Federal Reserve Bulletin, 1918-07

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

FEDERAL RESERVE BOARD. EX OFFICIO MEMBERS. W. P. G. HARDING, Governor, PAUL M. WARBURG, Vice Governor. WILLIAM G. MCADOO, FREDERIC A. DELANO. Secretary of the Treasury, ADOLPH 0. MILLER. Chairman. CHARLES S. HAMLIN. JOHN SKELTON WILLIAMS, Comptroller of the Currency, H. PARKER WILLIS, Secretary. L. C. ADELSON, Assistant Secretary. M. C. 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 or 1916 are available. Bound copies of the Bulletin for 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. 587 Branches of Federal Reserve Banks 596 Reclassification of bank clerks as to draft 597 Banks granted authority to accept up to 100 per cent of capital and surplus 597 Indexes of business conditions 597 Letter of Secretary of Treasury relative to new revenue legislation 600 Extracts from recent expressions on acceptances 602 Credits for canners 607 Fiduciary powers granted to national banks , 607 Assessment for expenses of the Federal Reserve Board 608 State banks and trust companies entering the Federal Reserve system 609 Charters issued to national banks during the month 609 Commercial failures reported 609 Plan for daily clearing through the gold settlement fund 610-612 Letter of Secretary of Treasury regarding future financing 612 Liberty bonds lost or stolen 613 Tax rulings by Commissioner of Internal Revenue 614 Questions and answers relating to membership of State institutions issued by the Federal Reserve Bank of New York 615-622 Foreign exchange regulations 622-627 Capital Issues Committee rules and regulations 627-633 Informal rulings of the Federal Reserve Board 634-636 Law department 637,638 Business conditions throughout the Federal Reserve districts 639-660 Gold settlement fund transactions 661, 662 Operation of the check clearing and collection system 663 Deposits and investments of member banks, January to May, 1918 664 Chart showing 665 Discount operations of the Federal Reserve Banks 666-672 Resources and liabilities of the Federal Reserve Banks 673, 675 Federal Reserve note accounts of Federal Reserve Banks and agents 675,676 Member bank condition statement 677-681 Earnings on investments of Federal Reserve Banks 682 Gold imports and exports 683 Discount rates in effect 683 Stock of money in the United States 684 Foreign exchange rates 684 IV Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BULLETIN VOL. 4 JULY 1, 1918. No, 7 REVIEW OF THE MONTH. loss to the system and a source of extreme personal regret to his colleagues." Late in June Mr. F. A. Delano, member of Sufficient time has now elapsed since the Resignation of the Federal Reserve Board official conclusion of the third Mr. Delano. since its organization, addressed The banks and T .•• , •> , i •, , • the President, asking that he be released from the loan Liberty loan to make it certain the obligation to serve on the Federal Reserve that the offering has been Board in order that he might accept service placed with comparatively little reliance upon with the American forces operating in France the banks and that the banking situation has as an officer of the United States Army Engi- been affected by it to an unexpectedly slight neer Corps engaged in the construction and extent. Reserves at Federal Reserve Banks have continued to show great strength during operation of military railways. The President the period since the conclusion of the loan. has granted Mr. Delano's request, and his resig- Some shifting of funds between Federal Renation will become effective upon acceptance of serve Banks was rendered necessary by the his commission in the Army. fact that tax-paying certificates had been For the period of practically four years purchased in varying proportions in the several since its organization the membership of the districts- and when used for the settlement of Federal Reserve Board has been intact, and obligations to the Government necessitated a Mr. Delano's retirement constitutes the first redistribution of funds. This tax settlement, change. The following entry in the minutes involving an aggregate payment of between two of the Board, voted upon the announcement of and three billions of dollars, had been generally his retirement, expresses the feelings of his looked forward to with serious apprehension. fellow members: It was predicted that the liquidation of the tax "The Board has heard with extreme regret payments would cause a considerable strinof the proposed resignation of Mr. F. A. Del- gency in the money market. The necessaiy ano. It desires to record its appreciation of transactions were, however, carried through Mr. Delano's able and faithful service as a without the slightest disturbance of normal member of the Federal Reserve Board and of business and banking conditions, a result which those high personal qualities which have was rendered possible only by reason of the made his relation to his colleagues one of un- mechanism of the Federal Reserve system and the measures taken in advance by the Treasury usual mutual confidence and regard. Mr. for the purpose of facilitating and expediting Delano has served two years as vice governor of the return to the market of the sums that had the Board and for nearly two years additional been paid in. The effects of the operation are as member. During this period of almost four probably not as yet fully complete, but the reyears the Federal Reserve system has attained serve percentages reported for June 28 show its growth, while the banking and financial approximately the true position of the system problems of the Nation, in whose solution the and were as follows: Federal Reserve system has necessarily had a large part, have been of unprecedented serious- Boston 66.2 St. Louis 50.3 New York 60.9 Minneapolis 48.8 ness. Mr. Delano's contribution to the effective Philadelphia 66.1 Kansas City 53.5 Cleveland 72.7 Dallas 51.2 organization of the system and to the success- Richmond 50.6 San Francisco — 69.4 ful solution of its problems can not be over- Atlanta 66.9 Chicago 61.7 Total - - 61.7 estimated. His departure will be a serious 587 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

588 FEDEKAL RESERVE BULLETIN. JULY 1,1918. Final figures showing the methods adopted 25 and mature October 25, with interest at 4J for settling for the third Liberty loan in cash per cent, and similar issues, it is expected, will and bank credit give the following results: be made on Tuesday of every other week following June 25. It is, however, contemplated Liberty loan payments to and including May 28. that at a convenient and favorable period during the summer an offering will be made to the Feder B al a n R k e . serve Cash. Credit. Certificates. Total. general public directly, and through the banks, of an amount yet to be determined, perhaps Treasury United States $11,895,000 811,895,000 $2,000,000,000, of certificates of suitable ma- Boston $39,486,000 $168,702,313 61,499,500 269,688,000 New York 107,618,168 625,952,779 186,350,000 919,920,448 turities for use by taxpayers in paying next Philadelphia.... 80,912,000 122,455,000 63,378,000 266,745,000 Cleveland 92,112,799 114,825,210 104,126,500 311,064,510 year's taxes, viz, taxes payable June, 1919, Richmond 51,530,519 54,664,413 21,712,500 127,907,432 Atlanta 37,174,158 57,307,621 12,371,500 106,753,280 levied under existing and pending legislation. Chicago 180,816,227 125,508,650 161,046,000 467,370,877 St. Louis 47,393,578 75,023,641 53,120,500 175,537,719 To the extent that certificates of that character Minneapolis 60,415,689 32,325,298 31,958,000 124,698,987 Kansas City 75,763,727 39,321,000 47,536,600 162,621,327 are sold, substantially an equivalent reduction Dallas 22,259,184 37,482,187 13,459,000 73,200,372 San Francisco... 83,383,500 56,301,000 54,879,500 194,564,000 in the amount of the regular fortnightly sale Total 878,865,549 1,509,869,112 823,332,600 3,211,967,452 of certificates issued in anticipation of the next Liberty loan will be effected. The success from the standpoint of the ab- In giving this advice of the estimated resorption and distribution of the securities, as quirements of the Treasury to shown by the enormous number of subscribers Sale of certifi- all the banks of the country cates. to the issue, augurs well for the coming financ- and, through them, to those ing of the Government during the first half of who expect to make payment of taxes in 1919, the fiscal year 1919 now opening. Figures for it is hoped that they will make arrangements rediscounts of 90-day Liberty-loan paper at promptly of such a character as to enable them the close of June show a total of only 125 to contribute their proper proportion to the millions in all, of which 25 millions was held by sale and distribution of Treasury certificates Boston, 55 millions by New York, and 21 of both issues. The Federal Reserve Banks millions by Philadelphia. will advise all national and State banks in The Secretary of the Treasury, under date of their respective districts of the amount of Jume 12, has sent to the certificates which they are expected to take President of each bank and from time to time in pursuance of this protrust company in the United gram, which amount can be figured as roughly States a letter in which he outlines the plans for to equal 2jV per cent of the gross resources of the new Treasury financing intended to supply each bank and trust company for every period the needs of the Government during the next of two weeks, or a total of 5 per cent monthly. few months. The expenditures of the Govern- It will be remembered that in the February ment, as nearly as [can be estimated, will program the amount which the banks were require the sale of certificates of indebtedness asked to take was substantially equal to 2 per up to the 1st of November, 1918, aggregating cent of their gross resources for each period approximately $6,000,000,000. This would in- of two weeks, or a total of 4 per cent monthly. volve the issue every two weeks of about The total number of biweekly offerings of cer- $750,000,000 of certificates substantially similar tificates to be made to the banks will somewhat in character to those issued prior to the third depend upon the amount to be raised from the Liberty loan, except that they will have various public through the sale of tax certificates as maturities not exceeding four months. For above described. The new plan of financing is the months of July and August this program thus practically parallel to that already applied will be followed as nearly as possible. The first during the past winter and spring, and it issue of the certificates bore the date of June looks forward to the offering of a new or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDEKAL BESERVE BULLETIN. 589 fourth Liberty loan whose amount and terms the month of May, 1918, by 33J per cent, it have not yet been indicated. The experience will be necessary to spend $24,000,000,000 in in placing the first issue shows that the banks the fiscal year 1919. In the fiscal year ending are responding enthusiastically to the require- June 30, 1918, cash disbursements amounted ments of the situation and are arranging the to between $12,500,000,000 and $13,000,000,placing of the new issue promptly and with 000. Of this amount about one-third lias cheerfulness. been raised by taxes and two-thirds by loans, The following is a list of the tentative quota, all of which will be represented by long-time by districts, and a list of the subscriptions obligations, that is, bonds of the first, second, finally allotted: and third Liberty loans and war savings certificates. With reference to the methods to Subscrip- be employed in meeting this heavy demand the Tentative tions, quota. allotted. Secretary of the Treasury says: "We can not wisely contemplate nearly doubling our cash United States Treasury., 811,938,000 Boston §68,000,000 64,590,000 disbursements in the fiscal year 1919 without New York 251,000,000 312,844,500 Philadelphia 53;ooo,ooo 53,000,000 providing additional revenue. We can not A C C R h l i t e c l ic a v h a n e m g l t a a o o n n d d 1 2 2 6 0 6 2 8 5 , , , , 0 0 0 0 0 0 0 0 0 0 0 0 , , , , 0 0 0 0 0 0 0 0 0 0 0 0 13 8 1 1 1 0 7 9 , , , , 4 0 2 0 8 0 3 1 1 0 3 3 , , , , 5 0 5 0 0 0 0 0 0 0 0 0 a ta ff x o a r t d i on to , b re e l c y a u u s p e o n w e $ 4 s , h 0 a 0 l 0 l ,0 th 00 en ,0 0 h 0 a v o e n l t y o f r r e o l m y M St i . n L n o ea u p is olis 3 2 0 6 , , 0 0 0 0 0 0 , , 0 0 0 0 0 0 2 3 0 4 , , 0 6 0 5 0 4 , , 0 0 0 0 0 0 on raising $20,000,000,000 by loans. This D K a a l n la sa s s City 3 1 0 8 , , 0 0 0 0 0 0 , , 0 0 0 0 0 0 2 1 8 8 , , 4 4 1 8 0 1 , ,5 5 0 0 0 0 would be a surrender to the policy of high San Francisco 53,000,000 48,000,000 interest rates and inflation, with all the evil 750,000,000 839,646,500 consequences which would flow inevitably therefrom, and which would, I firmly believe, The character and scope of the needs of the bring ultimate disaster to the country. We the Government have been out- can not afford to base our future financing upon i the quicksands of inflation or unhealthy credit Secretary of the Treasury in a expansion. If we are to preserve the financial letter to the chairman of the Ways and Means strength of the Nation, we must do sound and Committee, transmitted under date of June 12. safe things, no matter whether they hurt our In this letter he points out that the expendi- pockets or involve sacrifices—sacrifices of a tures of the Government for March, 1917, were relatively insignificant sort as compared with in round figures §100,000,000. In May, 1918, the sacrifices our soldiers and sailors are makthey were $1,508,195,000. If there should be ing to save the life of the Nation. The sound no further increase during the coming fiscal thing to do is unquestionably to increase taxyear, the cash expenditures upon the May basis ation, and the increases should be determined would be more than $18,000,000,000. If, as upon promptly and made effective at the seems inevitable, the increase in expenditures earliest possible moment." The conclusion should continue at the rate of $100,000,000 per which the Secretary reaches is that it will be month for the next six months, or until necessary practically to double the present December, 1918, and if thereafter the monthly Federal taxation, thereby raising it to approxiexpenditures should remain stationary until mately $8,000,000,000. In order to provide this June 30, 1919, the Treasury would have to sum it is suggested that resort be had to a high finance expenditures aggregating $24,000,- war profits tax superimposed upon the exist- 000,000 during the fiscal year ending June 30, ing excess profits tax and a substantial increase 1919; or, to put it another way, if the average on the normal income tax upon so-called unmonthly expenditure should exceed that for earned income. A general suggestion in favor Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

590 FEDERAL RESEBVE BULLETIN. JULY 1,1918. of heavy taxation upon all luxuries is added. Discounted bills rediscounted with and acceptances sold to Mr. McAdoo's letter, which constitutes an im- other Federal Reserve Banks Jan. 1 to June SO, 1918. portant outline of Treasury policy for the [In thousands of dollars.] coming year, is reprinted elsewhere in the present issue of the BULLETIN. Dis- During the pa m s e t m tw be o r w b e a e n k k s s t i h n e v d a e r m io a u n s d s d i o s f - Rediscou R n e te s d er o v r e s B ol a d n k b y of t — he Federal c c o o r b u e u i d n n l i l t t s s e e - d d . A a s c n o c c l e d e p . s t- Total. Demands for tricts for accommodation on funds. Federal Reserve Banks have Boston 18,936 j 18,936 New York... 75,816 ! 75,816 been unusually heavy. This has been largely Richmond... 21,028 53,858 Kansas City. 8,530 8,530 the outcome of excellent business conditions Dallas 5,003 2,995 i 7,998 and strong demand on the part of customers of Total. 34,561 130,577 165,138 banks for the means with which to finance normal industrial operations. In some dis- From the foregoing statement it is seen that tricts agricultural demands have been very the total amount of rediscounting which has large, while in others the industrial require- thus far been resorted to constitutes only a ments due to the Government's manufacturing small part of the total resources of the Federal activity have likewise been extensive. The Reserve Banks. It, however, affords precise!}7 reports of business conditions from various the same element of readjustment or equalizaparts of the country, published in this issue of tion which has been necessary in order to furthe BULLETIN, show clearly the nature and nish the resources that were needed in the scope of the commercial, agricultural, and various districts where the demands for loans industrial movement. were most active. It is interesting to note One symptom of this strength of demand is that in many cases the flow of money from one furnished by the exceptional calls made upon part of the country to another generally rethe Federal Reserve Banks in certain districts verses itself, so that Federal Reserve Banks where essential agricultural industries are that appear as applicants for rediscounts frereaching the peak of their activity. In such quently appear after a short time as takers of districts reserves have fallen more than in other rediscounted paper from other Federal Reserve districts, and it has consequently been desirable Banks. In times past, prior to the organito employ the rediscount machinery for equal- zation of the Federal Reserve system, a measizing resources provided by the Federal Reserve ure of relief was provided in part through Banks. During the month of June three such the transfer of actual currency or money and redistributions of resources affecting invest- gave rise to the annual stringency which prements and reserves of eight Federal Reserve vailed in different parts of the country from Banks were made through the transfer of early summer to late autumn—a series of weeks short-term paper. The mechanism of redis- sometimes referred to as the "crop-moving counting between Federal Reserve Banks is period.77 A form of accommodation which is now a familiar and smoothly working part of rendering this old method of interbank disthe Federal Reserve system. In the statis- count more and more nearly obsolete is now tical reports of the Board from time to time provided through the note issue of the Federal data with respect to these operations were in- Reserve Banks and transfers made by means cluded with other discounts and open-market of the Federal Reserve gold-settlement fund, operations. These data are summarized and whose operation is proving with each successive recapitulated here as a matter of current in- year more and more successful in avoiding the terest. To date the total of such operations shipment of actual money between different for the current year has been as follows: parts of the country. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 591 The operation of the gold-settlement fund and more certain, a private wire service has Set has so greatly extended its been established between Washington and the £* " Pe that the Board has di- various Federal Reserve Banks as well as berected Federal Reserve Banks tween the banks themselves. This service is to put into effect on July 1 a daily gold-clearing now in satisfactory operation. system. This merely substitutes a daily for a Comparative weekly figures of principal earnweekly settlement, such as has been employed ing assets for the period bein the past. It is not expected that the change *ween May 24 and June 21 will bring about any definite alteration in the Banks. reflect to some extent the degree relationship of the banks except that of in- of assistance rendered by the creasing the convenience and speed of their Federal Reserve Banks to their members and dealings with one another. Without a full through them to the industrial and commercial understanding of the plan daily telegraphic community in meeting the heavy tax demands transfers might at first seem to temporarily of the Government. Judging from the moderprejudice the reserves of some of the Federal ate increases in total investments reported by Reserve Banks. As a matter of fact, however, the Federal Reserve Banks for the first two the effect will be exactly as at present. The weeks in June and the very substantial decrease plan will eliminate a great deal of work at the shown for the last week under review, member Federal Reserve Banks, and through the daily, banks were able to take care of the financial instead, of weekly, settlement will provide the situation without casting an undue burden proper adjustments in the holdings of gold to upon the resources of their Federal Reserve the credit of each Federal Reserve Bank in the Banks. gold-settlement fund in as nearly automatic a Between May 24 and June 14, the Federal way as possible. At the present time the Fed- Reserve Banks increased their holdings of diseral Reserve Banks, in addition to the weeldy counted paper from 923.3 to 1,016 millions settlement, have the privilege of demanding and their total investments from 1,277.2 to transfers at any time when a net debit balance 1,333.4 millions, the larger figure being about 40 is shown in account with other Federal Reserve millions below the record total for May 10, the Banks. It must be expected that if the present Friday following the closing of the third plan of weekly settlements were to be main- Liberty loan. tained, such transfers would become more nu- By June 21, total investments of the banks merous in the future, as the calls upon the had fallen off to 1,240.6 millions and discounts Federal Reserve Banks become heavier. The to 931.3 millions. For the New York bank a proposed plan will do away with the greater similar development is shown, its discounts part of such transfers, and will release, for the showing substantial increases for the first two strengthening of their reserves, the funds now weeks in June and a considerable decline at the carried as " amounts due from other Federal end of the third week, the total discounts held Reserve Banks." At the present time pracby the bank on June 21—383.3 millions—being tically all the Federal Reserve Banks are ad- 58.9 millions below the corresponding total four vising each other by wire of their daily credits weeks earlier. The banks at Philadelphia, of immediately available city items. While Chicago, St. Louis, and Minneapolis report a good to a limited extent, this plan covers but practically unchecked increase in discount opera small proportion of the credits, and hence the ations, tempered somewhat by liquidation of need for a daily settlement. In order to render acceptances. War loan paper, i. e., members' the work of the gold-settlement fund more efcollateral notes and customers' paper, profective, as well as to make all communication tected by United States war bonds and Treasbetween the banks and the Board prompter ury certificates, constituted 58.4 per cent of the 67747—18 2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

592 FEDERAL RESERVE BULLETIN". JULY 1, 1018. total discounts held on June 21, as against 65 Reports from member banks in about 100 per cent on May 24, the Government having leading cities, showing princiredeemed over one billion of 4£ per cent certifi- ConditioR of 7 . \ v , -i-/. i member banks. Pa* assets and liabilities each cates on May 28 and June 18. At the New week between May 17 and June York bank this proportion shows a decline for 14, indicate large withdrawals of Government the same period from 86 to about 80 per cent. deposits and considerable liquidation of Gov- Acceptances on hand show a steady decline ernment securities, largely Treasury certificates. from 278.2 to 232.5 millions, the New York Increases in aggregate net demand deposits and bank reporting about 53 per cent of the total in other loans and investments were on a holdings of this class of paper on June 21 as smaller scale, while reserves show a more than against 52 per cent on May 31. But little corresponding increase. As the result of these change is shown in the total of United States developments the reserve position of the resecurities owned. These holdings are comporting banks shows a material improvement. posed chiefly of United States bonds with the Treasury certificates held by all reporting circulation privilege, 3 per cent conversion member banks decreased from 1,153 to 945.2 bonds, and 1-year Treasury notes, the banks millions, the largest decrease being shown for holding at present but limited amounts of May 31, the Friday following the redemption Liberty bonds or Treasury certificates. by the Government of 500 millions of certifi- During the period under review the banks' cates of the February 27 issue. United States gold reserves increased from 1,898 to 1,924.4 bonds, other than circulation bonds, on hand, millions, while their net deposits show a decline declined from 635.7 to 586.7 millions, the banks from 1,557.6 to 1,445.4 millions. Federal Re- apparently having placed approximately this serve notes in circulation show a continuous amount of Liberty bonds with their customers increase by nearly 100 millions from 1,578.6 to during the four weeks under review. As 1,678 millions. The ratio of total cash reserves against these substantial decreases the banks to aggregate net deposit and Federal Reserve report an increase from 501.6 to 518.4 milnote liabilities shows a rise from 62.4 to 63.4 lions in loans secured by Liberty bonds and per cent. Treasury certificates. In the following table are shown the changes Corresponding figures for member banks in between May 24 and June 21, 1918, in the central reserve city banks indicate decreases of totals of discounted and purchased bills held 150.2 millions in Treasury certificates and of by each of the Federal Reserve Banks, also about 24 millions in United States bonds, changes between the two dates in the holdings largely Liberty bonds, as against practically no of other classes of investments. increase in loans secured by United States war obligations. For the member banks in Greater [In thousands of dollars; i. e., 000's omitted.] New York, liquidation of 28 millions of Liberty Federal Reserve Bank. May 24. June 21. . J-fot Net bonds, of 128 millions of certificates, also of 3.5 decrease. of loans supported by these securities is shown. Boston 591 06, 2,589 New York 581,158 506, 74,397 Aggregate holdings of United States secur- Philadelphia... 64,128 74, 10,831 Cleveland 845 ! 66, 1,959 ities (exclusive of circulation bonds) and of Richmond 48|552 I 56, 8,091 Atlanta 28,3.83 30, 2,136 loans supported by United States war securities Chicago 121,782 I 131, 12,815 St. Louis 769 I 50, 12,363 decreased for the four weeks from 2,290.3 to Minneapolis— 28',796 35, 6,320 Kansas City.... 73,023 56, 10,161 2,050.3 millions. During the same period the Dallas 28,930 29, San Francisco.. 60'563 55, central reserve city banks show a reduction of Total 1,201,520 1,163,742 37,778 these items from 1,475.8 to 1,301.4 millions and United States long-term securities 42,067 40,877 1,190 the New York banks alone a reduction from. United States short-term securities 32,476 35,883 3,407 1,324.9 to 1,165.2 millions. Other earning assets 1,151 100 1,051 Loans and investments of all reporting banks Total investments held.1,277,214 11,2-10,602 j 36,612 exclusive of permanent investments, show a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1, 1918. FEDEBAL BESEBVE BULLETIN. 593 decline from 12,608.7 to 12,506.2 millions, while reserve cities a decrease"of excess reserves from the share of United States war obligations and 49.2 millions on May 17 to 28.6 millions on the loans supported by such obligations in the totals last of May is noted, followed by an increase to just given declined from 18.2 to 16.4 per cent. 75.8 millions on June 14. For the central reserve city banks this per- Even more marked changes are seen in the centage shows a decline from 23.4 to 20.6 per excess reserves of member banks in other recent and for the Greater New York banks a serve cities, which, after a decline from 36.8 decline from 26.2 to 23.1 per cent. millions on May 17 to 19.6 millions at the close For the four weeks under review Government of the month, increased to 49.7 millions on deposits of all reporting banks show a decline June 14, the banks in the Cleveland district from 1,284.1 to 868.3 millions, time deposits a showing the largest aggregate gain. decrease from 1,386.7 to 1,323.4 millions, and Gross earnings, partly estimated, of the Fednet demand deposits a gain from 8,922.6 to Dividends and eral Reserve Banks for the 9,247 millions. Total net, including Govern- surplus profits. p j nths of the present rst s x mO ment deposits, on June 14 stood at 10,506.7 year were $24,850,000, while current expenses millions, or 110.5 millions less than on May 17. for the same period aggregated $4,040,000; the Net withdrawals of Government deposits from total estimated net earnings for the first half of central reserve city banks for the same period the year are therefore $20,810,000. All of the aggregated 294.4 millions, aside from a loss of banks were able to declare dividends to cover 10.8 millions in time deposits. These losses are periods up to June 30 of the present year. Six only partly compensated by a gain of 251.2 of the banks declared dividends for the 6-month millions in net demand deposits. For the New period ending June; four banks for the 12-raonth York City banks net withdrawals of 247.7 period ending June; and two banks for the 18millions of Government deposits and of 9 month period endin g June. N one are now in armillions of time deposits as against a gain of rears with their dividend payments. The total 202.7 millions in net demand deposits are amount of dividends due and payable is about noted. $3,180,000, Deducting this amount, as well Reserves of all reporting banks (all with the as an additional amount of $644,000 reserved Federal Reserve Banks) increased from 1,148.1 for depreciation on securities from the total to 1,226.3 millions while cash in vault declined estimated net earnings for the six months, from 373.1 to 353.9 millions. there remains a balance to be carried to profit As the result of the considerable decrease in and loss of over $17,000,000—an amount deposits, the ratio of combined reserve and which may be somewhat reduced through advault cash to net, including Government de- ditional charges to profit and loss on account posits of all reporting banks, shows an increase of Federal Reserve currency issued during the from 14.3 per cent on May 17 to 15 per cont on period, furniture and equipment, and bank June 14. For the central reserve city banks a premises. This $17,000,000 is about 25 per rise of this ratio from 14.9 to 16.0 per cent is cent of the average paid-in capital of the Fednoted. Figures of excess reserves, in the calcu- eral Reseve Banks for the six months of the lation of which no account is taken of Govern- present year. At the present rate of growth ment deposits, indicate a downward trend to combined excess profits for all banks, after the end of May, the decline from 88.3 on May payment of the 6 per cent dividends, may 17 to 49.6 millions on May 31, fairly correspond- easily reach 50 per cent of the paid-in capital ing to the decrease in total reserves carried with at the close of the present calendar year. the Federal Reserve Banks. During June an Only one-half of these excess profits, according upward trend set in which carried the excess to section 7, is carried by the banks to surplus reserves of all reporting banks to 129.2 mil- account, the other half going to the United lions on June 14. For the banks in central States as a franchise tax. After the surplus Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

594 FEDERAL RESERVE BULLETIN. JULY 1, 1918. of any bank has reached 40 per cent of its paid- dealers may undertake under the new arrangein capital, all of the excess profits must be paid ment. Its functions in assisting in this matter to the United States. are simply advisory. Considerable differences, of course, exist be- The Secretary of the Treasury in a letter to tween Federal Reserve Banks in respect to the the Senate, in reply to an inquiry put before proportion of excess profits to capital, so that him with respect to foreign exchange, states in individual cases it may not be true the situation as to other negotiations with reeven with earnings accumulating at their spect to exchange arrangements as follows: present rate, that the 50 per cent level will "Agreements have been made with certain be reached. In the future, with all arrears in neutral countries in Europe and with countries dividends paid and a surplus of 40 per cent to in South America and elsewhere involving paid-in capital set up, the Government will financial considerations and tending to protect receive as a franchise tax from the banks all the value of the American dollar. Agreements the excess of their combined net earnings above involving like considerations are in process of 6 per cent on the paid-in capital stock. negotiation in other countries and in certain The most important development during the neutral countries steps have been taken to pro- Foreign ex- month of June in connection vide for payments required therein preliminary change develop- with the control of foreign ex- to the institution of negotiations. The amount tents, change has been the appoint- of balances of neutral nations held by banks, ment by the Government of Italy of a represent- trust companies, and bankers in the United ative in New York of its institute of exchange States can probably be ascertained and stated through which all of its foreign transactions with approximate accuracy as of about May 13, have to pass and which stands ready to buy and 1918." ' sell Italian exchange. The Treasury Depart- In the FEDERAL RESERVE BULLETIN for ment has made an arrangement with the June there was published a re- Gold embargo • i •• ,., A j • • . Italian Government under which certain trans- regulations vised drait ol£ the administraactions in lire must be approved by the New tive regulations relating to coin, York representative of the Italian institute and bullion, and currency as then actually applied the Division of Foreign Exchange of the Fed- in practice under the direction of the Federal eral Reserve Board. As a beginning, such Reserve Board. During the month of June transactions are only to affect bills of exchange new regulations have been promulgated by involving imports and exports between the the Board as approved by the Secretary United States and Italy. These represent funds of the Treasury. The most important adwhich American bankers may wish to dispose of dition to the modified practice already in to the institute. Exchange transactions with force as outlined in the June BULLETIN the institute for the time being are to be handled is the statement with reference to the through the regular banking channels. For the present policy with respect to controlling expresent no further restrictions have been ports of gold. Under the old regulations the placed upon trading in lire, and dealers may fundamental test to be applied to a given apbuy and sell as in the past, except that cable plication was said to be found in the question transfers can not be sold under the rate whether a given shipment of gold could be established by the Division of Foreign Ex- definitely connected with a specified shipment change from time to time. The Federal Re- of merchandise. As the policy has advanced, serve Board, of course, does not guarantee a this idea has been modified, and the real and continuance of the Italian institute in the decisive question in most cases now is not market for the purchase of lire, nor does it whether payment has to be made for merchanguarantee any transactions which American dise, but whether the merchandise in question Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 595 is desired from the standpoint of national in- several points of significance have been made terest, and whether, if so, it can or can not be clear in informal replies to inquiries. The paid for by some other means than the ship- Board has stated its opinion that the tradement of gold. The new regulations state, with acceptance question is to be developed on the reference to this question, that "It is the prac- basis of business experience after careful and tice of the Board not to authorize the exporta- sympathetic study of the requirements and tion of gold except in cases where the desirabil- characteristics of each trade. Members have ity of permitting such shipment is clearly es- taken the view that it would be unreasonable tablished as being compatible with the national to urge the use of the trade acceptance in interest. In reaching its conclusions, however, every business without exception. On this the Board will consider all attending circum- point, Mr. Paul M. Warburg says: "Personally, stances in each particular case.'7 This action I have championed the trade acceptance for practically places the question of gold ship- many years, and have expressed my views many ments upon an individual footing, each case times by word of mouth and in writing. That being considered on its own merits. does not necessarily mean, however, that I am ^Resumption of gold imports on a considerable one of those who believe that the trade acceptscale is indicated by the weekly reports of gold ance is suitable for every trade. If I could sell movements received from collectors of customs my goods for cash, without allowing a discount, for the four weeks ending June 14. The net I would be foolish to make any effort to secure movement in favor of the United States for trade acceptances in lieu of cash. If, however, this period was $19,410,000, as compared with as a seller I had to make a very considerable saca net outward movement of $509,000 for the rifice in order to secure cash, or if I had to sell preceding four weeks. Gold imports for the on long-term book credit, I would very carefully four weeks totaling $23,044,000 came largely consider the many advantages of introducing from Canada, Mexico, and Salvador, while gold the use of the trade acceptance into my busiexports totaling $3,634,000 were consigned ness.'7 chiefly to Mexico, Colombia, and Venezuela. Governor Harding, in an address recently de- The gain in the country's stock of gold since livered before a conference representing the August 1, 1914, was $1,066,078,000, as maybe American Cotton Manufacturers7 Association, seen from the following exhibit: expressed his view with respect to the financing of cotton by means of acceptances. He favored [000 omitted.] the use of the bankers' acceptance in order that the southern cotton planter may be Excess of Imports. Exports. im o p v o e r r ts assured of the continuance of his cash market exports. by giving him a type of paper which he can dispose of without delay because it repre- Aug.l to Dec. 31, 1914 I 1523,253 $104,972 I $81,719 Jan. 1 to Dec. 31, 1915 ! 451,955 31,426 i 420,529 sents the direct obligation of a bank. Else- Jan. 1 to Dec. 31, 1917 ! 553,713 372,171 ! 181,542 Jan. 1 to June 14,1918.... i 35,818 20,044 ; 15,774 where in this issue are printed extracts from an Total jl, 750,484 684,406 ! 1,066,078 address delivered by Mr. Warburg before the National Trade Acceptance Conference in i Excess of exports over imports. Chicago on June 18 and from the address of The discussion of the trade acceptance situa- Mr. Harding already referred to. tion is now in active progress The following resolutions relating to guar- Field for accept- 1 . . . . x 1 °,. Guarauty of de- anty of bank deposits were and various inquiries relating; posits. adopted at a meeting of the ances. . x , Federal Reserve Board, held on June 25,1918: to tne question nave been Whereas it is important that nothing should impede the brought from time to time to the attention of unification of the hanking system of the country under the the Board. No official rulings or expressions on the subject have recently been issued, but Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

596 FEDERAL RESERVE BULLETIN. JULY 1, 1918. Federal .Reserve Act, to which the President called atten- troverted question of guaranty of bank deposits as prejudition in his statement of October 13, 1917: cial to the development of the Federal Reserve system "The Federal Reserve Act is the only constructive and as menacing to the successful financial conduct of the financial legislation which we have ever had which was war, because of the agitation of mind produced in the broad enough to accommodate at the same time banks business and banking community; operating under powers granted by the General Government and banks whose charters are granted by the respective Be it further resolved, That it is the judgment of the Board States. The unification of our banking system and the that a fund, under the administration of the Federal complete mobilization of reserves are among the funda- Reserve banks, might well be set up to provide and insure mental principles of the act." immediate determination of the value of the assets of Whereas such unification is threatened by the proposed failed member banks of the Federal Reserve system and plan for the guaranty of deposits in national banks: an immediate distribution of the estimated value of such (1) Because it would tend to stimulate a spirit of com- assets among depositors, pending their final liquidation; petition and antagonism between State-bank systems and this to the end that the hardship and injury now sustained the national banking system; by depositors of failed banks, because of the delays to (2) Because of the difficult and embarrassing situation which they are subjected in receiving their pro rataof the in which such State banks, which, owing either to in- assets of failed banks, may be reduced to a minimum. sufficient capitalization or to existing contractual or trust In casting his vote in favor of this resolution obligations, could not convert into national banks would Governor Harding stated that while he had be placed; * (3) Because of the agitation which would be produced always been opposed to a Government guaranty in many States to secure local legislation for the guaranty of deposits made applicable by compulsion to of deposits in State banks, thus destroying the harmony all national banks and had so expressed himself, now happily developing and almost established between he had had, prior to June 5, several brief and in- State and national bank systems, as evidenced by the formal conversations with the Comptroller of increasing number of State member banks in the Federal Reserve system and the cordial cooperation which many the Currency regarding certain features of a States are giving to the policy of the Federal Reserve guaranty system, including a voluntary plan, Board in seeking to "bring about a unification of the Ameri- which warranted the Comptroller in including can banking system under the Federal Reserve Act. him in the "majority of the board" to which Whereas there is no sufficient evidence to establish that reference was made in the circular letter of that there are great sums of currency and specie now in hiding date issued by the Comptroller, but after a which would be drawn out and deposited in national banks were such deposits guaranteed beyond, what is careful and deliberate consideration of the already being accomplished by the postal savings system whole proposal he had reached a definite conand the vr&r savings stamp associations; clusion as expressed in the foregoing resolu- Whereas in the judgment o£ the Board no plan of intions, surance, either applied to bank deposits or to any other form of credit or property, is sound or can long be successfully maintained where a uniform premium is assessed Brandies of Federal Reserve Banks. upon all participants, good or bad alike, or equitable unless the insurance privilege be extended to all member JACKSONVILLE. banks at their election; On June 25 the Federal Reserve Board Whereas the extension of the principle of insurance to bank deposits raises large and most difficult questions of issued the following: general governmental policy which ought to be decided The Federal Reserve Board to-day anonly after the most mature consideration; nounced the organization of the new branch Whereas, the Government could not safely and wisely at Jacksonville, Fia, The directors named undertake the guaranty of bank deposits without exercising a degree of control over banking loans and invest- by the Board, will be Mr. J. C. Cooper, chairments, which would, in effect, amount to the Government man; Mr. Fulton Saussy. Mr, Cooper is a guaranty of such loans and investments, and thus bring well known attorney and Mr. Saussy a merbanking credit under the complete control of the Governchant of much experience in business adminment; istration. The directors named by the Atlanta Whereas the hardships now suffered by depositors of insolvent banks could be materially lessened by the es- Federal Reserve Bank for the Jacksonville tablishment of a fund for the prompt liquidation of the branch are: Mr, E. V. Lane, president of the valuable assets of failed banks: Therefore Atlantic National Bank at Jacksonville; Mr. B. Be it resolved, That the Board deprecates the injection H. Barnett, president of the Barnett National into the banking situation at this time of the bitterly con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1, 1918. FEDERAL RESERVE BULLETIN. 597 Bank; and Mr. Giles L. Wilson, vice president Acceptances to 100 Per Cent. of the Florida National Bank. Mr. George R. Since the issue of the June BULLETIN the De Saussurc will be manager of the branch. following banks have been granted authority He is a man of large experience in banking, by the Federal Reserve Board to accept having been a national bank examiner and at drafts and bills of exchange up to 100 per cent present vice president of the Barnett National of their capital and surplus: Bank, which he is leaving to become manager of the new branch. American National Bank, Terrill, Tex. Marine Bank & Trust Co., New Orleans, La. Hibernia Bank & Trust Co., New Orleans, La. EL PASO. Phoenix National Bank, Hartford, Conn. The El Paso branch of the Federal Reserve Bank of Dallas, the establishment of which was authorized by the Federal Reserve Board Indexes of Business Conditions. some time ago, was opened for business on June 17, with Sam R. Lawder as manager. In the FEDERAL RESERVE BULLETIN for June it was announced that the Board would shortly BIRMINGHAM. undertake the establishment of a series of indexes of business conditions, for regular publica- The Federal Reserve Board on June 22 antion, in future numbers of the BULLETIN, such nounced the directors of the Birmingham indexes to be compiled and presented for the branch of the Federal Reserve Bank of Atpurpose of affording data as nearly definite and lanta, as follows: Appointed by the Board, authoritative as they can be made with refer- W. H. Kettig, chairman; Oscar Wells. Apence to the progress of business, changes in ecopointed by the bank, T. O. Smith, W. W. nomic conditions, and general alterations in the Crawford, John H. Frye. Mr. Alex E. Walker financial and banking situation. Preliminary will be manager of the branch. to the initiation of this series of indexes, it is deemed desirable to furnish a general account MEMPHIS. of what is intended in this connection, both in The following press statement was issued on order to assist in obtaining the cooperation of June 25: those whose aid must be enlisted in order to The Federal Reserve Board to-day voted to make the undertaking a success and also to authorize the establishment of a branch of the furnish a more complete explanation of the Federal Reserve Bank of St. Louis at Memphis, scope and purpose of the new undertaking. Tenn. The powers and functions of this Preparatory work surveying and examining branch have not yet been definitely deterthe various sources of information relative to mined, but will be announced at a later date. the production and market supply of leading commodities was undertaken during the month with the view of selecting most typical and com- Bedassification of Bank Clerks. prehensive indexes of industrial and financial conditions. The following communication from Maj. It is the intention the Board to use largely Gen. E. EL Crowder, Provost Marshal General, material gathered by other governmental, was received by Gov. Harding, of the Federal State, and municipal agencies, commercial or- Reserve Board, under date of July 5: ganizations, and trade journals and to supple- I beg to advise you that bank clerks are oxcepted from ment the material thus obtained by information the operation of the regulations which, provide for the received through channels of its own, particuwithdrawal of deferred classification and order number of larly the Federal Reserve Banks and agents, registrants found to be idlers or engaged in nonproductive and also member banks. occupations or employments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

598 FEDERAL RESERVE BULLETIN. Jfe'LTl, 1918. Working arrangements have been effected ment of their output at varying intervals. with most of the Washington offices and serv- This is true of the basic industries such as ices whereby all statistics of a periodical char- iron, steel, coal, copper, and other leading acter not treated as confidential will be supplied mining industries. Figures are given on the to the Board for use in the preparation of its basis of reports received from the principal condensed reports. In this manner the market producing factors in the given lines to which movements, including receipts, shipments, they relate, and with them are frequently stocks in hand, and prices of leading commodi- associated data showing the quantities of the ties, will be made available. These data prop- given products on hand at points of shipment erly classified will be used for computing index or in storage at the chief points for assembling numbers showing changes in the physical vol- and distributing the output. In some of these ume of trade, visible stocks, consumption, etc. lines, figures are collected and issued by gov- Under the head of indexes of business con- ernmental agencies, but in most cases the data ditions the Board includes all statistics rela- rendered currently available are supplied tive to production, consumption, transporta- chiefly or only by the producers or distributors tion, and prices which may be regarded as themselves. The main lines of industry in affording definite indications of the character which basic statistics of this class can be oband trend of changes occurring from time to tained are the following, viz: Coal, iron ore, time in the economic organization of the pig iron, steel, cement, tin, lead, copper, country and in the activity exhibited by that sugar, meats, hides, skins, leather, boots and organization. At present various collections shoes, lumber, etc. of such data are made. They include compiled (c) The Railway Administration of the statistics covering the following topics, viz: United States has under consideration a plan (a) Prices, both retail and wholesale, ex- for the furnishing of compiled statistics relating hibited as actual series and also as index num- to the movement of goods. With this plan bers, computed with reference to a specific completely carried out it will be feasible to base. Such prices are furnished by the Fed- exhibit the movement of chief items entering eral Government in the publications of the into freight movements from period to period. Bureau of Labor Statistics, while several index These statistics exhibit the extent and characnumbers are computed and issued from time ter of changes in the movement of essential to time by private investigators. The prin- materials, and throw light upon the activity of cipal series of index numbers now available are industry by indicating the extent to which such Dun's, Bradstreet's, the Annalist's, Gibson's, materials are being demanded and produced in and two forms of the series compiled by the order to supply consumption. Selected tabu- Bureau of Labor Statistics. A complete scien- lar data intended to exhibit the relative tific study of the various characteristics of changes in such movements are thus essential these series of index numbers has been pre- in forming an idea, at any given time, of the pared by Prof. W. C. Mitchell and published by extent and activity of manufacturing, besides the United States Bureau of Labor Statistics furnishing information regarding the claims of (whole No. 173). Selective use will be made the sections producing and shipping such arof this series of index numbers and particu- ticles upon other regions of the country where larly of the data published by the Bureau of they are manufactured or consumed. Labor Statistics, with a view to correlating (d) Banking and credit statistics are relied changes in prices with changes in the produc- upon to show not only the character of the tion and movement of commodities, credit situation from the standpoint of internal (b) Reports of production.—Many of the chief bank organization but also the conditions under industries of the country issue, at intervals, which business is able to obtain the accommostatements showing the production and ship- dation it requires from those who control the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDEEAL BESERVE BULLETIN". 599 supply of liquid capital and credit. Such restricted fields, concerning the development of statistics include not only deposits, clearings, wealth and the growth of savings. This will and reserves but also data showing variations at least be possible with reference to corporate in commercial rates of interest and discount on savings and investments. specified classes of loans. The material for a OQ Data designed to show the extent of emstudy of variations in banking and credit is ployment at any given time in the country at peculiarly extensive and rich, but at certain large throw light on the activity of industry points has heretofore been incomplete. In- and also upon the purchasing and consuming clusive and valuable statistics of the national power throughout the various industrial secbanking system are prepared by the Comp- tions into which the population is divided. troller of the Currency, while the work done by The degree of employment and unemployment, the Federal Reserve system in gathering data and the general level of wages, furnish an relative to the condition of member banks in exact index of the economic condition of poputhe larger cities has become familiar through lation in 'any given line of business. The recent the pages of the FEDERAL RESERVE BULLETIN. entry of the Government of the United States In sundry of the States satisfactory statistics into the industrial field as a large employer of concerning the condition of State banks are pub- labor and its efforts to secure a better distrilished from time to time by the local depart- bution of available workers enables it to furments of banking. One of the most serious nish reliable information concerning the congaps in our banking information has been found ditions affecting the movement of and demand in the lack of authoritative data concerning dis- for labor in certain fields as well as the districount and interest rates for standardized classes bution of the available supply of workers in of paper. The Federal Reserve system has the specified classes of industry. already done something toward standardizing While it is desirable and practicable to furinterest and discount rates. Before long it may nish general indexes of business conditions for be able, with its twelve Federal Reserve Banks the country as a whole, it will also be necesand the branches, which will soon number up- sary, in order to obtain an accurate idea of the ward of 15, to furnish authoritative quotations situation of the different sections of the Nation, of interest and discount rates at the principal and also to obtain a more complete and definancial centers of the country, and so far as tailed analysis of local industries, to initiate possible to reduce these to an index number similar business indexes for each of the several basis. districts in which one or more basic industries (e) Figures relating to savings are consid- have their headquarters. The establishment ered of importance because they show, at least of a series of business indexes for the Nation approximately, the surplus of production over as a whole is only the first step forward in the consumption and thus furnish a clue to the eventual development of a complete series of volume of new wealth created from time to business indexes. It is the intention of the time and rendered available for reinvestment, Board, therefore, to extend the system genand thus for use in increasing or carrying on erally throughout the several Federal Reserve the productive capacities of the country, there- districts, securing in each district the estabby affording employment to labor. The data lishment of satisfactory indexes relating to the relating to savings have thus far been among condition of the chief industries situated there, the less satisfactory of those available to stu- and obtaining, as a result, reliable and authoridents of economic progress. With the develop- tative reports of local business conditions. No ment of the new system of income and excess- announcement can as yet bo made as to the profits taxes it is, however, hoped to obtain distribution of industries by districts, or the more satisfactory information, at least within character of the methods to be employed in 67747—18 3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

600 FEDERAL RESERVE BULLETIN. JULY 1,1918. reporting upon each of them. The character In the fiscal year ending June 30, 1918, cash disburseof industry and the methods of measuring it ments will amount to between $12,500,000,000 and $13,000,000,000. Of this amount, about one-third will vary so widely as between different parts of have been raised by taxes and two-thirds by loans, all of the country that identical methods can not be which will be represented by long-time obligations; that employed in all cases. The adaptation of the is, bonds of the first, second, and third Liberty loans and system of business indexes to the different lo- war-savings certificates. We shall thus have completed calities will therefore be deferred to some date 15 months of the war with a financial record unequaled, I believe, by that of any other nation. in the future, after the initiation and estab- We can not wisely contemplate nearly doubling our lishment of the business indexes designed to cash disbursements in the fiscal year 1919 without providexhibit in broad terms the development of na- ing additional revenue. We can not afford to rely upon tional industry. $4,000,000,000 only from taxation, because we shall then have to rely on raising $20,000,000,000 by loans. This would be a surrender to the policy of high interest rates and inflation, with all the evil consequences which would Additional Taxation. flow inevitably therefrom, and which would, I firmly believe, bring ultimate disaster to the country. We can The following letter relative to new tax not afford to base our future financing upon the quickrequirements was sent by the Secretary of the sands of inflation or unhealthy credit expansion. If we Treasury on June 5 to Hon. Claude Kitchin, are to preserve the financial strength of the Nation, we must do sound and safe things, no matter whether they chairman of the Ways and Means Committee hurt our pockets or involve sacrifices—sacrifices of a relaof the House of Representatives: tively insignificant sort as compared with the sacrifices JUNE 5,1918. our soldiers and sailors are making to save the life of the DEAR MR. KITCHIN: Nation. The sound thing to do is unquestionably to in- Replying to your letter of June 3, and referring to our crease taxation, and the increases should be determined recent conference on the question of new revenue legisla- upon promptly and made effective at the earliest possible tion, permit me to submit the following for your consid- moment. eration: I doubt seriously if the Government can be financed If the present rate of increase in expenditures should with only $4,000,000,000 derived from taxation, because continue for six months, the Treasury will actually have with a tax bill no larger than this sufficient economies to disburse during the fiscal year ending June 30, 1919, will not be enforced upon the people of America, and withapproximately $24,000,000,000. out such economies I see no way in which the great finan- This estimate is not based merely upon appropriations, cial operations of the Government can be safely conducted. nor merely upon estimates made by other departments as On the basis of the. present revenue laws we should have to their probable expenditures, although they have been to raise in the fiscal year 1919, $20,000,000,000 by the sale obtained and considered; it is based upon the actual ex- of Liberty bonds or by loans of one sort or another. I beperience of the Treasury during the past year, which has lieve that if we are to preserve the soundness and stability shown that actual expenditures, exclusive of transactions of our financial structure, we should raise by taxation not in the principal of the public debt, have increased at the less than one-third of the estimated expenditures for the average rate of $100,000,000 per month since March, 1917. fiscal year 1919, or $8,000,000,000. You will observe from the inclosed statement (Exhibit There are also certain general considerations bearing A) that in March, 1917, the expenditures were in round upon the problem of taxation which I hope I may be perfigures $100,000,000. In May, 1918, they were mitted to bring to your attention. 1,508,195,000. If there should be no further increase The existing excess profits tax does not always reach during the coming fiscal year the cash expenditures upon war profits. The rates of excess profits taxation are graduthe May basis would be more than $18,000,000,000. If, ated and the maximum is 60 per cent. In Great Britain as seems inevitable, the increase in expenditures should there is a flat rate of 80 per cent on all war profits. The continue at the rate of $100,000,000 per month for the next Government departments, under great pressure as they six months, or until December, 1918, and if thereafter the are to get necessary war materials and supplies with the monthly expenditures should remain stationary until utmost expedition, can not in the nature of things fix June 30, 1919, the Treasury would have to finance expen- their prices nor guard their contracts in such a way as to ditures aggregating $24,000,000,000 during the fiscal year avoid the possibility of profiteering. The one sure way is ending June 30, 1919; or, to put it another way, if the to tax away the excessive profits when they have been average monthly expenditure should exceed that for the realized. I do not say this in a spirit of criticism of the month of May, 1918, by 33J per cent, it will be necessary corporations or business men of the country who have for to spend $24,000,000,000 in the fiscal year 1919. the most part loyally supported the Government. In Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 601 entering into war contracts they take grave risks. They Committee last summer, there is not the same objection are called upon to make vast expenditures of capital for to the exemption from normal income taxes as there is to purposes which may prove unproductive after the war. the exemption from surtaxes. A substantial increase in They are not to be blamed in these circumstances for ask- the normal income tax is the soundest and surest way of ing for prices and terms which cover these risks. On the stabilizing the price of Government bonds. If we have other hand, when the risk has been liquidated by proper to increase the interest rate on Government bonds, the allowances, and the contract has proved profitable, the increased rate may continue for 10 to 30 years, and some Government should take back in taxes all profits above a of the bonds which we have issued will go to great premreasonable reward. Under existing law, that does not iums not long after the war is over. If we make the bonds happen because the tax rates are not high enough and can at the present rate more attractive by increasing the not safely be made high enough, since the test now is not normal tax, then the decrease in taxation which will folhow much of the profits are due to the war, but what rela- low the close of the war will automatically adjust the tion the profits bear to the capital invested. A company situation. I believe that to stabilize the price of Governwith a swollen capital and huge war profits escapes. ment bonds by first increasing arid subsequently reducing Of course, no one objects to reasonable profits; on the the normal income taxes, from which the holders of these contrary, everyone should want, and I am sure does want, bonds are exempt, is sound finance and sound economics. business and enterprise to be rewarded with reasonable, There is another feature deserving of consideration. We or even liberal profits. Prosperity should be preserved are asking the people to finance this war and we are offerand can be preserved, I believe, on the basis of reasonable ing them an investment paying 4J per cent interest. The profits. The problem of statesmanship is to establish a people have responded wonderfully to this appeal. In the just relation between necessary taxation and the earning last Liberty loan campaign 17,000,000, approximately, power of the Nation. subscribed. There is a widespread feeling that many This brings me to another consideration of great moment people who are able to do so, especially those who are in the Government's financial plans. I hope that it will making vast profits out of the war, are not doing their part, not be necessary further to increase the interest rate on either in the purchase of liberty bonds or in the payment Government bonds. The number of subscribers to the of taxes—that they are investing in corporate stocks and three Liberty loans aggregated 30,000,000. The people bonds producing high returns instead of in the bonds of who subscribed are impatient of those who have not. their own Government producing reasonable returns, when Various plans have been urged upon me for forcing the the first duty of patriotism and self-protection demands people to buy Liberty bonds. The man of small means that they shall buy Government bonds for the protection who buys a $100 bond wants his neighbor to do so, too. of the Nation in its hour of peril. There is a popular demand also for high taxes upon war There is a natural feeling among the masses of the people profits. There is also a popular demand that all the people that taxation upon incomes and upon war profits should be should contribute to financing the war. There should, high enough to bring the return from corporate investtherefore, be a substantial increase in the normal income ments more nearly on a parity with the return from Govtax rate and a higher tax should be levied upon so-called ernment bonds; that the Government should not be forced unearned incomes. Income derived from Liberty bonds to compete for credit with war industries which are profitwould be exempt from this taxation and the relation ing abnormally and which, unless restrained by the between income from Liberty bonds and income from exercise of sound and just taxation, will constantly add to other securities would be readjusted without increasing the difficulties of the people of the United States in their the rate of interest on Liberty bonds. It would not tax effort to supply the Government at reasonable interest the patriotic purchasers of Liberty bonds on their hold- rates with the credit it needs to fight successfully this war ings, but it would weigh heavily upon the shirkers who for liberty. have not bought them. It would make the return from If I may, without impropriety, offer a suggestion as to Liberty bonds compare favorably with the return from the proposed revenue measure, I should recommend: other securities. It would give the Government's bonds (1) That one-third of the cash expenditures to be made an essential and necessary advantage over those of corpo- during the fiscal yenr ending June 30,1919, be provided by rate borrowers and would very greatly decrease the rela- taxation. According to my estimates, this would involve tive advantage which State and municipal bonds now en- raising $8,000,000,000 through taxation. joy through the total exemption which they carry. It (2) That a real war profits tax at a high rate be levied would produce a gradual readjustment of the situation in upon all war profits. This tax should be superimposed the investment markets instead of an abrupt one, as would upon the existing excess profits tax in such, a way that the be the case if the interest rate on Liberty bonds should be taxpayer should be required to pay whichever tax is the increased. greater. The existing excess profits tax should be amend- A normal tax falls upon all alike. Therefore, as I ed in certain important particulars so as to remove in « pointed out in my statement before the Ways and Means equalities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

802 FEDERAL RESERVE BULLETIN. JULY 1, 1918. (3) That there should be a substantial increase in the ACCEPTANCES AND THEIR USE. amount of normal income tax upon so-called unearned Below are given some extracts from discusincomes. Under existing law earned incomes above certain exemptions are taxed 4 per cent as an income tax and sions of the acceptance situation recently of- 8 per cent as an excess profits tax, making a total of 12 per fered by the governor and vice governor of cent, while unearned incomes, derived from securities, the Federal Reserve Board: etc., are taxed only 4 per cent. The 8 per cent tax should be recognized as an income tax and the rate of 12 per cent THE FINANCING OF COTTON PURCHASES.1 (4 per cent normal and 8 per cent excess profits) should be I assume at the outset that there is no intention on the retained in respect to earned incomes, while a higher rate part of anyone to deprive the producer of cotton of his than 12 per cent should be imposed on unearned incomes. cash market. That would be unjust, for the cotton pro- (4) That heavy taxation be imposed upon all luxuries. ducer as a rule is a man of small means. The production Sincerely, yours, of cotton is distributed over a wide area and among a great (Signed) W. G. MCADOO. many individuals. Most cotton producers are obliged to Hon. CLAUDE KITCHIN, arrange for their lines of trade in the spring of the year. Chairman Ways and Means Committee, The southern banks load themselves up with loans to en- House of Representatives. able the southern farmer to produce his crop, and I take it that it will be universally conceded as fair and just that Statement showing classified disbursements by months from the southern farmer, having obligations to pay in the fall March, 1917, to May, 1918, as published m daily Treasuryof the year, shall receive cash for his product when he statements. brings it to the market. That, however, is only a small part of the financial opera- Ordinary. Foreign loans. tion involved. The customers of the southern cotton producer, the large customers, are the cotton mills of the March, 1917 $72,773,903.20 South, New England, Canada, Great Britain, and other April, 1917 81,599,598.22 $200,000,000.00 May, 1917 114,102,809.08 407,500,000.00 countries which in normal times absorb our production. .June, 1917 134.304,040.35 277,500,000.00 Most of this domestic business is done through the local 402,780,351.45 885,000,000.00 cotton buyer. The cotton buyer goes to his bank and ar- July, 1917 208,299,031.05 452,500.000.00 ranges for a line of credit. Ho makes such deposits as A Se u p g t u e s m t, b 1 e 9 r, 1 7 1917. 3 2 4 7 9 7 , , 0 4 1 3 3 8 , , 3 0 0 0 5 0 . . 3 6 4 4 3 47 9 3 6 ,0 ,0 0 0 0 0 ; o ,0 oo 0 . 0 o . o 00 may be agreed upon, in the way of margin, and he has an October, 1917 462,045,359.94 480,700,000.0;) arrangement with the bank to loan him the amounts which N D o ec v e e m m b b e e r r , , 1 1 9 9 1 1 7 7 . . . 5 6 1 1 2 1 , , 9 2 5 9 2 7 , , 0 4 3 2 5 5 . . 1 6 7 2 4 4 7 9 1 2 , , 9 0 2 0 9 0 , , 7 0 5 0 0 0 . . 0 0 ; 0 ) he may need in order to make his cash purchases from the January, 1918... 715,302,039.83 370,200,000.00 farmer. The southern bank has been accustomed, as far February, 1918.. 675,209,068.43 325,000,000.00 March, 1918 819,955,367. 20 317,500,000.00 as domestic purchases are concerned, to receive from the A M p a r y i , l , 1 1 9 9 1 1 8 8 1.0 9 6 1 8 0 , , 2 7 0 56 3 , , 7 0 5 2 8 6 , . 9 8 5 2 2 4 8 2 7 4 , , 5 0 0 0 0 0 , . 0 0 0 0 0 0 . . 0 0 0 ) cotton buyer his draft upon the northern or southern cotton mill, as the case may be, or, in the case of shipments 8,610, :i7!, 419.05 j 4,495,329,750.00 across the sea, upon the buyer on the other side. Total Mar. 1, 1917, to May 31, 1918 \ 7,013,251,770.50 ; 5,380,329,750.00 As far as domestic transactions and shipments are concerned, these drafts have been at sight which, in all States Other special. Total. except Massachusetts, means on demand. The bill of lading leaves a southern bank with the draft attached, goes to March, 1917. 327,176,896.12 $99,950,799.32 Boston, for instance, if it is a Massachusetts sight draft; the April, 1917.. 8.29-1,354.78 289,893,953.00 treasurer of tke mill accepts it, and after three days of May, 1917... 4; 962,746. 28 526,505,555.96 June, 1917... 919,445.78 412,723,486.13 grace, has to pay it. If he gets a bill of lading, he has 41,353,442.96 1,329,133,794.41 perhaps to negotiate a loan on that with some bank in the Northeast. The cotton may be three weeks or three July, 1917 1,511,814.92 662,310,815.97 August, 1917 2,019,363.50 757,457,36'!. 14 months in transit, and here results a dead load which those September, 1917.. 1,364,980.35 746,378,285.69 October, 3917..., 1,623,392.58 944,368,752.52 mills and their bankers have to carry. November, 1917.. 1,200,022.36 986,081,807.53 Meanwhile, let us look at the situation in the South. December, 1917.. 1,914,433.70 1,105,211,859.32 January, 1918 4,854,005.86 1,090,356.045.69 The change there, ordinarily in the fall of the year, is a February, 1918... 12,477,917.31 1,012,686; 985.74 March, 1918 18,338,441.98 1,155,793,809.24 sudden one. The southern banks, which rediscount April, 1918 17,031,020.28 1,215,287,779.23 heavily in order to carry the farmer during the producing Mav, 1918 15,992,206.83 1,508,195,233.65 78,327,599.67 11,184,128,768.72 1 Extract from address of William P. G. Harding, governor Federal Total Mar. 1, 1917, to May Reserve Board, before the Conference on Cotton Buying, held at the 31, 1918 '. 119,681,042.63 12,513,262,563.13 Biltmorc Hotel, New York, May 4, 1918, under the auspices of the National Association of Cotton Manufacturers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1D1S. FEDERAL RESERVE BULLETIN. 603 season, probably reach the peak of their load when the desirable investment that can be obtained. It will not cotton is being harvested and prepared for market. The have to go into the market and buy paper of which it advances they have to make to the cotton buyers to start knows nothing, taking the judgment of some one else. the .season, combined with those made to the farmer. It has paper with which It is familiar, based on a transcreate a highly expanded condition of credits. Then, as action it knows all about, and accepted by a bank of the they ,'.:;et these drafts payable on demand or at sight, their highest character. loans automatically are liquidated, so that in the course If, after receiving this acceptance, the southern bank of a few days or a few weeks at the longest, the banks which finds that it can not carry the credit longer and wishes to have been so greatly expanded, pay off their own obliga- realize upon it, it can go to the open market, a market as tions in the way of rediscounts and find themselves with a broad as the Nation itself, and sell the acceptance, or it large amount of surplus money on hand. They then go to can rediscount the acceptance with the Federal Reserve the note broker or correspondent banks in the larger cities Bank, or the Federal Reserve Bank can buy it in the open and buy commercial paper. market with or without the indorsement of the selling I am very much impressed with the proposition that bank. You may say there is the question of interest on some change should be made in the method of financing that acceptance. Perhaps the cotton broker may think the cotton crop, and I believe that the suggestion to intro- h e has to pay it. I do not think he will, as it will be added duce 90-day drafts to be accepted by a first-class bank or to the invoice. But suppose he does, let us see what corbanker a most excellent one. This is not a time for sec- responding benefit he has. Those familiar with the movetionalism of any kind. It is not a time for sectionalism in ment of cotton in the South realize that two factors are finance. There is no longer any such thing, because under controlling: One is transportation. Bear in mind that the the operations of the Federal Reserve system, if the banks cotton broker must be able to buy the cotton when it in one Federal Reserve district are unduly expanded, or, comes in from the country to the little towns, because, if their credits outstanding are burdensome, they go to if a farmer hauling his 10 or 20 bales of cotton to the market their Federal Reserve Bank and rediscount, and the in his county town is unable to sell the cotton, he is not resources of that bank can be built up under the system going to repeat the experience; and that county town will of interbank discount, for the Federal Reserve Bank of cease to be a trading center. The banks have always any district, may, and must, upon the order of the Federal exerted themselves to extend credit, in order to pay the Reserve Board, rediscount for the Federal Reserve Bank farmer for his cotton as it comes into the local markets. which needs the assistance; so that the entire resources of At times the railroads have been unable to furnish cars the country are mobilized and, if there is a deficiency in and that has stopped the movement to the cotton mills, one section and a surplus in another, a common level is but the local banks and the cotton buyer must carry the established through the operation of the system. As there load. But the spot demand must also be considered, and, is no longer any possibility of sectional finance, there is as I understand it, the spot depends upon the cotton-mill no reason why there should be any local sentiment. men, without regard to the supply of cars available. What affects one affects all. Suppose a cotton mill has exhausted its credit and its Now, let us consider the proposed changes. I do not bankers say: '' We have gone so far with you, and you have think they involve the slightest change in the relations so much cotton. You must spin that up before we will give of the local cotton buyer to the farmer from whom he you any further credits." The cotton broker in turn is purchases his cotton. The farmer gets cash as usual. compelled to say to the southern bank: "I had expected The southern bank is given an opportunity, if it so desires, to ship out 5,000 bales this month, but have received inof extending a long credit. In other words, its loans which structions to hold up for 60 days.'' This is usually because have been against goods in posse can become credits the cotton mill has had its credits deferred by its bank. against goods in esse. The crop when raised is a reality, Now, under the acceptance arrangement, credit is not and credits against these acceptances are credits against limited to the resources of a single bank or mill. The banks one of the most readily marketable staples in the world. of New York, Boston, or other large cities will undoubt- Assume that a bank in Texas has a bill of lading for 500 edly give acceptance credits to cotton mills. So there will bales of cotton, with invoice and draft on some well-known be no delay owing to lack of financial arrangements by the bank in Boston attached. That draft will be drawn not at mills. My experience is based on cotton at $60 a bale. sight, but at 90 days, with instructions that on the accept- With cotton at $160 and §175 a bale, you can see how ance of the draft by the bank the bill of lading may be greatly conditions are aggravated. If we had stoppage of surrendered. Then the southern bank, instead of having shipments for lack of credit at $60 a bale, is it not cona cash credit in Boston or in New York, will have this ceivable that the conditions are aggravated at present banker's acceptance, an instrument of the highest com- prices? mercial character, an instrument which the Federal So far as the cotton buyer himself is concerned, with the Reserve Board looks upon as paper of the highest class. advantage he gains from a steady market and continued If the southern bank is so situated that it can continue to operation, not subject to interruption because of inability carry this credit, it may do so and it will have the most, to secure credits by the cotton mills, the acceptance sys- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

604 FEDERAL SESEEVE BULLETIN. JULY 1,1918. tern will be of great advantage to him. He will save at his adoption of the trade acceptance so vigorously opposed by local bank and on his warehouse and insurance charges, some bankers and business men? Let us consider first the and, considering everything, the balance, I think, will go reasons given by the bankers. Some bankers assert that on the credit side of ins account. As far as foreign ship- in buying a promissory note the mere fact that they are ments are concerned, we are accustomed to long drafts, conscious of buying the naked note of a customer furnishes for no one draws a draft on a Manchester mill payable on a reason for their feeling obliged to carefully analyze the demand. The English have had this systematized for statement of the customer and to judge the merit of the many years. Drafts are drawn at 60 days', 3 months', or borrower upon the statement of the latter's financial con- 4 months' time and are accepted by a prime banker. If dition. They allege that this practice is safer than that a southern bank wishes to buy the drafts, it can do so; but of purchasing a trade acceptance issued by the same firm, as a rule they are sold through exchange brokers in NCAY because, as they say, in that case they are likely to rely York, a draft with invoice and bill of lading attached being on the legitimate character of this double-name paper drawn against them, upon payment of which the foreign without examining as cautiously as they otherwise would bills are delivered. I see no reason why brokers selling the general condition of the borrower; the likelihood of commercial paper and foreign bills can not also sell their adopting that course, they urge, might lead to the domestic bankers' acceptances, so that if a southern bank manufacture and sale of fictitious accommodation acceptwhich wishes cash has a 90-day draft against a lot of cotton ances on the part of their borrowers, and they cite expeaccepted by a bank in the East it can arrange with the rience in support of their contention. broker to buy that draft and draw on the broker with the Other bankers state with great force that they are opdocuments attached, the same as is done with the foreign posed to the trade acceptance because they would not feel draft, justified in continuing to buy the single-name paper of a I think that in the interest of the cotton broker, in the borrower who has adopted the habit of selling his trade interest of the southern banker, in the interest of the banks acceptances. The reason given for this view is that whoof the country at large, and in the interest of the Federal ever buys % trade acceptance acquires the first lien on what Reserve system, it is well to introduce this new plan, if it would otherwise have represented one of the accounts can possibly be done. I have considered the matter care- receivable of the concern which drew the acceptance, and fully in the last 10 days and I have been unable to find in addition to that lien, in case of bankruptcy of the any valid objections to the plan, nor have I received any drawer of the acceptance, the holder of that acceptance communications from anyone protesting against it. I am would rank equally with the unsecured note holder as a here to-day to learn rather than to advise; and in con- general creditor for any part of the acceptance which the cluding my remarks I wish to say that I will be in the acceptor might not have paid. As you can readily see, it room for an hour or so and I shall listen very intently to is impossible that both of these opposed views should be any arguments which may be made for or against the new correct; one banker asserting that he will not buy trade proposition, but with the light before me it strikes me as acceptances because he does not think they are safe an excellent plan which should be put in operation, and enough, the other that he opposes the trade acceptance one which I know can be greatly aided by the Federal because it is so good as to render unsafe the purchase of Kesorve Banks. single-name paper of any customers having sold trade acceptances. THE TRADE ACCEPTANCE SITUATION.1 Which of the two arguments is sound? To my mind neither. It has never been contended by the champions About two years ago I had the honor of addressing the of the trade acceptance that these acceptances should be Credit Men's Association at a meeting in New York upon bought by anyone who has not familiarized himself thorthe topic of the trade acceptance, and since then so much oughly with the financial condition of the maker of the has been said about the advantages in the use of that paper; he should take this precaution just as if he were method of financing that it would be needlessly taxing buying a single name note, and as long as he does that there your patience were I to undertake to demonstrate again to is no reason whatever why he should not be capable of you that the trade acceptance, when properly used, turns judging solvency and standing from the statement of a a frozen asset into a liquid one, and that the firm which borrower who sells the trade acceptances he receives just organizes its business on the basis of the trade acceptance as he can to-day from the statement of a firm which boris placing itself in a very much stronger position than its rows only on its own note. Indeed, one of the main vircompetitor who refuses to modernize on the same lines. tues of the trade acceptance is that it clarifies the state- It would be needless repetition were I to reiterate the ment, inasmuch as it shows on the asset side exactly how other arguments with which you are familiar. It may, much there is available in liquid items, among which are however, be useful to analyze this question: Why is the the trade acceptances owned, against outstanding liabilities. If the borrower wishes to obtain funds on his singlei Extract from an address of Hon. Paul M. Warburg before the Trade Acceptance Conference, June 17,1918. name note in addition to trade acceptances sold (which Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 605 would be shown as a contingent liability), he would have lower interest return, just as they buy. by preference, to satisfy the banker that these funds are required for bankers' acceptances on account of the greater liquidity temporary working capital or for the purchase of material of the latter, even though at present such acceptances net used in the process of manufacturing; unless, indeed, the only 4J per cent as against the commercial paper rate of 6 borrower were paying for the purchases by giving his per cent or more. own trade acceptance. In the latter case the trade accept- Now let us examine the reasons why some business men ance would show as an obligation on the liability side. oppose the development of the use of the trade acceptance. This leads us to the objection made by the banker who Some, I believe, fight it because they are jealous of mainis unwilling to buy the single-name note of a firm which taining their business on a cash basis—that is to say, they sells trade acceptances. The Canadian and European are willing to pay even a high premium in order to avoid methods indicate, I believe, the proper answer. In the cares and risks of sales on credit. That is a question Canada and England and on the European Continent it is which every business in an must decide for himself, and, quite customary for banks to grant a customer an overdraft as I said in the beginning, we should not attempt to force credit. Such a "line" represents the sum on which the anyone to do anything in this respect that he does not concustomer may count with fair regularity. In addition to sider to his own best advantage. It is impossible, howthat, the Canadian bank will buy freely the customer's ever, for me to understand why any business man should trade acceptances, though, of course, within given limits. be alarmed, or excited, because of the use of the trade Generally speaking, it may be said that if the customer be acceptance by others who are obliged to sell their goods strong and solvent, and if he be considered fairly conserva- "on open account." Valid objections could be raised tive in choosing his purchasers, the bank will be found only by one of two classes of business men: Weak or unreready always to buy a handsome amount of trade accept- liable purchasers who object to binding themselves to a ances in addition to the regular overdraft granted, relying definite obligation to pay on a certain date (in which case, on the fact that even in case of insolvency on the part of however, the reasons for the opposition on the part of the the customer the larger percentage of these trade accept- purchaser ought to be the very arguments for the preferances will usually be paid, the risk being so largely ence on the part of the seller); or certain firms of great divided. financial or commercial strength, who desire to preserve When our banks begin to look upon the trade acceptance their position of advantage as against weaker competitors. from this, let us call it, Canadian point of view, I think When borrowing on its own note, the strong firm, with wellthey may well conclude that it is perfectly proper and safe established credit, can obtain larger loans and on more for them to buy a certain amount of single-name paper favorable terms than its small competitor, and it is, there- (corresponding to the overdraft) and in addition to take a fore, in position to finance its purchases and its sales on a liberal amount of the customers' trade acceptances, pro- more favorable basis than the small firm. It gains the vided they use care in scrutinizing the statement of the advantage both as to the larger scope of business it can do borrower. I believe many of them will be willing to and the lower interest rate it enjoys. True, it could probadmit that the flagrant cases cited hv them of losses on ably do a larger business than at present by adopting the fictitious trade acceptances were those where the bankers trade acceptance plan, but by thus adopting the trade neglected to ask for or to insist on getting the customers' acceptance basis small firnss would probably profit more in statement. It may be timely for me to add that since the proportion than the larger ones; their handicap would be beginning of the operations of the Federal Reserve system lightened. the Board has done all in its power, by regulation and The general use of the trade acceptance is likely to tend admonition, to insist on full and frank statements on the toward greater standardization of banking paper and part of business firms, as well as of banks and bankers greater equalization of interest rates, and I am inclined to themselves. In banking and business the greatest safety think that we might call it a step toward greater delies in publicity and frankness. mocracy in commerce and banking. That is one of several I am willing to admit that I have a lingering suspicion reasons why the Federal Reserve Board favors the policy that certain banks which oppose the trade acceptance of granting a preferential rate for trade acceptances. But, may be somewhat influenced by the fact that single-name speaking broadly, the Federal Reserve system is interested paper offers a better interest return than the trade accept- in seeing the business of the country done on the soundest ance. I am glad, however, to state my belief that the possible basis. Whatever makes for prompt payment vast majority of the banks take a different point of view may be considered an actual gain at a time when our efforts in this respect, and that to them the facts that the trade must be bent upon saving as much as possible, not only in acceptance has been recognized as a preferred type of material and labor, but also time and credit. paper by the Federal Reserve Banks and that it has a wider It is one of the most difficult problems at this juncture, and more favorable market than single-name paper, are of when hundreds of millions of dollars have to be shifted sufficient force to make them very willing and even every day, to shorten the many circles in which it travels, anxious to buy these trade acceptances in spite of the not only in the large operations of the Government, but Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

606 FEDERAL RESERVE BULLETIN. JULY 1,1918. in every individual transaction. It is in the general inter- their finished product, and the difficulty of financing is est that money paid out for wages and material return as overcome. But for the short period of the peak of the fast as it can to the producer when his goods are sold. load the use of the trade acceptance might be of the great- Pending the return of the moneys due him he must rely est advantage to them. on bank credit, which naturally is limited, and conse- Facilitating the process of manufacture of food products quently he has to adjust the scope of his operations to the is certainly a service which contributes to the national speed with which his "turn-over" can be completed. interest at this time, and, while I have mentioned this The trade acceptance plays a most important part in this case merely for the purpose of illustration, I hope that it respect. By securing trade acceptances, even though he will not be taken amiss if I venture to urge the large inmay hold them to maturity, the manufacturer can figure dustrial concerns in dealing with this question not to conwith greater exactness what are his obligation and his avail- sider it exclusively from the point of view of what is to able cash assets, and, by removing elements of uncertainty, their own best advantage, but to bear in mind that in he is enabled to carry on a larger business and to do it in many cases they have the opportunity of rendering a disgreater safety. tinct service to the national interest, an opportunity At a time when so much depends upon using every pos- which when once clearly recognized, they will not wish sible advantage in order to speed up production, so as to to miss at this juncture. avoid an unnecessary tie-up of funds, the use of the trade In this connection, ifc may be useful to remind you of a acceptance may be considered a contribution to the na- ruling given by the Federal Reserve Board (printed in the tional welfare. It must not be said that whoever fails March, 1917, FEDERAL RESERVE BULLETIN) to the effect to use the trade acceptance is unpatriotic, but it may be that a trade acceptance, if drawn within reasonable time said that it is essential that everyone do what lies in his after the shipment or delivery of the goods, may be conpower to remove anything that stands in the way of secur- sidered as a bill of exchange drawn against actually existing the greatest possible efficiency of our country at this ing value, so that a national bank may buy such trade actime, and anything done in this direction is patriotic. ceptances from its customers even after it has reached the It has lately been explained to me that canneries are limit of 10 per cent of its capital and surplus, which confacing a rather difficult situation, inasmuch as all prices stitutes the maximum credit such bank may grant a cusfor cans, boxes, and wages have risen so much that during tomer on his single-name note. In view of the greatly the coming canning season the credits usually available increased price of practically all goods and the consequent for the canneries may not be sufficient, the amount of larger amount of money involved in production, the famoney involved having doubled and the 10 per cent cility thus afforded by the use of trade acceptances may limit in many cases prohibiting the country banks from prove of the greatest service, as you may readily see from providing locally the necessary advances. In discussing the problem of the canneries just described. this problem and trying to suggest means of relief, I asked Great efforts are being made at present to reduce bank the question, "How do the canneries pay for their cans loans as far as possible where they are made for the carryand their boxes?" I was told that they pay cash. I in- ing on of business transactions not strictly compatible quired, "Could not the can manufacturers take trade ac- with the public interest—that is to say, not absolutely ceptances in payment for their cans?" The answer was necessary for the successful prosecution of the war or the that the can company must pay cash itself for the tin health and necessary comfort of the people. that it buys from the steel manufacturer; that possibly The single-name note easily serves as "camouflage." next year something of the sort might be arranged, but It is very difficult to trace exactty what transaction is bethat for this season it would be too late. I did not have ing financed by any particular note. The trade acceptthe time to look.further into the matter, nor is it my in- ance, on the other hand, bears on its face the evidence of tention to venture any opinion as to whether or not it its legitimate character—it is capable of proving a most might be practicable for these important companies to convincing "alibi" where there is doubt as to the purpose change their methods of selling their goods. No doubt for which the proceeds have been used, and it may, therethey consider themselves better protected in selling for fore, be a great help to the banks in carrying out the nacash and probably they control the market sufficiently to tional object of conserving to the utmost material, labor, enable them to insist on cash terms. On the other hand, transportation, and credit. it is clear from the situation that I have described that great relief could be given in this particular case to the RESOLUTIONS OF CREDIT MEN. canneries, provided, of course, that their credit warrants The following resolutions were adopted at it, if they could be permitted to pay for their tins and the convention of the National Association of their boxes by 90-day trade acceptances. The process of Credit Men on Friday, June 21, 1918: canning is so rapid that probably even a shorter term than 90 days of credit might prove sufficient. As soon as the Whereas, it is of the utmost importance at this critical canning process is completed, I am told, the canners are juncture in our financial affairs that we make full use of able to secure their loans by warehousing and pledging every legitimate credit instrument, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 607 Whereas, in the inevitable expansion of credit incident It appears that although the canning industries have to the growing demands of war it is of the utmost impor- sold their output in advance, they are unable to realize tance that we create not only credit instruments that are on these sales until deliveries can be made. In the meaneligible for rediscount at Federal Reserve Banks but time they are in need*of funds with which to purchase instruments of the widest marketability, qualities which, materials and to meet pay rolls. The increased cost of as leading financial authorities state, are present in the labor and materials and the demands for larger production highest degree in acceptances; make their needs greater than usual. As the canning indus- Be it resolved, That the National Association of Credit tries are located mainly in the small towns, few of them Men continue to exert its powers to bring about a better have established connections with larger banks in the cities, understanding of the trade acceptance and to advise, so and have relied hitherto upon local accommodation. far as may be, its use in the various lines of trade as con- The suggestion has been made that the city banks extend templated in the Federal Reserve Act as interpreted by direct credits to the canners upon the recommendation of the Federal Reserve Board. local banks. While the Federal Reserve Board does not Resolved, That this convention give its cordial approval feel warranted in recommending to member banks in the to the officers and directors of the association in joining in financial centers that credits be extended to customers of the object which is recited in the formation of the Ameri- other member banks in the circumstances recited, it does can Trade Acceptance Council, believing that through the feel, however, that it would be desirable to have the cooperation of the large national organizations, represen- facilities of the Federal Reserve system made available tative of every phase of business, comprised within the as far as practicable in the present emergency. In order, council, the strongest possible influence is being placed therefore, to afford some measure of relief, it is suggested behind the movement to substitute the acceptance for that you communicate with some of the larger banks in your district and ascertain if they would be willing to the open account. cooperate with the smaller banks in the canning districts by extending temporary credits to such canning enter- Credits for Canaers. prises as may be able to make a satisfactory showing as to their financial condition. In a letter to Governor Harding, Mr. Herbert Hoover says of the canning industry: Fiduciary Powers. On a very modest estimate the output of this industry The applications of the following banks for in fruits and vegetables in 1917 was valued at $275,000,000, permission to act under section 11 (k) of the and I believe canners will this year need about $50,000,000 Federal Reserve Act have been approved since in addition to their ordinary supplies of capital, because of the increased cost of raw product, cans, cases, and the issue of the June BULLETIN: labor. DISTRICT NO. 7. I know of no industry that is of more genuine value Trustee, executor, administrator, and registrar of stocks to the country, the Army and the Navy, to those asso- and bonds: ciated with us in the war and toward the winning of the First National Bank of Englewood, Chicago, 111. war itself than the canning industry. Its products La Salle National Bank, La Salie, ill. represent conservation of the most valuable kind. DISTRICT NO. 8, The industry to-day is splendidly organized and is Trustee, executor, administrator, and registrar of stocks acting as a unit throughout the United States in con- and bonds: serving every particle of the seasonal products that may Citizens National Bank, El Dorado, Ark. result from probably the largest acreage ever planted in First National Bank, Murphysboro, 111. cannery crops. DISTRICT No. 9. Governor Harding on July 3 sent to all Trustee, executor, administrator, and registrar of stocks and bonds: Federal Reserve Banks the following letter: Montana National Bank, Billings, Mont. Trustee, executor, and administrator: The attention of the Federal Reserve Board has been First National Bank, Barron, Wis. called to the fact that because of the limitations of section 5200 of the Revised Statutes many of the smaller national DISTRICT No. 11. banks are unable to take care of the needs of their cus- Trustee, executor, administrator, and registrar of stocks tomers engaged in the canning business. The canning and bonds: First National Bank, Amarillo, Tex. season is now about to begin and the Board is informed that additional accommodation covering a period of about DISTRICT NO. 12. four months will be required by many concerns engaged Trustee, administrator, and registrar of stocks and bonds: in this business. Third National Bank. Walla Walla, Wash. 67747—18 1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

608 FEDERAL RESERVE BULLETIN. JULY 1,1918. Assessment by Federal Reserve Board. Estimated requirements, July to Dec, 1918, inclusive , $212,805. 54 Acting under the provisions of the Federal Estimated unencumbered balance July 1,1918 24, 979. 48 Reserve Act, the Federal "Reserve Board on 187, 826. 06 June 20 voted an assessment of 0.00125 per Total capitalization and surplus of Federal == cent upon the capitalization of Federal Reserve Reserve Banks, June 15, 1918 152, 556,000 Banks to cover the estimated general expenses Rate of assessment to produce $190.695 0. 00125 of the Board from July 1 to December 31,1918. In view of all conditions I have theh onor to recommend The assessment is based upon a capital of that an assessment of one hundred and twenty-five thousandths of 1 per cent (0.00125) be levied. $152,556,000, as of June 15, 1918. The rate W. M. IMLAY, Fiscal Agent. of assessment will yield $190,695. The reso- Approved: lution of the Board, with the figures on which COMMITTEE ON ORGANIZATION, the assessment is based and a detailed statement EXPENDITURES, AND STAFF. of expenditures and commitments as a basis of estimate, is given below. Detailed statement of expenditures and commitments as a basis of estimate. RESOLUTION LEVYING ASSESSMENT. Estimated monthly Whereas, under section 10 of the act approved December Total, Jan. I require- 23, 1913, and known as the Federal Reserve Act, the 1 3 0 to ,1 9 J 1 u 8 n . e ! | ontj;ly Ju m l e y n 1 t s t , o Federal Reserve Board is empowered to levy semiannually Dec. 31, 1918. upon the Federal Reserve Banks in proportion to their capital stock and surplus an assessment sufficient to pay Personal services: Board aiid its clerks S45,044.01 $7,507.34 87,650.00 its estimated expenses, including the salaries of its mem- Secretary's office 15,106.15 2,517.69 2,750.00 bers, assistants, attorneys, experts, and employees for the C D o iv u i n s s io e n l's o o f ff i a c u e dit and exam- 12,406.32 2,067.72 2,082.52 half year succeeding the levying of such assessment, ination 17,695.00 [ 2,949.16 • 4,500.00 Division of reports and statistogether with any deficit carried forward from the preced- tics 11,158.67 2,026.44 ! 3,500.00 ing half year; and D M i e v s i s s e io ng n e o rs f issue 3 6 , , 3 4 2 6 4 2 . . 1 5 6 2 ] 1,0 5 7 5 7 4 . .0 0 3 9 i ! 1,6 6 0 5 0 0 . .0 0 0 0 Whereas, it appears from estimates submitted and con- Charwomen 396.00 i 66.00 i 66.00 Contingent 1,000.00 sidered that it is necessary that a fund equal to one hundred and twenty-five thousandths of 1 per cent (0.00125) Total. 112,592.83 j of the capital stock of the Federal Reserve Banks be Nonpersonal services: Transportation and subsistcreated for the purposes hereinbefore described, exclusive ence- Board and its clerks of the cost of engraving and printing of Federal Reserve Secretary's office. notes: Now, therefore, Division of audit and examination Be it resolved, That pursuant to the authority vested in Division of reports and statistics it by law, the Federal Reserve Board hereby levies an Counsel's office assessment upon the several Federal Reserve Banks of an Messengers 15.00 2.50 i 5.00 Communication serviceamount equal to one hundred and twenty-five thousandths Telephone 1,316.60 219.44 250.00 of 1 per cent (0.00125) of the total capital stock and surplus Telegraph 4,368.92 728.15 | 100.00 49.50 8.25 ! 10.00 of such banks, and the fiscal agent of the Board is hereby Printing and binding, etc 18, 733.59 3,122.26 | 3,000.00 Contract ropairs 48.21 ! 8.03 ! 10.00 authorized to collect from said banks such assessment and Electricity (light and power).. 180.00 j 30.00 30.00 execute, in the name of the Board, a receipt for payment Steam (heat) 100.00 ! 16.66 20.00 Other nonpersonal services 1,635.16 | 272.52 250.00 made. Such assessment will be collected in two instal- Supplies- Stationery 1,537.50 I 256.25 200.00 ments of one-half each; the first instalment to be paid on Periodicals 146.35 ! 24.39 25.00 July 1, 1918, and the second half on September 1, 1918. Other 802.00 I 133.67 125.00 Equipment: Furniture and office 3,015.43 502.57 500.00 Estimate for July, 1918, assessment. Books 370.50 61.75 25.00 Gold-settlement fund (including Average monthly encumbrance for period salaries) 2,435.08 405.85 300.00 Foreign exchange (including sala- Jan. 1, 1918, to June 30, 1918 $28, 761. 71 ries) 8,522.07 1,420.35 Estimated monthly requirements, July to C R a e p n i t tal issues (including salaries). 1 7, , 6 9 8 2 7 9 . . 0 6 1 0 1,2 3 8 2 1 1 . . 1 60 7 119.07 Dec, 1918, inclusive 35,467.59 Contingencies. ' "5 f "666."66 Total 59,977.44 9,996.24 11,669.07 Estimated monthly increase 6,705.88 Grand total.. 172,570.27 i 28,761.71 35,467.59 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 609 State Banks and Trust Companies Admitted. Five hundred and twenty-three State institutions are now members of the system, hav- The following list shows the State banks and ing a total capital of $280,104,900, total surtrust companies which have been admitted to plus of $355,153,565, and total resources of membership in the Federal Reserve System $6,082,911,349. during the month of June. New National Bank Charters. Capital. Surplus. Total The Comptroller of the Currency reports the following increases and reductions in the num- Texas Bank & Trust Co., Beaumont, Tex $250,000 $110,000' 82,976,439 ber of national banks and the capital of na- The New Jersey Title Guarantee & Trust Co., Jersey City, N. J... 1,000,000 1,000,000 | 14.805,121 tional banks during the period from June 1, The Farmers Savings Bank, Walla 1918, to June 28, 1918, inclusive: Walla, Wash 200,000 40,000 j 1,682.915 The Citizens Bank of Aztec, Banks. Aztec, N. Mex 40,000 10,000 ! 271,392 New charters issued to 13 P F e ir o s p t le S s t a T te r u B s a t n & k, C Sa a v n i i n st g e s o , B N a . n Y k, . 50,000 25,000 458)038 With capital of $560,000 Perry, Iowa 50,000 500 j 378,055 Increased of capital approved for 6 Security Bank & Trust Co., With new capital of. 475,000 Wharton, Tex 50,000 6,000 I 350,367 Citizens State Bank, Tekoa, Wash. 25,000 10,000 j 358,239 Northeastern Banking Co., Com- Aggregate number of new charters and merce, Ga 100,000 35,000 j 657,674 banks increasing capital 19 A i< l 'a b r i m on o r S s t S a t t a e t B e S an av k i , n A g l s b B io a n n , k W , B as a h v . I 25,000 5,000 i ! 103,976 With aggregate of new capital authorized 1, 035, 000 City, Mich : ".J 100,000 25,000 | 1,050,198 Number oi banks liquidating (other than Thatcher Bros. Banking Co., i those consolidating with other national La L p o e g er a n C , o U u t n a t h y Bank, Imlay City, j \ 150,000 50,000 | 1,285,560 banks) 3 Mich | 50,000 10,000 962,049 Capital of same banks 180, 000 Fulton Trust Co., New York ! 500,000 250,000 9.731,360 Total number of banks going into liquida- Citizens State Bank, Gcoding, | Idaho ; 25.000 ! 10,000 341,9G1 tion or reducing capital (other than those American Trust Co., Jacksonville, I consolid ating with other national banks). 3 Fla 200,000 ! 10,000 728,998 Aggregate capital reduction 180, 000 Montgomery County Trust Co., Amsterdam, N. Y 220000,,000000 100,000 2,298,948 Security State Bank, Dillon, The foregoing statement shows the aggregate of Mont 5500,,000000 3,000 185,112 increased capital for the period of the banks Ogdcn Savings Bank, Ogdcn, Utah 115500,,000000 150,000 1,544,120 embraced in statement was—. .- 1,035, 000 Wells-IIino Trust Co., Savannah, Against this there was a reduction of capital Mo 110000,,000000 1,800 639,603 owing to liquidation (other than for consoli- Bellovue Realty Savings & Trust Co., Bollovue", Pa 112255,,000000 50,000 940,747 dation with other national banks) and The Bank of Oregon City, Oregon reductions of capital of 180, 000 City, Oreg 110000,,000000 50,000 1,298,641 McCornick & Co., Bankers, Salt LaTco City, Utah 660000,,000000 120,000 10,108,453 Net increase 855, 000 Mandamin Savings Bank, Mondamin, Iowa 3355,,000000 5,000 402,635 Grant Trust & Savings Co., Marion, Ind 100,000 | 100,000 j 1,845,387 Commercial Failures Reported. Lillcy State Bank, Tecumsch. Mich 40,000 j 20,000 ! 696,154 Tccumsch State Savings Bank, Notwithstanding various factors calculated Tecumseh, Mich 26,000 26,000 | 655,408 Farmers & Stockgrowcrs Bank, to enhance the possibilities of financial embar- Salt Lake City, Utah 300,000 18,009 | 1,187,127 Bank of New Richmond, New rassment, the country's business mortality re- Richmond, Wis 35,000 15,000 I 628,472 Savings Investment & Trust Co., mains remarkably moderate, only 540 com- East Orange, N. J 150,000 300,000 6,465,331 American Bank, Union Springs, mercial failures being reported to R. G. Dun Ala 50,000 5,000 208,270 Liberty Bank & Trust Co., New i & Co., during three weeks of June, against 815 Orleans, La 200,000 10,000 298,045 The Union Savings Bank, Man- in the same period of 1917. Moreover, the chester, Mich 25,000 50,000 803,804 The City Savings Bank & Trust statement for May, the latest month for Co., Alliance, Ohio 100,000 100,000 I 2,427,981 Dayton Savings & Trust Co., ! which complete statistics are available, dis- Dayton, Ohio 300,000 200,000 Albion State Bank, Albion, Mich.. 50,000 25,000 932,065 closes fewer insolvencies (880) than in any The Struthers Savings & Banking Co., Struthers, Ohio 50,000 50,000 | 1,717,284 month since September, 1911, and the smallest Wachovia Bank & Trust Co., Winston-Salem, N. C 1,250,000 750,000 j16,892,813 number for May in fully a decade. While the The Fifth Avenue Bank of New York, New York 200,000 2,000,000 I22,873,437 May liabilities, $13,134,672, are 11.6 per cent above those of last year, they are the lightest NOTE.—The Central Trust Co. of New York and the Union Trust Co. of New York, member institutions, have consolidated under the name for the period, with this exception, back to of the Central Union Trust Co. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

610 FEDERAL RESERVE BULLETIN. JULY 1,1918. 1910, and the indebtedness is less than in code words. It should show in numerals, May, 1917, in 7 of the 12 Federal Reserve dis- properly punctuated, the exact amounts in tricts. Thus, reductions from last year appear dollars and cents credited to each of the other in the fourth, fifth, sixth, eighth, ninth, tenth, 11 Federal Reserve Banks at the close of busiand eleventh districts, although the decreases ness on the respective day, and give the same are not sufficient to offset the increases in the figures as will be shown in the daily statement remaining 5 districts. Numerically, improve- on Form No. 34 against new liability item ment is shown in every district, as compared "Gold settlement fund—Suspense account" with last year, and in several instances the (replacing item "Due to other Federal Reserve changes are striking. Banks77). A sample of the form of telegram, with in- Failures during May. troductory test word and closing code word denoting date of credits, would read as follows: Number Liabilities. Cede 10,125, 671.29 Districts. New York 5,285, 024.74 1918 1917 1918 1917 Philadelphia 388,411.12 Cleveland 812,050.50 First 120 is?, $2,380,400 SI, 556,618 Second. 164 ?,37 4,250,139 2,760,807 Richmond 78,056.49 Third 45 59 1,121,474 578,653 Fourth 74 98 879,332 1,018,049 Atlanta 47,411.99 Fifth 39 7fi 20(5,811 915,789 Chicago 1, 304,856.50 Sixth 4© 115 209,110 1,438,019 Seventh 141 \ 167 2,106,672 1,250,190 St. Louis 708, 980.25 Eighth 34 i 177,340 278,59S Ninth.. 22 53 125,400 237,761 Minneapolis 98,412.16 Tenth 41 51 184,428 293.037 Kansas City 504,411.88 Eleventh 31 5« 262,671 5031691 Twelfth 129 161 1,230,895 910,673 Dallas 49, 560.48 8S0 1296 13,134,672 11,771,891 San Francisco 1, 048, 495.18 Code. SMITH, Casiiier. Plan for Daily Clearings Through the Gold Settle- On the morning following the Board, having ment Fund. received 12 telegrams, will charge each send- The following plan of daily clearings through ing bank in the gold settlement fund with the aggregate of its telegram, distributing the the gold settlement fund has been adopted by individual credits as therein advised. the Federal Reserve Board, and the Federal The Board will then credit each of the 12 Reserve Banks have been directed to make it Federal Reserve Banks in the gold settlement effective on and after July 1, 1918. fund with the aggregate of credits telegraphed At the close of business each night each by the other Federal Reserve Banks and send Federal Reserve Bank will wire to the Federal appropriate telegraphic advice to each of the Reserve Board the aggregate amounts credited banks credited. that day to each other Federal Reserve Bank. In these telegrams the Board will continue This would amplify the present Wednesday to show net gain or loss in the fund, which telegram, in so far as actual dollars and cents would confirm to the Federal Reserve Banks would be wired instead of even thousands. that their respective telegrams of the previous Credits now entered by each Federal Reserve day had been correctly received. Bank to the account of each of the other Upon receipt of the Board's telegram, each 11 banks, which are grouped at present Federal Reserve Bank will make the following on Form No. 34 in "Due to other Federal entries: Reserve Banks/; would be credited to "Gold Debit.—"Gold settlement fund, suspense.77 settlement fund, suspense" instead. Credit.—"Gold settlement fund77 (with ag- This telegram should be sent as an "open" gregate of telegram to the Board on the day message except for the introductory and final previous). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 611 Debit.—"Gold settlement fund." above, will prepare, as it now does, statement Credit.—"Collectionitems'7 (deferred debits) of the details with proper description, for the (with aggregate of the telegram received that use of each other Federal Reserve Bank whose day from the Board). account in the gold settlement fund has re- The necessity for "Gold settlement fund, ceived credit. suspense " account arises from the fact that the The aggregate of each statement would, of Federal Reserve Board's published statement course, agree exactly with the aggregate must reflect the figures shown on the books of amount of credits wired to the Federal Reserve and reported to it by the 12 Federal Reserve Board. This statement should be forwarded Banks. by first mail, carbon to be retained for the files. This new account will eliminate telegraphic Upon receipt of the Federal Reserve Board's " float" and thus avoid a situation encountered daily wire, it will be impossible to do other than several times on Friday nights, under which credit "Collection items" (deferred debits) asset item "Gold settlement fund" had been with the total, one ticket for each. Federal credited by one Federal Reserve Bank without Reserve Bank. corresponding debit by another Federal Re- Upon receipt, however, of the mail advices serve Bank. from other Federal Reserve Banks the carbon The above covers the modus operandi of the copies, or tickets representing previous debits suggested plan, in so far as the gold settlement to "Collection items—deferred debits," covfund accounts of the Federal Reserve Board ered in the mail advices received would be and the 12 banks are concerned. The interior transferred from the "Collection items—Dearrangements at the individual Federal Reserve ferred debits" files, as well as the credit ticket Banks may be made as follows: representing the entry made on receipt of the Everything dispatched from one Federal Board's wire. Reserve Bank to another should be deferred, It would be necessary, of course, to see that and charged to "Collection items, debit." the mail advice footed to the total of the wire, This covers not only cash letters, whether city and that the items covered in the mail advice, or country items, but payments on telegraphic corresponded to the carbons transferred from transfers ordered by other Federal Reserve the "Collection debit'7 file. Banks, Federal Reserve notes or currency Without a full understanding of the plan, shipped to other Federal Reserve Banks, mis- telegraphic transfers might at first seem to cellaneous charges, expense, service charges, temporarily prejudice the reserve of the interest, telegrams, etc., in fact, every item Federal Reserve Bank which credits its memheretofore charged to "Due from Federal Re- bers and charges "Collection items, debits." serve Banks" should, under the proposed plan, As a matter of fact, however, the effect is be charged to "Collection items, debits." exactly as at present, where "Due from other Some banks might prefer to enter these "Col- Federal Reserve Banks" is charged. Both lection items, debits" by detail in books; while accounts are deductions from gross deposits. others would prefer to file the carbons of their The effect of this plan would be to eliminate letters or other dispatches, etc., under the a great deal of work at the Federal Reserve names of the Federal Reserve Banks affected. Banks, and to provide daily, instead of weekly, Some banks prefer the latter plan for the reason the proper participations in the gold settlement that, by intelligent filing, an automatic tickler fund in as nearly an automatic wa;/ as possible. of unaccounted for items is thereby supplied At the present time, the Federal Reserve for convenient tracing. Banks, in addition to the weekly settlement, Each Federal Reserve Bank, in addition to have the privilege of demanding transfers at the daily telegram to the Board, as outlined any time when a net debit balance is shown in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

612 FEDERAL RESERVE BULLETIN. JULY 1,1918. account with other Federal Reserve Banks. debtedness up to the 1st of November, 1918, aggregating approximately $6,000,000,000. This would involve the It is to be expected that under the present plan issue every two weeks of about $750,000,000 of certificates of weekly settlements such transfers will besubstantially similar in character to those issued prior to come more numerous in the future, as the calls the third Liberty loan, except that they will have various upon the Federal Reserve Banks for financial maturities not exceeding four months. For the months assistance of their members become heavier. of July and August that program will be followed as nearly as possible. The proposed plan will do away with the greater The first issue of the certificates will be dated June 25, part of such transfers, also with the necessity will mature October 25, with interest at 4£ per cent, and of rediscounts between Federal Reserve Banks similar issues, it is expected, will be made on Tuesday of when due primarily to the unavailability of every other week following June 25. It is, however, con- "Amounts due from other Federal Reserve templated that at a convenient and favorable period Banks/7 The rediscounting operation, as at during the summer an offering will be made to the general public directly, and through the banks, of an amount yet present conducted, involves a great deal of to be determined, perhaps $2,000,000,000 of certificates work, which, by some means or other, should be of suitable maturities for use by taxpayers in paying next curtailed. year's taxes, viz, taxes payable June, 1919, levied under existing and pending legislation. To the extent that At the present time practically all the Federal certificates of that character are sold, substantially an Reserve Banks are advising each other by wire equivalent reduction in the amount of the regular iorttheir daily credits of immediately .available nightly sale of certificates issued in anticipation of the city items. While good, to a limited extent, next Liberty loan will be effected. the plan covers but a small proportion of the In giving this timely advice of the estimated requirecredits. The new plan will reduce the number ments of the Treasury to all the banks of the country, and, through them, to those who expect to make payment of of telegrams very considerably, and will cover taxes in 1919, it is hoped that they will make arrangements every credit. promptly of such a character that no delay will be experienced in the sale and distribution of Treasury certificates of both issues. New Treasury Financing, The Federal Reserve Banks will advise all national and State banks in their respective districts of the amount of The following is a copy of a letter sent by certificates which they are expected to take from time to Secretary McAdoo to the president of each time in pursuance of this program, which amount can be bank and trust company in the United States figured roughly to equal 2J per cent of the gross resources of each bank and trust company for every period of two on June 12, 1918: weeks, or a total of 5 per cent monthly. It will be remem- THE SECRETARY OE THE TREASURY, bered that in the February program the amount which Washington, June 12, 1918. the banks were asked to take was substantially equal to 2 DEAR SIR: Following the same plan as that announced per cent of their gross resources for each period of two in my telegram of February 6, 1918, I am writing to in- weeks, or a total of 4 per cent monthly. The total number form you of the program for the ensuing four months, so of biweekly offerings of certificates to be made to the far as one can be made at this time, in order that every banks will somewhat depend upon the amount to be raised bank and trust company in the United States may have from the public through the sale of tax certificates as above adequate notice and be able to prepare itself to meet described. patriotically the requirements of the Government. I am Already more than 700,000 of our splendid American sending a similar letter to every bank and trust company boys are on the soil of France and many of them are in the United States. actually fighting among the heroic defenders of the western This policy, adopted in February last, was successful, front. Fresh contingents of American troops are conand, having fulfilled expectations in the sale of certifi- stantly going forward to France, and this stream will not cates of indebtedness prior to the third liberty loan, stop until there is enough of American manhood and valor demonstrated that the Government could rely upon the on the battle line to defeat the Kaiser and his rninions, hearty support and cooperation of the banks when given and enforce peace upon the righteous basis which will opportunity in advance to make necessary preparations. make secure the liberties of mankind. America's sons The expenditures of the Government, as nearly as can are dying daily in those battles of fire and poison gases be estimated, will require the sale of certificates of in- that are now raging in France. The heart of every Amer- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 613 ican must thrill with pride and emotion as he thinks of the may prescribe, act as a fiscal agent of the United States in sacrifices our sons are making for our safety and our liberty. connection with the operations of selling and delivering Tha bankers of the United States can render a peculiarly any bonds, certificates of indebtedness, or war-savings helpful service to our gallant sons by "keeping the Treasury certificates of the United States. of the United States supplied with the money required by SEC. 5. That the short title of this act shall be "Fourth the Government to furnish every American hero with the Liberty Bond Act." things he must have to fight victoriously or to die gloriously. I am sure that no patriotic banker in the United Lost Liberty Bonds. States will fail to do his full meed of essential service to his country and to her noble defenders. In the following list will be found the num- Cordially yours, bers of United States Liberty bonds that have W. G. MCADOO. been lost or stolen; also a list of the bonds that To The PRESIDENT OF THE BANK OR have been recovered and returned to the proper TRUST COMPANY ADDRESSED. owners. The following bill (H. R. 12580) has been passed by the House of Eepresentatives and FIRST 3i PER CENT BONDS, DUE 1947. Senate: Number. Amount. Number. Amount. A BILL To authorize an additional issue of bonds to meet expenditures for the national security and defense, and, for the purpose of 78749 $500 961108 S50 assisting in the prosecution of the war, to extend additional credit 892879 50 380058 100 to foreign Governments, and for other purposes. 380057 100 ! Be it enacted by the Senate and Rouse of Representatives of SECOND 4 PER CENT BONDS, DUE 1942. the United States of America in Congress assembled, That section one of the Second Liberty Bond Act, as amended 92212 $50 326'2438 $100 by the Third Liberty Bond Act. is hereby further amended 893011 50 5446722. 100 3262431 100 5446793 100 by striking out the figures "S 12,000,000,000" and inserting 3262435 100 5446721 100 in lieu thereof the figures "820,000,000,000." 3262437 100 5146725 100 SEC. 2. That section two of the Second Liberty Bond THIRD 4-i PER CENT BONDS, DUE 192S. Act, as amended by the Third Liberty Bond Act, is hereby further amended by striking out the figures Number. Amount. i 1 Number. Amount. "$5,500,000,000" and inserting in lieu thereof the figures ! "87,000,000,000." 705913 S50 i| 943968 $1,000 SEC. 3. That, notwithstanding the provisions of the 705914 . 50 0439B9 1 000 705915 50 943970 1.000 Second Liberty Bond Act, as amended by the Third Lib- 385332 100 ! 943971 I'OOO erty Bond Act, or of the War Finance Corporation Act, 385333 100 943972... . . . 1,000 385358 100 943973 1 000 bonds and certificates "of indebtedness of the United States 385369 100 | 943974... . . . 1,000 385373 100 j 943975 1,000 payable in anyioreign money or foreign moneys, and bonTfs 924086 1,000 943376... . 1,000 of the War Finance Corporation payable in any foreign 924087 ... 1.000 943977 ] 000 924088 . 1,000 ! 943978 1,000 money or foreign moneys exclusively or in the alternative^ 924089 1,000" 943979 1,000 924090 1,000 • 943980 1,000 shall, if and to the extent expressed in such bonds at the 924091 . . 1,000 94398] 1,000 time of their issue, with the approval of the Secretary of 924092 1,000 ! 913982 1,000 924093 1.000 943983 1,000 the Treasury, while beneficially owned by a nonresident 924094 . I'OOO 94398-1 1,000 924095 1.000 943 985 1,000 alien individual, or by a foreign corporation, partnership, 924096 ! 1,000 I 943986 1,000 or association, not engaged in business in the United 924097 1.000 ; 943987... . 1,000 924098 . . 1,000 943988 . 1,000 States, be exempt both as to principal and interest from 924099 1,000 1 943989 1,000 924100 1,000 943930 1,000 any and all taxation now or hereafter imposed by the 943953 . . 1,000 943991 . 1,000 United States, any State, or any of the possessions of the 943954 1,000 : 943992 1,000 943955 1,000 . 943993 1,000 United States, or by any local taxing authority. 943956 1,000 943994 1,000 943957 . 1.000 943995 . 1,000 SEC. 4. That any incorporated bank or trust company 943958 LOO0 943996 1,000 designated as a depositary by the Secretary of the Treas- 943959. L.000 943997 . . 1,000 943960 L,000 943998 1,000 ury under the authority conferred by section 8 of the 943961 L,000 943999 . 1,000 943962 1,000 944000 1,000 Second Liberty Bond Act, as amended by the Third Liberty 943963 1,000 944001 1,000 Bond Act, which gives security for such deposits as, and to 943964.. L000 944002 1,000 943965 1,000 944003 1,000 amounts, by him prescribed, may, upon and subject to 943966 . 1,000 944004 1,000 943967 I 000 944005 1,000 such terms and conditions as the Secretary of the Treasury Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

614 FEDERAL BESEBVE BULLETIN. JULY 1,1918. In the following list appear the numbers of Under the income-tax act now in force (act United States Liberty bonds that have been Sept. 8, 1916, as amended by the act of Oct. 3, 1917) stock dividends are expressly taxed, recovered and restored to the interested bank. as they were not under the act of October 3, These numbers appeared in the Federal Reserve 1913, the statute under which it was decided in Bulletin, June, 1918. the case of Towne v. Eisner, to which you refer. On this point, see section 31 (a) of the act FIRST 4 PER CENT CONVERTED, DUE 1947. added by section 1211 of the act of October 3, ! No. Amount. 1 No. Amount. 1917, which provides in part as follows: "The term 'dividends7 as used in this title 540340. $50 j 540345 $50 shall be held to mean any distribution made or 5 5 4 4 0 0 3 3 4 4 2 1 5 5 0 0 i : 5 5 4 4 0 0 3 3 4 4 6 7 5 50 0 ordered to be made by a corporation, joint- 540343 50 ! 540348 50 stock company, association, or insurance' com- 540344 50 ! 540349 50 pany, out of its earnings or profits accrued j since March first, nineteen hundred and thir- SECOND 4 PER CENT BONDS, DUE 1942. teen, and payable to its shareholders, whether in cash or in stock of the corporation, joint- 5446705 £50 ! 5446714 $50 5446706. 50 5446715 50 stock company, association, or insurance com- 5446707 50 5446716 50 5446708 50 5446717 50 pany, which stock dividend shall be considered 5446709 50 ! 5146718 50 income, to the amount of the earnings or profits 5446710 50 5446719 50 5446711.. 50 5446720 50 so distributed." 5446712 50 5446721. 50 5446713, 50 It has been the ruling of this department, in accordance with an opinion of the Attorney THIRD 4} PER CENT BONDS, DUE 1928. General, that under this language the tax upon stock dividends is to be collected, notwithstand- 4620 i SoOO :I 385331. S100 "385330 100 i-I 385353. 100 ing the decision to which you refer relating to the earlier act. If any of these bonds or coupons are pre- You are therefore advised that in so far as the stock divident is issued against earnings or sented, kindly write, telephone, or telegraph, profits accrued since March 1, 1913, it will be collect, to L. W. Gammon, manager protective subject to additional or supertax in the hands department, American Bankers7 Association, of the individual stockholders. As to the allo- 5 Nassau Street, New York City. cation of earnings distributed by means of such dividends as between different years in which the earnings were received, see section 31 (b) Rulings by the Commissioner of Internal of the act, and Treasury Decisions Nos. 2659 and 2678, copies of which are inclosed. Divi- Revenue. dends are not, however, subject to the excess- TAX ON STOCK DIVIDENDS. profits tax against the individual stockholders. Following is a letter written by the Commis- Respectfully, sioner of Internal Revenue to a Texas firm: (Signed) DANIEL C. ROPER, Commissioner. JUNE 18, 1918. GENTLEMEN: Your letter of June 8, ad- STAMP TAX ON DRAFTS IN CONNECTION WITH dressed to Hon. W. F. Ramsey, asking certain SHIPMENTS OF GOODS TO SEABOARD. questions relative to the application of the internal-revenue laws to certain proposed stock Following is a letter written by the Comdividends, has to-day been referred to me for missioner of Internal Revenue to M. C. Elliott, reply by Hon. M. C. Elliott, counsel for the counsel for the Federal Reserve Board: Federal Reserve Board. Income upon which the bank in question has JUNE 21, 1918. paid income and excess-profits taxes does not MY DEAR MR. ELLIOTT: Referring to your become subject to any additional taxes by rea- letter of June 5 and my acknowledgment of son of its use in payment for stock issued as a June 10, it seems from Mr. Curtis's letter that stock dividend. Your conclusion as to the under credit agreements conforming with the first point dealt with in your letter appears to regulations of the Federal Reserve Board be correct. packers may draw bills of exchange on domes- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 615 tic banks against sales of goods to the Allied under which the functions of Federal Reserve Purchasing t^omtnission, such bills running for Banks are exercised has been issued by the a period of time covering approximately the Federal Reserve Bank of New York. It is retransit of the shipment from the interior point to the seaboard, where the goods are taken on printed here in order to render it available to board ship for the ocean voyage at the conven- all member banks. Certain portions of the ience of the Allied Purchasing Commission. document as issued by the Federal Reserve In Wm. E. Pock & Co. (Inc.) v. Lowe, Bank of New York have been omitted, either decided in the United States Supreme Court because they are of only local application or May 20, 1918, which held that the income tax of 1913 was valid as applied to net income because they have been thoroughly covered in derived from sales in foreign commerce, the the Federal Reserve BULLETIN of the past court had occasion to discuss the effect of the issues. constitutional prohibition against taxing articles Sediscoimting. exported, and it referred to and distinguished certain of its former decisions on the subject. SAFETY FOR DEPOSITORS, STOCKHOLDERS, AND BORROWERS. It concluded that when the tax is not laid on the articles themselves while in course of Q. 1. In what way is membership of advantage to a exportation, the true test of its validity is State bank or trust company? whether it so directly and closely bears on the A. Through membership in the Federal Reserve sysprocess of exporting as to be in substance a tem a State bank or trust company is assured of greater tax on the exportation. In the present cir- safety for its depositors and stockholders than when opercumstances it can probably fairly be said that ating as a nonmember bank not only as to the repayment the tax on the drafts, although they are to be of deposits, but also as to its ability to continue to grant paid before the actual ocean voyage begins, bears accommodation at all times, and especially in the midst so directly and closely on the process of export- of war-time conditions. ing as to be in substance a tax on it. The goods Q. 2. In what way does membership insure greater are doubtless ''in course of exportation" from safety to the institution, its depositors, and stockholders? the time the first carrier receives them. A. Nearly every bank or trust company has among its The same principle would seem to apply as assets a considerable amount of commercial paper. If it in the case of the transportation tax. In is a member of the Federal Reserve system, this com- Article 31 of Regulations No. 42 rules for mercial paper is practically as available as though it were determining when property may be deemed actual cash, for the member bank can at any time take it to be in the course of exportation are laid to the Federal Reserve Bank and rediscount or borrow down, and apparently the present situation is upon it and is thus in position to meet whatever demands within their scope. for cash it may have. Government securities and notes It is accordingly held that the stamp tax secured by Government securities or given for the purpose imposed by subdivision 6 of Schedule A of of purchasing or carrying Government securities may be Title VIII of the act of October 3, 1917, does used in the same way. The ability of the well-managed not attach to drafts on domestic banks in institution to meet its obligations is thus assured. connection with the shipment of articles from CERTAINTY OF ACCOMMODATION. the interior to the seaboard, where such articles have been sold to the United States Q. 3. How does this affect the ability of a bank to grant agent of a foreign purchaser for export under accommodation to its customers? circumstances entitling the transportation with- A. The ability of a bank to grant accommodation to its in the United States to exemption from the customers under our system of banking is dependent upon transportation tax. its ability to maintain a fixed ratio of reserves to its deposit Yours, sincerely, liability. As additional accommodation is extended, de- (Signed) DANIEL C. ROPER, posits increase and a larger reserve becomes necessary. If Commissioner. the bank can not obtain this additional reserve, it must cease extending accommodation. By borrowing from the Federal Reserve Bank and taking credit upon the books Questions and Answers Relating to Membership of that institution the member's reserve is increased and of State Institutions. its power to extend accommodation is thereby correspondingly extended to a maximum amount equal, in The following discussion of membership in the case of a country bank, to about 14 times the amount the Federal Reserve system and of conditions it borrows from the Federal Reserve Bank, and in the case 67747—18 5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

616 FEDERAL EESERVE BULLETIN. JULY 1, 1918. of a reserve city bank or a central reserve city bank to Per cent. about 10 times and 8 times, respectively. For trade acceptances having a maturity at time of Q. 4. How much can a member bank borrow from the rediscount of more than 15 days but not more than Federal Reserve Bank? 90 days 4$ A. The law places no limitation upon the amount which For rediscounting for member banks, for periods not a particular member bank may borrow from its Federal exceeding 15 days, eligible paper having a maturity Reserve Bank, and the only practical limit is that which at time of rediscount of more than 15 days 4 would be dictated by the banking judgment of the management of the Federal Reserve Bank, having in mind its PRACTICALLY ALL BANKS HAVE PAPER ELIGIBLE FOR REDISCOUNT. own position, and the needs of all the other member banks. Q. 5. Can a member bank borrow on anything besides Q. 7. State banks and trust companies frequently state commercial paper? that they do not hold paper of a kind eligible for rediscount A. Yes. Obligations of the United States Government at the Federal Reserve Bank. Is this true? are available as collateral for loans made by the Federal A. The experience of State banks and trust companies Reserve Bank to its members, and notes of customers, ranging from very small banks in the smallest communisecured by United States Government obligations, or ties up to the largest institutions of this kind in the country given for the purpose of purchasing or carrying Govern- which have become members of the system, shows conment securities, are eligible for rediscount. clusively that practically all such institutions have substantial amounts of paper which is eligible for rediscount RATES OF DISCOUNT MODERATE AND STABLE. at the Federal Reserve Bank, and the institutions which Q. 6. For what length of time and at what rates will the have thus far joined have experienced no difficulty in Federal Reserve Bank rediscount for or loan to a member obtaining from the Federal Reserve Bank all needed bank? accommodation. A. The following is quoted from the latest circular of Q. 8. Is not the paper held by the smaller banks and the Federal Reserve Bank of New York announcing rates trust companies, and especially those in small towns, too of discount effective April 6, 1918, and gives full informa- small to be used for rediscounting? tion concerning time and rates for various classes of borrow- A. No. It is probable that the small institutions have ing at the Federal Reserve Bank: an even larger proportion of eligible paper than the larger ones, and no item is too small in size to be used for this ADVANCES. purpose. Notes for amounts as small as §18 have been re- Per cent. discounted, and items of $100, $500, and §1,000 and simi- For advances not exceeding 15 days to member banks lar amounts constitute the bulk, in number, of Federal on their promissory notes secured by eligible paper Reserve Bank discounts. or bonds, notes, or certificates of indebtedness of the United States 4 Q. 9. What paper is eligible for rediscount? The Federal Reserve Act permits direct advances A. Generally speaking, the ordinary notes, single or by Federal Reserve Banks to member banks on double name which a bank receives from its business and their own collateral notes only for periods not ex- agricultural borrowers. More specifically, eligible comceeding 15 days. The Federal Reserve Bank has mercial paper includes notes, drafts, or bills of exchange pursued a reasonably liberal policy as to renewals having a maturity of not more than 90 days, exclusive of of 15-day notes. days *of grace (or agricultural paper having maturity of not REDISCOUNT. more than 6 months) the proceeds of which have been used For notes, drafts, and bills of exchange having a ma- or are to be used in actual commercial transactions, i. e., turity at time of rediscount of not more than 15 in purchasing, carrying, or marketing goods, or in one or days 4 more of the steps of the process of production, manufacture, For notes, drafts and bills of exchange having a ma- or distribution. turity at time of rediscount of more than 15 days Q. 10. What paper is not eligible? and not more than 90 days 4f A. Notes, drafts, or bills of exchange the proceeds of For agricultural paper having a maturity at time of which have been used or are to be used for permanent or rediscount of more than 90 days and not more than fixed investments of any kind, such as land, buildings, or six months 5 machinery, or similar instruments issued or drawn for the SPECIAL RATES. purpose of carrying or trading in stocks, bonds, or other For notes, drafts, and bills of exchange issued or drawn investment securities, except bonds and notes of the for the purpose of buying or carrying bonds, notes, United States, are not eligible for rediscount. or certificates of indebtedness of the United States Q. 11. If a note has been made fora commercial purpose, and secured thereby, having a maturity at time of does the fact that it is secured by pledge of collateral serediscount of more than 15 days but not more than curity make it ineligible? 90 days 4£ A. No; provided it is otherwise eligible. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

617 JULY 1, 1018. FEDERAL RESERVE BULLETIN. Q. 17. Is there any charge for these services? EEDISCOUNTING A SIMPLE OPERATION. A. Until June 15, 1918, there will be a service charge of Q. 12. Is not rediscounting very complicated? 1 cent per item, regardless of the size or place of payment. A. No. Items intended for rediscount are listed on an After that date this charge will be suspended and checks application blank and forwarded to the Federal Reserve collected without any cost to the member bank. Bank, which gives credit on the day of receipt, and notifies Q. 18. When is credit given for checks collected in this the applying bank by telegram of the amount placed to its way? credit. A. For checks on banks in the Borough of Manhattan, Q. 13. What information is a bank required to furnish received before 9 o'clock a. m., immediate credit is given. concerning paper offered for rediscount? Checks on Boston, Philadelphia, Richmond, Norfolk, and A. In applying for rediscount the member bank lists the Baltimore, are available one day after receipt. For other names of makers and indorsers, amounts, maturities, etc., checks in this and nearby districts, credit is given two days and certifies that to the best of its knowledge and belief after receipt and checks on more distant points are credited the paper has been used for a commercial or agricultural four and eight days, respectively, after receipt. purpose. Q. 19. How should checks be sent to the Federal Q. .14. How is the member bank to assure itself that the Reserve Bank for collection? paper has been issued for such a purpose? A. In the same manner as remitted to other correspond- A. The knowledge of the officers will usually enable ents, except that they should be classified according to them to make the certificate, but if they are in doubt and time of availability, i. e., one-day items listed together the member bank has a financial statement of the borrower and totaled, two-day items, likewise, etc. or an indorscr engaged in business or agriculture, which Q. 20. Can checks be sent direct to other districts or shows a reasonable excess of quick assets over current liamust they all be sent through the Federal Reserve Bank bilities, the statement may be taken as evidence that the of New York? paper has been issued for a commercial or agricultural A. Arrangements for direct sending may be made, in purpose. which case the checks are sent to the Federal Reserve Q. 15. Must financial statements of borrowers be fur- Bank of the receiving district, as, for instance, banks in nished when applying for rediscounts? Buffalo having checks on banks of the Chicago district, A. The regulation of the Federal Reserve Board recan send these items direct to the Federal Reserve Bank quires that whenever a member bank has rediscounted or of Chicago and receive credit with the Federal Reserve offers for rediscount at the Federal Reserve Bank obliga- Bank of New York at the time the checks are due to be tions of one name to the extent of So,000 or more (or in paid, this being accomplished by the Buffalo bank's the case of banks having a capital of less than 850,000, a sending a duplicate remittance slip to the Federal Resum equal to 10 per cent of the paid in capital of the serve Bank of New York at the time of mailing the origibank), it shall have in its own files a statement in respect nal remittance and items to the Federal Reserve Bank of to one of the names on the paper. The purpose of this re- Chicago. The moment the checks are collected in Chicago quirement is to stimulate member banks to build up their the funds automatically become reserve to the member credit files and to make it possible for them to get statebank in New York. ments from borrowers who have heretofore been unwilling Q. 21. How are items on member banks in this Federal to give- statements. No statements are required to be Reserve district handled? submitted to the Federal Reserve Bank with the applica- A. Items drawn on a member bank are mailed to it, with tion for rediscount, but the member bank indicates on its remittance blank, and settlement made in either of two application all names in respect to which it has stateways, viz: ments on iile, and the Federal Reserve Bank, if it desires (1) The member bank's account is charged two days after copies of any of these statements, will later ask for them. remittance has been forwarded, giving time for the items The Federal Reserve Board makes no requirements whatto reach the member bank and the member bank to forever regarding statements from the smaller borrowers. ward exchange to cover, or Collections, Transfers, and Currency Shipments. (2) The member bank, upon receipt of the items, forwards in payment draft on the Federal Reserve Bank or ECONOMICAL CHECK COLLECTION. other funds available on the day of receipt, thus keeping Q. 16. What service does the Federal Reserve Bank the transactions separate from reserve account. render in connection with the collection of checks and Q. 22. Suppose the member bank has not sufficient availdrafts? able exchange with which to make the remittance? A. The Federal Reserve Bank collects at par for member A. If the member bank has not sufficient exchange to banks checks on 17,500 banks in all parts of the United meet the checks drawn upon it, forwarded to it through States, including ail national banks and a considerably the Federal Reserve Bank, it may ship currency or specie larger number of State institutions, as shown in a par list from its own vaults at the expense of the Federal Reserve furnished to all member banks. Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

618 FEDEEAL RESERVE BULLETIN. JULY 1,1918. Q. 23. What are the advantages of collecting checks and insurance or express, plus any charge made by the collectdrafts through the Federal Reserve Bank? ing bank. A. (1) Greater economy in collecting these items and avoidance of the necessity of maintaining balances with MONEY TRANSFERRED WITHOUT CHARGE. correspondents in various cities in order to obtain check Q. 28. What advantages does the Federal Reserve Bank collection facilities. offer in the matter of transfer of funds? (2) The most direct routing of items possible, with cor- A. The Federal Reserve Bank makes telegraphic transresponding reduction in the length of time items are out- fers of funds to any part of the United States for its memstanding, which results in the elimination of float and bers absolutely without charge. For example, upon enables member banks and their customers to learn at request from a member bank in Utica the Federal Reserve the earliest possible moment whether items have been paid Bank of New York would wire the Federal Reserve Bank or dishonored, and to have the funds represented earn of Dallas to pay or credit to any of its members a specified interest more quickly. sum, no charge being made for this service. Q. 24. You state that checks can be collected on 17,500 A member bank may also make its special drafts on the banks; will it not prove a disadvantage to member banks Federal Reserve Bank available for immediate credit at in this district that there are a number of banks on which any other Federal Reserve Bank by advising the Federal checks can not be collected through the Federal Reserve Reserve Bank when such drafts are drawn. Its account is Bank? thereupon charged with the amount of the draft and the A. While there is a considerable number of banks upon Federal Reserve Bank at which the draft is made payable which checks can not be collected, they are almost alto- is advised by telegraph where the amount is in excess of gether the very small banks, upon which relatively few 1250. The member bank is thus placed in position to checks are drawn. It is probable that at least 95 per cent obtain without cost and furnish to its customers exof the checks which a member bank would have, would be change on any of the twelve Federal reserve cities at any upon banks included in the Federal Reserve Bank's time or season. These facilities are made possible by the par list. This is particularly true in connection with gold settlement fund which the 12 Federal Reserve Banks checks received by member banks in this district, as maintain at Washington and through which they settle checks can be collected at par on all banks in New England, their obligations to each other by transfers on the books of the fund instead of actual shipments of currency or in the Second Federal Reserve District, and on a very coin. The gold held in this fund amounted on May 17, large proportion of banks in other neighboring districts. 1918, to $418,000,000. Moreover, banks which are collecting through the Federal Reserve Bank find that the items not so collectible are so CURRENCY. few in number that the cost of collecting them is very small. Q. 29. What must a member bank do to obtain Federal Q. 25. Would we be able to carry smaller and fewer bal- Reserve notes from the Federal Reserve Bank? ances with correspondents for collection purposes? A. Federal Reserve notes in denominations of $5, $10, A. Undoubtedly. This has been the general experience $20, $50, and $100 are shipped to member banks on request, of our member banks. by registered mail, insured, and the member bank's Q. 26. How large a volume of items does the Federal account charged with the face amount plus cost of ship- Reserve Bank handle in this manner? ment, as follows: A. The average number of items handled by the Federal Reserve Bank of New York has been as follows: Daily. stry. Insur- Total ance. cost. 1915 (last 7 months) 7,259 1916 23,132 0.10 §0.30 SI. 84 1917 53,368 .10 .60 2.14 .10 1.20 2.74 1918 (first 4 months) 73, 461 .10 3.00 4.54 .10 6.00 7.54 1918 (April) 82,984 COLLECTION OF NOTES AND BILLS OF EXCHANGE. Shipments of gold, gold certificates, silver certificates, Q. 27. Does the Federal Reserve Bank collect notes and and legal-tender notes may be made to the Federal Rebills of exchange other than checks and bank drafts? serve Bank of New York either by express or registered A. Yes. Drafts, notes, coupons, acceptances, etc., are mail for credit of the member bank's account or for excollected without charge other than any exchange charge change for Federal Reserve notes. We pay transportation which may be made by the collecting bank. For items re- charges on gold, gold certificates, and silver certificates, turning unpaid, an additional charge of 15 cents is made, whether fit or unfit for circulation, and also furnish, free of the purpose of this charge being to prevent the clogging of expense, Federal Reserve notes in exchange. our facilities with dunning drafts. No charge is made for Q. 30. In what amounts are Federal Reserve notes •collecting coupons other than expenses of registration and available? Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDEEAL RESERVE BULLETIN. 619 A. The Federal Reserve Bank is not limited as to the without cost. In short, it may be treated practically the amount of notes which it may issue, except by the pro- same as an account carried with any other correspondent. vision that a 40 per cent gold reserve must be maintained The Federal Reserve Bank figures the reserve a member against Federal Reserve notes in actual circulation. bank is required to keep with it by taking the average The Federal Reserve Bank of New York now has in balances maintained during the month; so that an excess actual circulation approximately $500,000,000 of Federal balance during one part of the month willoffset a deficiency Reserve notes. It maintains, ready for issuance, an addi- in another part. tional supply of substantially the same amount, which OTHER SERVICES. assures member banks of an ample currency supply at all Q. 36. Will the Federal Reserve Bank check commertimes. cial paper for its member banks? A. The Federal Reserve Bank will give to its members Reserve Requirements and Reserve Balances. the benefit of such information as it has available or can obtain and properly divulge concerning commercial paper RESERVE TO BE CARRIED BY MEMBERS. but does not consider it advisable to express an opinion as to the standing of any particular name. Q. 31. What is the amount of the reserve which a mem. her bank must maintain with the Federal Reserve Bank? Q. 37. Will the Federal Reserve Bank hold securities in custody for its members? A. (a) If not in a reserve or central reserve city, 7 per cent of demand deposits and 3 per cent of time deposits; A. Yes. The Federal Reserve Bank is prepared to hold (b) if in a reserve city, 10 per cent of demand deposits and Government obligations or other securities in custody for 3 per cent of time deposits; (c) if in a central reserve city, member banks without charge. 13 per cent of denand deposits and 3 per cent of time Q. 38. What is the effect of membership in the Federal deposits. Reserve system upon a bank's right to obtain postal Q. 32. How are these reserves computed? savings deposits? A. Formula for the computation of reserves is attached A. The law now requires that new or additional postal hereto. savings shall be deposited with member banks only and Q. 33. What amount of reserve is a member bank re- State bank or trust company members are entitled to quired to maintain in its vault? receive postal savings deposits on a par with national banks according to the plan of distribution of such deposits. A. The Federal Reserve Act requires no stipulated vault reserve, leaving to the discretion of each institution Objections to Membership. the a mount ox cash on hand or till money to be maintained Q. 39. Does membership in the Federal Reserve system RELATION TO STATE LAWS PRESCRIBING RESERVES. have disadvantages for State banks and trust companies? A. When the Federal Reserve Act was enacted it was Q. 34. How are the reserve requirements prescribed by the belief of many officers of State banks and trust com- State laws affected by the admission of a State bank or panies that there were certain features of membership trust company to the Federal Reserve System? which would be disadvantageous to State banks or trust A. In New Jersey a member bank becomes subject to companies. Amendments have since been made which the reserve requirements of the Federal Reserve Act inhave eliminated practically all of these objections, and the stead of those of the New Jersey statutes. In New York opinion of those who have examined carefully into the a State bank or trust company continues to be subject to matter is substantially as stated by the Guaranty Trust the requirements of the State law concerning reserve, Company, in announcing its reasons for entering the but is permitted to count as ''cash on hand" any part Federal Reserve system: of its balance with the Federal Reserve Bank. In Con- "As the Federal Reserve Act stands to-day, practically necticut the statute permits one-half the reserve required every serious objection to membership, which was evident by State law to be carried in the Federal Reserve Bank. at the time the law was passed, has boon removed * * V RESERVE BALANCE CAN BE CHECKED ON. NO INTEREST ON BALANCES. Q. 35. Can a reserve balance carried with the Federal Q. 40. The Federal Reserve Bank pays no interest on Reserve Bank be checked against? reserve balances, does it? A. Yes. An account maintained with the Federal A. No. The funds which the Federal Reserve Bank Reserve Bank may be made as active as desired. It may holds are reserve funds. If the Federal Reserve Bank be freely checked against and balances built up by de- were to pay interest on its funds, it would, of course, have posits and remittances of checks and drafts, rediscounts, to keep such a large portion of them invested in order to or shipments of currency made at the expense of the Fed- obtain earnings sufficient to cover the interest paid, that eral Reserve Bank. Accumulated surplus funds in the the purpose for which the fund was set aside would thus account may be freely transferred to other banks or to be defeated and the Federal Reserve Bank would have other points in the United States by mail or telegraph no greater credit making power than other banks and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

620 FEDERAL RESERVE BULLETIN". JULY 1, 1918. trust companies which have to invest most of their funds (b) Checks can be collected through the Federal Rein order to pay interest on deposits. serve Bank in the shortest possible time, indirect routing The deposits held by the Federal Reserve Bank are the being avoided. Thus the funds represented become availultimate reserves of its members, and must be kept in- able and earnings begin much more quickly than is the stantly available where and when needed. case where more indirect methods of collection are used. For example, the State institution mentioned above OFFSETS TO LACK OF INTEREST ON BALANCES. estimates that it sends out daily about $200,000 in checks Q. 41. Would not the loss of interest incident to member- and drafts and that by using the Federal Reserve collecship be more than a State bank or trust company could tion facilities it receives returns on these items one day afford to pay to obtain the privileges of membership? sooner than through its former collection channels. This A. The experience of many State banks and trust com- saving is. therefore, equivalent to at least 2 per cent interpanies which are now members of the system demonstrates est on 8200,000 and completes the offset to the apparent that the apparent loss of interest can be offset in large part, loss of interest on the balance carried with the Federal or even entirely, by savings and added profits in other Reserve Bank. ways made possible by membership. Among these are 3. Under present conditions a member bank is able to the following: borrow at the Federal Reserve Bank at rates usually sub- 1. The deposit with the Federal Reserve Bank can, in stantially lower than those obtainable from correspondents. practically all cases, be made in part from cash held in This is of particular importance in relation to borrowing vault which is not at present drawing interest. This is for the purpose of assisting the Government in Liberty loan possible for the reason that the Federal Reserve Bank financing and in purchasing certificates of indebtedness. can be depended on to furnish currency at any time at a 4. But perhaps the most important offsetting advantage moment's notice, and that a member bank in New York is the fact that many member banks feel that they can and New Jersey is not obliged to maintain excess vault safely carry substantially lower excess reserves and invest reserves in order to be certain of not falling below the a considerable part of present excess reserves in additional minimum prescribed by the State laws. A member bank loans to customers or in commercial paper, which, being in New Jersey is subject only to the reserve requirements eligible for rediscount at the Federal Reserve Bank, is in of the Federal Reserve Act, which do not require reserve the nature of reserve. Additional income thus obtained in vault. A member bank in New York is permitted by will, in many cases, pay amply for the loss of interest on law to count balances with the Federal Reserve Bank as reserve deposits. Many institutions which as nonmembers cash on hand. For example, officers of a country bank felt that they must carry considerably more than the legal in New York, now a member of the system, state that requirement as an emergency reserve, now feel that memprior to membership they were obliged to maintain vault bership in the Federal Reserve Bank is their emergency reserves running as high as $500,000 in order to avoid reserve and that they are free to invest most of their former falling below the legal requirement for cash in vault of emergency reserve in paper immediately available at the $250,000. Their vault cash therefore averaged about Federal Reserve Bank. $350,000. As members of the system it will average about The following is an illustration taken from the actual $200,000, ranging from $125,000 to $300,000, these amounts figures of three country member banks in New York State being ample to meet its demands for cash, the wide fluc- differing in size and in nature of deposits, and is quite tuation being due to pay-roll requirements. It therefore typical of other institutions of which we have knowledge. estimated that of a reserve of less than $400,000 required to be carried with the Federal Reserve Bank, about half Trust Trust State could be transferred from vault and therefore represented company. company. bank. no loss of interest whatsoever. 2. By using the check collection facilities of the Federal (a) Net demand deposits 82,493,000 $2,427,000 $785,000 Reserve Bank the State bank or trust company member (6) Net time deposits 7,567,000 1,876,000 117,000 (c) Due from banks at timn of is enabled to accomplish considerable savings in two ways: joining 642,000 461.000 99 000 (d) Cash in vault at time of j oining. 334,000 166,000 39,000 (a) Balances carried with correspondents at variou a (e) Reserve required to be carried points solely for the purpose of getting checks collected with Federal Reserve Bank 401,000 226,000 58,000 (/) Interest at 2 per cent on this can be closed and the balances utilized for loaning. This amount... . .. 3,000 4,000 1,200 If the business of these banks course is obviously desirable as, with practically all its justified them in carrying only checks collected without cost through the Federal Reserve the legal reserve and they could invest their former excess re- Bank, the member is able to effect a very considerable serves (c-e) at 6 per cent, they saving by the utilization of balances which have had to s m e i t g s h to t l m os a s k o e f t i h n e te r f e o s ll t o ( w it i e n m g / o ) ff . - .. i^OOO 2 9,400 »1,600 be maintained in amounts sufficient to pay for the collec- Possible profit from membership.. l,f>00 4,800 400 tion of its checks through channels which are indirect i $241,000 at 4 per cent. 2 $235,000 at 4 per cent. and sometimes expensive. 3S46,000at4percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN". 621 Qualifications and Requirements for Membership. WITHDRAWAL FROM MEMBERSHIP PROVIDED FOR. WHAT BANKS ARE ELIGIBLE. Q. 46. Can a State bank or trust company member Q. 42. What banks are eligible for membership in the withdraw from the system? Federal Reserve system? A. Yes. Any State bank or trust company desiring to A. Any bank incorporated by special law of any State, withdraw from membership in the Federal Reserve Bank or organized under the general laws of any State, which may do so after six months' written notice shall have been has a paid-up, unimpaired capital stock as follows, is filed with the Federal Reserve Board. eligible for admission to membership: Q. 47. Is there not a provision that no Federal Reserve Bank, without authority of the Federal Reserve Board, In cities or towns not exceeding 3,000 inhabitants, may cancel within the same calendar year more than 25 125,000. per cent of its capital stock for the purpose of effecting In cities or towns exceeding 3,000 but not exceeding voluntary withdrawals during that year? 6,000 inhabitants, $50,000. A. Yes. In the case of the Federal Reserve Bank of In cities or towns exceeding 6,000 but not exceeding New York, however, this qualification is not of great 50,000 inhabitants, §100,000. importance for the reason that the proportion of its stock In cities exceeding 50,000 inhabitants, $200,000. held by State banks and trust companies is less than one- Q. 43. What tests are applied in considering the applithird of its total stock, so that all of its State bank and cation of a State bank or trust company for membership? trust company members could retire within two calendar A. (1) The iinancial conditions and character of the years. management of the applying institution is considered. REPORTS AND EXAMINATIONS. (2) Whether the powers exercised by it are consistent with the Federal Reserve Act. Q. 48. Does a State bank or trust company which is a (3) Whether the laws of the State in which the applying member of the Federal Reserve system make reports to bank or trust company is located contain provisions likely the Comptroller of the Currency, or is it subject to examinato prevent proper compliance with the provisions of the tion by the Comptroller of the Currency? Federal Reserve Act. The present laws of New York, A. No. State banks and trust companies which are New Jersey, and Connecticut do not contain any such members of the system are not in any way under the provisions. jurisdiction of the Comptroller of the Currency. They are required to make in each year not less than three DEPRECIATION OF BOND INVESTMENTS. reports of condition and of the payment of dividends to Q. 44. What is the attitude of the Federal Reserve the Federal Reserve Bank of their district, the dates to Bank and the Federal Reserve Board relative to depre- be fixed by the Federal Reserve Board. No publication of ciation in market values of stock and bond investments? these reports is required. A. A reasonable attitude is taken regarding deprecia- Q. 49. What examinations would a State bank or trust tion in market values. Wherever heavy depreciation is company member be subject to? shown the applying banks are requested to charge off a A. They are subject to examinations made by direction reasonable amountj of the depreciation, say about 20 of the Federal Reserve Board or of the Federal Reserve per cent, and to agree to make further annual reductions Bank by examiners selected or approved b}r the Federal until the book and market value of the securities are Reserve Board, but, in order to avoid duplication, examimore nearly in accord. nations made by the State authorities included in this district are accepted by the Federal Reserve Bank, so that A STATE BANK OR TRUST COMPANY RETAINS ITS FULL except as noted in the next succeeding answer no special POWERS. examinations are made and member banks are not subject Q. 45. If a State bank or trust company becomes a to additional expenses for examinations. member of the Federal Reserve system can it continue Q. 50. Then membership would not involve extra examto exercise the powers granted it by its State laws or inations? charter? A. No. The Federal Reserve Bank may, of course, at A. The Federal Reserve Act and the regulations of the any time make a special examination but should it be Federal Reserve Board provide that a State bank or trust deemed necessary to have its examiner visit a member company, while a member of the Federal Reserve system, bank, the examination would usually be made in eoopera* shall retain its full charter and statutory rights as a State tion with the State examiner at one of the latter ?s regular bank or trust company, subject to the provisions of the examinations. Federal Reserve Act and to the regulations of the Federal Reserve Board relating to all members, national and State NO LIMITATIONS ON LOANS. alike, including any conditions embodied in the certificate Q. 51. Is a State bank or trust company member limited of approval. in the amount which it may lend to any one borrower? Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

622 FEDERAL RESERVE BULLETIN. JULY 1, 1918. A. No, It is governed in this particular solely by the COMPUTATION OF RESERVE TO BE CARRIED WITH THE provisions of the State laws or its charter. The Federal FEDERAL RESERVE BANK BY MEMBER BANKS. Reserve Act does provide, however, that a Federal Reserve Bank may not rediscount the note of a person or corpora- DEMAND DEPOSITS. tion which is indebted to a member bank for more than 10 1. Deposits, other than United States per cent of the latter's capital and surplus. Government deposits, payable within 30 days 2. Balances due to banks, other than INTERLOCKING DIRECTORS. Federal Reserve Banks Less: Q. 52. Is a State bank or trust company which is a mem- 3. Balances due from banks, other than ber of the system liable to the provisions of the Clayton Federal Reserve Banks S.. Act? 4. Items with Federal Reserve Bank in A. The status of a State bank or trust company, with process of collection %.. relation to the provisions of the Clayton Act, is not in any 5. Checks on other banks in the same way altered by its becoming a member of the Federal Re- place $.. 6. Exchanges for clearing house S.. serve System. Total deduction (items 3, 4, 5, and 6) PROCEDURE IN APPLYING FOR MEMBERSHIP. 7. Net balance due to banks * Q. 53. What is the procedure in applying for member- 8. Total demand deposits (items 1 and 7). ship? TIME DEPOSITS. A. The steps to be taken are: 9. Savings accounts (subject to not less 1. Adoption by the board of directors of a resolution than 30 days' notice before paymaking application for stock in Federal Reserve Bank ment) (Form 83a). 10. Certificates of deposit (subject to not. loss than 30 days' notice before pay- 2. Formal application for the requisite number of shares» ment) agreement to pay for same and to comply with require" 11. Other deposits payable only after 30 ments of Federal Reserve Act, etc. (Form 83a). days 3. The following three exhibits are to be attached to 12. Postal savings deposits 13. Total time deposits (items 9, 10, 11, application: and 12) Exhibit 1.—A statement of condition as of given date signed by three directors and duly certified by cashier or EESESVE REQUIRED, secretary. Banks in central reserve cities, 13; reserve Exhibit 2.—A copy of charter or articles of incorporation cities, 10; elsewhere,. 7 per cent of demand deposits (item 8) of the corporation with amendments. 3 per cent of time deposits (item 13) Exhibit 3.—A. statement containing certain supplemen- Total reserve to be maintained with Fedtary information (supplement to F. R. B. Form 83a). eral Reserve Bank STOCK SUBSCRIPTION. Foreign Exchange Regulations. Q. 54. How much stock of the Federal Reserve Bank is a member bank required to purchase? The following new regulations relating to A. A member bank is required to subscribe for stock of foreign exchange have been sent to Federal the Federal Reserve Bank equal to 6 per cent of its own Reserve Banks: capital and surplus, and make payment at once for half of the amount of the subscription. (l) INSTRUCTIONS FOR DISTRIBUTION TO DEALERS IN Q. 55. What dividends does the stock pay? FOREIGN EXCHANGE. A. The law provides that member banks shall be entitled to cumulative dividends at 6 per cent per annum "Dealers," as defined under the Executive order, are upon the amount of their paid-up stock of the Federal Re- prohibited, without the approval of the Division of Foreign serve Bank. The Federal Reserve Bank of New York Exchange of the Federal Reserve Board, from acting upon has paid dividends in full up to December 31, 1917, and confirmations of cablegrams which may be received by is now earning currently an amount far in excess of its them, wherein the original cablegram in part or in whole dividend requirements. has never been delivered to them. Q. 56. At what rate is payment for stock made? All confirmations of cables sent by "dealers" to corre- A. At half of the par value, plus interest at J per cent spondents or others outside of the United States, covering per month from the date of the last dividend. The unpaid * Should the aggregate "due from banks" (items 3, 4, 5, and 6) exceed portion of the subscription is payable upon call by the the aggregate "due to banks," both items must be omitted from the Federal Reserve Board. calculation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESEEVE BULLETIN. 623 a transfer of funds or other financial operation, must be "Dealers3' who are concerned withTthis order should written upon separate sheets of paper, which must not forward these instructions immediately to such of their carry any other correspondence, and must be delivered foreign correspondents as carry dollar accounts with them. unsealed, but stamped, ready for mailing, to the Division In the meantime, while such notices are going forward, of Foreign Exchange, 14 Wall Street, New York, when copies of the statements of the credits to foreign correthe confirmations are to go from the eastern seaboard, spondents must be delivered to the Division of Foreign or cover cablegrams leaving this country by the eastern Exchange weekly, beginning June 25, in accordance with seaboard; to the Federal Reserve Bank of San Francisco regulations going forward to the Federal Reserve Banks. when confirmations are of cablegrams leaving this country The operation of this order, in so far as it relates to deposits via the western seaboard; to the Federal Reserve Bank of made by "persons3* in the United States, becomes effective Dallas when the confirmations are of cablegrams leaving June 15. but "dealers3' may retain deposits made with this country via Galveston; and to the New Orleans them, while obtaining the proper information, until the branch of the Federal Reserve Bank of Atlanta when the order becomes generally known, unless otherwise inconfirmations are of cablegrams leaving this country via structed, but can not enter such credits after June 15, New Orleans. Any confirmations which may be discov- except to a suspense account, nor advise the beneficiaries, ered by the postal censorship in the body of other letters, either by mail, cable, or otherwise, until receipt of the or that have been otherwise mailed than as above, will be information, which must be immediately turned over to forwarded to the Division of Foreign Exchange of the the Division of Foreign Exchange. Federal Reserve Board for such action as may seem In case any "person-' or "dealer3' has reason to believe advisable. that any transaction of this nature is for the account or "Dealers " having the accounts of foreign correspondents benefit of an enemy or ally of enemy, he must notify the on their books are prohibited from accepting credits to Division of Foreign Exchange directly by mail or wire, such accounts which are not accompanied by the name of as the urgency of the matter would seem to require. the party making the original request that the deposit be There are now over 12,000 "dealers3' in foreign exchange made, and by the name of the party to whom the foreign registered in the United States. Under the Executive institution receiving the credit is to pay the funds, and order they have all been obliged to send forms for declarafor whose account such payment is made, and the purpose tion of nonenemy interest to all of their foreign correof the deposit must also be stated. spondents. The Federal Reserve Board has not yet pro- It is important that this order be noted by all bankers, hibited "dealers3' from doing business with foreign correinstitutions, individuals, or others in the United States, spondents who have not returned the declarations. The without regard to whether they are "dealers" or not. time has been allowed to run longer than was originally This information will be required in addition to the intended, because of the great delay in the mails and the regular customers' statement. desire of the Federal Reserve Board not to interfere with If, for instance, a firm in Peoria, 111., is requested by an the legitimate business of the country unnecessarily. individual to pay a bank in New York $1,000 for account Further, a sufficient proportion of declarations has been of a bank in Sweden, the firm must obtain from such indi- received to warrant, together with the information convidual the required information, which it must deliver stantly being received through the research department, to its banker in Peoria through whom it wishes to make the temporary continuation of business with some of those the transfer, and such banker, if he carries out the opera- institutions which have not yet returned their declarations. tion through his Chicago or New York correspondents It should be noted, however, that the day is fast approachmust forward the information with the instructions, which ing when the nonreceipt of declarations will result in the must follow the deposit to the New York bank which is necessity for the discontinuance of relations, and every to credit the account of the Swedish bank. All such infor- "dealer8* is warned that he should immediately take up mation must be on a separate sheet of paper, which must the question with any of his correspondents whose declarabe initialed by every institution through which it goes, tions have not yet been received. and that must be delivered to the Division of Foreign All declarations of foreign correspondents should be Exchange of the Federal Reserve Board, 14 Wall Street, filed with the Division of Foreign Exchange of the Federal New York, by the banker crediting the item to the foreign Reserve Board immediately upon receipt. "Dealers2' are institution. also requested to advise the Division of Foreign Exchange Deposits received for the credit of dollar accounts of by letter of all foreign correspondents to whom they have foreign correspondents on the books of American "dealers9' sent declarations which have not been returned, or from " persons," as defined in the Executive order, out- where cable advice that they were being sent has not been side of the United States must bear the same information, received by the close of business June 20. and "dealers9* should notify their foreign correspondents There has been some doubt on the part of "dealers" as that when arranging to have deposits made in this country to just when they should require "customers' statements." for their account that such information must follow the This has been particularly true as between "dealers" traddeposit. ing with each other. Customers' statements, which are 67747—18 6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

624 FEDERAL RESERVE BULLETIN. JULY 1, 1918. merely declarations of nonenemy interest, which have to The memorandum referred to is as follows: be made by "persons" in this country having foreign ex- The Government of Italy has formed an institute of change operations with "dealers," must be taken by every exchange, through which all of its foreign exchanges have "dealer" from every person who is not a "dealer" when to pass. The United States Treasury Department has any foreign exchange service is being extended. In other made an arrangement with the Italian Government under words, the "dealer" having contact with the "person" which certain transactions in lire must come before the who is not a "dealer" is the party who must take the cus- representative in New York of the Italian institute and tomers' statement. Such statements do not follow the the Division of Foreign Exchange of the Federal Reserve items, but must be filed by the "dealer" receiving them, Board for approval. Such transactions, for the moment, subject to the call of the Federal Reserve Board at its only cover commercial bills of exchange for exports from discretion. the United States to Italy that represent funds American As "dealers " receiving items from other "dealers" have banks might wish to dispose of to the institute, which no means of determining whether such, "persons" are expects to enter the New York market as a buyer of lire. "dealers," authority has been granted by the Board to The institute may also be a seller of lire from time to accept the censorship stamp of "dealers" upon letters of time. Exchange transactions with the institute should advice or inclosure from one "dealer" to another as being preferably be handled through regular foreign exchange sufficient evidence that a customers' statement has been brokers. obtained. The methods under which the institute will operate are Every "dealer" is responsible to the Federal Reserve as follows: Board for the taking of customers' statements and not to Between 10 and 10.30 o'clock every morning the repreother "dealers" through whom he may be passing trans- sentative of the institute and a representative of the Fedactions, except that any "dealer" who has reason to eral Reserve Board will meet in the offices of the Division believe that any transaction may be for account or benefit of Foreign Exchange, Federal Reserve Board, Room 608, of an enemy or ally of enemy may make inquiry of the 14 Wall Street, New York, to pass upon the eligibility for "dealer" who places the transaction through him. If purchase by the institute, of the proceeds of bills of satisfactory answer is not received, the Division of Foreign exchange covering exports from the United States to Exchange of the Federal Reserve Board should then be Italy. Presentation of bills must be made by letter in notified immediately. triplicate or, in case of necessity, by telegraph. All The same means of identification may be passed from bills require the approval of both the representative of one '' dealer " to another in connection with items received the institute and a representative of the Federal Reserve from abroad. The responsibility for obtaining declara- Board. The institute will not purchase the bills themtions from foreign correspondents and from holders or from selves, but will make offers for the proceeds of approved agents of holders of securities, and in connection with bills to dealers in the United States buying them. If the coupon and dividend payments, has been placed entirely rate is accepted, the dealer, upon arrival of the exchange upon the "dealer" receiving the items from the foreign in Italy, must arrange with his correspondent for deposit countries. It is not the duty of payers of dividends or of the proceeds in lire with the Bank of Italy, Rome, to coupons, nor of others in the United States who receive the credit of the representative of the institute in New such items from "dealers" to require declarations. If, York City. Upon receipt of the lires in Italy by the Bank however, they have information which leads them, to of Italy, it will wire the representative in New York of believe that a transaction is for enemy account, it is their the institute to make payment in dollars, for the equivaduty to withhold payment and notify the Division of lent of exchange purchased at the rate agreed upon. Foreign Exchange. In this manner American dealers in lire exchange can (2) THE CONTROL OF LIRE EXCHANGE. continue their purchases from their customers as in the past and handle their bills directly through their Italian The following letter has been sent to the governor of each correspondents. Until otherwise instructed, they are not Federal Reserve Bank: obliged to offer any lire exchange to the institute in New , DEAR SIR: It has become necessary to take charge of the York, but if they prefer may sell the proceeds of such lire exchange rate in New York in so far as conditions make it possible to do so. bills as they may purchase to American dealers or others While the rate for lire in other cities is based upon the who may be buyers. New York rate, yet it is very probable that some of the Some American dealers have issued letters of credit for dealers in your district may require information as to how account of Italian banks, under which such dealers have to protect your customers, and themselves, when purchasing bills of exchange covering exports from the United agreed to make payment upon presentation of documents States to Italy. for shipments of goods to Italy, with the understanding We therefore inclose herewith a memorandum outlining that cable advice be sent to the Italian bank which will the situation in so far as it has developed. cover the amount so paid out in dollars by cable. On all Very truly, yours, such transactions advice by letter in triplicate, or by tele- F. I. KENT, Director Division of Foreign Exchange, graph (as the necessities of the case require) should be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 625 sent to the Division of Foreign Exchange, Federal Reserve Therefore be it resolved that (subject to all conditions Board, 14 Wall Street, in order that the application of the herein enumerated) a general license is hereby granted to Italian bank for dollars to meet such payment may be any persons, firms, or corporations in the United States to passed upon by the representative of the institute and the trade (by exporting merchandise to such "enemy" per- Federal Reserve Board. sons, firms," or corporations and by receiving payment At present dealers in the United States are prohibited therefor) with, for, or on account of such "enemy" perfrom trading with each other in lire exchange under 9.10 sons, firms, or corporations as by the terms of said Article basis for cables. The rate in the New York market will 3 of the statutes of the S. S. S. may not be excluded from reflect this restriction while the order lasts, but dealers in the benefit of receiving commodities from the S. S. S. lire in other cities should be advised that they can not This license shall be subject to each of the following trade between each other at any lower rate than 9.10 for conditions: cables until otherwise advised. The purchase of lire ex- A. That the exportation or shipment of any such merchange from persons, as defined in the Executive order, chandise out of the United States shall be authorized by a outside of the United States, can not be made without first duly issued export license. obtaining the approval of the Division of Foreign Ex- B. That such payments shall be made to the person, change. firm, or corporation in the United States entitled thereto At the moment no further restrictions have been placed only through a dealer duly licensed by the Federal Reupon trading in lires. Dealers can buy from their cus- serve Board pursuant to the Executive order of January 26, tomers and sell to their customers as they have been doing 1918. until otherwise instructed, except that cable transfers can C. That such trading be limited to the delivery to such not be sold under the rate of 9.10. "enemy" of commodities or articles enumerated in the It must be clearly understood that the Federal Reserve several schedules annexed to said memorandum of De- Board does not guarantee a continuation of the Italian cember 5, 1917, subject to the conditions of said memo- Institute in the market for the purchase of lire, nor does it randum, and the receipt of payment therefor. guarantee any transactions which American dealers may D. That prior to receipt of payment by the person, firm, undertake with the Italian Institute. In other words, or corporation in the United States, a certificate shall be dealers when operating with the Italian Institute are doing issued in duplicate either by the S. S. S. or by a dealer so at their own risk exactly as would be true in case they duly licensed by the Federal Reserve Board pursuant to were dealing with Italian bankers. the Executive order of January 26, 1918, or by a foreign correspondent of such dealer who has signed the declara- (3) FOREIGN PAYMENTS. tions required to be signed by said order, certifying that (War Trade Board resolution of June 20,1918.) such "enemy" person, firm, or corporation is entitled to Whereas the "Memorandum between the War Trade receive and has received or will receive delivery of said Board and the Government of Switzerland relating to ex- commodity pursuant to the provisions of said Article 3 ports from the United States to Switzerland," dated De- and specifying the description, character, and value therecember 5, 1917, provides that the distribution of the of, and stating that no other certificate has been issued articles, commodities, material, and substances described covering the same transaction. in the schedules thereto annexed shall be subject to the E. That the person, firm, or corporation in the United condition that such distribution must in every case be States receiving payment or engaging in said transaction made pursuant to the rules and statutes of S. S. S.; and shall retain one of said duplicate copies and forward the Whereas there is contained in Article 3 of the statutes of other copy to the Federal Reserve Board for filing. the said S. S. S. a provision as follows: "No firm appearing in the Register of Commerce can, by RUPEE EXCHANGE. reason of the nationality of the heads, partners, members, or stockholders, be excluded from the benefit of receiving The following letter was sent by the Govcommodities from the S. S. S., excepting, however, foreign. ernor of the Federal Reserve Board to a Federal houses registered since July 1, 1914, and foreign houses not appearing in the Register of Commerce. In respect of Reserve Bank under date of June 24: these two classes there is reserved to the S. S. S. the right to examine the facts of each particular case after having The Board has been advised that the Secreconferred with the three Governments which participated ta.ry of the Treasury has made arrangements in the creation of the S. S. S."; and for a supply of rupee exchange sufficient for an Whereas because of the facts herein recited individuals, indefinite period, to finance such imports from firms, or corporations who are within the category of India as may be required for civil or military "enemies" under the trading with the enemy act, may in purposes of importance in connection with the certain cases be entitled to receive and pay for commo- prosecution of the war. The Secretary desires dities imported into Switzerland from the United States. that the sale of rupee exchange for these pur- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

626 FEDERAL BESERVE BULLETIN. JULY 1,1918. poses be administered as heretofore through the Treasury for certain information, the following Federal Reserve Board, the price to be 35.73 is respectfully submitted: cents per rupee for telegraphic transfers. I. Agreements have been made with certain I am informed that the arrangement made neutral countries in Europe and with counbetween the Secretary of the Treasury and the tries in South America and elsewhere involving British Government in relation to the sale of financial considerations and tending to protect silver under the Pittman Act contains a provi- the value of the American dollar. Agreements sion whereby the Government of Great Britain involving like considerations are in process of undertakes to arrange for the opening of rupee negotiation in other countries, and in certain credits in New York at the rate—with respect neutral countries steps have been taken to proto telegraphic transfers—of 35.73 cents of vide for payments required therein prelimi- United States money for each rupee. It is nary to the institution of negotiations. The deemed important that the price of rupee amount of balances of neutral nations held by credits in New York should be on the exact banks, trust companies, and bankers in the mathematical equivalent of the London price, United States can probably be ascertained and in order that the American merchants may be stated with approximate accuracy as of about in exactly the same position as London mer- May 13, 1918. However, I am directed by the chants, with respect to rupee exchange. * * * President to say that, in his judgment, it would In view of the arrangement made by the be incompatible with the public interest to Treasury, the Board will limit the sale of tele- make a public record at this time of the terms graphic rupee transfers, regardless of the origin of such agreements already made or in process of the credit which it is drawn against, to (a) of negotiation, or of the other steps that have imports reasonably required for civil or mili- been taken or are in contemplation to protect tary purposes of importance in connection the value of the American dollar, or of the with the prosecution of the war; and (i) to a amount of balances of neutral countries in the price not exceeding 35.73 cents. United States, because chiefly of the very great There will be, of course, no objection to banks value such information would be to the enemy. purchasing commercial bills on India at such II. I have given directions to have compiled, price below 35.73 cents as will yield them a fair so far as the Federal authority can be exercised remuneration for the labor and risk involved in and the same can be made available, figures to the business. An exception may properly be show the amount severally of commercial and made for small rupee bills drawn for noncom- financial bills payable in terms of the currency mercial purposes. If recommended by the of the neutral nations of Europe which have director of the Division of Foreign Exchange, been bought and sold severally By the member the Board would be willing to place a limit of, banks of the Federal Reserve system and other say, 1,000 rupees on the amount that can be banks and banking houses dealing in foreign sold regardless of the above restrictions, but exchange in the city of New York from January only if the credit is used for purposes other than 1 to April 1, 1918, and the amount of profit in commercial. such transactions. It will take some time to compile this data, but as soon as it is obtained AGREEMENTS WITH FOREIGN COUNTRIES. I shall furnish it. I am not at present able to state just how completely or accurately this The following letter was sent by the Secretary information can be obtained. of the Treasury, under date of June 12, 1918, to Respectfully submitted. the President of the United States Senate: (Signed) W. G. MCADOO. Following is a sample of the form of inquiry SIR: In response to the resolution adopted by the Senate of the United States on the 13th day into foreign exchange operations that has been of May, 1918, calling upon the Secretary of the sent to banks: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 827 Profits or losses, first quarter 1918—Exchange purchased and sold—European neutral countries. Purchases. Sales. Deductions. Classification. c F u o rr r e e n ig c n y. Dollars. c F u o rr r e e n ig c n y. Dollars. pr G l o o r f s o it s s . s or l D o in n i t s g e c r o b e u i s l n t l , s t , O he v a e d r- d P t a e i r o f d o t n e u f s r i c t . - Taxes. pro l N o f s i e t s t . or commis- charges. sion, etc. DENMARK. Portion of 1917: Kr. Balance used i 14,662.63 4,655.39 Financial bills 2,778.70 937.98 Commercial bills 781.38 242.23 12,665.31 •1,337.03 Unsold balance Purchased during period.. Total 15,444.01 4,897.62 15,444.01 5, 274.01 376.39 376 39 376.39 SWITZERLAND. Portion of 1917: Fes. Fes. Balance used Financial bills ioo, 666.66 22, 402.71 47,437.33 10.664.28 I i i C U o n m so m ld e r b ci a a l l a n b c i e ll s purchased 467.05 103.77 40,234.67 9,039.14 during period 12,795.05 2 2,975.60 Total 100,467.05 22,506.48 100,467.05 22,679.02 172.54 17? 54 172.54 i Figured at 31$. 2 Figured at 4.30. Capital Issues Committee Rules and Regula- refunding of indebtedness existing upon April 5, 1918; tions.1 (3) the resale of any securities, the sale or offering of which the committee has determined to be compatible with the [All communications intended for the committee must be addressed to national interest; (4) any securities issued by any rail- "Capital Issues Committee, National Metropolitan Bank Building, road corporation, the property of which may be in the Washington, D. C."J possession and control of the President of the United 1. The act.—The War Finance Corporation Act author- States; or (5) any bonds issued by the War Finance izes the Capital Issues Committee, under rules and regula- Corporation. tions to be proscribed by it from time to time, to investi- Nothing done or omitted by the, committee under the gate, pass upon, and determine whether it is compatible act shall be construed as carrying the approval of the with, the. national interest that there should be sold or committee or of the United States of the legality, validity, offered for sale or for subscription any issue, or any part worth, or security of any securities. of any issue, of securities issued after April 5, 1918, by 2. Object of the committee.—The object of the creation of any person, firm, corporation, or association, the total or the committee is to assist in the conservation of financial aggregate par or face value of which issue and any other resources, labor, and material, so that they may be availsecurities issued by the same person, firm, corporation, able for uses essential to the prosecution of the war. or association since the said date may be in excess of The necessity of such conservation has often been made $100,000. Shares of stock of any corporation or associaknown and the Government has adopted various methods tion without nominal or face value are deemed to be of of accomplishing it, one of the most important of which is the face value of $100 each. through the regulation of the issue of securities. In order Any securities which upon April 5, 1918, were in the that this method may be pursued with due regard to the possession or control of the corporation, association, or requirements of the National Government, as well as to obligor issuing the same, shall be deemed to have been private interests, Congress has created the "Capital Issues issued after that date. Committee." In order to perform its duties and fulfill its The term "securities" as used herein includes stock, responsibilities in the fairest and most effective manner> shares of stock, bonds, debentures, notes, certificates of the committee has prescribed these rules and regulations, indebtedness, and other obligations. not only establishing forms for procedure, but also defining The committee is not authorized to pass upon (1) any general principles of construction and policy which it will borrowing by any person, firm, corporation, or associaapply equally and uniformly throughout the United tion in the ordinary course of business as distinguished from borrowing for capital purposes; (2) the renewing or 3. Interpretation of the act.—The provisions of the act applying to the committee will be interpreted by it in a i Created by act of Congress known as the War Finance Corporation Act, approved April 5,1918. manner to enable the committee to perform its duties in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

628 FEDERAL RESERVE BULLETIN. JULY 1,1918. a broad and comprehensive manner, in accordance with expression that such issues are not incompatible with the the intent of Congress. These provisions may be con- national interest is made by the committee in execution sidered with respect to (a) the classes of securities, (b) the of the congressional intent, and is not an independent classes of persons and corporations issuing securities, and determination of the committee in excess of its authority. (c) the classes of financial transactions involved in the issue With respect to the limitation of 3100,000, it is to be of securities which come within the scope of the act. observed that after an issuing principal has issued securi- With regard to (a), the description of securities is the ties of all classes amounting to $100,000 since April 5,1918, broadest possible, and includes every class of securities all future issues of any amount come within the province that can be issued and. sold or offered for sale or subscrip- of the committee. The committee, however, does not pass tion, whether the issue is made by an existing corporation upon issues of 8100,000 or less, unless a district committee or other issuing principal or by one organized or created for special reasons shall recommend action by the comafter the passage of the act. The form or length of time for mittee. In case a district committee should feel that an which notes or other securities are to run is not any cri- issuing principal is resorting to successive small issues for terion. Original issues of stock and securities are included the purpose of evading the spirit of the act, the matter as well as all increases thereof. should be brought to the attention of the committee. With regard to (6), the act applies to every class of per- It should be remembered, however, that the reasons for son, association, and corporation which can issue secur- conserving capital for war purposes apply always, whether ities, whether now existing or hereafter created or organized. the amounts involved are large or small, and while it is With regard to (c), there are several classes of financial wholly impracticable for any governmental agency to pass transactions which do not come within the province of the upon all issues of securities separately, the principles committee, to wit: involved affect all alike. Patriotic citizens should not (1) Borrowing in the ordinary course of business as dis- permit capital under their control to be wasted or used tinguished from borrowing for capital purposes; for any purpose not contributory to the prosecution of (2) Renewing or refunding indebtedness existing on the war, no matter how small the amount, and they April 5, 1918; and should be even more diligent when they must decide for (3) The sale of securities up to but not exceeding themselves without the benefit of specific advice from the $100,000 in amount since April 5, 1918. Government. In construing these exceptions, the nature of the trans- 4. States and subdivisions thereof.—In defining the issues action and not the form oi" security is to govern. of securities which the committee was authorized to in- Borrowing in the ordinary course of business is usually vestigate and pass upon, Congress did not in express terms done for seasonal requirements, through bank loans, ad- refer to States, counties, or municipalities. The reason vances, or through the issue of short-time notes, but bor- for this omission is presumed to be because Congress did rowing may be done in the same manner for capital pur- not wish even indirectly to appear to regulate the affairs poses, and in such cases bank loans, advances, or short- of the sovereign States. On the other hand, Congress did time notes come within the province of the committee. not forbid the committee to pass upon such issues, and it is As to securities issued to refund or renew indebtedness so obvious that the purpose and object of the act of Conexisting on April 5, 1918, the committee construes the act gress will not be effective to a very large extent unless the to mean that in the opinion of Congress the issue of such committee does so, the committee will entertain and act securities is compatible with, the national interest, and upon the applications of States and all subdivisions. that the committee is not to pass upon the same for the With respect to the position of the States and subdivipurpose of determining that fact. But before any such sions, the committee for convenience, repeats the views issue is made application should be made to the commit- it has expressed in response to many official inquiries, as tee, stating the amount of the indebtedness existing on the follows: said date and the amount of securities necessary to renew The purpose of the act of Congress is clear—to conserve or refund the same. The committee being satisfied on national resources. Its appeal is addressed to all patriotic these two points will pass the issue as a matter of course. citizens, in whatever capacity they may be acting. All This procedure is designed to give refunding securities the are expected to cooperate in giving effect to the act "for official sanction to which they are entitled and to save the purpose of assisting in the prosecution of the war." investors desiring to purchase them from the burden of The same reasons and the same inducements applicable to making unnecessary investigation. It is not intended the officers of private corporations and to individuals in to extend the jurisdiction of the committee beyond the their private capacity apply with even greater force to the limits denned by the act. The finding given by the com- officers of States, counties, and municipalities, and they mittee on refunding issues, for the sake of convenience, should be the leaders in the national effort to conserve rewill be in the same form as used for other issues (see par. sources. Every issue of bonds and securities of States and 21 hereof), unless some different form is requested by the all subdivisions should be submitted to the committee .applicant. It will be understood, however, that the before being sold or offered for sale. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1, 1918. FEDERAL EESEEVE BULLETIN". 629 must be made by the purchaser without being influenced GENERAL POLICIES. in any manner by the favorable action of the committee. 5. War work.—With regard to issues for the purpose of 10. Roads.—It is recommended that all State authoriaiding war operations, war contracts, production of war ties (including counties, districts, commissions, and materials, or intended to assist the National Government municipalities) shall undertake only such paving and other in the prosecution of the war, the committee will feel free road improvement work as may be actually necessary to to consult and avail itself of the advice of the departments be undertaken at this time, thereby avoiding the use of or officers of the National Government having knowledge men and money needed for the service of the National of the requirements, conditions, or facts affecting the Government. In order to justify the construction of Government. The committee will endeavor not only to roads, either military necessity or unusual economic restrict the use of capital for nonessential purposes, but necessity must be clearly proved. also to encourage its use for essential purposes. 11. Municipal expenditures.—The amount of capital 6. Issues of shares for property.—The issue of securities invested in municipal bonds every year is very large, and in exchange for property or for other shares, may or may if this amount, or a substantial portion thereof, could be not constitute a sale or offer of such securities within the saved, the funds of investors and savings banks would be meaning of the act. No general rule can be laid down and available in corresponding amounts for the use of the each case must be considered by the committee separately. National Government. There are certain classes of Applications for such issues should be made in the usual municipal improvements and expenditures which should manner. wholly cease, such as parks and betterments solely de- 7. Stock dividends.—The issue of shares through a stock signed for purposes of appearance or architecture. All dividend should be made only from bona fide surplus others should be curtailed and postponed until after the earnings or profits to present shareholders,, without pay- war whenever possible. This applies to public buildings, ment by them, and must not require the use of additional hospitals, street and road construction, waterworks excapital. All such issues should be submitted to the com- tensions, sewerage and drainage improvements, sidewalks, mittee by application in the usual manner. etc. Ordinarily only a small proportion of the improve- 8. Private issues.—There is no distinction between ments planned by a municipality are of such a character "'public" issues and "private" issues. Whenever securi- that they can not be postponed for a period without ties or shares of any kind are issued to obtain fresh capital, endangering the health or welfare of the community. the transaction come3 within the province of the commit- For example, it is said that no schoolhouses have been tee. It is not important whether the fresh capital is built in England since the war except in munition centers, obtained irom the public, or from any portion of it—that where temporary and inexpensive structures have been is, from private individuals. The approval of the com- erected. In this country, if such additional facilities are mittee is required regarding all issues sold, offered for sale necessary, such temporary structures should be resorted or for subscription, in excess of §100,000, regardless of to whenever possible. whether the transaction is public or among individuals The fact that the expense is to be repaid wholly or in privately. part by special assessments does not make any difference. 9. Merits.—The committee will not express any opinion The fact that there appears to be labor available is not upon the intrinsic merits of securities to be offered for sale. a true criterion, because war industries in many parts of It is authorized to examine into two questions: the country are in such need of labor that labor organiza- (1) Whether the issue is timely with respect to the tions are making comprehensive efforts to transport surplus financial operations to be undertaken by the Government labor wherever most needed. from time to time, and 12. Elections authorizing issues.—In cases where the (2) Whether the objects for which the funds are to be opinion of the committee is desired before the proceedings raised are compatible with the national interest. authorizing the issue have been completed, caution will Intending purchasers of securities which have been be exercised BO that the action of the committee can not passed by the committee must thoroughly understand and be used to influence the decision as to the issue. Whenappreciate the above statement. The fact that securities ever the decision of the committee can be postponed until have been passed is no criterion whatever as to their value after the completion of such proceedings, without involvor standing as an investment in any respect. The favor- ing undue delay, expense, or hardship, it will be the able action of the committee is not even any criterion as policy of the committee to do so. This is especially true to the merits of an issue in a national or patriotic sense. in cases of popular elections because the limited scope of In some cases the committee feels obliged to pass issues on the committee's action can not be justly appreciated by account of local or special circumstances, when it would electors and it might influence their vote. not do so if such reasons did not exist. While it will, of In cases, however, where the committee is clear that course, result that patriotic citizens will purchase only its opinion would be unfavorable, it is not improper that securities that have been passed by the committee, never- suggestion to that effect should be made in order to save theless the decision whether to make any such purchase the expense of calling and holding a popular election. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

630 FEDERAL RESERVE BULLETIN. JULY 1,1918. Government to conserve the financial resources, materials, INSTRUCTIONS TO APPLICANTS, and labor of the country for the prosecution of the war. 13. Applications.—Applications respecting the proposed 14. Identification.—It is necessary to identify the issues issue or offering of any securities shall be executed in accurately. The following information must be furnished: triplicate, the original and one copy transmitted to the Capital Issues Committee, National Metropolitan Bank WITH REGARD TO PROPOSED ISSUES OF BONDS, NOTES, Building, Washington, D. 0., and the other copy to the CERTIFICATES OF INDEBTEDNESS, AND OTHER SECURIdistrict committee in care of the Federal Reserve Bank TIES. in the district of the applicant. (a) Name or designation of the proposed issue, amount, The committee has prepared a form of application, and date of issue, dates of maturity, and rate of interest. The all applicants are urged to obtain such forms from the serial numbers shall be given whenever possible. The committee or a district committee, and make their appli- serial numbers are necessary when the proposed issue is cations on them. In addition the applicant must pro- part of a larger authorized amount, either then outstanding vide all the information which will enable the committee or issuable in future. to perform its duties with a full knowledge of all circum- (5) Amount of total authorized issue of which proposed stances and conditions appropriate thereto. issue is part. The following suggestions are made with regard to ap- (c) Attested copies of the votes, ordinances, or resoluplications, and the additional information required: tions authorizing the proposed issue. (a) The purpose of the proposed issue shall be fully and (d) In case the proposed issue is to be made under or accurately described. secured by a mortgage, deed of trust, indenture, or similar (6) If the purpose of the issue is to renew or refund instrument, attested copy of such instrument. indebtedness created before April 5, 1918, describe fully (e) Certified copies of the last balance sheet of applicant, the nature and character of such indebtedness and the including a statement of bills payable and income statetime or times and the general purposes for which it was ment for three years past, including last preceding 12 incurred. months. (This does not apply to States or municipalities.) (c) If the issue is to be created wholly or partly for war WITH REGARD TO PROPOSED ISSUES OF SHARES OF STOCK. purposes, or to raise capital or secure advances in connection with war contracts or war supplies, or to provide (/) Total capitalization of the corporation. equipment, buildings, materials, or facilities of any kind (g) Certified copies of the last balance sheet of applicant, for war work, full details thereof, and of the kinds and including a statement of bills payable and income statein general, the quantity of supplies or materials to be ment for the last preceding 12 months. furnished, and the amounts needed therefor, should be (h) Total authorized issue of stock of which proposed stated as well as the proportion which such, war work issue is part. bears to the total business of the applicant. Where any (i) Name or designation and amount of the proposed war purpose exists, mention should be made of the con- issue; the method and dates of issue, stating whether the trolling governmental authorities at Washington and else- issue is to be made by offer to shareholders, by sale, public where in order that the committee may obtain from such subscription, or otherwise. authorities any further information it may desire. (j) Attested copies of the votes or resolutions authoriz- (d) If the issue is deemed necessary by reason of any ing the proposed issue. governmental requirement, national, State, or municipal, 15. Time of application.—Applications with respect to or on account of the requirement of any commission or proposed issues should be made as early as possible in order other authority, the application should give complete to enable the committee to cooperate most effectively. details. Municipalities should forecast expenditures for the year, (e) If the issue is deemed necessary for public health and agree with the committee upon necessary items withor for educational or road purposes or other public nec- out waiting until an issue of bonds is about to be adveressity, the application should describe the same in full. tised or sold. This procedure has already been followed in (/) If the issue is desired for private purposes and no several important instances with satisfaction, both to the public necessity or requirement exists, very complete municipality and to the committee. A program once exposition of purpose and necessity should be stated. decided enables agreed issues of bonds to be expedited (g) The consideration, stating amount and character, when ready for sale. for which the proposed securities are to be issued, the price of sale, and the amounts to be received by the appli- DISTRICT COMMITTEES AND AUXILIARY COMMITTEES. cant, should be shown. 16. In each Federal Reserve district there shall be a dis- (h) In all cases, except for war work, explicit reasons trict committee of the capital issues committee, with headmust be given why the proposed issue can not be post- quarters at the Federal Reserve Bank of the district. poned until after the war, or why the necessity of the Each district committee shall consist of the Federal issue is greater than the paramount need of the National Reserve agent as chairman, the governor of the Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 631 Reserve Bank as vice chairman, and three or more other 20. Gases referred to district committees by the commembers chosen because of special qualifications to aid the mittee shall each be the subject of separate correspondence, district committee in its work. in order that office files may be kept intact. Bankers and others having experience in municipal, 21. Form of favorable opinion: manufacturing, or public utilities securities may be invited CAPITAL ISSUES COMMITTEE, to become auiliated with a district committee as an auxiliary committee, the members of which, from time to time, as their advice and experience may be useful or helpful, Issue of u ..*,«, „ [Here follows an accurate description of the securities passed upon.] i?;ay be asked to join in investigating and making recom- After due investigation into the purpose ofiho issue above described, mendations regarding specific applications. wo have determined that the sale thereof is not incompatible with the No .member of a district or auxiliary committee shall in national interest. any "manner, directly or indirectly, participate in the This ilnding constitutes no approval of such issue as regards its legality, validity, worth, or security in any respect. determination of any question affecting his personal inter- In any public offer of the said issue for investment by advertisement or ests or the interest of any corporation, partnership, or circular, and whenever reference is made to this finding, it is requested association in which he is directly or indirectly interested. that the statement quoted below shall be incorporated in full. 17. The district committees upon receipt of applications CAPITA L iH-suss COMMITTEE. By '. will examine them in order to determine whether the Chair num. necessary information baa been furoished. by the applicant i; .Passed by the Capital Issues Commirlee as not incompatible wi!;h the in accordance with these rules and regulations, and without national interest, but -without approval of legality, validity, worth, or waiting for the direction, of j;.he ciK-^/dtteo will, advise the security. Opinion No " [NOTE. This opinion can not be given unless an accurate and complete applicant to supply such, additional Iruorhjauort as may description of the securities necessary for Identification has been furappear to be necessary or desirable. From time to time nished, as hereinbefore prescribed. Applicants will save delay by carethe committee will advise the district (-omniitteos when fully regarding this requirement.] the latter should take further action upon Bitch applications, and in accordance with such advices the district committees will make full and complete investigation into 22. Form oi unfavorable opinion. all matters connected with the application and into all CAPITAL ISSUES COMMITTED. considerations hearing thereon. The district committees will make an analysis or summary of the application, veri- WASHINGTON. fying the detailed description of the securities to be issued Referring to the proposed issue of the following securities, to wit: and especially describing the purpose or object of the issue. [Here follows a brief description of the securities.] The district committee will complete its analysis with a In accordance with the authority vested in the Capital Issues Comrecommendation to the committee giving an accurate and mittee by act of Congress, approved April 5, 1918, this committee Iras full statement of its reasons for such recommendation, and investigated the proposed issue of securities above mentioned and has the district committee will thereupon send forward to the determined that the sale, or oiler for sale or subscription thereof at this committee its analysis, summary, and recommendations, time, is not compatible with the national interest. CAPITAL ISSUES COMMITTEE, together with all original documents, certificates, and. other By .. '„ papers not already filed with the committee.. Chulrmmi. Opinion No. ..... 18. The applicant shall not bo informed of the recom- JUNE 4.1918. mendations of trie district committee unless and until (Form No. 9.) such recommendations shall have been adopted by the File No. Bonds... 8 committee. The final action of the committee will in .Re. general be sent to the district committee and the applicant Classification Other securities $.. State, county, city, or district New work $ at the same time, in special cases the committee- will Application of Refunding communicate with the district committee, requesting the proceeds. latter to inform the applicant. Nature of proposed improvement. Other purposes 5.. 19. District committees are requested whenever possible to discourage or postpone for the period of the war proposed issues of securities and all expenditures for nonessential APPLICATION BY STATE OR SUBDIVISION THEREOF purposes, whatever the amount. If they are successful Place in discouraging or postponing an issue or expenditure, Date. CAPITAL ISSUES COMMITTEE, that fact shall be reported promptly to the committee. Washington, I). C. District committees are also charged with the duty of The undersigned hereby make application to the Capital Issues Comfurthering the public understanding of the functions and mittee with respect to the issuance of the within-described securities under Title II of the War Finance Corporation Act. purposes of the committee in their districts, especially with bankers and public officials. 67747—18 7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

632 FEDERAL RESERVE BULLETIN". .rur,v 1, 101S. INSTRUCTIONS TO APPLICANTS. (Form No. 10.) 1. To facilitate the speedy decision of the committee, this form should File No Bonds be lilted out in triplicate, two copies sent to the Capital Issues Com- Notes Classification mittee at Washington and one copy to the Federal Reserve Bank of the Re. Preferred stock district; where the State or subdivision thereof is located. Name of applicant. Common stock 2. In addition to the information requested herein, thero should "bo Other securities..., filed with the committee, an attested copy of the ordinance or resolution Total if already adopted, authorizing the proposed issue. Construction and equip- CAPITAL ISSUES COMMITTEE. Principal office ment I. D ( E a S ) C R B IP o T n I d O s N , n O o P te S s, E C o U r c R e IT rt I i E f S ic a P t R es O P o O f S i E n D de b T t O ed B n E es I s S : SUED. Field of operations. P h r o o w ce e u d se s d , ' iR W e o fu rk n i d n i g n g c . a , pital Number. Amount. Nature of business.. Other uses 1. Name of issue f ,@ $100 2. A mount, § 3, Denominations.! @ $500 . APPLICATION BY INDIVIDUAL OR PRIVATE CORPORA- 4. Dated I ©61,000 TION. 5. Maturity 6. Serial numbers ,.. to... , Place (6) Other securities, if any: Date , CAPITAL ISSUES COMMITTEE, Washington-, D. ,6y. II. PURPOSE OF PROPOSED ISSUE. (State exact application of proceeds.) The undersigned hereby makes application to the Capital Issues Committee with respect to the issuance of the within-described securities, "NOTE.—Secretary MeAdoo and the Federal Reserve Board have re- under Title II of the War Finance Corporation act. peatedly slated that no capital should be used for purposes not essential to the prosecution of the war or urgently necessary from the standpoint By. of public health and welfare. III. NECESSITY OP PROPOSED ISSUE. INSTRUCTIONS TO APPLICANTS. The applicant must give explicit reasons why the proposed issue can (Read carefully.) not be postponed until after the war, and why the necessity of the issue is greater than.the paramount need of the National Government to con- 1. To facilitate the speedy decision of the committee, this .form should serve the financialr esources, material, and labor of the country for the be filled out in triplicate, two copies sent to the Capital Issues Committee prosecution of the war. It is obvious that this statement must be com- at Washington, and one copy to the Federal Reserve Bank in the displete and accurate and sufficient to justify the issue at the present time. trict where the main office of applicant is located. (If applicant desires, an additional statement of reasons may be filed 2. In addition to the information asked herein, applicant will file with with this application.) each committee the following: (a) Attested copy of votes or resolutions authorizing the proposed issue. (&) In case the proposed issue is to be made under or secured by a [Applicant will leave this page blank.] mortgage, deed of trust, indenture, or similar instrument, attested copy 1. Date application received., of such instrument. 2. References: (c) Certified copy of last balance sheet of applicant, including a statement of bills payable and income statements for 3 years past, including last preceding 12 months. Approved or dis- Date referred. To whom. Answer received. approved. 3. If proceeds of proposed issue are intended to be used to develop mining, oil, or agricultural properties, applicant will file with each committee a full description of the location of such properties as to State, county, township, range, and section. 4. If applicant desires, a further statement (in addition to the information requested or contained herein) may be submitted with this application. 3. Examination and recommendation. CAPITAL ISSUES COMMITTEE. Date Member of Committee. I. HISTORY OF APPLICANT: (a) Date of incorporation, (b) State, 4. Recommendation of executive committee.. (c) Capital stock: Par value of Date shares. Authorized. Issued, Preferred stock.. Common stock.. Total (d) Bond indebtedness: 5. Action of Capital Issues Committee. Issue. Amount. Trustee. Attest: Executive Secretary. Other secured indebtedness (except bank loans): Issue. Amount. When due. 6. Applicant notified.. Date.. By. (/) Names of directors and officers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULS i, 1918. FEDERAL RESERVE BULLETIN". 638 II. DESCRIPTION OF SECURITIES PROPOSED TO BE ISSUED: (c) Other oapital purposes: (Specify and describe fully.) (a) Bonds, notes, certificates of indebtedness, and other obligations 1. Exchange for property No. Amount. 1. N ame of issue r @ S1OQ % Working capital 2. Amount, § 3. Denominations.! ©8500 8. Stock dividend 4. Dated I.... ©81,000 5. Maturity 4. Stock bonus 5. Other purposes ... 0. Serial numbers to NOTE.—Secretary McAdoo and the Federal Reserve Board have 7. Amount of total authorized bonds of this issue., 8 repeatedly stated that no capital should be used for purposes not essen- 8. Trustee tial to the prosecution of the war or urgently necessary from the stand- 9. How issued— point of public health and welfare. Mark X IV. NECESSITY OF PROPOSED ISSCK: (a) Public offering ( ) Price * 1. In all cases, in addition to answering the questions contained on (6) Private sales ( ) Price & this form, the applicant must file separately a full statement of explicit (c) Exchange for property...( ) * reasons why the proposed issue can not be postponed until aficr the (<Z) Exchange for securities.. ( ) * war, and why the necessity of the issue is greater than the paramount (ft) Preferred stock: need of the National Government to conserve the financial resources, .1. Name and dividend rate 2. Par value, $ materials, and labor of the country for thG prosecution of the war. Jt 3. Amount, S 4. Total authorized end is obvious that this statement must be complete and accurate and unissued sufficient to justify the issue at the present time. 5. How issued—- Mark X 2. If applicant holds any Government contracts, indicate them below: (a) Public offering ( ) Price >? (6) Private sale ( ) Price % ( ( c d ) ) E E x x c c h h a a n n g g e e f f o o r r p se r c o u p r e i r t t ie y s .. . . . ( ( ) ) * * N c u o m nt b ra e c r t o . f Department or officer. i A nv m o o lv u e n d t; . (c) Common stock: 1. Amount, S 2. Par value, $ 1 3. Total authorized and unissued, § 1 4. IIow Issued— MarkX i (a) Public offering .( ) Price $ (6) Private sale ( ) Price S 3. What is proportion of Government or other war contracts to total (c) Exchange for property...( ) * business of applicant? (Direct and indirect war work stated sepa- (d) Exchange for securities..( ) * rately.) ....... (O Stock dividend ( ) * (/) Stock bonus ( ) * [Applicant; will leave this page blank.] 5. Date of proposed offering 1. Date application received * NOTE.—Explain issuance fully under heading ''Purpose" below. 2. References: III. PURPOSE OF PROPOSED ISSUE: (Under one or more of the headings below give; exact application of (a) p r N oc e e w ed s c , a ) pita! expenditures, such as construction work, now Date referred. To whom. | Answer received. d A i p sa p p ro p v ro e v d e o d r . equipment, etc.: 1, Describe in detail, with general cost estimate-- 2, Whou work will be completed 3, Estimated increase in production , 3, Examination and recommendation. (6) Refunding existing indebtedness: Bate Member of Committee. Character of ! indebtedness ( i i i l . o o o t a e . n , s s , b , b o a a n c n d - k s, Whe r n e d in . cur- Purpose. T o o w w n h u o r m . Amount. Da 4 t . e Recommendation of executive committee. n-ounts payable, etc.). o. Action of capital issues committee; Attest: Executive Secretary. 6. Applicant notified: Date By.... Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

684 FEDERAL, RESERVE BCTLLETIJS. JtJLl I. INFORMAL RULINGS OF THE BOARD. Below are reproduced letters sent out from Release of Shipping Documents Upon Acceptance of Draft. time to time over the signatures of the officers [To an individual.] or members of the Federal Reserve Board Receipt is acknowledged of your letter of which contain information believed to be of May 30 m which you ask whether it is necessary general interest to Federal Reserve Banks and where a domestic acceptance is based upon a member banks of the system: bill of lading that^ the bank retain the bill of lading or other collateral during the life of the Warehouse Receipts for Canned Goods as Security. acceptance, or may the bank release the bill of lading after acceptance. You also ask whether (To a member bank.) the same rule will apply in case the acceptance Your letter of June 5, in reference to the is secured by a warehouse receipt. right ox a member bank to accept drafts or In reply you are advised that inasmuch as the bills of exchange drawn against the security of statute merely requires the accepting bank to canned goods under circumstances set fortn in be secured in domestic transactions" by ship- 3^our letter, has had the attention of the Fed- ping documents or warehouse receipts at the eral Reserve Board. time of acceptance the bank would" no doubt It appears that a certain concern engaged in have the right, if it became necessary to do so, the canned goods business proposes to set to release either the shipping document or the aside part of its readily marketable goods and warehouse receipt, provided the draft or drafts materials not necessary for immediate purposes accepted for one person did not exceed 10 per and to place them in storage with a lessee of cent of the capital and surplus of the accepting part of its premises. The lessee is then to bank. This is a question, however, which Issue warehouse receipts to the owners of the should be determined by the bank itself. goods, which receipts are to be used as security It is no doubt necessary in some instances for drafts drawn against the member bank and for the bank to release the shipping documents accepted by that bank under authority of under some agreement with its customer in section 13 of the Federal Reserve Act. order that the transaction may be consum- You desire to be informed whether such a mated. There would seem to be much less plan would in the opinion of the Federal Rereason for releasing the warehouse receipts, and serve Board meet with the requirements of the the banks might very property adopt the rule statute. not to release warehouse receipts other than in In reply, you are advised that if the premises exceptional cases. In any event, this is in question^ are actually turned over to the purely a matter of agreement as between the lessee under a bona fide lease, the lessee being bank and its customers. The Federal .Reserve independent of the borrower and having entire Bank in rediscounting such acceptances may custody and control of the goods, there would reasonably take into consideration the question seem to be no objection to a member bank whether or not they are secured or unsecured accepting drafts drawn against the security of at the time they are offered for rediscount. warehouse receipts issued by such lessee. It MAY 31, 1918. should, however, be expressly understood and agreed that the borrower shall not have access to the premises except with the permission of Rate on Paper of Acceptance Corporation. the lessee and that he shall exercise no control [To a Federal Reserve Bank.] of any sort over the goods against which warehouse receipts are issued. The warehouse I have your letter of May 29, in which receipt must, of course, bo in form to properly you inquire about the proper rate to be given convey and secure title to the bank. to acceptances of the Corporation JUNE 10, 1918. of . Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JOLX t, 19-18. FEDERAL ftE&EBVE BULLETIN. 685 My own feeling In the matter is that ac- real estate, except where such security is taken ceptances of this corporation ought to be dealt for a debt previously contracted, or where the with exactly as would be the acceptances of a loan meets the requirements of section 24 of prime private banker. These acceptance cor- the Federal Reserve Act. porations are in the same relation to the Federal In the opinion of this office, a loan on the Reserve system as the private bankers. They security of a farm-loan bond should not be can not become members, but, inasmuch as classified as a loan on real estate. It has been they expect to give you full information about consistently ruled by your office in accordance their own financial standing and the nature of with decisions of the Supreme Court of the their acceptances, and as they exercise a most United States on this subject, that a note seimportant function for the further development cured by another note as collateral, such colof our acceptance business and discount mar- lateral note in turn being secured by real estate, ket, their operation ought to be encouraged in does not constitute a loan on real estate. In every respect. such case the security for the note discounted I do not think, therefore, that it would bo is the obligation of the maker of the collateral proper to discriminate against their acceptances note and the fact that the maker of this note when they reach you properly indorsed by a is in turn secured by real estate does not mako bank or banker. If they should be offered to the security which* the bank receives a real you without any indorsement, then, indeed, estate security. . i would discriminate against them—at least In the case of farm-loan bonds, these bonds to the extent of one-fourth per cent in the dis- are the obligations of farm-land banks. The count rate, if not more. bonds, as I understand it, are not secured by As you know, I am very anxious to see hj mortgage on real estate, but by the notes adopted in growing measure the habit of or other obligations of various farmers being Federal Reserve Banks to insist upon the third held by the farm-land bank. In legal effect, signature for all the acceptances that they therefore, the farm-loan bond is in the nature buy. of a collateral trust bond and the security for P. S.- -Since dictating the above, I have had these bonds consists of the personal obligation an opportunity of discussing this letter with of various farmers, which obligations are in the members of the Board, and they are in turn secured by real estate. accord with the sentiments that I nave ex- In the opinion of this office, therefore, notes pressed. It is, of course, understood that the secured by farm-loan bonds may be discounted acceptance corporation will publish its reports by national banks. and that 7/0u will keep yourself fully advised (Signed) M. 0. ELLIOTT, as to its assets and obligations, That will, Counsel. of course, guide your board of directors in its JUNE 10, 1918. judgment as to how large an amount of these acceptances it will be willing' to take from time to time. DEAR ME. SECRETARY: I have your letter of the 7th instant, making inquiry as to whether MAY 31, 1918. or not a national bank may lawfully make loans on the security of farm-loan bonds, issued Right of National Bank io Make Loans Secured by Farm- under act of July 17, 1916. Loan Bonds. This question has been submitted to counsel, MY DEAR MR. COMPTROLLER: YOU asked' and I inclose herewith a copy of the opinion whether, in the opinion of this office, national rendered, which holds that notes secured by banks are prohibited by law from, making loans farm-loan bonds may legally be discounted by on the security of farm-loan bonds issued under national banks. This opinion has the approval authority of act of July 17, 1916, and known of the comptroller's office?. as the Farm Loan Act. Sincerely, yours, The question involved seems to be whether (Signed) J. S. WILLIAMS. the loans in question come within the classifi- W. W. FLANNAGAN, Esq., cation of loans on real estate. Under the Na- Secretary Federal Farm Loan Board, tional Bank Act national banks are permitted Washington, D. 0. to lend on personal security and are impliedly prohibited from making loans on security of JUNE, 21, 1918. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

638 FEDERAL. BESEHVE BULLETIN. JULY 1,1918. Receipt of Custodian of Wool as Warehouse Receipt acceptor in their hands without notification to the acceptor? (To n. Federal Reserve BfrnV.) Do you see any advantage in one form over Receipt is acknowledged of your letter of the the other, or can you suggest any improvement 31st ultimo, and I have to-day wired you as in the forms as given ? follows, which I now confirm: Your letter 31st. It being understood that [Form /.« wool is stored in buildings under control of Accepted at , 191 custodian entirely independent of borrower, Bank where payable (Without further notice to acceptor.) custodian's certificate or receipt, if issued in Address of bank fli no bank, address of acceptor.) proper form to convey or secure title, may be Name treated as a warehouse receipt within the mean- (Acceptor's authorized signature.) .13 Y ". ing of section 13 of the Federal Reserve Act, and acceptance of member bank under such [Form 2.) conditions would be eligible for rediscount. Accepted at , 191 Bank whore payable (If no bank, address of acceptor.) JUNE 3, 1918. Address. (Pay as specified, charge to the account of.) Name Form of Trade Acceptance. (Acceptor's authorized signature.) Bv. (From and to an individual.) JUNE 5, 1918. Various clients of ours send their trade acceptances to all States of the Union and wish Receipt is acknowledged of your letter of the to have them so worded that it would be proper 5th instant outlining two forms of trade acfor a bank in any State, including the State ceptances and requesting an expression of the where the negotiable-instrument la,w has not Board's preference. The matter was referred been enacted or it has been modified, to pay to counsel, and the Board concurs with his the acceptance without previously notifying the opinion that Form 2 would seem to be the most acceptor. desirable, since it contains a specific request to Will you advise me, in your opinion, if the pay the draft, instead of a mere implied request wording in either form of indorsement, as noted or waiver of further notice. below, should be sufficient warrant for the bank to pay the acceptance from funds of the JUNE 25, 1918. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JtitY 1, IStlS. FEDEBAL EE8J3RVE BULLETIN. 637 LAW DEPARTMENT. The following opinions of counsel have been ment may be necessary, and to issue therefor authorized for publication by the Board since war savings certificates of the United States, the last edition of the Bulletin: Under the terms of the act ''such war savings certificates shall be in form or forms and sub- Rediscount of Paper Secured hy War Savings Stamps, ject to such terms and conditions and may Notes, drafts, and bills of exchange which are secured by war savings stamps and the proceeds of which were have such provision for payment thereof beused to purchase or carry war savings stamps are ineligible fore maturity as the Secretary of the Treasury for rediscount with a Federal ."Reserve Bank. may prescribe/' The act further provides that--- JUNE 8, 1918. Sut: The accompanying letter from the "The Secretary of the Treasury may, under deputy governor of a Federal Reserve Bank such regulations and upon such terms and conditions as he may prescribe, issue or cause to be raises the question whether notes, drafts, or issued stamps to evidence payments for or on bills of exchange secured by w&v savings account of such certificates." stamps may be red isco tinted with a Federal From this it appears that while the Secretary Reserve Bank, it being assumed that the proof the Treasury in his discretion might issue coeds of such notes, drafts, and bills of exwar savings certificates in the form of a bond change were used to purchase or carry war or note, or in any other form, he deems necessavings stamps. sary, the war savings stamps, under the terms Section. 13 of the Federal Reserve act makes of the act, merely evidence the payments for or eligible for rediscount with a Federal Reserve on account of war savings certificates. Bank - The form of certificates prescribed by the "Notes, drafts, and bills of exchange arising Secretary is more nearly that of a certificate of out of actual commercial transactions; that is, indebtedness than that of a bond, or note of the notes, drafts, and bills of exchange issued or drawn for agricultural, industrial, or commer- United States. It merely provides that subject cial purposes, or the proceeds of which have to the terms and conditions printed thereon, been used, or are to be used for such purposes, the owner named in the certificate shall be * * * but such definition shall not include entitled to receive, on January 1, 1923, the notes, drafts, or bills covering merely investments, or issued or drawn for the purpose of amount indicated thereon by the war savings carrying or trading in stocks, bonds, or other stamps or receipts attached. investment securities, except bonds and notes Under the terms and conditions printed on of the Government of the United States." the certificate, it is expressly stipulated that It is obvious, therefore, that notes, the pro- "this certificate is of no value except to the ceeds of which have been used to purchase, owner named hereon and. is not transferable." carry, or trade in war savings stamps are not In view of this condition, the certificate itself, eligible for rediscount with a Federal Reserve which is the evidence of the Government's Bank unless war savings stamps can be treated liability, could hardly be treated as a bankable as bonds or notes of the United States, within security for loans. This being true, the war the meaning of the language used in Section savings stamp which is, in effect, a receipt for 13 of the Federal Reserve act. payment on account of a nonnegotiable evi- Section 6 of the act approved September 24, dence of indebtedness, could not, in the opinion 1917, authorizes the Secretary of the Treasury of this office, be classified as a bond or note of to borrow from time to time on the credit of the United States, and notes, drafts, or bills the United States such sums as in his judg- of exchange secured by such war savings Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

638 FEDEBAL BESERVE BULLETIN, JULY 1,1918. stamps, or the proceeds of which have been for borrowed money to such State bank or used to purchase, cany, or trade in such stamps, trust company in an amount greater than 10 per cent of the capital and surplus of such should not be treated as eligible for rediscount State bank or trust company. by n Federal Reserve Bank. It is, therefore, necessary for the Board to Respectfully, determine whether under the circumstances M, 0. ELLIOTT, Counsel. recited the bank's customer is liable to the To HON. W. P. G. HARDING, bank for borrowed money within the meaning Governor, Federal Reserve Board. of this act, on notes of the customer which have been rediscounted with the bank's indorsement, and which are held by a third Rediscounts by Member State Banks. party. Where a State bank, which is a member of 'the Federal It is true that in such case the bank is con- .Reserve system, has loaned to one of its customers au tingently liable on the notes in question and amount equal to 30 per cent of its capital and surplus, and may be called upon to pay them if the maker lias rediscounted two-thirds of this amount with a corredefaults. The liability of the maker, however, spondent bank, the remaining one-third is eligible for rediscount with its Federal Reserve I3ank. is to the holder of the notes, which are negotiable, and he does not become liable to the JUKE 21, 1918. bank after the notes are rediscountod until Si a: The attached letter from the deputy the bank as indorser, has paid the notes or governor of a Federal Reserve Bank raises the has again become the holder in due course of follv >wing question: such notes. A State hank, which is a member of the This question was considered by the Board Federal Reserve sjrstem, has loaned to one of and by the office of the Comptroller in conits customers an amount equal to 30 per cent nection with the limitations prescribed by of its capital and surplus. If it rediscounts section 5200, Revised Statutes, on liabilities two-thirds of this amount with a correspondent to a national bank of any one person, firm, or bank, would the remaining one-third which is corporation. equal to 10 per cent of its capital and surplus The conclusion was reached in that case that be eligible for rediscount with its Federal notes which have been rediscounted by a na- Reserve Bank ? tional bank and which are no longer owned or Section 9 of the Federal Reserve Act reads held by the bank, should not be included as in part as follows: a liability of the maker to the bank for bor- Subject to the provisions of this act and rowed money within the meaning of section the regulations of the Board made pursuant 5200. thereto, any bank becoming a member of the The same principle is involved in the present Federal Reserve system shall retain its full charter and statutory rights as a State bank case, and, in my opinion, the paper held by or trust company and may continue to exer- the State bank in the case cited, if otherwise cise all corporate powers granted it by the eligible, could be rediscounted with a Federal State in which it is created and shall be en- Reserve Bank. titled to ail privileges of member banks: Pro- Respectfully, vided, however, That no Federal Reserve Bank shall be permitted to discount for any State M. C. ELLIOTT, Counsel. bank or trust company notes, drafts, or bills To Hon. P. M. WARBURG, of exchange of any one borrower, who is liable Vice governor, Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

SUMMARY OF BUSINESS CONDITIONS, JUNE 23, 191.8. District. b G us e i n n e e r s a s l . Industri t e r s ic o k f the dis- | Co a n n s d tr . u e c n ti g o i n n , e e b r u in il g d . ing, Foreign trade. j Money rates. ila a i n lr d o a o d th , e p r o r s e t c e o i f p f t ic s e . , Lai)or conditions. No. 1—Boston Active Average, promis- :' Busy.. Decreased.. Increased. Steady and strong. Mixod. Scarce: wages high. ing. ' ! No. 2—New York. Very active.. Good | Engaged to full capac- Dull, except lor con- Many restrictions, Firm and steady. Post office increase, Scarcity and high | ity; widespread struction of Army but large aggre- 19.28 per cent over com.petit, ive adaption oi1 produc- wwaarreehhoouusseess,, ss hhh ii pp - gate. last year; railroads \va30 offers, retion to warcssontJals, yard\s , h*o uussiinngg for show increase in sulting in large G ovorn merit labor gross and decrease turnover. and factory in net earnings. struction. No. 3—Philadel- Very good Excel Ion t . i Very busy | Very little new build- Largo. Firm; no change... Gross receipts in- Shortage acute in phia. 1 ! ing. creasing. all lines. No. 4—Cleveland.. Good j Satisfactory a n d j Busy i Very dul) Increasingly firm..,Increase.. Unsatisfactory; scarcity. | promising. j No. 5—Richmond.. Active, lim- Excellent ] Active, profitably em- Private building neg- Limited by freight 8 por cent; heavy Railroad irregular; Inadequate; unsatited only by i ploved. ligible: Government room. * " demand and in- post office, volume isfactory. labor 'and ' j work active. creasing. large; reflects insupplies. creased rates. ft No. 6—Atlanta..... Good Very satisfactory..! Busy Inactive.. Unsatisfactory i Firm. Unsettled. s No. 7—Chicago Very active.. Excellent. Generally at capacity. Dull. .do. Post office receipts de- Very scarce. 1 crease over" last I month. | I w No. S-St. Louis... Good do...- Active .....Do do.... Increase in postal re- Nearing settleceipts. ment. No. 9—Minneapolis. do do .do. Fair Very firm. Not much change , Good. No. 10—K a n s a s do........ Good to excellent.. ..do Slightly improved.. Firm Equalization of farm demand City. and supply. No. H-Dallas Quite satisfac- Fair to good.. ..do. Building activities be- As satisfactory as Firm, heavy do- Railroad increase and j Unsatisfactory; tory. low normal; Gov- shipping space maud, but slight higher tariffs not no- shortage in all ernment work has available per- j evidence of in- ticeablo in travel; [ "branches, right of way. mits. | crease. post office increase. No. 12—San Fran- Active Cxood ..do.... Operations generally Increase Firm Increasing.. More settled. cisco. curtailed. 00 CD Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

640 FEDEBAL BESEB.VE BULLETIN". JULY 1,1918. GENERAL BUSINESS CONDITIONS. There is given on the preceding page a sum- side of emergency work, for which extremely mary of business conditions in the United high wages are paid. States by Federal Reserve districts. These Antiloafing legislation has been passed and reports are furnished by the Federal Reserve committees have been formed in different States agents, who are the chairmen of the boards of to work out a solution of this problem. Results directors for the Federal Reserve Banks of the in this direction should soon be apparent. several districts. Below are the detailed re- Domestic wools are coming in freely from the ports as of approximately June 23: West and are being distributed to mills as fast as possible. South American wools are not DISTRICT NO. I—BOSTON. coming forward as satisfactorily as might be The general public is fast becoming accus- desired, due to the difficulty of securing tontomed to the idea of precedence for Govern- nage. There is no trading between mills or ment business and Government regulation of dealers, and none of the domestic wools are commodities and industries. In fact, with being allotted for civilian needs. prices of raw materials at the present level, Woolen and worsted mills are running at manufacturers would not be able to plan capacity. The statement of the National Asfuture business were it not for the aid given sociation of Wool Manufacturers, under date by the Government. As the participation of of June 19, 1918, reports practically all spindles our troops in the war increases, the manu- in operation. Of these nearly 50 per cent are facture of and demand for less essentials de- engaged on war orders. creases, and increased energies are devoted to Boot and shoe manufacturers, although runwar requisites. ning as full as practicable, report an unsatis- Retail merchants are finding on the whole factory condition in both labor and raw matethat the quality of goods purchased by their rials. The leather market is strong and steady, customers is above the average and that the holding its recent advance. The British War increase in their cash business is greater than Mission has been buying seven to eight million in the case of charge accounts. This follows dollars' worth of sole and upper leather to be the trend apparent for some months past, used in England for civilian shoes under Govnamely, that labor engaged at high wages is ernment restrictions. buying freely, while persons of means or living The United States Government has canceled on a fixed salary are obliged to economize licenses issued for the importation of hides in because of the increased cost of living. all but a few exceptional cases, and this to- Retailers note a contraction in the volume gether with expected price fixing, has made for of their sales during months in which large a strong market. Manufacturers are gratified Government payments are due, cither for by the Government ruling restricting the styles Liberty loan bonds or for taxes, and the income and height of shoes, feeling that it will enable and excess profits taxes due this month have them to concentrate on particular styles and proved no exception. Nevertheless, taking the effect economies. first six months of this year as a whole, business Cotton mills making fine and fancy fabrics in many lines shows an increase over corre- are, for the most part, sold well into the fall sponding months last year, not only in dollars and consequently are indifferent in regard to but in units. new orders. The prospect of Federal price reg- The labor situation continues without change, ulations has caused both buyers and sellers to employees being hard to obtain for lines out- refrain from commitments until the matter is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 641 more definitely settled. As a consequence, corresponding week last year, and $291,441,064 orders are slow, although prices remain firm. for the week ending June 8, 1918. Manufactures of print cloths are sold far ahead Building and engineering operations in New and it is reported that in some cases orders England from January 1 to June 12, 1918, have been placed up to next March, where amounted to $64,867,000, as compared with mills would accept such business. $87,034,000 for the corresponding period of Good average growing conditions for crops 1917. have prevailed during the past month. The The receipts of the Boston post office for growth of corn has been retarded by cool nights. May, 1918, show an increase of $99,336.63, or Potatoes continue to do well. about 13 per cent more than May, 1917. For Garden crops are making good progress, the first 15 days of June, 1918, receipts were although a higher temperature would be bene- about 17 per cent, or $62,643.05 more than for ficial. Apples are dropping somewhat more the corresponding period of last year. than usual at this season, and haying is begin- Boston & Maine Railroad reports net operning in the southern portion of New England, ating income, after taxes, for April, 1918, of with the growth on old fields light, but good on $784,977, as compared with $869,026 for the new ground. corresponding month of 1917. The payment of income and excess profits For April, 1918, the New York, New Haven taxes has not been felt by the banks to any such & Hartford Railroad reports operating income, extent as had been anticipated, due to the im- after taxes, of $1,224,097, compared with mediate redeposit of funds with the banks on $2,046,685 for April, 1917. whom the checks were drawn. For the first four months of this year oper- Banks are maintaining a conservative lend- ating income, after taxes, of the four principal ing policy and are keeping their assets in as New England roads was $2,758,133, as comliquid a condition as possible to meet with- pared with $10,780,170 for last year. drawals of these Government deposits, but it Loans and discounts of the Boston clearing is to be expected that when this large amount house banks on June 15, 1918, amounted to is called by the Government, considerable re- $499,730,000, as compared with $503,733,000 discounting with the Federal Reserve Bank will last month, and $455,330,000 on June 16, 1917. result. Demand deposits on June 15, 1918, amounted The statements of banks and the general to $458,431,000, as compared with $464,336,000 money market will not reflect the true condi- on May 18, 1918, and $352,879,000 on June 16, tion caused by these payments until after the 1917. Time deposits on June 15, 1918, totaled Government has withdrawn the money now on $14,780,000, as compared with $16,179,000 on deposit. May 18, 1918, and $34,657,000 on June 16,1917. Call money remains 5£ per cent to 6 per cent, The amount "duo to banks" on June 15, generally 5£ per cent. Time money is quoted 1918, was $125,771,000, as compared with 6 per cent, with very few exceptions. In the $129,078,000 on May 18, 1918. case of borrowers carrying large balances there DISTRICT NO. 2—NEW YORK. is an occasional shading to 5-f per cent for short Widespread absorption by the Government maturities. of industrial products essential for war, and The commercial paper market is quiet, with increase in the scope of the Government's su- 6 per cent the going rate for all names and pervision over industry, especially through dates. control of raw materials, are the important The exchanges of the Boston clearing house features in the present business situation. for the week ending June 15, 1918, were $370,- Business is active and manufacturing is as near 045,043, compared with $266,557,142 for the maximum capacity as restricted supplies of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

642 FEDERAL RESERVE BULLETIN. JULY 1,1918. raw material and difficulty in obtaining ade- uary, when congestion was acute. April requate labor will permit. ports for the 34 roads of the eastern region show Under arrangements made June 8 between increased gross earnings and mileage, net earnthe Government and the American Iron and ings being cut by high operating expenses: Steel Institute, industries using iron and steel on other than war orders will receive little ma- Gross Net earnings. Mileage. earnings. terial. About 85 per cent of the pig-iron output is reported as being necessary for war pur- Eastern region (34 roads): | poses, although the present rate of production April, 3918 i8101,093,476 29,463 §18,916,307 April, 1917 ! 85,661,811 28,120 20,916,618 is the highest on record—in May, 3,446,412 Net change (increase) per cent.. I 18.03 4.05 19.56 Entire United States (194 roads), j gross tons, or 111,175 tons per day. Practi- net change (increase). .per cent.. I 15.70 .9 i 18.51 cally all iron, finished steel, and scrap in the 1 Decrease. vicinity of New York City and Buffalo is being Lumber prices are extremely high due to the availed of by plants occupied in the production fact that logging operations have produced of munitions, railroad equipment, shipyard supsmaller output than usual. Improvement-in plies, and other war materials. To avoid excessive congestion of industry, the War In- rail facilities have, during recent weeks, perdustries Board with the Fuel and Railroad mitted shipments of pulpwood from Canada, Administrations on June 11 determined that no which, if continued, will assure a sufficient supfuture war orders should be placed in New York, ply for the paper mills. New Jersey, and other eastern territory, unless Demand for window glass is active but light arranged with their joint consent. The Fuel for plate glass, cut glass, and mirrors. Administration estimates that the country will Automobile plants are restricting output of need 735,000,000 tons of coal in the year which passenger cars to 30 per cent of capacit^y, and began April 1, or 84,000,000 tons more than the in addition to devoting their plants to making production in 1916-17. The Anthracite Com- trucks are making gun carriages, mine anchors, mittee has increased the allotment for 1918-19 tractor parts, artillery wheels, and in some into States in this district, as follows: stances installing machine^ to make shells. In the textile industry 50 per cent of knit goods, 75 per cent of denim, 100 per cent of cot- Connecti- New York. New Jersey. cut. ton duck, and 60 per cent of woolens are being applied to Government use according to an 1918-19 (tons) 15, 655,300 5,460,784 2,476,700 1916-17 (tons) 14,169,809 4,961,822 1,952,000 estimate in Dun's Review. The Government Increase (per cent) { 11.89 10. G4 26. 82 on May 20 requisitioned the entire 1918 wool clip. High prices of both cotton and iflbolen Actual coal stocks on hand at New York City materials have encouraged a relatively greater are very small, and although receipts of both utilization of silk in civilian trade, though high anthracite and bituminous increased during the and uncertain prices for raw silk resulting from 4-week period, May 20 to June 17, the demand scarcity in the Orient and shipping difficulties, for domestic sizes of anthracite and for commercial coal exceeded supplies. Demand for have held the production of the mills down to petroleum products also exceeds supply, largely about 65 per cent capacity, and caused the price because of utilization of a considerable part of of manufactured goods to advance sharply. the oil-carrying fleet of tank steamers in over- Increased demand for burlap, which is being seas transportation. extensively used instead of wood in packing Traffic on railroads east of the Mississippi is goods for shipments, is coincident with deflowing smoothly, only 11,000 cars above nor- creased imports from Dundee and Calcutta, the mal being recorded as in transit on eastern two principal sources of supply, so that stocks lines June 14, compared with 160,000 in Jan- are short. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN, 643 The money volume of the dry goods move- important factor in stimulating sales. A sement is large, with increase in sales of medium rious problem in public utility financing is priced goods, while sales of those of high grade being solved by the War Finance Corporation, are decreasing. Purchases of clothing and which is making the Brooklyn Rapid Transit woolen materials are being made by retailers Co. a direct loan of $17,320,000 to assist in in advance of the season, partly because of ap- meeting a $57,735,000 note issue due July 1, prehension of later scarcity, and retail sales are on condition that holders of the notes exheavy, Business in the fur trade has been very change not less thai). 70 per cent of their holdgood, both wholesale and retail, especially in ings for notes of a new three-year 7 per cent towns outside of New York city. Chain stores issue. are having a very active business. Business Stock market prices have recovered from in the shoe trade is active despite recent sharp the low point touched around June 1, followprice advances due to higher cost of leather. ing a rather sharp reaction dining the last week Collections are reported good in practically of May. BOTH! sales have increased with modall lines, with exceptions only in drugs and erately declining prices. Demand for municichemicals. pal and other tax-exempt obligations has been Governmental restrictions have greatly re- quickened by the proposed increase in Fedduced exports to countries not allies in actual eral income taxes. fighting, including articles which made heavy Payment of income and excess profits taxes volume in normal times, such as steel, wheat, have been made without disturbance of money flour, and coal. Imports of some articles are market conditions and with much less strain absolutely embargoed, while others, including than had been anticipated, the loans of the provisions, crude rubber, etc.. have been re- Federal Reserve Bank of New York showing stricted because of tonnage scarcity. Coffee a heavy decrease during the tax-payment prices are slightly lower than in 1914, specula- period. Call money, though frequently reachtion being discouraged by price regulations; ing 8 per cent, has been readily obtainable, and tea prices are somewhat higher with heavy eased materially after June 15, the tax payvolume of purchases, including contracts for ment date. During early June substantial the Navy. Supplies of sugar arranged for by amounts of time loans on stock exchange colthe International Sugar Committee, are being lateral were made, though funds for this purexported from Cuba and Porto Rico in quan- pose continue scarce, Commercial paper has tities increasing during the course of the month, been sold in fair volume throughout the month and materially larger than last year. Deliv- at rates close to 6 per cent. eries at refineries on a percentage allotted basis, are reported adequate to meet consumption on DISTRICT NO. 3—PHILADELPHIA. the basis approved by the Food Administration. General confidence in the business situation. Extended acreage, excellent condition and is denoted by the liberal advance buying probable large yield of grain, decreased planting throughout the district. The retail demand of potatoes, and favorable orchard conditions, for seasonable merchandise continues quite except for peaches, are reported in this district. active, although the steady decrease in the Following the completion of the third Lib- variety of goods being offered by the leading erty loan campaign, capital issues increased stores and uniformly high prices are causing in volume, and a number of oil, gas, shipping, a well-defined tendency toward economy. In chemical, and munitions companies were in- all lines increasing difficulty is being expericorporated. Federal farm loan bonds amount- enced in replenishing supplies, and the growing to $60,000,000 were quickly taken by in- ing shortage of competent labor is an embarvestors, their tax-exempt character being an rassing feature. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

644 FEDERAL RESERVE BULLETIN. JULY 1, 1918. The railroad freight-car movement has great- Sumatra and Java leaf has caused renewed ly improved. A new record for the movement activity in Manila and Porto Rico, and large of freight to and from the South, in any one quantities of the former are being received. day, over the Philadelphia, Baltimore & Wash- Steel, like most of the big industries, is workington Railroad, was made in the 24 hours ing nearer capacity than at any time this year. ending at midnight, June 16. Figures com- The resolution adopted by the War Industries piled that day show that 3,326 cars were count- Board and the American Iron and Steel Instied passing Edgemoor, Del., the principal ob- tute that all pig iron and steel products shall servation point on the southern division of the be shipped hereafter only on priority certifi- Pennsylvania Railroad. The east and west cates or to a preferential list of industries will movement via the main line of the Pennsyl- make little, if any, difference, as steel plants vania Railroad also continues to be of record- have been for many weeks shipping almost all breaking volume. of their products as the Government directed. Coal is moving more freely. Production is The iron and steel industry has shown a rather decidedly better, but the situation generally is notable improvement during the month of becoming more critical, as the demands of May. The production of pig iron was the war industries and for domestic use are esti- greatest in its history with the exception of mated at 80,000,000 tons more than was pro- October, 1916, the output being 3,446,000 duced last year and the labor supply is gradu- tons, compared with 3,288,000 for April of this ally being depleted. Some of the men are year and 3,417,000 for May of last year. Steel leaving for higher wages with war industries production has also increased considerably, and others are being drafted into the Army. the output of this commodity amounting to Some collieries, because of labor shortage, 2,513,000 tons during May, compared with claim they are unable to operate at more than 2,411,000 the preceding month and 2,404,000 50 per cent capacity. The only change of tons in May, 1917. Labor shortage has benote in the bituminous situation is in the fact come a more important factor in mill and furthat the car supply is better than it has been. nace operations, and in some districts, there The improvement is to such an extent that has been at times an excess of cars over loadthere are in some places more cars available ing capacity. than can be loaded. Here, too, the matter of The building situation continues quiet, new sufficient and efficient labor will need attention. construction being confined almost exclusively Compared with the average for 10 years, to the erection of buildings for the Governthe general condition of all crops in the States ment or war industries, although it is reported in this district is indicated as follows: Penn- that plans are being made for a large number sylvania, 101.4 per cent; New Jersey, 101.4 of dwellings needed to accommodate the great per cent; Delaware, 94.4 per cent. New influx of labor attracted to Philadelphia, by the Jersey wheat is improving, truck crops are increased activity at the shipyards and other good, and there are excellent prospects for manufacturing plants. hay. In Pennsylvania considerable corn must Cotton mills are well sold ahead. Yarns are be replanted. Wet ground has prevented cul- scarce and high. The Government is requiring tivation. Early potatoes, oats, and rye are more and more of the product. in fine condition. In Lancaster County the The Government has complete control of the number of tobacco growers is approximately wool situation, and it is stated that the trading- 10,000, arid the 1918 acreage is about 25,000. profit in the business has been practically elim- At least 75 per cent of the new crop is planted. inated. Some houses have reduced their work- It is making good growth, the weather being ing forces and are making no effort to get favorable. The embargo on importations of business Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 645 Textile manufacturers have all the business fruit. In the southern part of the district they can take care of. more, in fact, than they wheat is now being harvested, and prospects for can handle comfortably, considering the labor a large yield were never better. In the northand transportation difficulties, and the scarcity ern part the outlook for this grain is improved of raw materials. over last month. Generally for the district it is Chemicals and dj^estuffs are active and com- expected that the crop will surpass the average. mand good prices, while collections are good. In the Toledo district corn is said to be two Drugs are in demand, with scarcity in imported weeks further advanced than at the same time goods. The Government demand is very large. a year ago, while in other places it is reported The demand for printing papers for domestic somewhat backward but doing fairly well. In consumption is practically normal, but it is some districts the oats are already headed, and increasingly difficult to secure reasonably generally throughout the district the prospects prompt deliveries. On the other hand, the de- for a good yield are almost certain. The acremand from foreign countries, which under ex- age in potatoes is large. In some parts of the isting conditions are obliged to look to the district it is reported that this crop is suffering United States as the only source of supply, is from lack of rain. It is yet too early to estiphenomenally large. mate the amount of the yield. The money market continues firm, the pre- War gardens in the city and suburban disvailing rate for paper being 6 per cent. In- tricts axe of larger areas than last year; small creased activity is noted in the sale of bonds and vegetables are growing well, and arc of excepother securities. Tax payments and with- tional quality. Apparently a great many peodrawals from member banks of Government ple will be able fully to supply their own needs. deposits increased the demand on the bank for Labor.—The pressing demand for labor conloans, which on June 18 amounted to $83,677,- tinues. However, in the large manufacturing 402, the largest amount outstanding at any one districts it is believed that the labor situation time. Total discounts and loans to member is less difficult than last month, or a realization banks during the month of May amounted to that a shortage is to be expected has resulted $71,966,894; rediscounts for other Federal Re- in an acceptance of the fact. Girls and women serve banks amounted to $2,038,200. Accept- are being employed in increasing numbers. ances purchased amounted to $11,419,746, a Agriculture and industry are intensifying their total of loans and investments during the month efforts to meet the loss occasioned by the men's of $85,531,840, compared with $61,161,414 in leaving for the camps. April, and 125,878,818 in May, 1917. Collections.—It is generally reported that there is very little cause for complaint in this DISTRICT NO. 4—CLEVELAND. line. The number of requests for extensions is The concentration of the efforts of commerce not more than usual, and failures for the disand industry on the production of articles trict are below the average. It would seem most needed by the Government for its own use that a closer scrutiny of credits and a scarcity and the support of the allies continues. Busi- of goods tends to confine sales to the responsible ness generally is measuring up to the necessities buyers. of the times to escape the drawbacks which be- In quarters where a slight tendency toward set unnecessary production, and throughout the deferred settlements is reported, it is explained entire district there is apparent a substantial as a result of heavy tax payments at this time. confidence that shows faith in the future. Transportation.—Transportation service in Agriculture.—In the northern part of the the main is only fairly satisfactory, although district considerable damage is reported to fruit somewhat better than a month ago. However, trees by reason of the extreme cold of the past there are still complaints from a number of diswinter, and early frosts have in places killed the tricts. These complaints are for the most part Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

646 FEDERAL RESERVE BULLETIN. JULY 1,1918. from districts which are largely dependent on manufacturers continue to operate under reone line of industry, and due to embargoes this strictions, and very little change is reported in industry has been placed in an unusual position. this line. In some quarters delays have had a rather The demand for pottery is greater than the serious effect on smaller companies. production, due in part to the scarcity of a Mercantile lines.—The jobbing business con- sufficient labor supply to operate the plants tinues to be very large, and promises to exceed to capacity. Inadequate transportation facilithe average for the season. Prices are increas- ties also conspire to reduce the output, and in ing, a strong demand is apparent and season- some quarters brick and sewer-pipe kilns have able goods axe readily disposed of. ceased operation. In many quarters in the clay Retailers in the large manufacturing districts products line an uneasiness is felt as to the report an increase over last year in money final outcome of this class of manufacture as value of sales due to the increase in the cost of to what extent their products will be ruled as merchandise, but that the sales and actual nonessential. volume of business is smaller than in previous Coal production is still short of expectations, years. and little change is noted either from the stand- In some of the outlying districts it is reported point of production or in the strong demand that the wave of economy is affecting merchants which still continues. It is reported by large to a considerable extent and that business is producers that this industry is still very much not as active and sales have decreased in num- hampered through lack of transportation ber. facilities, and a fear is expressed that if these Manufacturing.—Operating conditions sur- facilities were adequate a supply of labor could rounding blast furnaces and steel mills show a not be obtained. Ketail dealers report difmarked improvement, and capacities are being ficulty in receiving supplies sufficient to fill increased. It is said that practically 95 per orders already booked for domestic use,, and it is cent of the material produced in the district is equally true of both bituminous and anthrabeing taken by the Government either in direct cite, partly due to householders' placing orders shipments or indirectly as raw material to con- now which in other times would be placed later cerns outside who are furnishing the finished in the year. product to the Government, Building.—In sporadic instances only the The demand for pig iron is very heavy, and building permits show an increase over last firms not engaged along essential lines have year, due to furnishing homes to workmen difficulty in obtaining a supply. A brisk where large Government plants have been demand is noted for structural steel and iron erected. The general decline continues. In for bridge purposes and for use in additions to a number of instances there is reported a shortmanufacturing plants. A shortage in sheet age of housing facilities, and, in general, the bars has very materially reduced the output of operations in this line are confined to cases of mills using this product. Generally in all lines absolute necessity. of iron and steel manufacture the demand is Money and investments.—The demand for unequal to the supply, and production is at the money is very strong, and the ruling rate is 6 maximum when supplies, labor, and transporta- per cent. In some quarters an inclination is tion can be secured. shown to increase this rate on other than com- Face brick manufacturers report a very mercial and Government loans. Tax payments much decreased output due to the general de- have been provided for, and bankers are now pression in building lines. The character of looking forward to the purchase of certificates the buildings being erected is such as not to of indebtedness to take care of subscriptions require a desirable quality. Window glass to the new loan. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 647 DISTRICT NO. 5—RICHMOND. very promising appearance. Cutting will begin The financing and collection of Liberty loan within the next 10 days, so we figure that by subscriptions and income taxes have held the early July our wheat mills will be again in center of the financial stage in this district operation, with the prospect of an unusually during the past month. They have made large crop. Due to the regulations of the large demands on the resources of the dis- Food Administration calling for substitutes, in trict, and a material expansion of loans in the order to help out the short wheat crop of 1917, banks and in the Federal Reserve Bank has we were unusually busy in our corn mills for been a natural sequence, but it has been the late winter and early spring months, but accomplished with a smoothness which has this business has now slowed down, due to the caused scarcely a comment. heavy early buying and to the fact that vege- Jobbers and retailers report active demands tables are now becoming plentiful, which for all classes of goods, sales largely for cash always cuts the meal demand with us." Truck and limited only by supplies. Money was shipments have been very heavy and some never so plentiful with wage earners and they sections report profitable returns, but others are spending it freely, almost recklessly. In report that the high cost of production has the port cities of the district retail business left no net. has been extraordinary on account of large Tobacco in Virginia and North Carolina is increases in the volume of labor on Govern- about the same as last year, South Carolina ment and other work. Interior points where reporting a considerable increase. The crop Government activities are on an extensive is in average condition. The South Carolina scale report similar conditions. A large pack- season opens July 1, the North Carolina season ing house advises that although the demand will follow closely, and the Virginia season is from the country districts is not up to that expected to open by August 15. Stocks of of the corresponding period last year, which leaf tobacco of all grades held by dealers for is due to the supply of home-cured products, sale are smaller than known for 25 years, this is more than offset by the increased de- especially tobacco suitable for cigarette manmand from the larger towns and cities and ufacture. The only considerable stocks held manufacturing districts which take a product are those already purchased by manufacturers. of better class and higher price. Grazing sections report good shipments of Crop reports are too favorable to justify the cattle and lambs at double former money expectation that present conditions can be values, the returns realized being highly satisfully maintained. Weather conditions have factory. been so far above the average that a reaction Canning is reported to be normal, a good to restore the average would only be natural. supply of corn, peas, and beans being obtain- "Have never seen crops in such fine condi- able. tion" is the general tenor of reports. Cotton The output of lumber has decreased to 50 prospects are said to be the best since 1911: a per cent to 60 per cent of normal. Some mills dry May resulted in good stands and the crop report that cars are a little more readily is reported in excellent condition. Some re- obtainable, but there is still general complaint ports indicate a reduction in corn acreage, but in regard to shortage, and also the difficulty corn, wheat, oats, and hay promise an abun- of shipping by water. Labor continues a diffidant yield. Final results depend largely on cult problem. A prominent manufacturer success or failure in harvesting. A large says: "Contractors performing work for the miller reports that "wheat milling through Government at cost, plus 10 per cent, have this section has been extremely dull for three certainly demoralized labor ail over this part months, but we have in prospect at the present of the country, and, if this is to continue, it time a local crop of both large acreage and looks to us as if the lumber mills and other in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

648 FEDERAL RESERVE BULLETIN. JULY 1,1918. dustries necessary to the prosecution of the However, reports of the spread of the boll war are going to have to shut down; that is, weevil are somewhat discouraging. if the Government insists upon fixing prices The wheat crop for the State is reported as at or below the cost of production, they are 1,640,000 bushels, as compared with 930,000 going to have to take over the industries or bushels last year. The acreage of oats and allow the owners to operate same under an corn is found to be 583,000 bushels, as comagreement to furnish the Government such pared with 540,000 last year. Figures on the lumber as it may require on the basis of cost, hay crop show more than double of that of last plus a small profit." year. Agricultural conditions in general for Manufacturers in all lines are running to the State are very promising. capacity, limited only by labor and supplies. Florida: Crop conditions in general for the Coal conditions are reported as improving, with State are reported the best for the past 30 a better supply of cars, but the complaints of years. The acreage to cotton will not exceed inadequate labor are reiterated. Women are that of 1917. The reason that cotton has rebeginning to take the place of men in lighter mained at a practical standstill regarding lines of work, but this has not yet obtained to acreage is that the agitation in Congress over any very considerable extent. the reduction in price of the staple has caused The views of a large textile manufacturer on many farmers to fear a loss in case they should the banking situation may be considered dis- increase their acreage. In numerous instances interested. He says: "Southern banks hav- in this State where larger acreages had been ing been well supplied with cash, due to the planted much of it was plowed up and planted general prosperous condition of the section, to corn because of this belief. have taken care of all legitimate needs of their Peanuts are fair to good, as are also castor customers, as well as thoroughly backing up beans, citrus fruits, melons, and tobacco. in proper patriotic spirit all war efforts of finan- Some rust and spider are reported locally in cial character. The section could hardly have citrus groves. a better general condition or a more favorable Large areas of the State have been planted general outlook." to wheat, and the greater part of this staple General crop and commercial conditions has been harvested. The oats crop is the throughout the district are highly favorable, largest known, and has all been harvested, Government operations at the various camps and reported of the finest quality. and on the coast are extremely active, and Georgia: Crops on an average throughout large disbursements are the result. the State indicate that they are about three weeks late, but they are in very good con- DISTRICT NO. 6—ATLANTA. dition, except the cotton crop in the boll There is very little incentive to engage in weevil sections. The conditions relative to any new business—primarily on account of the the boll weevil are worse than at this time last high cost of raw material, as well as machinery year. While making a tour of south Georgia and other necessities, and secondarily on ac- the last few days it was observed through the count of the difficulty in securing delivery of coastal plains section that thousands of acres these things. Some of the older manufactur- of cotton are being plowed up and planted to ing establishments in our district have enlarged corn and cow peas, on account of the ravage on account of the necessities of the times, but of the boll weevil. There will not be an acrethere has been no desire to do this. age equal to that of last year to be cultivated to Agricultural.—Alabama: Cotton conditions maturity in cotton, and speaking conservatively in general throughout the State of Alabama are it may be said that acreage to cotton this year fair to good. The crop has made good growth. will be 10 per cent less than last year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN-. 649 The setting out of sweet-potato slips con- The outcome of the wheat crop has been tinues, and it seems that even a larger crop somewhat disappointing, it being reported that has been planted than last year. The planting the heads are not well filled, due to rust and of peas for hay is under way; com is reported other diseases having affected the grain in its good to excellent and earing well. final development. In the northern districts the harvesting of Corn, cotton, tobacco, potato, and other wheat and oats is nearing completion. How- staples are doing well. Corn to some extent ever, spring oats remain yet to be harvested. has been laid by. The large production of The peach crop is abundant, and reported tobacco from this State is now being moved at of good quality, although having been damaged most satisfactory prices. in some portions of the State by storms. The Building.—Building continues inactive, with conservation of ice has been ordered to make the exception of Government construction sufficient ice available to move the large crop work. This is primarily due to the desire of safely. city and town authorities to comply with the Louisiana: The weather throughout the wishes of the Government that unless abso- State has been generally favorable, but the lutely necessary for the general health and showers were irregularly distributed. Cotton welfare very few new buildings should be conis in good condition, and is blooming. It is structed. mostly well cultivated. Reports of the boll The Capital Issues Committee for this disweevil are increasing. trict has received many applications for the Corn and some sugar cane have been "laid issue of new securities, but very few have been granted; and only those that are absolutely by." The potato, oats, and wheat harvests necessary for the national interest, and for the are mostly completed. particular communities where it is shown that Good crops of pears, plums, and peaches are the health demands require it. being gathered. The sweet-potato acreage will be increased Labor.—Labor conditions continue very unfrom 15 to 20 per cent over that of last year. satisfactory, and this becomes more manifest daily. Women are largely taking the places Mississippi: Crop prospects for the State are of men in the fields, running elevators, and reported very satisfactory. Cotton is bloomdoing other manual labor heretofore entirely ing and fruiting, and a considerable increase done by men and boys. in acreage over that of previous years is reported. Oats and wheat have been harvested, Live stock.—The live-stock industry throughand while the acreage was small, the yield is out the district is increasing rapidly, and to highly satisfactory. Corn prospects all over meet the demands in this section Montgomery, Ala., has recently built and opened a large the State, due to the favorable weather condistockyard plant. tions, are excellent. Alfalfa is doing splendidly Iron and coal.—Business conditions in the and has been cut for the second time. Potato, iron and steel industry as to demand are most oats, and wheat harvests are practically comsatisfactory, but labor conditions in this inpleted, the season having been especially fadustry and others whose products enter into vorable. There appears to be a large supply the manufacture of iron and steel have never of sweet-potato slips, and a large acreage is been more unsatisfactory. Wages now paid expected. bring to the men an income not heretofore Tennessee: Due to the lack of rain, crops in received, and this results in their working three general are suffering. However, weather conto four days, and not in excess of five days ditions for harvesting wheat, rye, and winter per week. This decreases production of coal, oats were good. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

650 FEDERAL EESERVE BULLETIN. JULY 1,1918. ore, coke, and commodities necessary for the Short-term notes and municipals have an manufacture of iron. As to skilled labor, it is active market. Long-term bonds are reported difficult to keep in the service competent men, not in great demand. Prospective investors on account of high wages paid in Government in public utilities are uncertain on account operations, although the present scale paid for of the present attitude of the War Finance such labor is in excess of any maximum scale Board against rendering direct assistance. heretofore employed. In the agricultural implement line there is Financial,—Statistics on business conditions no change from the conditions frequently for the month show a marked improvement. reported in the past, namely, large demand Money rates are firm, and banks are rediscount- with insufficient material and transportation ing very freely. Banking operations in general to enable producers to meet it. It is mentioned are in a very healthy condition. Figures for that farmers are repairing old machines wherthe sixth district show 40 failures for the month ever possible. Crop promise would appear to as against 115 in 1917, involving $209,110 as justify confidence in continuance of excellent against $1,439,019 for the year 1917. Stocks collections. and bonds are bringing unusually good prices. Passenger automobile manufacture is reported curtailed from 50 per cent to 75 per DISTRICT NO. 7—CHICAGO. cent, due to Government priority in the steel The most favorable single condition in this supply, as well as to the diversion of these district is that of the very promising state of factories to the manufacture of trucks, aerothe crops, except in Michigan. plane engines, and ordnance. Demand for There is a strong and continuous demand passenger vehicles is, of course, excellent but for money generally, and rates are therefore beyond the ability of manufacturers to satisfy. hard at 6 per cent or better. Banks lose There is no complaint that automobile manudeposits when the Government borrows, only facturers are being financially injured but to regain them temporarily, through redeposit, simply that the advent of the Government as or in the ordinary course of business. Tax a customer operates to exclude the civilian payments are reported to have been made public. without inconvenience. No new activity or improvement is observed Transportation facilities record a marked in the building line. Banks quite generally improvement, resulting in better distribution are discriminating against loans the proceeds of raw and finished material. of which go into fixed investments. Inability An unusually strong purchasing power is to secure funds, together with high costs of observed to exist in manufacturing centers labor and material, offer a ready explanation where labor is fully employed at high wages. of the marked recession over past years. May* Retailers report an insistent demand in the 1918, building permits granted in 15 cities of cities and find difficulty in financing their the district, including Chicago, aggregate 3,080 business, which under present conditions re- for a value estimated at $9,700,000, against quires, or is thought to require, heavy stocks. 4,947 permits in May, 1917, estimated at Country retail trade is at this time somewhat 118,800,000. The number of permits granted backward on account of the intensive field in May, 1918, in Chicago was 379 against 619 work of farmers. Because of Government reg- for the same month last year. Values were ulations wholesalers in textiles are denied the respectively $3,700,000 for 1918 as against usual variety of lines, but still record increas- $6,500,000 for 1917. May of this year shows ing money returns. In the trade there is a approximately a 50 per cent improvement movement toward cash payments and shorter over April in valuation of buildings for which terms. permits were granted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 651 Improvement in car supply would permit Wholesale grocers are enjoying a large money a fair distribution of coal for next winter's volume of business, with collections much imrequirements. Agitation of the need for pro- proved due to efforts to reduce sales terms and viding against a repetition of last winter's to encourage and demand cash settlement when shortage has brought out an excellent demand. possible. Demands for sugar for home pre- Supply is now restricted to some extent by serving of fruit is strong. Retailers in farmlabor scarcity. ing communities have observed a falling off in Confectioners experience seasonal dullness* sales to farmers due to their close attention to However, the restriction against the use of the crops at this time. sugar prevents their filling even the reduced There is reported a strong demand for hardvolume of orders. Transportation is some- ware, probably on account of the scarcity what improved. Labor is scarce and inde- thereof. Volume is excellent and collections pendent. Collections are good. satisfactory. There is nothing new to report in the whisky Price fixation now imposed on hides and business. Liquidation of stocks continues at skins is expected to be extended to cover all mounting prices. Maltsters and brewers are classes of leather. Tanners and factories are seriously hampered by labor shortage. Do- reported employed to capacity on Government mestic distribution is improved, with good and civilian work. Labor scarcity hampers transportation facilities, but export permits production. Price fixation is generally welare not obtainable. come as a stabilizing element. There is a tentative agreement between cot- Live stock receipts at Chicago show an inton goods merchants and manufacturers and crease for the four weeks ending June 15 over the War Industries Board that all sales made the same period last year, but a noticeable for delivery after January 1, 1919, be made at decrease for the same period last month. Stock prices to be agreed upon later, and that all has been of good quality. There is a healthy bona fide sales made after June 8, 1918, for demand for beef. Domestic and foreign shipdelivery after September 30, 1918, be subject ments have been heavy. Prices are well mainto price revision. This is taken to mean a tained. Comparative receipts of live stock at reduction and has caused hesitation in buying. Chicago for the four weeks ending June 15, Still, demand continues strong, while goods are 1918, and a corresponding period in 1917: scarce. Retail purchasing power is great on account of high wages and salaries. Cattle. Calves. Hogs. Sheep. Business in the furniture line enjoys increased volume due to high prices and not to 1 19 9 1 1 7 8 . . . . 2 2 1 0 3 3 , , 1 8 1 4 2 8 5 6 1 4 , , 9 5 7 3 4 8 I 4 4 9 8 3 5 , , 0 1 4 4 2 1 2 1 0 5 0 4 , ,7 1 5 4 9 9 tonnage. Some orders are being placed against further advances. Cost of doing business is Lumber business is still "spotty." No gencontinually on the increase. eral or consistent demand is experienced as As the season advances with nothing to mar normal building operations are at a standstill. crop prospects, the belief grows stronger that There is some anticipatory buying against we shall raise the largest crop of wheat, com, freight advances. oats, barley, and rye that has ever been known Mail order houses are maintaining average in the United States. Wheat harvest has be- volume, with a reported scarcity of many artigun in southern sections and a large movement ticles, though the situation is not as unfavorable is confidently expected around the first of the as it has been on account of better transportacoming month (July). The corn is reported to tion. Collections are excellent. be in excellent condition and other crops as Piano orders are in large volume. Labor well. shortage prevents full delivery. Transporta- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

652 FEDERAL EESEEVE BULLETIN. JULY 1, 1.9.18. tion and materials seem readily available. articles needed in the conduct of the war. Collections are good. Some of the shoe manufacturers have called in Nothing more can be said of the steel indus- their salesmen, as they have sufficient orders try than that the question is only one of pro- on hand to insure capacity operations for some duction, as there is only one customer, the time. Wholesalers and jobbers of dry goods Government, who either takes the product or report that there is a good demand for merassigns the privilege of buying it. chandise for both summer and fall use. Deal- Jewelry houses report steady increase in ers in farm implements say that sales are unvolume, with improvement in all departments usually large. Some of the wholesale grocers except silverware, which shows a considerable state that their sales are considerably below last reduction. This condition is laid to the absence year, due to the restrictions placed by the Govof the formal wedding. Demand for watches of ernment on numerous articles handled by them. all descriptions continues to absorb and exceed Department stores and retail merchants the production of manufacturers. Collections generally report good business. Many state are very good. that the volume of their business is in excess of Government control of raw wool will operate this time last year, measured in dollars, but to make civilian woolens increasingly scarce. that the number of transactions or articles sold Uniform cloths practically absorb the mills and is about the same as or less than last year. wool is not being ailoted for civilian use. Apparently more economy and discrimination Clearings in Chicago for the first seventeen in purchasing are being practiced. business days of June were $1,375,000,000, or Collections, as a rule, are reported to be good, $114,000,000 less than for the corresponding many of our correspondents stating that they seventeen business days in June, 1917. Clear- are excellent. It is said that bills are being ings reported by twenty-two cities in the dis- paid more promptly and that the demand for trict outside of Chicago amounted to $311,- credit is diminishing. This, no doubt, is due 000,000 for the first fifteen days of Juno, 1918, to the increased wages to all classes of labor, as compared with $284,000,000 for the first and the high prices which the farmer is refifteen days of June, 1917. Deposits in twelve ceiving for his products. member banks in Chicago were $870,000,000 The chief disturbing factors in business are at the close of business June 20, 1918, and the scarcity of materials, the high prices, loans were $607,000,000. Deposits show a delays in transportation, and the limited supdecrease of approximately $8,000,000 over ply of competent workmen. last month, and loans an increase of approx- Favorable crop conditions continue, and the imately $23,000,000. prospects are the best in years. The condition of all crops in the States included in this dis- DISTRICT NO. 8—ST. LOUIS, trict was estimated by the Government on June Business in this district is more and more 1 to be 11.2 per cent better than the ten-year adjusting itself to meet the needs of the Gov- average. Harvesting of winter wheat has ernment in the prosecution of the war. Manu- begun in this district, and a large output is exfacturers are enlarging and remodeling their pected. According to Government estimates, plants to do Government work, and some new the condition of the winter wheat in Indiana, enterprises are being launched for the pro- Illinois, Missouri, Kentucky, and Tennessee, duction of essentials. Efforts are being made on June 1, was 96.6 per cent, which is 18.8 per to meet the demands of the Government as cent better than the ten-year average. The efficiently and expeditiously as possible. acreage in these States is estimated to yield Industries are generally active throughout 176,490,000 bushels of wheat, as compared the district, especially those which contribute with 105,162,000 bushels for 1917 and the five- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 653 year average of 114,823,000 bushels. Spring DISTRICT NO. 9—MINNEAPOLIS. wheat is also growing satisfactorily, with an Some localities in the western portion of the acreage in excess of last year. The condition district report that additional moisture is of cotton in Arkansas, Mississippi, Missouri, and needed to assist the progress of the crop, but Tennessee was estimated by the Government the unfavorable reports are few, and the outon May 25 to be 85 per cent, which is 3.3 per look over the district as a whole continues to cent better than the 10-year average. Reports be excellent. have been received that the boll weevil has Some damage to growing crops may be exappeared in some sections of the cotton terri- pected as the season progresses, but the outtory, but no concern is felt as yet on its account. look is so good that even a considerable injury Corn is doing well, with plenty of sunshine and to the present prospects will not destroy the moisture. Practical^ all minor crops are promise of an exceptionally large output. satisfactory, and the present indications give Corn has been somewhat backward due to favorable promise of abundant foodstuffs. the lack of warm growing weather, but has In the live-stock market trading in cattle made good progress in the last two weeks and during the past month has been about the same promises well. Late sowing has improved the as last year, but there has been a falling off in flax acreage, and the outlook for that crop is the demand for horses and mules. The defavorable. Pastures have greatly improved mand for hogs has been steady, while increased during the past 30 days, as "have forage crops. activity is noted in sheep. Although this is not an industrial district, Reports from the leading cities in this disthe amount of production on war orders is trict indicate little change in building operasteadily increasing, and all the plants that are tions. Due to the high cost of materials and producing goods and materials for the Govlabor, and the policy of the Government to reernment are steadily increasing their output. strict unnecessary building, so as to release The labor situation is good, although the capital, labor, and materials for war purposes, effect of the draft is beginning to show itself very little construction work is going on except in the increasing employment of women. that which is absolutely necessary. Retail trade conditions show little or no The outstanding feature in financial circles change. The demand for merchandise is good, during the past month has been the payment of and most concerns are doing a fair average the Federal income and excess profits taxes on volume of business. In the large centers the June 15. This was accomplished with little character of the buying has changed somewhat, strain on the banks or disturbance to the money and those who were formerly liberal purchasmarket, due to the arrangement for redeposit- ers of the better grade of goods are not so ing the funds with qualified depositary banks, much in evidence. In their place a considerand also to the fact that many persons and corable number of new buyers has appeared, porations paid their taxes with United States indicating that favorable wage rates and op- Treasury certificates which they had preportunities for full employment have created viously purchased. a new class of buyers and provided an offset There is a good demand for money, and the against the natural shrinkage of sales due to bank rate to customers continues firm at 6 per war conditions. cent in the large cities and somewhat higher in Shipyards at the head of the Great Lakes the country districts. are working night and day on merchant ships The commercial paper market is quiet, with and are beginning to make substantial con- 6 per cent as the ruling rate for ail names and tributions in response to the demands of the maturities. Shipping Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

654 FEDERAL BESERVE BULLETIN. JULY 1,1918. Banking conditions show little change. The tration. A maximum price will be fixed for demand over the district is active in conse- flour, based on a reasonable milling profit above quence of the increased cost of agricultural the guaranteed price for wheat, and millers and operations and the larger production this grain dealers will then be permitted to compete year. Rates are firm and show little change. for the merchandising of the wheat crop. The present outlook is uniformly good, and The corn and oats movement has continued probably will not change during the midsum- fairly large and prices showed a lowering tendmer period. ency until shortly after June 1, when they rallied strongly. This section has good sup- DISTRICT NO. 10—KANSAS CITY. plies of both grains, but they are not being Agriculture.—Crops have continued to im- marketed any faster than needed. Stocks of prove steadily during the past month. The corn on the four principal markets decreased winter wheat prospect, as a whole, owing to two-fifths during May, while oat stocks reabundant rainfall in nearly all sections, has mained practically stationary. Receipts and shown marked improvement during May. The shipments of corn on the local market were onecrop is generally reported in excellent' condi- half and two and one-fourth larger, respection throughout all the States, except in limited tivety, than those of the same month last year. districts where it was damaged by drought. The new crop prospects for both of these cereals Harvesting has begun under very favorable are promising. The oats crop is well advanced conditions and the district will have, by all with the expectation of a yield equal to last indications, the largest crop ever produced year's large one, and corn has made a favorable excepting the phenomenal harvest of 1915. start on a large acreage. The oats crop fore- The condition of the grain, as reported by cast by Government estimates on June 1 was Government estimates on June 1, in the five for 225 million bushels in the States of Kansas, principal wheat-growing States of this district, Missouri, Oklahoma, and Nebraska, based on averaged 80 per cent of normal, or 2 per cent an acreage of nearly 8 million, the average in excess of the 10-year average. For this condition in these four States being 87 as district the crop is placed at 232 million compared with the 10-year average of 81 per bushels. cent. Old wheat supplies have been practically Live stock.—Liberal supplies of cattle conexhausted and supplies of flour are only about tinue to arrive at all western markets, the one-third of those on hand a year ago. Before movement to the principal markets for May, the present harvest comes in stocks of wheat in however, being one-tenth smaller than a year all bins and elevators will be smaller than ever ago. Prices are maintained around the highest before. Receipts on the local market during levels ever reached, and are $2 to $4 higher May were about one-ninth and shipments less than at this time last year. The live-stock than one-hundredth of those for the same industry at present is in a very good condition. month last year. Local mills were grinding at Shipments of cattle back to the country are only 5 per cent of capacity during the past larger than a year ago, which indicates that week. With 69 mills reporting in this district, grazing conditions are good and reflects the averaging but 38 per cent of capacity, the flour confidence of feeders and pasture men in the output for the past month decreased nearly future stability of the market. Intensive two-fifths under the same period a year ago, feeding methods and high prices for fat cattle when the mills were running at 61 per cent of have resulted in feeders seeking new supplies capacity. earlier than last season. Initial shipments of The plan for marketing the new wheat crop grass-fed cattle have just been received on the .has just been announced by the Food Adminis- local market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 655 Sheep receipts on the six important markets The market for zinc ores in the Missouriof this district for the past month were about Kansas-Oklahoma district during May showed 42 per cent in excess of those for May, 1917. some improvement. The fixed minimum price The bulk of the local offerings came from of $75 per ton for high-grade ores now in effect Colorado-Kansas feed lots. Packers showed makes an approximate advance of $20 per ton more interest in the market than during the over former prices. A decided improvement previous month. Lambs continue to sell was also shown in the prices paid for intermearound $20 per hundredweight, which means diate grade ores, while the average price for good profits for sheep raisers. all grades throughout the month was about $48 The movement of hogs is substantial^ larger per ton, as compared with $42 in April. For than last year, and district market receipts for the first five months of 1918 a radical decrease May were 5 per cent moro than those of the was recorded in shipments and value of all zinc same month last year. The average weight ores, this decrease being 11 and 30 per cent, of hogs at four centers was 225 pounds, as respectively. Strenuous efforts have been compared with 210 pounds for May, 1917. made by the operators to obtain a fixed mini- Prices were well maintained above $16 per mum price on second-grade ores, as well as for hundredweight, and an active packing demand the first grades. was prevalent. Local stocks of hog products During the past month the average price of decreased moderately during last month, but lead increased from $80 to $87.50 per ton, but are still 72 per cent in excess of those on hand the output of the mines was about one-tenth June 1 a year ago. less than in April. Comparing the five months7 The caUle and sheep men in northwestern period of this year with the corresponding New Mexico are facing an unusual and critical period in 1917, a decrease of nearly $25 per ton situation. As a result of severe drouth, pas- in the average price, or 22 per cent, and a gain tures and ranges are burned and barren. of 5 per cent in shipments have been regis- Cattle, to escape starvation, will probably be tered. shipped to Colorado and "Wyoming for grazing. Oil.—Kansas oil fields showed more general Ranges in those States are generally reported activity during May than in April. Complein good condition, except in scattered areas tions for the month numbered 502, an increase where there is need of rainfall. Sheep shearing of 28, while the new production was over 35,000 is well under way. barrels, a slight increase over April. A gain Mining.—Upon the basis of present condi- of about 63 per cent is shown in comparing the tions and indications it is predicted that the total estimated production of the past month coming summer in the mining camps of Colo- with the corresponding period last year. rado will be the dullest of any in recent years. Oklahoma maintained its good record of There is no evidence at this time of the usual large production from, its many fields. The spring revival in mining, which is attributed to wells completed were only 5 in excess of the the many uncertainties surrounding all oper- number of completions during the month preations £in.d the general feeling that costs must vious, but the new production obtained was be materially advanced without any chance of 48,000 barrels, a substantial gain of about onea like advance in metal prices. Operators arc third over April. Owing to a shortage of new said to fear the complete shutdown of many oil-field material and delay in. its transportaproporties on account of the recent increase in tion, some trouble is being experienced by the freight rates. Labor is again showing signs of smaller companies in the purchasing of necesunrest; demands for larger wages have been sary second-hand drilling supplies, which often made in some camps, and there is apparently can not stand the strain of hard drilling operano prospect of meeting these in view of the tions. The total estimated production of the foregoing conditions. State during the past month, as compared Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

656 FEDERAL RESERVE BULLETIN. JULY 1, 1918. with May, 1917, decreased about 7 per cent. creased but 13 per cent under the correspond- Latest figures available show that stocks in ing month last year, as compared with a destorage in the Oklahoma-Kansas fields de- crease twice as large recorded in April. The creased from over 93,000,000 barrels to slightly estimated value of such construction was oneunder 92,000,000 barrels during the month of fifth in excess of that of the previous month, April. and but one-fourth less than the valuation for The number of drilling wells in Wyoming is May, 1917, as against a loss of 34 per cent for still increasing, and the predicted drive for oil the cities of the entire United States. Wichita in that State is now in full swing. Operations and Denver recorded substantial gains of 161 for May were more general than in April, and and 86 per cent, respectively, over May a year with 21 completions, as compared with 12 last ago. month, the new production was nearly three Labor.—As the result of the cooperation of times as large. Drills are busy in Colorado and Government labor offices throughout the wheat operators hope that the long-sought large oil districts, the movement of farm labor is being field in that State will be found this year. It is controlled as never before. Supply and dereported that the quantity of oil that can be mand are being equalized. Government reextracted from the shale deposits of Colorado ports show that good wages are being paid the is estimated by the United States Geological harvest hands, the general wage averaging Survey at 20,000,000 barrels, approximately about $1 per day higher than in 1917. With three times the total estimated oil reserve of both a supply of imported labor greater than the United States lying beneath the ground. anticipated and a good supply of local labor, Lumber and construction.—Lumber manufac- practically all demands from the wheat States turing conditions have changed very little. have been successfully met. Indications are The handicap of labor shortage and the uncer- that future needs will be equally well supplied. tainty of transportation facilities are still pres- Over a dozen strikes were reported during ent. General reports show that there is no sur- the past month. Most of these, however, were plus of lumber anywhere, and as Government of little consequence and satisfactorily adrequisitions continue to take large quantities justed. Considerable trouble has been experiof material, indications are that the supply enced in wage controversies throughout Wyowill not increase at present. Although there is ming between sheep growers and sheep shearers, only a fair demand for lumber at retail yards, but mediation was finalty effected in all cases. however, because of good crops, dealers antici- Mercantile.—The number of commercial pate a heavy trade during the summer and fall business failures in the tenth district during the throughout the country districts. General month of April was 49, as compared with 41 for price tendency is upward at the present time. the same month a year ago. Liabilities of such Nevertheless, predictions are that the future insolvencies were one-half in excess of those for problem of dealers will not be that of price, April, 1917. Purchasing, indebtedness, and but of securing material, so that it may be payment activity (for the seven States wholly or available for the consumer. The advisement partially within this district) remain practically of fixing lumber prices for its own consumption stationary, as shown by comparisons between and for domestic purposes is now under con- May this year and last year. sideration by the Government. Business in all lines is good and manufac- The general trend of building operations in turing continues heavy. Wholesale trade in the cities has shown some improvement and general is unusually large. Eetail merchants the present outlook is more optimistic. Volume report a good house trade, with an active deof construction work, as reported in the mand for merchandise, particularly dry goods principal cities of this district for May, de- and shoes. Indications point to a large volume Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 857 of business throughout the summer, although Since May there have been further heavy there is a scarcity of merchandise in certain rains over a large area of the farming belt, and lines. The call for drugs is up to normal and as this is written, agricultural conditions are sales of groceries and provisions are hoav}7". quite favorable, except in those sections where Collections are generally prompt, though slow abnormal conditions exist on account of the in some cities. protracted drought. The passing month has The call on the farmers for increased food brought the height of the small grain harvesting production, together with a labor and horse in this district, and the weather has been ideal shortage, is bringing the tractor into unprece- for the same. Reports vary as to the yield dented prominence on the farms. Retail deal- of wheat and oats in Texas. Authorities estiers report good sales of tractors for immediate mate the wheat crop at from 7 to 10 million delivery and increased needs for harvesting bushels and the oat crop approximately 40 machinery and corn tools. Jobbers of auto- million bushels. As has been previously stated, mobiles state the demand for cars is large and the small grain crop will yield little, if anyfarmers continue to place orders in good vol- thing, in the "Panhandle" section, a part of ume. Automobiles are now scarce because of this district, where, under normal conditions, curtailment in production and reduced trans- the grain is largely grown. In more favored portation facilities, and orders for several of parts, the central, north, and northeast, howthe popular makes are taken subject to indefi- ever, the crop is exceEent and the yield will be nite delays. far above normal. Financial.—Bank clearings for 17 principal Our correspondents advise that the peanut cities of this district during the month of May crop will be unusually large, that corn is looking were about 1,400 million dollars, a substantial fine over practically all of the farming belt, and gain of 37 per cent over the same month last that other feed crops are, as a whole, in excelyear, as against the small increase of 7 per cent lent condition. The cotton crop is in various for all of the cities of the United States. Tulsa stages of development in Texas, and varying and Denver showed increases of 83 and 78 per reports are received as to its condition. Up to cent over May a year ago, these being the the first week in June the condition of the crop second and fifth largest gains reported through- could be summarized as fair to good. The out the entire country. extremely hot weather, however, of the past The demand for loans continues strong and week has hurt the staple to some extent and rates are firm. should it continue for any great length of time Reports of condition of the State banks by serious damage will result. The authorities the last call of May 10 show a large increase in report that the acreage planted will show a deposits over the same date last year, but a small decrease as compared with last year, slight decrease as compared with the previous probably 5 per cent. call, attributed chiefly to the purchase of Wholesale jobbing trade in mercantile lines Liberty bonds. is good. In dry goods, notions, and shoes, dealers report an active trade, and say that DISTRICT NO. 11—DALLAS. while the number of orders is not as great as As we enter the hot season, the usual lull in the same period last year, the high prices of in various lines of trade and industry in this such merchandise more than offset the dedistrict becomes noticeable. Considering this crease. In groceries, drugs, farm machinery, however, and the further fact that conditions implements, and harvesting supplies, business are uncertain on account of the war, the com- is far above normal. Mail-order houses are mercial outlook in general is satisfactory, and receiving a satisfactory volume of trade and industrial activities are well maintained. . report orders 25 per cent in excess of last year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

658 FEDERAL RESERVE BULLETIN. JULY 1,1918. OoEections are satisfactory. Retail trade is Post-office receipts at the principal cities of satisfactory though, as reported in former the district show an increase of 56.9 per cent letters, it is especially noticeable that purchas- for May, over the same period last year. ing is restricted more to necessities than non- Cattle conditions continue to improve, as essential lines. most of the range country has received fine The bank situation is quite active and every rains since our last letter. There is a better day proves interesting on account of the ex- feeling among cattlemen and sheepmen. With traordinary demand for funds. Our member the improvement in range conditions the shipbanks report a decrease in deposits and heavy ping of cattle to other sections for grazing has increase in loans; in fact, in some quarters our practically ceased, and the stock is being correspondents advise that the demand with shipped back into pastures from other sections them is almost unprecedented. As a result where it was sent during the drouth. Our the facilities of this bank are being largely used, correspondent at Tucson advises that spring and during the past 30 days, while our total shipments of cattle from that section, which bills discounted and bought show an increase usually are very large, have been materially of only $1,500,000, the increase in member restricted on account of the dry weather. At a banks collateral notes has increased, within recent meeting of the Cattle Raisers Associathat period, some four million dollars. The tion a resolution was adopted favoring the situation presents no serious elements, but will establishment of a through joint emergency necessitate careful scrutiny of credits; this, we freight rate for a period of from 30 to 60 days believe our member banks are making, Money to assist ranchmen in reshipping their cattle rates show a slight tendency to advance, back to pastures in this district. though no material increase is expected. In the mining sections conditions show little Clearings at the principal cities of the dis- change. Reports from Tucson indicate that trict for the month of May show an increase of the high cost of labor and material has affected 10.7 per cent over the same month for 1917. production of copper and rare metals, the main The building industry, which has been at industry in that section, and disappointment low ebb for several months, shows evidence of is felt that the prices of these two commodities improvement in the returns for May. The have not been advanced or placed upon a more number of permits issued in principal cities in suitable basis. Coal mines of Oklahoma are May shows an increase of 85 per cent, and in working to capacity, although a shortage of valuation of 52.1 per cent. The figures were laborers is affecting operations to a large exas follows: tent. It is reported that this condition will be improved somewhat by the recent "work or Year. No. ! Valuation. fight" order, which will put the idlers into service. 3917 7141 §1,281,139 1918 1,179 1 1,948,878 There is considerable activity in the oil industry around Ranger. This field is being Tho lumber mills of the district continue to rapidly developed, and authorities state it is experience a scarcity of labor, and manufac- destined to become one of the most important turers in this section have only enough help to in the southwest. A large number of oil men produce about 50 per cent of a normal cut. from the north and east have leased property Some mills are in better condition in this regard in that section, and the field is being rapidly and quite a few are below that figure. The extended. This has made business good in all mills are well supplied with orders and could lines and activities are booming. run for perhaps 30 days longer if no addi- The labor conditions are the same as reported tional business was procured. a month ago. There is considerable surplus Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN". 659 of labor at most of the shipbuilding plants at California in considerable quantities, and the Texas ports. There is also a sufficient amount canneries are in operation. Lemon and orange of skilled labor in almost all lines of employ- groves are in splendid condition. Vegetables ment. Farm help continues scarce, and the show an average condition, but a shortage in same is true of railroad laborers and miners. sugar-beet production is expected, due not The condition confronting the State with refer- only to adverse weather conditions, but also to ence to farm labor for the coming cotton-picking a reduced acreage. Present indications point season is extremely serious. Efforts are now to a normal grape crop at double last year's being made to secure Mexican laborers under prices. The Food Administration is regulattemporary suspension of the head tax and lit- ing the prices of most products on a basis eracy test of the Burnett immigration law. eminently fair to producers and consumers, This is just getting under way, and it is too speculation being prohibited. early to discuss what success will attend the California has the highest yield of cotton per efforts along this line. acre of any State in the Union, Louisiana ranking second. Acreage, yield, and farm value DISTRICT NO. 12—SAN FRANCISCO. for the last three years are as follows: With a large demand and high prices for all agricultural products, with industrial and man- Total ! Acres. produc- | Farm ufacturing establishments operating at full tion (bales).• value. capacity, and with labor fully employed at high wages, the Twelfth Federal Reserve District is 1917 : 117,000 67,000 ! 9,380,000 1916 i 52,000 4.4,000 | 4,362,000 prosperous. 1915 i 40,000 29,000 ! 1,599,000 The Government crop report of June 1 gives The first ocean voyage of the concrete the following estimate of production of grain steamer Faith was entirely successful. The for the district: Emergency Fleet Corporation, as a result of [000's omitted.] the satisfactory record made, has placed 1918 1917 orders for a number of concrete steamers of 7,500 tons dead weight, 2,000 tons greater Wheat bushels 100,916 70,899 capacity than the Faith, and eight of these Barley do.. 55,996 57,664 Oats do.. 50,652 43,037 vessels will be constructed at a plant to be Rye do.. 1,043 580 Hay tons 12,651 13,601 installed by the corporation in Oakland, Cal. The threatened shortage of hydroelectric Although a marked increase in production of power in northern and central California, due wheat, oats, and rye, over last year is indicated to the small amount of rainfall and snow in an extremely cold spring with scanty rainfall the mountains last winter, has become acute. has caused a reduction in the earlier estimates. The electric power companies have, with the This is most noticeable in California where the approval of the State Railroad Commission, barley production is estimated at nearly agreed to the pooling of all power resources, 6,000,000 bushels less than 1917, although the and the commission, through its assistant acreage is only 40,000 less. In California, engineer, will exercise control over the distri- Arizona, and Nevada the new crop of barley is bution of power between companies and from already coming into the warehouses, and the the companies to consumers. wheat harvest has started. May bank clearings for 20 principal cities of Pastures are reported as about 10 per cent the district increased 20.08 per cent over the below the average. Short crops of peaches same month in 1917. The greatest gain was and prunes are expected, while apricots and shown by Seattle with 62.5 per cent, followed the other deciduous fruits will probably yield by Tacoma with 43.3 per cent, and Portland an average crop. A heavy crop of cantaloupes with 29.3 per cent. San Francisco, although is indicated. Fruit is now being shipped from having the largest amount of increase, with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

660 FEDERAL RESERVE BULLETIN. JULY 1,1918. $64,519,000, was sixth in rate of increase with the Federal Reserve system in the Twelfth 16.5 per cent. Federal Reserve District. On June 15, 1918, Building permits for the same cities in- there were 50 State member banks in the discreased 2.58 per cent. trict. The applications of 2 other banks have Lumber production increased during May, been approved, and 12 applications are penduntil on June 12 it was only 4.65 per cent ing. These banks are divided among the under normal compared with 22.16 per cent States of the district as follows: a month previous, and is heavier than at any Arizona 1 time since the strike of last July. The mills California 3 have practically completed shipment on Gov- Idaho 16 Nevada 0 ernment orders, but the retail trade has been Oregon 13 buying heavily, orders and shipments being 13 Utah 6 per cent above normal, and further orders Washington 25 from the Government are expected in the Total 64 near future on account of the housing projects at Bremerton Navy Yard and other coast The total resources of the 41 State banks, industrial centers, as well as for 100,000 new which were members at the time of the May 10 freight cars recently authorized by the Rail- report of condition, were $84,738,000, approxiroad Administration. mately 6 per cent of the resources of all the The limited sales of war-savings and thrift State banks in the district. stamps indicate that, although the public The deposits of all national banks in the subscribed liberally to the three Liberty loans, district increased between March 4, 1918, and it has not yet realized the importance of this May 10, 1918, $14,479,000, or 1.526 per cent, form of Government finance. It is only by con- and loans and discounts increased only stantly practicing self-denial in the purchase of $4,970,000, or 0.79 per cent. During the year luxuries and the curtailment of all unessential May 1, 1917, to May 10, 1918, deposits inspending that the people can accumulate the creased $75,453,000, or 8.50 per cent, and surplus savings necessary to supply the in- loans and discounts $51,322,000, or 8.803 per creased amount of money needed by the Gov- cent. Comparative statements follow: ernment. War-savings and thrift stamps, DEPOSITS. being in small denominations and purchasable Per almost anywhere, furnish a convenient means M 1 a 9 y 1 8 1 . 0, M 1 a 91 y 7 1 . , Increase. c c e re n a t s i e n . for the prompt investment of the amounts realized through small economies. On a basis C A a ri l z if o o n r a n ia. 5 jS 7 l 6 l, , 6 08 5 8 0 , , 0 0 0 0 0 0 5 S 3 S 8 , , 8 5 8 0 3 4 , , 0 0 0 0 0 0 3 $ 7 3 , , 2 14 0 6 5 , , 0 0 0 0 0 0 36 6 . . 9 9 9 0 4 4 of $20 per capita each year this district should I N d e a v h a o da 4 1 0 1 , , 2 6 2 3 3 6 , , 0 0 0 0 0 0 3 1 7 0 , , 9 9 4 9 0 6 , , 0 0 0 0 0 0 2,2 6 8 4 3 .0 , , 0 0 0 00 0 5 6 . . 8 01 2 7 buy $8,750,000 of stamps each month. Actual U Or t e a g h on 1 3 1 8 2 , , 0 8 0 9 0 0 , , 0 0 0 0 0 0 4 9 1 9 . , 2 1 7 1 0 5 , , 0 0 0 0 0 0 1 1 3 3 , , 2 7 7 7 0 5 , ,0 0 0 0 0 0 1 1 7 3 . . 9 8 2 9 3 7 sales to May 31, 1918, have been as follows: Washington.. 172.467,000 150'. 793,000 21,674,000 14.373 Twelfth District... 1962,954,000 887,501,000 75,453,000 8.501 Arizona SI, 030,137. 00 California 4,106., 351. 59 LOANS AND DISCOUNTS. Idaho (incomplete) 93, 683. 50 Nevada 303,552.85 May 10, May 1, Per 1918. 1917. Increase. cent in- Oregon 3,425,173. 07 crease. Utah 1,055,480.00 Arizona $6,652,000 84,797,000 $1,855,000 38.67 Washington (incomplete) 4,520,118. 52 California... 398,957,000 364,399,000 34,558,000 9.483 Idaho 29,252,000 25,910,000 3,342,000 12.898 14, 534,496. 53 Nevada 7,227,000 6,798,000 429,000 6.31 Oregon 70,789,000 62,679,000 8,110,000 12.938 Utah 27,362,000 29,163,000 11,801,000 i 6.175 On June 12, 1917. the Federal Reserve Washington.. 94,076,000 89,247,000 4,829,000 5.41 Board at Washington, D. C, approved the Twelfth District... 634,315,000 582,993,000 51,322,000 8.803 application of the first State bank member of i Indicates decrease. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1018. FEDERAL RESERVE BULLETIN. 661 GOLD SETTLEMENT FUND. Shifting of credits between reserve banks gold withdrawals of $6,041,700, resulting in largely on account of Government fiscal opera- net gold deposits during the 5-week period of tions, including payment of maturing issues of $122,197,500, of which $83,904,000 or 68.6 per certificates of indebtedness and transfers to cent was deposited by the Federal Eeserve New York of funds received from income tax Bank of New York. Net deposits of gold in and third Liberty loan payments, resulted in the agents' fund between May 16 and June 20 combined clearings and transfers through the amounted to $10,700,000, resulting in an gold settlement fund for the 5-week period aggregate gain in the combined funds of from May 16 to June 20, 1918, of $4,590,254,000 $132,897,500, or 13 per cent of the combined averaging $918,050,800 per week against a like funds on May 16. The increase in the comaverage of $946,351,250 for the preceding bined funds from January 1 to June 20 4-week period. The settlement of June 20, amounted to 44 per cent of the holdings on amounting to $944,253,000, was the second January 1, 1918. largest since the commencement of the opera- Below are given figures showing changes in tion of the fund, the record total of $979,920,000 the fund between May 17 and Juno 20, both being reported for November 22, 1917, the inclusive. week following the first installment payment on the second Liberty loan. Combined clearings Amounts of clearings and transfers through the gold settlement fund by Federal Reserve Banks from May 17, 1918, and transfers for the week ending June 20 agto June 20, 1918, both inclusive. gregated $1,140,258,000 and were the heaviest [In thousands of dollars.] since the establishment of the fund. Changes in the ownership of gold in the Total Balances clearings. adjusted, banks' fund through transfers and settlements during the 5-week period amounted to 1.46 Settlement of— ! per cent of the total obligations settled, as M M a a y y 3 2 1 3 | i $8 7 1 4 1 6 , , 7 4 2 8 1 3 $3 79 0 , , 8 7 ( 6 5 5 4 86 7 9 2 , , 8 0 0 0 0 0 June 6.. 711,493 ! 48,753 131,000 against 1.45 per cent during the preceding .Tune 13. 824,499 34,257 83,000 4-week period. Net changes in the ownership June 20. 944,258 ! 29,233 196,000 of gold since the commencement of the opera- Previo T u o sl t y a l reported for 1918 j J 1 4 4 , , 0 3 3 6 8 4 , , 4 0 5 5 4 9 j j 1,1 2 1 2 7 2 , ,8 2 7 9 2 9 1,0 5 0 5 4 1 , ,8 8 0 9 0 5 tion of the fund May 20, 1915, to June 20, Total since Jan. 1, 1918 | 18,402,513 j 1,340,171 2,156,695 1918, amounted to 1.06 per cent of the total Total for 1917 24,319,200 j 2,154,721 2,835,504.5 obligations settled during that period. New Clearings and York. Richmond, and Chicago banks show the transfers. largest gains through the shifting of credits in Total for 1918 to date $20,559,208 the fuitd during the period under review, Total for 1917 27,154,704.5 Total for 1916 | 5,533,966 while Cleveland, Philadelphia, and St. Louis Total for 1915 1 1,052,649 show the largest decreases. Total clearings and transfers from May 20, 1915, to June 20, 1918 54,300,527.5 Deposits of gold in the banks' fund from May 16 to June 20 totaled $128,239,200 against Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

662 FEDERAL RESERVE BULLETIN. JULY 1,1918. Changes in ownership of gold. [In thousands of dollars.] Total changes from Total to May 16,1918 From May 17, 1918, to June 20, 1918, both in- May 20,1915, to June clusive. 20, 1918. Balance to Federal Reserve Bank. credit May 16, 1918, Balance, plus net June 20, .Decrease. ! Increase deposits of 1918. gold since that date. Boston 910 New York 240 Philadelphia 223 66,506 Cleveland 194.9 99,988 Richmond 044.6 8,776 Atlanta 722 4S3 385 Chicago 123.1 79.864 St. Louis 811 986 33,301 Minneapolis 514 301.8 16,225 Kansas City 488.5 103.6 45,382.5 Dallas 855.5 731.2 20,084.5 039 98,312 Gold settlement fund—Summary of transactions from May 17, 1918, to June 20, 1918, both inclusive. [In thousands of dollars.] Aggre- Weekiv settlements May 23, 1918, to I gate de- June 20,1918, both inclusive. I Balance Balance posits in fund last and at close st M a 1 t a e 9 y 1 m 8 . e 16 n , t, tr a a g f n r e o s n m f t e ' r s s i J b u u n s o e in f 2 e 0 ss , fund. 1918. Boston 5,025 5,025 2,900 10,783 316,352 315,717 10.148 : 65,375 .New York 22,336 83,904 83,904 194,000 307,000 104,650 1,283,185 1,197,072 18,537 i 133,127 Philadelphia 55,729 6,490 16,100 10,594 46,008 5,501 448,862 476,183 32,822 j 31,544 Cleveland 60,754.7 3,034.8 5,475 18,034.8 5,475 54,000 3,000 6,862 339,400 368,421 35,883 ! 26,215.9 Richmond 6,850.4 12.6 2,206.8 2,012.6 2,206.8 15,000 21,800 4,015 200,605 209,226 12,660 i 22,465.6 Atlanta 8,993 14 2,843 13,114 20,843 3,367 123,100 131.192 11,459 i 24,814 Chicago 81,739 700 9,312.1 30,600 11, 984.1 130,900 i 162,000 41,480 583,812 563', 908 21,576 i 74,319.1 St. Loins ; 37,421 1,301 992.5 6,301 2,866 , I 6,000 33,659 276,440 258.930 10.149 : 22,476 Minneapolis j 18,572 100 3,829.8 100 3,829.8 18,000 ! 2,713 112,512 123; 223 IS) 424 i 15,012.8 Kansas City ! 35,848.2 75.6 3,331 2,075.6 8,331 45,000 i 8.000 151,955 186,849 i 34,894 i 39,997.6 Dallas • 7,397.9 503.7 837 503.7 5,837 16,000 ! 8^ 000 993 71,363 77,592 7,222 !10,960.2 San Francisco I 21,088 300 3,993 9,500 4,858 30,000 ! 36,000 8,819 130,868 130,141 8.002 !21.719 Total | 420,614.2 6,041.7 | 128,239.2 j 98,341.7 165,753.7 ! 551,800 | 551,800 222,872 4,038,454 4,038,454 j 222,872 ; 488,026.2 Federal Reserve agents' fund—Summary of transactions from May 17, 1918, to June 20, 1918, both inclusive. [In thousands of dollars.] Balance Withdraw- Deposits Balance at Federal reserve agent at— m la 1 e s 6 n t , t 1 s , 9 t M 1 a 8 te a . - y G d o r l a d w w al i s t . h- G p o o l s d i t d s. e- t t o r a a l b s n a s f f n o e r k r . fr t o t r h m a r n o s u b fe g a r h n s k. T d o r t a a w l w al i s t . h- T p o o ta s l i t d s. e- b J c u u lo s n s i e n e 2 e o 0 s f s , 1918. Boston 31,500 3,000 21,000 3,000 21,000 49,500 New York i 65,000 65,000 Philadelphia 75,734 1,000 4,104 i 16,100 5,104 I 16,100 86,730 Cleveland 70,000 15,000 15,000 85,000 Richmond 29,500 2,000 2,000 31,500 Atlanta 33,420 3,000 18,000 13,100 21,000 i 13,100 25,520 Chicago 148,393.5 1,500 2,672 29,900 4,172 I 29,900 174,121.5 St. Louis 35,093.8 300 1,873.5 5,000 2,173.5 ! 5,000 37,920.3 Minneapolis 19,500 19,500 Kansas City 34,360 5,000 2,000 5,000 2,000 31,360 Dallas 5,584 5.000 5,000 584 San Francisco. 67,796 1,500 865 9,200 2,365 "9,"2O6" 74,631 Total.... 615,881.3 10,300 21,000 37,514.5 j 92,300 47,814.5 ; 113,300 681,366.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1, 1918. FEDERAL RESERVE BULLETIN. 663 OPERATION OF THE FEDERAL RESERVE CLEARING SYSTEM, MAY 16 TO JUNE 15,1918, ms drawn on banks in It d e i m st s r ic d t r a o w ut n s i o d n e b F a e n d k e s r o a i l »i Items drawn on banks In Reserve city (daily other districts (daily average). average). (daily average). ._!_.. Number. Amount, j Number. I Amount. Number. Amount. Boston I 5.455 818,378, '86 ! 42,512 $7,273,347 4,641 §7,104,749 Ne w York ! 8.9<)9 69.375:000 i 53,920 42,883,293 26,444 15,973,830 PhiladcJDhia i 13',257 21.7IS!223 ! 24,594 4,028,935 12,428 12,161,122 Cleveland I 2,583 4j804,933 I 29,014 17,592,940 1,983 4,283,675 Richmond ; 1,451 4,639, 100 i 28,580 8,152,612 2,347 4,499,093 Atlanta 2,015 3,025,252 ; 13,038 3.013,17S 1,424 3,483,271 Chicago i 8,328 19,333.009 i 26,370 7; 480,000 2,188 633,000 St. Louis : 2,025 7,315:705 • 13,459 3,461,191 185 937,833 Minneapolis ! 2,510 6,203;852 :• 13,698 1,416,083 850 1,109,051 D K a a l n l s a a s s City ...; 2 lj .0 l2 1 4 7 6 1 , .4 1 2 8 1 1 4 1 9 4 7 7 j ! 1 1 4 7 , , 0 4 8 4 5 2 5 7 . '7 1 4 3 3 7 , , 4 28 7 3 3 6 < 3 m 3 3 l, , 0 4 2 29 i; . 1 6 0 25 3 San Francisco i 1,291 2,142;505 ! 18,338 5;224,278 407 1,066,898 Totals: May 16 to June 15, 1918 .: 51,036 164.539,000 • 295,056 113,407.619 54,132 55,703,310- Apr. 18 to May 15, 1918 ; 49,509 178^372,385 ! 287,061 ! 114,099,520 54,888 58,513,363 Mar. 16 to Apr. 15,1918 ; 55,034 159,44L 188 i 271,506 ' 98.201,962 53,725 53,391,691 Feb. 16 to Mar. 15, 1918 ' 51.408 153,70i:375 I 259,531 113; .134,102 51,259 48,556,709 Jan. 16 to Feb. 15,1918 46', 207 153,847;568 : 227,312 80,248,400 44,054 42.852,372 Dec. 16,1917, to Jan. 35,1918 48,549 148,033;108 i 253,458 89.065,135 49,342 52; 175,578- Nov. 16 to Dee. 15, 1917 ; 47,67S 171,723;439 | 2-10.750 84' 440,761 46', 353 58,458,952 Oct. 16 to Nov. 15, 1917 1 47,574 166,552.773 ". 232', 723 64,296,210 45,393 53,089,R27 Sept. 16 to Oct. 15, 1917 ! 40,591 128,27I;406 i 212,935 47.470,204 40,216 44,984,581 Aug. 16 to Sept. 15, 1917 .! 36,300 100,331,094 i 182,191 41,323,621 32,564 40,648.108 July 16 to Aug. 15, 1917 30,727 98,075,919 i 175,625 40,353,278 31,273 37.98i;022. June 16 to July 15, 1917 1 38,476 1G9,722,256 i 182.622 41,004,720 33.941 46', 762,698 May 16 to June 15, 1917 • 37,898 07.322:883 ! 179!193 38,599,461 33;150 38,314,393 Apr. 16 to May 15,1917 : 83,767 87,370:859 : 171,093 30.473,163 33;428 36,836; 934 Mar. 16 to Apr. 15,193 7 j 31,162 60.288,002 : 168,C07 32,660,959 32,008 34,693,512 Ite b m a ( n s d k a h i a l a y n n d d a l v e b e d r r a a b n g y c e h ) b . e o s th. T d o r t a a w ( l U d n ( a n e i i o x l t y e c n l d u a T s v S r i e v e t r a a e a s t g e u o e s r f ) ) e . i r t e o m f s It u e r m e ( r d s a o d i f l r y a U w n a n v it e e o r d a n g S T e t ) r a . e t a e s s - N b m d u a i m e n s m t k b r s i b e c e r i t n . r of n N o b p u n a a m m n r k e b l s m e i s r e b t n . o e f r Number. Amount. Number. Amount. Number. Amount. Boston 52,608 332,756,882 6,586 $3,512,219 416 249 New York 89,363 128,232,129 37,826 15,051,800 686 362 Philadelphia.. 50,279 37,906,280 5,790 3,960,377 629 321 Cleveland 856 86,606,543 34,436 33,288,091 4,438 2,532,302 775 635 Richmond 291 1,035,685 32,669 18,32(5,490 1,533 398,186 543 341 Atlanta 181,533 16,706 9.703,234 1,380 1,908', 840 397 317 Chicago 210 403,000 37,102 27,849,000 9,003 3,115,000 1,164 2,278 St. Louis 253 191,016 15,922 11,908,745 4,323 854,134 487 1,012 Minneapolis.. 17,058 8,728,986 763 136,096 818 1,143 Kansas City.. 1,019 3,317,455 23,111 20,671,588 2,630 347,500 972 1,568 Dallas. 35,811 7.580,055 1,247 347,295 678 270 San Francisco 2,705 619,883 22,741 9,053,504 2,231 6,890,194 600 1,114 Totals: May 16 to June 15,1918 7,623 12,355,115 407,806 346,005,044 77,750 39,054,003 8,166 9,710 Apr. 16 to May 15, 1918 8,294 . 15,141,604 399,812 366,126,872 60,771 30,928,185 8,113 9,475 Mar. If) to Apr. 15,1918 7,793 I 8,942,976 388,058 319,977,817 59,228 31,563.675 8,059 9,450 Feb. 16 to Mar. 15, 1918 7,700 ' 6,413,071 309,898 321,805,317 58,991 25,827;757 8,013 9,425 Jan. 16 to Feb. 15,1918 7,128 5,836,958 325,301 282,785,304 48,224 21,316,033 7,972 9,319 Dec. 16, 1917, to Jan. 15, 1918 7,718 3,402,035 359,007 292,585,856 38,130 21,116,293 7,909 9,268 Nov. 16 to Dee. 15, 1917 343,787 314,623,152 33,806 27,179,053 7,823 9,321 Oct. 16 to Nov. 15, 1917 325,090 283,938.810 30,426 17,496,974 7,820 9,210 Sept. 16 to Oct. 15, 1917 293,742 220,732,251 26,797 13,518,566 7,747 9,052: Aug. 16 to Sept. 15, 1917 251,061 182,303,483 23,492 11,000,515 7,718 8,934 July 16 to Aug. 15,1917 243,625 176,410,219 19,533 9,701,509 7,683 8,837 June 16 to July 15, 1917 255,039 197,489,674 19,100 11,637,899 7,666 8,805- May 16 to June 16, 1917 250,241 174,236,737 16,344 4,414,508 7,651 8,789 Apr. 16 to May 15.1917 238,288 160,680,956 15,925 3.597,805 7,634 8,926 Mar. 16 to Apr. 15,1917 231,777 127,648,503 12,582 2,643,408 7,025 8,607 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

664 FEDEKAL KESEBVE BULLETIN. JULY 1,1918. DEPOSITS AND INVESTMENTS OF MEMBER BANKS, JANUARY TO JUNE, 1918. During the five and one-half months of the little change in the item is shown by the New present year net deposits of member banks in York banks, the latter reporting on June 14 about 100 leading cities increased from 9,188.6 an increase under this head of about 90 millions millions to 9,638.4 millions on June 14, the when tax payments apparently caused a conmaximum, 9,688.3 millions being shown on siderable increase in loans. May 3, the Friday before the close of the third The larger growth of investments, as com- Liberty loan. Government deposits, which on pared with net deposits, indicated in the follow- January 4 totaled 550.4 millions, reached a ing tables and accompanying diagram, is usually maximum of 1,284.1 millions on May 17, and explained by the considerable investments of stood at 868.3 millions about the middle of the banks since the beginning of the year in June. Loans and investments of reporting Treasury certificates only partly offset by liquibanks show a more continuous growth, from dation of Liberty bonds, the net increases in 11,205.9 millions to 12,659.8 millions on May 10, investments being reflected only partially in the Friday following the consummation of the larger deposits. Part of the larger increase in third Liberty loan. Since then redemption of investments may be due also to loans and other Treasury certificates is responsible to a large investments made in the form of currency, of extent for a decrease in total loans and invest- which increasing amounts remain outside the ments to 12,506.2 millions. banks in the pockets of the people. As against an increase during the period of [In thousands of dollars.] 767.9 millions in total net deposits (including Government deposits) there is shown an increase All reporting banks. Greater New York banks. of 1,300.3 millions in total loans and investments, exclusive of investments of a permanent Net de- Net decharacter, such as bank buildings, real estate, po w s h it i s c h on G m ov e e n r t n- To v t e a s l t - in- po w s h it i s c h on G m ov e e n r t n- To v t e a s l t i - nand Federal Reserve stock. The ratio of aggre- reserve deposits. ments. reserve deposits. ments. is com- is computed. puted. gate loans and investments to total net deposits from about 115 per cent at the beginning of the 1918 year rose to over 124 on May 10, and stood at Jan. 4 9,188.6 550.4 11,205.9 4,006.7 232.4 4,447.9 11 9,466.3 419.0 11,237.5 4,122.2 129.2 4,422.1 about 119 per cent on June 14. 18 9,286.2 354.7 11,214.4 4,026.3 141.5 4,373.7 25 9,284.3 485.1 11,411.6 4,046.5 264.2 4,468.4 For the member banks in Greater New York, Feb. 1 9,376.9 555. S 11,642.6 4,095.3 347.8 4,592.7 8 9,380.6 593.3 11,494.5 4,0S6.8 343.5 4,574.3 similar increases in individual and bank deposits 15 9,260.6 621.8 11,792.1 4,134.3 409.5 4,787.4 21 9,504.6 742.6 11,859.9 4,102.3 503.0 4,791.0 but smaller increases in Government deposits Mar. 1 9,368.8 776.2 11,995.2 4,062.0 495.2 4,963.9 8 9,406.0 796.9 11,928.4 4,024.0 483.8 4,777.7 are noted. The ratio of aggregate loans and 15 9,525.0 518.5 11,924.8 4,067.4 269.6 4,751.7 22 9,533.6 762.1 12,114.0 4,094.1 370.4 4,806.8 investments to total net deposits, which at the 29 9,605.9 631.2 12,094.1 4,143.3 325.9 4,756.8 Apr. 5 9,583.0 500.8 11,947.3 4,141.6 253.8 4,722.3 beginning of the year was less than 105per cent, 12 9,632.8 774.0 12,338.7 4,154.5 404.7 4,942.9 19 9,657.2 633.6 12,412.7 4,144.2 329.9 4,979.0 shows a rise to nearly 116 per cent on May 10 26 9,524.9 669.4 12,402.1 4,109.5 392.8 4,995.2 May 3 9,688.3 006.0 12,432.3 4,178.0 326.0 4,975.8 and a decrease to 111 per cent on June 14. It 10 9,349.3 827.0 12,659.8 4,015.1 352.7 5,060.6 17 9,333.1 1,284.1 12,608. 7 4,020.5 593.7 5,048.7 should be noted, though, that while total loans 24 9,271.3 1,028.7 12,485.9 3,972.4 424.1 5,018.6 31 9,428.8 909.3 12,435.6 4,121.4 362.1 4,966.9 and investments of reporting member banks June 7 9,483.6 765.1 12,443.5 4,144.1 305.3 4,963.6 14 9,638.4 868.3 12,506.2 4,221.0 346.0 5,052.7 indicate net liquidation by 153.6 millions, but Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDEEAL RESERVE BULLETIN. 865 u NET DEPOSITS, GOVERNMENT DEPOSITS. ALSO TOTAL LOANS Am> INVESTMENTS OF MEMBER BANKS IN GREATER HEW YORK AND IHLEADIH6 CITIES Curve /.• Mb&qwsihs tfJCmberJkrifo in, ffFeaterJfewI&r/e. Cburvcd: <5i! (hrve4:6ovem7ne7W&epj®5i£$ofJ&^ CurveS: /bansmdlnvestmnts ofJ^mderJSanlcsik $rm^M&Mr?c* Gzrpeff.>&a7i$m&Iri^£^ '/9/&1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

666 FEDERAL KESEKVE BULLETIN. JULYl, DISCOUNT OPESATIONS OF THE FEDERAL RESERVE BANKS. Discount, operations of the Federal Reserve of the New York bank, owing to the larger pro- Banks for the month of May totaled $3,002,- portion of collateral notes handled, this share 889,591, compared with $2,178,410,479 for is about 97 per cent. Average rates and ma- April and $3,206,486,771 for November, 1917, turities of the paper discounted by the banks the month when the second Liberty loan closed. | during May, as calculated by the use of the Of the total bills discounted during the month, method outlined on page 553 of the June BULwar paper proper, i. e., members7 collateral LETIN, were somewhat higher than for April. notes and customers7 paper secured by Govern- Over 88.5 per cent of the paper was discounted ment war obligations, constituted 84.8 per cent, at 4 per cent, which was the uniform rate during compared with 83.2 per cent in April and over most of the month for the system on all 15-day 80 per cent in November, 1917. Over 70 per paper, including that secured by Treasury cercent of the total paper and about 79.4 per cent tificates and Liberty bonds. Owing to the relaof all the war paper discounted by all the 12 tively large amount of 90-day war paper disbanks during May are reported by the New counted during the month by Boston and of York bank. 6-month agricultural paper discounted by Min- Discounts of member banks7 collateral notes neapolis, these two banks show the longest aversecured by eligible paper aggregated age maturities for their May discounts, viz, 46.4 $70,469,263, the Federal Reserve Banks at and 45 days, the latter bank, as weH as the Chicago and Kansas City accounting for banks at Kansas City and Dallas, because of $64,336,757, or about 91.3 per cent of the total. the relatively large amount of 6-month paper Trade acceptances discounted during the month handled, showing the highest average rates by 11 banks totaled $16,302,062, of which charged. For the New York bank the average $13,593,565 covered transactions in the domes- maturity of the paper discounted during May tic trade and $2,708,497 transactions in the for- works out at 6.95 days as against 7.22 days in eign trade. The New York bank leads all April, while the average rate for May, 4.09 per other banks in the discount of this type of cent, compares with 4.05 per cent for April, the paper, reporting 28.8 per cent of the domestic reason for the lower average April rates appartrade acceptances and 98.7 per cent of the for- ently being the fact that during the first few eign trade acceptances discounted during the days in April large amounts of 15-day war month by all the banks. The totals just given paper were discounted at the lower 3 J per cent are exclusive of $7,157,620 of foreign trade rate. acceptances purchased in the open market dur- On the last Friday of the month the banks ing the month under review. Other discounts, held a total of 896.4 millions of discounted largely unsecured customers7 paper, also bills paper, as against an aggregate of 901.7 millions protected by other than Government securi- held on the last Friday in April and of 47.6 milties, totaled $399,091,341, compared with lions held on the corresponding date in 1917. $322,585,211 for April and only $198,842,158 Of the total discounts on hand the share of war for November of the past year. Fifteen-day paper was 62.8 per cent, as against 70.9 per paper, i. e., paper maturing within 15 days from cent about the end of April. At the Boston date of discount with the FederalReserveBank, and Philadelphia banks this share was in excess totaled $2,736,456,881, or over 91 per cent of of 73 per cent, and at the New York bank as the total discounts for the month. In the case high as 83.5 per cent. Discounted trade accep- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1, 1918. FEDEEAL RESERVE BULLETIN, 667 tances on hand about the end of May totaled of the month. In the following exhibit are 17.72 millions, of which over 1 million repre- given the number of member banks in each sents the holdings of discounted foreign-trade Federal Reserve district at the end of May and acceptances. Cleveland leads in the amount of the number of discounting members for the domestic trade acceptances held, followed by same month. New York and St. Louis. Holdings of agricultural paper of all maturities totaled about 19.5 millions, or about 2.1 per cent of the total dis- Federal reserve districts. counts held, while live-stock paper aggregated May 31. 47.3 millions, of which over 57 per cent is reported by the Kansas City bank. Boston... , 415 179 New York 306 During the month, mainly as the result of Philadelphia.. 643 202 Cleveland 775 150 further accession to membership of State banks Richmond 542 254 Atlanta 401 163 and trust companies, the number of member Chicago 1,164 359 St. Louis 488 125 banks increased from 8,145 to 8,168. The total Minneapolis 819 276 Kansas Citv.... 975 315 number of member banks accommodated Dallas *_... 675 304 through discounts during May was 2,693, or 33 San Francisco.. 586 160 per cent of the total membership at the close Total., 8,168 2,693 Bills discounted during the month of May, 1918, distributed by classes. Member banks' collateral Customers' n'o•tes. paper se- j cured by • liberty ; Secured by- Trade All other Federal Reserve Banks. bonds or ! liberty acceptances, j discounts. I .Total. United States! bonds or Otherwise certificates jUnited States secured. of indebted-! certificates ness. I of indebted- : ness. Boston $23,920,032 320,764,048 S350,225 | §901,692 $10,068,717 §56,004,714 New York 38,610,339 1,960,216,460 17,400,431 174,916,121 2,181,143,351 Philadelphia.. 10,867,822 45,022,975 2,500 355,851 17,755,946 74,005,094 Cleveland 5,750,008 48,681,431 110,000 2,690,211 20,088,802 77,300,252 Richmond 4,524,938 96,162.708 3.238,500 1,006,215 23,282,728 128,215,089 Atlanta 74,739 29,225,000 658,500 873,152 15,788,722 46,620,113 Chicago 5,454,933 72,174,353 48,834,331 223,689 39,842,127 166,529,433 St. Louis 594,262 33,576,941 1,147,022 24,239,863 59,558,088 Minneapolis... 426,024 15,210,500 900,281 213,950 12,844,337 29,595,092 Kansas City... 249,609 48,083,500 15,502,426 978,868 150,903.021 95, 717,424 Dallas 36i;945 27,858,060 870,000 8,148)580 37,238,585 •San Francisco. 296,168 28,920,130 2,500 2 510., 981 21,232,577 50,962,356 Total 91,130,819 |2,425,896,106 70,469,263 ; 16,302,062 399,001,341 ! 3,002,889,591 i Includes $2,672,399 in the foreign trade. 2 Includes $36,098 in the foreign trade. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

668 FEDERAL RESERVE BULLETIN. JULY 1,1913. Amounts of discounted paper, including member banks' collateral notes, held by each Federal Reserve BanJc on the last Friday in May, 1918, distributed by classes. [In thousands of dollars; i. e., 000 omitted.] Member banks' col- Customers' lateral notes. paper secured by Liberty Secured Banks. A t g u r r ic a u l l- Li p v a e p -s e t r o . ck b U on n d it s e d or b b y o L nd ib s e o r r ty 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 ness. indebtedness. Boston. . 25,276 6,859 130 11,109 10,441 43,815 New York 51,321 289,482 2 3,985 63,487 408,275 Philadelphia. .. 146 12,229 19,289 1,479 9,697 42,840 Cleveland 100 93 7,762 11,217 iio 3,617 24,359 47,258 Richmond.. 2,454 14 5,175 23,647 721 1,875 15,140 49,026 Atlanta 800 467 85 12,435 43 981 10,028 24,839 Chicago. . 4 967 6,560 28,117 13,831 31,868 85,343 St. Louis... . . 148 1,290 1,452 12,331 2,874 13,162 31,257 Minneanolis 2,217 4,816 445 6,717 593 326 11,216 26,330 Kansas City.. 2,080 27,184 281 15,346 7,450 853 12,269 65,463 Dallas . 3,560 6,319 657 13,632 398 5,516 30,082 San Francisco 3,002 7,077 792 11,696 772 624 17,934 41,897 Total. 19,474 47,260 112,035 450,768 24,048 17,723 225,117 896,425 Per cent 2.1 5.3 12.5 50.3 2.7 •2.0 25.1 100 i Includes $95,000 in the foreign trade. 2 Includes $951,000 in the foreign trade. Bills discounted by each Federal Reserve Bank during May, 19IS, distributed by rates of discount; also average maturity and rate of bills discounted by each bank during the month. 4 per cent. 4* per cent. 4£ per cent. 4-J per cent. jf'edoral Reserve Bank. Amount. Discount. Amount. Discount. Amount. Discount. Amount. Discount. Boston j $25,056,373 841,070 $22,875,023 $212,981 i $2,730,292 $12,567 $5,340,033 $38,405 N Ph e i w la Y de o l r p k h ia ! 2,12 5 7 6 , , 5 9 8 3 8 7 , , 4 1 2 0 1 7 1,2 8 1 1 5, , 6 0 1 2 1 8 4 1 0 0 , , 3 5 0 9 5 0 , , 1 0 3 7 7 2 3 1 7 0 9 1 , , 6 2 0 1 6 0 ! ! 2,3 8 3 8 5 3 , , 8 5 0 1 0 6 1 9 0 , , 1 2 9 6 3 3 12 4 , , 3 1 0 2 2 4 , , 8 1 7 5 8 0 9 2 2 7, , 0 8 7 0 4 0 Cleveland 42,656,987 43,626 23,999,757 82,536 i 1,931,993 14,625 8,661,995 62,582 Richmond 65,712,320 53,093 42,130,564 70,965 ! 765,368 4,942 13,143,579 81,753 Atlanta ! 40,190,062 61,759 308,757 2,116 i 711,459 4,669 4,905,791 31,730 Chicago i 133,623,376 201,432 5,393,303 44,768 2,250,705 1,327 13,854,898 75,853 St. Louis i 44,145,125 66,936 554,588 i 4,779 1,178,625 10,380 13,574,458 86,369 Minneapolis j 17,008,182 25,998 439,252 I 3,034 271,790 2)332 5,432,551 34,008 Kansas City I 41,541,453 65,698 16,781,240 i 28,567 7,424,089 14,261 11,666,475 86,283 Dallas j 29,033,470 46,923 345,071 ! 2,770 2,478,756 13,375 San Francisco I 35,350,001 56,877 445,923 2,356,664 10,964 10,465,407 84,765 Total | 2,658,842,877 1,960,051 164,168,687 936,924 22,840,301 95,523 105,950,971 714,997 5 per cent. 5J per cent. 5$ per cent. Tota Average Average Federal Reserve Bank. maturity rate (per Amount. Discount. Amount. Discount. Amount. Discount. Amount. Discount. in days. cent).i Boston $2,993 $38 $56,004,714 §305,061 46.45 4.28 New York 63,399 2,235 i 2,181,143 3511 699,445 6 95 4 09 Philadelphia 17,965 348 j 74,005,094 219,923 25.35 4.22 Cleveland §49,520 $962 77 300 252 204 331 21 86 4 35 Richmond 6,172,572 56,392 290,686 6,418 128,215,089 273,563 17.07 4.50 Atlanta .. 504,044 10,517 46,620,113 110,791 19.89 4.30 Chicago 10,237.201 116,205 SI, 169,950 824,681 166,529,433 464,266 22.67 4.43 St. Louis 105,292 2,271 59,558,088 170,735 23.60 4.37 Minneapolis . .. 2,691,727 28,636 3,751,590 90,102 29,595,092 184,110 45.01 4.98 Kansas City 11'. 185,562 231,097 3,231,016 28,351 3,887,589 87,242 95,717,424 541,499 42.11 4.84 Dallas 2,247,802 24,999 3,133,486 69,555 37,238,585 157,622 32.33 4.71 San Francisco 414 2,343,947 52,966 50,962,356 209,171 31.77 4.65 Total 33,123,285 470,487 6,705,122 105,293 11,258,368 257,262 |3,002,889,591 4,540,517 12.59 24.35 1 Boston and New York calculated on 365-day basis: all other Federal Reserve Banks on 360-day basis. 2 Average discount rate on all paper discounted works out at 4.32 per cent if calculated on a uniform 360-day basis, and at 4.38 if calculated en a uniform 365-day basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 669 Acceptances bought in ope?i market and held by Federal Reserve Banks as per schedules on file with the Federal Reserve Board, or as reported by the Federal Reserve Banks on dates specified, distributed by classes of accepting institutions. Bankers' acceptances. Trade Date. M ba e n m k b s e . r N co o m n t m r p u a c s n m t ie b s e . r N be b o r a n n m S k t e s a m . te - P b r a i n v k a s te . b F ra b o a n a r n e c n d i h k g e n s Total. a b c m o ce u o a p p g r t k e h a n t e n t i c . n es acce T p o t t a a n l ces. agencies. 1915. Feb. 22 $93,000 $93,000 S93,000 Apr. 5 3,653,000 87,820,000 810,000 SI10,000 11,593,000 11,593,000 July3 4,342,000 5,267,000 161,000 9,770,000 9,770,000 Oct. 4 9,000,000 4,898,000 132,000 343,000 14,373,000 14,373,000 1916. Jan. 3 15,494,000 7,160,000 362,000 822,000 23,838,000 23,838,000 Apr. 3 21,000,000 13,572,000 473,000 3,262,000 38,308,000 §722,000 39,030,000 July 3 32,989,000 18,921,000 471,000 11,830,000 64,211,000 3,422,000 67,633,000 Oct. 2 37,798,000 21,782,000 712,000 9,944,000 70,236,000 2,306,000 72,542,000 1917. Jan. 1 66,803,000 34,625,000 1,502,000 18,224,000 121,154,000 4,585,000 125,739,000 Apr.2 43,979,000 20,328; 000 689,000 16,830,000 8200,000 82,026,000 1,144,000 83,170,000 July 14-16 , 108,597,000 30,390,000 3,333,000 38,082,000 3,805,000 184,785,000 4,660,000 189,445,000 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 1918. Jan. 31 210,259,000 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 1,648,000 3,856,000 28,419,000 7,097,000 293,767,000 5,456,000 299,223,000 Mar.31 275,144,000 1,360,000 1,884,000 31,779,000 8.562,000 318,729,000 8,015,000 326,744,000 Apr.30 218,390,000 654,000 2,907,000 25,921,000 10; 304,000 288,176,000 9,279,000 297,455,000 May31 207,917,000 1,330,000 5,168,000 26,217,000 8,398,000 249,030,000 8,276,000 257,306,000 Acceptances bought in open market and held by each Federal Reserve Bank on May 31,1918, distributed by classes of accepting institutions. [In thousands ol dollars; i. e., 000 omitted.] Foreign Trade acceptances bought in open Feder B al a n R k e . serve M ba e n m k b s e . r c N o b m o er n p m t a r n e u i m s e t s - . N be b o r a n n m S k t e s a m . t e - Pr u i a v 11 a ^ t ' e br b a a a n n n c k d h s e , s, Total. market. a a T c n c o c e t e p a s l t . agencies. Domestic. \ Foreign. Total. ! i i i Boston 20,064 68 j 1,825 678 22. KIR ! 42f> 425 23.060 New York 98 464 1,070 4,406 ! 20,127 7,367 : 131,434 1,986 133,420 Philadelphia 19,359 27 4 j 1,242 309 i 20,941 27 20,968 Cleveland 9,657 46 ! 768 i 10,471 21 21 10,492 Richmond 2,798 i 2.798 2,798 Atlanta 3,840 i 3,840 3,840 Chicago. .«, 30,508 152 1 892 31 552 31,552 St. Louis 6,306 5 300 32 6'643 6 643 Minneapolis 3,013 3,013 3,013 Kansas City 635 635 '635 Dallas 920 920 920 San Francisco 12,353 8 412 1,331 44 14,148 j 5,817 5,817 19,965 Total 207,917 1,330 5,168 26,217 8,398 249,030 | 8,276 8,276 257,306 i Amounts of bills discounted and acceptances and warrants bought by each Federal Reserve Bank during May, 1918, distributed by maturities. 15-day maturities. 30-day maturities. Discounts. | Acceptances. • Warrants. | Total. Discounts. Acceptances. Warrants. Total. Boston 825.097,283 $652, $25,749,479 54,309,981 SI, 184, 85,49-V* 84 New York 2,12L236,516 2,028, 2,123,265,321 9,020,796 10,786, 19,807,112 Philadelphia 57;543,872 47, 57,591,478 1,672,290 1,944, 3,616,829 Cleveland 59,531,772 10, 59,541,774 4,120,333 2,353, 6,473,790 Richmond 106,108,771 102, 106,211,271 3.920)244 1,307, 5,227,815 Atlanta 40,213,229 20. 40,233,229 1, 683,056 125, 1,808,056 Chicago 133, 620,012 450, 134,070,012 4,260,546 602, 4,862,516 St. Louis 46,721,836 46,721,838 2,117,801 132, 2,250,301 Minneapolis 007,772 17,007', 772 737,094 100, 837,094 D K a a l n l s a a s s City 6 2 4 9 9 01 4 7 4 , , 4 1 7 7 0 2 300,000 i 6 2 4 9 , , 9 3 4 1 4 7 , , 1 4 7 7 2 0 2,4 7 6 5 0 1 , , 9 1 4 7 5 4 ""'3667 2 1 , , 4 0 6 5 0 1 , , 9 1 4 7 5 4 San Francisco 35;414,176 3,416,631 ! 38,830,807 :. 650,345 935, 3,585,904 Total. 2,736,456,881 7, 027,740 ! \2,74S, 484,021 37,704,605 19,771,545 57,476,160 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

870 FEDERAL RESERVE BULLETIN. JULY 1,1918. Amounts of bills discounted and acceptances and warrants bought by each Federal Reserve Bank during May, 1918, distributed by maturities—Continued. 60-day maturities. 90-day maturities. Discounts. Acceptances. | Warrants. Total. j Discounts, i Acceptances. Warrants. Total. Boston 33,878,052 S2,504,725 86,332,777 !!?22.71o,406 $8,145,740 530,862,146 New York 8'. 116,568 12,148,986 !. 20,265,5521 42,706,079 36,415,403 79,121,482 Philadelphia 3'699,033 2,116; 829 !. 5,815)862j 11,071,935 7,310,673 18)382.608 Cleveland 4,617,931 3,152,831 j. 7,770,762; 8,980,697 1,352,098 t 10,332)795 Richmond 7,509,506 1,650,512 !. 9,160,018! 9', 679,203 2,251,127 j 11,930,330 Atlanta 2,219,828 '686,951 ! $16,500 2,923.279i 1,999,957 441,185 I 2,441,142 Chicago 14,303,717 1,780,542 I. 16,084,259! 12,181,039 4,405,753 S 16)587) 692 St. Louis 4,175,970 377.479 :. 4,553.449i 6,437,189 722,991 ! 7,160,180 Minneapolis 5,031,868 900)000 •. 5,931', 868i 3,063,797 180,000 i 3,243,797 Kansas~City 8,528,105 200,000 •. 6,728,105! 6,731,779 ! 0,731,779 DalJas 1,851,289 595,000 i. 2,446;289i 2,455,315 900,000 ! 3,355,315 San Francisco , 4,051,531 11,262,030 ' 6,500,721 4,205,673 j i 10,706,394 Total 05,980,396 33,321,354 16,500 99,324,250 ;134,525,017 66,330,643 j j 200,855,660 1 Over 90-day maturities. Total. i For cent.. Discounts. A a c n c c e e p s. t- r W an a t r s - . Total. Discounts. Acceptances. r W an a t r s - . *<** lei A an cc c e e p s. t- r W an a t r s - . Total. Boston 82,992 $1,050,000 $1,052,992 §56,004,714 $13,537,164 $69,541,878 1 80.5 19.5 100 New York 63,394 63,394 2.181,143,351 61,379,510 2,242,522.861 ; 97.3 2.7 100 Philadelphia 17 964 17,984 74,005,094 11,419,747 85 424'841 : 86.6 13.4 100 Cleveland 49,519 3,5.14 53,033 77,300,252 6,871,902 84,172,154 : 91.8 8.2 100 Richmond 997,365 270,000 1,267,365 128,215,089 5,581,710 133,796,799 > 95.8 4.2 100 Atlanta 504,044 504,044 46,620)113 1,273,136 816,500 47,309,749 i 97.3 2.7 100 Chicago 2,163,21S 600,000 2,763,218 166,529,433 7,838,295 174)367,728 : 95.5 4.5 100 St. Louis 105,292 560,047 665,339 59,558,088 1,793,017 61,351,105 ! 97.1 2.9 100 Minneapolis 3,754,561 3,754,561 29,595,092 1,180,000 30,775,092 ! 96.2 3.8 100 Kansas City 15.052,423 15,052,423 95,717,424 200,000 95.917,424 1 99.8 .2 100 Dallas 3;183,337 3 163 337 37,238,585 2 095 000 39,333,585 I 94.7 5.3 100 San Francisco 2,342,583 :.n_::2,342,583 50,962,356 15,765,362 68,727,718 j 76.4 23.6 100 Total 28,216,692 2,483.561 30,700,253 3,002,889,591 128.tt34.843 i 16,500 3,131,840,934 i Per cent . : Qfl.o 4 1 100 i ! i Maturities of discounts, acceptances, and municipal warrants held by each Federal Reserve Bank on Friday, May 31, 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 . - b A a o c n u c c g e e h p s t t - . M wa u r n r i a c n ip ts a . l Total. B co il u ls n t d e i d s- . b A a o c n u c c g e e p h s, t t - . M wa u r n r i a c n ip ts a . l Total. Boston... 10,812 5,424 16,236 6,017 3,160 9,177 New York 3-12,439 31,751 374,190 12,152 23,566 35) 718 Philadelphia.. 26,087 4,577 30,664 2,369 3,652 6,021 Cleveland 22,629 1,035 23,664 7,560 3,037 10,597 Richmond 23,769 118 28,887 3,201 351 3,552 Atlanta 18,971 1,070 20,042 1,481 1,176 13 2,700 Chicago 53,710 9,115 67,825 3,987 9,840 13,827 St. Louis 18,660 2,274 20,934 4,052 2,004 6,056 Minneapolis... 10,239 1)996 12,235 2,992 352 3,344 Kansas City... 27,998 135 28.133 5,150 150 5,300 Dallas.....'.... 16,488 200 456 17.' 144 2,143 300 2,443 San Francisco. 17,736 4,947 22,683 8,814 4,599 11,413 Total. 593,538 j 62,642 457 662,637 57,918 52,187 43 110,148 Percent 57.4 9.5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1, 1918. FEDERAL RESERVE BULLETIN. 671 Maturities of discounts, acceptances, and municipal warrants held by each Federal Reserve Bank on Friday, May 31, 1918—Continued. [In thousands of dollars; i. e., GOO omitted.] 31 to 60 days. 61 to 90 days. disc B ou il n ls te d.^ j A b a o c n u c c g e e p h s t t - . M wa u r n r i a c n ip ts a , l j T lO + t a i L disc B o i u ll n s ted. A b a o c n u c c g e e p h s t t - . M wa u r n r i a c n ip ts a . l Total. Boston 7,202 5,763 12,665 19, 783 S, 713 28,498 New York 20,097 47,936 68,033 33,579 30,167 63,746 Philadelphia 4,628 9,716 14,344 9,740 3,023 12,763 Cleveland 10,512 5,826 16,338 6,509 594 7,103 Richmond 9,269 712 9,981 6,587 1,617 8,204 Atlanta 2,851 1,333 4,185 859 261 1,120 Chicago 7,942 8,004 15,946 11,737 4,593 16,330 St. Louis 5,403 i 1,388 6,791 3,021 977 3,998 Minneapolis 6,221 | 510 6,731 1,815 155 1,970 Kansas City 8,632 350 8,982 i 6,926 6,926 Dallas 5,098 270 5,368 2,152 150 2,302 San Francisco 10,381 7,250 17,631 3,726 3,169 Total- >8,236 | 187,295 ! 106,434 53,419 159,853 Percent 16.2 ! 13.9 Over 90 days. Total. Percentages. w M a i r u p r n a a i l n c t - s , ! i i Total 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 - . w M a i r u p r n a a i l n c t - s. Total. j c B o i u ll n s t d e i d s . - b A a o c n u c c g e e h p s t t - . w M a i r u p r n a a i l n c t - s. Total. Boston 1 43,815 23,060 66,875 65.5 34.5 100 New York 8 408,275 133,420 541,695 75.4 24.6 100 Philadelphia 16 16 42,8-10 20,968 a3,808 67.1 32.9 100 Cleveland 48 48 47,258 10,492 57,750 ; 81.8 18.2 100 Richmond 1,200 1,200 49,026 2,798 51,824 i 94.6 5.4 100 Atlanta 677 677 3^840 45 28,724 86.5 13.4 0.1 100 Chicago 2,967 2,967 85,343 31,552 116,895 73.0 27.0 100 St. Louis 121 121 31,257 6,643 37,900 82.5 17.5 100 Minneapolis 5,063 5,063 26,330 3,013 29,343 89.7 10.3 100 Kansas City 16,757 16,757 65,463 635 66,098 j 99.0 1.0 100 Dallas 4,201 4,201 30,082 920 456 ; 31,458 j 95.6 2.9 1.5 100 San Francisco 3,240 3,240 41,897 19,965 61,852 67.7 32.3 100 Total. 34,299 34,299 896,425 257,306 501 1,154,232 Percent 3 100 77.6 22.3 .1 100 Liberty loan bonds and United States certificates of indebtedness purchased under repurcliase agreements during the month of May, 1918. [Figures included with United States securities in table showing total investment operations.] New York. Cleveland. Atlanta. Chicago. M ap i o n l n is e . - K C a i n ty sa . s Total. Liberty bonds 51,600 $23,400 §25,000 Certificates of indebtedness S3,686,000 $305,500 i $578,000 449,500 seo,666 15,088,000 Total 3,686,000 305,500 1,600 578,000 472,900 69,000 5,113,000 i Includes Liberty bonds purchased by the Chicago bank under repurchase agreements. Total investment operations of each Federal Reserve Bank, during the months of May, 1918 and 1917. Bills dis- Bills bought in open market. Municipal warrants. counted for Federal Reserve Bank. members and s F er e v d e e r B al a n R k e s - . ac B ce a p n t k a e n r c s e s. ! acc T ep r t a a d n e ces. Total. City. State. ot A h l e l r. Total. Boston 004,714 i $13,287,164 18250,000 $13,537,164 N C R Ph l i e e c i w v l h a e m d Y la e o o n l n r p d k d hia 2,18 7 7 1 7 4 , , 3 3 0 2 1 0 0 1 4 0 5 3 5 , , , , 3 0 2 0 5 9 5 8 1 4 2 9 ! ! j j 6 H 0 6 5 3 , , , 4 5 5 8 1 8 6 6 9 4 1 7 , , , , 9 7 1 7 0 4 3 1 9 7 9 0 1812,371 6 1 6 5 1 1 , , , , 8 5 3 4 7 8 7 1 1 1 9 9 , , , , 9 7 5 7 1 0 1 4 0 2 0 7 Atlanta 128;620,113 1,273,136 1,273,136 $16,500 $16,500 Chicago 46, 838,295 7,838,295 St. Louis 166; I;793,017 1,793,017 Minneapolis 59,595,092 180,000 1,180,000 Kansas City 29.717,424 200,000 200,000 Dallas 95.238,585 i 1,095,000 2,095.000 San Francisco 37;962,356 670,113 10,095,240 15,765,362 50, Total, May, 1918 3,002,889,591 121,770,230 7,164,613 128,934,843 I 16,500 16,500 Total, May, 1917 91,413,473 79,355,48] i 3,188,891 82,544,372 $75,656 j I 43,265 i 118,921 i In the foreign trade. 2 In the domestic trade. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

672 FEDERAL RESERVE BULLETIN. JULY 1,1918. Total investment operations of each Federal Reserve Bank during the months of May, 1918 and 1917—Continued. United States securities. Total Federal reserve bank. 'united States investment c 2 e p n e t r . 3 c e p n e t. r 3 c v e n p t e . r c 4 e p n e t. r 4 c -1 e n p t e . r tr n 1 e o - a y t s e e u s a . r r " y c o e f e r t d i i n n fi d e c s e a s b t . e t s - Total. operations. Boston . . .. §509,525 SL25.000 8634,525 870,176,401 New York 31,309,000 12,751,000 178 £86'000 192,646,000 2,435,168,861 Philadelphia 107,000 107,000 85,531,841 Cleveland 12,100 :::::::::: 1,024,000 1,036,100 85,208,254 Richmond 10,000 10,000 133,806,799 Atlanta 201,600 4,650 108,000 314.250 48,223,999 Chi^a^o 1719,500 719,500 175,087; 228 St Louis 61,351,105 Minneapolis . . .. $23,400 5,650 2,433,500 2,462,550 33,237,642 Kansas Citv 2 450 69,000 71,450 95,988,874 Dallas 12,450 81,000 93,450 39,427,035 San Francisco 1,000,000 1,162,500 2,162,500 68,890.218 Total, May, 1918 25,850 2,510,600 13,295,375 184,425,500 200,257,325 3.332,098,259 Totol Mpv 1917 $56 666 82,000 52,000 2174,128,766 1 Includes United States bonds purchased from banks under 15-day repurchase agreements. 2 Exclusive of purchases of United States certificates of indebtedness. United States securities held by each Federal Reserve Bank on May 31, 1918, distributed by maturities. United States bonds with circulation privilege. Federal Reserve Bank. 2 per cent • 2 per cent 3 per cent 4 per cent consols of ; Panamas of j loan of loan of 1930. i 1936-1938. | 1918. 1925. Boston $750 j Nev York 50 ! 350,000 Philadelphia.. S100 i Cleveland 2,653,660 $2,378,200 Richmond 915,100 ! 237,000 I Atlanta 240,600 j 21,000 i Chicago 1,862,500 i 387,300 i 2,581,000 1,768,000 St. Louis 100 !. 1,080,000 Minneapolis.. 304,300 : 16,260 j 1,199,180 206,250 Kansas City.. 7,155,850 ! 22,240 | 825,000 Dallas. 2,450,900 ; 281,500 ! Sail Francisco ! 2,428,750 1,000,000 Total ! 15,358,900 ' 945,400 ; 7,563,840 I 6,177,450 Other United States securities, including 1 year Treasury notes and Treasury certificates of indebtedness, available as security for Federal Reserve Bank notes under silver act of Apr. 23,1918. Federal Reserve Bank. 3 per cent 34 per cent 4 per cent United Total. conversion Spercent Liberty Liberty- 4i- per cent States cerbonds of y ! loan of loan of Liberty tificates of 1946-47. notes. ! 1947. 1942-1947. loan of 1928. indebtedi ness. Boston §529,000 $1,416,000 i S60.000 826,450 8125. 157,200 New York 1,255,100 2,226,000 253,850 1,320,700 $12,751,000 62.128: 985,000 Philadelphia 549,200 1,537,000 11,850 786,250 '605; 489,900 Cleveland 414,800 2,660,000 1,966,900 374,550 11,650 5,797, 256,760 Richmond 1,513,000 42,850 37,750 10, 755,700 Atlanta 10,300 1,141,000 13,500 440,400 4,650 60, 931,950 Chicago 427,400 2; 962,000 i 8400 83,050 42, 093,650 St. Louis 1,153,300 511,000 i 744,400 Minneapolis 114,800 880,000 I 500 50 3,995 471, 198,835 Kansas City 838,500 1,374,000 ! 23,250 2.332, 570.640 Dallas * 1,233,800 1.430,000 ; 700 2,200 99, 510;350 San Francisco 1, 500,000 : 21,450 10,850 258, 219,050 Total. >, 526,30000 I 19,150,000 j 900 2,394,200 I 3,082,200 U12,783,245 72,929,000 146,911,435 1 Includes unpaid portion of Liberty loan bonds sold to individual subscribers. Total United States bonds with circulation privilege, 530,045,590. Other United States securities, §116,865,845. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1,1018. FEDERAL RESERVE BULLETIN. 673 RESOURCES AND LIABILITIES OF FEDERAL RESERVE BANKS. Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays, May SI to June 21, 1918. RESOURCES. [In thousands of dollars; i. e., 000 omitted.] I 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 . - m R o ic n h d - . Atlanta. Chicago.! L S ou t. is. M ap i o n l n is e . - I ! K C a i n t s y a . s Dallas. | F c S i r s a a c n n o - . Total. i •Gold coin and eeri/ioatos in vault: May 31 3,452 i 329.384 , 9,123 21.705 6,364 6,708 28,176 1,944 ; 8,269 453 ! 5,430 35,169 456,177 Juiie 7 2,909 ! 338,171 j 9,234 i 21,628 8,370 6,740 28,756 1,905 j 8,404 : 83 | 5,675 35,747 463,622 June 14 3,329 i 302,033 9,120 | 25,017 6,427 6,754 27,614 1,894 ! 8,177 i 300 i 5,740 36,152 432,557 June 21 2,751 : 302; 525 i 9,233 ! 31,291 6,431 6.753 27,548 2,035 | 8,261 ; 206 : 5,852 35,887 438,773 Gold settlement fund, ?ede i a I Reserve Board: May 31 68,989 I 1,807 = 52,169 52,157 23,715 18,780 88,657 40,637 j 27,903 ' 28,475 ; 7,986 13,962 j 425,237 Juno 7 72,502 | 28,189 i 54,775 63,342 17,967 21,315 i 66,926 27,470! 17,,77 02 I 22.859! 6,723 17,905 | 417,675 June 14 65; 995 ! 89,514 ! 46,306 57, 453 13,205 23,914 i 88,051 33,247 1166,002244!! 3333JJ114400 II 5,84116,920 I 489,610 June 21 ., 66,375 ; 140,617 I 32,074 26,948 17,510 24,194 i 68,465 22,409! 18,138 i 40,716 j 10,858 14,719 i ! 481.023 Gold with foreign agon-! cies: May 31 3,675 : 18,112 i 3,675 4,725 1,837 1,575 7,350 2,100 1 2,1002,625 i 1,838 2,888 | 52,500 Jane 7 3,675 i 16,892 3,675 4,725 1,837 1,575! 7,350 j 2,100! 2,100 2,625 i 1,838 2,888 i 51,280 June 14 , 2,914 j 11,218 ! 2,914 4,725 1,837 1,575! 7,350! 2,100 i 2,100 2,625 i 1,&38 2,888 | 44,084 June 21 , 1,513 : 5,579 • 1,132 1,455 570 485 i 2,284 j 847 | 647 1,261 ! 566 889 j 17,008 Gold with Federal Re- ; i i servo agents: May 31 63,122 247,264 i 86,059 117,295 32,870 40,624 ! • 34,530 36,908 19,147 76,089 ! 955,919 June 7 63,037 246,807 ! 87,912 116,873 32,669 37,593 ! 184,418 i40,555 I 34,400 ! 38,858 19,122 80,498 958,255 J J u u n n e e 1 2 4 1 6 6 2 2 , , 8 5 5 4 6 5 2 24 4 6 6 . ,4 0 6 6 5 6 ! ! . 9 94 2 , , 2 4 5 3 1 1 1 1 0 1 7 4 , , 8 2 7 9 6 8 3 3 2 2 , , 3 5 8 3 6 2 ; I3 2 2 8 , , 8 67 5 4 7 j 1 1 6 7 6 2 , , 6 6 6 9 7 2 ! : 3 3 9 9 , , 9 9 9 3 3 8 3 3 4 4 , , 1 2 0 8 9 7 3 3 1 3 , , 7 7 7 1 1 2 1 1 4 4 , , 1 0 0 7 2 7 8 84 1 , , 9 0 7 4 1 4 9 95 5 7 1 , , 2 1 3 4 8 5 Gold M re a d y e 3 m 1/ ption fund: 2,000 12,500 i ! 3,000 318 694 I 31 1 , ,2 1 9 2 7 9 | 17 2 6 , , 1 1 0 7 8 8 - ;:1,711 2,194 765 1,258 148 27,993 Jane 7 2,000 12,500 i 3,000 399 572 I 1,473 i 2,223 : 1,700 2,387 792 1,258 129 28,431 June 14 2,120 12,500 ' 3,000 693 488 ! 2,071 ! 2,380 : 1,689 2,455 800 1,256 55 29,507 June 21 2,303 12,500 ! 3,000 855 363 | 2,311 j 2,595 i 1,671 2,543 917 1,254 19 30,331 Total gold reserves: May 31 141,238 609.067 i154,026 196,200 65,480 65,953 I 290,709 i87,016 74,996 69,226 35,659 128,258 1,917,826 June 7 144,123 840,559 ;158,596 206,967 59,415 63,960 i 271,922 !73,730 64,993 63,217 34,614 137,167 1,919,263 June 14 137,211 661, 730 i153,771 202,188 54,489 62,988 ! 298,087 !78,923 63,043 68,638 28,777 137,059 1,946,903 June 21 135,487 707,287 !139,690 168,425 57,260 64,872 i 277,050 i68,700 61,698 76,812 32,607 136,485 1,924,373 Legal tender notes (silver), etc.: May 31 2.359 43,243 i 1,179 450 390 854 4,583 ! 1,477 119 445 ! 2,486 298 57,883 June 7 2,489 43,828 ! 1,048 410 371 729 5,195 i 1,325 ! 94 389 | 2,288 295 58,461 June 14 2,504 44,262 I 692 476 426 809 4,804 ! 1,345 ! 95 412 j 2,281 254 58,360 June 21 i 2,539 i 43,896 ; 394 363 407 747 ! 4,557 | 1,201 j 95 388 | 1,996 155 56,738 Total cash reserves: i May 31 | 143,597 652,310 155,205 i196,850 65,870 66,807 !295,292 ; 88,493 i 75,115 •9,671 ! 38,145 128,554 975,709 June 7 -.146,612 1,387 159,644 •207,377 59,786 64,689 I277,117 75,055! 85,087 63,606 ; 38,902 137,462 977,724 J Ju u n n e e 2 1 1 4 ! | 1 13 3 8 9 , , 0 7 2 1 0 8 7 7 5 0 1 5 , , 1 9 8 9 3 2 1 1 4 5 0 4 , ,4 0 8 8 3 4: 2 1 0 6 2 8 , , 6 7 6 8 2 8 5 57 4 , , 6 9 6 1 7 5 6 6 5 3 , , 6 7 1 9 9 7 I i3 28 0 1 2 , , 6 8 0 9 7 1 ! 1 8 6 0 7 , , 2 9 6 0 8 1 1 j 6 6 3 1 , , 1 7 3 9 8 3 j i 6 7 9 7 , , 0 2 4 0 8 0 ; | 3 3 4 1 , , 6 0 0 5 3 8 1 1 3 3 7 6 , , 3 6 1 4 3 0 0 9 0 8 5 1, , 2 1 8 1 3 1 Bills discounted for | members and Fed- i I eral Reserve Banks: May 31 43,815 408,275 42,840 i 47,258 49,026 24,839 !85,343 ; 31,257 26,330 65,433 ! 30,082 41,897 896,425 June 7 47,013 462,099 49,599 ! 45,796 49,555 25,923 93,160 i 39,285 30,703 68,150 j 33,443 39,766 j 984,492 June 14 48,056 468,535 50,296 : 49,962 51,601 32,624 94,335 j 47,733 33,480 62,050 3"6 ,"8"59" 40,500 1,016,031 Juno 21 45,844 383,303 55,015 i 34,420 50,483 26,045 112,916 | 48,357 34,376 56,612 28,752 37,145 931270 Bills bought in open market: May 31 23,060 133,420 20,968 10,492 2,798 3,840 31,552 ! 6,643 3,013 i G35 I 920 19,965 | 257,306 June 7 21,811 130,580 23,114 10,053 3,512 4,380 26,151 I 5,959 2,375 800 I 720 19,287 ! 248,542 June 14 21,303 127,966 21,281 11,935 4,244 4,125 24,380 I 4,803 1,092 600 1,320 19,874 ! 242,923 .Tune 21 20,336 123,458 19,944 12,384 6,158 4, 474 21,681 | 3,775 740 250 | 1,170 18,102 ! 232,472 United States Govern- ! ment long-term se- i curities: :vlay31 616 15,631 1,347 ! 7,800 1,233 730 7,090 2.233 i 1,845 I 8,885 ' 3,981 3,461 54,832 June 7 616 25,283 1,347 I, 7,800 1,233 730 7,090 2,233 1,845 ! 8,865 3,981 3,461 64,484 June 14 (516 1,559 1,347 i 7,700 1,233 730 7,090 2.234 | 1,860 8,872 3,881 3,481 40,683 June 21 616 1,549 1,747 I 7,499 1,233 730 7,090 2,234 i 1,860 8,877 3,981 ' 3,481 40,877 United States Government short-term securities: J M u a n y e 3 7 1 1 1 , , 5 5 4 4 1 1 64 4, , 8 3 1 5 4 4 2 2 , , 1 1 4 2 3 7 9 9 , , 4 6 5 9 7 2 1 1 , , 5 5 2 2 4 4 1 .1 , , 2 2 0 0 2 7 2 3,0 9 0 7 4 9 5 5 1 1 1 1 1 1;. 3 3 5 3 2 4 3 3 , ,6 7 1 0 3 8 1 1 , , 5 4 3 9 0 0 1 1 , , 7 76 5 9 8 3 9 2 2 , , 8 0 0 8 1 2 June 14 1,541 5,264 1,970 9,876 1,524 1,237 2^982 511 1349 3,628 h490 I827 33,179 June 21 1,416 4,487 5,658 9,962 1,523 1,197 2,962 511 1294 3,588 1,430 795 35,883 All other earning assets: May 31 1 53 54 30 58 533 10 736 Juno 7 52 47 30 28 519 18 694 June 14 53 40 8 467 23 594 June 21 32 3 8 108 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

674 FEDERAL RESERVE BULLETIN. JULY 1,1918, Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays, May 31 to June 21, 1918—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 . - m R o ic n h d - . Atlanta. Chicago. Lo S u t. is. M ap i o n l n i e s. - K C a i n t s y a . s Dallas. F S r a a n n- Total. Total earning assets: May 31. T 69,032 621,690 67,298 75,007 54,581 30,664 127,043 40,674 32,596 37,046 67,090 1,301,390 June 7 70,981 622,776 76,187 73,341 55,824 32,292 129,427 48,018 36,285 81,228 40,153 64,301 1,330,813 June 14 71,516 603,324 74.894 79,473 58,602 38,769 128,807 55,284 37,789 75,150 44,117 65,685 1,333,410 June 21 68,212 512,797 82; 364 84,265 I 59,399 32,503 144,681 52,880 38,278 69,327 35,393 60,503 1,240,602 Due from other Federal Reserve Banks, net: May 31 16,288 10,144 1,412 1 19,194 June? 7,477 1,073 9,891 2,085 3,014 2,822 . 2 1,605 June 14 3,269 5,011 453 3,725 2,299 I i 19,350 June 21 7,018 6,748 2,933 14,705 Uncollected items: May 31 24,228 80,915 60,052 39,745 29,473 26,991 45,501 45,367 9,801 30,122 14,761 20,377 427,331 June 7 25,031 75,193 46,195 34,465 26,679 31,398 55,308 29,369 8,485 31,643 17,523 19,635 400,924 June 14 35,535 169,287 51,604 44,544 31,828 32,403 57,682 31,456 8,503 24,153 16,942 25,716 529,653 June 21 32,055 168,402 43,140 53,771 45,294 36,464 73,491 37,643 9,627 35,203 23,500 30,269 588,859 Total deductions from gross deposits: May 31 24,226 80,915 60^2 56,033 29,473 26,991 55,645 45,367 9,801 31,534 14,761 21,986 40S, 137 June 7 25,031 75,193 46,195 41,942 27,752 31,398 65,199 31,454 11,499 34,465 17,523 19,635 402,529 June 14 35,535 169,287 54,873 49,555 32,281 32,403 57,682 31,456 8,503 27,878 16,942 28,015 510,303 June 21 32,055 175,420 49,178 60,519 45,294 36,464 I 73,491 37,643 9,627 35,203 23,500 30,269 584,154 5 per cent redemption fund against Federal Reserve banknotes: May 31 100 389 137 626 Jurie7 100 400 137 637 June 14 14 100 400 137 735 June 21 14 ! 100 400 137 735 All other resources: May 31 241 207 448 June 7 June 14 June 21 90 •I" 90- Total resources: I May 31 236,855 1,355,146 282,762 327,690 149,924 124,462 ! 478,080174,534 117,512 180,263 90,089 217,630 3,686,300 June 7 242,624 1,382,356 322,660 143,362 128,379 I 471,843 154,527 ! 112,871179,699 94,715 221,398 3,711,703 June 14 246,769 1,478,603 284,230 331,690 145,798 134,983 i 489,480 167,008 ! 109,430172,476 92,254 231,097 3,849,711 June 21 1,439,400 271,716 313,572 162,360 134,600 i 499,879 158,424 | 109,698182,130 93,633 230,429 3,806,692 J Difference between net amounts due i'rom and net amounts due to other Federal Reserve Banks=net amount duo to other Federal Reserve Banks. 2 Difference between net amounts due from and net amounts due to other Federal Reserve Banks. LIABILITIES. Capital paid in: May 31 6,467 19,755 6,939 8,537 3,812 3,024 9,745 3,623 2,785 3,510 2,968 4,381 75,546 June 7 6,474 19,777 6,939 8,557 3,815 3,034 9,771 3,627 2,786 3,522 2,970 4,390 75,662 June 14 6,474 19,777 6,939 8,556 3,819 3,045 9,775 3,627 2,788 3,527 2,973 4,411 75,711 June 21 6,474 19,786 8,556 3,045 9,781 3,607 2,797 3,529 2,985 4,447 75,770 Surplus: May 31 75 649 116 40 216 38 1,134 June 7 75 649 116 40 216 38 1,134 June 14 75 116 40 216 38 1,134 June 21 75 116 40 216 1,134 Government deposits: May 31 14,479 21,572 11,800 32,544 6,900 6,288 22,142 14,625 10,275 4,021 12,637 166,191 June7 23,062 16,826 18,846 26,478 8,423 10,334 15,766 18,797 12,736 10,319 7,740 10,549 179,876 June 14 6, 705 48,325 4,691 16,736 5,560 12,185 16,023 14,597 3,384 6,201 8,204 12,921 155,532 June 21 3,277 55,073 3,774 553 15,659 11,627 23,503 5,711 9,004 6,375 15,532 159,457 Due to members—reserve account: May 31 , 91,968, ! I 618,641 89,231 111,591 42,999 38,247 182,974 46,631 39,164 41,323 71,562 1,440,413 June 7 , 89,040 | 640,968 91,102 109,456 42,844 34,652 181,909 46,118 38,735 63,644 38,662 72,356 1,449,486 June 14 , 96,615 i 683,738 128,023 44,579 192,627 54,267 37,400 66,009 35,935 79,651 1,555,434 June 21 89,963 116,446 41,741 41,835 186,562 46,822 38,166 68,451 37,040 71,949 1,464,986 Collection items: May 31 , 18,462 i 54,766 36,818 23,192 21,437 16,232 22,748 33,178 10,011 19,937 8,115 13,772 278,698 June 7 15,920 ! 48,464 29,815 ! 22,859 17,855 19,897 20,576 20,298 4,399 19,629 8,850 11,409 239,971 June 14 27,441 j 54,345 35,012 22,261 20,281 16,164 24,286 23,373 8,020 13,770 6,877 13,057 264,887 June 21 26,727! 63,838 29,365 I 29,021 23,739 19,225 24,122 24,794 6,457 16,978 14,695 287,76$ Due to other Federal Reserve Banks, net: May 31 , 247 21.341 4,215 3,519 11,171 1,176 | 109 June 7 22 14)385 3,627 2,037 4,458 |. June 14 930 12,283 7,062 1,107 5,412 4,090 I. June 21 1,762 5,308 1,266 ! 4,366 j 7,675 1,253 707 5,105 J. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BULLETIN. 675 Resources and liabilities of each Federal Reserve Bank and of the Federal Reserve system at close of business on Fridays, May 31 to June 21, 1918—Continued. LIABILITIES—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 . - m R o ic n h d - . Atlanta. Chicago. Lo S u t. is. M ap i o n l n is e . - K C a i n t s y a . s Dallas. F c S i r s a a c n n o - . Total. Other deposits, including foreign government credits: May31 101,314 605 6 3,385 104 45 3,984 109,443 June 7 103,926 137 16 2,136 104 82 3,159 109,560 June 14 115,601 191 7 3,580 233 24 3,585 123,221 June 21 110,426 264 12 3,740 417 41 2,445 117,3-15 Total gross deposits: May 31 125,186 817,634 142,064 167,932 78,205 64,292 231,249 105,709 60,671 94,927 53,568 101,955 1,994,745 June 7 128,044 824,569 139,991 158,930 69,122 68,526 220,387 85,317 55,952 93,592 57,289 101,931 1,978,893 June 14 131,691 914,292 137,941 167,211 70,420 73,770 237,623 97,882 52,051 85,980 55,106 109,214 2,099,074 June 21 121,057 866,057 123,102 146,284 86,447 73,965 242,293 89,077 51,628 95,140 57,328 104,621 2,029,557 Federal Reserve notes in actual circulation: May 31 104,475 517,108 133,759 150,428 67,611 57,089 235,163 64,716 53,610 72,854 33,198 110,957 1,600,968 June 7 107,327 536,764 135,004 154,347 70,016 56,748 238,498 65,004 53,635 73,374 34,073 114,789 1,639,579 June 14 107,808 537,918 139,316 155,032 71,043 58,074 238,809 64,921 54,071 73,627 33,758 117,123 1,651,500 June 21 109,955 546,707 141,675 157,884 71,745 57,477 244,152 65,211 54,693 74,186 33,254 121,012 1,677,951 Federal Reserve bank notes in circulationnet liability: May 31 560 • 7,704 8,324 June 7 1,700 i. 7,880 6, r>so June 14 2,000 j. 8,000 June 21 7,910 10,001 All other liabilities: 9,945 May31 652 180 1,147 486 408 1,208 355 337 5,583 June 7 704 597 826 293 1,271 579 460 1,331 383 288 6,855 Juno 14 721 5,967 400 1,057 i 578 482 1,342 4.17 349 12,291 June 21 732 6,201 228 1,437 j 529 542 1,365 349 12,335 Total liabilities: May 31 236,855 1,355,146 282,762 327,690 149,924 124,462 478,080 j 174,534 117,512 180,263 90,089 217,630 3,686,300 June 7 242,624 1,382,356 282,026 322,660 143,362 128,379 471,843 ! 154,527 112,871 179,699 94,715 221,398 3,711, 703 June 14 246,769 1,478,603 284,230 331,690 145,798 134,983 489,480 I 167,008 109,430 172,476 92,254 231,097 3,849,711 June 21 238,293 1,439,400 271,716 313,572 162,360 134,600 499,879 | 158,424 109,698 182,130 93,633 230,429 3,806,692 FEDERAL RESERVE NOTES. Federal .Reserve note account of each Federal Reserve Bank at close of business on Fridays, May SI to June 21, 1918. [In thousands of dollars; i. e., 000 omitted.] I 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 . - Atlanta. Chicago.1 Lo S u t. is. M ap i o n l n is e . - K C a i n t s y a . s Dallas. Fran- Total. Federal Reserve notes received from agent—net: May 31 109.412 ! 568,078 144,479 159,395 79,560 59,073 258,593 68,256 55,876 78,310 33,582 121,933 jl, 736,547 June7 lio; 257 I 583,339146,332 165,773 80,422 59,039 260,841 55,946 79,031 34,288 125,621 11,769,876 June 14 111,596 593,657 150,851 165,598 79,286 60,404 266,866 68,625 55,833 79,039 34,370 127,268 jl,793,393 Juno 21 , 112,885 591,037 154,671 168,955 78,847 59,660 270,353 69,020 56,255 79,142 33,898 130,795 11,805,518 Federal Reserve notes j held bv banks: i May 31 ! 4,937 50,970 10,720 8,967 11,949 ! 1,984 23,430 3,540 2,266 5,456 10,976 135,579 June 7 i 2,930 46,575 11,328 11,426 10,406 i 2,291 22,343 3,983 2,311 5,657 215 10,832 130,297 June 14 1 3, 788 55,739 11,535 10,566 8,243 j 2,330 28,057 3,701 1,762 5,412 G12 10,145 141,893 Juno 21 j 2,930 44,330 12,996 11,071 7,102 2,183 26,201 3,809 1,562 4,956 644 9,783 127,567 Federal Reserve notes j in actual circulation: May 31 104,475 517,108 133,759 150,428 67,611 ! 57,089 235,163 64,716 53,610 72,854 33,198 110,957 1,600,068 Juno 7 107,327 536,764 135,004 154,347 70,016 j 56,748 238,498 65,004 53,635 73,374 34,073 114,789 1,639,579 June 14 107,808 537,918 .139,316 155,032 71,043 ; 58,074 238,809 64,921 54,071 73,627 33,758 117,123 1,651,500 Juno 21 109,955 M6, 707 141,675 157,884 71'. 745 ! 57,477 244,152 65,211 54,693 74,186 33,254 121,012 1,677,951 Gold deposited with or to the credit of Federal Reserve agent: ! May 31 63,122 247,264 32.870 37,593 164,418 40,624 34,530 36,908 19,147 76,089 955,919 June 7 63,037 246,807 87,912 116,873 32; 669 32,857 166,667 40,555 34,400 36,858 19,122 80,498 958,255 June 14 62,856 246,465 92,431 114,298 32,532 28,674 172,692 39,993 34,287 31,771 14,102 81,0-14 951,145 June 21 62,545 246,086 94,251 107,876 32,38S 31,129 176,178 39,938 34,109 33,712 14,077 81,971 957,238 Paper delivered to Federal R c s e r v e agent: May 31 66,875 541,695 58,853 57,750 50,286 21,581 111,847 33,355 23,884 62,372 31,002 52,823 1,112,323 .Time 7 68,824 592,679 71,866 55,849 52,73S 26,487 112,003 34,824 27,816 64,365 34,183 52,015 1,193,629 Juno 14 69,359 596,501 70,321 61,897 do,382 32.456 111,738 45,254 29,646 57,704 38,179 51,413 11,219,848 June 21 66,180 505,761 71,737 56.410 28', 700 128,243 42.170 30,490 52,128 29,922 48,254 11,127,797 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

676 FEDERAL RESERVE BULLETIN. 1,1918. Federal Reserve note account of each Federal Reserve agent at close of business on Fridays, May 31 to June 21,1918. [In thousands of dollars; i. e., 000 omitted.] j York, jdelphia. C la le n v d e . - m R o ic n h d - . Atlanta. Chicago. Lo S u t. is. M ap i o n l n is e . - K C a i n t s y a . s Dallas. F c S i r s a a c n n o - . Total. FEDERAL RESERVE NOTES. Tlcceived from Comptroller: May 31 152.580 875,880 190,200 196,060 107,060 92,740 320,880 92,200 73,980 103,700 68,500 131,640 2,405,420 Juno 7 157:4-10 888,480 197,360 197,260 109,260 92,740 323,380 92,200 73,980 104,700 68,500 135,420 2,440,720 June 14 159', 640 307,480 208,240 205,420 109,860 96,740 327,040 93,200 73,980 104,700 68,500 138,020 2,492,820 Juno 21 159,640 921,880 208,240 206,900 110,360 96,740 334,360 93,200 73,980 104,700 68,500 141,620 2.520,120 Returned to Comptroller: May 31 29,428 195,002 31,981 15,825 21,240 17,142 17,607 14,554 13,449 17,180 15,618 9,707 398,733 June 7 30,583 199,741 32,128 16,247 21,728 17,376 18,219 14;623 13,579 17,459 15,682 9,799 407,164 June 14 31,244 205,623 34,209 16,822 22,294 17,661 18,894 15,185 13,992 17,651 15,750 10,752 420,077 June 21 31,955 209,443 17,245 23,233 17,905 20,027 15,240 14,170 17,848 16,012 10,825 428,292 Chargeable to Federal Reserve agent: May 31 123.152 680,878 158,219 180,235 85,820 75,598 303,273 77,646 60,531 86,520 52,882 121,933 2,006,687 June 7 126', <S57 688,739 165,232 181,013 87,532 75,364 305,161 77,577 60,401 87,241 52,818 125,621 2,033,556 June 14 12S, 396 701.857 174,031 188,598 87,566 79,079 308,146 78,015 59,988 87,049 52,750 127,26S 2,072,743 June 21 127,685 712', 437 173,851 189,655 87,127 78,835 314,333 77,960 59,810 86,852 52,488 130,795 2,091,825 In hands of Federal Reserve agent: May 31 13,740 112,800 13,740 20,840 6,260 16,525 44,680 9,390 4,655 8,210 19,300 270,140 June 7 16,600 105,400 18,900 15,240 7,110 16,325 44,320 8,590 4,455 8,210 18,530 263,680 June 14 16,800 108,200 23,180 23,000 8,280 18,675 41,280 9,390 4,155 8,010 18,380 279,350 June 21 14,800 121,400 19,180 20,700 19,175 8,940 3,555 7,710 18,590 286,310 Issued to Federal Reserve Bank, less amount returned to Federal Reservo agent for redemption: May 31 109,412 568,078 144,479 159,395 79,560 59,073 258,593 68,256 55,876 78,310 33,582 121,933 1,736,547 June 7 110,257 583,339 146,332 165,773 80,422 59,039 260,840 68,987 55,946 79,031 34,288 125,621 1,769,876 June 14 lli;S96 593.657 150,851 165,598 79,286 60,404 266,866 68,625 55,833 79,039 34,370 127,268 1,793,393 June 21 112.885 591,037 154,671 168,955 78,847 270,353 69,020 56,255 79,142 33,898 130,795 1,805,518 Collateral held us sccu- , rity for outstanding | notes: ! Gold coin and cer- j tificatcs on { hand— i May 31 12.000 169,743 23,518 2,504 13,102 11,581 232,448 June" 8,000 169,743 23,517 2,503 13,102 11,581 228,446 June 14. 8,000 169,740 20.517 2,504 13,102 11,581 225,444 June 21 7.000 166,740 14.518 2,504 13,102 11,581 215,445 In gold redemption fund— May 31 5,622 12,521 i 7.3S5 8,777 1,370 2.169 I 378 2,155 1,928 2,548 1,982 6,593 55,428 June? 5,537 12,064 I 7; 738 8,356 1,169 1/J34 572 2,096 1,798 2,498 1,957 6,502 52,221 June 14 5.356 11,725 • 7,(34 8,781 1.032 2,650 311 2,059 1,685 2,411 1,937 0,413 51,994 June 21 (T. 045 14,826 j 8.021 8,358 ' 886 2,405 417 2,018 1,507 2.352 1,912 6,340 54,587 Gold settlement fund, I I Federal Itescrve Hoard: May 31 Ab. 500 65,000 j 78,674 85,000 31,500 32,920 164,040 38,469 19,500 34,360 5,584 69,496 670,043 June 7 49'. 500 6.1,000 j 80,174 85,000 31,500 28,420 166,095 38,459 19,500 34,360 5,584 73,996 677,588 June 14 49; 500 65,000 j 84,797 85,000 31,500 23,520 172,381 37,931 19,500 29,360 584 74,631 673,707 June 21 49,500 65,000 ! 86,230 85,000 31,500 26,220 175,761 37,920 19,500 31,360 584 78,631 687,205 Eligible paper(required minimum): J May 31 46,290 320,814 i 58,420 42,100 46,690 21,480 94,175 27,632 21,346 41, 102 14,435 45,841 780,628 June 7 47,220 336,532 I 58,-120 48,900 47,753 26,182 94,174 28,432 21,546 42,173 15.166 45,123 811J621 June 14 48.740 347,192 j 58,420 51,300 46,754 31,730 94.174 28,632 21,546 47,268 20" 208 46.224 84.2,248 Jane 21 on! 340 344,977 I 60,420 61,079 46,461 28,531 94.175 29,082 22,146 45,430 19,821 45'. 824 848,280 Total: i May 31 i 109,412 568,078 I 144,479 159,395 79,560 59,073 258,593 08,256 55,876 78.310 33,582 121,933 i, 736,547 June 7 ..I 110,257 5S3,339 j 146,332 165,773 80.422 59,039 260,841 68,987 55,946 79', 031 31,288 125,621 1,769,876 June 11 | lll',58fi 593,657 ! 150,851 105,598 79,2S(> 60,404 266,866 68,625 55,833 79,039 34,370 127,208 1,793,393 June 21 1112,885 591,037 j 154,071 168, £55 78,847 59,660 270,353 69,020 56,255 79,142 33,898 130,795 ',805.518 :i For actual amounts see item " Paper delivered to Federal Reserve agents," on page 675. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL RESERVE BULLETIN. 677 MEMBER BANK CONDITION STATEMENT. Principal resources and liabilities of member hanks located in central reserve, reserve, and other selected cities, as at close of business on Fridays from May 24 to June 14, 1918. 1. TOTAL FOR ALL .UEFORTING BANKS. [Tn thousands of dollars; i. e., 000 omitted.] Boston. Y N o e r w k . | j d P el h p il h f i i- a. C la le n v d e . - m R o ic n h d - . Atlanta.] i Chicago. Lo S u -: i . s , j I M ao i o n l n is e . - - " ; . K C a i n ty s . as Dallas, j j F S r a a n n- Total. i CISCO. i i Number of reporting I banks: May24. 42 98] 65 38 94 ! .32! 33 40 47 691 May 31 42 98 i 64 37 95 | 32 I 33 ! 38 48 689 J J u u n n o e 7 14 4 4 2 2 9 9 9 9 j ! 6 7 7 0 3 3 5 6 9 9 2 1 ! | 32 II 2 2 9 7 : i 4 41 1 i I 4 4 7 7 i United States bonds to secure circula- ! ! tion: i I May 24 14,616 51,367 12,978 43,016 21,908 ! 14,190 | 18,817 17,392 i 6,168 • 14,012 16,879 !34,105 2(55,448 May 31 14,621 51,367 12,978 43,341 21,158 ! 14.390 j 19,142 17,392 I 5,919 ! 13,787 17,074 j 35,355 2(56,524 June 7 14,621 51,367 I 12,975 43,462 23,220 13'685 i 18,930 I 17,392 i 5.344 I 14,012 17,579 !35,355 267,942 June 14 14,621 51,897 ! 12.975 43,523 23,968 13,285 I •18,179 '17,417 j 5.619 '•• 14,02217,579 i 33,655 266.740 Other United States bonds, including , Liberty bonds: Mav'24 16,369 285,710! 22,271 70,435 22,882 20,889 71,896 17,889 i 11,730 j 18,149 15,499 18,976 592,695 May 31 15,381 275,590 ! 25,357 68,807 25,226 24,736 77,413 25,801 i 13.207 1 18,253 16,052 24,225 610,048 June 7 14,736 278,419 | 24,527 61,709 27,383 22,169 73,682 24,720 ! 10', 023 18,680 16,059 23,363 595,470 June 14 14,825 269,443 24,337 59,641 27,728 21,812 78,303 24.285 : 10; 615 17,609 15,594 22,513 j 586,705 United States certificates of indebtedness: May 24 28,395 i 804,714 46,429 42,837 16,372 22,320 56,235 1 31,227 11,197 25,035 18,510 38,421 1,141,692 May 31 30,772 I 762,004 39,124 32,343 12.187 18,418 55,292*1 20,642 9,177 15,768 14,970 31,181 1,041,878 June 7 31,186 733,399 38,607 31,055 13;136 17,290 5555,118844 2200,886644 | 99,004466 1166,227799 16,034 29,879 1,011,959 June 14 29,910 I 682,415 43,017 14,128 16,192 32,486 21,344 j 10,005 i 17,435 16.258 33,186 945,1(52 Total United States securities owned: May 24 59,380 1,141,791 81,678 156,288 61,162 57,399 146,948 66,508 29,095 57,196 50,888 91,502 1,999,835 May 31 60,774 1,088,961 77,459 144,491 58,571 57,544 151,847 63,835 28,303 47,808 48,09(5 90,761 1,918,450 June 7 60,543 1,063,185 78,109 136,220 63,739 53,144 147,796 62,976 24,413 48,971 49,672 88,597 1,875,371 June 14 59,356 1,003,755 80,329 131,950 65,824 51,289 128,968 63,040 26,239 49,066 49,431 89,354 1,798,007 Loans secured by United States ! bonds and certificates: May 24 56,639 274,792 34,318 44,411 15,224 6,465 27,362 14,006 3,740 4,495 5,146 5,843 492,441 May 31 54,151 287,404 35,849 46,910 16,220 6,040 30,059 14,343 4,502 4,672 5,845 6,967 512,962 June 7 52,816 j 278,913 38,238 54,442 16,976 6,304 33,814 18,102 4,509 4,625 6,138 7, (551 522,528 June 14 54,248 281,057 38,782 50,549 17,380 6,816 29,423 14.998 4,668 4,451 6,585 9,450 518,407 Other loans and investments: May 24 775,845 4,027,762 625,843 941,757 |327,150 258,766 1,327,745 375,749 245,067 459,411 167,613 460,972 9,993,680 May 31 768,040 4,013,342 633,752 942,889 i316,243 265,944 1,342,098 375,213 235,341 459,205 162,311 489.784 10,004,162 June 7 , 771,650 4,038,385 628,529 953,472 I335,280 246,631 1,341,210 i 386,126 224,894 461,288 167.738 510,433 110,045,636 June 14 797,114 4,193,061 637,622 350,744 242,074 1,285,149 j 368,240 230,000 461,983 167; 963495,389 10,189,202 Total loans and in- ! 1 1 vestments: I I Mav24 , 891,864 |5,444,345 ; 741,839 1,142,456 403,536 i 322,630 223,647 558,317 12,485,956 J J M u u a n n y o o 3 7 1 1 4 8 8 9 8 8 3 5 2 0 , , , 0 9 7 0 6 1 9 5 8 1 1 1 5 5 5 , , 3 3 ,4 8 8 7 9 0 7 , , 7 4 ,8 0 8 7 7 3 3 i i ; 7 7 7 4 4 5 2 7 6 , , , 8 0 7 7 3 6 6 3 0 1 1 I' , . , 1 1 4 3 1 2 4 4 . , 4 3 2 , 6 9 1 2 0 40 3 4 4 1 9 3 5 1 3 , , , 9 0 9 9 3 1 5 4 8 i 3' 3 3 0 0 " 2 0 6 9 ", , , 1 0 5 "7 7 2 -9 9 8 J 1 1 1 il , , , , 5 5 5 A i4 0 2 2 '4 2 4 2 i 3 , , , , 0 0 8 XA 5 5 0 2 (\4 5 4 0 0 j I I I j 4 4 A 4 4 5 5 4 U 0 3 4 7 \ , , 6 , 3 2 , 2 « 9 ( >2 0 . 5 R8 4 1 3 A4 I j \ ; 2 2 2 5 7 6 2 3 7 8 6 , , , 0 8 9 1 , 1 0 4 9 6 2 6 0 7 < ! | ! 5 5 1 5 5 1 4 2 1 5 , 1 1 , 8 , , 5 8 6 1 0 4 8 0 0 5 22 2 2 1 2 2 ( 3 3 5 , , , 9 5 2 7 4 5 9 8 2 5 6 5 0 8 9 ( 7 4 5 , , , 5 1 6 1 9 8 2 3 1 | 1 1 1 1 2 2 2 , , 4 , 4 5 4 3 0 3 5 6 'f , , 5 2 5 7 1 3 4 6 5 Reserve with Federal Reserve Jianks: May 24 62,809 596,952 . 57,298 81,153 26,007 25,049 134,314 I 31,702 ! 17,933 i 41,202 15,974 41,788 I 1,132,181 May 31 66,783 589,113 I 54,591 78,808 24, 728 24,266 j 333,502 I 34,001 I 17,935 39,386 13,707 45,844 i 1,122,664 June 7 63,158 ! 609,698 I 59,773 76,642 25,856 20,802 ! 135,364 I 32,895 i 15,769 42,813 15,837 47,038 I 1,145,645 June 14 , 70,723 I 649,757 j 5599,,990077 95,3,53 28,181 24,980 ! 136,501 I 37,681 i 17,210 36,971 16,452 52,(532 j 1,226,348 Cash in vault: May 24 26,971 124,979 19,664 30,629 14,631 13,537 ( 61,229 13,395 ! 9,569 i 16,12(5 10,432 18,327 ! 359,489 May 31 24,765 119,999 20,469 32,087 j 15,259 14,522 j 62,786 13,625 ! 8,822 j 15,800 11,744 19,509 i 359,453 June 7 , 2(5,533 123,000 20,986 34,773 j 15,491 12,785 ! 62,134 j 14,045 j 9,166 I 16,510 10,369 19,535 j 365,327 June 14 26,683 120,641 20,179 33,635 15,783 12,484 j 57,481 | 13,572 i 7,590 ; 15,934 10,582 19,333 j 353,903 Net demand . de- i posits on which reserve is computed: M Ma a y y 3 2 1 4 6 6 5 5 4 7, , 8 5 8 3 1 2 | 4 4 , ; 3 2 7 1 6 9 , , 0 6 7 7 7 8 5 5 7 8 5 6 , , 7 4 0 1 3 0 6 70 8 1 8 , , 4 2 1 5 3 2 i I 2 2 3 4 9 8 , , 1 5 5 5 9 9 1 1 8 8 2 9 , , 8 7 7 5 6 0 i i l , 0 9 1 9 0 9 , , 6 7 1 1 8 9 i i 2 2 5 5 2 9 , , 0 6 4 5 7 3 j i 1 1 6 7 8 4 , , 2 0 4 9 7 7 ! j 3 3 5 5 0 1 , , 0 8 0 2 4 1 1 1 3 3 3 5 , , 2 7 1 7 9 8 3 37 6 4 4 , , 7 8 2 1 6 8 9 8 , , 0 8 2 6 5 9 , ,5 4 4 9 2 5 June 7 666,094 4,399,524 578,464 707,756 i 256,341 177,006 i 1,006,030 \ 256,041 158,525 ! 358,728 135,002 381,345 9,080,856 June 14 689,482 4,486,422 589J093 721,117 272,354 182,017 998,479 \ 258,332 159,966 ! 363,811 142,2S6 373,591 i 9,246,950 Time deposits: May 24 95,788 | 249,472 13,740 228,795 40,720 May 31 95,607 I 281,507 I 13,796 229,107 36,836 June 7 93,873 i 257,522 I 13,799 231,937 41,841 June 14 93,474 i 2(52,341 I 14,571 228, S81 42,926 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

878 FEDERAL EESEEVE BULLETIN. JULY 1,1918. Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of business on Fridays from May 24 to June 14, 1918—Continued. 1. TOTAL FOE ALL REPORTING BANKS—Continued. [In thousands of dollars; i. e., 000 omitted.] Cleve- Rich- Minne- Kansas San Boston. land. mond. Atlantaj Chicago. | apolis. City. Dallas. F ci r s a c n o - . Total. Total net deposits on which reserve is computed: May 24 758,966 261,753 208,226 |l,094,999 279,602 190,951 370,428 142,622 393,287 9,271,328 May 31..: 771,926 251,177 214,919 il,106,145 271,420 182,792 368,596 140,586 405,606 9,428,779 June 7 779,492 270,573 202,185 11,100,827 275,003 171,117 376,873 141,973 413,672 9,483,554 June 14 726,314 791,944 287,077 206,455 11,082,136 287,241 173,065 382,379 150,192 403,933 9,638,398 Government deposits: May 24 102,868 87,910 18,437 30,120 | 98,910 53,316 22,864 22,793 28,520 16,890 1,028,738 May 31... 97,364 ; 74,633 31,030 14,704 | 77,634 54,144 24,028 20,301 19,796 23,416 909,312 June 7 1 75,028 59,054 58,664 17,437 18,390 ! 96,753 40,819 18,287 14,105 14,163 22,108 765,144 June 14 !141,510 72,021 57,279 17,674 12,284 i 38,977 20,120 15,594 11,344 19,645 2. MEMBER BANKS IN CENTRAL RESERVE CITIES. CENTRAL RESERVE CITIES. Number of reporting May 24, May 31, June 7. June 14 United States bonds to secure circulation: May24 1 37,023 May31 ! ! 37,023 June7 i ! 37,023 June 14 i i 37,553 Other United States : bonds, including Liberty bonds: May'24, May 31. June 7. June 14 United States eortiiicates oi indebtedness: May 24. May 31 June 7. June 14 Total United States securities owned: May 24 1,081,826 1,205,731 May 31 1,030,960 1,158,254 June 7. 1,008,013 1,132,802 June 14, 949,023 1,066,806 Loans secured by United States bonds and certificates: May 24. 275,003 May 31. 289,355 June 7. 285,151 June 14 283,980 Other loans and investments: May 24. 805,711 I 265,859 760,467 May 31 813,974 266,441 756,493 June 7 816,108 262,222 782,055 June 14 830,668 271,526 953,188 Total loans a ad investments: May 24. | 6,241,201 May 31. . , , June 7 1 4,963,033 I 6,200;008 Juno 14 ! jo, 052,702 i 6,308,974 Reserve with Fed- i | eral Reserve Banks:! I ! Mav24 i 571,018 : 688,194 May31 | 561,886 ! 681,4-12 ;»uiie7 ! i 583,759 ] 704,501 June 14 ! ! 618,192 ! 747,000 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1, 1918. FEDERAL RESERVE BULLETIN. 679 Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of business on Fridays from May 24 to June 14, 1918—Continued. 2. MEMBER BANKS IN CENTRAL RESERVE CITIES-Continued. [In thousands of dollars; i. e., 000 omitted.] San Boston. Y N o e r w k. K C a i n ty sa . s Dallas. F ci r s a c n o - . Total. Cash in vault: ! ! May24 | ! 112,111 7,402 157,307 May 31 1 j 106,766 7,315 152,034 June 7 | i 109,258 . 7,762 154,945 June 14 107,' 810 |..! | ! : j So, 759 7,276 150,845 Net demand deposits on which reserve is computed:. May 24 ! 13,920.053 674, 755 184,798 4,779,606 May 31 ; i4,070,986 ! -I- 678,725 179,500 4,929,211 June 7 '" i4,094.914 ! 683,231 181,641 4,959,786 June 14 i |4,170', 796 i j i 709,132 191,143 5,071,071 Time deposits: May 24 208,000 i 130.738 54,667 391,405 May 31 218,467 ! i 130', 252 54,252 402,971 213,198 : 129,907 53,932 397,037 June 14 1. 217,684 ' 130,328 53,560 401,572 Total net deposits on j which reserve is j computed: ! May 24 3.967,592 ; 704,925 197,413 : 4,869,930 May 31. M', 121,401 708,783 192,020 : 5,022,204 June 7 ''A, 144,112 ! ' 713.210 194,087 ' 5,051,409 June 14 | 14,221,031 ' ! ! 739; 208 203,503 • 5,163,742 Government depos- ' ! " ' : j its: ' i i . . i May 24 | 424,103 I ! | , 79,310 43.527 ! 546,940 May 31 \ 362,130 I ! I 62.472 45;357 : 469,965 Tune 7 ! 305,338 ; ! ! 73.738 34', 491 413,567 June 14 346,0-16 • 70,758 32,954 449, 758 3. MEMBER BANKS IN OTHER RESERVE CITIES. OTHER RESERVE CITIES. Number of reporting Lanks: May 24 19 ! 15 : 33 422 May 31 19 i 15 ; 422 June 7 19 ! 15 ; 418 June 14 19 ! 14 • 418 United States bonds to secure circula- i tion: Mav24 4,493 i 7,796 8.968 35,359 13,944 11,360 16,624 5,330 3,340 i 14,012 I 15,126 34,105 i 170,457 May 31 4,498 ! 7,796 8', 968 35', 684 13, 769 12,360 16,949 5.330 , 3,340 i 13,787 i 14,621 35,355 i 172,457 June 7 4,498 I 7,796 8,965 35,755 13,521 10,855 16.624 5; 330 j 3,340 ! 14,012 I 15,126 35,355 ! 171,177 June 14 4,498 i 7,796 8,965 35,811 13,944 11,255 15; 960 5,330 i 3,440 : 14.022 > 15,126 33,655 i 109,802 Other United States bonds, including I Liberty bonds: May "24 11,042 ! 16,407 18,836 66,217 14,939 18,153 26,870 4,450 I 8,860 i 18,149 13,842 18,976 i 236,741 May 31 9,668 I 15,839 21,407 64,189 17,393 22,230 30,604 4,268 i 10,598 : 18,253 13,854 24,225 i 252,588 J J u u n n e e 1 7 4 99,,100777 Ii 1 1 4 3 , , 3 9 7 5 3 2 2 2 0 0 , ,1 5 5 9 3 8 5 5 6 5 , , 9 0 3 9 5 8 1 1 7 7 , , 1 1 3 0 0 0 1 19 8 , , 0 9 6 1 3 1 2 24 9 . , 2 5 7 3 5 4 5 5 , , 1 0 1 3 4 6 i i 8 8 , , 8 4 4 3 3 5 ; * 1 1 8 7 , , 6 6 8 0 0 9 I 1 1 3 3 , , 2 6 4 3 6 8 2 2 3 2 , , 3 5 ( 1 5 3 3 j ! 2 22 3 5 5 , , 9 8 9 4 5 8 United States certificates of indebtedness: May 24 20,216 i 7,519 41,810 39,481 14,291 18,428 25,088 3,266 8,085 i 25,035 17,073 38,421 i 258,713 May 31 24,109 •' 5,890 35,394 29,780 10,779 16,346 21,188 2,227 7.457 : 15,768 13,317 31,181 ! 213,436 June 7 24,757 ! 5,025 34,827 28.207 10,954 14,718 20,115 2', 077 7,335 ' 16,279 14,620 29,879 ! 209,393 June 14 23,595 \ 5.439 38,867 25;909 11,80-1 13,920 14,753 2.063 8,302 j 17,435 14,839 33,186 210,112 Total United States securities owned: May 24 35,751 i 31,722 69,614 141,057 43,174 47,941 68,582 13,046 20,285 ! 57,196 46,041 91,502 665,911 May 31 38,275 j 29,525 65,829 129,653 41,941 50,936 68,741 11,825 21,395 ! 47,808 41,792 90,761 638,481 June 7 38,422 ! 27,794 64,390 120,897 41,575 44,484 66,273 12,521 19,110 ; 48,971 43,384 88,597 616,418 June 14 37,170! 27,187 67,985 116,818 42,878 44,238 54,988 12,429 20,585 | 49,066 43,211 89,354 605,909 Loans secured by United States bonds and ccrtiQcates: May 24 46,997 i 14,976 32,458 43,568 13,522 5,964 10,916 1,876 j 4,495 4,936 5,843 May 31 44.773 14,824 33,933 46,078 14,090 5,658 11,727 1,757 J 4,374 4,672 5,565 6,967 194,418 June 7 43;039 14,364 36,299 53,500 14,268 5,682 12,441 4,470 ! 4,384 4,625 5,866 7,651 206,589 June 14 44,220 14,686 36.794 49,614 14,586 6,182 10,724 1,979 S 4,549 4,451 6,278 9,450 203,513 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

680 FEDERAL RESERVE BULLETIN. JULY 1,1918. Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of business on Fridays from May 24 to June 14, 1918—Continued. 3. MEMBER BANKS IN OTHER RESERVE CITIES—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 . - m R o ic n h d - . Atlanta. Lo S u t i . s. M ap i o n l n is e . - K C a i n ty sa . s Dallas. F c S i r s a a c n n o - . Total. Other loans and investments: May 24 546,564 ! 150,103 557,039 j 869,247 249,587 226,334 511,042 j 87,643 i 182,663 459,411 146,723 460.972 4,447,328 May 31 540,079 I 149,388 504,907 874,248 244,904 241,251 517,208 !86,134 I 183,291 459,205 136,070 489', 784 4,486,467 .Tune7 |543,608 ' 141,873 559,577 879,414 238,058 213,852 514,895 j 81,657 184,716 461,288 142,192 510,433 4,471,563 June 14 j 567,263 146,445 568,285 I 886,240 249,922 214,542 437,554 i 74,263 185,282 461,983 141,921 495;389 4,429,095 Total loans and investments: May 24 629,312 196,801 659,111 |l,053,872 306,283 280,239 j 590,540 j 102,565 206,380 521,102 197,700 558,317 5,302,222 May 31 623,127 193,737 664,669 11,049,979 300,935 297,845 597,674! 99,716 209,060 511,685 183,427 1587,512 5,319,366 June 7 625,069 184,031 660,266 11,053,811 293,901 264,018 593,609 1 98,648 208,210 514,884 191,442 1606, (581 5,294,570 June 14 648,653 188,318 673,064 11,052,678 307,386 264,962 503,266 ; 88,671 210,416 515; 500 191,410 1594,193 5;238,517 Reserve with Federal Reserve Banks: May 24.. 48,914 13,122 51,931 75,871 21,327 23,041 39,380 6,979 14,228 41,202 14,651 41,788 392,434 May 31 53,384 14,587 49,660 73,688 20,358 22,771 39,656 5,921 14,603 39,386 12,059 45,844 391,917 June 7 49,960 13,941 51,018 71,378 20,217 19,163 38,838 6,500 13,297 42,813 13,999 47,038 391,162 June 14 57,074 17,009 54,566 89,939 22,045 23,172 35,953 6,728 14,486 36,971 14,666 52,632 425,241 Cash in vault: May 24 17,964 5,308 16,204 26,551 11,502 11,933 23,046 4,718 6,203 16,126 9,291 18,327 167,173 May31 16,250 5,433 16,836 28,127 12,228 13,522 24,342 5,088 6,017 15,866 9,895 19,509 173,113 June 7 17,552 5,418 17,089 30.101 11,537 11,436 23,738 4,934 6,790 18,510 9,046 19,535 173,686 June 14 17,669 16,709 29j 140 11,420 11,187 21,329 4,955 5,597 15,934 8,956 19,333 167,668 Net demand deposits on which reserve is computed: May 24 497,406 128,002 517,599 627,001 187,870 162,093 315.936 59,056 132,797 351,821 119,386 364,818 3,463,785 May 31 498,074 129,845 506,257 641,833 184,107 174,035 323', 006 58,389 131,336 350,004 112', 722374,726 3,484,334 June 7 508,238 127,441 510,221 644,846 185,309 156,206 314,693 58,400 129,954 358,728 118,417 381,315 3,493,798 June 14 530,336 132,715 518,436 657,264 197,971 164,527 281,135 127,843 363,811 122,095 373,591 3,530,414 Time deposits: May 24 26,518 16,586 8,128 212,651 33,111 64,120 211,035 16,210 23,864 62,023 19,524 94,896 788,666 May 31 25,509 16,532 8,115 215,256 29,308 68,110 212,220 14,596 23,818 61,974 17,757 102,932 796,127 June 7 25,199 17,976 8,016 215,174 28,775 63,596 210,302 13,488 22.849 60,482 19,643 107,758 793,258 June 14 25,107 18,266 8,730 212,061 28,571 63,834 172,557 13,505 23; 760 61,894 19,588 101,141 749,014 Total net deposits on which reserve is computed: May 24 505,361 132,978 520,037 690,796 197,803 181,329 379,247 63,919 139,956 370,428 125,243 393,287 3,700,384 May 31 505,727 134,804 508,692 706,410 192,899 194,468 386,672 62,768 138,481 368,596 '118,049 i405,606 3,723,172 June 7 515,798 132,833 512,626 709,398 193,941 175,285 377,784 62,446 136,809 376,873 i 124,310 413,672 3; 731,775 June 14 537,868 138,195 521,055 720,882 208,542 183,677 332,902 64,742 134,971 382,379 1127,972 403,933 3,755,118 Government deposits: May 24 88,487 26,039 68,964 86,909 12,956 26,349 19,369 7,378 18,437 22,793 i 24,697 16,890 419,268 May 31 81,261 21,099 68,147 73,495 23,720 11,686 14,922 6,964 21,368 20,301 i 18,246 23,416 384,625 Juno 7 63,200 14,469 56,513 57,547 12,329 15.866 18,840 16,801 14,105 i 13,114 22,108 309,993 June 14 116,149 12,727 68,868 56,162 13,915 11^122 17,987 4,598 18,788 15,594 ! 10,587 19,645 366,142 4. MEMBER BANKS OUTSIDE RESERVE CITIES. COUNTRY BANKS. Number of reporting banks: May 24 25| 23 8 149 May 31 25 23 6 147 June 7 25! 27 8 150 June 14 25! 29 6 150 United States bonds to secure circulation: May 24 10,123 6,548 i 4,010 7,657 7,964 2,830 750 1,670 2,828 j. 1,753 46,133 May 31 10,123 6,548 I 4,010 7,657 7,389 2,030 750 1,670 2,579 I. 2,453 45,209 June7 10,123 6,548 ' 4,010 7,707 9,699 2,830 750 1,670 2,004 i. 2,453 47,794 June 14 10,123 6,548 I 4,010 7,712 10,024 2,030 750 1,695 2,179 i. 2,453 47,524 Other United States i bonds, including Liberty bonds: May 24 5,327 13,277 3,435 4,218 7,943 2,736 1,995 1,729 2,870 1,657 45,187 May31 5,713 15,885 I 3,890 4,618 7,833 2,506 2,096 2,285 2,609 2,198 49,633 June 7 5,569 15,062 j 3,929 4,774 10,283 3,258 1,980 2,013 1,588 2 421 50,877 June 14 5,748 14,880 I 4,18-1 4,543 10,598 2,749 1,633 1,991 1,772 |. 2,348 50,446 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

JULY 1,1918. FEDERAL EESEBVE BULLETIN. 681 Principal resources and liabilities of member banks located in central reserve, reserve, and other selected cities, as at close of business on Fridays from May 24 to June 14, 19.18—Continued. 4. MEMBER BANKS OUTSIDE RESERVE CITIES—Continued. [In thousands of dollars; i. e., 000 omitted.] i Boston. Y N o o r w k. d P el h p i h la i - a. C la l n ev d e . - m R o ic n h d - . Atlanta.! Chicago. Lo S u t i . s. M ap i o n l n i e s. - K C a i n ty sa . s Dallas. F c S i r s a a c n n o - . Total. United States certificates of indebtedness: May24 8,179 8,418 4,619 3,356 2,081 3,892 i 390 3,112 | 1,437 38,873 May 31 6,663 6,043 3,730 2,563 1,408 2,072 ! 230 791 . 1,720 I 1,653 26,873 June 7 6,429 5,768 3,780 2,848 2,182 2,572 I 220 556 : 1,711 | 1,414 27,480 June 14 6,315 i 6,117 4,150 2,877 2,324 2,272 | 230 515 1,703 i 1,419 27,922 Total United States securities owned: May 24 23,629 28,243 12,061 15,231 17,988 ; 9,458 ; 3,135 4,788 8,810 I. 4,847 128,193 May31 | 22,499 28,476 11,630 14,838 16,630 i • v, uuo i 3,076 4,746 6,908 |. 6,304 121,715 June7 22,121 27,378 11,719 15,329 22,164 I 8,660 ! 2,950 4,239 5,303 |. 6,288 126,151 June 14 22,186 27,545 j 12,344 15,132 22,946 | 7,051 ' 2,613 4,201 5,654 L 6,220 125,892 Loans secured by United States bonds and certifi- i May 24 9,612 11,931 1,860 843 1,702 I 501 625 833 308 i 210 28,455 May31 9,378 12,691 1,916 832 2,130 I 382 642 810 128 j 280 29,189 June 7 9,777 12,654 1,939 942 2,708 i 622 600 1,149 125 | 272 30,788 June 14 10,028 12,686 1,988 935 2,794 | 634 666 757 119 ! 307 30,914 Other loans and in- j =• vestments: L May24 , 229,281 I 188,762 68,804 72,510 ! 77,563 32,432 10,992 22,247 62,404 20,890 785,885 fc. May31 227,961 i 187,876 68,845 68,641 | 71,339 24,693 10,918 22,638 52,050 26,241 761,202 i June7 !228,042 | 192,787 68,952 74,058 i 97,222 32,779 10,207 22,247 40,178 25,546 792,018 **• June 14 i229,851 ! 196,622 69,337 73,617 i 100,822 •27,532 10,927 22,451 44,718 26,042 801,919 Total loans and in- ! i vestments: I May 24 1262,552 228,936 88,584 97,253 42,391 14,752 27,888 71,522 |. 25,947 942,533 May 31 j259,838 | 229,043 82,391 84,311 90,099 31,083 | 14,636 28,194 59,088 |. 32,825 912,106 June7 1259,940 232,819 82,610 90,329 122,094 £2?11 13,757 27,635 45,606 I. 32,106 948,957 June 14 262,065 ! 236,853 83,669 89,684 126,562 35,217 14,206 27,409 50,491 j. 32,569 958,725 Reserve with Federal Reserve Bank: May24 13,895 j 12,812 5,367 5,282 4,680 2,008 944 1,537 3,705 1,323 51,553 May 31 13,399 1 12,640 4,931 5,120 4,370 1,495 1,472 3,332 1,648 49,305 June 7 13,198 | 11,998 5,755 5,264 5,639 1,639 740 1,439 2,472 1,838 49,982 June 14 13,649 | 14,556 5,341 5,414 6,136 1,808 757 1,876 2,724 1,786 54,047 Cash in vault: May 24 9,007 I 7,560 3,460 4,078 3,129 ! 1,604 3,275 3,366 1,141 35,009 May31 8,515 i 7,800 3,633 3,960 3,031 | l,Q00 491 1,222 2,805 1,849 34,306 June 7 8,981 I 8,324 3,897 4,672 3,954 I 1,349 471 1,349 2,376 1,323 36,696 June 14 9,014 | 7,392 3,470 4,495 4,363 I 1,297 393 1,341 1,999 1,626 35,390 Net demand deposits on which reserve is computed: May 24.... 160,475 171,623 68,811 61,251 60,089 j 20,783 9,028 15,799 41,300 ! 16,392 628,151 May 31 156,458 175,246 69,446 59,580 55,052 15,735 8,387 14,158 36,911 ! 20,497 611,950 June 7 157,856 177,169 68,243 62,910 71,032 I 20,800 8,106 16,000 28,571 ] 16,585 627,272 June 14 159,146 182,911 70,657 74,383 i 17,490 8,212 16,499 32,123 20,191 6-15,465 Time deposits: May 24 69,270 j 5,612 16,144 7,609 14,266 4,198 5,765 22,622 2,303 174,675 May 31 70,098 26,508 5,681 13,851 7,52S 11,051 4,208 5,773 17,267 j 4,759 166,724 June 7 68,674 i 26,348 5,783 16,763 13,060 14,233 4,030 5,763 13,3S6 i 2,515 170,561 June 14 68,367 26,391 5,841 10,820 14,355 ! 12,338 4,232 5,825 13,933 j 4,735 172,837 Total net deposits on which reserve is computed: M M a a y y 2 3 4 1 .fc 1 1 9 8 0 6 , , 1 5 6 0 2 0 1 1 8 8 3 6 , , 1 6 4 0 6 7 !7 7 1 1 , , 2 8 1 8 6 1 6 6 8 5, , 5 1 1 7 6 0 5 6 8 3 , , 2 9 7 5 8 0 2 20 6 , , 4 8 5 9 1 7 1 1 0 0 , , 8 6 2 9 7 0 1 1 8 6 , , 2 6 7 3 0 2 4 5 4 0 , , 3 9 1 9 1 5 , 2 1 2 7 , , 5 3 3 7 7 9 i , 7 68 0 3 1 , , 4 0 0 1 3 2 June 7 187,288 188,461 70,721 70,091 76,632 26,900 9,833 18,470 34,308 17,003 ! 700,370 June 14 188,446 194,221 73,160 71,062 80,535 22,778 10,026 18,996 38,094 22,220 ; 719,538 Government deposits: May24 14,381 24,565 2,439 1,001 5,481 i 3,771 231 2,411 4,427 3,823 62,530 May31 16,103 18,162 2,718 1,138 7,310 3,018 240 1,823 2,660 1,550 54,722 June 7 11,828 14,529 2,541 1 117 5,108 2,524 175 1,230 1,483 1,049 41,584 June 14 25,361 14,182 3,153 1,117 3,759 ! 1,162 136 1,425 1,332 757 52,384 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

682 FEDERAL KESERVE BULLETIN. 1,1918. EARNINGS ON INVESTMENTS OF FEDERAL RESERVE BANKS. Average amount of earning assets held by each Federal Reserve Bank, during May, 1918, earnings from each class of earning assets, and annual rales of earnings on basis of May, 1918, returns" Average balances for the month of the several classes of earning assets. Banks. Bills dism F c e o e m u d n e b r t e e a r d l s R f a o e n r - d Bi m i l n ls a o r b k p o e e u t n g . ht se U S cu n ta r i t t i e t e i s d es. M w u a n rr i a c n ip t a s l Total. serve banks. Boston 844,819.109 $20,220,714 •S2,082, S67,122,023 New York 413,626]256 129,270,383 15,527, 558,424,608 Philadelphia.. 39,987.334 25,205,982 3,962, 69,155,716 Cleveland 56,634', 836 13,511,059 17,731, 87,877,187 Richmond 48,961,420 4,001,285 3,114. 56,077,115 Atlanta 23,745,139 6,085.470 1,994, 850,004 31,874,998 Chicago 88,966,192 39.509,219 10;i63, 138,639,044 St. Louis 35,827,016 8,381,904 2,744, 46,953,320 Minneapolis 21,420,000 7.391,000 3,199, 32,010,000 Kansas City... 60,431,571 ~' 351,811 13,249, 76,032,975 Dallas 27,831,346 6,007, 485,416 36,219,391 San Francisco. 39,851,755 20. 640,540 65,361,153 Total i 902,101,974 278,464,206 84,645,930 i 535,420 j 1,265,747,530 Earnings from— Calculated annual rates of earnings from— Bills dis- Bills discounted counted Banks. m F e e a m f d n o e b d r r e a r l s m i b n o B a u o r i k l p g l e s e h n t t . ' i ! i . U s S e t n t i c a c i u t s t r e e . i s d - p M r a a i u n n w t i s a c . i r - - I i I Total. m F e e a m d f n o e d b r r e a r l s m i b n o B a o u r i k l p g l e e s h n t t . U S n ta i t t e e s d Munici- Total. Reserve Reserve I Banks. Banks. Boston S159,678 $73.6-15 I 85,410 §238.733 4.19 4.29 3.06 4.19 New York 1,426,595 459,784 i 34,389 1,920,763 4.06 4.18 2.61 4.05 Philadelphia.. 141,698 85,776 I 12,027 239,o01 4.17 4.00 3.57 4.07 Cleveland 210.95o 48,827 ! 54,411 314,193 4.38 4.25 3.61 4.21 Richmond 182,392 lo,461 6.110 203,963 4.39 4.55 2.31 4.28 Atlanta 85,336 21,334 5,091 S205 111,966 4.23 4.13 3.01 4.82 4.14 Chicago 329,847 143,350 24,415 497,612 4.37 4.27 2 36 4.23 St. Louis 133,217 29,996 6,051 169,264 4.37 4.21 2.51 4.24 MinnoaapoJis.. 87,179 28,361 7,603 123,143 4.79 4.52 2.80 4.53 Kansas City... 227,871 8,336 32,099 268.306 4.44 4.17 2.85 ; 4.15 Dallas 1 1 5 0 2 9 , ,1 6 5 1 6 8 7 9 2 , , 5 4 0 2 7 7 1 11 3 , , 6 7 8 9 5 8 1,672 2 1 3 3 6 4 , ,1 7 3 3 3 0 4 4 . . 5 6 1 1 5 4 . . 0 1 9 3 2 2 . .7 7 0 6 4.05 4 4 . . 3 2 6 6 San Francisco. Total. 3,246,5-12 ! 996,804 213,089 1,877 i 4,458,312 4.38 4.36 3.06 i 4.27 4.29 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Jnr-i 1,1918. FEDERAL EESEBVE BULLETIN. 683 GOLD IMPORTS AND EXPORTS. Gold imports and exports into and from the United Stales. (In thousands of dollars; i. e., 000 omitted.) Week ending— Total for Total since correspond- Mav 24, Mav 31, June 7, June 14, Jan. 1,1918. in i g n p 1 e 9 r 1 i 7 o . d 1918. 1918. 1918. 1918. IMPORTS. Ore and base bullion ... 602 503 417 90 5 635 7 097 United States Mint or assay office bars 19 Bullion refined 71 62 100 17,061 23,412 252,145 United States coin 2,000 2,137 1 6,629 52,356 Foreign coin 142 77,222 Total 2,673 2,702 518 17,151 35,818 388,839 = = = == EXPORTS. Domestic: Ore and base bullion . .. 6 50 106 United States Mint or assav office bars 90 90 30 361 18,441 Bullion refined 2 5 3,388 2,895 Coin 1,328 580 872 596 15,899 127,160 Total 1,420 675 913 600 19,698 148,602 Foreign: Bullion refined 31 Coin 27 346 5,177 Total 27 346 5,208 Total exports 1,420 675 940 600 20,044 153,810 Excess of gold imports over exports since Jan. 1, 1918, $15,774; excess of gold imports over exports since Aug. 1,1914, $1,066,078. DISCOUNT RATES. Discount rales of each Federal Reserve Bank approved by the Federal Reserve Board up to June 29,1918. Maturities. Discounts. Tra do accep tanccs. Secured by TJ. S. ccrtificates of indebtedness or Liberty loan Federal Reserve Bank. W in m b c d i e a t l a m h u n y d i k b n s i s , e n ' 1 r g 5 16 d t a o y s 6 . 0 61 d a to y s. 90 l t i A u v o p r e v g a a - e r l s p i r c t a e o 9 u n r c 0 l d - k W da b i y t o h s n i , d n i s n 1 . - 5 in 1 c d l a t u o y s s i C v , O e. in 6 c d 1 l a u t y o s s iv , 90 e. collateral days. cluding 16 to 90 notes. m b e a m nk b s e ' r days. collateral notes. Boston 4 New York i.... 4 Philadelphia... 4 Cleveland 4 4-1 Richmond t 4-1 Atlanta 4* Chicago 4 4* St. Louis 4 4"4 Minneapolis... 4 4-1 Kansas City... f i Dallas San Francisco. 4 4 a Rate of 3 to 4>J per cent for 1-day discounts in connection with the loan operations of the Government. NOTE 1.—Acceptances purchased in open market, minimum rate 4 per cent. NOTE 2.—Rates for commodity paper have been merged with those for commercial paper of corresponding maturities. NOTE 3.—-In case the 60-day trade acceptance rate is higher than the 15-day discount rate, trade acceptances maturing within 15 days will be taken^at the lower rate. NOTE 4.—Whenever application is made by member banks for renewal of 15-day paper, the Federal Reserve Banks may charge a rate not exceeding that for 90-day paper of the same class. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

684 FEDERAL KESEKVE BULLETIN. JULY 1,1918. Estimated general stock of money, money held by the Treasury and by the Federal Reserve system, and all other money in the United States. June 1,1918. G o t e f h n e m S e t r o U a a n t l n e e i s s y t t . e o i d c n k U G a T H n o s r s e v i e t e l e e a d t r s d s n i u o n m S r f y t e t a t h n h a t e t e s e . s 1 Re a f H o s n e r e d r l d v F a e e g b d e y B e n a r o t a s n r . l ks St H a a t n t h e e R s d l e s d y e F s U T s o t e e r e n u d r e m i t v a e t s e e s i r . d u d a r e l y R a S c n A t e a t a s d p h m e t i e e t r t o h s v a U u e e T o n n s F r u t y e i e t t a s p d s e t s i e d e e u d r r m r e a y l . Gold coin 2 S3,043,879,782 §216,384,007 $1,237,973,169 $436,755,229 Gold certificates 545,928,249 576,839,128 Standard silver dollars ""518,"583* 959* 25,880,763 3 819,218 76,924,936 Silver certificates 10,618,687 402,482,428 Subsidiary silver 23i646'325" "io," 603," 258' 216,043,067 Treasury notes of 1890 1,857,927 United States notes 346,681,016 7,055,564 « 46,448,482 293,176,970 Federal Reserve notes 1,736,548,025 35,501,730 123,609,220 1,577,437,875 Federal Reserve bank notes. 13,681,030 71,795 4,408,700 9,200,535 National bank notes 723,987,645 17,825,587 13,990,372 692,171,686 Total: Junel, 1918 6,615,007,782 348,322,704 1,983,796.097 4,282,888,981 $40.51 May 1,1918 6,540,954,630 321,192,308 1,909,594; 674 4,310,167,648 40.82 April, 1918 6,480,181,525 339,856,674 1,873,524,132 4,266,800,719 40.47 March, 1918 6,351,548,056 330,927,176 1,827,126,208 4,193,494,672 39.83 February, 1918 6.271,603,039 332,576,125 1,834,102,608 4,104,924,306 39.04 January, 1918 6,256,198,271 277,043,358 1,723,570.291 4,255,584,622 40.53 December, 1917 6,026,127,909 248,167,148 1,646,773', 746 4,131,187,015 39.40 November, 1917 5,823,854,335 242,265,377 1,546,124,691 4,035,464,267 38.54 October, 1917 5,642,264,856 242,469,027 1.429,422,432 3,970,373,397 37.97 September, 1917 5,553,661,154 239,654,267 1,373; 987,061 3,940,019,826 37.73 August, 1917 5,513,292,894 248,268,325 1.395,982,728 3,869,041,841 37.10 July, 1917 5,480,009,884 253,671,614 1,280,880,714 3,945,457,556 37.88 I 1 Includes reserve funds against issues of United States notes and treasury notes of 1890 and redemption funds held against issues of national bank notes, Federal Reserve notes and Federal Reserve bank notes. 2 .Includes balances in gold settlement fund standing to the credit of the Federal Reserve Banks and agents. 3 Includes subsidiary silver. 4 Includes Treasury'notes of 1890. FOREIGN EXCHANGE RATES. Monthly ranges of exchange rales on leading foreign money centers, quoted in New York during the three months ending June, 1918. April. May. June. Exchange |_ at par. i Low. High. Low. High. Low. High. London: 60-day bankers' bills dolls, for £1.. 4.8665 i 4.7225 4.7275 4.72625 4.7275 4.7225 4.72625 Sight drafts do.... 4.8665 ! 4.7535 4.7550 4.7545 4.7550 4.7530 4.7550 Paris francs for 100 dolls. 518.1347 i 572.25 571.75 572 570.50 571.50 571.25 Petrograd dolls, for 100 rubles. 51.46 ; 13.25 14.50 114.50 15.25 15.25 Milan lire for 100 dolls. 518.1347 I 902 879 914.50 896.50 911 886 Madrid dolls, for 100pesetas. 19.30 ! 25.50 29.75 27.50 28.40 27.25 28.55 Amsterdam dolls, for 100 florins. 40.20 46.50 48.25 47.75 50.50 49.75 51 •'$ Stockholm dolls, for 100 kronor. 28.80 33.75 34.50 33.70 34.75 34 35.60' Copenhagen do... 26.80 31 31.75 31 31.50 30.80 31.25i Zurich..". francs for 100 dolls. 518.1347 431.50 425 425 383 404 394 r. Buenos Aires 2 dolls, for 100 gold pesos. 96.48 97.75 99.65 95.25 99.80 97.15 Rio de Janeiro -' dolls, for 100 paper milreis. 3 54.62 25.32 25.84 25.19 25.64 24.88 25.64" Valparaiso 2 dolls, for 100 pesos. 36.50 29.37 31.10 31.55 33.28 32.95 33.78 Yokohama dolls, for 100 yen. 49.85 51.65 51.90 51.90 52.75 52.50 52.90^1 Hongkong dolls, for 100 Hongkong dolls.. 74 77 74.75 76.50 76.35 79 r Shanghai dolls, for 100 Shanghai tacls.. 104.50 100 107 109.50 109 London price of silver at nominal rate of £ (84.8665) * *.. 113.50 Now York price of silver» 1 Quotations for May and June are cable rates. 2 Cable rates on Z\e\v York. 3 Rate for a gold milre is. 4 Average for April, 81,035; for May, S1.G74; and for June. $1.0714. s Average for April, s.0.953; for May, S0.995; and for June,'§0.995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX. Acceptances: Page. Informal rulings of the Federal Reserve Board— Banks granted authority to accept up to 100 Continued. pgo. a per cent of capital and surplus 597 Form of trade acceptance 636 Distribution of, statements showing 666-668 Law department: Extracts from recent expressions on trade Rediscount of paper secured by war savings acceptances 602-606 stamps 637 Bank clerks, reclassification of, as to draft 597 Rediscounts by member State banks 638 Branches of Federal reserve banks established at Liberty bonds: Jacksonville, El Paso, Birmingham, and Mem- List of, lost or stolen 613,614 phis 596 Text of bill relating to fourth Liberty loan 613 Business conditions: Member banks: Indexes of 597-600 Deposits and investments of, in leading cities.. 664 Reports on, by Federal reserve agents 639-660 Chart showing 665 Canners, credits to 607 Statement showing condition of 677-681 Capital Issues Committee, rules and regulations Money, stock of, in the United States 684 issued by 627-633 National banks, charters issued to, during the month 609 Chart showing deposits and investments of member Regulations: banks in leading cities 665 Capital Issues Committee 627-633 Charters issued to national banks during month 609 Foreign exchange 622-627 Check clearing and collection system, operation of. 663 Resources and liabilities of Federal Reserve Commercial failures reported 609 Banks 673-675 Commissioner of Internal Revenue, tax rulings by.. 614 Review of the month: Deposits and investments of member banks in lead- I Resignation of Hon. F. A. Delano 587 ing cities 664 j The banks and the Liberty loan 587 Chart showing 665 | New Treasury financing 588 Discount operations of the Federal reserve banks. 666-672 | Demands for funds from Federal Reserve Discount rates in effect 683 Banks 590 Earnings on investments of Federal reserve banks.. 682 Daily gold statement plan 591 Expenses of Federal Reserve Board, assessment for. 608 Operations of the Federal Reserve Banks 591 Federal Reserve agents' fund, transactions through. 662 Condition of member banks 592 Federal reserve banks: Dividends and surplus profits of Federal Branches of, at Jacksonville, El Paso, Birming- Reserve Banks 593 ham, and Memphis 598 Foreign exchange d evelopm ents 594 Earnings on investments of 682 Gold-embargo regulations 594 Resources and liabilities of 673-675 Field for acceptances 595 Federal Reserve Board, assessment for expenses of.. 608 Guaranty of deposits 595 Federal Reserve note accounts of Federal Reserve Rupee exchange, arrangements for 625 Banks and agents 675-676 State banks and trust companies: Fiduciary powers granted to national banks 607 List of, admitted to system during the month.. 609 Foreign exchange rates 684 Questions and answers relating to membership Foreign exchange regulations 622-627 of, issued by the Federal Reserve Bank of Gold imports and exports 683 New York 615-621 Gold settlement fund: Secretary of the Treasury: Plan for daily clearings through 610-612 Letter of, to banks and trust companies regard- Transactions through 661-662 ing future bond issues 612 Indexes of business conditions 597-600 Letter to chairman of Ways and Means Com- Informal rulings of the Federal Reserve Board: mittee relative to new tax requirements... 600-602 Warehouse receipts for canned goods as security. 634 Letter to President of the Senate regarding Release of shipping documents upon acceptance rupee exchange 626 of draft 634 Trade acceptances: Rate on paper of acceptance corporation 634 Extracts from recent expressions on 602-606 Right of national banks to make loans secured Resolutions by National Association of Credit by farm-loan bonds 635 Men regarding 606 Receipt of custodian OL wool as warehouse re- Treasury certificates of indebtedness issued in ceipt 636 anticipation of fourth Liberty loan 612 o Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis