68,822 j 88,580 i 47,244 89,,7 42 1,,847,,8383 Mar. 8. ! 110,005 620,106 142,095 1175,682 ! 62,505 69,075 :278,034 8844,,33(22 7766,,001144 ! 95,,3 98 : 47,,0 36 91,,8 81 i 1,,8,52,193 Mar. 15 ! 114,706 ; 650,091 i 144,934 1172,471 57,486 6o,295 265,194 82.530 I 70,413 ; 90,054 : 47,768 110011,443300 :: 118,682623,73272 Mar.22 ! Bills discounted for mcrn- ' bcrs and Federal Reserve Banks: 60,959 ; 217,801 i 22,249 ; 33,513 : 31,721 9,549 i 35,663 22,574 I 8,696 16,525: 10,739; 325,36 502,525 Mar.l 60,249 ; 223,296 i 25,052 32,722 32,284 10,940 ! 36,219 25,606 6,177 20,7591 12,683 34,353 520,340 Mar. 8 54,761 ! 241,146 i 24,290 30,669 28,654 9,711 : 33,847 22,727 ! 5,598 22,578; 11,839 31,664 i 517,484 Mar.15 56,829 i 249,280 ! 29,265 31,682 31.290 12.1.19 34,177 24,818 ! 5,236 24,070i 13,806 30,544 1 543119 Mar. 22 : ! Bills bought in open I market: ! 21,685 105,545 I 17,475 ! 14,175 • 4,293 6,512 19,073 6,204 ! 1,635 1,481 : 10,722 30,353 I 299,213 Mar.l ! 8,072 178.256 18,901 : 22,735 5,555 7,104 19,432 6,376 ! 3,986 • 6,519 10,060 30,956 ! 317,952 Mar. 8 i 9,477 182,116 1„9,,.1.7_2 .: _2_2,,„6_4.4 6,939 7.18S • 20.649 7,258 ! 3,611 I 6,165 : 8,110 29,919 j 323,248 Mar. 35 i 11,475 179,905 18,172 i 22.351 8,625 7'. 470 27; 025 8.208 ! 3.011 i 6,150 6,417 : 29,471 ! 328,880 Mar.22 i United States Govern- ' ment long-term sccuri- i ties: I 940 4,768 5.744 8,262 1,233 4,335 31.676 2,233 3,174 8,862 : 4,021 2,457 1')705 Mar.l j 960 4,761 : 5', 886 8,262 1,233 | 4,046 26.452 2,233 2,982 8,862 ; 4,020 2,457 72,154 Mar. 8 i 4,729 ! 5,583 7,788 1,233 4,040 24', 270 2,233 2,388 8,862 I 4,020 2,457 68,383 Mar. 15 ! 895 1,620 I 5,467 7,788 1,233 4,183 . 39,533 2,233 2,787 8.862 ! 3,970 2,468 ttl0,39 Mar.22 j United States Govern- j I ment short-term securi- ; ties: j 2,219 87,780 6,162 17,255 1,994 3,096 : 20,298 j 1,444 '8,594 4,358 : 2,730 1,552 ! 157,,482 Mar. 1 i 2.194 121,760 4.867 16,687 1,934 :<.$!» ! lft. 609 ! 1.444 ;4,149 4,301 '• 3,220 1,9S2 i IS'/.,S22 Mar.* i 2'199 137,461 6) 01J 15,105 1,994 3'. 766 i 13'. 287 : 1,4443.655 4,191 ' 2,944 1,923 j ] 93 Mar. 15 : 2,249 155,832 : 8,056 17,967 1.99J •5)445 j 2O;-!77J 1,4-14 4,087 j 2,929 1,«67 226! 030 Mar.22 : Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

848 ITE.DK.EAL RESERVE BULLETIN; AL>3IL 1, 19-18. Resources and liabilities of each Federal Reserve Bank and -if the Federal Reserve system at close of business on t'ridays. Mar. I to Mar. ;>•?,' ,'9/£—Continued. RESOURCES—Continued. [In thousands of dollars; i, e., 000 omitted.] Boston. Y N o e r w k. d P el h p i h la i - a . • ! C la le n v d e . - la A n t t - a. Chicago. Lo S u t. is. n M o e l a i i n s p . - - Dallas. F c S r is a a c n n o - . I ! ; Total All other earning assets: Mar.l 207 739 274 985 1,180 285 ! 3,680 Mar. 8 254 673 297 955 1,602 283 ! 4,064 Mar. 15 305 629 388 748 1,781 189 ! 4,040 Mar. 22 337 672 520 24 ! 1,826 173 4,240 Total earning assets: •I- Mar.l 85,803 475,894 51,640 ' 73,20539,241 23,699 107,449 32,729 23,144 31,226 I 29,392 67,183 I 1,040,605 Mar. 8 71,475 52S, 073 54,706 i 80,406 41,066 25,959 99,385 35,956 18,249 40,441 31,585 70,031 ! 1,097,332 Mar. 15 67,217 565,452 55,056 i 76,206 38,820 25,010 92,682 34,050 16,000 41.796 28,694 66,152 ! 1,107,135 Mar. 22 71,448 588,637 60,960 I 79,788 43,142 28,554 101,884 37,223 17,064 43; 143 i 28,948 04,523 i 1.163,314 Due from other Federal Reserve Banks—not: Mar.l 3,010 9,429 3,949 5,134 20,742 6,442 8,933 1,189 2,622 1,747 i i.U,882 Mar. 8 2,334 5,990 24,068 3,373 8,241 8,452 946 I I 6,113 Mar. 15 8,786 4,834 2,310 14,806 3,354 804 5,154 352 I 1 11,609 Mar.22 1,841 2,640 "3,"433" 769 4,700 16,546 4,947 5,811 6,546 734 1,573 ! 18,801 Uncollected items: Mar.l 18,975 75,731 38,386 21,915 27,959 21,042 66,566 19,264 12,293 32,330 i 21,172 13,552 i 369,185 Mar.8 18,412 69,8.16 40,181 19,521 19,675 57,169 19,005 10,594 25,714 ; 17,280 12,990 ! 337,283 Mar. 15 22,064 84,690 38,426 26,368 26,156 20,037 53,729 18,843 11,045 25,088 I 18,209 12,492 ! 357,147 Mar.22 20,065 79,306 38,3.59 29,089 27,627 19,740 64,594 17,818 13,295 29,354 ; 17,695 10.879 -l 367,821 Total deductions from gross deposits: Mar.l. 21,985 75,731 39,424 31,344 31,908 26,176 87,308 25,706 21,226 33,519 15,299 ! 381,067 Mar.8 18,412 69,816 40,181 21,855 26,926 25,665 81,237 22,378 18,835 34,166 17,280 13,936 343,396 Mar.15 30,850 84,690 43,260 26,368 26,156 22,347 68,535 22,197 11,849 30,242 18,209 12,844 368,756 Mar.22 21,906 79,306 40,999 32,522 28,396 24,440 81,140 22,765 19,106 35,900 18,429 12,452 376,822 5 per cent redemption fund against Federal Reserve bank notes: Mar.l 400 137 537 Mar.8 400 137 537 Mar.15 400 137 537 Mar.22 400 137 537 All other resources: Mar.l 404 |. 141 82 796 Mar.8 345 I - 2 88 326 761 Mar.15 387 I- 52 84 929 1,452 Mar.22 341 82 97 30 550 Total resources: Mar.l 199,243 1,236,163 230,357 273,191 126,247 121,169 438,396 137,717 110,415 164,289 102,758 173,186 3,260,778 Mar.8 200,384 1,276,594 238,854 270,660 126,086 118,415 427,833 138,600 105,906 163,587 96,246 174,035 3,289,909 Mar. 15 208,072 1,270,248 240,798 278,256 127,533 116,516 439,251 140,609 103,863 167,836 94,076 171,806 3,330,073 Mar.22 208,060 1,316.034 247,234 284'781 i129' 106 118,386 448,218 142,518 106.583 169,497 95,282 178,435 3,403,395 LIABILITIES. Capital paid in: S Mar.l 6,018 19,685 8,842 8,320 ! 3,740 2,916 9,261 3,504 2,668 3,413 2,813 4,243 73,401 Mar.8 6,110 19,641 6,863 8.355 ! 3,753 2,928 9,269 3,512 2,703 3,413 2,814 4,263 73,624 Mar.15 6,327 19.645 6,864 8.356 I 3,756 2,927 9,290 3,454 2,734 3,447 2,823 4,263 73,88(5 Mar.22 6,351 19,720 6,864 8,363 ! 3,756 2,943 9,296 3,466 2,736 3,450 2,823 4,243 74, Oil Surolus: Mar.l 75 649 116 40 216 38 1,134 Mar.8 75 649 116 40 216 38 1,134 Mar.15 75 649 116 40 216 38 1,134 Mar.22 75 649 116 40 216 38 1,134 Government deposits: Mar. 1 6,724 8,800 10,303 17,930 4,989 7,684 25,962 14,563 13,833 12,938 12,905 14,052 150,781 M M a ar r . .8 15 5, 6 68 9 5 9 . 8 ; , ) 6 , 6 72 0 9 5,9 2 4 8 2 1 1 1 0 , , 9 6 4 4 4 2 ? 2, ? 4 4 4 ? 8 3 4 , , 7 3 2 0 1 2 2 7, , 1 6 9 7 0 8 4 6 , , 7 2 9 5 8 6 3 6 , , 5 3 7 2 3 4 2 5, , 1 8 0 1 8 7 4 6 , , 7 0 8 8 0 3 6 9 , , 2 6 2 6 1 0 7 5 2 6 , , 0 2 2 0 3 8 Mar.22 5,728 349 8,974 11,487 | 4; 111 6,696 12,885 8l 046 6,391 8,788 7,129 10,921 91,505 Due to members—reserve ! account: Mar.l.. 82,886 594,032 77,779 !l08,0;>3 I 44,978 37,767 178,366 50,286 38,530 68,881 39,234 67,398 1,388,020 Mar.8 83,277 634,778 91,810 ! 110,632 ! 48,927 40,960 183,089 52,772 39,837 72,323 39,901 69,198 1,465,504 Mar.15 87,226 616,249 87,748 1108,734 ! 45,747 39,181 187,954 51,907 40,453 74,884 38,576 69,388 1,448,047 Mar.22 87,247 849,IS6 91', 306 |I13,055 j 42,501 38,954 185,946 53,499 39,895 70,541 38,442 69,453 1,480,025 Collection items: Mar.l 15,636 54,010 31,450 ! 18,495 i 19.057 13,700 23,683 8,994 3,988 9,686 5,884 13,448 218, a31 Mar.8 15,269 50,806 31,644 j 16,830 i 17,791 11,695 24,765 15,145 4,637 10,783 5,862 11,759 216,986 Mar.15 18,063 59,«14 32,650 I 21,486 j 17,523 12,287 24,389 15,756 4,099 9,530 5,560 11,200 232,157 Mar.22 17,0.15 54,295 31,175 I 22,529 j 20,283 11,734 25,731 14,291 4,198 10,852 5,997 11,015 229,115 1 Difference bo-tvvaen net amounts dio from and net; amounts due to other Federal Reserve Banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

. 1, 1918. FEDERAL RESERVE BULLETIN. 34"9- Resources and liabilities of sack Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays, Mar. 1 to Mar..22, *92£—-Continued. LIABILITIES—Continued, [.tn thousands of dollars; I. e., 000 omitted,] Boston. I>\ Y N o e rS w c, 1 de P l h p i h la ia - . I ; C la lo n v d e , - i ' m R o ie n h d - . ia A n t t - a. Chicago. ! ; Lo s u t i . s. n M o e l a i i n s p . - - K C a i n t s y a . s Dallas. F c S i r s a a c n n o - . Total. Due to other Federal Re- i serve banks—net: • Mar.l !, 52,353 Mar. 8 ! 38.763 3,713 ! ... 1.543 Mar. 15 |. 24;003 2,627 | 1,085 ! Mar. 22 \. "40,739 >€ ther deposits, including • foreign Government credits: Mar.l ' 81,756 232 j 2,085 i 24 I II ! 84,122 Mar. 8 : 72,192 236 ! 2,158 I 81 | 2,440 77,137 Mar.15 75,163 200 j 2,365 i 127 & 18 3,155 81,048 Mar. 22 i 788,331 207 ! 2,620 ! 37 ! 6 19 2,518 81,751 Total gross deposits: j Mar.l i 105,028 771,101 119,532 144,710 i 6!), 024Jw,158 230,096 | 73,88: 58,362 91,512 58,023 94,898 1,820,954 Mar. 8 ! 104,508 ; 800,268 127,195 138,340 | 68,709 56,961 i 212,690 72,796 50,806 85,941 51,855 93,057 1,815,835 Mar.15 110,974 : 783,695 126,340 144,991 fil? nnQ 55,194 i 221,898 74,046 48.140 89,540 49,986 89,964 | 1,833,275 Mar. 22 109,990 820,900 131,455 147,278 57,397 i 227,182 75,873 50,490 90,200 51,568 93,907 I 1,882,396 Federal RevServe notes in ! actual circulation: i Mar.l ' 87,273 441,025 103,933 119,920 j 53,367 59,057 i 198,477 59,966 51,251 60,912 41,815 74,045 1,351,09?. Mar. 8 J 88,908 451,781 104,798 123,410 i 53,508 58,486 i 205,084 61,894 52,248 65,707 41,453 76,715 1,383,990 Mar.15 89,932 ' 481.719 107,594 124,392 55.363 58,355 !207,284 62,706 ! 52,854 66,300 41,150 77,579 1,406,228 Mar. 22 30,844 469] 7i»2 198,915 128,566 58j 339 58,006 I 210.776 62,770 I 53,225 67,271 40,760 80,285 1,429,509 Federal Reserve bank notes in circulationnet liability: Mar.l..; , j 7,999 Mar. 8 8,000 ! 8,000 Mar.15 8,000 I 8,000 Mar. 22 7,978 | 7,978 A.II other liabilities: Mar.l 851 i 3,723 ... 241 I 346 380 453 107 6,199 Mar. 8 783 • 4,255 .. 555 j 574 398 111 526 124 7,326 Mar.15 764 ; 4,540 !.. 517 ! 563 403 97 549 117 7,550 Mar. 22 800 ; 5,013 j... 574 | 748 409 94 131 8,367 Total liabilities: Mar.l 199,243 11,230,163 230,357 273,191 126,247 121,169 i 438,396 137,717 110,415 164,289 102,758 173,186 3,280,778 •'.Tar. 8 200,384 il,276.594 238,854 270,660 I126,086 118,415 i 427,833 138,600 105,906 163,587 96,246 174,035 3,289,909 Mar.15 208,072 1,270,248 240,798 278,256 127,533 118,516 i 439,251 140,609 103,883 167,836 94,076 171,806 3,330,073 Mar. 22 208,060 1,316,034 247,234 284 781 129,106 118,388 i448,218 142,518 169,497 95,282 178,435 3,403,395 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

350 FEDERAL BESEKVE BULLETIN. APRIL 3, 1918. FEDERAL RESERVE NOTES. Federal Reserve note account of each Federal Reserve Bank at close of business on Fridays, Mar. 1 to Mar. 22. 1918. [In thousands of dollars; i. e., 000 omitted.] Kan- ! San Boston. Y M o e r w k. de P l h p i h la i - a. m R o ic n h d - . i la A n t t - a. C s i a t s y . ^ '•. Dallas. c F i r s a c n o - . Total. Federal Reserve notes re- \ ceived from agent—net: • Mar. 1....: i 90,180 508,724 107,708 122,689 59,346 i 60,845 i 207,082 ! 64,116 52,235 65,481 42,102 84,137 1,464,645 Mar. 8 92,101 527,366 !108,567 126,208 60,027 60,182 I 213,109 i 65,333 I 52,904 70,887 : 41,878 86,651 1,505,213 Mar. 15 '• 92,046 526,168 :110,900 129,326 62,758 . 59,504 218,607 : 66,327 I 53,807 70,555 ! 41,379 88,919 1,520,296 Mar. 22 93,502 540,854 i 119,316 134,878 64,528 : 58,974 I 221,540 j 65,959 ! 54,098 71,619 1 40,925 92,512 1,558,705 Federal Reserve notes ' Tielff by banks: Mar.'l 2,907 67,699 3,725 2,769 5,979 ; 1,788 ! 8,605 ! 4,150 984 4,569 287 10,092 113,554 Mar. 8 8,193 75,585 3,771 2,798 6,519 1,696 i 8,025 3,439 656 5,180 425 9,936 121,223 Mar. 15 2,114 64.449 3.306 4,934 6,395 : 1,149 i 11,323 ! 3,621 953 4,255 11,340 114,068 Mar. 22 2,658 71J102 10,401 6,312 6,189 968 i 10,764 : 3,189 873 4,348 165 12,227 129,196 Federal Reserve notes in actual circulation: Mar. 1 87,273 441,025 103,983 119,920 53,367 59,057 198,477 = 59,966 51,251 60,912 ! 41,815 74,045 1,351,091 Mar. 8 88,908 451,781 104,796 123,410 [ 53,508 58,486 ] 205,084 61,894 52,248 65,707 41,453 76,715 1,383,990 Mar. 15 89,932 461,719 107,594 124,392 | 56,363 : 58,355 ! 207.284 j 62,706 52,854 66,300 i 41,150 77,579 1,406,228 Mar. 22 90,844 469.752 108,915 128,566 58,339 : 58,006 i 210,776 I 62,770 53,225 67,271 j 40,760 80,285 1,429,509 Gold deposited with or to credit; of Federal Reserve agent: Mar.i 48,680 249,784 74,388 84,549 25,888 46,734 151,407 : 40,004 43.989 j 55,634 ; 21,156 43,133 885,346 Mar. 8 j 48,601 249,226 75,247 86,568 I 25,646 44.402 159,474 i 41.471 43^ 858 i 55,544 I 21.118 45,547 896,702 Mar, 15 ! 48,546 209,028 76,580 90:306 ! 25.577 44', 423 116655.472 ": 4rf,,445 45,761 I 55.498 ! 21,496 45,496 869,628 Mar. 22 i 48,502 208,514 77,,?.)6 94,978 I 29'. 429 41,893 162;805 41.077 46,652 j 55,446 i 21,985 50,128 878,805 Paper delivered to Fed- j oral Reserve a^ent: j Mar. 1 : I 82,644 383.345 34,565 : 47,688 35,014 14,286 56,293 j 25.608 8, 16,397 i 21,461 56,608 782,777 Mar. 8 1 68,321 401.548 40,421 ; 50,403 37,225 16,642 : 54,498 ! 30', 769 9,654 20,990 ! 22,743 60061 813,275 Mar. 15 04,238 423,261 35,976 53,313 35,556 15,437 53,315 i 27,939 8,554 27,600 19,949 55914 821,052 Mar. 22 68,304 429.185 42,003 : 54.033 39,297 17; 646 I 60,438 I 30,462 8.259 29.180 20,223 53644 852.674 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1. 3 918. FEDERAL .RESERVE BULLETIN, 851 Federal Reserve note account of each Federal Reserve agent at close of business on Fridays, Mar. 1 to Mar. 22, 1918. [In thousands of dollars: i. o., 000 omitted.] San- ; San 'Boston. Y N o o r w k. de P l h p i h la ia - . C ia lo n v d e . - i ; m R o ic n h d - . (. s i a f s y . i ; Da Has. c F i r s a c n o - . Total. FEDERAL RESERVE NOTES. Received from Comptroller: Mar. 1 117,920 : 744,120 142,840 147,040 i 81,740 80,620 I 253,800 • 70,100 ; 67,980 j 86,740 i 68,50091,800 1,968,200 Mar. 8 126,000 : 703,480 142,840 147,040 I 82,740 89,620 ! 258,840 \ 80,800 ' 67.980 : 92,740 j 68,59040,400 2,014,980 Mar. 15 126,000 : 782,680 149,400 154,080 ! 85,740 89,620 | 264,160 , 83,500 ; 69,980 ! 93,740 [ 68,50096,720 2,064,120 Mar. 22 126,440 789,080 153,600 159,700 j 87,740 89,620 ! 276,580 83,500 . 69,980 i 94,740 ! 68,501000,680 2,100,160 Returned to Comptroller: Mar.l : 22,820 : 139,956 23,852 11,071 | 16,939 12,150 ! 9,498 9,774 ! 11,30513,899 \ 13,563 7,663 292,490 Mar. 8 23,259 i 140,514 24,093i 11,552 I 17,25812,883 '•• 9,951 • 10,307 ; 11,436 14,093 ! 13,837 7,749 296,932 Mar.15 23,314 145,712 25,260! 11,814 ! 17,52713,111 ; 10,493 i 10,333 11,678 14,425 i 13,946 7,801 305,412 Mar. 22., 23,858 146,226 25,644I 12,142 i 17,75713,641 i 10,940 10,701 : 11,78714.661 I 14,180 8,168 309.704 Chargeable to Federal Reserve agent: Mar.l 95,100 604,164 118,988 135,969 64,801 77,470 :244,302 66,326 56,675 i 72,841 i 54,937 84,137 1,675,710 Mar.8 102,741 622,966 118,747 135,488 ! 65,482 76,737 !248,889 70,493i 56,544 ! 78,647 I 54,663 86,651 1,718,048 Mar. 15 102,686 636,968 124,140 142,266 168,213 76,509 :253,667 ,73,167 58,302 79,315 I 54,554 88,919 1,758,706 Mar. 22 102,582 642,854 127,956 147,558 I 69,983 75,979 j265,640 j72,799 58,1 80,079 i 54,320 ; 92,5121,790,455 In hands of Federal Re- i serve agent: Mar.l 4,920 95,440 11,280 13,280 : 5,455 :16,625 i 37,220 ! 2,210 4,440 7,360 12,835 ! 211,065 Mar.8 10,640 95,600 10,180 9,280 I 5,455 j 16,555 ! 35,780 ! 5,160 3,640 7,760 ! 12,785 \ 212,835 Mar. 15 10,640 110,800 13,240 12,940 I 5,455 17,005 ! 35,060 ' 6,840 : 4,495 8,760 • 13,175 : 238,410 Mar. 22 9.080 102,000 8,640 12,680 i 5,455 17,005 44,100 I 6,840 I 4,095 8,460 ! 13,395 ' 231,750 Issued to Federal Reserve Bank, less amount returned to Federal Reserve agent for redemption: Mar.l 90,180 508,724 107,708 122,689 ! 59,346 60,845 ! 207,082 ' 64,116 52,23565,481 | 42,102 i 84,1371,464,645 Mar.8 92,101 527,366 108,567 126,208 : 60,02760,182 I 213,109 j 65,333 52,904 70,887 i 41,878 86,651 1,505,213 Mar. 15 92,046 526,168 110,900 129,326 i 62,758 59,504 ! 218,607 i 66,327 ! 53,80770,855 ! 41,379 88,919 1,520,296 Mar. 22 93,502 540,854 119,316 134,878 i 64,528 58,974 ! 221,540 i 65,959 : 54,09871,619 | 40,92592,512 1,558,705 Collateral held as security for outstanding notes: Cold coin and certificates on hand- Mar. 1 32,110 195,961 18,130 3,104 !. 13,102 14,580 I 276,987 Mar.8 32,109 195,961 19,951 : 2,504 !. ; 13,102 14,580 i 278,207 Mar. 15 32,109 191,161 13,368 ! 2,504 •. ! 13,102 14,580 ! 266,824 Mar. 22 32,109 191,154 18,209 ! 2,504 L : 13,102 14,580 i 271,658 In gold redemption fund— Mar.l 5,070 13,823 5,729 6,419 ! 888 : 3,160 412 2,266 2,387 2,774 2,302 j 4,517 49,747 Mar. 8 I 4,992 13,265 5,488 6,617 ! 646 2,428 196 ; 2,219 2,256 3,184 2,264 i 4,431 47,986 Mar. 15 1 4,937 12,867 5,871 8,938 | 577 i 2,199 484 i 2,192 2,159 3,138 2,242 i 4,380 47,984 Mar. 22 ! 4,893 12,360 5,777 6,769 i 429 2,669 371 s 2,164 2,050 3,086 2,221 i 4,232 47,021 Gold settlement fund-! Federal Reserve | Board— i Mar.l I 11,500 40,000 68,659 60,000 25,000 : 40,470 150,995 ! 37,738 28,500 52,860 4,274 ! 38,616 558,612 Mar.8 1 11,500 40,000 69,759 60,000 25,000 :39,470 159,278 ! 39,25228,500 52,360 4,274 : 41,116 570,509 Mar. 15 i 11,500 5,000 70,709 70,000 25,000 39,720 164,988 | 39,253 30,500 52,360 4,674 [ 41,116 554,820 Mar. 22 j 11,500 5,000 71,619 70,000 I 29,000 36,720 162,434 i 38,913 31,500 52,360 5,184 ! 45,896 560,126 Eligible paper, re- i quired minimum*—: Mar.l i 41,500 258,940 j 33,320 I 38,140 I 33,458 j 14,111 55,675 24,112 8,246 9,847 20,946 I41,004 | 579,299 Mar.8 j 43,500 278,140 i 33,320 i 39,640 ; 34,381 ! 15,78053,635 23,862 9,046 15,343 20,760 j41,104 j 608,511 Mar. 15 43,500 317,140 | 34,320 ! 39,020 I 37,181 ! 15,081 :53,135 24,882 8,046 15,057 19,883 |43,423 650,668 Mar. 22 ! 45,000 332,340 | 41,920 j 39,900 ! 35,099 ! 17,08158,735 24,882 7,446 16,173 18,940 |42,384 679,900 Total— i I Mar. 1 90,180 508,724 107,708 122,689 59,346 j 60,845 207,082 i 64,116 52,235 65,481 42,102 i84,137 1,464,645 Mar.8 : 92,101 527,366 108,567 126,208 60,027 ! 60,182 •213,109 ! 65,333 52,904 70,887 41,878 86,651 1,505,213 Mar. 15 '• 92,046 526,168 110,900 129,326 62,758 I 59,504 218,607 • 66 32753,807 70,555 41,379 88,919 1,520,296 Mar. 22 ! 93,502 540,854 119, 316134,878 64,528 I 58,974 221,540 ! 65,959 54,098 71,619 40,925 92,512 1,558,705 I'or actual amounts see item " Paper delivered to Federal Reserve agent," on p. 350. 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8.52 .FHDEB.4.L BESKRVE BULLETIN. 1, 1C-IS. MEMBER BANK CONDITION STATEMENT. Principal resources and liabilities of rn&nbcr banks located in central reserve, reserve, and other selected ctiitti-es, as at close business on Thursday, Feb. 21, and on Fridays from Mar. 1 to Mar. 15, 1918. [hi f-housduds of doilass; i. e... 000 omitted.] L TOTAL :FOE ALL REPORTING HANKS.. San Boston. Y N o e r w fc. Ph p i h la ia d . el- V J . a l n v d vc . - m R o ic n h d - . la A n t t - a. Chicago. Lo S u t. i s. j j M ap i e w ?. n is e . - K f a 'i n ty s . as Dallas. c F i r s a c n o - . Number of bsiiks reporting: Feb. 21.... 46 i Mar. 1 4o : Mar. 8 Mar. 15 41 | 47 ! (.-82 United States bones to secure fiircuiation: Fob. 21 1.4,621 i 50, tiC7 12.933 42, o~3 23.072 ! 15.200 i 19,331 ; 17,S7O 17,750 j 35,399 ! 254, S4ti Mar. ],... 14.621 I 50,885 I2l934 22) 076I 13,430 i 19,043 1 17,380 ; 17,414 j 35,399 j 265) 502 Mar. 8.... .14,621 i 50,476. 12,928 42! il 2 ' 24,75-i I 15,147 39,367 , 17.369 5,507 17,569 I 35,469 ! 270, G&s Mar. 15 14.622 | 50,201 12,981 42)342 23,775 ; 15,150 19,567 I 17; 369 5,1)32 17,569 ! 35,399 i 208, &?. 5 Orher 'United States bonds, ini'tod s Liber tv bonds: Feb. 21 10,701 180,056 14,131 42,551 18,899 14,384 43,012 I 10,992 10,217 16,679 Mar. 1. 10,744 182,921 11,950 42,712 17,420 13,547 41,624 ! 12,165 6.140 9,842 15,338 375;st# Mar. 8 10.496 182,787 11,391 I 37; 711 19,250 13,462 41,384 I 11,229 0)052 9.857 17,334 371, 70C Mar. 15 10.899 178,800 13,082 i 37,202 19,750 13,206 39,935 ! 11.395 8,315 10)132 15,047 307,127 United States certificates of indebtedness: Feb. 21 .- I9,o00 691,591 ! 26,826 56,786 7,356 9,909 43,603 J 15,688 10,339 6,653 16,380 m, Mar. 1 28,328 786,998 i 37,291 46,726 11,260 12,710 53,388 . 24,146 11,475 21,405 9,929 24,281 Mar. 8 20,325 729,243 ; 40,176 46,805 12,783 14,894 53,231 24,811 11,917 23,494 10,519 24,738 1,067,937 Mar. 15 18,493 723,242 i 36, 178 46.108 12,868 14,804 52,348 24,121 13,159" 22,758 10.54S 25,114 l,012,9&> Total United States se- 999,^31 curities owned: Feb. 21 ...! 44,822 922,854 i 53,890 141,890 49,327 39,498 105,946 i 44,050 | 22,22ti 40,255 I 34,620 68,458 1,567,731 Mar.l I .53,693 1,020,804 :. 62,175 ! 132,210 50,756 39,687 114,055 i 53,691 j 23,385 46,208 I 37,185 75,018 1,708,867 Mar. 8 | 45,442 962,506 j 64,295 1127,428 56,787 43,503 113,982 I 53.409 I 23,476 -^8,380 I 37,945 77,541 1,654,094 Mar. 15 ! 44,014 952,243 ! 60,241 1125,802 56,393 43,160 111,850 ! 52'. 885 I 27,406 ",994 38,249 75,560 1,635,803 Loans secured by United I States bonds and cer- i • iificates: I Feb. 21 31,903 193,797 '•22,527 20,393 12,742 I 2,657 32,950 j 10,326 2,896 2.839 ! 3,425 5,260 341,715 Mar. 1 I 31,583 194,611 i 22,359 21,095 12,875 2,390 35,673 ! 10,306 2,688 2,730 3,569 5,107 344,986 Mar. 8 ! 31,348 179,349 I 22.799 20,924 13,675 2,863 33,108 ! 9,579 2,649 3,209 ; 3,384 5,247 328,134 Mar. 15 ! 31,196 163,880 ''22', 098 20,179 13,786 2,686 26,293 j S,722 2,724 3,290 i 3,042 4,812 •302,708 A3! other loans and investments: Feb. 21 .! 710,431 4,042,932 603,004 9Ot5,965 1327,796 288,570 1,333,939 1372,730 |246,186 452,328 ; 190,593476,026 9,951,500 Mar.l ! (191,976 4,124,021 594,200 907,421 |308,385 261,280 1,327,122 1372,370 !244,248 452,720 ; 184,061473,527 9,941,331 Mar. 8 i 712,572 4,008,702 597,347 918,959 (344,287 291,027 1,354,827 382,545 {231,066 452,304 1180,846 471,062 9,945,544 Mar. 15 \ 722,943 4,015,493 596,346 914,466 1341,155 292,336 1 358,537 382,800 243,783 156,015 |184,O98 478,359 9,986) 331 Reserve with Federal Re- j serve Banks: i Feb. 21 ! 61,417 615,351 58,607 86,806 27,240 24,921 137,11" 36,275 19,433 42,218 i 17.185 44,167 1,170,737 Mar.l i 58,993 i 556,722 51,102 83,888 55,583 22,598 35,495 18,876 41,435 ! 17', 48841,339 1,089,152 Mar. 8 j 59,039 I 600,600 64,116 82,527 | 29,217 26,432 36,531 18,937 45,569 IS', 857 43,308 1,164.890 Mar. 15 ! 61,305 j 587,284 58,058 81,060 I 28,871 26,014 144,465 35,911 10,946 j 45,067 18,632 45,692 1,152',3C5 Gash in vault: i Feb. 21 : 23,466 ! 123,599 i 21,974 36,384 ! 15,710 16,652 59,051 12,784 8,831 i 15,913 I12,309 21,739 368,413 Mar.l ! 23,236 i 119,489 ! 20,872 35,989 I 14,806 13,876 60,128 11,651 9,014 : 16,696 •12,226 20,959 358,942 Mar.8 ! 22,746 121,936 j 19.424 35,993 i 16,251 14,042 63,148 13,235 8,532 ; 16,813 j11,843 20,211 364,174 Mar. 15 22,650 119,923 ! 19;659 34,106 15,570 14,318 63,847 12,793 8,987 i 16,269 I 12,202 20,277 360,601 Net demand deposits on which reserve is com- I ! puted: Feb. 21.... 606,494 4,320,311 ! 569,913 715,494 '257,098 207,551 11,036,781 272,199 J179,436 398,747 1172,782 158,140 9,095,546 Mar.l 602,747 4,288,632 i 571,755 690,339 1242,500 187,571 ll, 011,509 270,406 il79,718 |400,694 ;168,003 554,664 8,968,138 Mar.8 593,488 4,243,281 ! 578,497 694,835 1273,358 213,945 |l,014,072 281,961 1176,746 403,755 !170,037 354,117 8,998,092 Mar. 15 605,882 4,294,804 ; 576,268 699,445 268,095 215,921 11,049,607 287,492 .189,161 '404,872 160,930 360,458 9,118,935 Time deposits: Feb. 21... 81,546 307,705 ! 15,876 217,119 47,554 74,631 343,440 83,081 51,640 ! 55,676 !24,563 102,051 1,404,882 Mar.l 80,960 303,193 I 15,056 217,757 45,500 77,287 336,237 73,424 50,037 ! 50,806 !22,254 102,555 1,375,066 Mar.8 80,684 298,223 ! 14,963 217,337 45,853 78,817 355,289 77,126 45,270 I 55,570 i24,170 102,365 1,395,667 Mar. 15 80,202 293,630 i 15,225 211,635 48,200 80,218 355,781 77,224 51,310 j 51,460 I22,116 106,179 1,393,180 Government deposits: Feb. 21 35,704 512,563 ! 40,099 36,143 8,711 51,066 19,588 14,140 I 14,300 i10,311 742,625 Mar.l 45,104 498,780 j 39,184 43,966 8,539 61 986 28,194 i 14,796I 14,814 j10,300 776,244 Mar.8 42,241 499,853 i 38,594 50,823 10,360 69,500 28,928 16,770 I 17 342 !11,733 796,855 Mar. 15 37,055 278,318 i 29,257 39,914 12,195 51,385 22,953 13,800 i 14,577 ! 9,972 518,545 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BULLETIN. 353 (U resources and liabilities of member hanks located in central reserve, reserve, and other selected cities, as at close of hudness. on Thursday, Feb. 21, and on Fridays from Mar. 1 io Mar. ./•>. 1918—Continued. riu thousands of dollars; i. e., GOO omitted.] 2. MEMBER BANKS IN CENTRAL RESERVE OITJES. San : Boston. ! j Ph p i h l i a a d . el- C la le n v d e , - m E o ic n h o - . ! i ia A r.t t . - r;. Chicago. ! Lo S u f. i s. | I M ap i o n l n is e . - \ i K C a i n ty s . as Dallas. F ei r s a c n o. - ; | Total. i •COTTEA;. r^SETv."7:1: <:57]i".S. Nf>'i:r.ber <:•! b&DV.s reporri .Feb. 2! i 58 I 40 ! 34 112 Mar. l : 58 i 40 '• 14 112 Mar. 8... ..! i 58 i : 34 U2 Mar. 35.. 1-1 112 I'tited States bonds to f-seure circulation: Feb. 23; 35,693 1,303 : 10,370 !... Mar. I 35,957 3..:-H)3 ; 10,370 i... 47.720 Mar. 8 35,563 1^893 ''-. 30,339 i... •1~;325 Mar. 15, 35,287 1,393 •' 10,369 ..... 47,04-) Other XT. S. bends, inf lading Liberty bonds: Feb. 23... 162,168 i 15,102 •• 6,444: i IS;*.. 714 Mar.l 164,533 i 1-1,906 ! 7,211 ; . . 3 88', 650 Mar. 8 162,955 i «3,8C0 i. 0,962 : '•• 183.717 Mar. 15. 160,675 ! 13.983 ! (5,980 :.. = • 18]\988 United States certificate: of indebtedness: Feb. 21 :..., .! 681,068 i 2ti, 12h i 12,664 : • ! 719,857 Mar. 1 -1 i 770,688 1 32,587 ! 19,469 •.... 822'744 Mar. 8 ..I I 711,185 ..| i I 31,300 ! 19,220 : : .j 761,705 Mar. 35 ! 706,589 .1 . i . i 30,292 : IS, 882 755,703 Total United States se- " ! • • ; • " •• : i ! curities owned: Feb. 21 878,929 42,620 ! 29,478 \ I 950,947 Mar. 1 973,178 48,886 ! 37,050 '. ! 1,057; 114 Mar. 8 | 909,703 46,493 ! 36,551 i 992,747 Mar. 15 j 902,851 45,668 ; 36,171 • • . . . . 984,690 "Loans secured by United States bonds 'and certificates: Feb. 2! 171,693 39,354 7,793 198,040 Mar. 1 170,840 21,595 | 8,7S8 201,223 Mar. 8 155,326 17,380 ! 7,941 180,647 Mar. 15 140,610 12,942 i 7,117 160,669 All other loans end investments: Feb. 21 3,621,616 828,553 ,273,114 4,723.283 Mar.l |3,, 698,,762 818,208 |270,461 4,787; 431 Mar. 8 =' 13,584,334 825,346 ,272,971 4,682,651 Mar. 15 •' ;3,583, oW 819,651 273,472 4,676,689 Reserve with Federal | j Reserve Bank: ; ; Feb. 21 i ! 580,000 96,322 27.652 703,974 Mar. 1 ! ! 517,168 97 27:663 642,268 Mar. 8 |.... j 560,675 ,223 28,130 686,028 Mar. 15.. j ...' 550,365 100,498 27,155 678,018 Cash in vault: Feb. 2] 108,359 37,810 7,261 153.436 Mar.l 104,809 37,652 6,863 ! 149,324 Mar. 8. 306,058 39,145 7,676 152,879 Mar. 15 104,713 38,191 7,427 ; 150.331 Net demand deposits on which reserve is computed: ! i Feb. 21 !.... 13,938,037 717,560 194,224 4,849,821 Mar.l ! 13,895,742 690,472 199,266 : 4,785,480 Mar. 8 1 13,859,439 686,505 199,787 4,745,731 Mar. }5. ! !3,902,899 701,131 205,045 : 4,805), 075 Time deposits: ! J Feb. 21 1 259,869 137,422 63,510 : 460,801 Mar.l : 256,160 138,112 57,030; 451,302 Mar. 8 i 244,485 138,688 57,137 : 440,310 Mar. 15 j 247,245 138,708 57,243 443,196 Government deposits: i Feb. 21 495,053 37,422 16,504 ! :. 548,979 Mar.l '•• 486,067 48,044 24,051 : i. 558,162 Mar. 8 : 471,704 53,891 24,618 ! i. 549,343 Mar.lfi 4 266,559 38,600 19,519 : I I i .. 324,678 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

354 .FEDERAL RESERVE BULLETIN. APRIL 1, 1918. Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of business on Thursday, Feb. 21, and on Fridays from Mar. 1 to Mar. 15, 1918—Continued. [In thousands of dollars; i. e., 000 omitted.] 3. MEMBER BANKS IN RESERVE CITIES. Total. OTHER RESERVE CITIES. Number of banks report- i ing: : Feb. 21 ! 421 Mar.l.... ! 418 Mar. 8 : 420 Mar. 15 421 United States bonds to • secure circulation: ! Feb. 21 ! 4,498 35,399 158,441 Mar.l 4,498 • 35,399 170,671 Mar. 8 4,408 • 35,469 173,257 Mar. 15 4,499 35,399 173,370 Other U. S. bonds, in- i eluding Liberty bonds: i Feb. 21 ; 6,115 10,459 i 11,473 I 39,410 12,602 12,786 26,618 ! 3,5184,113 8,714 16,679 152,487 Mar.l I 6,050 : 10,4L6; 9,424 i 39,921 12,410 12,152 25,434 i 3,841 4,459 10,965 I 8,628 15,338 159,038 Mar. 8 : 5,911 : 12,226 i 8,684 ; 34,981 12,775 12,078 26,043 3,106 4,223 10,947 I 8,434 17,334 156,742 Mar. 15 5.886 I 10,280 j 8,589 ! 34,788 12,690 11,837 i 24,421 3,291 6,363 11,298 j 8,625 15,047 153,095 United States certificates ; of indebtedness:. i Feb. 21 i 15,403 8,363 ! 24,999 i 53,949 | 8,087 9,028 i 17,238 2,363 8,471 8,003 16,380 168,284 Mar.l ; 23,518 12,896 i 34,536 I 42,924 9,205 10,916 i 20,511 3,302 8,825 I 21,405 8,818 24,281 221,137 Mar. 8 i 15,048 13,646 ! 37,251 42,584 10,1.39 12,664 • 21,611 4,003 9,707 23,494 9,284 ! 24,738 224,169 Mar.JS ! 13,970 12,216 ! 33,689 42,562 12,624 i 21,730 3,686 9,637 22,758 I 9,390 "• 25,114 217,426 Total United States se- j curities owned: ! Feb. 21 i 26,016 27,188 I 45,395 1.28,498 31, 775 33,784 I 61,124 11,211 15,899 40,255 30,064 i 68,458 519,467 Mar.l 34,066 31,678 i 52,883 118,053 35,279 33,468 I 62,845 12,483 16,409 46,208 32,457 I 75,018 550,847 Mar. 8 25,457 34,238 j 54,852 112,913 36,869 36,662 i 64,878 12,439 17,055 48,380 32,884 ! 77,541 554,168 Mar. 15 24,355 30,862 > 51,248 112,508 38,695 36,381 I 83,575 12,307 19,125 47,994 ! 33,181 j 75,560 543,891 Loans secured by United ; States bonds and cer- i tificates: i Feb. 21 1 26,193 i 12,276 '>21,846 19,677 | 10,706 2,383 ! 13,341 2,140 2,713 ! 2,839 i 3,339 i 5,260 122,713 Mar.l ; 25,838 ! 13,961 ' 21,693 20,353 J 10,944 2,130 I 13,635 1,173 2,533 I 2,730 | 3,483 ! 5,107 123,580 Mar. 8 25,493 I 13,637 ! 22,136 20,269 11,486 2,608 15,280 1,295 2,529 I 3,209 j 3,297 j 5,247 126,486 Mar. 15 25,455 i 13,237 ! 21,542 19,418 11,807 2,419 ! 12,914 1,265 2,541 | 3,290 i 2,943 4,812 121,643 All other loans and in- i vestments: Feb. 21 531,482 257,139 542,273 833,485 228,418 251,076 493,758 78,053 180,182 i 452,328160,886 476,026 4,484,906 Mar.l 513,279 260,643 534,015 836,485 231,377 225,624 497,451 77,524 181,197 1452,720 155,229 1473,527 4,439,071 Mar. 8 534,174 257,782 537,313 845,464 243,010 253,043 518,333 84,694 180,855 452,304 153,182 1471,062 4,531,016 Mar. 15 542,935 256,571 536,048 849.382 1245,627 254,490 527,597 84,082 178,242 456,015 156,511 1478,359 4,565,859 Reserve with Federal Reserve Bank: Feb. 21 51,126 23,874 54,214 80,480 20,767 22,136 6,965 15,529 42,218 15,206 44,167 416,670 Mar.l 48,389 26,410 46,575 78,666 20,663 19,982 37,361 6,357 15,098 41,435 15,342 41,339 397,617 Mar. 8 48,536 28,166 59,539 76,818 22,461 23,781 41,693 6,731 15,710 45,569 16,941 43,308 429,253 Mar.15 50,774 25,497 53,616 76,125 22,441 23,352 43,127 7,202 15,843 45,067 16,416 45,692 425,152 Cash in vault: Feb. 21 16,814 8,358 19,451 32,330 11,646 14,579 20,732 4,431 5,844 15,913 10,587 21,739 182,424 Mar.l 16,844 8,304 18,229 31,589 11,882 11,906 22,010 3,735 5,882 16,696 10,363 20,959 178,399 Mar. 8 16,558 8,574 18,956 32,138 ! 12,241 11,902 23,553 4,349 5,973 16,813 9,989 I 20,211 179,257 Mar.15 16,614 16,709 30,481 | 11,841 12,443 25,238 4,216 5,929 16,269 10,463 ! 20,277 178,970 Net demand deposits on I which reserve is computed: Feb.21 479,147 227,368 512,024 651,927 1181,897 181,717 310,386 60,063 134,521 398,747 147,829 (358,140 3,643,766 Mar.l 475,168 235,426 514,205 626,275 182,918 162,715 311,976 53,687 136,341 400,694 143,102 1354,664 3,597,171 Mar. 8 467,790 234,579 520,775 631,490 192,842 187,212 318,567 64,022 139,920 403,755 145,128 354,117 3,660,197 Mar.15 482,664 233.868 518,915 639,378 199,731 189,467 339,272 64,842 142,343 404,872 140,297 366,458 3,722,105 Time deposits: Feb.21 31,810 30,462 200,123 34,137 60,188 201,397 13,760 27,155 55,676 19,286 102,051 785,893 Mar.l 31,386 28,210 8,961 200,693 32,366 64,009 193,502 10,408 26,870 50,806 17,432 102,555 767,198 Mar.8 31,035 28,41.7 8,836 200,418 31,894 64,625 212,150 14,153 27,029 55,570 19,383 102,365 795,875 Mar.15 30,580 28,341 9,098 198,910 34,338 65,887 212,639 14,031 27,017 51,460 19,359 j106,179 797,839 Government deposits: Feb.21 31,166 9,740 38.764 35,573 8,149 13,464 2,267 12,460 I 14,300 10,026 ! 175,909 Mar.l 39,600 4,115 37,246 43,428 7,839 13,796 3,161 12,156 I 14,814 9,732 I 194,054 Mar.8 36,297 19,170 36,613 50,208 9,220 16,349 3,116 15,075 I 17,342 11,028 222,659 Mar.15 31,815 3,987 27,530 39,193 7,488 12,687 2,444 11,638 ; 14,577 9,373 I 167,778 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1918. FEDERAL KESEEVE BULLETIN. 355 Principal resources and liabilities of member banks located in central reserve, reserve., and other selected cities, as at close of business on Thursday, Feb. 21, mid on Fridays from. Mar. 1 to Mar. 15, 1918—Continued. [In thousands of dollars; 1. e., 000 omitted.] 4. MEMBER BANKS OUTSIDE RESERVE CITIES. Kan- San Boston. Y N o e r w k. d P el h p i h la i - a. Lo S n t. i s. j j M ap i o n l n i e s - . C s i a ty s . Dallas. c F i r s a c n o - . Total. COUNTRY BANES. Number oi bams reporting: Feb. 21 , March! 21 153 March 8 21 146 March 15 21 150 United States bonds to 20 149 secure circntetzon: M M Fe a a b r . r . . ! 2 8 1 1 1 1 0 0 0 , , , 1 1 1 2 2 2 3 3 3 6 6 6 , , , 5 5 5 6 4 4 2 7 8 4 4 4 , , , 0 0 0 1 1 1 0 1 1 7 7 7, , , 5 4 3 6 1 6 4 4 4 1 8 0 , , 4 7 1 9 2 9 3 3 3, , , 2 2 0 2 3 3 7 0 0 7 7 7 5 5 5 0 0 0 1 1 1, , , 6 6 6 7 7 7 0 0 0 2 2 2, , , 3 8 6 8 9 4 2 5 5 2 2 2 , , . 4 4 4 . 0 0 0 3 3 3 4 4 4 7 9 9 , , , 1 4 0 7 7 2 0 6 9 Mar. 15 10,123 6,548 4,011 7,064 9,820 3,230 750 1,670 2.807 2; 403 48,426 Other U. S. bonds, including Liberty bonds: Feb. 21 " 4,586 8,029 2,658 3.141 6,297 1,598 1,292 1,030 1,664 1,503 ! 31,798 Mar.l 4,694 7,972 2,526 2^791 5,010 1,395 1,284 1,113 1,681 1,214 29,680 Mar. 8 4,585 7,606 2.507 2,730 6,475 1,384 1,541 1,161 1,829 1,423 31,241 Mar. 15 5,013 7,545 2,493 2,494 7,066 1.369 1,531 1,124 L952 1,507 32.094 United States certificates of indebtedness: ! Feb. 21 4,097 2,160 1,827 2,837 1,269 881 240 661 1,868 ;.... 650 j 16,490 Mar.l 4,810 3,414 2,755 3,802 2,055 1,794 j 290 1,375 2,650 j.... 1,111 24,056 Mar. 8 5,277 4,412 2,925 4,221 2,644 2,230 j 320 1,588 2,210 !.... 1,235 27,062 Tota M l a U r. n 1 it 5 e . d .. . States se- 4,523 4,437 2,489 3,636 2}818 2,180 326 1,613 3,522 !... i l',158 26,702 curities owned: Feb. 21 18,806 16,737 8,495 13,392 17,552 5,709 2,282 3,361 6,427 \ ! 4,556 97,317 Mar.l 19,627 17,948 9,292 14,157 15,477 6,219 2,324 4,158! 6,976 I ! 4,728 100,906 Mar. 8 19,985 18,565 9,443 14,515 19,918 6,84.1 2,611 4,419 6,421 : j 5,061 107,779 Mar.15 19,659 18,530 8,993 13.194 19,704 6,779 2,607 4,407 8,281 \ ! 5,068 107.177 Loans secured by United States bonds and certificates: I =• ! Feb. 21 5,710 681 716 2,036 455 393 j 183' t 86 20.362 Mar.l 5,745 9,810 742 1,931 I 443 345! 155 86 20;i83 Mar. 8 5,855 10,386 663 655 2,189 I 255 448 343 120 I ! 87 21,001 Mar. 15 5,741 10,033 556 761 1,979 i 267 437 340 183 i 99 20,396 AJ1 other loans and investments: Feb. 21 178,949 164,177 60,731 73,480 99,378 37,494. 11,628 I 21,563 66,004 • 29,907 743,311 . Mar. 1 178,697 164,616 60,185 70,936 77,008 :35,656 11,463 24,385 63,051 28,832 714,829 Mar. 8 166,586 60,034 73,495 101,277 37,984 11,148 24,880 50,411 ! 27,664 731.877 Mar. 15 180,008 I 175,356 60,298 65,084 95.528 37,846 11,289 25,246 65,541 ! 27,587 743;783 Reserve with Federal Reserve BanV: Feb. 23 10,291 I 11,477 4,393 6,326 6,473 2,785 807 1,658 ! 1,979 50,093 Mar.l 10,604 ! 13,144 4,527 5,222 4,920 2,616 835 1,475 2,146 49,267 Mar. 8 10,503 ; 11,759 4,577 | 5,709 6,756 2,651 841 1,670 1,916 49,609 Mar. 15 10,531 ! 11,422 | 4,442 ! 4,935 6,430 2,662 840 1,554 2,216 49,135 Cash in vault: Feb. 21 6,652 i 6,882 2,523 4,054 4,064 2,073 503 1,093 ! 1,722 32,553 Mat. I 6,392 | 6,376 2,643 4,400 2,924 1,970 466 1,053 ! 31,219 Mar. 8 6,188 ! 7,304 2,468 3,855 4,010 2,140 450 1.210 i .! 1 854 32,038 Mar.15 6,036 [ 6,520 2,950 3,625 3,929 !, 875 418 l',150 I .j 1,739 31.300 Net demand deposits on I which reserve is computed: Feb. 21 127,347 !154,906 57,889 63,567 75,801 25,834 8,835 17,912 44,915 i 24,953 601.959 Mar.l 127,579 |157,464 57,550 64,064 59,182 24,856 9,061 17,453 43,377 24,901 585; 487 Mar. 8 125,698 :149,263 57,722 63,345 80,516 26,733 9,000 18,152 36,826 24,909 592,164 Mar.15 123,218 i 158,037 57,353 60,069 68,364 26,454 9,204 17,605 46,818 20,633 587,755 Time deposits: Feb. 21 49,736 ! 17,374 6,028 16,996 13,417 14,443 4,621 5,811 i 24,485 5,277 158,188 Mar.l 49,574 18,823 6,095 17,064 13,134 13,278 4,623 5,986 23,167 4,822 156,566 Mar. 8 49,649 25,321 6,127 16,919 13,959 14,192 4,451 5,836 18,241 4,787 159,482 Mar.15 49,622 18,044 6,127 12,725 I 13,862 14,331 4,434 5,950 24,293 2,757 152,145 Government deposits: Feb. 21 ' 4,538 7,770 1,335 570 i. 562 180 817 1,680 285 17,737 Mar.l 5,504 ! 8,598 ! 1,938 538 !2,414 700 146 982 2,640 568 24,028 Mar.8 5,944 i 8,979 1,981 615 2,470 1,140 130 1,194 1,695 705 24,853 Mar. IB 5,240 : 7.772 1,697 721 !2.303 4,707 98 990 2,162 26.089 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

356 JTEDKKA.L RESERVE BULLETIN". 1, 1918. EARNINGS ON INVESTMENTS OF FEDERAL RESERVE BANKS. Average amounts of earning assets held by each Federal Reserve Bank during February, 1918, earnings from each class of earning assets, and annual rates of earnings on basis of February, 1918, returns. Average balances for the month of the several classes of earning assets. Bills discounted for an m d e m Fe b d e e r r s al Bi m l i l n s a r o b k p o e e u t n . g ht j ! se U S cu n ta r i t i t t e e i s d es. M wa u r n r i a c n ip ts a . l Total. Reserve Banks. j n $53,712,747 314,551,394 53,310,893 i 575,034 New York 180.063,642 171,032,882 . 72,079,388 i 1273,590 423,4449,502 Philadelphia.. 26| 462,460 16,792,076 ! 10,311,798 i 10,000 53,5576,334 Cleveland 39,598,731 10,631,834 i 35,525,442 ! 85 7756,007 Richmond 32,757,638 8,561,241 3,257,284 I 44,5576,163 Atlanta 9,940.007 6,660,865 6,677,614 | 140,533 | 23,4418,519 Chicago 84,923)160 12,438,155 12,277,779 I 109,6639,094 St. Louis 27,395,180 5,835,624 3,677,400 j 36,9908,204 Minneapolis— 11,348.000 1,420,000 8)697,000 21,4465,000 Kansas City... 24,350,246 757,905 13,971,993 ,080,144 Dallas 9,425,212 11,064,860 6,786,414 400,600 j 27,677,086 San Francisco.. 31,564,310 29,325,210 I 3,943,000 64,832,520 Total. 531,541,333 289,071,546 180,516,005 824,723 I 1,001,953,607 rnings 1'rom- Calculated annual rates of earnings from— Bills dis- Bills dis- Banks. c a m o e n u r e s d a n e m l t r e F v b R d e e e e d r f - s o - r m i b n o B a u o r ii k g p ls e h en t t . i s S / e t n t i c a e i u t t s e e r . i s d - M wa u r n r i a c n ip ts a . l Total. f c b R o F o e r e e r u . s d s m n e e a t r e r e v n a m d e l d - m i b n o B a u o r il k g p l e s e h n t t . U s S e t t n i c a e i u t t s e r e . i s d - M wa u r n r i a c n ip ts a . l Total. Banks. Banks. Per cent. Per cent. Per cent. Per cent. Per cent. Bostont 3163,349 $45,726 «S, 150 $217,225. 3.96 4.14 3.21 3 77 New York - .. 522,075 494,616 175,472 $686 1,192,849 3.77 3.76 3.17 3.26 3.67 Philadelphia 81,895 46,913 29,600 35 158,443 4.03 3.61 3.74 4.56 3.85 Cleveland .. 122,986 32,592 98,623 254.200 4.28 3.70 3.62 3 86 Richmond 101,902 18,253 6,775 126,930 4.00 2 81 2 70 3 71 Atlanta ... 32,423 19,934 17,165 394 69,916 4.25 3.90 3.35 3.65 .3.89 Chicapo ... 263,322 37) 259 31,069 331,650 4.04 3.90 3.30 3 94 St. Louis 88,926 17,958 7,769 114,653 4.23 4.01 2.75 4 08 Minneapolis... 41,897 4,317 22,522 68,736 4.81 3.96 3.37 4 17 Kansas City. 82,897 2,339 30,013 115,249 4.43 4.02 9 80 '5 84 Dallas 30,760 31,995 14,739 1,247 78,741 3.91 3.47 2.61 3 73 3*41 SanfFrancisco 106,014 89,358 7,949 203,321 4.38 3.97 2.41 4.06 Total 1,638,446 841,259 449,846 2,362 2,931,913 4.02 3.79 3.25 3.73 3.8i Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

APRIL 1, 1918. .FKOEKAl.. B I* I ,LETJ X .' 857 GOLD IMPORTS AND EXPORTS. .Gold imports and exports into and from the United States. [[n thousands of dollars: i. a., OIK) ornitled.] Week ending— Total tor; Total corresince sponding Fe 1 b 9 . 1 8. 2 2. ' M 1 a 9 r 1 . 8, 1, M 1 a 9 r 1 . 8. 8, M 1 a 9 r. 1 8, 15, T 1 a 9 n 1 . 8 . 1, d p 1 u e 9 r r i 1 i o n 7 g d .' " IMPORTS. Oro and base bullion 221 143 IIS 34!.i 2,039 2,952 United States mint or ass&v office bars Bullion refined 679 400 i 3ni 1G7 3,377 143,219 United States coin 88 2,449 51,006 Foreign coin 10 98 132 50,85* Total 995 549 ' 482 611 7,997 248,041 EXPORTS, i Domestic: Ore and base bullion 1 ! 4 IS 52 United States mine or assay office bars 3,238 Bullion refined 64 2,982 25 169 3,253 ' 1,194 Coin 282 434 776 641 6,690 42,519 Total 346 3,417 805 810 9,959 47,008 Foreign: Bullion refined 31 Coin 2 1 175 3,323 Total 2 1 175 3,854 Total exports- 348 3,4.18 805 810 10,134 50,857 DISCOUNT RATES. Discount rates of each Federal Reserve Bank in effect Mar. 30, 1918. Maturities. Discounts. Trade acceptances. Secured by U. S. certificates of indebtedness or Liberty loan Federal Tlesorva Baalc, Within 15 j Agricul- bonds. days. i tural and i m n b c e a l m u n d k b i s e n ' r g 1 d 0 a t y o s . 60 61 d a t y o s. 90 liv o p e v a - e s p r t e o 9 r c 0 k W da i y th s i , n i n 1 - 5 collateral days. cluding notes. member banks' collateral notes. Boston Mew York i.... Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis, Minneapolis... Kansas City... Dallas.....".... San Francisco. 1 Rate of 3 to 41 per cent for 1-day discounts in connection with the loan operations of the Government. NOTE 1.—Rate for acceptances purchased in open market, 3 to 4A per cent, except for Boston, Chicago, and Minneapolis, whose rates range from 3 to 5 per cent. NOTE 2.—In case the 60-day trade accaptaacn rate is higher than the 15-day discount, rale trade acceptances maturing within 15 days wili to taken at the lower rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

358 FEDERAL EESEEVE BULLETIN. APRIL 1, 19IS. FOREIGN EXCHANGE RATES. Monthly ranges of exchange rates on lead/ing foreign money centers, quoted in New York during the three months ending March 1918. [In continuation of figures published in the January, 1918, Federal Reserve Bulletin.] January. | February. March. i Exchange i at par.' Low. High. Low. High. Low. High. i ! ! London: I 60-day bankers' bills dolls, for £1 . 4.7125 4.71625 j 4.715 4.71625 4. 7150 4. 72125 SightTdrafts do iI 44..88666655 4.7520 4.7535 : 4. 7530 4.7535 4.7535 4 7535 Paris francs for 100 dolls..I 518.1347 573.75 570.25 572.50 571 572.75 572. 2-0 Berlin dolls. for 400 marks 23.82 Petrograd dolls, for 100 rubles ! 51.46 12.75 13.125 13 13.75 13.25 13.50 Vienna dolls for 100 kronen 20.26 Milan.. . lire for 100 dolls 1 518.1347 859.50 83i.5O ! 878.50 850 892.50 835 Madrid dolls, for 100 pesos..; 518.1347 24 24.40 i 24 25.25 24.30 25.625 Amsterdam dolls. for 100 fiorins i 40.20 43 44.25 i 44 45.50 44.75 46 75 Stockholm dolls.for lOOkroros '. 26.80 32.50 34.25 i 32.25 33.50 31.75 34 OopfiTjh fl.g#n do 26.80 30.25 31. 75 30.50 31 30 31. 75 Zurich .. francs for 100 dolls '. 518.1347 450 435 i 451.50 446 448 431.50 Buenos Aires1 dolls, for 100 paper pesos i » 96.48 44 45.977 * 43.737 44.044 43.868 44.436 Rio de Janeiro* dolls, for 100 paper imlreis ! 3 54.62 26.577 27.137 i 25.773 26.666 25.77 26.42 Valparaiso1.. dolls, for 100 pesos 1 2 38.50 26.88 28.01 26.312 27.322 27.32 30.30 dolls, for 100 yen 49.85 50.65 51.875 ! 51.50 51.65 51.65 51.75 Hongkong. .dolls.for 100 Hongkong dolls 71 75 70.75 73 70.75 77 Shanghai dolls, for 100 Shanghai taels 1 105 114 103 108 103 111 London price of silver at nonunal rate of £—$4.8665« 94.809 98.919 j 93.165 94.809 93.165 100.837 New York price of silver6... 86.625 91.25 ! 85.125 86.625 85.125 92.875 1 Cable rates on New York. * Average for January, 97.222; for February, 93.825; and for March, 95.795. 2 Rate for a gold peso. * Average for January 88.702; for February, 85.716; and for March, 88.082. • Rate for a gold milreis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX. Acceptances: Pase- Informal rulings of the Board—Continued. Bankers', memorandum by Board regarding Redemption of Federal Reserve notes 310 practice of granting renewal acceptance Notes of farmers for commodities used in farming 310 credits 257 Drafts for purchase of electrical goods, including cost of installation, as trade acceptance 310 Banks granted authority to accept up to 100 per Investment operations of the Federal Reserve Banks cent of capital and surplus 296 during the month 346 Distribution of 343 Investments of Federal Reserve Banks, earnings on. 356 Acts: Law department: Third Liberty loan 306 Acceptances by correspondents at request and Federal control of railroads 296 under guarantee of national banks 311 War finance corporation 300 Acceptances without documents attached 311 Bankers' acceptances, memorandum by Board re- Note for purchase price of commodities used garding practice of granting renewal acceptance for agricultural purposes 312 credits 257 Duty of national banks to assist in financing the Branches of Federal Reserve Banks authorized.... 256 Government 313 Business conditions throughout the Federal Re- Bankers' acceptances growing out of export serve districts 318-336 transactions 314 Capital Issues Committee: Acts passed by Mississippi and Kentucky Legis- Act creating 304 latures regarding State bank membership 315 Press statements issued by 263 Yvar stamp tax on negotiable instruments 316 Certificates of indebtedness oversubscribed 250 Liberty loan, third: Chart showing deposits and investments of national Announced 250 banks, 1913-1917 337 Text of act of 306 Charters issued to national banks during month 295 Member banks, statements showing condition of... 352 Check clearing and collection system, operation of. 340 National banks: Commercial failures reported 295 Charters issued to. during month 295 Commercial paper, discount of. 341 Deposits and investments of, 1913-1917 337 Credits, curtailment of 260-263 Securities of foreign governments held by 263 Deposits, interest rates on 285-294 New York Clearing House Association, amendment Deposits and investments of national banks, 1913- to by-laws of, regarding interest rates on deposits. 285-294 1917 337 Note circulation, deposits, and reserves of principal Chart showing 337 banks of the world 267-284 Discount operations of the Federal Reserve Banks. 341 Official Bulletin, reference to 266 Discount rates in effect 357 Railroads, text of act providing for operation of 296 Federal Reserve agents' fund, transactions through. Resources and liabilities of Federal Reserve Banks.. 347 Federal Reserve Banks: Review of the month: Discount operations of 341 Our first year of war 247 Earnings on investments of 356 The credit situation 249 Investment operations during month 346 The third Liberty loan campaign 250 Resources and liabilities of 347 Certificates of indebtedness oversubscribed 250 Federal Reserve note account of Federal Reserve War finance corporation act 251 Banks and agents 350 Interest on deposits—agreement among New Fiduciary powers granted to national banks 296 York clearing house banks 252 Foreign countries, note circulation, deposits, and Operations of the Federal Reserve Banks 254 reserves of principal banks in 267-284 Condition of member banks 254 Foreign exchange rates 358 Acceptance problems 255 Foreign governments, securities of, held by national New branches of Federal Reserve Banks banks in the United States 263 authorized 256 Gold imports and exports 357 Meetings with the governors of the Federal Gold settlement fund, transactions through 338 Reserve Banks 256 Governors of Federal Reserve Banks, conference of, Movement of gold 256 with the Federal Reserve Board 256 State banks and trust companies admitted to the Informal rulings of the Board: system during the month 294 Draft drawn for insurance premium as a trade United States bonds held by Federal Reserve Banks acceptance 309 on February 28, 1918 346 Cattle as readily marketable commodity 309 War expenditures, war debts, and increase in note Tractors used in agricultural operations 309 circulation of principal countries 267-284 ?3ank examination forms 310 War finance corporation act 300-306 o Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis