Federal Reserve Bulletin, 1924-05

FEDERAL RESERVE BULLETIN MAY, 1924 ISSUED BY THE FEDERAL RESERVE BOARD AT WASHINGTON Reparation Payments and Stabilization of German Currency Business Conditions in the United States Report of Committees of Experts to Reparation Commission WASHINGTON GOVERNMENT PRINTING OFFICE 1924 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BOARD Ex officio members: D. R. CRISSINGER, Governor. EDMUND PLATT, Vice Governor. A. W. MELLON, Secretary of the Treasury, Chairman. ADOLPH 0. MILLER. CHARLES S. HAMLIN. HBNKY M. DAWES, GEORGE R. JAMES. Comptroller of the Currency. EDWARD H. CUNNINGHAM. WALTER L. EDDY, Secretary. WALTER WTATT, General Counsel. 3. C. NOELL, Assistant Secretary. WALTER W. STEWART, W. M. IMLAY, Fiscal Agent. Director, Division of Research and Statistics. J. F. HERSON, M. JACOBSON, Statistician. Chief, Division of Examination, and Chief Federal Reserve Examiner. E. A. GOLDENWEISER, Associate Statistician. E. L. SMEAD, Chief, Division of Bank Operations. FEDERAL ADVISORY COUNCIL District No. 1 (BOSTON) CHAS. A. MOBSS. District No. 2 (NEW YORK) PAUL M.WARBURG, President. District No. 3 (PHILADELPHIA) L. L. RUE. District No. 4 (CLEVELAND) C. E. SULLIVAN. District No. 5 (RICHMOND) JOHN M. MILLER, Jr. District No. 6 (ATLANTA) OSCAR WELLS. District No. 7 (CHICAGO) JOHN J.MITCHELL. District No. 8 (ST. LOUIS) FESTUS J. WADE. District No. 9 (MINNEAPOLIS) G. H. PRINCE. District No. 10 (KANSAS CITY) E. F. SWINNEY. District No. 11 (DALLAS) W. M. MCGREGOR. District No. 12 (SAN FRANCISCO) D. W. TWOHY. II Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

OFFICERS OF FEDERAL RESERVE BANKS Federal Reserve Bank of— Chairman Governor Deputy governor Cashier Boston.. Frederic H. Curtiss W. P. G. Harding C. C. Bullen W. Willett. W. W. Paddock New York Pierre Jay Ben). Strong J.H.Case L. H. Hendricks.1 L. F. Sailer A. W. Gilbart.! G. L. Harrison J.W. Jones, i E. E. Kernel G. E. Chapln.' Philadelphia R.L.Austin Geo. W. Norris Wm. H. Hutt W. A. Dyer. Cleveland D.C. Wills E. E. Fancher M.J.Fleming.... J. C. Nevin. Frank J. Zurlinden Richmond Wm.W. Hoxton George J. Seay C. A. Peple Geo. H. Keesee. R. H. Broaddus John S. Walden, jr.1 Atlanta Joseph A. McCord M. B. Wellborn J. L. Campbell M. W. Bell. Creed Taylor Chicago Wm. A. Heath J. B. McDongal C.R. McKay W. C. Bachman.' JohnH. Blair K. C.Childs;1 J. H. Dillard.1 D.A.Jones.1 0. J. Netterstrom. • Clarke Wsshburne. • St. Louis Wm.McC. Martin D.C. Biggs O.M.Attebery J, W. White. Minneapolis JohnH. Rich R. A. Young W. B. Geary Gray Warren. B.V.Moore Frank C. Dunlop.1 Harry Yaeger« Kansas City M. L. McClure W.J.Bailey C. A. Worthington J. W. Helm. Dallas Lynn P. TaUey B. A. McKinney R.R.Gilbert R. B. Coleman. Val. J- Grund Sao Francisco John Perrin J.U. Calkins Wm. A. Day W.N.Ambrose. Ira Clerk' '. L. C. Pontious • 1 Controller. » Assistant deputy governor. MANAGERS OF BRANCHES OF FEDERAL RESERVE BANKS Federal Reserve Bank of— Manager Federal Reserve Bank of— Manager New York: Minneapolis: Buffalo branch W. W. Schneckenburger. Helena branch R. E. Towle. Cleveland: Kansas City: Cincinnati branch L. W. Manning. Omaha branch L. H. Earhart. Pittsburgh branch Geo. DeCamp. Denver branch J. E. Olson. Richmond: Oklahoma City branch C. E. Daniel. Baltimore branch A. H. Dudley. Dallas: Atlanta: El Paso branch D. P. Reordan. New Orleans branch Marcus Walker. Houston branch Fred Harris. Jacksonville branch Geo. R. De Saussure. San Francisco: Birmingham branch A. E. Walker. Los Angeles branch C. J. Shepherd. Nashville branch J. B. MeNamara. Portland branch Frederick Greenwood. Chicago: Salt Lake City branch R. B. MotherweU. Detroit branch W. R. Cation. Seattle branch C. R. Shaw. St. Louis: Spokane branch W. L. Partner. Louisville branch W. P. Kinebeloe. Memphis branch J. J. Heflin. Little Rock branch A. F. Bailey. SUBSCRIPTION PRICE OF BULLETIN THE FEDERAL RESERVE BULLETIN is the Board's medium of communication with member banks of the Federal Reserve System and is the only official organ or periodical publication of the Board. It contains, in addition to the regular official announcements, the national review of business conditions, detailed analyses of business conditions, research studies, reviews of foreign banking, and complete statistics showing* the condition of Federal Reserve Banks and member banks. The BULLETIN will be sent to all member banks without charge. To others the subscription price, which covers the cost of paper and printing, is $2. Single copies will be sold at 20 cents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

TABLE OF CONTENTS The month: P ag8 Review of the month—Reparation payments and stabilization of German currency 325 Business conditions in the United States * 332 Prices in the United States and abroad during the past year ._ 349 Report of committees of experts to Reparation Commission 351 Official: Law department— Supreme Court decision on right of national banks in Missouri to exercise fiduciary powers 418 State banks admitted to system 421 Fiduciary powers granted to national banks 421 Charters issued to national banks 421 Business statistics: Industrial statistics in the United States 422 Wholesale and retail trade 428 Industrial statistics for foreign countries 430 Foreign trade of principal countries 431 Financial statistics for principal foreign countries 432 Price movements in principal countries: Federal Reserve Board wholesale price indexes 433 Comparative wholesale prices in principal countries 435 Comparative retail prices and cost of living in principal countries 436 Banking and financial statistics: Federal reserve banks— Condition of Federal reserve banks 437 Federal reserve note account 441 r Holdings of earning assets , . 442 Discount and open-market operations of Federal reserve banks 443 Federal reserve clearing system 444 Gold settlement fund 445 Discount rates of Federal reserve banks '__ 445 Member banks— Condition of member banks in leading cities 446 Deposits of all member banks ^ 448 Earnings and dividends of State bank and trust company members 449 Money in circulation 450 Bank debits : 451 Money rates in principal cities 452 Gold and silver imports and exports 453 Foreign exchange rates and index 454 IV Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BULLETIN VOL. 10 MAY, 1924 No. 5 REVIEW OF THE MONTH bank and in enabling Germany to meet her most urgent immediate obligations. During the month the principal event of The committee regards its proposal as one interest has been the report of the committees indivisible whole and considers it essential to its of experts appointed by the successful operation that the report be adopted Report of ex- Reparation Commission to in its entirety. It furthermore points out that perts to Repara- make an inquiry into fiscal while the plan does not" attempt a solution of tion Commission conditions in and monetary the whole reparation problem, it foreshadows a Germany and their relation to settlement extending in its application for a the problem of reparations. After receiving the sufficient time to restore confidence, and at the unanimous approval of the Reparation Commis- same time is so framed as to facilitate a final sion the reports of the experts were accepted by and comprehensive agreement as to all the probthe German Government and favorably received lems of reparation and connected questions as by the Governments of the Allied Countries as soon as circumstances make this possible." offering a practical basis for a solution of the In considering the conditions essential to the problem of reparations. In view of the imrestoration of Germany's credit and the estabportance of these reports, which are reprinted lishment and maintenance of stability in bud<in full elsewhere in this issue, the present reget and currency, the committee based its review summarizes the proposed program of acport on the assumption that the fiscal and tion contained in the recommendations of the economic unity of Germany will be restored. committee on budget and currency. Furthermore, the committee recognizes that Under its terms of reference this committee Germany's present financial conditions are was to consider "means of balancing the Ger- such that reparation payments can be made man budget and the measures to be taken to from her ordinary budget revenues only stabilize its currency." The essential features after a period of recuperation. The report of the plan recommended by the committee says: "At the time of our investigation Gerare a schedule of reparation payments to be many was passing through an acute economic made by Germany directly out of taxation and crisis, the direct result and the culminating through the imposition of a mortgage debt point of a depreciation of the currency so upon German railways and industry; the sepa- catastrophic as practically to destroy the curration of collections in Germany, for which the rency and reduce the budget to all but a German Government is to be held responsible, shadow. The habit of saving has been defrom the transfer of funds abroad, which is to stroyed and it will require time and the restobe controlled by a committee representing the ration of confidence to reestablish it. The Allies whose function it will be to make the maxi- existing wealth is maldistributed in an almost mum transfers consistent with maintenance of unparalleled degree. The cessation of depreexchange stability; the establishment of a new ciation, with the consequent removal of the bank of issue to unify and stabilize German premium on exports and the stabilization of prices at a level which is momentarily, at any currency; and the flotation of a foreign loan rate, above that of the world level, has had intended to assist in the establishment of the 325 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

326 FEDERAL RESERVE BULLETIN MAT, 1924 important reactions. Finally, the state of transition, with a gradual increase of payemployment and the fiscal and economic ments to the fifth year, when the amount to machinery of Germany have been violently be paid reaches a standard total. During the deranged by the events of 1923. A return to first two years no payments are to be made normal conditions in this respect can not be out of ordinary budget receipts; in the foleffected overnight." lowing years the payments from this source In its analysis of the problem of stabilization are increased so that in the standard year of the German currency and balancing the the budget furnishes one-half of the total German budget, the committee distinguishes payments. The plan further provides for a sharply between the two phases of the prob- foreign loan and for the collection of interest lem, the amount of revenue Germany can upon a mortgage indebtedness to be placed make available for the reparation account and on German railroads and industry. Essential the amount which can be transferred to foreign deliveries in kind are to continue and their countries. Since the probable amount of the value is to be included each year in the total budget surplus and other collections on repa- of payments prescribed by the plan. The ration account can be more definitely estimated amounts which it is estimated Germany will than the amount which can be made available be in a position to pay during the periods for payments abroad, the report presents a of recuperation and transition and the standschedule of annual payments over a series ard amounts specified for subsequent years of years, but does not undertake to estimate are given in the following schedule, which the amounts that can be converted into designates the several sources from which the foreign currencies without causing instability funds are to be derived. Provision is made of exchange. The limits within which pay. for modification of the amounts set forth in ments can be made abroad are defined as the schedule during the third and fourth follows: "The funds raised and transferred years in accordance with the yield of certain to the Allies on the reparation account can not controlled revenues and for additions to the in the long run exceed the sums which the standard payments to be determined by an balance of payments makes it possible to index of prosperity. transfer without currency and budget instability ensuing." The entire plan rests upon SCHEDULE OP COLLECTIONS [In millions of gold marks] this distinction between the collections in Germany on reparation account, which are Budget morato- Transition Standard rium period period year measured by the German taxpayers' capacity to pay, and the transfer of funds to the Allies, Fifth and First Second Third Fourth subsethe volume of which depends in the final year year year year quent years analysis on Germany's balance of international payments. 110 500 1,250 The committee, in view of its terms of Interest on railway bonds. 8 2 0 0 0 0 595 550 660 660 reference, did not undertake to determine the Sale of railway preference 500 total amount of reparation pay- Interest on industrial bonds 125 250 300 300 Transport tax 290 290 290 °f ments' bufc worked out a Plan Total 1,000 1,220 1,200 1,750 2,500 of annual payments to be in- In the proposed schedule, as shown above, no clusive for any particular year of all possible collections on reparation account are expected charges for which Germany may be liable to to be made out of funds dethe Allies, with the understanding that any Sources of riyed from the ordinary budget addition to one category of charges can only collections. . J & be made at the expense of another. The first during the two years of refour years of the operation of the plan are cuperation or so-called budget moratorium. regarded as a period of recuperation and It is a requirement of the plan, however, that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 192'4 FEDERAL RESERVE BULLETIN 327 for these two years, taken as a whole, ordinary plan provides for the issue of 11,000,000,000 of revenues and expenditures shall balance. mortgage bonds, 2,000,000,000 of preference In the third year the budget is expected to shares, and 13,000,000,000 of common stock. contribute 110,000,000 gold marks, in the The mortgage bonds, which shall be guaranteed fourth year 500,000,000 marks, and in the fifth by the German Government, are to be turned and subsequent years 1,250,000,000 marks, over to the Reparation Commission and are to which constitutes one-half of the total standard bear in the standard year a rate of interest of 5 payment. The contributions of the budget to per cent and an amortization charge of 1 per reparation payments are to be secured by the cent. The income from these bonds, which incontrol and supervision of revenues derived creases during the first four years, is the princifrom taxes on tobacco, alcohol, sugar, and beer, pal source of payments during these years. Of and from customs receipts. During the transi- the preference shares, one-fourth is to be turned tion period, the third and fourth years, pro- over to the German Government and threevision is made for increases and decreases in fourths to a company which is to take over the payments within the limit of 250,000,000 operation of the railroads. This company is to marks, dependent upon the yield of these con- be administered by a board of directors repretrolled revenues. It is estimated that these senting the Reparation Commission, the Gerrevenues will yield in the standard year over man Government, and the holders of the pref- 2,000,000,000 marks, against which reparation erence shares. From the sale of its preference payments will be a first charge. Any excess of shares the Government is to make reparation yield over this charge will be available to the payments in the second year amounting to German Government for ordinary expendi- 500,000,000 marks, and in case the sale of these tures. Beyond indicating the total amounts to shares fails to yield this amount the deficit is to be paid from budget and the guarantees pro- be made up by an internal loan. The common vided by the controlled revenues, the commit- stock is to be issued to the German Governtee does not undertake to prescribe methods of ment, which will have authority to hold the raising revenue, but Germany is left free to stock or to sell it, as it prefers. Through redevise such fiscal arrangements as seem best demption of the bonds and the repurchase of adapted to her conditions. The committee the preference shares the plan provides a means does, however, commend to the German Gov- for the German Government ultimately to reernment certain methods of taxation which gain control of the railroads. have been worked out by technical experts. Upon German industry the plan places a A proposed foreign loan of 800,000,000 gold mortgage amounting to 5,000,000,000 gold marks is to be the chief source of reparation marks, to be represented by bonds, the burden payment during the first year. This loan is to be distributed among individual concerns intended to "serve the double purpose of and guaranteed by the Government. The assuring currency'stability and financing essen- yield of these bonds in the standard year (5 per tial deliveries in kind during the preliminary cent interest plus 1 per cent amortization) is to period of economic rehabilitation." The rela- be a source of reparation payments beginning tion of this loan to the proposed bank of issue with the second year. The tax now levied on and its use as a basis of currency stabilization is railroad transportation is retained and, beginconsidered later in this review. ning with the third year, is to be a direct source Other proposed sources of payment are in- of reparation payments up to 290,000,000 terest on railroad and industrial bonds, the marks. Total payments under the schedule, sale of railway preference shares, and the trans- as shown in the table, are to increase from port tax. The committee places upon the 1,000,000,000 gold marks in the first year German railroads a total valuation of 26,000- to 2,500,000,000 gold marks in the standard 000,000 gold marks, and against this total its year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

328 FEDERAL RESERVE BULLETIN MAT, 1924 A guiding principle used by the committee in under existing arrangements, will under the determining this schedule of annual payments proposed plan increase in accordance with a Commensu- was that the German people composite index based upon statistics of railrate taxation should bear a burden of taxa- way traffic, population growth, total foreign tion as heavy as that borne by the peoples of trade, consumption of tobacco, sugar, beer, the allied countries—the principle of commen- and alcohol, budget expenditures (excluding surate taxation. This principle, which is con- reparation payments), and per capita considered just in its application to Germany, is sumption of coal. There is no provision for also deemed to be economically desirable, decreasing the standard payments on the because it tends toward competitive equality basis of the prosperity index, but in case it in international trade between Germany and indicates a reduced capacity for payment in the Allies. The placing of a mortgage debt of any year the amount of the deficiency is to be 16,000,000,000 marks upon German railroads deducted from any future supplementary payand industry is in recognition of the fact that ment based on the index. A further modificaall bonded indebtedness in Germany has been tion is provided for on the basis of changes in virtually extinguished through the fall of the the value of gold which, in case they exceed mark. Railroads and industry, which through 10 per cent of its value in 1928, may result in the depreciation of the German currency future years in a corresponding increase or dehave been relieved of a large part of their bur- crease of annual reparation payments. den of bonded indebtedness to investors, are to A more important factor in its possible contribute under this plan to currency and effect upon total reparation payments is the fiscal restoration and to reparation payments provision which places a defithrough the assumption of a mortgage debt to Transfer of nite limit upon the accumulathe Separation Commission. Interest pay- funds to Allies tion of reparation funds in ments on this mortgage debt into reparation Germany in excess of the account will under the plan take the place of amount that can be transferred abroad without the annual interest charges which were borne resulting in undue fluctuation of exchanges. by German enterprises in the years before in- In case collections on reparation account are in flation. No mortgage debt is placed upon excess of what Germany's balance of payments agriculture, but it is recommended that the will make it possible to remit to the Allies, a German Government, in case it deems it de- limit is placed upon the accumulation of repsirable, impose such a mortgage in favor of the aration funds in Germany. Up to 2,000,regular budget. Certain obligations, it may 000,000 marks these funds, which are to be be noted, have already been imposed upon deposited in the new bank of issue, may be agricultural land through the levy which guar- used in short-term credit operations in Gerantees the rentenmarks. many. If the accumulation continues beyond Two considerations are indicated by the this amount and up to 5,000,000,000 marks, committee which might lead to a modification the funds may be used by the Allies in Gerof the annual totals specified in the schedule— many in the purchase of bonds and other forms growth of industrial prosperity and changes in of investment. When, however, the total the value of gold. For the purpose of enabling amount of these funds reaches 5,000,000,000 the Allies to share in the growth of German marks provision is made for a decrease of payindustry and trade, an index of prosperity is ments out of the budget and the transport tax proposed, which, after the first five years, may and for their discontinuance to the extent that indicate variable additions to the standard transfers can not be effected. Even before payments on reparation account. Thus the the funds accumulated reach this total the payments, instead of being modified by changes payments may be modified if in the judgment in the value of exports alone as is contemplated of the transfer committee it appears that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL, RESERVE BULLETIN 329 further accumulation is a menace to the fiscal German currency has been brought about, is or economic situation of Germany or to the viewed by the committee as not affording, in creditor countries. In case the transfer com- the absence of other measures, an adequate mittee discovers concerted financial maneuvers guaranty of permanent stabilization. Such by the Government or by individuals to pre- stability the committee believes is essential to vent the transfer, the transfer committee may the maintenance of a balanced budget and the undertake whatever measures are necessary to restoration of German credit. The committee defeat these maneuvers and is authorized under provides safeguards that reparation payments these circumstances to accumulate funds be- will not lead to instability of exchange through yond the limit of 5,000,000,000 marks. the control it places in the hands of the trans- In discussing the relation between collec- fer committee, and proposes to maintain the tion—that is, the German taxpayers' capacity gold value of the domestic currency by means to pay—and remittance abroad—-that is, Ger- of the establishment of the new bank of issue many's capacity to pay the Allies—recognition and through the limitations placed upon its is made in the report of the fact that the amount note-issuing power. that can be paid abroad by means of an eco- The bank is to perform the usual functions nomic surplus in international trade is "by of a central bank and may, in fact, be estabcomparison with the budget, incapable of close lished through a reorganization of the Reiehscalculation, 'unmanageable', and too elastic. bank. The capital of the bank is to be 400,- But limits set by economic balance, if impos- 000,000 gold marks, of which one-fourth is to sible of exact determination, are real. For represent the fixed assets of the Reichsbank and stability of a country's currency to be per- the remainder is to be offered for sale in Germanently maintained, not only must her budget many and abroad. The bank is to have the be balanced but her earnings from abroad exclusive right, with certain minor qualificamust be equal to the payments she must make tions, to issue notes, and all other notes now in abroad, including not only payments for goods circulation are to be gradually withdrawn. she imports but sums paid in reparation. Nor Against these notes the bank is required to can balance of the budget itself be permanently maintain a normal reserve of 33J per cent in maintained except on the same conditions." gold and gold credits with foreign banks. The Thus the amount which the exchange position purpose is to keep the currency stable in relation makes it possible for the Allies to transfer not to gold, stable foreign exchange, and as soon as only limits the receipts to the Allies on repara- conditions will permit to place it upon a contion account but also ultimately places a limit vertible basis. Against its demand deposits upon the collections to be made in Germany. the bank is to maintain a reserve of 12 per cent Faced with this limitation the committee does in gold, with certain further provisions regardnot undertake to make a definite estimate of ing liquidity of assets. The bank is intended the amount which can be transmitted, but to be primarily a bankers' bank, though it may makes the volume of transfers depend upon make loans directly to the public, with safethe actual exchange situation as it develops in guards as to type and maturity of paper to be experience. discounted. It is to be the fiscal agent of the Reference has already been made to the German Government, but entirely free from proposed bank of issue, which is to serve as governmental control, and its power to lend to „ , ,. the depositary of reparation the Government and to State enterprises is Bank of issue , n . , • vT strictly limited. lunds collected in Germany It is contemplated that the new bank of and is regarded by the committee as an essen- issue, which will either supersede the Reichstial agency for the creation of a unified and bank or be the outcome of a reorganization of stable currency. Establishment of the Ren- that bank, will absorb the recently organized tenbank, through which the recent stability of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

330 FEDERAL RESERVE BULLETIN MAT, 1924 gold discount bank (the so-called Schacht will appoint five. Of the directors appointed Bank). This latter bank is considered an in- by the trustee, five may be of German terim arrangement expressly limited to pro- nationality. The chairman of the board and viding the means of carrying on foreign trade the general manager shall be Germans. The and thus supplementing the Rentenbank, foreign members of the board of directors will whose operations and currency issues are lim- select the commissioner of railways who is to ited to domestic trade. According to the exercise active supervision over the operations committee's plan, the Eentenbank is to be of the roads, and in case the railways fail to liquidated. With the passing of the Renten- yield net revenues sufficient to meet the rebank and the absorption of the gold discount quired reparation payments, is to take over the bank, the new bank of issue is intended through functions of the general manager. its operation at home and abroad to take over The Reparation Commission will appoint a the functions which at present are performed trustee of bonds and a commissioner of conby both of these institutions. trolled revenues. The trustee will receive and Provision is made in the plan for machinery hold the railway and industrial bonds and will to administer the bank of issue and the rail- have charge of the sale of these bonds and the roads, and for the establish- collection of interest payments. The duty of Proposed ad- t f a transfer committee. the commissioner of controlled revenues will m ch i i m ne s r t y ra tive ma- A m. e d ,n m i . n o i . s , trative arrangements be to supervise the reparation payments out of budget, and in case of default to take comwith reference to the bank proplete charge of the controlled revenues. Tide for an organization committee consisting of the president of the Reichsbank and one All operations in connection with the transfer member of the committee of experts; and after of funds to the Allies and the investment in its establishment a general board of 14 Germany of accumulated funds are to be in members, 7 elected by German stockholders charge of a transfer committee appointed by and 7 foreign members, representing the United the Reparation Commission. With this com- States, Great Britain, France, Italy, Belgium, mittee will rest the decision to suspend colthe Netherlands, and Switzerland, to be ap- lections when the funds exceed the stated pointed by the organization committee, and limit of 5,000,000,000 marks. This committee later self-perpetuating. This board is to elect will include in its membership the agent the president of the bank, who must be ap- for reparation payments, who is to be the proved by the president of the Reich, and for principal representative of the Reparation the first six months of the bank's operation is Commission and is to coordinate the activities of all the agencies proposed by the plan. to be the president of the Reichsbank. The Funds arising from the proposed foreign loan board is to have general supervision of the of 800,000,000 gold marks, to which reference operations of the bank, and the actual administration is to be in charge of a managing board to Foreign loan has been made in connection with the first year's reparation consist of German nationals appointed by the payments, will be deposited in the bank to president, subject to the approval of the general the credit of the German Government and board and the president of the Reich. In addiwill constitute a contribution to its reserves tion the general board shall elect a banking and thus enlarge the basis of its currency commissioner to supervise the maintenance of issues. The loan will also help to overcome reserves and the issue and redemption of notes. the acute shortage of liquid funds in Germany The railroads are to be operated by a board and will assist in meeting her immediate and of 18 directors, 9 of whom are to be appointed more urgent obligations to the Allies, particuby the trustee of the mortgage bonds and 9 by larly in making payments in Germany for the German Government. After the sale of goods to be delivered on reparation account. the preference shares the holders of these shares In commenting upon the credit position of will elect four directors and the Government Germany in connection with the proposed for- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 331 eign loan and upon the use to be made of the Banking credits of a short-term character have funds thus raised, the report states that—• already been granted by New York and London "A considerable sum can certainly be raised bankers in connection with the recent estabupon the good security that the plan provides, lishment of the gold discount bank in Germany. with a clear prospect of improved international The establishment of foreign credits as a means political position and of stability. of stabilizing currency in relation to gold was " The question is, therefore, whether the the plan followed by a number of other Euroclaims upon Germany can be so reduced by pean countries during the past year, and the agreement among the allied creditors as to results of this method of currency stabilization come within this potential credit. If they can, were described in the previous issue of the then obviously the greater the reduction the FEDERAL EESERVE BULLETIN. In effect these more moderate the sum to be .raised, and the plans establish a gold exchange standard and greater the probability of Germany success- may be regarded as constituting an intermefully raising a loan. If not, then the loan will diate arrangement between depreciating paper not be forthcoming, stability can not be in- money with wide fluctuations in exchange and sured, and neither this plan nor any other can currency stability on the gold standard. Curcome into being. rency reforms undertaken in Europe have been " The successful launching of the scheme de- in the direction of reestablishing the connecpends, therefore, upon three main factors: (1) tion between domestic currencies and gold by Limitation of payments for all purposes to linking them to stable foreign exchanges. In 1,000,000,000 gold marks, of which at least those countries whose budgetary position was 800,000,000 must be spent in Germany for the not immediately affected by the payment of first year, and thereafter to such sums as are reparations, this method of currency reform available under the plan during the succeeding has resulted in a greater stability of exchange. years; (2) cooperation between the Allies and In Germany the balancing of the budget and Germany in securing political conditions which the stabilization of the currency is complicated will incline the investors of the world favorably by reparation obligations, but in its proposals toward the German loan upon good security; the committee has considered currency stability (3) a loan of 800,000,000 gold marks, which will as essential to the restoration of German credit serve the double purpose of assuring currency and has made the maintenance of stability a stability and financing essential deliveries in limiting factor upon the payment of reparakind during the preliminary period of economic tions. rehabilitation." Flotation of this external loan will be one of Reprint of reports of experts to Reparation Commission the first practical steps in the carrying out of The complete official English text of the the plan, after the acceptance reports to the Reparation Commission of the Cu"encr sta: of the report by the Govern- two committees of experts, which is printed in bihzation and , • , , .„ full in this issue, has been reprinted as a sepreparations ments concerned, and will test arate pamphlet and can be obtained on request the acceptability to the investat a nominal charge. ing public of the security offered by the plan. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

332 FEDERAL RESERVE BULLETIN MAT, 1924 BUSINESS CONDITIONS IN THE UNITED STATES Production of basic commodities decreased during March, and there was a recession in wholesale prices. Distribution, both at wholesale and retail, showed less than the usual seasonal increase and was smaller than a year ago. Production.—The Federal Reserve Board's index of production in basic industries, adjusted to allow for length of month and other seasonal variations, declined 3 per cent in March. Output was reduced by most industries, and the decreases were particularly large in mill consumption of cotton and production of bituminous coal and copper. Daily average production of steel ingots, however, was larger than in any previous month. The level of factory employment was unchanged, but some curtailment in working hours was evidenced by a decline of 1 per cent in average weekly earnings. Contract awards for new buildings in March reached the the highest total value on record, owing chiefly to a large increase in the New York district. Estimates by the Department of Agriculture on the basis of condition on April 1 indicate a reduction of 4 per cent in the yield of winter wheat and of 6 per cent in the production of rye as compared with the final harvests in 1923. Trade.—Shipments of commodities by railroads declined each week in March and car loadings were 4 per cent less than a year ago. Wholesale trade increased slightly during March, but was 8 per cent less than a year ago owing to decreases in sales of dry goods, shoes, and hardware. March sales of department stores were 8 per cent less than in March, 1923, and merchandise stocks at the end of the month were 8 per cent larger than a year ago. Sales of mail-order houses also showed less than the usual seasonal increase in March. Decrease in the volume of purchases at retail compared with last year is partly accounted for by the late Easter and the generally unfavorable weather conditions. Prices.—Wholesale prices, as measured by the Bureau of Labor Statistics index, decreased slightly more than 1 per cent in March and were 6 per cent lower than a year ago. Prices of farm products, foods, clothing, chemicals, and house furnishings declined, building materials remained unchanged, while fuel and metals were slightly higher than in February. During the first three weeks of April quotations on pig iron, lead, coal, silk, and sugar declined, while prices of wheat, corn, and cotton advanced. PRODUCTION IN BASIC INDUSTRIES WHOLESALE PRICES PER CENT PER CENT PER CENT PER CENT 150 150 300 300 r\ i 100 / 100 200 200 AT 50 50 100 100 0 0 n 1313 1920 1921 1322 1923 192^ 1919 1920 1921 1922 1923 1324- Index of 22 basic commodities corrected for seasonal variation. (1819= Index of United States Bureau of Labor Statistics. (1913=100, base- 100.) Latest figure, March, 116 adopted by bureau.) Latest figure, March, 150 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 333 MEMBER BANK CREDIT DEPARTMENT STORE SALES aiLLIONS OF DOLLARS BILLIONS OF DOLLARS PER CENT 16 16 200 ZOO 1 U / D D e e m po a s n i d ts . - wvw^. 12 150 w\ 0 00 v 100 17 |V V v V Investments, 50 50 y WITH SEAS7NAL CORRECnoN — SALEy WITHOUT c0RRECT10H n 1319 1920 1921 1922 1923 192A- 1919 1920 1921 1922 1923 Weekly figures for member banks in 101 leading cities. Latest figures Index of sales of 333 stores in 117 cities. (1919=100.) Latest figures April 16 March Bank credit.—Volume of borrowing for commercial purposes at member banks in leading cities, after increasing during the early part of the year, remained constant at a high level between the middle of March and the middle of April. During the four-week period total loans of these banks were in larger volume than at any time in more than two years. Discounts and investments of the Federal reserve banks, which on April 2 were slightly above $1,000,000,000, declined by about $125,000,000 during the first three weeks in April to the lowest point for the year. This decline represents a reduction in discounts and in the holdings of acceptances, while the volume of Government securities increased somewhat. Money rates in the New York market during the first three weeks in April were at about the same level as in the latter part of March. Prime commercial paper was quoted at 4J per cent and 90-day bankers' acceptances at 4 per cent throughout the period. AGRICULTURE and Atlanta districts and in parts of the St. Louis district. In the San Francisco district A decline in crop prices, a further slackening the rains were generally beneficial, and in the in marketing, and unsatisfactory weather in drought areas they afforded considerable relief most sections for spring preparations were the and greatly improved the agricultural prospects. outstanding factors influencing the agricultural Early in April more favorable weather was situation in March. Contrary to the usual reported from all districts, and farm work was seasonal movement, crop prices declined in progressing rapidly. While the low tempera- March and were 2 per cent lower than in Februtures which prevailed in March retarded outary, but compared with March a year ago they door operations, they were favorable to the were slightly higher. The total volume of fruit crops. Buds were retarded and the poagricultural products marketed in March was tential damage from cold was lessened. The 15 per cent smaller than in February and, supply of farm labor on April 1 was practically largely on account of the heavy decline in the the same as a year ago, bijt the demand was less movement of grain, distribution was smaller than in the previous season and the supply was than a year ago. Receipts of livestock, animal 92 per cent of the demand. products, and cotton, sales of tobacco, and shipments of fruits decreased, while shipments Grain of vegetables showed the usual seasonal in- On April 1 the condition of winter wheat was crease. 83 per cent of normal, compared with 75 per Rains and cold weather seriously delayed cent a year ago, but improvement was not farm operations in almost all districts, and spring reported for all districts. In the Philadelphia, preparations and plantings are reported to be Cleveland, Chicago, and St. Louis districts, from two to three weeks late in the Richmond where consideiable damage had been reported Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

334 FEDERAL RESERVE BULLETIN MAY, 1924 from unsatisfactory weather during the winter growing areas. The low temperatures lessened months, the condition was decidedly below the potential damage by the boll weevils and that of a year ago. The crop in the Kansas the rainfall was sufficient to put the soil in City, Dallas, and sections of the San Francisco good condition. Since the beginning of spring, districts was generally well protected during however, the wet weather has continued in the winter, and the condition on April 1 sections of the Richmond and Atlanta districts, showed great improvement over a year ago. and the season is from ten days to two weeks Despite the better average condition of the late. In sections of the St. Louis and Dallas crop, the acreage sown was smaller than in the districts conditions have been more favorable, previous season, and the yield is estimated at and plantings are progressing rapidly, especially 549,415,000 bushels, a 4 per cent reduction in Texas. Reports indicate that more fertifrom the final harvest in 1923. The average lizers are being used than in 1923 and that a condition of the rye crop was higher than a greater effort is being made to combat the year ago, but the estimated yield is 6 per cent weevils with poison and intensive cultivation. smaller than the 1923 production, whicn is also Marketing of the old crop showed a further seasonal decline in March. Sight receipts due to a curtailment in acreage. Under were 12 per cent less than in February and 19 favorable weather conditions during the closing per cent smaller than a year ago. Spinners' weeks in March and early in April, spring takings, on the other hand, which are usually wheat seedings progressed rapidly in all smaller in March than in February, increased sections. Oat seeding was practically com- 10 per cent, but compared with March, 1923, Eleted as far north as Missouri by the end of the they were 26 per cent smaller. Domestic conrst week in April and work was advancing sumption of cotton continued to decline in satisfactorily in the areas of the Chicago and March from the corresponding month a year Minneapolis districts, although it was someago and the total consumption since the beginwhat later than usual in some sections of these ning of the crop year is nearly 9 per cent below districts. Corn planting has been delayed in that of the previous season. Exports, on the all districts, but the early seeded corn in the other hand, have continued in large volume Gulf States is in good condition. and are 16 per cent greater than a year ago. The marketing of all grains declined in At the end of December domestic consumption March and was 25 per cent smaller than in of cotton was 6 per cent smaller and exports February. With the exception of corn, all were 15 per cent larger than in the previous grains were distributed in smaller volume than season. Since that time the domestic conin March a year ago. While bad weather is sumption has been decreasing at a greater rate reported to have retarded marketing at pri- than in the autumn, but exports have been mary markets, receipts were probably affected larger than a year ago. The following table by price declines in March, which were noted shows the monthly consumption and exports for all grains except barley. Exports of grain of raw cotton and the percentage change from since the beginning of the crop year have been the corresponding periods a year earlier. considerably less than in the preceding season, as shown in the table. EXPORTS OF GRAIN Consumption Exports [000 omitted] Per cent Per cent change change Nine months ending- Percent- 1923-24 from 1923-24 from age 1922-23 1922-23 change March, 1923 March, 1924 from 1923 1923 Bales Bales 492,000 -6.5 244,000 -10.6 Barley bushels.. 16, 758 9,542 -43.1 September 484,000 -2.0 689,000 87.2 Corn _ _ do 81,812 16,620 -79.7 October 542,000 1.5 782,000 -2.1 Oats do 17,481 1,062 -93.9 531,000 -8.3 770,000 -10.3 Eye do 40,704 9,996 -75.4 December 462,000 -12.7 846,000 39.1 Wheat doi... 196,377 144,615 -26.4 Eice pounds.. 238, 697 172, 485 -27.7 Total 2, 511,000 -5.7 3,331,000 14.6 1924 1 Wheat flour in terms of wheat. January _. . 577,000 -5.4 546,000 15.4 Cotton 508,000 -10.4 482,000 33.9 484,000 -22.4 332,000 4.4 During the winter months the weather con- Total 4,080,000 -8.6 4,691,000 15.6 ditions were generally satisfactory in the cotton- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL, RESERVE BULLETIN 335 Tobacco fornia has not been as large as in the previous Marketing of the 1923 tobacco crop was season. Canned fruits have moved steadily practically completed in March, and many into consuming markets in recent months, markets and cooperative receiving stations and the market position of these products have closed. Sales in all districts showed a has been strengthened. Large sales of dried considerable decline from the February totals fruits in the San Francisco district caused a and were smaller than in March a year ago. considerable reduction in unsold stocks in Prices received by the growers for the crop first hands. sold in the independent markets were some- Livestock what lower than for the 1922 crop, which was Although the cold and stormy weather durattributed to the poorer qualities of the 1923 ing the last week of March was generally unyields than in 1922. In the Virginia markets favorable for livestock in the western range dark tobacco sold for higher prices during the areas, causing some losses in sections of the month than bright tobacco, which was very Kansas City and San Francisco districts and unusual and was due principally to the low making much feeding necessary for a short quality of the bright product. With the closing of the marketing season, active at- period, warmer weather in April cleared the tention has been turned to preparations for snow from the greater part of the ranges and the new crop and, while there is a tendency to increase the acreage in some sections, efforts are being made in the burley districts to curtail the acreage in order to prevent an overproduction in 1924. Activity in the manufactured-tobacco industry Was well maintained in March. Production of all products was seasonally larger than in February, but only small cigars and cigarettes were produced in larger volume than in March a year ago. The demand for cigars was better in April than in March, but not as good as a year ago. Prices are generally firm and stocks are moderate. Fruit With the exception of slight damage by late freezes and frosts to the deciduous fruit crops in the southern portion of Arizona and to the peach crop hi sections of the Dallas, Kansas 40 City, and St. Louis districts, weather conditions were generally satisfactory during March and 20 20 the first weeks in April for the fruit-growing industry. In fact, the late spring in the eastern States delayed budding and thereby 19Z1 1322 1923 192Alessened the potential damage from cold and Monthly average prices, 1921-1924, of sheep, cattle, and hogs at principal markets, reduced to relatives with 1913 monthly average price as 100 frost. Citrus groves in Florida and California continued in good condition. The decided improvement was evident in the Daltotal volume of fruit marketed in March was las district and the southern sections of the smaller than in February, but it was slightly Kansas City and San Francisco districts. larger than in March a year ago. Although Ranges and stock in most of the principal the shipments of apples were seasonally States were in much better condition on April smaller than in February, they were in consider- 1 than a year earlier and the outlook for both ably larger volume than last year. Cold- the cattle and sheep industry is better than it storage holdings of apples on March 1 has been in recent years. The spring moveamounted to 5,966,000 barrels, compared ment of livestock from the Dallas district to with 3,090,000 barrels at the same period a the long-grass areas farther north began early ?rear ago. Citrus fruit shipments from Florida in April, but with the improvement of the or the season through March were larger ranges and better feed conditions in that disthan in 1923, but the movement from Cali- trict the transfer is expected to be light. In Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

336 FEDERAL RESERVE BULLETIN MAT, 1924 some sections of Texas the ranges are under- where gross domestic production exceeds gross stocked and rather than supply them at the domestic consumption, and evidences of a conpresent time there is a tendency among many tinuation in the expansion are reflected in the cattlemen to increase cotton planting on them. gradual increase in the number of dairy cattle, In February the foot-and-mouth disease was which totaled 24,765,000 head on January 1, detected in California and by late in March it 1924, the largest number in the history of the had spread into a considerable area, and country. strenuous efforts are being made by the State MINING of California and the Federal Government to Coal and coke combat the further spreading of the disease. Inactivity continued to prevail in coal mar- All animals except calves were marketed in kets during April, and production and prices of fewer numbers in March than in February, bituminous coal reached new low records. and for the first time since April, 1922, hog re- Mine operations were curtailed considerably ceipts were smaller than for the corresponding throughout March and April, and in the week month in the previous year. This decrease in ending April 12 daily, average output was the hog receipts was very significant and reflected smallest, with the exception of the period of the tendency of the producers to curtail the the 1922 strike, since the low point of the supplies. Since the beginning of the year live- depression in the spring of 1921. Estimated stock prices have been rising, and in March production for March totaled only 39,909,000 the highest levels were reached since Novem- tons, the smallest figure recorded for that ber. Reduced marketing and a continuation month in any year, excepting 1921 and 1919, of a fairly active demand in March were two of since 1915. The Coal Age index of bituminous the principal factors affecting the industry. coal prices in the week of April 21 fell to $2.04, Compared with recent years the outstanding the lowest point reached since 1916. Despite fact has been the increase in lamb prices. these low prices, contracts which expired on While cattle prices are still low, they have in- April 1 have not yet been renewed to any apcreased in recent months and are higher now preciable extent. Several railroads have signed than a year ago. The large supply of hogs has contracts, but industrial consumers are either depressed prices, but producers have been com- using up their stocks or buying for immediate pensated to some extent by increased produc- needs in the spot market. tion. Detailed changes in the prices of cattle, On April 1 producers announced reductions hogs, and sheep are shown in the chart. in anthracite prices of about 50 cents a ton on Dairy products domestic sizes and 25 to 50 cents for steam A seasonal expansion in the production of sizes. Many retail dealers made further rebutter and cheese began in March and the total ductions. Customers who had kept out of output was greater than in March a year ago. the market in March awaiting this announce- Distribution, on the other hand, as indicated ment have since made purchases. Demand by receipts at five principal consuming centers, consequently improved somewhat, but was declined and was in smaller volume than last reported to be under expectations considering March. As a result of smaller receipts than in that the lower prices were announced only for February, cold-storage holdings were reduced the month of April. Production is well mainto the lowest levels since July, 1923. Although tained and many mines are producing at capaca decline in the stocks in March is a seasonal ity. March output totaled 8,114,000 tons. occurrence, it is significant that supplies were This was larger than for any month since last considerably heavier on April 1 than a year ago. October, but at a lower rate than during last Prices of butter have declined continuously spring. since the beginning of the year, and quotations Production of both beehive and by-product for 92 score creamery butter at New York coke in March totaled more than in any month reached a low point of 36.5 cents on April 18, since early last fall. More recently, however, as compared with 47.5 cents a month earlier. the decreased demand from iron and steel Receipts of milk in the New York market in- sources has been reflected in output. Buying creased in March and amounted to 3,124,000 in April was comparatively light and the weekly cans, an increase of 14 per cent over February production of beehive coke declined from and 8 per cent over March a year ago. 316,000 tons in the week ending March 22 to The Department of Agriculture reports that 266,000 tons three weeks later. Prices of coke the dairy industry has expanded to a point were reduced considerably about the middle Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

337 MAY, 1924 FEDERAL RESERVE BULLETIN of April and a new minimum of $3.40 for comparison^: the production and consumption standard furnace coke was established. of petroleum is shown in the accompanying chart. The continuous increase in stocks Petroleum during 1923 and 1924 is clearly reflected by the Under the influence of rising prices and the fact that production continued well above coming of better weather in March and April, consumption throughout the year and the increased activity was noted in the petroleum first months of 1924. industry. Drilling operations were stimulated and the number of new wells that came MILLIONS OF BARRELS MILLIONS OF BARRELS 90 90 into operation increased. Total production of crude petroleum in March exceeded the 80 — Production and Imports output in February, but on account of the --- Consumption and Exports smaller production in the first three weeks 70 of March than in the corresponding period in /A- February the daily average production was A. A. ' J 60 i slightly lower. During the week ending March i 29 production, particularly in the mid-conti- 50 nent fields, began to increase and by the middle of April the daily average output had V 40 J ' reached the highest level since early in Decem- 30 ber. Stocks increased further during the month and on April 1 they were 31 per 20 cent greater than a year ago. Notwithstanding an increase in production and stocks, 10 prices made further advances, although the rate of increase was not as great as in February. Since the beginning oi the year changes 1921 1922 1923 1924 in petroleum prices have been very similar Production and consumption of petroleum expanded rapidly in 1923, tut the increase in production was greater and stocks are at the highest level to those a year earlier, as is indicated by the on record. Figures compiled by American Petroleum Institute. following table of price relatives for the Cali- Metals fornia and mid-continent fields: Buying of nonferrous metals by consumers was in large volume during March and the first 1923 1924 three weeks of April. Quotations for silver advanced, copper and zinc were practically January- 164 150 unchanged, and lead declined during this February. 183 194 March... 193 209 period. Copper shipments in March by both North and South American producers Compared with a year ago, prices at the amounted to approximately 271,000,000 California fields are approximately 60 per cent pounds, the largest of any month on record, higher and quotations in the mid-continent while United States mine production and fields are 10 per cent lower. As a result of this imports totaled 128,600,000 pounds and variation eastern refiners are reported to be 55,700,000 pounds, respectively. Exports of turning away from California for their supply refined copper amounted to 93,300,000 pounds of crude oil, with the consequence that stocks in March, and foreign demand continued large are steadily increasing at the California fields. in the first half of April. Demand for copper The heavy production of crude oil and the from hydroelectric plants in the United States accumulation ol large stocks have been accom- has been particularly well maintained. panied by increased activity in the refining Shipments of zinc and lead ore from the industry, and stocks of most products are Joplin district were large during March and exceptionally large. Gasoline stocks at the there was some decline in ore prices. Slab zinc beginning of March were the largest in the production, however, was less than consumphistory of the country, and for the first time tion and stocks at the end of March were since the beginning of the year prices showed reduced to 64,100,000 pounds, which is equivaa tendency to decline, especially in some lent to about a three-weeks supply. Lead of the mid-continent consuming centers. A production increased about 17 per cent in 9741T—24 2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

338 FEDERAL RESERVE BULLETIN MAT, 1924 March and was larger than in any other month the month, and on April 1 they were larger of the past five years. Silver production than in any April since 1920. This increase in aggregated 5,727,000 ounces, the largest stocks may be attributed in part to a decline monthly output since the cessation of purchases in the volume of domestic sales and exports. under the Pittman Act in May, 1923. Sales were also smaller than in March, 1923, and all pork products except hams and shoul- MANUFACTURING ders were exported in smaller volume than a Food products year earlier. An increase in the production of wheat flour Textiles and sugar and a decrease in the output of meat During March and April some improvement products were the principal factors which was noted in textile markets, but the volume characterized the food-product industries in of buying to date this year still falls far short March. The production of wheat flour was 3 of that for the same period last year. Orders per cent greater than in February and with the continue to be largely restricted to current exception of March, 1923, it was greater than needs and prices are generally weak. Although in any March on record. The decline in this is ordinarily the season of high productive the price of wheat during the month created a activity, operations in many lines have been dull flour market, as buyers became more curtailed and in others increases have not been cautious than they had been earlier in the as great as usual. year. Following the price of wheat, flour A definite turn for the better was noted in quotations fluctuated widely during the month cotton textile markets during the first week of and reached a low point in the week ending April, following sharp declines during the last March 28. During the first three weeks of week of March in prices of both raw cotton April prices remained unchanged at about the and cotton goods to the lowest levels since last same level as was evident in the middle of September. At that time percale prices were March. The new tariff on wheat and mill announced at 2 cents below previous quotaproducts went into effect on April 7, but it is tions. Early in April, however, the price of too early to trace any influence which it has raw cotton advanced, the market for cotton had on prices. goods became more active, and for the first Although the production of sugar in March time in 13 weeks the Fairchild cotton-goods showed a seasonal increase over the preceding price index increased. Print-cloth sales in month, it was smaller than in March, 1923. the Fall River market during that week In spite of the smaller output in March than totaled about 180,000 pieces, the largest figure a year ago, the total volume produced since recorded in several months. This increased the beginning of the year has been greater activity, however, was short-lived as the than in the preceding season and stocks on market became irregular, and prices again fell. hand are slightly larger than last year. The Mills in all sections of the country curtailed price of both raw and refined sugar declined production during March and to a certain almost continuously during the month, and on extent in April. Although a few mills in- April 18 the price of raw sugar was 23 per cent creased operations at times during April, this and refined sugar 17 per cent below quotations appeared to be largely tentative or to supply a year ago. some immediate demand. Mill consumption The production of meat products was smaller of cotton totaled 483,928 bales in March, as in March than in the preceding month or compared with 507,867 bales in February and in March, 1923. While the decline from 624,264 bales last March, the largest on record. February was due in part to seasonal factors, Decreases occurred in practically every State. the decrease from March a year ago was very Active spindles and active spindle hours were significant in that it was the first month since fewer than in any month since July, 1922, and April, 1922, that the volume of packing fell employment in cotton mills was smaller than below the level of the corresponding month in at any time since the early fall of 1922. Cotton the previous year. The decrease from the finishers reported March production, orders, preceding year in the number of hogs slaugh- and shipments to be less than those of tered is further evidence that the enormously February. heavy marketing has passed its peak and the In the woolen and worsted business, conproduction of hogs is declining. Notwith- ditions remained without appreciable change standing the slackening in the production of during March and early April. Manufacturers pork products, stocks increased further during generally refrained from purchasing raw wool, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 339 which is being reexported to foreign markets, sales have fallen off still more, and stocks of where prices are higher, but after the middle goods are accumulating. Imports of raw silk, of April some improvement in buying by large however, were reduced m March to the smallest manufacturers was reported. The following figure since January, 1921, and warehouse table, giving imports and reexports for certain stocks were cut down about 25 per cent. Derecent periods, shows how little wool came into liveries to mills in March, although smaller this country and how much went out during than during the two preceding months and the first quarter of this year as compared with during the early months of last year, were the same period last year. Contracting in the nevertheless greater than during last fall. Stawest for the domestic clip has not been as active tistics from mills in New Jersey show continas it was last year, and prices this season have ued reductions in operations, and the Philaranged somewhat lower. Prices in eastern delphia Federal Reserve Bank reports that curmarkets have recently shown little change, tailment among Pennsylvania mills has inbeing held down by inactive domestic demand creased. and held iip by the higher prices prevailing Orders for knit underwear during March, abroad. according to reports from 24 identical firms, [Pounds, 000 omitted] were smaller than for any month in the last two years, and unfilled orders reached the lowest figure since September, 1922. Shipments Imports Reexports and daily average production also declined. Prices are higher than a year ago and jobbers 1919-22 quarterly average. 87,616 1,508 1923—First quarter 177,129 314 and retailers are generally purchasing only to Second quarter 154,350 5, 246 Third quarter 31, 594 7,374 fill immediate needs. Early in April prices Fourth quarter 31,178 11,247 were materially reduced on practical!}7 all lines 1924—First quarter 111,330 4,625 of hosiery, one large manufacturer cutting quotations on a standard number from $13.85 to Purchasing of woolen and worsted yarns and $12.60 a dozen. The Philadelphia Federal Recloth continues to be comparatively light and serve Bank reports that these reductions have is largely to meet current needs. All manustimulated demand for full-fashioned silk hofacturers have opened their heavy-weight lines, siery for women and that novelties are in fair but orders, although numerous, have been request, but other lines are inactive. Prelimismall and the total volume to date has fallen nary statistics show an increase in the producbelow that of last season. Clothing manution of full-fashioned hosiery in March as comfacturers, however, report that buying of pared with February, but seamless output derecently opened fall lines of men's wear has clined. On the other hand, orders for fullbeen somewhat more favorable than was fashioned hose declined, whereas orders for initial spring business. Late orders for spring seamless increased. Shipments were slightly goods also showed some increase, reflecting larger. good business among retail clothiers. Prices on fall lines are at about the same level as Iron and steel those of last year. Despite the longer month, Decreased buying of iron and steel products, consumption of raw wool by manufacturers first noted during March, continued in April, during March was slightly less than in Februprices were weak, and operations were curary. The percentage of active hours increased tailed. Production, however, continued unin the case of cards and of woolen spindles, abated through March, and the daily average but active loom and worsted-spindle hours output of steel ingots for that month was the declined. highest ever recorded. Shipments were re- Weakness still prevails in the demand for ported to be somewhat larger than orders, and raw silk and silk goods. Prices of the former, unfilled orders of the United States Steel Corwhich have fallen almost steadily since the poration fell off 130,094 tons to 4,782,807 tons. earthquake last September, in April reached the These orders have for some time been unusually lowest figure since the summer of 1921, the small in relation to the large volume of output; post-war low point. Owing to this decline and evidently buyers have been purchasing large to poor demand, reductions have also been quantities of steel, but prompt shipments have made in silk fabrics, ranging from 15 to 35 removed the necessity of ordering far ahead of per cent since January 1. Although manufac- requirements. Operations during the third turers have reduced operations considerably, week in April were reported to be at about 80 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

340 FEDERAL BBSERVB BULLETIN MAY, 1924 per cent of capacity, as compared with an from a number of dealers in the Middle West average of about 90 per cent in March. to the Chicago Federal Reserve Bank showed Eailroads continue to be active buyers. decreases as compared with March, 1923, of 1.5 Orders for cars during the first three months per cent in sales by wholesalers, of 11 per cent of this year compare favorably with the large in retail sales, and of 7 per cent in sales of used total for the same period of last year, as is cars. Stocks of new cars at the end of the shown by the chart on page 342. Reports indi- month were 66 per cent and of old cars 34 per cate heavy buying in April also. Structural cent larger than a year ago, and both were 5 steel awards were estimated to total less in per cent greater than at the end of February. March than in February, but continued large, Production of automobile tires and tubes and a number of large contracts were let in during March was greater than in any month April. The building industry is providing an since last May. Shipments increased to a less active demand for many iron and steel products. extent, and stocks were enlarged during the Oil companies have also been purchasing more month. Inventories of inner tubes were the freely. Automobile manufacturers are gen- largest since June of last year. Producers are erally marking time," awaiting the results of prepared for an active season, but dealers' dealers' spring sales. Pig-iron demand has stocks are reported to be smaller than a year been rather dull, and the ore market is also ago. Production of balloon tires is increasing, quiet. Prices for Lake Superior ore have been and they are being used to stimulate new established at 80 cents below last year's business. quotations and are the lowest since 1915. Iron Trade Review's composite iron and steel THOUSANDS THOUSANDS 'WO 4UU prices declined steadily during April and in the third week averaged $42.01, the lowest since February, 1923. s— A 1924. 192:i „ Automobiles 300 A \._ ~_- 300 Automobile manufacturers continued opera- / /\ tions throughout the winter at a high rate and 1922A stored cars in warehouses both at plants and / V s /— r —^* with dealers that they might be prepared for 200 200 spring sales. These large stocks, together with / 1921 retardation of the selling season by unfavorable weather, made it unnecessary and in many cases / N undesirable for manufacturers to increase out- 100 100 put as much in March as usual. In fact, many producers curtailed operations, and the increase in production from 366,683 passenger cars and trucks in February to 381,348 in March is O Jan. Feb. Mar. Apr. May June July Au|. Sept. Oct. Nov. Deo. accounted for by the larger number of working days in the later month. Since sufficient cars Production of passenger automobiles, by months, 1921 to date. Increase during March was not as great in 1924 as in previous years are on hand to care for any immediate rush of buying, future production is expected to be Lumber adjusted more closely to the volume of retail Although the volume of building in prospect demand. appears to be about as large this year as last, Reports indicate a substantial increase in the buying of lumber has not been so great. deliveries during the last 10 days of March and Manufacturers produced at an unusually high the first part of April. Deliveries to retailers rate throughout the winter and are prepared by the largest producer in March totaled over to take care of a large demand. Production 205,000 cars and trucks, of which a daily aver- during the first 15 weeks of this year, accordage of 10,800, were made in the last 10 days. ing to statistics of the National Lumber These, together with data from other producers Manufacturers' Association given in the table and statistics of railroad shipments, indicate below, exceeded the high rate of output in the that distribution of cars from factory to dealer corresponding period of 1923 by about 8 per during March and the first quarter of this year cent. Shipments, on the other hand, totaled was greater than during the corresponding 3 per cent and orders 6 per cent less than they periods last year. On the other hand, reports did a year ago. Whereas orders were larger Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 341 than shipments during the first 15 weeks of Raw stocks of cattle hides and calfskins were 1923, this year they have been smaller. reduced in those months and at the end of February were the smallest recorded in the [In M feet] last four years. Buying of leather is restricted to narrow Cut Shipments Orders limits, and the production of sole leather during March was further reduced and totaled less 15 weeks, 1924 3,535,906 3,677,022 3,582,469 than in any month, except February, 1921, 15 weeks, 1923 3,281,449 3,787, 634 3,828, 290 15 weeks, 1922 2,641,227 2,663,155 2,836, 657 since the statistics began in September, 1920. Moreover, finished stocks and stocks in process were smaller than at the end of February, Thus, manufacturers enter their most active although the former were greater than a year producing period with a smaller volume of ago. No improvement was reported in deunfilled orders than they had a year ago. mand during April. Moreover, stocks were not reduced during the winter to the same extent as in the winter of Easter demand for shoes was reported by 1923. It must be remembered, however, that manufacturers to be below expectations, and buying by dealers last year was both unusually the usual rush of buying was lacking. In heavy and unusually early. In fact, for April, however, a slight improvement was awhile supplies were insufficient to meet the noted in the sales of shoes to consumers. demand, and prices rose rapidly. This year Production of shoes has been well below that of with prices steady and stocks larger, buyers last year, and daily average output during have found no necessity for placing future March, ordinarily a month of maximum proorders and have bought only as supplies were duction, was no larger than in February. In needed. Reports from dealers in various New England factories, however, the increase sections of the country indicate that consumers in total output was 14 per cent, whereas for have also been buying sparingly. This was the country as a whole it was only 5 per cent. rather generally attributed to the unfavorable Wholesale and retail sales of shoes during weather during March, and retail business in March, although larger than in February, did that month did not equal that of the same not show as much increase as at the same time month last year. Increased activity was last year and were about 20 per cent smaller noted during the early weeks of April in the than in March, 1923. San Francisco district, as compared with the relative inactivity in March. Prices of hard- BUILDING wood recovered somewhat in April from the The volume of new construction projected sharp drop noted during the second week of in March was larger than in any previous March, and Lumber's index for the week of April 18 was higher than a month before, but month on record, as measured both by value 11 per cent below the 1923 maximum reached of contract awards and value of building peron the corresponding date last year. Soft- mits, and this high rate of activity was mainwood prices have fallen slightly, and the index tained during the first half of April. The floor was 13 per cent lower than a year ago, when space for which contracts were let in March prices were at the top of a long rise. totaled 68,425,000 square feet in 27 Northeastern States, which was 42 per cent more than in February and 5 per cent greater than Leather and shoes in March, 1923. Construction of residences, Shoe markets were less active than usual in schools, churches, and hospitals was in con- March, partly as a result of unfavorable siderably larger volume than a year ago, while weather conditions and the late date of Easter, the volume of industrial building was much and this was reflected in the demand for smaller. leather and hides. Hides and skins were The total value of contracts let in 10 Federal sparsely bought during April and the price de- reserve districts (according to data collected cline which began in February continued at a by the F. W. Dodge Co.) was $431,000,000 in lessened rate, bringing many quotations below March, which was 17 per cent more than in the low point reached last November. This March, 1923. Most of the gain occurred in decline is partially seasonal, as quality is not so the New York district and was accentuated good now as in the fall. Activity early in the by the desire to take advantage of the law peryear is shown by the increase in sales of raw mitting tax exemption for a period of years on hides and skins during January and February. residences started prior to March 31 in New Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

342 FEDERAL RESERVE BULLETIN MAY, 1924 York State. That law has now been reenacted cent. The number of cars awaiting repairs was for another year. There were also increases augmented by 3,966 during March. in the Boston, Atlanta, Chicago, St. Louis, The accompanying chart shows in cumulaand Kansas City districts, whereas awards in tive form the number of new freight cars the Philadelphia, Cleveland, Richmond, and ordered in the months of 1924 as compared Minneapolis districts were slightly smaller with 1923. Orders placed in March were much than last year. Statistics of contract awards smaller than in February or March, 1923, but and buildings permits, divided by classes of the total orders for the first, quarter of 1924 construction and geographical regions, are were only slightly less than a year ago. Morepublished on page 427. over, orders in the first three months of this Shipments of building materials showed a year amounted to 60 per cent of the total orders seasonal increase during March, but continued for the year 1923. to be smaller than current production, so that Net operating income of Class I carriers there was a further accumulation of stocks. totaled $71,192,000 in February, the latest Consumption of brick has been particularly month for which information is available. large so far this year, due partly to changes in This amounted to an annual rate of return of the fire laws of Chicago. The average price 6.28 per cent, according to the Bureau of Railof building materials in March was the same way Economics, as compared with a 3.76 per as in February, but was 8 per cent lower than cent rate of return in February, 1923. Southa year ago. ern railroads earned 7.6 per cent on their valuation as compared with 7.1 per cent for eastern TRANSPORTATION railroads and 5 per cent for western railroads. Railroad car loadings declined each week during March and were 4 per cent smaller than TRADE Wholesale trade in March, 1923. Loadings were in less volume Business of wholesale dealers increased less between February and March than in the cor- THOUSANDS OF CARS THOUSANDS OF CARS 120 120 responding period of any of the last five years. This may be partly ascribed to the lateness of Easter and the bad weather conditions which 100 retarded retail trade throughout the early spring. The wholesale trade index of the Fed- 80 '€£!-• ,-—• .— 80 eral Reserve Board indicated that March trade z was 2 per cent larger than in February, but 8 per cent less than a year ago. Sales of shoes, j A hardware, agricultural implements, groceries, drugs, stationery, automobile supplies, men's <*( and women's clothing, and jewelry were larger 7 i than in February, while sales of dry goods, i meats, electrical supplies, and diamonds def * f clined. The decrease in the volume of dry goods sold was contrary to the usual trend at this season of the year. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Sales of dry goods, shoes, women's clothing, Orders for new freight cars compiled by Iron Trade Review. March furniture, machine tools, electrical supplies, orders were much smaller than a year ago, but orders for first quarter diamonds, and jewelry showed decreases rangof 1924 were in about the same volume as in first quarter of 1923 ing from 10 to 25 per cent for March as comthan a year ago in the case of all commodities pared with business a year ago, and smaller except forest products and in all railroad oper- reductions in volume of trade were shown by ating districts except the Pocahontas and most of the other reporting lines. Business southwestern. was relatively better in eastern and far-western The reduction in volume of traffic during districts than in the Middle West or South. March resulted in an increase in the average The volume of merchandise stocks at wholenumber of surplus freight cars from 144,426 in sale warehouses showed little change in March, the week ending March 8 to 248,301 in the week but continued to be larger than at the correending March 31. In this period the surplus of sponding date a year ago. Stocks of hardware coal cars was more than doubled, while the showed some accumulation during March in all number of surplus box cars increased 52 per of the four districts from which reports were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 343 received, while there was a seasonal reduction decreases ranging from 14 per cent in the in stocks of shoes. Dry-goods inventories on Eichmond and Kansas City districts to 1 per March 31 were about the same size as on Feb- cent in the San Francisco district. Reports ruary 29, but averaged over 15 per cent larger from the Boston and New York districts indithan at the end of March, 1923. cate that sales of the shoe, women's and misses' Accounts outstanding on March 31 were ready-to-wear, men's and boys' wear, silk goods, somewhat larger than a year previous in the fur, glove, and jewelry departments were sub- Philadelphia district, whereas they were smaller stantially less than a year ago, whereas sales of in the Chicago district. Shoe firms in both furniture, cotton goods, and sporting goods districts reported a substantial reduction in showed some increase. outstandings. Merchandise stocks at department stores increased somewhat more than usual during Retail tirade March and at the end of the month were 8 per Sales of all reporting retail dealers, with the cent larger than a year ago. The largest inexception of cigar and candy chains, showed creases during the past month occurred in the less than the usual seasonal increase in March. Chicago, Philadelphia, Boston, and Richmond For the first time in almost two years a smaller districts. Statistics of wholesale and retail volume of mail-order business was received trade by lines and districts are published on than in the corresponding month of the imme- pages 428 and 429. diately preceding year. The trend of mail- PRICES order sales, both with and without allowance for seasonal variations, are shown for the Commodity prices declined 1.2 per cent in months of the last five years in the accom- March, according to the index of the Bureau panying chart. of Labor Statistics, and were about 6 per cent below the high point reached a year ago. Prices of farm products and clothing showed 160 (J —;ales correcttd for seasonai variation particularly large declines in March, while >afe$ w'rthof useasonal ocrrection smaller reductions occurred in foods, chemicals and drugs, and house furnishings. Average quotations for fuels and metals were slightly U higher than in February. \ A The Federal Reserve Board's regrouping of f j 100 this index by the stage of manufacture of commodities shows that average prices of raw ma- 80 80 terials, producers' goods, and consumers' goods Vi all decreased in March, though the decline was 60 less marked in the last group. Among the raw V materials crops and forest products were lower, while animal products and mineral products advanced slightly. Comparisons with a year ago indicate that the declines for the three main groups of commodities were: raw materials 8 per cent, producers' goods 7 per cent, 1919 1920 1921 1922 1923 and consumers' goods 2 per cent. Sales of mail-order houses since January, 1919. March sales showed Price declines and advances were about equal much less than usual seasonal increase and were smaller than in March, 1923 in number during the first three weeks of April. Quotations for pig iron, lead, coal, silk, sugar, Trade at department stores increased by only and hogs were lower, while prices of wheat, 13 per cent in March, as compared with an corn, cotton, and potatoes increased. average increase of 30 per cent at that season of the year. The late date of Easter and the EMPLOYMENT prevalence of cold and stormy weather throughout most of the country accounted for much General factory employment remained pracof this decline in volume of spring buying. tically unchanged during March, as shown by Recent reports indicate that sales showed a the Federal Reserve Board's employment index, substantial increase in volume in the latter which remained at 99, the February figure. In part of April. March sales were smaller than bituminous-coal areas mine employment has dea year ago in every Federal reserve district, the clined rather considerably in recent weeks and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

344 FEDERAL RESERVE BULLETIN MAT, 1924 a surplus of miners is reported. Outside em- March, 1923, and all classes show an increase ployment in building construction and on in the number of failures over the same period. farms has increased, but in many sections un- Insolvencies for the first quarter of the year favorable weather during March prevented as numbered 5,655 and involved liabilities amountgreat an increase as usual in these phases of ing to $184,865,571. These totals compare activity. That the demand for labor did not with 5,316 failures, with a total indebtedness of show as great a growth during March as the $138,231,574 in the first quarter of 1923, and supply is indicated by the decline in the board's 5,218 failures, with a total indebtedness of index of the labor market from February to a $181,208,179 in the last quarter of that year. point slightly below that reached last Decem- Comparing the first quarter of this year with ber. The greatest declines were noted in the the same quarter of last year, the number of States of New York, Illinois, and Wisconsin. failures increased in all of the three classes of Advances in the volume of factory employ- commercial enterprise and the liabilities inment in the iron and steel, building materials, creased in all but the trading lines. Comparand automobile industries were offset by reces- ing the first quarter of this year with the previsions in textiles, food products, and railroad ous quarter, the number of insolvencies invehicles. Among the textiles, declines were creased among only the trading lines, and the noted in cotton goods, silk, and men's clothing, liabilities in only the manufacturing class. whereas increases occurred in knit goods and Comparative data by districts for the month women's clothing, and the woolen and dyeing of March are given in the table below. and finishing industries remained practically In all except the St. Louis, Dallas, and San unchanged. Ice cream plants and bakeries Francisco districts the number of insolvencies reported increases in employment, but in meat was larger in March this year than last. Compacking and milling substantial declines took f>aring the same months, the liabilities in deplace. The cement, brick, and glass industries ault were larger in the New York, Richmond, enlarged working forces considerably. In the Atlanta, Chicago, and Kansas City districts. paper and printing, leather and shoes, and lum- Due to a single failure, that of a chemical comber groups changes were slight. pany in Virginia, with indebtedness amounting Pay rolls and per capita earnings averaged to $40,000,000, the liabilities for the Richmond less in March thaa in February, indicating a district were the largest on record. reduction in working hours, as wage rates remained practically unchanged. Five thousand FAILURES DURING MARCH establishments reporting to the Bureau of Labor Statistics operated in March at an aver- Number Liabilities age of 94 per cent of full time and 82 per cent District of full capacity, the former figure referring to 1924 1923 1924 hours and the latter to number employed. Activity was particularly great in the vehicles No. 1—Boston _._ 143 $2,729,443 $2,996,492 No. 2—New York 363 316 26,870,199 8,883,184 group, with operations at 97 per cent of full No. 3—Philadelphia. _. 83 73 1, 724, 650 10, 622,911 No. 4—Cleveland 144 130 3,037,892 5,156, 589 time and 89 per cent of capacity. No. 5—Richmond 105 100 42, 232,827 2, 847,909 No. 6—Atlanta 128 117 5, 111, 223 2, 788,463 No. 7—Chicago 251 203 8, 298,645 5,360,490 COMMERCIAL FAILURES No. 8—St. Louis 100 107 1,313,655 1,508,844 No. 9—Minneapolis... 77 76 979, 270 1,415, 434 No. 10—Kansas City.. 113 97 1, 851,517 1,361,100 are C r o e m p m or e te rc d i a b l y fa i R lu . re G s . fo D r u t n h e & m C o o n . t h n u o m f b M e a ri r n c g h N N o o . . 1 12 1 — — S D a a n l l F as rancisco 21 7 6 4 2 9 2 1 9 2, 9 5 5 5 0 3 , , 6 3 7 2 7 8 2 2, , 9 4 7 7 7 4 , , 2 50 1 4 8 1,817 and involving liabilities amounting to Total 1,817 97, 651, 026 48, 393,138 $97,651,026. Both figures are higher than the corresponding totals for the same month last MONEY RATES year and for February of this year; in fact, the liabilities exceed those of any previous month Money rates in the New York market were on record. The unusually heavy indebtedness stable during the first three weeks of April at for March this year is due largely to four somewhat lower levels than prevailed during manufacturing defaults, which alone account the first three weeks of March, and weakened for about 60 per cent of the total sum reported. again during the last week of April. This is Of the three classifications of failures given, in contrast with the corresponding period of manufacturing, trading, and those among 1923, when rates were rising. The rate on agents and brokers, only the trading class show prime commercial paper of 4 to 6 months' a decrease in defaulted indebtedness from maturity, after a temporary recovery the last Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

, 1924 FEDERAL RESERVE BULLETIN 345 week in March from the decline of the tax increase in the supply of bills the active deperiod, fell again to 4J per cent, the lowest rate mand, together with the heavy maturities, previous to that time since February, 1923. resulted in a further reduction in dealers' There was a good demand from the interior at portfolios, which reached the lowest point since this rate. The offering rate on 90-day bankers' October. Bills drawn to finance the exportaacceptances also partly recovered its middle of tion of cotton and the importation of sugar March decline, but remained below the level constituted the greater proportion of the total prevailing during most of 1923 and 1924. The supply, but considerable amounts were issued average yield on 4 to 6 months Government against silk, wool, and provisions, and to furnish securities declined during the last week in April dollar exchange. to the lowest rate since the low, in August, 1922. Easier money rates in March were reflected Government bond prices reflected the easier immediately in lower acceptance quotations, money rates, and the yield on Liberty bonds but by the close of the period the rate had fell to the lowest rate since September, 1922. partly recovered. Rates ranged from 3| to The table below shows the rates prevailing in 4J per cent bid and 3f to 4| per cent offered the New York market during the last two for maturities up to 90 days and from 4 to 4^ months compared with the corresponding per cent bid and 31 to 4f per cent offered for months a year ago. maturities of more than three months. SAVINGS DEPOSITS Yield on c m p o P m a o c r 4 p i i n - m a 6 m e t l h r e e , s r- b 9 a a P a 0 c n n r c i d c k e m e a e p s y e r t , - s s ' m c i e c n a d e o d 4 t n r e n - e t e s i 6 t b f s h i o s t - s - , f p A L b e y o v i r o b i e n e n e c r 4 l a d r e d i t g s n y e t o n l n r o e R a a w e c t n - e a a s l l l a o m u S t o t t u a h n t e i t s i t U n i g c n s i t t o o e d f $ 9 7 S 1 , t 3 2 a 0 t 7 e b , s a 0 n 6 sh k 2 o s ,0 w 0 d e 0 i d s t o r s n i a b v A u i t n p e g r d i s l t d 1 h e , r p o 1 o u 9 s g 2 i 4 h ts , as compared with $7,253,541,000 on March 1, 1924, and $6,740,410,000 on April 1, 1923. 1923 The increase for the month was 0.7 per cent March 5 4 4.12 4.49 5 14 April . 5 -5i 4i 4.13 4.51 4 87 and for the year 8.4 per cent. The only 1924 district in which a decrease occurred during M Av a e r r c a h g e for . week 4i-4| 4 -4J 3.57 4.29 4.04 March, 1924, was Kansas City, although the ending- increases in the Philadelphia and St. Louis Mar. 29 ^1 ^2 4 3.48 4.27 3.95 Apr. 5 4 4 3.50 4.25 4.55 districts were very small. The New York, A A p p r r . . 1 1 2 9.. 4-V 4 4 3 3 . . 5 4 0 7 4 4. . 2 2 4 5 4 4 4 2 5 5 Richmond, Atlanta, and Minneapolis districts Apr. 26. 4 31-4 3.22 4.22 3.95 all showed increases of over 1 per cent over the March 1 figures. A comparison of savings In the London money market money rates deposits by Federal reserve districts on April continued to decline through the first three 1, 1924, with deposits on March 1, 1924, and weeks in March, but steadied at the end of the April 1, 1923, is shown in the following table. month. Three-months bank bills fell to 3 per Figures for the Boston and New York districts cent the third week in March for the first time are those of large mutual savings banks, but since the advance in the bank rate last July, in all other districts reports of other banks are but were quoted at 3-^ the first week in April. included to make the figures representative. Treasury bills were also allotted at the lowest average rate since June during the week ending SAVINGS DEPOSITS BY FEDERAL RESERVE DISTRICTS March 21, 2.9 per cent, and at a somewhat [In thousands ot dollars] higher rate afterwards. ACCEPTANCE MARKET District N of u b m a b n e k r s Apr. 1,1924Mar. 1,1924 Apr. 1,1923 During the period ending April 9 the accept- Boston 64 $1,241,474 $1, 235, 079 $1,165,719 New York 30 1,948, 347 1, 928,114 1,825,991 ance market was under the influence of wide Philadelphia. 79 485,844 485,354 449,191 variations in money rates. The easing of the C R l i e c v h e m la o n n d d 6 9 4 1 7 3 5 0 6 2 , , 0 9 5 6 8 0 2 7 9 5 8 1 , , 4 4 6 4 4 1 6 2 6 8 6 7 , , 6 8 7 2 3 8 money market in the middle of March resulted Atlanta 94 225, 477 223,107 207,217 Chicago. 207 908,162 841, 673 in an active demand for acceptances, especially St. Louis 33 136,244 135,929 126,838 from city banks, which was temporarily in M Ka i n n s n a e s a p C o i l t i y s. . . . 6 1 0 5 1 9 0 3 7 , , 5 8 4 6 2 7 1 9 0 2 8 , ,1 0 2 7 5 6 1 8 0 7 3 , ,8 9 0 6 6 7 excess of the supply. But early in April the Dallas 102 90,146 89,484 79,925 San Francisco. 72 1,010,941 1,006,480 897, 682 money market became firmer and the demand for bills slackened. Notwithstanding a slight Total... 912 7, 307,062 7,253, 541 6, 740, 410 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

346 FEDERAL RESERVE BULLETIN MAY, 1924 FOREIGN TRADE THE BALANCE OF INTERNATIONAL PAYMENTS Imports of commodities during March de- OF THE UNITED STATES, 1923 clined by about $12,000,000 as compared The Department of Commerce has issued with February, while exports declined by an information bulletin stating the balance of about $26,000,000. Net exports, accordingly, the international payments of the United amounted to $19,000,000, somewhat less than States. For 1923 it shows an "unfavorable" two-thirds the value of net exports reported balance of $152,000,000, compared with $488,for February. 000,000 in 1922, This balance " may be attrib- Below is given a table showing the visible uted to discharge of previous open bank and trade balance for the first three months of merchant debts" held over from previous 1924 and of 1923. Totals for the three years. However, the report remarks that in months of 1923 show an excess of imports for calculations of this sort "there is always a the three items, merchandise, gold, and silver, possibility of error either way up to $100,000,making a net unfavorable balance for the 000." period of $84,000,000. For the three months of 1924, even allowing for the fact that gold BALANCE OF INTERNATIONAL PAYMENTS OF THE exports have so declined as to be negligible, UNITED STATES while gold imports have increased to double [In millions of dollars] the amount shown for the earlier period, the Items 1922 1923 balance has shifted to an excess of exports over imports amounting to $45,000,000. Net We sold: merchandise imports of $47,000,000 have 3,867 4,208 shifted to net exports of $152,000,000, a gain Silver 63 72 Gold -- 37 29 in net merchandise exports of $199,000,000 50 Servicesover the 1923 period. 476 567 71 65 Services to foreign tourists 60 100 MERCHANDISE TRADE BALANCE OF THE UNITED Investments of capital (stocks and bonds, etc.) 328 394 Keceipts by United States Government from for- STATES eign nations in payment of their debts - .. - 44 • 91 [In thousands of dollars] Total 4,946 5,576 Months Imports Exports E im xc p e o ss rt o s f E e x x c p e o s r s ts of We bought: 3,113 3,819 Silver. . 71 74 Gold — 275 323 1923 Services- January 329,254 335,417 6,163 Use of foreign capital . .- -. 125 150 February. ... .-- 303,412 306,957 3,545 Use of foreign ships 64 73 397, 928 341,376 56, 552 Services to American tourists 360 500 April 364,252 325,492 38, 760 Investments of capital (stocks and bonds, etc.) 997 410 372, 545 316, 360 56,185 Expenditures abroad by United States Govern- June , - - 320,234 319,957 277 ment . „ -_ 29 19 July 287, 434 302,186 14, 752 Amounts remitted to friends and relatives abroad August 275, 438 311,263 35, 825 or for charitable and missionary purposes.. .. 400 360 September.. 253, 645 381,433 127, 788 October ._. 308, 291 399,199 90,908 Total imports, visible and invisible. 5,434 5,728 November 291, 438 400,507 110,069 December . 288, 067 426, 799 138, 732 Excess of imports . _ 488 152 Year 3, 791,938 4,167, 946 376, 008 In view of the very considerable part in the 1924 January 295, 551 395,170 99,619 1923 balance represented by unfunded debts on M Fe a b r r c u h ary.., 3 32 3 0 2 , , 6 5 1 4 6 0 3 3 6 3 6 9 , , 1 6 3 7 4 4 3 1 3 9 , , 0 5 5 9 8 4 merchandise account remaining from the enormous export trade of the years immediately following the war, the question arises as to COMPARATIVE TBADE BALANCE OF THE UNITED STATES FOR THREE MONTHS ENDING MARCH, 1923 AND the amount of such unfunded credits still out- 1924 standing. While no computation of this figure [In thousands of dollars] is attempted, the significant reduction of this Merchan- Gold Silver Total otherwise unexplained debit remainder, from dise $488,000,000 in 1922 to $152,000,000 in 1923, 1923 suggests that it is being rapidly reduced either Imports 1,030, 594 57,154 14,243 1,101,991 by the purchase of goods and services or Exports 983,751 20, 263 13,844 1, 017, 858 Net imports 46,843 36,891 399 84,133 through funding. 1924 The foreign investments of the United States Imports 948, 707 114, 569 20,101 1, 083,377 Exports 1,100, 978 1,603 25, 441 1,128,022 during 1923 amounted to $410,000,000, of Net exports + 152,271 -112, 966 +5, 340 +44, 645 which part undoubtedly represented such fund- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

347 MAY, 1924 FEDERAL, RESERVE BULLETIN ing operations, rather than current extensions Gold imports and exports, by principal counof credit. Against these foreign loans is set tries, for March, 1924, and the nine months the considerable investment of foreigners in ending March, 1924 and 1923, are shown in American securities, amounting to $394,000,- the following table. A detailed table of the 000, and in American currency, amounting to foreign trade in gold and silver for the same $50,000,000. In other words, during 1923 periods appears on page 453. America apparently borrowed more abroad than she lent. In part this was due to the GOLD IMPORTS INTO AND EXPORTS FROM THE UNITED high yield offered by American investments, STATES but no doubt it was mostly traceable to the [In thousands of dollars] so-called "flight of capital" from the disturbed currency and economic conditions of Europe. 9 months 9 months Country March, ending ending 1924 March, March, GOLD MOVEMENTS 1924 1923 UNITED STATES England : 19,327 166,991 107,912 Net gold imports for the month of March France 3,433 19,932 20,789 totaled $33,505,000, bringing the total for the I G ta er l m y. any 2,3 3 5 68 9 25 3 , , 1 5 2 4 3 4 30 present year to $115,000,000. About 56 per Netherlands. 13,200 16,644 Canada 6,296 35,035 29,668 cent of the gold imports for the month came Mexico 487 5,380 4,045 from Great Britain, over 15 per cent came A Co rg lo e m nt b in ia a . . . . . - 1,7 1 4 99 9 9 2 , , 7 9 0 6 6 3 4,239 from Canada, about 10 per cent from France, Peru... 272 2,024 1,311 China 91 4,120 5,896 about 7 per cent from Germany, and over 5 Egypt 176 2,150 3,271 per cent from Argentina. Gold exports for All other 565 15,617 16,506 the month continued in small volume and Total. 34, 322 306, 685 19, 311 were directed largely to Mexico, Venezuela, and Canada. France. 2,660 Canada 167 1,460 21, 873 For the nine months ending March, net gold Mexico 411 2,389 3,680 imports were $297,730,000, compared with Venezuela 201 601 British India. 1,311 13, 394 $162,317,000 for the corresponding period in Hongkong 38 1,386 2,863 Allother 2,524 1922-23 and $413,345,000 in 1921-22. Imports from Great Britain were 5*59,000,000 Total 817 7,955 larger than in 1922-23, reflecting in part the Net imports . 33,605 297, 730 162, 317 larger output of the South African mines; gold imports from Germany, which were small GREAT BRITAIN in 1922-23, amounted to $25,544,000; gold imports from Argentina during the period Gold imports during February declined by totaled $9,706,000, as against none the year more than £1,000,000 as compared with Janubefore, and gold imports from Canada were ary, owing to the fact that imports from the $5,367,000 larger than in 1922-23. On the Transvaal fell off from £4,046,000 in January to other hand, gold exports during the nine £2,965,000 in February. Exports during Febmonths, mainly to Canada and British India, ruary rose by almost £1,000,000 as compared which in 1922-23 amounted to $46,994,000, with January. The greatest increases are were only $7,955,000 in the current fiscal year. shown in figures for the United States, which Silver imports for March totaled $6,221,000, rose from £4,100,000 in January to £5,400,000 compared with $7,900,000 the month before in February; and for British India, which rose and an average of $7,413,000 for the preceding from £598,000 to £1,048,000. These increases eight months. Imports from Mexico were are partly offset by a decline in exports to about $1,000,000 larger than in February, Egypt from £700,000 to £300,000, and to the while imports from Peru and Canada show Netherlands from £522,000 to £258,000. Net considerable declines. For the sixth con- exports for February were £3,900,000 as comsecutive month silver exports were in excess pared with £1,900,000 in January, an increase of imports, the net exports for the nine months of £2,000,000. being $7,127,000. British India and China For the eight months ending February, 1924, took over 80 per cent of all the silver exported gold imports declined to £27,600,000, as comduring the month and the nine months under pared with £28,900,000 for the corresponding review. period of a year earlier. Most of this decline Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

348 FEDERAL RESERVE BULLETIN MAT, 1924 is reflected in the decrease from £1,420,000 to cents on the 23d, the highest point touched £51,000 in imports from the United States. since May, 1923, and almost double the low Exports for the eight months ending February, rate for the year of 3.49 cents quoted on March 1924, rose by £3,000,000 as compared with the 8, but declined to 6.45 cents at the end of the earlier period, increasing from £40,900,000 to month. Belgian francs rose from 4.72 cents £43,800,000. Increases are shown in figures per franc on April 1 to 5.72 cents on the 23d, for the United States of £8,500,000, for Egypt or a gain of 81 per cent over 3.16 cents quoted of £2,500,000, for the Netherlands of £1,900,- on March 10, the low rate for the current year, 000. These increases are partly counter- but declined to 5.43 cents on the 30th. Italian balanced by declines shown for India, of lire rose from 4.36 cents per lira on April 4 to £6,800,000, for France of £3,400,000. Net 4.50 cents on the 22d, as compared with the exports show an increase of about £4,000,000 previous low rate of 4.13 cents on March 11. as compared with eight months ending The Danish krone rose from 16.44 cents per February, 1923. krone on April 3 to 16.87 cents on the 30th, compared with 15.30 cents on March 11. The Spanish peseta rose from 13.03 cents on April GOLD IMPORTS INTO AND EXPORTS PROM GREAT BRITAIN 3 to 14.16 cents on the 23d, compared with 12.13 cents, the low rate quoted on March 8, but declined to 13.75 cents the following week. 8 months 8 months February, January, ending ending Other European currencies show slight ad- Country 1924 1924 February, February, 1924 1923 vances as compared with March. Of the South American exchanges, the Chil- IMPORTS ean peso advanced somewhat, while the Argen- Netherlands £7,900 £3,858 £60,526 £7,224 tine peso and the Brazilian milreis showed a United States 314 4,778 50,905 1,420,273 moderate recession. Egypt 8,325 66,003 1,505 Rhodesia .. 210,193 194, 671 1,598,834 1,409, 661 In the Far East, the Shanghai tael and the Transvaal 2, 964, 782 4,046, 271 24,934,025 24, 943,372 West Africa 97,883 142,124 791,302 826 542 Indian rupee remained relatively stable. The Allother 3,849 6,217 119,372 265,413 Japanese yen declined from 42.12 cents per Total 3,293,246 4, 397,919 27,620,967 2S, 873,990 yen on April 1 to 39.09 cents on April 24, but rallied to 40.15 cents on the 30th. EXPORTS Belgium 33,500 756 79, 598 120, 499 N Sw et i h tz e e r r l l a a n n d d s . ... 2 5 57 3 , ,8 6 8 3 4 7 5 7 2 7 1 9 8 , , , 5 2 5 0 2 7 0 1 4 1,9 2 1 8 7 7 6 8 5 , , , 3 7 7 4 9 8 3 4 6 3, 1 6 1 1 5 0 4 0 , , , 3 1 2 0 8 2 0 5 8 M 1 a 92 rc 4 h, April, 1924 A 1 p 9 r 2 i 3 l, United States 5, 399,267 4,132, 737 32, 574,691 24,007,952 British India 1,048, 277 597,868 5,231,170 12,054,373 J S a t v ra a its Settlements __ 35,808 1 75 0 , , 0 7 0 2 0 1 1 3 7 5 1 , , 3 0 8 3 4 1 2 24 3 2 0 , , 4 9 2 9 0 2 Month w Fi e r e s k t S w ec e o e n k d T w h e i e r k d F w o e u e r k th Month Egypt 300,000 700,000 2,507, 400 29,800 Allother ... 28,526 85,274 775,066 396, 377 Average quotations Total 7,156,899 .6,281,651 43,815,163 40, 857,126 (cents): Sterling 429. 06 431. 63 433.27 436.14 438.54 465. 55 Net exports 3,863,653 1,883,732 16,194,196 11,983,136 French franc 4.68 5.79 6.97 6.28 6.49 6.67 Italian lira 4.28 4.42 4.42 4.44 4.47 4.96 Netherlands florin 37.07 37.09 37.22 37.20 37.20 39.18 Swedish krona. _ 26.29 26.44 26.42 26.38 26. 30 26.64 FOREIGN EXCHANGE Canadian dollar. 96.96 97.89 98.12 97.96 98.24 98.02 Argentine peso _. 76.55 75.27 76.20 74.90 74.05 83.15 Marked recovery in leading European ex- Shanghai tael -.. 70.00 69.64 69.55 69.88 69.99 . 74.50 Percentages of par: changes, which began during the second week Sterling ... 88.2 88.7 89.0 89.6 90.1 95.7 French franc 24.3 30.0 30.9 32.5 33.7 34.5 of March, continued during April. Sterling Italian lira 22.2 22.9 22.9 23.0 23.2 25.7 rose from $4.30 on April 1 to $4.39 on the 23d, Netherlands florin 92.2 92.3 92.6 92.6 92.6 97.5 the highest rate quoted since November, 1923, Swedish krona.. 98.1 98.7 98.6 98.4 98.1 99.5 Canadian dollar. 97.0 97.9 98.1 98.0 98.2 98.0 and a gain of 13 points as compared with the Argentine peso.. 79.4 78.0 77.9 77.6 76.8 86.2 low rate for the year of $4.26 on March 10. Shanghai tael.. _ 104.7 104.0 104.0 104.5 104.7 111.4 On the 30th it stood at $4.38. The French General index of 17 franc rose from 5.66 cents on April 1 to 6.72 countries... 68 61 62 63 63 67 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 349 PRICES IN THE UNITED STATES AND ABROAD DURING THE PAST YEAR Movement of wholesale prices.—Wholesale different from those in the other countries prices on a gold basis have declined during the reflects largely the influence of exchange past 12 months in all countries except Ger- fluctuations. In Japan price movements have many. In the United States the wholesale been irregular, chiefly as the result of the price index of the Bureau of Labor Statistics disturbed economic conditions following the declined from 159 in March, 1923, to 150 in earthquake. March, 1924, a decrease of about 6 per cent. Advance in the price of food.—Food prices The same tendency is apparent in other coun- have undergone a readjustment, so that taken tries, although the extent of the price reduc- as a group they are now higher in relation to tions is not uniform. In countries whose cur- other commodities in nearly all countries. In rencies have remained relatively stable the rate the United States food prices declined about 1.5 of price decline has been approximately the per cent during the year from March, 1923, to same as in the United States, while in countries March, 1924, while the general index declined by whose currencies have widely fluctuated in 6 per cent. In England food prices, when exvalue, it has been considerably greater. In the pressed in gold, declined by 2 per cent and case of England there has been a rise in prices stand now slightly above the American level. corresponding to the decline in sterling ex- When expressed in British currency, however, change, with the consequence that the relation- food prices in England have advanced from a ship Detween gold prices in America and in point considerably below the level of prices England has remained relatively constant. of other commodities to nearly that level. Compared by groups, prices in the United In Italy food prices have advanced slightly, States declined during the year for every while prices of other commodities have degroup of commodities included in the Bureau clined somewhat. In general, increases in the of Labor Statistics index. In their relation price of food compared with other commodities to the average for all commodities the value are noted in the United States, England, Italy, of farm products, foods, metals, and chemicals France, Denmark, the Netherlands, and Spain. advanced; the value of fuel and lighting, This relative upward tendency in food prices building materials, and miscellaneous goods has brought them in most countries more declined, while the price of cloth and clothing nearly to the level of the general price index, a and house furnishings remained practically though in the United States foods are still unchanged. about 6 per cent below the general level. International price comparisons by com- In Germany there has been, since more stable modity groups based on the Federal Reserve exchange conditions have prevailed, a consid- Board's indexes for the United States, England, erable readjustment in the prices of different France, Canada, and Japan indicate that in groups of commodities; in recent weeks food all the countries except Japan there has been prices have advanced, while prices of other during the past 12 months an increase in commodities have remained fairly stable. In the price of imported goods and consumers' February the index of food prices was about goods in relation to the all-commodities index, 28 per cent below the index for industrial and a decrease in the price of raw materials. products. The general index of German indus- Producers' goods advanced in the United trial prices, expressed in terms of gold, is States, England, and Canada, and declined in at about the world level, while the index for France, while export goods declined in the foods on the 1913 base is below that prevailing former three countries and advanced in France. in other countries. The fact that price movements in France were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

350 FEDERAL RESERVE BULLETIN MAT, 1924 TREND OF BUSINESS ABROAD United United Items England France Canada States Items England France Canada States Million Million Million Million FOREIGN EXCHANGE—Con. Per cent of par COMMERCIAL BANK LOANS: £ sterl. francs dollars dollars 1924—January. 87.52 24.17 97.36 1922—March 1,097 12,558 1,301 10,842 February 88.52 22.90 96.94 1923—March 992 13,402 1,220 11,783 March 88.17 24. 25 96.96 September 1,005 14,719 1,219 11,877 1924— M Fe J a b a r n r c u u h a ar r y y 1 1 1 , , , 0 0 0 0 3 5 9 2 3 1 14 5 , , 1 8 3 1 9 6 1 1 , , 1 1 7 7 7 3 1 1 12 1 1 , , , 8 8 0 8 7 6 4 4 5 PIG 1 1 I 9 9 R 2 2 O 2 3 N — — M P M R a O a rc r D h c U h C .- T .. ION: 4 7 5 4 . . 6 2 Relati 7 v S 2 e . . s 7 8 -1913=1 5 7 0 0 8 0 . . 0 0 1 7 3 9 7 . . 5 6 - COMMERCIAL BANK DEPOS- September 65.4 111.1 89.5 122.1 ITS: 1924—January 74.4 135.0 75.8 117. 9' 1 1 9 9 2 2 2 3 — — Se M M p a a t r r e c c m h h ber.-- 1 1 1 , , , 5 6 7 9 0 4 6 9 7 1 1 14 2 3 , , , 3 5 6 7 1 7 4 2 4 1 1 1 , , , 7 9 9 1 9 8 5 7 1 1 1 1 0 1 0 , , , 3 0 8 0 8 9 9 2 1 F M e a b r r c u h ary 7 7 1 8 . . 7 1 135.9 7 92 1 . . 8 8 1 1 2 3 0 5 . . 1 1 1924— F M e J a b a r n r c u u h a a r r y y 1 1 1 , , , 6 6 6 7 3 0 4 3 3 1 1 4 5 , , 0 7 9 0 3 4 2 1, , 9 0 9 0 3 0 1 1 1 1 1 1 , , , 1 1 2 6 7 3 5 1 9 COA 1 1 L 9 9 2 2 P 2 3 R — — O S M M D e U p a a C r t r c e c T h h m IO b N e : r . 9 8 9 9 9 7. . . 4 2 8 1 1 8 1 2 9 1 9 . . . 6 8 6 1 1 9 1 1 7 5 7 . . . 4 7 0 1 1 1 3 1 1 0 5 7 . . . 4 3 & CENT 1 1 9 9 R 2 2 A 2 3 L — — S B e M M p A a a t N e r r K c c m h h b D e I r SCOUNTS: 2 2 2 , , , 9 5 6 1 1 8 4 1 5 6 7 8 3 0 6 6 0 2 1924— M F J e a a b n r r u c u a h a ry ry 1 1 9 0 0 4 4 2 . . . 0 6 0 s1 1 0 4 7 4 . . 2 8 121.6 1 1 1 1 2 0 4 7 0 . . . 4 1 7 1924— M Fe J a b a r n r c u u h a a r r y y 4 3 5 , , , 1 3 8 9 6 8 7 0 9 5 5 2 3 2 2 SHIP 1 1 9 9 C 2 2 L 3 2 E — — A S M R M e A p a a N t r e c r C c h m B h b . S - e : . r - 1 1 8 0 0 5 7 7 . . . 0 6 1 1 1 8 1 1 8 3 9 . . . 9 4 1 1 1 1 2 0 0 9 4 8 . . . 2 4 9 - CENTRAL BANK NOTE IS- 1924—January 90.2 102.8 103. 3- SU 1 1 E 9 9 S 2 2 : 2 i 3 — — M M a a rc r h ch----- 4 3 0 8 4 8 3 3 5 7 , , 5 1 2 8 8 8 4 41 0 6 4 2 2 , , 1 2 8 3 2 2 M Fe a b r r c u h ary 8 9 6 0 . . 1 1 9 9 4 4 . . 0 0 1 10 0 1 2 . . f 2 r September 394 37, 626 427 2,248 1924— F M e J a b a r r n c u u h a a r r y y 3 3 3 8 8 8 1 4 4 3 3 39 8 9 , , , 3 9 8 4 5 3 5 0 4 3 3 9 8 1 8 2 2 1 , , , 9 0 0 8 2 2 3 2 3 UNE 1 M 1 9 9 P 2 2 L 3 2 O — — Y M M M a E a r r N c c T h h : »' Per 1 1 ce 1 5 n . . 5 6 t Num 3, b 5 5 e 4 8 r 6 8 Relatives* Relative 1 s 8 0 7 3 *• BAN 1 1 1 K 9 9 9 2 2 2 C 4 3 2 L — — — S E e A M J M p a R t n a I e a r u N c m r a c h G r b h y S e . : . r 2 . 3 3 3 2 , , , , 4 4 3 6 1 5 6 0 5 2 7 3 1,4 4 7 7 1 5 6 5 7 5 1 5 1 1 1 1 , , , , 3 1 2 8 3 8 2 4 7 1 0 6 1 1 1 1 7 6 9 9 , , , , 6 2 5 3 4 6 3 9 4 0 5 5 1924— M F S J e e a a p b n r t u r c e u h a m r a y b ry e . r . . - 1 1 1 9 0 1 1 . . . . 9 7 7 9 5 3 2 1 5 9 9 1 0 6 5 1 2 7 7. . . 8 0 5 1 9 9 0 9 8 1 - February 3,205 1,490 1,272 17, 512 March 3,379 1,794 1,154 19,193 Thous. Million Thous. Thous. VALUE\OF IMPORTS: £ sterl. francs dollars dollars CENTRAL BANK DISCOUNT 1922^^SM;arch 87,870 1,941 79,379 256,178 BATE: Per cent Per cent Per cent 1923—March 90,028 2,479 91,881 397,928- 1922—March 5 September. 83,266 2,613 71,351 253, 645- 1923—March 5 1924—January 101,259 66, 568 295,506 September *• 5 February.. 96, 705 3,714 62,134 332, 540 1924—January. 6 March 103, 729 3,623 86,922 320,616 February 6 March VAL 1 U 9 E 2 2 O — F E M X a P rc O h RTS: 64, 681 1,877 60,847 329,980- 1923—March &y, 921 2,380 77, 787 341,377 W - HO .1 1 1 L 9 9 9 E 2 2 2 S 2 4 3 A — — — S L e M E J M p a a t n P a e r u c r R m a c h I r b h C y e . E . r INDEX: ' 1 1 1 1 7 7 6 6 3 8 6 5 Relat 3 3 4 4 i 0 0 4 9 v 7 4 4 8 es—191S= 1 1 1 1 5 4 4 5 1 0 6 9 5 00 1 1 1 1 6 6 6 4 3 3 9 7 1924— M F S J e e a a p b n r t u r c e u a h m r a y r b y e . r . . 6 6 6 6 7 4 1 3 , , , , 1 8 9 2 0 3 3 7 3 6 6 4 2 3 6 2 , , , , 6 9 7 4 1 1 0 3 8 8 0 5 6 7 9 0 8 3 , , , 6 3 7 1 5 5 5 5 8 3 3 3 3 9 3 8 6 5 9 1 6 , , , , 1 6 4 1 9 7 3 3 6 4 4 4 February 180 465 148 163 March 180 481 147 160 VOLUME or IMPORTS: ' ReUtives-191S=100 1922—March 79.7 120.3 206.5 RETAIL PRICE INDEX: July, lSli=100 1923—March... 95.3 111.3 262.4 1922—March 186 294 142 136 September 88.8 137.4 128.2 1923—March...-. 176 321 145 139 1924—January 106.7 182.2 September 173 339 141 146 February 119.3 222.7 1924—January 177 376 145 146 March 102.0 130.9 195.3 February 179 384 145 144 VOLUME OF EXPOETS: 7 March 178 392 143 141 1922—March 67.1 85.3 106.9 1923—March 74.4 99.1 87. S FOREIGN EXCHANGE: Per cent of par September 68.7 145.7 112.5 1922—March 89.92 46. 65 96. 86 1924—January 96.2 101.0 1923—March 96.49 32.77 98.06 February 79.0 126.4 98.1 September-.. 93.34 30. 34 97. 65 March 135.0 90.4 1 Canada—issues of the Dominion and commercial banks. 1 England and Canada—total monthly clearings; France—average daily clearings; United States—total monthly debits to individual accounts, not including New York City. 1 Federal Reserve Board index numbers. 4 England—Ministry of Labor cost of living; France—Statistique G§n#rale retail food in Paris; Canada—Department of Labor retail food index; United States—Bureau of Labor retail food recomputed on new base. » England—per cent of unemployed in insured trades; France—actual number unemployed in Paris; Canada—index of employment in 54 industries; United States—index of employment in 33 industries. 8 Canada—Jan. 17, 1920=100; United States—1919=100. 7 Figures for England are for the quarter ending with the month for which figures are shown. 8 Excluding the 3aar district. 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MAT, 1924 FEDERAL RESERVE BULLETIN 351 REPORT OF COMMITTEES OF EXPERTS TO REPARATION COMMISSION REPORT OF THE FIRST COMMITTEE OF EXPERTS LETTER FROM THE CHAIRMAN TO THE REPARATION as can be obtained will be of little value in meeting COMMISSION the urgent needs of creditor nations. APRIL 9, 1924. To insure the permanence of a new economic peace Your Committee of Experts has unanimously between the Allied Governments and Germany, which adopted a report upon the means of balancing the involves the economic readjustments presented by the budget of Germany and the measures to be taken to plan, there are provided the counterparts of those stabilize its currency, which I now have the honor to usual economic precautions against default recognized submit. as essential in all business relations involving ex- Deeply impressed by a sense of its responsibility to pressed obligations. The existence of safeguards in no your commission and to the universal conscience, the way hampers or embarrasses the carrying out of committee bases its plan upon those principles of jusordinary business contracts. The thorough effectivetice, fairness, and mutual interest, in the supremacy of ness of these safeguards should not embarrass the which not only the creditors of Germany and Germany normal economic functioning of Germany, and is of herself, but the world, has a vital and enduring concern. fundamental importance to her creditors and to With these principles fixed and accepted in that Germany. common good faith which is the foundation of all business and the best safeguard for universal peace, Great care has been taken in fixing conditions of the recommendations of the committee must be con- supervision over Germany's internal organization so as sidered not as inflicting.penalties, but as suggesting to impose the' minimum of interference consistent means for assisting the economic recovery of all the with proper protection. This "general plan, fair and European peoples, and the entry upon a new period reasonable in its nature, if accepted, leads to an ultiof happiness and prosperity unmenaced by war. mate and lasting peace. The rejection of these proposals by the German Government means the deliber- Since, as a result of the war, the creditors of Germany are paying taxes to the limit of their capacity, so also ate choice of a continuance of economic demoralization, must Germany pay taxes from year to year to the eventually involving her people in hopeless misery. limit of her capacity. This is in accord with that just In the preparation of this report, the committee and underlying principle of the Treaty of Versailles, has carefully and laboriously covered the broad field reaffirmed by Germany in her note of May 29, 1919, of investigation. It has had the constant cooperation that the German scheme of taxation must be "fully of able staffs of experts, gathering information, digestas heavy proportionately as that of any of the powers ing it and presenting it. It conducted, on the ground, represented on the commission." More than this an examination of the officials of the German Governlimit could not be expected, and less than this would ment and representatives of its labor, agriculture, and relieve Germany from the common hardship and give industry. It received from the German Government and her an unfair advantage in the industrial competition its representatives voluminous and satisfactory answers of the future. This principle the plan embodies. in response to its written inquiries. In connection The plan has been made to include flexible adjust- with various features of its report, both for gathering ments which, from the very beginning, tend to produce information and for advice, it has called to its assistance the maximum of contributions consistent with the con- outside experts of international reputation. The pubtinued and increasing productivity of Germany. The lished reports and statements of economists of worldconservative estimates of payments to be made in the wide standing have been in its hands. It has had the near future are dictated by business prudence in out- benefit of the accumulated information heretofore lining the basis of a loan, and should not destroy per- gathered by your commission. spective as to the effects to be registered in the aggre- In its work, the full committee has held, since gate of eventual payments, which will annually increase. January 14, 1924, 54 meetings; the subcommittee on With normal economic conditions and productivity the stabilization of the currency, composed of Monrestored in Germany, most hopeful estimates of sieur Parmentier, Sir Robert Kindersley, Monsieur amounts eventually receivable will be found to be Francqui, and Professor Flora, assisted by Mr. H. M. justified. Without such restoration, such payments Robinson, under the chairmanship of Mr. Owen D. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

352 FEDERAL RESERVE BULLETIN MAT, 1924 Young, has held 81 meetings; and the subcommittee II. German economic unity on the balancing of the budget, composed of Professor For success in stabilizing currency and balancing Allix, Baron Houtart, and Monsieur Pirelli, under the budgets, Germany needs the resources of German chairmanship of Sir Josiah Stamp, has held 63 meetterritory as defined by the treaty of Versailles, and ings. They have had the assistance of Mr, Andrew free economic activity therein. McFadyean, the general secretary. Again, the time of the committee, outside of that consumed by the m. Military aspects; contingent sanctions and guaranties meetings, has been given largely to investigation and (a) Political guaranties and penalties are outside •study. our jurisdiction. In speaking of my colleagues and as bearing upon (b) The military aspect of this problem is beyond the value of this report, I feel that I should make it our terms of reference. known to your commission and to the world, that (c) Within the unified territory, the plan requires their governments have in no case limited their comthat, when it is in effective operation: plete independence of judgment and action, either 1. If any military organization exists, it before or after their appointment by you. Limited must not impede the free exercise of only by the powers granted by your commission, each economic activities; has performed his arduous and responsible work as a 2. There shall be no foreign economic confree agent. These men, searching for truth and advice trol or interference other than that thereon, were answerable only to conscience. In proposed by the plan. granting this freedom, the governments have but (d) But adequate and productive guaranties are followed your own spirit and intent in constituting provided. "the committee, but in so doing, they have paid the highest tribute which governments can bestow—com- IV. The committee's task plete confidence in a time of crisis in human affairs. (a) Stabilization of currency and the balancing of In their vision, in their independence of thought, and budgets are interdependent, though they are proviabove all, in their spirit of high and sincere purpose, sionally separable for examination. "which rises above the small things over which the (b) Currency, stability can only be maintained if small so often stumble, my colleagues have shown the budget is normally balanced; the budget can only themselves worthy of this trust. That their work, be balanced if a stable and reliable currency exists. which I now place in your hands, may assist you (c) Both are needed to enable Germany to meet her in the discharge of your great responsibilities, is their internal requirements and treaty payments. prayer, and the knowledge hereafter, that it has done so, will be their full reward. V. Economic future of Germany CHARLES G. DAWBS, Chairman. (a) Productivity is expected from increasing population, technical skill, material resources, and eminence SUMMARY OF PART I1 in industrial science. (b) Plant capacity has been increased and improved I. The attitude of the committee since the war. (a) The standpoint adopted has been that of VI. Currency and a bank of issue business and not politics. (6) Political factors have been considered only in so (o) All classes will benefit from stabilized currency, far as they affect the practicability of the plan. especially labor. (c) The recovery of debt, not the imposition of (b) Under present conditions rentenmark stability penalties, has been sought. is only temporary. (d) The payment of that debt by Germany is her (c) A new bank is set up or the Reichsbank reornecessary contribution to repairing the damage of •the war. (d) The main characteristics of the bank will be: (e) It is in the interest of all parties to carry out 1. To issue notes on a basis stable in rela- "this plan in that good faith which is the fundamental tion to gold, with an exclusive priviof all business. Our plan is based upon this principle. lege; (/) The reconstruction of Germany is not an end 2. To serve as a bankers' bank, establishing in itself; it is only part of the larger problem of the the official rate of discount; reconstruction of Europe. 3. To act as the Government banker, but (g) .Guaranties proposed are economic, not political. free of Government control; 4. Advances to Government to be strictly 1 The summary is furnished only for the convenience of the readers. limited; Parts I and II and the Annexes2are~thejmly authoritative statement of the plan. 5. To hold on deposit reparation payments; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE 353 (d) The main characteristics of the bank will be— (d) There is an important difference between the Continued. German's capacity to pay taxes and Germany's 6. The capital of the bank will be 400,000,- capacity to transfer wealth abroad. 000 gold marks; IX. Normal resources from which payments are made' 7. It will be directed by a German president and managing board, who can be Germany will pay treaty charges from three sources : assisted by a German consultative (A) Taxes; (B) Railways; (C) Industrial debentures. committee; (A) From her ordinary budget: 8. The due observance of its statutes will 1924-25 budget may be balanced if it is free be further safeguarded by a general from peace treaty charges. board, of which half of the members, 1925-26 budget receiving 500,000,000 gold including a commissioner, will be for- marks from special sources, may pay that sum eign. for reparation. Gold marks 1926-27 2 110, 000, 000 VII. Budget and temporary reparation relief 1927-28 2 500, 000, 000 Balancing the German budget requires: 1928-29 1, 250, 000, 000 (a) Full economic and fiscal sovereignty, subject to This is considered a normal year and a standard paythe supervision provided for in this report; ment; thereafter additional payments will be made, (6) A stable currency; depending on prosperity. (c) Temporary relief from charges on the budget (B) From railways: for treaty obligations; 1. Railway bonds— (d) Such relief not to suspend essential deliveries in (a) Eleven milliards of first mortgage railway bonds kind. against a capital cost of twenty-six milliards will be VIII. The basic principles of Germany's annual burden created for reparations; (6) These bonds bear 5 per cent interest and 1 per (a) Treaty obligations and continuity of balanced cent sinking fund per annum; budgets. (c) In view of reorganization, interest is accepted as 1. Balancing the budget does not entail merely provision for internal admin- follows: Gold marks 1924-25 330, 000, 000 istrative expenditure. 1925-26 465, 000, 000 2. Germany must also provide within the 1926-27 550,000,000 utmost limit of her capacity for her 1927-28 and thereafter 660, 000, 000 external treaty obligations. Behind the bonds there will be created 2 milliards of 3. The budget can be balanced without preference shares to be reserved for sale to the public, necessarily dealing with the total and 13 milliards of common stock; three-fourths of the capital debt of Germany. proceeds of the preference shares will be applied, as 4. It can not be continuously balanced required, to the payment of debt and for capital unless the annual charge is fixed for a expenditure of the railways. The remaining 500 considerable period, on a basis clearly millions of preference shares and all the common shares prescribed in advance. go to the German Government. (&) Commensurate taxation: 2. Transport tax— 1. Government internal debt has been prac- After 1925-26, 290,000,000 gold marks per annum tically extinguished by the deprecia- for reparation and balance to German Government. tion of the currency. (C) Industrial debentures. 2. New debt charge ought to be met com- 1. Five milliards of industrial debentures are mensurate with the burden of the provided for reparation. French, English, Italian, and Belgian 2. The resulting charge on industry is less taxpayer. than that existing before the war and 3. The treaty recognizes this principle. now wiped out by depreciation. 4. It is morally sound. 3. These bonds bear 5 per cent interest and 1 5. It is economically just in its influence on per cent sinking fund, i. e., 300,000,000 costs of production. gold marks per annum. 6. This principle has been applied to the 4. Pending economic restoration, interest and sinking fund are accepted as follows: full limit of practicability, First year: Nothing. (c) Allies' share in Germany's prosperity. Second year: 125,000,000 gold marks. 1. Germany's creditors must share in the Third year: 250,000,000 gold marks. improvement in Germany's prosperity. Thereafter: 300,000,000 gold marks. 2. This will be secured by an index of prosperity. ' Subject, to addition or reduction in certain contingenciei. 97417—24 3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

354 FEDERAL RESERVE BULLETIN MAT, 1924 X. Summary of provision for treaty payments (b) These payments cover Germany's annual obli- (a) 1. Budget moratorium period. gation. First year: From foreign loans and part interest on XIII. How the payments are received by the creditors railway bonds: (a) Germany's creditors will use these moneys in Gold mark Germany or convert them into foreign currencies. Total 1, 000, 000, 000 Second year: From part interest on railway bonds (b) Experience will show the rate and extent to and on industrial debentures, budget contribution, which the conversion can safely take place. through sale of 500,000,000 gold mark railway shares: (c) Danger to stability through excessive remittances is obviated by a transfer committee. Gold mark Total 1, 220, 000, 000 (d) Sums not remitted accumulate, but with a 2. Transition period. limitation of amount. Third year: From interest on railway bonds and on XIV. Guaranties, in addition to railway and industrial bonds industrial debentures, from transport tax, and from budget: (a) The following revenues are pledged as collateral security for budget contributions and other payments: Gold mark Total- 1, 200, 000, 000 Alcohol, tobacco, beer, sugar, customs. subject to contingent addition or reductions of (6) The yield of these revenues is estimated to be 250,000,000 gold marks. substantially in excess of required payments. Fourth year: From interest on railway bonds and on (c) The excess is returned to the German Governindustrial debentures, from transport tax, and from ment. budget. XT. External loan—its conditions and prrpose Gold mark Foreign loan of 800,000,000 gold marks meets a Total 1, 750, 000, 000 double purpose. subject to contingent addition or reduction of 250,- 000,000 gold marks. (a) Requirements of gold reserve of the new bank. 3. Standard year. (6) Internal payments for essential treaty purposes Fifth year: From interest on railway bonds and on in 1924-25. industrial debentures, from transport tax, and from XVI. Organization budget: The organization consists of: Gold mark (o) A trustee for railway and industrial bonds; Total 2, 500, 000, 000 (6) Three commissioners of (1) railways, (2) the Thereafter, 2,500,000,000 plus a supplement computed bank, (3) controlled revenues; on the index of prosperity. Interest on the securi- (c) An agent for reparation payments, who will ties, but not the proceeds of their sale, is included coordinate the activities of the above and will preside in these figures. over the transfer committee. (6) The first year will begin to run from the date when the plan shall have been accepted and put into XVII. The nature of the plan effective execution. XI. Inclusive amounts and deliveries in kind (a) The plan is an indivisible unit. (a) The above sums cover all amounts for which (b) The aim of the plan is: (1) To set up machinery Germany may be liable to the Allied and Associated to provide the largest annual payments from Germany; Powers. (2) To enable maximum transfers to be made to (6) Deliveries in kind are to be continued, but are Germany's creditors; (3) To take the question of paid for out of balances in the bank. "what Germany can pay" out of the field of speculation and put in it the field of practical demonstration; All. How the annual payments are made by Germany (4) To facilitate a final and comprehensive agreement (a) The amounts will be raised in gold marks and upon all the problems of reparations and connected paid into the bank. questions, as soon as circumstances make this possible. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 355 TEXT OF THE REPORT We were invited by the Reparation Commission, by We have the honor to present the following report decision of November 30, 1923, to " Consider the means which states the unanimous conclusions formed as a of balancing the budget and the measures to be taken result of our studies and inquiries. to stabilize the currency" of Germany. Part I of this report states our conception of our We have been in continuous session since January task, our conclusions, and the broad outline of our plaa. 14, 1924, in Paris, except for one fortnight spent in Part II indicates the considerations which guided us to our conclusions, in particular so far as they result Berlin. from certain aspects of the present financial and eco- We have called in to assist us eminent technical nomic condition of Germany, which is here described. advisers on the various questions which have been Part III consists of a series of annexes which give the under consideration, and have been in touch with technical detail of our several proposals, and should be representative German opinion. read as a supplement to the respective portions of Part I. PART L—THE COMMITTEE'S CONCLUSIONS AND SCHEME I. THE ATTITUDE OF THE COMMITTEE II. GERMAN ECONOMIC UNITY We have approached our task as business men The committee has had to consider to what extent anxious to obtain effective results. We have been the balancing of the budget and the stabilization of the concerned with the technical and not the political currency could be reestablished permanently in Geraspects of the problem presented to us. We have many as she actually is at the present moment, with recognized indeed that political considerations neces- limitations as to her fiscal and economic rights over sarily set certain limits within which a solution must part of her area. be found if it is to have any chance of acceptance. To We should say at the outset that we have been unthis extent, and to this extent only, we have borne able to find any practical means of ensuring permanent them in mind. stability in budget and currency under these conditions, The dominating feature of the German Budget is and we think it unlikely that such means exist. The Germany's obligation to the Allies under the Treaty of solution of the double problem submitted to us implies Versailles. We have been concerned with the practical indeed the restoration of Germany's credit both means of recovering this debt, not with the imposition externally and internally, and it has appeared to us of penalties and the guarantees which we propose are impossible to provide for this restoration under the economic and not political. At the same time it is no conditions mentioned. We have, therefore, been ordinary debt with which we deal, for Germany compelled to make the assumption that the fiscal and suffered no appreciable devastation, and her primary economic unity of the Reich will be restored and our moral obligation is toward those who have suffered so whole report is based on this hypothesis. severely through the war. As regards past history, it has not seemed necessary III. MILITARY ASPECTS—CONTINGENT SANCTIONS to establish the causes, nor the responsibility for those AND GUARANTEES causes, which have operated to produce the present If political guarantees and penalties intended to state of German finances and currency, except in so far insure the execution of the plan proposed are conas a recognition of their character is required for the sidered desirable, they fall outside the committee's prescription of remedies. jurisdiction. Finally, convinced as we are, that it is hopeless to Questions of military occupation are also not within build any constructive scheme unless this finds its own our terms of reference. guarantee in the fact that it is to the interest of all the It is, however, our duty to point out clearly that our parties to carry it out in good faith, we put forward our forecasts are based on the assumption that economic plan relying upon this interest. We hope the character activity will be unhampered and unaffected by any of our plan will itself assist in securing this guarantee, foreign organization other than the controls herein which is essential for its execution; but in the main, of provided. Consequently, our plan is based upon the course, it must be for others to take such measures as assumption that existing measures, in so far as they are necessary to maintain or assure it. hamper that activity, will be withdrawn or sufficiently Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

356 FEDERAL RESERVE BULLETIN MAT, 1924 modified so soon as Germany has put into execution for their financial and economic existence and must the plan recommended, and that they will not be re- likewise be enabled to carry on the normal exchange imposed except in the case of flagrant failure to ful- of goods on which the general prosperity depends. fill the conditions accepted by common agreement. In case of such failure it is plainly for the creditor V. THE ECONOMIC POTENTIALITIES OP GEBMANY Governments, acting with the consciousness of joint The task would be hopeless if the present situation trusteeship for the financial interests of themselves of Germany accurately reflected her potential capacity; and of others who will have advanced money upon the the proceeds from Germany's national production lines of the plan, then to determine the nature of could not in that case enable her both to meet the sanctions to be applied and the method of their rapid national needs and to insure the payment of her and effective application. foreign debts. In saying this we wish to add at once that if the But Germany's growing and industrious population; economic system now in operation in occupied terri- her great technical skill; the wealth of her material tory is modified, we are unanimously of the opinion resources; the development of her agriculture on that a settlement of reparation must be reinforced by progressive lines; her eminence in industrial science; adequate and productive securities. We propose for all these factors enable us to be hopeful with regard this purpose a system of control which we believe will to her future production. be effective, and at the same time such as not to im- Further, ever since 1919 the country has been pede the return to financial stability (see XIV below). improving its plant and equipment; the experts specially appointed to examine the railways have IV. THE COMMITTEE'S TASK shown in their report that expense has not been As the terms of reference indicate, two principal spared in improving the German railway system; problems were submitted to us for inquiry—the telephone and telegraph communications have been stabilization of German currency and the balancing assured with the help of the most modern appliances; of the German budget. It is self-evident that these harbors and canals have likewise been developed; lastly, problems are interdependent. The currency of a the industrialists have been enabled further to increase country can not remain stable unless its budget is an entirely modern plant which is now adapted in normally balanced, for if expenditure continually many industries to produce a greater output than exceeds receipts there will in time be no alternative before the war. to the printing of new notes to meet the excess; and Germany is therefore well equipped with resources; the inflation will inevitably involve depreciation. she possesses the means for exploiting them on a On the other hand, the task of balancing a budget, large scale; when the present credit shortage has been unless the currency is relatively stable, is an impossible overcome, she will be able to resume a favored position one, for a falling currency makes calculations both in the activity of a world where normal conditions of of receipts and expenses unreliable, and in particular exchange are gradually being restored. causes a continual loss to the taxing authority through Without undue optimism, it may be anticipated the necessary interval of time between assessment that Germany's production will enable her to satisfy and collection. While, therefore, in the nature of her own requirements and raise the amounts conthings it is necessary that the two problems should templated in this plan for reparation obligations. in the first instance be studied separately—their The restoration of her financial situation and of her interdependence must be consistently borne in mind, currency, as well as the world's return to a sound In examining each of them separately, we have economic position, seem to us essential but adequate assumed for the minute that the other has been conditions for obtaining this result. solved, without ever losing sight of the fact that the VI. STABILITY OP THE CURRENCY—A NEW BANK OF stabilization of the currency and the balancing of the ISSUE budget are means designed to enable Germany to satisfy her own essential requirements and to meet We propose to deal in the first place with the curher Treaty commitments, the fulfillment of which is rency problem. so vital to the reconstruction of Western Europe. The present financial and currency position in It must not be forgotten that the performance of Germany is stated in Part II. It will be seen that by these commitments is of vital importance, not only means of the Rentenmark, stability has been attained for the countries having a claim on Germany, but also for a few months, but on a basis which, in the absence for Germany herself. It is, indeed, clear that a of other measures, can only be temporary. Germany whose economy had again become flourishing The committee proposes the establishment of a new could not long resist a financial and economic crisis in bank of issue in Germany, or, alternatively, a reorganthe nations surrounding her. In order that the ization of the Reichsbank, as an essential agency for restoration of Germany may be definitive, the other creating in Germany a unified and stable currency. nations must also return to the conditions requisite Such a currency, the committee believes, is necessary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 357 for the rehabilitation of Germany's finances, the Dutch, and Swiss. This general board is given broad balancing of her budget, and the restoration of her powers in such matters of bank organization and foreign credit. The principal features of the bank operation as might affect the interests of the creditor plan, which is printed in Annex 1, are as follows: nations. One of the foreign members of the general The bank is to have the exclusive right (with certain board will be known as the "commissioner." He minor qualifications) to issue paper money in Germany will be responsible for seeing that there is no infringefor the period of its charter, 50 years. All of the ment of the provisions relative to the issuance of many kinds of paper money now circulating in Germany notes and the maintenance of the bank's reserves. (except limited note issues of certain State banks) are Decisions of the general board will require a majority to be gradually withdrawn from circulation, giving vote of 10 of the 14 members, unless both the president place to a single uniform paper currency, the bank and the commissioner are included in the majority, in notes of the new bank. These bank notes will be which case a simple majority will be sufficient. Thus, protected by a normal legal reserve of 331 per cent, cooperation by members of both groups is necessary and by other liquid assets. The reserve will be held for action. largely in the form of deposits in foreign banks. It has been suggested in various quarters that to The plan contemplates that as a permanent policy insure the bank's independence of the Government, the notes of the bank shall be redeemable in gold, but an issue department, which could be under the directhe committee is of the opinion that at the time of the tion of the commissioner and which would be reinception of the bank the situation will temporarily sponsible for the reserve and for the issue of notes, not allow of the application of the rule of convertibility. should be established abroad. Such a guarantee is It, therefore, suggests that a currency should be created political rather than technical in character, and to which will be kept stable in relation to gold and as soon propose it is outside the jurisdiction of the committee. as conditions permit be placed on a convertible basis. A study of the annex is essential to a thorough com- Like the present Reichsbank, the new bank will prehension of the committee's recommendations, and serve as a bankers' bank, rediscounting the safest it has contented itself with drawing attention here to category of short-term bills, etc., and so establishing the main features to which it attaches importance. the official rate of discount. It will also handle for Still assuming for the minute that the budget the other banks the giro system for the transfer of problem has been successfully surmounted, we believe bank credits. that our recommendations furnish a practical method, The bank will deal with the public, making short- not only of stabilizing the German exchange, but of time commercial loans and discounts, effecting trans- securing to German economy those credits in stable fers, and receiving deposits. value which are essential to its reinvigoration and~to It will be the depository and the fiscal agent of the the payment of reparation. German Government. It may make short-term loans Labor also will benefit, for its interests above all to the Government, but the amount and character of are dependent upon stability. Some classes of the these loans are strictly limited, and the granting of community may have compensations in the amazing such loans is carefully safeguarded. The German Govoverturn of fortunes which inflation brings—some ernment is to participate in the profits of the bank but benefit and others suffer. But for the working classes the bank is to be entirely free from governmental instability is wholly evil; it has no compensations control or interference. whatever. In this connection, we may refer to the Treaty funds collected in Germany are all to be views expressed by the representative of labor who deposited in the new bank to the credit of a special appeared before us in Berlin: "Speaking not for the account and are only to be withdrawn by the creditor whole of the German people, but merely for the class nations under conditions and safeguards which will which he represented, Herr Grassmann stated that adequately protect the German exchange market and the German working classes could not stand another the interests of the creditor nations and the German period of inflation. They must appeal to the world economy. for a stable currency which would render it possible The new bank will have a capital of 400,000,000 for them to buy something with their wages even four gold marks, part to be subscribed in Germany and weeks after they had received them." It is clear that part abroad. It is to be administered by a German if the statutes of the bank are strictly observed there president and a German managing board, which can can be little danger of future inflation. One of the have the assistance, as in the case of the Reichsbank, advantages to be expected is that foreign currencies of a consultative committee. Alongside of this German immobilized in Germany, which are at present econommanaging board there is to be another board, called the general board, which will consist of seven Germans ically sterile, will be mobilized in the form of subscripand seven foreigners, one each of the following nation- tions or deposits to the bank and return to economic alities: British, French, Italian, Belgian, American, uses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

358 FEDERAL RESERVE BULLETIN MAY, 1924 VII. THE BUDGET AND TEMPORARY REPARATION obvious^purpose of our terms of reference, if we RELIEF approached our task from any other angle. It might, indeed, be thought that if we have thus Attention may now be directed to the other main been involved in a consideration of reparation payaspect of our problem, the balancing of the budget. ments, it is only of such payments as are to be made We propose to deal first with the general budget of the during the reconstruction period of the next few years. Reich, and secondly and separately with the railways, Our task, it may be said, is to advise as to the way to which, at present are contributing nothing to the attain stabilization and a balanced budget, not as to general budget. the sums to be demanded from Germany when that In addition to a stable currency and the economic aim has been achieved. But no such sharp division unity defined above, the budget requires certain of periods is possible, for the following reasons: relief from immediate charges for treaty purposes, 1. The basis on which the budget is balanced at which, while securing the budgetary position, will not the end of the reconstruction period, and the sum it imply the cessation of the payments indispensable includes for reparation, must obviously determine to to the Allies in the form of deliveries in kind. a large extent the sums payable in the following years. VIII. THE BASIC PRINCIPLES OF GERMANY'S AN- Otherwise, as we have said, an equilibrium, though once attained, might be rapidly lost. The effort NUAL BURDEN would have been in vain and the same problem would (A) TREATY OBLIGATIONS AND THEIR BEARING UPON again present itself. THE CONTINUITY OP BALANCED BUDGETS 2. More important still is the fact that the success It will be obvious that the balancing of the budget of our proposals to attain financial stabilization de* is, like the stabilization of the currency, of little pends essentially upon the return of confidence. value unless it can be maintained. It is not enough Without this the return of German capital invested to be satisfied that one or even several budgets will abroad, the attraction of foreign capital for the purbe balanced. It is necessary to consider under what poses mentioned in the scheme and of foreign credits conditions, assuming sound administration, financial for the current conduct of business, and even the as well as currency stability can be continuously proper collection of taxes, will alike be impossible. insured, or rather under what conditions such stability Such confidence can not be attained unless a settleonce gained is likely to be endangered. It is inevitable, ment is now made which both Germany and the therefore, that we should look forward, not indeed in outside world believe will give an assurance that for the same detail but with proper regard to the chief a considerable period neither its finances nor its fordetermining factors, to those later years during which eign relations will be endangered by renewed disputes. Germany will have gradually to liquidate her external Such an assurance, as we shall see, does not mean maktreaty obligations. ing the charge on Germany a uniform one over a period We repudiate, of course, the view that Germany's of years, nor even deciding beforehand what the charge full domestic demands constitute a first charge on her shall be in each of these years. But it does mean resources and that what is available for her treaty settling beforehand the method by which increases obligations is merely the surplus revenue that she shall be determined. may be willing to realize. But at the same time, if the When we'speak of "the adoption of such a method for prior obligation for reparation that is fixed for Ger- "a'considerable period," we are thinking primarily of many to pay, together with an irreducible minimum the period which lenders and investors whose money for her own domestic expenditure, make up in a given is required as a part of our scheme will have in mind. year a sum beyond her taxable capacity, then budget As we shall see, our scheme needs both foreign and instability at once ensues and currency stability is also internal subscrptions to a bank of issue, and in parprobably involved. In that event, an adjustment of ticular an external loan as an essential condition of the treaty obligations of the year is obviously the only enabling and assuring reparation payments. We course possible. The amount that can safely be fixed fully recognize both the necessity and the justice of for reparation purposes tends therefore to be the maintaining thejprinciple embodied in the treaty that difference between the maximum revenue and mini- Germany's payments should increase with what may mum expenditure for Germany's own needs. We shall prove to be the increase in her future capacity. naturally and inevitably be led to discuss later the We also recognize that an estimate now made once amount of reparation payments which can be made for all might well underestimate this, and that it is out of budget resources and the method by which they both just and practicable that the Allies should share can be effected, if the postulates of a stable currency in any increased prosperity. All that we regard as and of a balanced budget are accepted. It would be essential as a condition of stabilization is that any to ignore both the plain dictates of justice, the prac- such increased demands to correspond with increasing tical conditions which must determine the acceptance capacity should be determined by a method which is or rejection of our proposals, and the context and clearly defined in the original settlement, and which is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 359 capable of automatic, or at least professional, im- (c) AN INDEX OF PBOSPEEITY IS NECESSAEY TO ENABLE partial, and practically indisputable application. THE ALLIES TO SHAKE IN THE INCREASED PROSPERITY This requirement we have tried to meet, as will be OF GERMANY seen, by providing that in addition to a fixed annual After a short period of recovery we believe that the payment, there shall be a variable addition dependent financial and economic situation of Germany will have upon a composite index figure designed to reflect returned to a normal state, after which time the index Germany's increasing capacity. will begin to operate. It is outside the competence of the committee to The system of a variable annuity has the sanction establish a limit of years or of amount for the working of usage in the schedule of payments. But we venof the index, nor is it within their competence to fix the ture to suggest for most careful consideration the adnumber of annuities which Germany will have to pay, visability of altering the existing index, constituted by as this would practically mean the fixation of a new the value of exports. This index appears to us to be German capital debt. In any new arrangements imperfect. made for a definite settlement of the various international financial obligations arising out of the war it We are aware that there are cogent reasons both for woul be easy as regards the German debt to apply and against any test which may be suggested, and we our plan to those new conditions. do not propose to examine them in detail. We are of opinion that the undoubted shortcomings of particular (6) COMMENSURATE TAXATION, indices are neutralized to a large extent if a composite We have done our utmost to apply the principle of index is chosen, and we have a reasonable assurance commensurate taxation. that a fair measure of Germany's increasing prosperity It is not open to dispute, as a simple principle of will be obtained. Our suggestions, after considering Justice, and it is contemplated by the treaty, that the many various alternatives for such an index, are given German people should be placed under a burden of in Annex 2. taxation at least as heavy as that borne by the peoples We take upon ourselves to recommend these sugof the Allied countries. No single person in Germany, gestions, as an indication, to the attention of the whether speaking as an individual or representing any Reparation Commission. section of the nation, has failed to accept that principle We are of opinion that at least during the period when it has been squarely put to him. Any limitation within which the loan which we propose is being amorupon it, if there is one, must be a limitation of prac- tized, the annual charge upon Germany should not be ticability and general economic expediency in the heavier than that which would result from the applicainterest of the Allies themselves. Obviously it is tion of this index; nor would the committee accept any morally sound; and it would be clearly repugnant to all responsibility for the balancing of the budget even in sense of natural justice that the taxpayers of countries later years if heavier payments than the above were with large and important regions devastated by the war called for. should bear the burden of restoring them, while the We propose that an average of years (chiefly 1926, taxpayer of Germany, on whose territory the war caused 1927,1928, and 1929) should be taken as the base; that no comparable devastation, escaped with a lighter the percentage increase shown by each of six sets of burden. The principle is, at the same time, economic- representative statistics (railway traffic, population, ally just, for it is obviously unfair and in every way foreign trade, consumption of tobacco, etc., budget undesirable that the allied taxpayer should be penalized expenditure, and consumption of coal) should be ascerby the fact either that taxes resulting from the war tained; and that the average of these six percentages weigh more heavily upon him as a consumer, or that in should be taken as indicating the proportionate incompetition in his business he should be handicapped by crease to be added to the treaty sums demanded in a greater burdens on the costs of production, including given future year. wages, than his German competitor bears. Under this system Germany will retain her incentive We have borne in mind both the importance of the to develop, as she retains the major part of the advirtual extinction of debt in Germany and the general vantage of any increase in prosperity, while the Allies burden of taxation in allied countries. As we indicate obtain a reasonable share in this increase and avoid more fully in Part II, there are many difficulties in the risk of losing through a premature estimate of theory and practice, but in spite of them we have done future capacity. our utmost to secure that the proposals we make should At the same time, the adoption of a method involvinvolve a "commensurate burden" in the fairest inter- ing not discretionary but automatic application gives pretation and application of that principle which is the necessary assurance from the commencement both practicable. We are satisfied that in what we propose to Germany and the world that treaty demands will we are not imposing a heavier burden; we are also satis- not, in the period to which the settlement relates, be fied that we have applied the principle as far as it is again the subject of negotiation and dispute. is practicable in the interests no less of the Allies than of We propose, however, one further correcting factor Germany. of quite a different character which is only a precau- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

360 FEDERAL RESERVE MAY, 1924 tionary measure and may never be actually involved. an existing economic balance, before such obligations The treaty prescribes Germany's obligations in terms have been in operation long enough to have their effect of gold, and for convenience we have expressed our on the economy of the country, gives a very uncertain estimate in the same terms. But both the burden on criterion. The economic balance is, therefore, by com- Germany, and the advantage to the Allies of treaty parison with the budget, incapable of close calculation, payments, consist of goods and services. Gold is only "unmanageable," and too elastic. a measure of value, and over a long period of years But the limits set by the economic balance, if immay be an uncertain and defective one. It is only in possible of exact determination, are real. For the the case of really important changes that any action is stability of a country's currency to be permanently necessary and we therefore propose that a reduction maintained, not only must her budget be balanced, or increase of the figures both as regards the standard but her earnings from abroad must be equal to the and the supplementary payments should be made au- payments she must make abroad, including not only tomatically in correspondence with changes in the gen- payments for the goods she imports, but the sums eral purchasing power of gold, whenever, by the decision paid in reparation. Nor can the balance of the budget of an impartial authority, such changes amount to itself be permanently maintained except on the same more than 10 per cent. conditions. Loan operations may disguise the position—or postpone its practical results—but they can (d) THE DISTINCTION BETWEEN THE TAXPAYERS* "CA- not alter it. If reparation can, and must, be provided PACITY TO PAY" IN GERMANY AND GERMANY'S CA- by means of the inclusion of an item in the budget, PACITY TO PAY THE ALLIES i. e., by the collection of taxes in excess of internal There has been a tendency in the past to confuse two expenditure, ft can only be paid abroad by means of distinct though related questions; i. e., first, the amount an economic surplus in the country's activities. of revenue which Germany can raise available for rep- We have, it will be seen, attempted to give effect to aration account, and, second, the amount which can both these sets of considerations by a method we be transferred to foreign countries. The funds raised believe to be both logical and practical. We estimate and transferred to the Allies on reparation account can the amount which we think Germany can pay in gold not, in the long run, exceed the sums which the balance marks by consideration of her budget possibilities; but of payments makes it possible to transfer, without we propose safeguards against such transfers of these currency and budget instability ensuing. But it is mark payments into foreign exchange as would dequite obvious that the amount of budget surplus stroy stabilization and thereby endanger future reparawhich can be raised by taxation is not limited by the tion. entirely distinct question of the conditions of external By comparison with a system which reduced the transfer. We propose to distinguish sharply between sums considered possible on budget grounds because the two problems, and first deal with the problem of of considerations based upon estimates of the possible the maximum budget surplus and afterwards with the economic balance, this has the following advantages: problem of payment to the Allies. In the past the (a) It enables the maximum sums to be obtained varying conclusions formed as to Germany's "capacity " and paid to the Allies' account. have often depended upon which of these two methods (b) Any limitation upon transfers into foreign curhas been chosen. rencies will depend upon the exact economic position As a first method of approach the budgetary criterion as it develops in fact and not upon a necessarily probhas obvious advantages and attractions. Reparation lematical estimate of it; and the limitation will only must first be provided for as an item in the budget. apply so far as it actually proves necessary. The budget itself is the sum of decisions taken by a (c) Even so far as the sums paid in reparation can single authority. It is capable of expert judgment not be completely transferred, they can, under certain and, within narrower limits of error, of calculation conditions, be used by the Allies for internal investand analysis. ment in Germany. By comparison a country's "economic balance" de- Above all, we recommend our proposal for these fies exact calculation. The balance, even at a given reasons: It adjusts itself automatically to realities; the moment, can only be estimated approximately, for the burden which should rest upon the German taxpayer invisible exports and imports which constitute an im- should, in justice, so obviously be commensurate with portant part of it can not be known exactly. And a that borne by the Allied taxpayer that, in our view, potential economic balance is much more uncertain. It nothing but the most compelling and proved necessity depends not on the decisions of a single authority, but should operate to make it lighter. It would be both on the enterprise of individual merchants and manu- speculative and unjust to attempt to forecast the posfacturers. Reparation demands themselves will in- sibilities of the future exchange position and to detercrease it. The extent to which economic adaptation mine Germany's burden in advance with reference to is possible over a long period of years, under the pres- a problematic estimate of it. Experience, and exsure of external obligations, is a matter of conjecture; perience alone, can show what transfer into foreign Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 361 currencies can in practice be made. Our system 1924-85 budget—In the first year (1924-25) we conprovides in the meantime for a proper charge upon sider that the ordinary budget may balance. Even the German taxpayer, and a corresponding deposit in if there is a deficit we are confident that it should not gold marks to the Allies' account; and then secures the be such as to endanger the stability of the currency, maximum conversion of these mark deposits into and that at the worst the Government can meet it by foreign currencies which the actual capacity of the the orthodox expedients—increases of existing taxaexchange position at any given time renders possible. tion, further emergency taxes, and internal loans. Even if energetic measures are taken to obviate any IX. THE NORMAL RESOURCES FROM WHICH GERMANY deficit in 1924-25, we are satisfied that neither by re- SHOULD MAKE PAYMENTS duction of expenditure nor by an increase in receipts With these principles in mind, we recommend that can Germany be expected to provide out of budget Germany should make payment from the following resources for any peace treaty payments to the Allies, sources: and that any demand for their payment would imperil (a) From her ordinary budget. both the structure of the budget and the stability of (6) From railway bonds and transport tax. the currency. How relief can be otherwise provided (c) From industrial debentures. for the reparation creditors will be considered sepa- We proceed to consider each of these in turn. rately. The fundamental importance of the effect upon the (a) PROVISION PROM THE BUDGET FOR TREATY PAYstability of the Reich budget of the finances of the MENTS; BUDGET EQUILIBRIUM States (Prussia, Bavaria, etc.) and of the communes To recommend what payments Germany can make has greatly exercised us, and we have stated our views from her ordinary budget, and from what dates, is in on the system of subsidies and local expenditure in effect to answer the first of the two specific questions Part II. put to us; i. e., how to "balance the German budget." 1925-26 budget.—On passing to the budget for For in our view, if the economic and fiscal unity of 1925-26, it is obvious that the existing data are the Reich is restored, if a stable currency is established, insufficient for a precise judgment on its detailed and if the budget is given temporary relief from treaty prospects. Certain general conclusions are, however,, payments, Germany should balance her budget from possible. her own resources by a vigorous internal effort sup- On the revenue side, the lapse of a whole year of ported by the confidence which a general and stable settlement may be expected to give, and she should currency stability and readjustment should of itself thereafter be able to maintain it in equilibrium, if the increase receipts. The period of recuperation will not future charge for treaty payments is determined by a have been long enough completely to restore the yield method which assures that it will not exceed her of the income tax, but there will at least be gold mark capacity. profits of 1924-25 on which to frame a reasonable assessment. Consumption taxes should be directly In other words, we do not consider that an external affected by returning prosperity. loan is needed—as in the case of Austria and Hungary— On the expenditure side it may be hoped with some to be devoted specifically to meeting ordinary deficits degree of confidence that expenditure on unemployduring a transition period. External money is indeed ment will exhibit a notable decrease. The expenditurean essential part of our scheme, in part for the estabon the army is capable of reduction. An automatic lishment of a new bank of issue; in part to prevent an decrease will make itself felt in the pension charge. interruption of deliveries in kind during the transition It is not to be expected, on the other hand, that sums period; and essentially to create the confidence upon thus saved on these or other heads will represent a net which the whole success of the scheme depends. But benefit to the budget. In particular, and this remark we do not propose that it should be confined or devoted specially to meeting deficits on ordinary expen- applies also to the budgets of the immediately succeedditure even during a transition period. On the con- ing years, increases in the salary charges of the Reich trary, as will be seen, we think that from the beginning which can probably not be entirely off-set by decreases internal resources should meet internal ordinary ex- in personnel must be anticipated. penditure, and at a very early date should suffice in Some increase of expenditure must therefore beaddition to make substantial contributions toward the expected. On balance, however, we are of opinion that external debt. the growth in receipts should be more than sufficient to counterbalance any increase in expenditure. What- The present budget position is described in some deever views may be held about the eventual outcometail in Part II, which includes our criticisms and recomof the 1924-25 budget, we are clear that the second mendations as to the measures we think practicable for economizing in expenditure and increasing taxation. year should show a substantial improvement upon it. We confine ourselves here to our conclusions as to The result of the first year therefore affects our view the provision that can be made for meeting treaty as to whether the result of the following year will bepayments. actually an appreciable surplus. If it should prove- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

362 FEDERAL EESEEVE BULLETIN MAT, 1924 that the 1924-25 budget can not be balanced by tax- in 1925-26 and 290,000,000 gold marks in subsequent ation alone, the improvement to be expected in the years. following year might not be more than sufficient to We once more reserve the question of providing for secure the balance desired. If, on the other hand, no further reparation payments by other means. loans were necessary in 1924-25, any improvement in The budget of later years.—As we have said already, the following year would be net surplus and entirely Germany's credit can not rest upon the mere establishavailable for meeting peace treaty charges. ment of budget equilibrium. It must be clear that it We are clearly of the view that, if the two years are can be permanently maintained. It is, therefore, necestaken together, receipts should be sufficient to cover sary for us to consider what burden Germany can bear ordinary expenditure, and we do not exclude the possi- in the near future without danger to that equilibrium. bility of a small surplus. On the other hand it can not In this connection, certain assumptions have necessabe stated with certainty that the inclusion of a com- rily been made. It has been considered that if for two pulsory liability for peace treaty charges will not years the budget is relieved from peace treaty charges destroy the whole balance, and it is obviously vital that and a stable currency is reestablished, Germany ought the mistake should not be made of fixing as a first in 1926 to be making rapid strides toward complete payment during recovery a sum which the circum- recovery, and should in three years, by 1928, reach a stances may not justify. normal economic condition. We have taken into ac- The stability of future reparation payments and count the probable yield of her several taxes and her German credit in general might thus be endangered. taxable capacity as a whole and the probable changes in There is another factor that must be taken into expenditure under these improving conditions, and account. For the successful operation of the scheme after making full allowance for error we have reached for dealing with the railways, to which we shall refer definite conclusions as to the sums which can be fixed later, it is necessary that the proceeds of the transport for peace treaty charges without endangering the tax to the extent of 250,000,000 gold marks should be stability of the budget. These results we have conwithdrawn for this year from the revenue side of the sidered in relation to the maximum probable rate at budget and devoted to the payment of treaty charges. which the national income can be expected to grow On the other hand that scheme also provides for the from its present point and the maximum proportion of sale by the railway company of preference shares to that growth which can successfully be absorbed in the nominal value of 2,000,000,000 gold marks, one- taxation. quarter of the proceeds accruing to the profit of the We draw the conclusion that, allowance being made German budget and the balance providing for past and for some inevitable growth in expenditure, the budgets future capital expenditure of the railways. For the for the three subsequent years can safely provide for successful execution of the railway scheme we attach the following maximum sums: great importance to the sale to the public of these Gold marks preference shares and we feel justified in assuming that 1926-27 110, 000, 000 before the end of the year 1925-26 the German Govern- 1927-28 --- 500, 000, 000 ment will be in effective possession of 500,000,000 gold 1928-29 1, 250, 000, 000 marks as a result of this transaction. The budget can On the other hand, regard being had to the fact that therefore be reinforced to that extent and after making it is difficult to estimate the recuperative power of allowance for the withdrawal of 250,000,000 gold marks Germany in 1926-27 and 1927-28, we would propose in respect of the transport tax there will be a balance that these amounts should be regarded as subject to of 250,000,000 gold marks which should be available modification by a sum not exceeding 250,000,000 gold for meeting peace treaty charges. marks on the following plan: If the aggregate controlled By the procedure we have indicated any danger of revenues as defined in Section XIV exceed 1 milliard hampering future stability by a premature call upon in 1926-27 or 1,250,000,000 in 1927-28, an addition the ordinary resources of the German budget will be shall be made to the above contributions equal to obviated and there will be an additional inducement one-third of such excess. Conversely, if those aggreto transfer the preference shares to private ownership. gate revenues fall short of 1 milliard in 1926-27 or We, therefore, recommend that in the year 1925-26 1,250,000,000 in 1927-28, the total contributions shall Germany should be required to meet peace treaty be diminished by an amount equal to one-third of the charges out of her budget to the extent of 250,000,000 deficiency. gold marks. If, contrary to our expectation, the We believe that at the end of the fiscal year 1928-29 budget fails to realize 500,000,000 gold marks from the the financial and economic situation of Germany will sale of preference shares, we consider that any resultant have returned to a normal state, and that in this and deficit could be met by an internal loan. subsequent years the ordinary budget should support The proceeds of the transport tax should thenceforth the inclusion of a sum of 1,250,000,000 gold marks. not figure in the revenue side of the budget except to The total sums, therefore, to be provided from ordinary the extent to which they exceed 250,000,000 gold marks qudget resources would be the standard payment of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL KESERVE BULLETIN 363 of 1,250,000,000 plus the additional sum (already the custom to include in operating and maintenance referred to) computed upon the index of prosperity, charges large expenditures which might properly have as from 1929-30 onward. been charged to capital account. We have considered carefully the question of the The railway experts are convinced, and we share amount to which the index should be applied and, as their conviction, that under proper management, under we are desirous that in the earlier years of her recovery unified control, and with a proper tariff policy, the German progress shall not be unduly handicapped by railways can without difficulty earn a fair return upon shortage of new capital, we think that it will be de- their present capital value. sirable to apply it to the purely budget contribution Nor need it be thought that this improvement in 1,250,000,000 (or one-half of the total standard pay- profits will be made at the expense-of the German ment) for the first five years of the application of the people by increasing their fares and the cost of all index, viz, 1929-30 to 1933-34. After that date, goods transported by rail. It can be substantially 1934-35, the index should apply on the full amount provided by the more economical administration of the of the contribution, namely, 2,500,000,000 gold marks. railways themselves. In saying this we have not in mind inadequate wages, (b) RAILWAYS but rather the elimination from operating and maintenance charges of certain elements of waste and also We have conducted, with the assistance of two expenditure more properly chargeable to capital eminent railway experts, a close examination of the account. situation of the German railways. The subject is an The railway experts arrived, however, with considerimportant one, for the railways have been operated able reluctance at the conclusion that it would be useless since the armistice at a constantly increasing loss, to expect anything approaching the full measure of which has involved heavy burdens upon the German improvement which is possible, so long as the railways budget. remain in the control of the Government. The whole Most, if not all, railway systems have passed through spirit of the Government's ownership in the past has a period of great difficulty since the war from causes been directed to running the railways primarily in the which were largely beyond their control. It is clear, interest of German industry, and only secondarily as a however, from a study of the report drawn up by the revenue-producing concern, and in their opinion a experts, which will be found in Annex 3, that the complete break with old traditions is essential. greatest difficulties were of the Germans' own making. We accept their conclusions and we recommend the The German railway administration can not but plead conversion of the German railways into a joint stock guilty to two serious charges. In the first place, as is company. It is not our intention thus to deprive proved by the reduction which it is now possible to Germany of the administration of her railways in favor make, they have been enormously overstaffed, even of the Allies; on the contrary, our plan demands only when all account is taken of the introduction of an a modest return on the capital cost, and so long as this eight-hour day and of peace-treaty charges justifying return is forthcoming we do not anticipate any intertemporary disorganization. In the second place, the ference in the German management of the undertaking. administration has indulged in extravagant capital We would add that if, as the German Government expenditure for which the official excuse is that con- has itself proposed, the exploitation of the railways is struction was largely undertaken to ward off unem- divided into several systems, this division should not ployment. affect detrimentally their financial unity. It" is only just to observe that the situation has now The details of our proposals will be found in Annex 4, improved out of recognition, though more remains to and we will content ourselves with giving only a broad be done. The German Government have separated outline at this point. the railways from the ordinary administration and The committee recommends that there should be assimilated them in form, so far as is possible, to a paid from the German railways 11 milliard gold marks business concern. Capital construction has been to be represented by first mortgage bonds bearing 5 slackened and fares have at any rate been raised to a per cent interest and 1 per cent sinking fund per annum. point where the railways are not only self-supporting, The capital cost of the German railways computed on a but can provide some profit. gold mark basis is estimated by our experts at 26 mil- These measures are, however, insufficient. The liards. The net earnings of these railways before the capital value of the railways is estimated by the experts war, after liberal and indeed exaggerated charges to on a conservative basis at 26 milliards. They are operating and maintenance, were as high as 1 milunemcumbered with old debts, for their prior charges liard. The interest and sinking fund on these debenwere extinguished by the depreciation of the mark, and tures represents less than 3 per cent of the capital cost, these prior charges absorbed half the gross profits in which is a very modest charge on the capital investthe pre-war period, which amounted to approximately ment compared with that required in many other coun- 1 milliard gold marks, in spite of the fact that it was tries of the WOT1^ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

364 FEDERAL RESERVE BULLETIN" MAT, 1924 Realizing that during the period of reorganization rency, such as the long delayed payment of taxes, by of the railways, full interest and sinking fund charges subsidies granted and advances made by the German should not be required, we think payments on account Government, and by depreciation of emergency money of interest should be as follows: which they have issued. On the other hand it is Gold marks incontestably true that there have also in many 1924-25 330, 000, 000 instances resulted losses, through the depreciation of 1925-26- 465,000,000 currency, from the sale of output at fixed prices, and 1926-27 550,000,000 in other ways. 1927-28 and thereafter 660, 000, 000 It is unnecessary for the committee to make an estimate of the total amount of such profits and losses; This is regarded as a normal year. it is sufficient to say that the committee is satisfied In addition to the 11 milliards of bonds, the new railthat a burden of mortgage debt of the amount of 5 way company is to have a capital of 2 milliards of prefmilliard gold marks on the industries of Germany, erence shares and the remainder of its capital cost, fairly apportioned, bearing a moderate rate of interest,, namely 13 milliards, is to be represented by common and payable on long maturity, does not create a burden, stock; 1J milliards of preference shares are to be set greater than that which would have existed had there aside in the treasury of the company, for sale to private been no depreciation of currency. persons to provide funds for the payment of existing In fact the fairness of such a proposal has been indebtedness and future capital expenditures. The recognized by the German Government itself in a proceeds of the sale of the other 500,000,000 of preferproposal submitted on June 7, 1923, to all the allied ence shares and all of the common shares are to go to and associated governments. the German Government. This proposal was later confirmed by persons in high; The railways are to be managed by a board of 18 authority in the subsequent and present German Govdirectors of whom 9 will be chosen by the German ernments. Government and the private holders of preference The offer referred to above was of 10 milliard gold shares, and the other 9 will be named by the trustee of marks, covering business, industry, banking, trade,, the bonds, 5 of whom may be German. It is therefore traffic, and agriculture. The request of the committee contemplated that the board will have 14 German is for 5 milliards only and it suggests the exemption members. The chairman of the board and the general of agriculture from the obligations of the mortgage. manager of the railways will be German. Realizing the importance of agriculture to a nation It is contemplated that the railway company will be unable to provide its entire food supply, we feel more free to conduct its business in such manner as it may reserved in making a recommendation as to the burdens think proper, provided always, however, that the Gerwhich should fairly be put on it, though we can not man Government will have such control over its tariffs close our eyes to the fact that a very large amount of and service as may be necessary to prevent discriminaagricultural indebtedness has been discharged at merely tion and to protect the public. Such government connominal figures and the owners of equity in land have trol, however, is never to be exercised so as to impair realized substantial profits at the expense of their the ability of the railway company to earn a fair and former creditors. reasonable return on its capital cost. We desire to make it clear that the committee in The railway commissioner represents the interests of asking for mortgage bonds on industries does not the bondholders. His principal duty will be, in the recommend in any sense an unfair or discriminating absence of default in interest, to receive reports, staburden against them, and so we do recommend that tistical and financial returns, and generally to see that equalization be properly and fairly made by the German the interests of the bondholders are not menaced. Government for the benefit of its own budget. If, in (c) INDUSTRIAL DEBENTURES the opinion of the German Government, a burden on other property should be imposed in order to equalize The committee has been impressed with the fairness the burden of reparation payments on property other and desirability of requiring as a contribution to repara- than industrial property, we recommend that it be tion payments from German industry, a sum of not less done in favor of the German budget either by a further than 5 milliards of gold marks, to be represented by valorization tax or by a specific lien or otherwise. first-mortgage bonds bearing 5 per cent interest and If this course be followed and a fair and accurate sys- 1 per cent sinking fund per annum. This amount of tem of direct taxation be adopted the committee bebonds is less than the total debt of industrial under- lieves that all classes in Germany will be called upon to takings in Germany before the war. Such indebted- make their fair and reasonable contribution to peace ness has for the most part been discharged by nominal treaty charges either through direct or indirect taxapayments in depreciated currency, or practically ex- tion. tinguished. In addition the industrial concerns have Realizing the depletion of the liquid capital supply profited in many ways through the depreciated cur- in Germany, and that a period should be provided for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 365 its recuperation, we recommend that the interest on the creditor governments. As soon as the plan is put the 5 milliards of debentures above referred to be into execution, the Reparation Commission will-be in waived entirely during the first year; that the interest possession of bonds for 16 milliard marks, which may during the second year be 2| per cent; during the third be sold to the extent to which the financial markets are year 5 per cent; and thereafter 5 per cent plus 1 per capable of absorbing them. Subsequently, bonds cent sinking fund. In the event of default in the pay- representing the transport tax and the contribution ment of interest, sinking fund, or principal on any of from the budget may be issued, and will enable the the said debentures, provision has been made for recov- governments to realize the capital of their claims. ery from the German Government through the commissioner of controlled revenues. XI. INCLUSIVE AMOUNTS.—DELIVERIES IN KIND The plan will be found in Annex 5. THE INCLUSIVE NATURE OF THE PAYMENT X. SUMMARY OF PEOVISION FOB TREATY PAYMENTS Before passing from this part of our report we desire to make it quite clear that the sums denoted above We are now in a position to summarize the full proin our examination of the successive years comprise vision we contemplate for treaty payments: all amounts for which Germany may be liable to the Budget moratorium period— allied and associated powers for the costs arising out First year. From foreign loan and of the war, including reparation, restitution, all costs part interest (200,000,000) on Gold marks of all armies of occupation, clearing-house operations railway bonds 1, 000, 000, 000 to the extent of those balances which the Reparation Second year. From interest on rail- Commission decide must legitimately remain a definiway bonds (including 130,000,tive charge on the German Government, commissions 000 balance from first year) and of control and supervision, etc. Wherever in any part interest on industrial debentures of this report or its annexes we refer to treaty payand budget contribution, includments, reparation, amounts payable to the Allies, etc., ing sale of railway shares 1, 220, 000, 000 we use these terms to include all charges payable by Transition period— Germany to the allied and associated powers for these Third year. From interest on rail- war costs. They include also special payments such way bonds and industrial de- as those due under articles 58, 124, and 125 of the bentures, from transport tax treaty of Versailles. and from budget (subject to The funds to be deposited in the special account in contingent addition or reduction the bank are to be available for the foregoing purposes, not exceeding 250,000,000 gold notwithstanding anything in this report which may be marks) 1, 200, 000, 000 interpreted to the contrary, though in saying this we Fourth year. From interest on railare not to be read as prejudicing questions of distribuway bonds and industrial detion or questions of priority between the various bentures, from transport tax categories of charges. and from budget (subject to We venture to emphasize the fact that from the contingent addition or reducpoint of view from which we are called upon to regard tion not exceeding 250,000,000 the question these obligations of Germany are one, gold marks) 1, 750, 000, 000 and that any addition to one category of charges can Standard year— only be made at the expense of another. Fifth year. From interest on rail- The committee have noted the important fact that way bonds and industrial deben- Germany is not in a position to ascertain her liabilities tures, from transport tax and out of the peace treaty as demands are made upon her from budget 2, 500, 000, 000 from time to time during the year, which can not be The first year will begin to run from the date when calculated beforehand. It appears to us a matter of the plan shall have been accepted and made effective. impossibility for any budget to be scientifically com- We must point out that the total figures indicated for piled and satisfactorily balanced under such an arrangeeach year must include the sums paid by the German ment, and that, therefore, means should be found to budget, the railway company, or the debtors on indus- bring this system to an end. The difficulty will be trial debentures, whoever may be the actual recipients satisfactorily met if Germany's liabilities for any of these sums, the Reparation Commission, the capi- particular year are absolutely limited according to our talists who purchased securities, or even the debtors plan and, as suggested above, made inclusive of all posthemselves if they have repurchased their bonds. sible charges whether in or outside Germany, including These figures clearly do not include the proceeds the costs of the administrative controls which are set from the sale of capital assets which may be effected by up by our plan. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

366 FEDERAL KESEBVE BULLETIN MAT, 1924 DELIVERIES IN KIND This payment is the definitive act of the German Government in meeting its financial obligations under the We have given special attention to the question of plan. It is easier to estimate the burden that Gerdeliveries in kind; in their financial effects, deliveries many's economic and fiscal resources can bear than in kind are not really distinguishable from cash paythe amount of her wealth that can be safely transferred ments and they can not in the long run exceed the abroad, and it is the former and not the latter that • true surplus of German production over consumption has formed the first objective of the committee. available for export without either upsetting the exchange or rendering foreign loans necessary. XIII. How THE PAYMENTS ARE TO BE RECEIVED Having made this clear, we have to remember that: The use and withdrawal of the moneys so deposited 1. Deliveries in kind are dealt with in the treaty. will be controlled by a committee, consisting of the 2. They are now an inevitable part of the economic agent for reparation payments (a coordinating official conditions of several of the Allies and can not be under the Reparation Commission, whose position and wholly removed without considerable dislocation. duties are defined later in this report) and five persons, 3. If the principle is not carried too far, they may skilled in matters relating to foreign exchange and represent a stimulus to German productivity and finance, representing five of the allied and associated: therefore the creation of a greater export surplus. powers. This committee will regulate the execution, 4. They may help in avoiding such surplus being of the program for deliveries in kind and the payments, absorbed by the prior action of private German inunder the reparation recovery act, in such a manner vestment abroad. In this connection, the maintenance as to prevent difficulties arising with the foreign, of the system of deliveries in kind, if not carried too exchange. far, may act in a manner to keep the transfer as large They will also control the transfer of cash to theas possible and to give the Allies priority. Allies by purchase of foreign exchange and generally While, therefore, we recognize the necessity for the so act as to secure the maximum transfers, without continuance of deliveries in kind, we think that unless bringing about instability of currency. Fuller details they can be confined to natural products of Germany, as to their functions will be found in Annex 6. If the such as those specifically dealt with in the treaty (coal, payments by Germany on reparation account, in the coke, dyestuffs, etc.) and in the second place to exports long run, exceed the sums that can be thus transferred which do not entail the previous importation into by deliveries or by purchase of foreign currencies, they Germany of a large percentage of their value, they will of course begin to accumulate in the bank. Up to tend to be uneconomic in character. a certain point, in normal circumstances not exceeding In the first two years of the operation of the plan two milliards, these accumulations will form part of the available finance is so restricted that there will be the short money operations of the bank. an automatic limitation of deliveries, but in the later Beyond this point, the committee will find employperiod the program must be carefully and periodically ment for such funds in bonds or loans in Germany considered in advance by the Reparation Commission under the conditions laid down in the annex, but, for in conjunction with the committee referred to in economic and political reasons, an unlimited accumu- Section XIII if exchange difficulties are to be avoided. lation in this form is not contemplated. We recom- We refer below to the necessity of expending almost mend that a limit of five milliards be placed upon all exclusively within Germany the sums available for funds accumulating in the hands of the reparation treaty payments in 1924-25 and 1925-26. In these creditors in Germany. If this limit is reached, the circumstances, the Allied Governments will doubtless contributions from the budget are to be reduced consider whether it is not advisable to continue the below the standards set out in our plan, so that they system whereby the costs of armies of occupation were are not in excess of the withdrawals from the account a first charge upon the proceeds of deliveries in kind and the accumulation is not further increased. In this made to the Governments which maintain the armies. contingency, the payments by Germany out of the Where we have referred to payments for deliveries budget and the transport tax would be reduced until in kind in this report we have intended to include such time as the transfers to the Allies can be increased therein payments in Germany arising through the and the accumulation be reduced below the limit operation of the reparation recovery acts. named. We do not deny that this part of our proposal will XII. How THE PAYMENTS ARE TO BE MADE present difficulties of a novel character which can All payments for the account of reparations (whether only be solved by experience. But what are the from interest and sinking fund on railways or industrial alternatives? debentures, the transport tax, or from the budget In order that no difficulties with exchange or stability contribution) will be paid in gold marks or their can possibly arise, the sum payable for reparation equivalent in German currency into the bank of issue may be definitely fixed at such a figure as is certain to the credit Of the "Agent for reparation payments." beyond all doubt to be within Germany's capacity to. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDEEAL KESEKVE BULLETIN 367 export in excess of her imports. In this case the The use of this safeguard general budgetary control attainment of such certainty would involve so low a should be reserved for the case of Germany's willful figure as to be quite unacceptible to her creditors and failure to meet the obligations now laid upon her. unwarrantably favorable to Germany. If, as we believe, the payments which we have sug- On the other hand, the liability may be fixed without gested can be made without compromising budget regard to that excess of exports at all, and the discharge stability, it in in our opinion not impossible to establish of the liability left to uncontrolled events without any a system under which a combination of self-interest and possible regard to exchange difficulties. That way latent pressure will suffice to assure sound financial lies future instability and disaster. administration. We believe that the object can be We are convinced that some kind of coordinated attained if, without in any way impairing the first policy, with continuous expert administration in regard charge which now exists in favor of reparation on all to the exchange, lies at the root of the reparation Germany's assets, certain specific revenues are assigned problem and is essential to any practicable scheme in to, and under the control of, Germany's creditors. obtaining the maximum sums from Germany for the These revenues will furnish a collateral, but not a benefit of the Allies. primary, security and we suggest that they should be the taxes on customs, alcohol, tobacco, beer, and sugar. XIV. GUARANTEES IN ADDITION TO RAILWAY AND We propose for this purpose that they should pass INDUSTRIAL BONDS directly into the hands of an impartial and effective control; that the treaty payments should first be It is plainly not enough to demonstrate the feasi- deducted by the controlling authority for the account bility of raising the sums under consideration. It is of the Allies; and that Germany should only have the desirable, in the common interest, that means should use for her own purposes of such balance as may remain. be devised for securing that the possible surplus is We believe that this system contains the greatest actually established. The greater the extent to which degree of effectiveness without involving the Allies in payment, may be rendered automatic and a matter of the onus of responsibility for any breakdown in the habit and independent of fluctuating political atti- execution of the plan. tude toward reparation, the less will be the friction We recommend that the control should be instituted and the greater will be the real stability of the Ger- forthwith in spite of the fact that the budget supports man budget. In the last resort the best security is no peace treaty charge in the year 1924-25. the interest of the German Government and people We make this recommendation for two reasons: to accept in good faith a burden which the world is Germany, by instituting this control, puts this part of satisfied to be within their capacity, and to liquidate the plan into execution in a definite and public manner, as speedily as possible a burden which is and should and in the second place early action will insure that conbe onerous. trol is in effective operation at the moment when part Creditors, however, are not usually satisfied with a of the revenues is retained by Germany's creditors. moral security, and experience and the present condi- We would add that while leaving untouched the tion of Germany's finances are such as to reinforce existing alcohol monopoly, we do not, in view of reports their natural desire for tangible and productive guar- received from technical experts, propose the transantees. formation of consumption duties into new monopolies, These are no less vital in the interest of Germany though we recommend certain important new regulaherself, who will be relieved of a large part of her tions with regard to the sale of tobacco. political troubles if the main source of political controversy is removed by a system which no longer makes CONTROLLED REVENUES—THEIR YIELD the payment of reparation depend upon the constant The estimate made by the German officials of these maintenance or renewal of Governmental decisions. In revenues for the year 1928-29, exclusive of customs, particular, it is vital in the interests of our scheme, was 1,700,000,000 gold marks. which depends for its success on the assured belief of The technical advisors specially consulted by the the whole world in the regular observance of a settle- committee have estimated the yield at 2,146,000,000 ment once made. gold marks. On the other hand, we do not hesitate to reject as There is every prospect, therefore, that the assigned undesirable, for the purpose which all have in view, and controlled revenues will give a large margin over save in certain extreme events, any system which the treaty charge payments, even in the standard year, would involve directly or indirectly the virtual control of 1,250,000,000 gold marks. The revenues are a of all Germany's revenue and expenditure. It would security for a payment otherwise fixed. This principle involve the controlling authority in responsibility for renders possible a system of control which, while equally all financial troubles, and it might be a pretext for effective, is much more simple in operation, and is them. strengthened by the association of Germany's self- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

368 FEDERAL BESERVE BULLETIN MAY, 1924 interest. Once the treaty charges are met she is enti- We first considered whether Germany would have tled to the whole balance and therefore she-has the sufficient credit at the outset to meet the full amount fullest inducement to increase the yield. But she can of her charges by loans or capital assets. In our view, touch no part of the revenues in a given period until it is impossible to say that she could obtain funds, the treaty charges are fully met; so that every increase until her position is well established, adequate to disoperates in the first instance to increase the Allies' charge them. But it does not follow that the most security. pressing of the demands can not be met, for a con- We have suggested above that in the years 1926-27 siderable sum can certainly be raised upon the good and 1927-28 the amount of reparation to be paid security that the plan provides, with a clear prospect should be dependent to some extent on the yield of of improved international political position and of these particular revenues. In order that there may stability. The question is, therefore, whether the be no misunderstanding, we desire to state clearly claims upon Germany can be so reduced by agreement that in our opinion this arrangement should be strictly among the Allied creditors as to come within this confined to the two years in question and be regarded potential credit. If they can, then obviously the greater the reduction, the more moderate the sum to as exceptional. be raised and the greater the probability of Germany We believe it to be of the greatest importance that successfully raising a loan. If not, then the loan will the revenues should normally be regarded strictly as not be forthcoming, stability can not be insured, and security, and should not be relied upon in the ordinary neither this plan nor any other can come into being. course as the determinant of the actual sum to be paid The successful launching of the scheme depends thereas reparation. In particular, if the yield of, the revefore upon three main factors: nues exceeds the amount to be secured, the excess should accrue to the German Government. Our (a) Limitation of payments for all purposes, to reasons for holding these opinions are more fully 1,000,000,000 gold marks of which at least 800,000,000 stated in Part II. must be spent in Germany for the first year, and thereafter to such sums as are available under the XV. EXTERNAL LOAN—ITS CONDITIONS AND PURPOSE plan during the succeeding years; An integral part of our scheme is the issue by Ger- (b) Cooperation between the Allies and Germany in many of a foreign loan of 800,000,000 gold marks; this securing political conditions which will incline the loan is primarily essential for the successful establish- investors of the world favorably toward the German ment of the new bank and to ensure the stabilization loan upon good security; and of the currency. The deposit of this amount in the (c) A loan of 800,000,000 gold marks which will new bank will be an important and necessary contri- serve the double purpose of assuring currency stability bution to its gold reserves and enlarge the basis of its and financing essential deliveries in kind during the currency issues. It will thus be enabled in the second preliminary period of economic rehabilitation. place, without impairing its usefulness for the above, It will be seen that under the plan, among the to play an important part in solving the problem different revenues available, ample and sufficient created by Germany's immediate and more urgent security could be found to form the basis of such obligations to the Allies which do not necessitate the a loan, both as to interest and sinking fund. transfer of money abroad. Obviously, the first loan should be fully secured, We have already stated our conclusion that Germany but it is equally true, that it is neither in the interest should not be called upon in the years 1924—25 and of a first loan nor of the Reparation Commission to 1925-26 to provide for any treaty charges out of ordi- create a situation which would prejudice the flotation nary budget resources, and we have deferred to this of subsequent German loans or the realization of the point indication of means by which a complete sus- capital assets provided for in the plan. pension of payments may be avoided. The amount required for the service of this first and The current liabilities of Germany under the treaty any subsequent loans must be deducted from the sums other than liabilities for cash payments in foreign which in subsequent years can, in accordance with our currencies, comprising the most essential deliveries in plan, be placed at the disposal of Germany's creditors. kind, and costs under a number of other heads, are In effect the loan is only an anticipation of the sums known to be considerable. Although their precise subsequently available which, it is necessary to emamount is not easily determinable, they aggregate to a phasize, represent in our opinion the maximum burden large amount and if no arrangement is made for meet- and therefore one not capable of increase. ing or reducing them they form a formidable obstacle It is not for us to offer suggestions as to the priority in the way of a complete solution. of claims or how the sums should be distributed. In the year 1924-25, the extra-budgetary resources On this aspect of the matter we confine ourselves to can be relied upon to provide 200,000,000 gold marks, stating that in the interest of currency stability and being interest on railway bonds. The question arises to aid the successful inauguration of the new bank, whether a further sum can be provided. the proceeds of the loan should be used exclusively for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 369 financing internal payments, such as deliveries in kind The plan also provides for an agent for reparation (whether direct or by the operation of the repara- payments. tion recovery act), and that part of the costs of the In order that the machinery thus set up by our plan armies of occupation which represents expenditure in may function properly, both in relation to the Repara- Germany by or on behalf of these armies. But we do tion Commission and in its German environments, assert that, if as we believe, Germany's credit will be there must be an agency between the Reparation Comgood enough to float such a loan, it is natural and mission and the various commissioners. We suggest necessary that her credit should be employed to ease that this coordinating agency devolve upon the agent the burden on her creditors during the period of her for reparation payments. own recovery. The commissioners would retain all responsibility for In the year 1925-26, the problem is somewhat differ- the carrying out of the task intrusted to each, only ent in character. The reasons which make a foreign subject to such coordinating policies as may prove loan essential in the first year should have disappeared. necessary in order to avoid any duplication of effort, If confidence is in process of reestablishment a large overlapping of functions, unnecessary friction, and reflux of capital to Germany is to be expected. » People,generally all interference with the harmonious working whose object in transferring money abroad or in hoard- of our plan. ing foreign notes within Germany has been simply to In case of a difference of opinion between one cominsure against further loss, will, to a great extent, re- missioner and the "Agent General for Reparation convert this capital into German currency. Other Payments" in his capacity as coordinator, the commisthings being equal, the German currency and exchange sioner can appeal to the Reparation Commission. situation will continue to improve, a phenomenon The existence of this right of appeal will have a salutary which has been clearly exhibited in the last 12 months effect upon the relations of the coordinating agency and in Austria. the different commissioners. The exchange position of Germany will, therefore, be To facilitate the interchange of information which relatively strong and her budget position relatively will develop a situation in its entirety for appropriate weak. In the few succeeding years the position will be action a general coordinating board is also suggested in exactly reversed; the exchange will become normal, which the various commissioners of representatives but weaker than during the abnormal period of recon- named by them will participate together with the struction, while budget resources should be enormously "Agent for Reparation Payments" and the trustee. strengthened. The coordinating board is to have advisory powers In view of these facts, we see no danger, and perhaps only and is for the purpose of giving information to positive advantage, in requiring that during 1925-26 the agent general to assist him in preparing coordinatdeliveries in kind and that part of the costs of the armies ing orders. of occupation spent in Germany by or on behalf of the These suggestions are naturally far from exhausting armies should be financed up to 1,220,000,000 gold this important subject, one of the most important of marks by sums raised in Germany itself. our plan. They are laid down simply as an indication, The above sum is made up of (1) railway interest, as the drafting of the rules for such a coordination will partly carried over from the first year, amounting to devolve upon the Reparation Commission so far as 595,000,000 gold marks; (2) the transport tax to the they have power, and upon the various Governments; amount of 250,000,000 gold marks; (3) interest on Rules should be laid down for the rendering of industrial debentures amounting to 125,000,000 gold periodical reports and for the publication of such as the marks; and (4) 250,000,000 gold marks from the public interest may require. budget provided by the sale of railway preference We desire, however, to record in this connection that shares belonging to the German Government. If for the expense of the new machinery provided for by any reason the whole of the above sums are not pro- the plan can and should be contained within limited vided, the balance should be raised by a German amounts and in any case be included in the annuities internal loan. already contemplated. Trustee.—The plan also provides for the appoint- XVI. ORGANIZATION ment of a trustee with the following duties: The committee's plan provides for a commissioner"of He will receive and administer the railway and the bank of issue, a commissioner of railways, a com- industrial bonds and will be accountable to the Reparmissioner of controlled revenues, the last-named to have ation Commission for these and all other securities. under his control a certain number of subcommissioners He will insure the service (interest and amortization) severally intrusted with the special revenues under of the railway and industrial bonds by means of funds consideration and, if the need arise, for a commissioner remitted to him for this purpose by the agent for of industrial debenture. reparation payments. 07417—24 4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

370 FEDERAL RESERVE BULLETIN MAT, 1924 He will fix the conditions of the amortization of On the other hand from the standpoint of the taxthe bonds and if necessary the redemption at par of all payer in Germany the plan means a direct burden or a part of the bonds not yet amortized, by means of only one-half this sum, viz, 1J milliards per of any supplementary payments which may be made year, and the transport tax, plus such additional by the German Government, the railway company or amount as may represent only a relatively small share industry. in increased prosperity. The German taxpayer can With the authorization of the Reparation Commis- look without anxiety upon the remainder of the paysion and for its benefit, the trustee may sell the bonds ment of 2J milliards, for it represents a relatively which he holds, and may use the mortage bonds and small burden on German industry, which has been the deeds which he holds to secure new securities which beneficiary of substantial special profits and only a he may himself issue. modest return on a large capital invested in railroads flhich are yielding him no relief in taxation in his bud- Both the agent and the trustee should be appointed "get at present, such capital having been accumulated by the Reparation Commission. prior to the war. We are satisfied that the contribu- In framing the organization of control, the committee tions from railway and industrial debentures will not be has adopted as fundamental the principle that, if the reflected to any substantial degree in a burden to the plan is to yield the best financial results, it is desirable individual German taxpayer; as regards the railways it that control should be of such a. nature as not to will only require the same kind of return as exists in involve the assumption of responsibility by the comsimilar enterprises in many countries. missioner for German administration, though the committee recognize that this principle can not be Our purpose has been to set up a machinery which adhered to in case default under the plan arises. will secure the maximum payment which Germany can make in each year in her own currency. We do XVII. THE NATUBB OP THE PLAN not speculate on the amount which can annually be In concluding this part of our report, there are several paid in foreign currency or on Germany's capacity to points which we desire to emphasize. make a total payment. In the first place we regard our report as an indivis- The committee is confident that it lies within the ible! whole. It is not possible, in our opinion, to power of the German people to respond to the burdens achieve any success by selecting certain of our recom- imposed by the plan, without impairing a standard mendations for adoption and rejecting the others, and of living comparable to that of the Allied countries we would desire to accept no responsibility for the and their neighbors in Europe, who are likewise subresults of such a procedure nor for undue delay in ject to heavy burdens, largely resulting from the catasgiving execution to our plan. trophe of the war. In the second place, as we have remarked earlier, We have not concealed from ourselves the fact that our plan is strictly dependent upon the restoration of the reconstruction of Germany is not an end in itself, Germany's economic sovereignty, and it is important It is only part of the larger problem of the reconstructo observe that the operation of the plan will be pro- tion of Europe. portionately postponed if there is a delay in effecting We would point out finally that while our plan does that restoration. The various dates which we mention not, as it could not properly, attempt a solution of the in the report must be interpreted in the light of the whole reparation problem, it foreshadows a settlement above remark. extending in its application for a sufficient time to From the standpoint of the taxpayer in creditor restore confidence, and at the same time is so framed countries the plan means in due course an annual relief as to facilitate a final and comprehensive agreement to the extent of 2\ milliards, plus such additional as to all the problems of reparation and connected amount as the index of prosperity may provide. questions as soon as circumstances make thia possible. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

371 MAI, 1924 FEDEBAL BESERVE BULLETIN PART II I. THE CURBBNCY POSITION hoarded (dollars, pounds, florins, gulden, Swiss francs, The conditions at the outset of our inquiry.—WhenFrench francs, Scandinavian crowns, etc.)—the old we started our investigations the value of German paper marks, dollar treasury bonds (Dollarschatsancurrency had been stable for some two months. It weisungen), bonds of the gold loan (Wertbestandige would not have been pretended, however, by any Anleihe), 6 per cent Treasury bonds (6 per cent Schatzauthority that German currency had been stabilized. anweisugen), rentenmarks, and, lastly, a whole set of It would perhaps be juster to apply the term "unstable odd emergency currencies (Notgeld) expressed either equilibrium" than the term "stability" to this transi- in gold or in paper marks. tion period, which has fortunately continued to the Backing.—The security of the rentenmarks is a present day. The elements of permanent stability, mortgage on real and to some extent on personal propeven if the repercussions of the budget situation are erty. The so-called gold loan is repayable in legal momentarily left out of account, were then and are tender on a gold basis but has no gold backing. The still wanting. various forms of emergency money were for the most One of the first steps which the committee took was part based on no security at all. The gold reserve of to request Doctor Schacht, the governor of the Reichs- the Reichsbank amounted to some 467 milliards, but bank and the currency commissioner of the Reich, 200,000,000 thereof was specifically earmarked as to give evidence before them with a view to their security for the dollar loan issued by the Reich in being fully informed of the existing currency situation. 1923. Quantity of currency.—The total circulation, although Taken as a whole therefore the liquid backing of the so enormous in nominal values, was, when reduced to currency is wholly inadequate for a permanent system. its gold equivalent at that date, something over 3 Interchangedbility.—The rentenmark is not actually milliard gold marks only, whereas the pre-war circula- legal currency within the country nor available for any tion in Germany had amounted to 6 milliard gold purposes of foreign trade. The old currencies with marks. Prima facie, therefore, the amount of currency their vast denominations remain the legal currency,, seemed deficient rather than excessive, and not likely but prices are everywhere expressed in rentenmarks. in itself to be a cause of further depreciation. In It is therefore obviously necessary that payments proportion as the German mark dwindled in value should be made indifferently either in Reichmarks or and became less and less utilizable for the threefold in rentenmarks at a fixed relation between them. The function of standard of value, instrument of payment Reichsbank accordingly accepts rentenmarks at the and medium of saving, foreign currencies naturally rate of 1 rentenmark for 1,000,000,000,000 paper marks, became by force of circumstances, more and more and rentenmarks are also accepted in payment of taxes sought after in Germany. The Germans resorted in- at the same rate. creasingly to the currencies of countries with a com- Annex 7 to the present report shows in some detail paratively stable exchange, not only to invest their the curious monetary situation in Germany at the end savings, but also to define and even settle their transacof January last. tions, and the presence of such currencies in Germany The present tranquillity.—As the committee have increased ever more as the mark depreciated further. remarked, the elements of currency stability were not In spite of this extended use of foreign currencies to be found in such a situation. The temporary equiin Germany, the shortage of purchasing power made librium of the German exchange has been ascribed to itself increasingly felt, leading first the German Gov- various causes by different authorities; some lay stress ernment, then the States and municipalities, and upon psychological factors, and in particular a refinally the great industrial and agricultural organiza- newal of confidence, the exact basis of which it would tions and even private firms to supplement the cur- be difficult to determine, but which took account of the rency shortage by new instruments of payment. These efforts being made by the German Government to token currencies, expressed in gold or paper marks, balance its budget, and of the appointment of the sprang up in Germany in the summer of 1922, at a Committees of Experts by the Reparation Commission; moment when the need became urgent to find new others refer to a decrease in internal consumption means to meet the requirements of current transac- which with the lack of credit, accompanied by what tions, the old mark on the verge of its collapse no was probably an excessive restriction in importation, longer answering such requirements. reduced the demands both for the circulating medium At the end of 1923, we find in Germany an abso- and for foreign currencies. lutely hetrogeneous monetary circulation, which in- Credit facilities.—-The exportation of the rentenmarfc cluded—-besides the foreign money in circulation or is prohibited. Its existence was of no assistance in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

372 FEDERAL RESERVE BULLETIN MAT, 1924 maintenance of foreign trade. The reichsmark was too mended, and it omitted others which seemed to the discredited to be any longer available for the purpose of committee to be essential to any permanent settlement meeting foreign obligations. Credit was only obtain- of the problem as a whole. Moreover, an attempt to able abroad at dangerously high rates of interest. settle particular difficulties in isolation and without At the same time, the currency depreciation and its reference to other essential requirements appeared to secondary effect had produced a serious dearth of liquid the committee to involve certain risks. capital in Germany itself. The stringency may be The committee, therefore, without expressing any indicated by the fact that (according to figures fur- opinion on the plan as given to them in outline, assured nished to us) the savings bank deposits had fallen from themselves in consultation with the authorities re- 10,700,000,000 at the end of 1913 to 760 gold marks at sponsible for Germany's monetary policy that the the end of 1922; the credit accounts in the eight large bank would be so organized as to facilitate its absorp- Berlin banks amounted to 7,400,000,000 at the end of tion into a new bank of issue which might be set up in 1913 and to about 1,000,000,000 at the end of 1922. accordance with the recommendations of the com- The figures for 1923 are not yet available but can mittee. scarcely exhibit an improvement. Leaving for the moment out of account capital which in one form or II. CONSIDERATIONS REGARDING THE MEASUREMENT another had been exported, liquid capital in monetary OP GERMANY'S BURDEN forms liable to depreciation had been steadily converted (O) COMMENSURATE TAXATION into fixed assets with a permanent intrinsic value. The In Part I we refer to the fact that we have taken private individual had purchased consumable com- full account of this principle. But it is necessary for modities, while industrial enterprises had largely ex- us to make some further observations thereon. tended their plant and equipment. The motor was in The principle of the "commensurate burden," as good, perhaps in unusually good, condition, but the it has been called, unimpeachable in abstract statemotive power and lubrication were apparently lacking. ment, is exceedingly difficult to translate into quan- Immobile credit resources.—On the other hand, there titative measurement as a basis for practical action. was general agreement that not inconsiderable re- While obviously sound and just, it does not easily sources were available in the shape of German balances admit of precise and arithmetical calculation. What abroad and foreign currencies in the pockets of the at first sight seems to be a simple conception, on exampopulation in Germany itself. This latter item alone ination is found to be complex and in some respects has been estimated at 1.2 milliard gold marks by the not reducible to exact definition. committee appointed to consider the means of estimat- Now the ordinary expenditure which has to be proing the amount of German exported capital. It was vided for in the German budget is reduced, in part by reasonable to suppose that a large proportion of these the restriction upon her military preparations but resources would be available if complete confidence in above all by the practical extinction of her internal the stability of German currency could be restored and debt. maintained. If Germany had sustained the burden of her own As stated in Part I, the committee consider that this debt, as the Allies have done, and not obliterated it end can best be secured by the institution under proper by inflation, she would have had to raise 4J to 5 safeguards of a new bank which should absorb the milliards per annum in addition to her domestic existing currencies, liquidate the rentenbank, and expenditure. transform the Reichsbank, and provide, against rec- This would make it both just and practicable to ognized banking, cover the foreign currencies neces- add a provision in her budget which should bear some sary for the revival of Germany's languishing trade. correspondence to the provision made in the Allies' The plan for this bank is given in Annex 1. budgets for their war expenditure. Psychological considerations seem imperatively to re- But the raising of any particular sum from one secquire an institution which should be so far new in its tion of her inhabitants, to be paid back to another policy and its administration as to detach it entirely section within her borders, is a "burden" in a different from the errors of the recent past and restore the older sense from the payment of such a sum by the whole traditions of German banking. population to people abroad—different in more than The interim bank.—While coming to this conclusion the economic sense—and it is difficult to bring such a and while reducing the general plan to details, the task into direct relation with the problem of reparations. committee had to deal with an actual change in the It is a measure of what individual taxpayers, rather situation as it originally presented itself. The com- than a nation, may be capable of bearing. mittee were informed that a scheme for a gold bank was In the first case the interest paid forms a part of the in'preparation. It was expressly and admittedly lim- national income, as it is expended it provides profits ited to providing the means of carrying on foreign and a stimulus for internal trade and so increases trade. When first submitted it contained some fea- further the income of the country, and in particular tures which the committee would not have recom- it is itself an important source of internal taxation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 373 A payment in respect of a debt to foreigners has no In the search for the "commensurate" it is not comparable advantages to the country making it. enough to compute the burden as a per capita charge, The extinction of the German debt has after all been it must be related to per capita wealth or income; it at the expense of her own nationals, who are her tax- is considered by many that justice requires a "minipayers; they have sustained as holders of German mum of subsistence" to be first deducted from such bonds, not only the burden which they have already per capita income; the amount of the minimum is not escaped as taxpayers, but that which they would have exactly determinable and it seems to vary as between borne in future years to meet the service of the internal different countries of different climates, different debt if its value had not been destroyed by deprecia- economic development, and different customs, e. g., as tion. The process of extinction has indeed (except between Spain and the United States; it may even in its incidence as between different individuals and vary between different periods in the same country. classes) had the same results both to the treasury and As a rough working assumption, such a minimum may to the German taxpayer regarded collectively with a be regarded as varying in proportion to the per capita capital levy devoted to debt extinction. income of different countries. Furthermore, over any period of time this burden per head in the allied coun- The loss incurred by individual holders of debt is tries must change and what might be a valid compariexactly offset by a corresponding profit accruing to the son to-day in taxation in those countries may be quite taxpayers as a whole. different in 10 years' time. The comparison of statis- It renders both practicable and just a greater tics of total taxation, national and local, in each councharge for other war debts than would otherwise have try presents many technical difficulties. Moreover, been possible. A large proportion of the richest taxstatistics of total national income and income per head payers of the country have obtained the relief without are at present either very defective or wholly lacking. themselves sustaining the cost. They are a proper Notwithstanding these difficulties it is possible to source of taxation commensurate with that weighing compute roughly what total budget charge would be upon the corresponding classes in allied countries and borne by the German people if they were subject to in particular upon the industrial classes. To them as taxation (central and local) on the same scale per individual taxpayers a tax is a tax whether its ultimate unit of income as in Great Britain, and by deducting destination is the payment of a war debt due to fellow from the result the necessary domestic expenditure to citizens or to foreigners. And under the system we derive an arithmetical balance which could be, theopropose it may be regarded as a tax in internal curretically at any rate, assigned to the payment of reparency without the complications which result from the ration. question of how sums so received can be converted into foreign exchange. For this special problem we Combining these various aspects, we have reached provide special safeguards. The German taxpayer the view that the "commensurate burden" principle should regard a payment in respect of war debt exactly for Germany, when she is fully restored to economic as an allied taxpayer regards a similar payment. Its prosperity, would more than justify all the practical ultimate destination need not concern him, and is conclusions we have set down and that they are in certainly no justification for him to attempt to evade it. every way morally defensible. The facts as to the burden actually being borne by There are, of course, good reasons of a political, the Allies for debt service are perhaps a better approach economic, and psychological character for confining to the actual problem. If the German burden per head the actual requirements of budget accumulation within for debt were as onerous as the burden for debt existing Germany to limits well below the figure that would upon the inhabitants of Belgium, France, Great be arrived at from the consideration of this principle Britain, and Italy taken together, then the German by itself. Different individuals will differ in the dedebt charge would approximate to 6 milliards. But gree of importance they assign to such reasons. It in this case, again, the charge is to a considerable is perhaps unnecessary to state these aspects in detail extent in the nature of a redistribution of annual and sufficient to register our united conviction that all wealth among the members of each nation and has our recommendations and suggestions are well within little relation to the problem of a national burden in the what can be morally justified on the principle of "comcollective sense. mensurate burden," whatever limitations may be In the third place, it may be said that if the German placed upon that principle. In this sense, therefore, people were burdened as heavily as the members of the the justice and moderation of our proposals ought to most heavily taxed of the allied countries are taxed be fully recognized by the German people themselves. for all purposes, excluding debt charge, we should have In the above discussion we have disregarded the an expression of the commensurate burden principle question of railway profits. Inasmuch as budget in a limited and strictly defensible sense. But even revenue is not derived from profits on railways elsehere theoretical and practical difficulties prevent where, no question arises as to whether railway profits exactness. are a burden (in the sense of a tax). Such profits in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

374 FEDERAL RESERVE BULLETIN MAT, 1924 other countries form a part of the ordinary profits of increasing the yield of the controlled revenues, and private concerns accruing to individuals, and it may be should be under no temptation to discriminate against said therefore that in Germany the position of the tax- these taxes in favor of others. payer is the same, whether such profits go to individuals 2. The year's liability, which under our plan include or to the Allies as reparation. an allowance for increased prosperity, will already On the other hand, the German railway profits have been established by one test, in which, moreover, might go in relief of taxation burdens if they were not the yield of the controlled revenues indirectly forms applied to reparations. Moreover, it is difficult to one element. Having applied one test, it would be say that the abstractibn of the profits of so important unfair to apply a second and to choose whichever an undertaking as the railways of a country from that gives the higher result. country, instead of leaving them there to be enjoyed 3. The year's liability ought not to vary with the individually or collectively by the inhabitants, is not fortuitous yield of particular taxes. The character a "burden" in the international sense, even if it is and level of these taxes should be chosen with a view not a part of the individual commensurate burden otfo their suitability as security and not with a view to taxation. their appropriateness for fixing obligations. Unless the liability of the year is definitely fixed and (b) EXPORT STATISTICS AS AN INDEX OF PROSPERITY unless the German Government can proceed to estimate its resources by reference to the whole and not In Part I we have suggested an index of prosperity part of the taxable field, the difficulties of forming a and indicated that in our opinion it was a fairer test satisfactory budget are aggravated and German than the existing index, namely, export statistics. The credit is affected. use of the latter in isolation has certain definite defects, 4. Common sense requires that the reparation to some of which we desire to draw attention. liability ought not to rest even indirectly upon the 1. Foreign trade only covers part of the area of total rate of particular taxes, or otherwise every change in trade, and if foreign trade at a given moment only rates or methods of collection, even when thoroughly covers a small part of the area, total trade may be justified by social or political reasons, must be scrutimoving in a direction opposed to that of foreign trade. nized with such a degree of care and perhaps suspicion 2. Artificial conditions, such as alterations in transthat it becomes a fruitful source of friction and dispute. port charges, may affect the trade figure in the absence of any real change in the value or volume of exports. III. THE GERMAN BUDGET FOR 1924-25, AND THE 3. The export statistics, more especially when no FISCAL SYSTEM export duty is in force, may be subject to changes in The 1924-25 budget.—The German Government prepresentation and frequently furnish material for pared and submitted to us the outline of a provisional controversy. budget for 1924-25 which estimates a small excess of 4. Reparation payments themselves are, and can receipts over the ordinary administrative charges of only be, financed by an excess of exports. It follows the country. (Annex 8.) that an increased reparation payment in one year While the committee have spent a great deal of time furnishes an increased base for the following year. upon the details of this budget, and have put many This process is cumulative, and the basis for the index questions in writing to the Government and in oral is continuously raised, so to speak, at compound cross-examination of the officials upon its chief feainterest, even though actual prosperity may be tures, the subject is so vast in its ultimate implicastationary. tions, especially having regard to the constitution of 5. In a country with an economic life such as that the Reich, that no finality could possibly be reached, of Germany invisible exports may increase more especially in a matter which to the Germans themselves rapidly than physical exports, and there may be a is full of difficulty and doubt. Nevertheless, we begrowing prosperity which is not reflected in export lieve that the ground has been explored to a sufficient statistics. extent to justify us in feeling that even a prolonged examination could not substantially alter our conclusions. (c) MEASUREMENT BY YIELD OF PARTICULAR TAXES To some of the more salient points we shall make par- We have laid some stress in Part I on the fact that ticular reference. certain revenues were chosen strictly as guarantees The conditions under which the budget estimates were and that fluctuations in their yield were not to be made.—It should, however, be first remarked that in regarded (save in 1926-27 and 1927-28 exceptionally) general the budget must necessarily be in the nature as determining the payments due by Germany. The of an experiment and the individual items in it somefollowing are the broad principles justifying this what arbitrary estimates. At the time of our invesstandpoint: tigation Germany was passing through an acute eco- 1. It is desirable that the German Government and nomic crisis, the direct result and the culminating point the German people should be themselves interested in of a depreciation of the currency so catastrophic as prac- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 375 tically to destroy the currency and reduce the budget to Taking one item with another, however, we can not all but a shadow. The habit of saving has been de- justifiably state that the results are likely to be any stroyed, and it will require time and the restoration of better than have been indicated in their estimate. But confidence to reestablish it. The existing wealth is mal- if, for this year 1924, there was a deficit (we have just distributed in an almost unparalleled degree. The ces- seen that this possibility can not be absolutely dissation of depreciation, with the consequent removal of regarded) we can assert that it would not be of an the premium on export and the stabilization of prices extent to endanger the stability of the currency, or at a level which is momentarily at any rate above that force the German Government to have recourse to. of the world level, has had important reactions. Fi- other than the conventionally authorized expedients nally, the state of employment and the fiscal and eco- for meeting it, such as increases of existing taxation, nomic machinery of Germany have been violently de- further emergency taxes, or small internal loans. ranged by the events of 1923; a return to normal con- Moreover, so many of the settlements due in the ditions in this respect can not be effected overnight. year 1924 will fall to be made in the year 1925-26, Assumption underlying the budget.—It should be that fiscally these two years tend to be merged into one most carefully noted that the budget is not made up period, and, as will be seen later, we have no doubt to represent the financial expectations of actual existing that in that period ordinary budget receipts will fully conditions. As we have remarked above, the general equal ordinary budget expenditure. budget as presented anticipates a credit balance, and Special features in the fiscal system.—The Income the German Finance Minister appeared to be reason- Tax.—We do not propose to comment in any detail ably confident of his ability to live up to these esti- on the existing taxes, but there are certain broad mates, provided three essential conditions were ful- features which call for notice. filled: We have been unable to escape the conclusion that 1. That the bank of issue which would serve as a the wealthier classes of Germany have, in recent years basis for the grant of credits would be established. not been reached properly by the system of taxation 2. That the full development of German economic in force, either to an extent which the taxation of the life should not be restricted by the severance of the working classes would justify, or to an extent compa- Ruhr and the Rhineland, ' rable with the burden upon the wealthier classes in 3. That Germany enjoyed complete freedom in her other countries. economic relations with other countries. It is, of course, common knowledge that, with a The first and second of these conditions will be ful- continually depreciating currency, many classes of filled if our recommendations are accepted, and they business men tend to obtain as profit a larger share appear to us to be essential to budget equilibrium. As than is normal of the total produce of industry. Many regards the third, we understand that Germany's com- of their expenses are in the nature of fixed charges; mercial freedom is restored under the terms of the moreover, generally speaking, paper-mark wages have treaty in less than 12 months' time. not advanced as rapidly as paper-mark prices have We are not, however, satisfied that the budget as increased, so that the share of the business proprietor framed is not exposed to a real risk of deficit. The in the total produce of industry, altogether apart from German fiscal year begins on the 1st of April and even the special profits made by him on redeeming debenif our recommendations are accepted a certain lapse of tures or mortgages at nominal figures, has tended to be time will be necessary before an absolutely normal greater than is normal. administrative situation can be reestablished. Direct taxes, such as income tax, are necessarily For this, if for no other reason, we conclude that on assessed for completed periods and during a time of the existing basis of taxation the estimated revenue rapidly rising prices the burden of any particular year, may not be realized, even allowing for certain possible based on the profits of previous years, is small relaunder-estimates under particular headings. tively to the profits of the year itself. Moreover, the On the expenditure side, the only item on which a process of return, assessment, and appeal for such a saving may emerge of any great significance relatively tax, necessarily occupies further time and by the date to the possible deficit is the provision of relief for un- when substantive liability is fixed in paper marks its employed. The sum allocated to this purpose (500,- real burden is far less than was originally intended. 000,000 gold marks) is estimated on the assumption Further delay in payment of that liability intensifies that the existing amount of unemployment will con- this effect. It was not until the inflation movement tinue throughout the year. It appears to us that this is was well advanced in Germany that any serious effort unduly pessimistic and any reduction in the number was made to combat this evil. Although the rates of will both relieve the expenditure and the revenue side income tax according to the nominal scales rose to of the budget, inasmuch as the wages earned by a nearly 60 per cent on the highest incomes, statistics laborer are subject to direct, and through the medium of cases furnished to us by the German Government of his expenditure, to indirect, taxation. show that in effect, even in the year 1920, the burden Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

376 FEDERAL RESERVE BULLETIN MAY, 1924 of actual tax (measured in gold) on the higher incomes, The ultimate profit or loss to industry and agriculture instead of being 50 to 60 per cent, was only half those as a whole of the depreciation era may be difficult to rates upon the income of the year (measured in gold). calculate. There are many cases, however, of indus- This was undoubtedly one of the primary causes for trial and other undertakings which were not only able to the budgetary difficulties of Germany, and the dis- make large profits but succeeded in paying off prior parity was very much greater in the later periods. charges at a trifling fraction of their value when It can be said with confidence that the wealthier incurred. classes have escaped with far less than their proper If a mortgage or debenture of 10,000 marks has been share of the national burden, and we have put it as paid off for practically nothing, a "windfall" profit to a matter for the serious consideration of the German the debtor (at the expense of the impoverished creditor) Government whether they should not, facing even the has been made to that extent. If it has not yet been admitted administrative difficulties, review the assess- paid off, but the debt can in due course be discharged by ments of recent years in the case of these particular worthless paper marks, the "windfall" is a potential classes of taxpayer and reassess their liability upon one. In this last case, it has been decided by the a gold basis. German Government to "valorize" the debt at 15 The whole system of direct taxation went to pieces per cent and the windfall to the creditor is to be in 1923 and, for 1924, the income tax, as is easily restricted to 85 per cent. On this remarkable imunderstood, is in abeyance. The profits of industry provement in his position, the Government proposes in 1923 expressed in nominal figures of paper marks to levy a tax of 2 per cent, or 1.7 on the whole debt. have no meaning unless they can be resolved into the In the case where the debt has been paid off, the profits of the particular dates on which they were made Government will take the actual difference between and then reduced to a common denominator of gold the gold price paid and 16.7 per cent. In our view, values. A profit of 1,000 marks made in January, 1923, such special taxation, if justified in principle at all, as is obviously quite a different amount from 1,000 marks we believe it to be, is justified at much higher rates. made in September. We can well believe the German But certain rights of taxation are being given to the Government finds it impossible to use the year 1923 as Federal States which encroach upon this area of taxaa basis for income-tax assessment in 1924. tion, and, for the rest, our proposals (Section IX (c) They have been driven to temporary expedients of of Part I) in regard to industrial debentures cover a very makeshift character, not rising to a higher what might otherwise have been independent recomnormal burden than 25 per cent, with the intention of mendations under the head of taxation. rescheming and reassessing the income tax proper in Similar extraordinary profits have been made 1925. through State subventions and through the repayment These expedients do not reassure us upon the general in depreciated currency of bank loans, State advances, question as to the taxation of the wealthy classes, and, and other similar obligations. in our judgment, if they desire the Allies and their The Reich and the States.—The third special feature own working classes to realize their good faith in this to which we would refer is the financial relation between matter, the German Government should publish at the Reich and the States and communes. an early date their definite intentions with regard to The more complete financial centralization that took the scales of income taxation that are to be applied place after the war in accordance with the Weimar during 1925-26 to the actual profits of 1924-25 for constitution has not fundamentally changed the the final adjustment of the fiscal year 1924-25. character of the relations between the Reich and the The 1924-25 budget estimates 1,344,000,000 gold States. Although the Reich is charged with the admin- * marks as the income tax yield, of which all but 480,- istration of taxes formerly undertaken by the States, 000,000 gold marks is estimated to be assessed on it is under obligation to cede the major part of the wages. proceeds of the income tax, for example, to them. We have drawn the German Government's attention The States discharge wholly or in part many of the to the absence in the temporary measures of any proper functions of Government, and there is no clear prinprovision at present for dealing with income from ciple connecting their resources with their obligations. abroad. They were asked to furnish us with details When in difficulties, they press the Reich for larger of the comparative position of different incomes drawn subventions (as percentage of the yield of taxation), from dividends in the years 1920-21, 1923-24, and just as in turn the needy communes press the States 1924-25. The reply is given in Annex 9 as indicating for greater financial aid. the present position of direct taxation in Germany. The situation has hitherto been governed by merely Special taxation on those who have specially profited by political or administrative opportunism rather than depreciation of currency.—Currency depreciation, onby clear financial principle. The Reich can either the scale it has occurred in Germany, has brought into yield to the pressure for higher percentages in subexistence a new and special type of "windfall" wealth vention or they can confer upon the States the right which is a suitable subject for taxation in an emergency. to exploit particular fields of taxation for themselves. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 377 The check by the States upon the communes is equally tion merely because it has been the result of constituunsatisfactory. It is almost impossible to ascertain tional evolution. Germany waged war as an undithe true cost of any of the single functions of gov- vided whole and the financial responsibility of the Reich ernment in view of its division between these three to the Allies can not be qualified or weakened by an constitutional entities, and in the absence of proper attitude of passive acquiescence in the undiminished aggregated financial statistics of the States and still rights of subordinate areas. So long as Germany has more of the communes. any external obligations they must be paramount, and The changes that have taken place completely the resources normally to be assigned to tile States and falsify any comparison which could be established communes must be clearly defined, and dare must be between the pre-war Reich budget and that for 1924- taken to secure that these resources are n<j>t more than 25. adequate to legitimate needs. | Moreover, these relations are once more under Where further assistance must be given by the Fedreview. During the period of rapid depreciation the eral Treasury, the amount of such assistance should resources of the States and communes, together with again be strictly proportioned to the necessities of each regular allocations from the revenues of the Reich, case and subordinated to continually increasing cenwere inadequate to their needs. Their financial situ- tral supervision by the Federal Treasury of local ation was similar to that of the Reich itself. expenditure. The expedient adopted by the Reich of multiplying In considering the budget as drafted in 1924-25, we the issue of notes was not open to the States and com- have felt compelled to assume that the assignment to munes, who had necessarily to be supplied with con- the States amounting to 1,800,000,000 gold marks is tinuously increased subsidies from the Reich, and this an irreducible figure, and that if the States themproceeding was one of the principal causes of the utter selves have budgeted for the receipt of this sum the breakdown of the German finances. Reich will be unable to escape the liability in one form The resultant chaos has been such that no up-to-date or another. This is the most probable assumption statistics are available, and the States have not yet which we can make in a matter which bristles with framed their budget on a gold basis. It is in our political difficulties, and it is supported by the estiopinion essential that at the earliest possible moment mates submitted to us of the revenue and expenditure the preparation of complete statistics of the receipts in 1924-25 of Prussia, Saxony, and Bavaria; in each and expenditure of the States and communes should case deficits are disclosed. be resumed. The importance of the question may be seen if it is FURTHER COMMENTS UPON PARTICULAR TAXES realized that the Reich budget, after allowing for the 1. The committee recognize that the taxation of subsidies, contains little more than one-third of the each large nation to-day is the product of many total expenditure, one-third being met by the States factors, including its historical evolution, its economic and one-third by the communes. It would be quite conditions, its political ideas, its constitutional framepossible for the communal budgets to be enjoying work, and its social psychology. What is a good considerable prosperity at the same time that the system for one country may be quite unacceptable for Reich budget is in serious difficulties. another. Even though the same elements may exist We do not pretend to be in a position to make de- in two systems, the importance played by those several tailed recommendations; the subject is a complicated elements in the whole may be quite different. If a one and involves the consideration of social and po- similar total burden is being raised in two countries, litical factors, many of which have deep roots in historic it is almost certain that the manner in which it is being traditions. spread over the community and the particular devices Moreover, if our recommendations are accepted in adopted to raise it will be very different. their entirety, self-interest alone may almost confi- 2. For these and other similar reasons we do not dently be relied upon to force the German Govern- regard it as particularly profitable to pass the German ment to make provident arrangements with the States, budget in detailed review merely to suggest that each and it has already given us an assurance that the particular tax can be raised to a rate or level found in re'gime of increased subsidies has come to an end and some allied country for that tax, and thus to impose will not be revived. upon Germany the maximum burden borne under It is clear, however, that in the near future the Ger- each head in any of the creditor countries. To do this man Government must take steps to put the relations would be to lose sight of the principle we have referred between the Reich and its component parts on a regular to above, and also to ignore the question of the total basis which shall insure that the latter are not a con- burden. For example, to state that Germany could stant drain upon Federal resources; the existing hole stand increases in the rates on tobacco, beer, spirits, in the budget must be plugged. etc., to the level of those in England, while ignoring the existence of her high turnover tax, which England It does not suffice, in our judgment, for the Reich to does not impose; or to state that Germany could bear remain in supine contentment with the present situa- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

378 FEDERAL RESERVE BULLETIN MAT, 1924 increased rates of death duties, while wholly ignoring 8. Importers of foreign manufactured products shall the existence of her capital taxes, would be to destroy be free to continue their business on the sole condition the balance of her system and be oblivious to the total that they sell the imported products to the State burden thus accumulated. The committee would warehouses, under the same conditions of delivery as desire to avoid being dogmatic as to the way in which home manufacturers who deliver the goods produced a given sum shall be raised by the German Govern- in their factories. ment. Having come to the conclusion that a given In regard to sale organization, the technical experts burden can be borne, it is for Germany to suit her own make the following recommendations: conditions in prescribing the ways in which it shall be 1. The State shall use the wholesale dealers' wareobtained. At the same time, diverse as the systems houses for its own purposes. in the allied countries themselves are, the committee 2. Retail sales must be carried out exclusively by offers the following suggestions as the subject of their licensed retail dealers. common agreement and as suited, in their judgment, 3. The retail dealers must only sell State products to German conditions: bearing the proper guarantee band at the price fixed on the package. 1. Tobacco 4. The remuneration of retail dealers shall be fixed at regular intervals by a certain rate of commission on Eminent technical experts have made the following the sale price to the consumer, such rate not to exceed suggestions, which we commend to the notice of the an average of 12 per cent. Bonuses within this limit German Government:3 of 12 per cent would encourage the most energetic While they believe that the institution of a tobacco retail dealers and thus develop the turnover. monopoly would entail heavy immediate expenditure ) 5. Payment for manufactured products delivered to thus causing economic disorder, the technical experts retail dealers shall be made to the warehouse supplying recommend that the free manufacture and sale of them by means of check or postal order (not in cash tobacco should only be allowed to continue if subject and without credit) minus the commission above stated. to the regulations of the following scheme: 6. A small number of State retail shops shall be 1. No factory, nor wholesale or retail tobacco shop instituted in order to obtain reliable estimates and to may in future be established nor may any existing control the expenses of sale. establishment be enlarged without the permission of On the basis of this plan the technical experts make the State. the following estimate of the profit to be obtained by 2. The introduction of tobacco substitutes in manu- the State. facture is prohibited. Swiss francs 3. The number of existing factories must be re- Cost of manufacture 476, 160, 000 duced by abolishing, with a fair indemnity, those Manufacturer's profit and additional which are really not industrial in character, while all general expenses (35 per cent of the factories which have been proved by experience to be cost of manufacture) 166, 656, 000 incapable of producing goods at a fair cost price must Expenses for the warehouse service and be expropriated. general expenses of the sale organi- 4. Products manufactured in the various factories zation (1 per cent of the gross reshall still be sold with their trade-mark, while the sale ceipts) -. 20, 906, 400 price to the consumer shall be indicated on each Cost of delivery to retailers (12 per package; each box or packet to be sealed with a band cent of the gross receipts) 230, 876, 800 representing the State guarantees. Additional expenses for transport 5. Existing manufacturers shall form a consortium (80,000 tonsXaverage distance of according to the category of goods produced. This 25 MlometersX0.25 franc) 500, 000 consortium, while collectively undertaking to supply Annuity payment in the event of the the State with the quantities required for consump- indemnification of one-fourth of the tion, shall have to deliver its products at its own ex- present manufacturers 16, 975, 000 pense and exclusively to the State warehouses indicated. Total expenses 912, 074, 200 6. The products manufactured shall be bought by Gross receipts (according to Tables the State at a price to be fixed at regular intervals. V and VI)-. 2,090,640,000 7. Prices shall be fixed in conformity with the results obtained in one or two State factories, to be run for Net profit for the State 1, 178, 565, 800 experimental purposes and for the control of prices. That is_ gold marks. . 856, 515, 000 »These suggestions are contained in a report drawn up by M. Mayer Percentage of net profit : .. 56. 4 and M. Aliprandi, which will be put at the disposal of the Reparation The technical experts have the following observa- Commission, together with a report on indirect taxes drawn up by M. Hulin and M. Mazzuechelli. tions to make on the above table: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 379 1. An annuity payment is provided for, which A considerably larger sum can be realized from the would correspond to the amounts to be allowed for German duties, while decreasing the burden falling on the indemnification of the small factories to be closed the German consumer. The less efficient factories will down. be eliminated and substitutes will be abolished; surplus 2. The cost prices of a free industry distributed profits of the intermediaries will be reduced, leaving amongst a large number of factories are higher than them nevertheless a reasonable margin. Without those of a monopoly. Consequently the costs of introducing the monopoly reform, standard factories manufacture under a monopoly system are increased will be instituted (one or two factories to control costs by 35 per cent in order to allow the manufacturer a and few selling shops) and the sales will be strictly reasonable profit. disciplined. 3. With this organization, which leaves the factories The proceeds would be paid n periodically by the and retail establishments in their present form, the "Service of assigned revenues," either: taxes now collected by the German Government would (a) In the case of the adoption of the "assiette" no longer have to be deducted, with the sole exception suggested by the technical experts, on the basis of of the tax on wholesale dealers to the amount of 60 per cent of the gross revenue (as the technical 6,000,000. experts themselves have calculated that 40 per cent Under a system of sale, organized in conformity with represents purchase price of manufactured tobacco, this scheme the technical experts put forward the plus cost of distribution, etc., the remaining 60 per •results of such a plan as under: cent represents an absolutely net profit from the duty); or, Gross receipts (amount expended by Gold marks (6) Otherwise, on the basis of a sum in gold marks consumers) 1, 523, 960, 000 for every kilogram of tobacco taxed, according to the Profit obtained by the State from which various chief qualities of the tobacco; this sum to be must be deducted the taxes at fixed by the technical experts. present collected by the Reich 856, 515, 000 Customs, tax on turnover 6, 000, 000 2. Indirect taxes generally Net profit obtained by the State 850, 515, 000 The technical experts consider that it would be The rates appear to the committee to be unduly preferable to entrust the sale organization to an entirely low, and, as prosperity grows, to be susceptible of autonomous organization, the constitution of which increase without diminishing consumption. might well be based on the example of the Swedish monopoly. On the other hand, it is their opinion that 3. Turnover tax the present fiscal organization of the German Reich It is our general opinion that this tax should at the should be used for the supervision of the tax. earliest possible moment, be somewhat reduced in In conclusion, the technical experts believe that favor of other forms of taxation. during the first period, which would not exceed two years, the estimate of the guaranteed net profit might 4. Taxes on motor transport be based'on'the assumption that each inhabitant spends It is considered that the present total burden is too only 26 Swiss francs per annum, which is the figure low and that a substantial further sum might be now obtaining in Austria. Such a figure would yield raised without detriment either by a tax on petrol or a net profit of 657,000,000 of gold marks, on the followa supplementary duty on motor cars, or by a coming estimate. bination of these means. Swiss francs Gross receipts 26 X 62 millions.. 1, 612, 000, 000 Total expenditure i . 707, 917, 000 5. Death duties Net profit 904,082,000 The yield from these duties is extraordinarily low or 657,000,000 gold marks. judged by almost any standard. It is not satisfactorily To recapitulate, the guaranteed revenues for the accounted for by the temporary depreciation in capital payment of reparation which Germany might obtain values which is due to lack of profits and trade output. by the tobacco tax would be as follows: Not only is the total yield low judged by any test as Gold marks to capital values, but the actual rates of duty being 1924-25 German estimate. . 498, 000, 000 imposed are also, in the committee's judgment, 1925-26. do 657, 000, 000 inadequate. While not unmindful of the effect of 1926-27 .do 657, 000, 000 the relation between these duties and the capital 1927-28 ..do 856, 000, 000 tax in general, the committee thinks that the position disclosed in the following table, compiled by the 1 Expenditure shown in the table on the previous page reduced by German Government, indicates that there is con- 36 with the exception of the expropriation annuity. 33.72 siderable room for increased taxation under this head. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

380 FEDERAL BESEE.VE BULLETIN MAT, 1924 It will be observed that where the rate in Germany is In 1928-29, and subsequent years, the amount of nominally higher than that in other countries, it is in Germany's obligation is fixed by the standard paythose scales where the tax may be least influential ment, plus supplementary payment (and into the in its effect upon total yield. computation of the latter, the increased consumption Annual taxation on capital, in the committee's of these taxed articles will enter). judgment, tends to become a part of the income tax The total yield of the controlled revenues will be system and to discriminate between income derived paid into the account of the agent for reparation payfrom work and that derived from investment. In ments as from the time when the plan is put into this case, therefore, taxation of capital by annual execution. payments is in a different category from ordinary In the first year in which there is a charge on the succession duties. budget and in all subsquent years, the amounts required to meet the charge will be retained and the FISCAL BURDEN CONSTITUTED BY THE DEATH DUTIES balance will be periodically released to the German IN GERMANY, BELGIUM, GREAT BRITAIN, AND Government. FRANCE [Burden expressed in percentage] We propose that there should be one commissioner to supervise the controlled revenues and under him Property left (in gold marks)' m G a e n r y - Belgium B G ri r t e a a i t n France a subcommissioner for each of the five controlled revenues. In order that the Reparation Commission may be WIFE AND THREE CHILDREN in a position to secure an officer of the greatest ex- 2 20 0 0 ,0 ,0 0 0 0 0 2 1 . . 9 5 2 2. . 7 1 3 5. . 0 0 3 6 . . 5 1 perience and efficiency as chief commissioner, the area 2,000,000..... 5.9 3.8 15.9 11.5 of selection should be as wide as possible and not 6,000,000 --- 7.5 4.8 22.8 14.4 confined to the allied countries. BROTHER He should have the assistance of a consultative and 20,000....- - 7.8 8.3 3.0 23.3 200,000 - - 17.4 H.4 5.0 36.0 advisory committee on which each of the interested 2,000,000 - 30.0 17.0 19.2 50.1 allied countries would be represented. 6,000,000 - - 30.0 22.2 25.9 56.2 The various German services of the assigned revenues PERSON NEXT OF KIN would be obliged to deposit, through the receiving 20,000 18.2 16.7 3.0 36.8 offices, immediately on receipt, the amount received 200,000 40.6 22.8 5.0 48.3 2,000,000. 70.0 34.8 23.5 61.0 under the head of the revenues in question at the 6,000,000 70.0 44.5 29.8 66.5 nearest branch of the central bank acting as treasurer. 1 The foreign currency has been converted into gold marks on the basis (A) Funds.—The separate branches should pay the of the average rates of exchange quoted for the currency at issue on the sums into the central bank to an account at the dis- Berlin Stock Exchange in the month of January, 1924. According to these quotations 1,000 gold marks were equivalent to—55.5 pounds posal of the commissioner, who should afterwards sterling in round numbers, or 5,000 French francs in round numbers, or 5,550 Belgian francs in round numbers. provide for the periodical "reversements" to the German Government of sums in excess of the pro- IV. PROPOSAL FOR CONTROL OP REVENUES portion of the year's peace-treaty payments accrued ASSIGNED AS SECURITY to date. It is necessary to elaborate in rather fuller detail the (J3) Audit.—The commissioner would impose such recommendations which we have made in Part I of this methods of independent audit as he might desire to report for the assignment of the taxes, etc., on tobacco, ascertain that all assigned revenues— alcohol, sugar, beer, and of the customs revenue as 1. Were properly obtained from the public, and security for payment of the sums charged annually on 2. Flowed through the control administration. the German budget. (C) Detailed responsibility for management.—He As regards the year 192&-27, 1927-28, as already would not be obliged to assume responsibility for deindicated, the assigned revenues will play a special part tailed administration except in the case and in the in our plan. They will not only serve as a guarantee manner indicated below. It would be his duty to see to creditors, but also as a means of measuring the con- at all times that the administration was reasonably tingent addition to, or deduction from, the total amount efficient and the accounting system honest and acof reparation payments laid down in the plan. If curate. But since the interests of the Allies are not the yield of these revenues falls short of 1 milliard in affected so long as the revenues are sufficient, with 1920-27 or \\i milliards in 1927-28, the reparation an adequate margin, to meet the annual charges, it payments will be diminished by an amount equal to would not be his duty in such circumstances to interone-third of such deficiency; on the other hand, if they fere with the details of control. exceed those limits, there will be an additional pay- He would therefore not normally be obliged to insist ment equal to one-third of the excess; both deduction on the exact tariffs or the exact form of administration and addition, however, are limited to an amount of which would, in his view, secure the utmost yield, and 250,000,000 in each year. he would not, therefore, be obliged (unless the need Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDEBAL BBSEBVE BULLETIN 381 arose) to assume the responsibility of detailed direction to effect inereases in the taxation of alcohol, beer, and with the administrative expense on staff, etc., which sugar. But all interference in the German Governthat would involve nor would he be required to have ment's tariff policy is to be avoided. such an elaborate and expensive accounting and calcu- To sum up this subject we would lay down the followlating personnel as would enable him to certify that ing general principles: every mark was accurately accounted for (which is 1. The main lines on which the control should work obviously a very different thing from seeing that the ought to be decided by the countries interested. These system is honest and efficient). main lines establishing the principle of a control If the need arose, his control would become auto- developing automatically as required, and becoming matically more active, more responsible, more difficult complete control as soon as the revenues appeared to and, of necessity, more expensive. For if the revenues be insufficient, should, therefore, be laid down in were in danger of being insufficient, it would be his duty protocols signed by all the countries whose interests to take every possible measure to increase their pro- are mainly involved. ductivity. This increase in the active character of the 2. These main lines should be elaborated into control would be in exact proportion to the need for it. detailed instructions by international experts (in He would thus reform and direct administration in practice of the nationalities of the countries interested). detail only if and so far as necessary. 3. With this safeguard, the execution of the control (D) The technical control would consist, in the ordi-is intrusted to a single impartial person (with the nary course, of the right: necessary staff) so as to secure the rapid and consistent (a) To obtain all information and examine all books. administrative decisions required for an efficient (6) To visit and inspect the factories subject to du- control. ties, and to ascertain that approved standards are 4. His responsibility to the Reparation Commission maintained. should not be of a day to day order, but a periodical (c) To send experts to report and advise and, in case report should be made by him upon the condition and of actual necessity arising, to exercise detailed control. yield of the gage revenues. (d) To propose higher technical standards. 5. In the event of the revenues for a given year prov- (e) To require prior advice of all administrative regu- ing insufficient, the whole system outlined in this lations. scheme (working of the railways, a mortgage on indus- In settling the constitution of the control body, it trial property, the control of the revenues assigned as should be borne in mind that it may be concerned with security) will be prolonged as required for the purpose the issue of bonds guaranteed by the said assigned of making good the deficit. revenues, if it is desired to create an international bond The committee desires to express its high appreciaother than the railway one. tion of the valuable and efficient cooperation received The German Government should be asked not to throughout its task from the general secretary, Mr. reduce the rate of the assigned revenues without the Andrew McFadyean, and to thank his assistant, consent of the commissioner, which would not be Monsieur Denis, the interpreters, and all the staff for given until the consultative committee had had an their ungrudging services. opportunity of considering the proposal and approved CHARLES G. DAWES, Chairman. it by a majority; on the other hand, it is considered OWEN D. YOUNG. necessary that the German Government should be ROBERT M. KINDERSLEY. encouraged, regard being had to the rates prevailing J. C. STAMP. in other countries, to effect increases in the taxation J. PAKMENTIEK. of alcohol, beer, and sugar. EDGARD ALLIX. The above system makes it unnecessary in relation ALBERTO PIRELLI. to the problem of security, to insist on an increase in FEDERICO FLORA. any particular tax, though we suggest to the German E. FRANCQUI. Government that it is to their interest, especially MAURICE HOUTART. having regard to the rates prevailing in other countries Paris, April 9, 1924. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

382 FEDERAL RESERVE BULLETIN MAY, 1924 ANNEX NO. 1 TO THE REPORT OF THE FIRST COMMITTEE OF EXPERTS PLAN FOE THE ORGANIZATION OF A BANK OF ISSUE IN have power if it deems wise, to carry out this plan by the GERMANY transformation of the Reichsbank, under suitable legislation, rather than by the organization of a new I. Name and location corporation. It shall frame the statutes regulating The bank,hereinafter designated asthe "newbank," the administration of the bank. These statutes shall shall bear a new and suitable title, unless, in conform- in particular include provisions concerning: ity with paragraph(6), Section III,below, the organiza- 1. The form and character of the share certificates of tion committee shall decide to use the Reichsbank for the bank. putting the present plan into operation. It shall be a 2. The formalities to be fulfilled for the transfer and private corporation, and its charter shall be for 50 pledging of the registered share certificates. years. The new bank shall have its principal office in 3. The cancellation of share certificates lost or Berlin and such branches and agencies as its managing destroyed. board shall determine. 4. The method by which the German shareholders shall elect the German members of the General Board. n. Capital 5. The nature of the reports published by the bank, (a) The bank shall have a cash paid-up capital of as well as the method and place of their publication. 400,000,000 gold marks, which shall be in registered or 6. The nature and duties of the permanent combearer shares of 100 marks each. These shares shall mittees, of the managing board, and the officials of the be issued as follows: bank. 1,000,000 shares to represent the assets of the 7. The administrative departments to be created Reichsbank; within the bank. 3,000,000 shares for subscription in Germany 8. The date and place of the regular meetings of the and abroad. managing board and of the general board. (6) All shares shall be alike, and after the initial 9. The special meetings of the managing board and of subscriptions have been accepted, no restriction shall the general board. be imposed upon their purchase and sale, other than IV. Administration and management such general restrictions of German law as shall apply The bank shall be administered by a managing to the purchase and sale of shares of other banks. board, under the chairmanship of a president, all of (c) Shares whether sold in Germany or abroad shall be paid for entirely in gold, and/or foreign bills, at their whom shall be of German nationality. current gold values. V. The president of the bank (d) Subject to the preceding provision of this section, (a) For the purpose of this memorandum only, the the shares of the new bank shall be allotted and sold on chairman of the managing board and of the general such terms as to prices, times of payment, and other board is hereinafter called the president; he shall be conditions, as are most advantageous to the bank. the managing director of the bank. Subject to the limitations imposed by law, he shall perform such III. Organization committee duties as are assigned to him by the bank's statutes. (a) For the purpose of taking the preliminary steps (6) The president may be elected from among the for the bank's corporate organization, there shall be members of the general board, or chosen from outside created a temporary committee, to be known as "the the board. The election by the board of a nonmember organization committee." This committee shall con- as president, shall operate to vacate automatically sist of two members—the president of the Reichsbank, the seat of that German member of the general board and one person who shall have been a member of one having a term of two years or more yet to run, whose of the committees of experts acquainted with the election was obtained by the smallest share vote, discussions which resulted in the drafting of the plan unless some other member of the general board, having for the bank. a two years' term or more yet to run, shall resign at (b) The organization committee shall have power the time, and his resignation be accepted by the board. generally to interpret any ambiguities appearing in the A president, elected from outside the general board plan, provided always such interpretation shall not shall, by the fact of his election, become a member of interfere with the principles involved. It shall also the board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT. 1924 FEDERAL RESERVE BULLETIN 383 (c) The first president shall be the president of the (6) Each member of the general board shall be chosen Reichsbank; his term of office shall be six months. for a period of three years, except in^the case of the Subsequently, the president, who must be of German first election or appointment. In the case of the first nationality, shall be appointed by a majority vote of term of office, three German members and three foreign not less than nine members of the general board, of members shall serve for a term of one year; two Gerwhich majority at least six votes shall be the votes of man members and two foreign members shall serve for German members; this appointment shall be coun- a term of two years, and two German members and tersigned by the president of the Reich. two foreign members shall serve for a term of three (d) The president shall direct the managing board years. At the first meeting of the general board and shall take the chair at its meetings. In case of a chosen, the members shall decide, by lot, the term for tie vote, he shall have the casting vote. He shall which each shall serve, namely, one, two, or three appoint the officials of the bank on the recommenda- years. tion of the managing board. He shall organize the (c) Subject to the provisions of paragraph (6) of distribution of their work and duties in the bank, and this section, and to the provisions of this plan that shall exercise disciplinary powers over the officials and apply to all members of the general board, members employees, these powers being provided for in a special of German nationality shall be chosen in such a manclause of the statutes to be approved by the general ner and under such conditions as the stockholders of board. German nationality shall decide, in accordance with VI. Managing board German law. The manner and conditions so decided (a) The administration of the bank shall be in- upon shall be incorporated in the statutes. The mantrusted to a managing board which shall be the admin- ner of selecting the first group of German members istrative and executive body. This board shall be shall be determined by the organization committee as under the chairmanship of the president. It shall provided for in Section III of this plan. No plan shall adopt its decisions by majority vote and in conformity be adopted for the first selection of German members that does not meet with the approval of the president with the regulations laid down in the statutes and by of the Reichsbank. law. In particular it shall direct the currency, discount, and credit policy of the bank. It shall fix the (d) The foreign members of the first general board rates of interest and shall draft all regulations con- shall be appointed by the organization committee. cerning the policy of the bank. They shall be chosen with due regard to their professional qualifications and financial experience. In mak- (6) The members of the managing board shall be ing the appointments, the organization committee may appointed by the president for a period to be fixed by consult the principle foreign banks of issue and/or any the organization committee, subject to the approval other authorities in financial matters whose advice it of the general board, whose decision in this connection may desire. shall be adopted by a majority of nine votes, at least (e) In case of vacancy in a position of a foreign six of which shall be given by the German members; member of the general board, arising from death, these appointments shall be countersigned by the resignation, or other cause, there shall be a new elecpresident of the Reich. tion of another person of the same nationality to fill (c) The members of the managing board shall occupy the vacant place. This election shall be by the foreign no other remunerated post, neither shall they accept members of the board who are in active membership any honorary post without the previous consent of at the time this election is held. Unanimity less one the general board. vote shall be necessary for an election. The new (d) The salaries and pensions of the members of the member shall always be chosen from among the namanaging board and of the president shall be fixed by tionals of the country of the member whose vacancy the general board, the salaries and pensions of the he is to fill. Before electing any foreign members of senior staff of the bank shall be fixed by the managing the board, the board shall consult, with reference to board with the approval of the president, and in case of said election, the central bank of issue of the country the junior staff, by the managing board alone. whose national is to be chosen and/or any other finan- (e) The managing board may, if they think fit, cial authorities of that country whom it may desire to obtain the assistance of a consultative body composed consult. of German members chosen from agriculture, com- (/) The foreign members shall be chosen, one from merce, and industry. each of the following nationalities, British, French, VII. General board Italian, Belgian, American, Dutch, and Swiss. Cgr) On the unanimous vote of the general board, the (a) There shall be created a general board, connumber of German members may be increased. sisting of 14 members hereinafter called the members (h) No Government official, or other person receiving of the general board. One-half of these members compensation from the German Government, or from shall be of foreign and the other half of German any foreign government shall become a member of the nationality. general board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

384 FEDERAL KESERVE BULLETIN MAT, 1924 (i) Except as otherwise provided for by the bank's essary, he may make any investigations either in perstatutes, decisions of the board shall be by a majority son or through his assistants. He shall be entiled to be vote of 10 members, or by a simple majority vote present at the meetings of the managing board in Berlin. if the president and the commissioner are included in (e) The office entrusted with the custody of the rethe majority. Should a member not be able to attend serve of notes shall only deliver notes when authorized a meeting of the board, it will always be open to him by the commissioner so to do. to empower one of his colleagues, by registered letter if) The commissioner shall be bound to the greatest or by telegram, to vote for him and on his behalf. secrecy in regard to all information he may obtain on (j) At each of its meetings, and at least once every the commercial operations of the bank. month, the general board shall examine the reports submitted to it by the president and the commissioner. EC. Loans* discounts* and investments It shall adopt decisions on all the proposals made to it (a) The bank shall make no loans or discounts havby the president and the commissioner, provided that ing a maturity at the time the advance is made, in exthese decisions do not encroach upon the rights recess of three months. served to the president and the managing board as specified in Sections V and VI above. (6) The bank shall discount no notes or bills bearing less than three names of known solvency, except that (fc) The metal reserve of the bank and the office for for one name there may be substituted collateral in the the printing of the notes shall be in Germany, but the form of warrants relating to bona-fide commercial general board may, by a three-quarters majority vote, transaction or to goods. Such definiton shall not be decide that either or both be transferred abroad to a taken as including any notes issued or bills drawn in neutral country. financial transactions or secured by stocks, bonds, or Tin. The commissioner other investment securities but may include treasury (o) The commissioner, who shall be a foreigner, shall bills of the German Government. be elected by a majority vote of not less than nine (c) The bank may, with the special authorization members of the general board, of which majority at of the general board voting in the conditions laid down least six votes shall be those of foreign members. in paragraph (i) of Section VII, accept the long-term The commissioner's term of office shall be fixed by the bonds of the Reich as collateral for loans with maturiorganization committee. ties not exceeding three months, if the loans bear two (6) The commissioner may be elected from among responsible names, in addition to the collateral, one the members of the board of foreign nationality or of these names being the name of a commercial bank may be chosen from outside the board, from citizens of doing business in Germany: Provided, That loans any one of the foreign countries represented on the collaterally secured by the long-term securities of the board. The election by the board of a nonmember to Reich shall never exceed the amount of the bank's net the position of commissioner shall operate to vacate paid-in capital and surplus, except by the unanimous automatically, the position of the citizen of the country vote of all the members of the general board save one. of which the commissioner is a citizen. A commissioner (d) The bank shall make no loans nor advances on elected from outside the board shall, by the fact of his the security of real estate, mining property, oil propelection, become a member of the board. erty, or stock shares; nor on the security of Government (c) If, at the first election, the person chosen as obligations, except as otherwise provided for in this commissioner should be a member whose term, as de- plan. The bank may, however, take mortgages.or cided by lot, in accordance with paragraph (6) of titles to such property, stock shares, and Government Section VII of this scheme, should only be one year, debt bonds as additional security for loans previously "the term of this member shall automatically be in- made in good faith in accordance with provisions creased to two years. In this case, one of the two herein made. foreign members who have been assigned to two (e) Subject to the provisions contained in paragraph years' term, shall have his term reduced to one year. (a), the bank shall make no loans, discounts, or other The decision as to which of the two foreign members advances directly or indirectly to the German Reich, shall have his term thus reduced from two years to one any German State, communes, or other German shall be made by lot. governmental units, or to any foreign government or (d) It shall be an essential duty of the commissioner governmental units, nor shall it invest its funds in the to enfprce the provisions of the law and the statutory bonds, debentures, or other debt of any such governregulations relative to the issue of notes and the main- mental unit, except as otherwise specifically authorized tenance of the bank's reserves which guarantee that by its constitutive law. The deposit accounts and issue. To this effect, the commissioner shall have the current accounts in the bank, of the German Reich, the right to have furnished to him all statistics and docu- German States, the German communes, or other ments which he may deem useful for the accomplish- German governmental units, shall never show a debit ment of his task, and whenever it appears to him nec- balance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 385 (J) The bank shall not accept time bills of exchange to issue or circulate paper money in Germany during drawn against it. the period of the bank's charter, with the exception of (g) The bank may not buy or sell merchandise, the banks of Baden, Bavaria, Saxony, and Wurtemberg, produce, real estate, or stock shares of other corpora- which shall retain their charter of issue for sums not to tions for its own account. exceed their present legal quota. The notes of the (h) The restrictions contained in the preceding rentenbank shall be gradually withdrawn from circulaparagraph shall not operate to prevent the bank from tion under the conditions prescribed in Section XV buying such real estate, equipment, and supplies as it and the appendix hereto. needs for its own banking business, or from selling (c) During the period of the bank's charter, the such property as may come into its possession in con- Reich shall not issue any coins for circulation in nection with the guarantee of statutory loans, More- Germany (except gold coins, containing approximately over, the bank shall not be prevented, by the above their full value in gold metal) of a larger denomination restrictions, from buying in property where it needs than 5 marks; and shall not issue coins of 5 marks or to do so, in order to protect itself in the collection of less, in excess of 20 marks per capita of her population. statutory loans previously made in good faith and not All coins, other than gold coins, issued by the Governpaid at maturity. ment, shall be issued through the bank. They shall be received by the Government in unlimited quantity X. Service of the Reich's treasury at their nominal value, in payment of all taxes and (a) The managing board is authorized to make other Government dues. advances from time to time to the Reich, but the (d) The bank may issue notes for circulation, against amount outstanding at any one time shall never exceed gold coin or bullion, statutory discounts as defined in 100,000,000 marks. Such advances shall, in no case, Section IX, demand credits in foreign banks and foreign be for a longer period than three months and in no case commercial trade bills, with maturities of three months shall the Reich be indebted to the bank at the end of or less, taken at their present gold values at current the bank's financial year, which shall coincide with that rate of exchange. of the Reich. In consideration of these facilities, the (e) The notes of the bank, as well as metallic cur- Reich and its treasury shall conduct all their domestic rency, shall be receivable in unlimited quantities for all and foreign banking business through the medium of taxes and other Government dues in Germany. The the bank. notes shall be unlimited legal tender, unless otherwise (6) The managing board shall also be empowered to specifically provided by contract, for all debts, public grant advances to the post office and the railways for and private. reasonable amounts on condition that these organiza- (J) The notes of the bank shall be accepted at their tions shall intrust the bank, except in so far as the nominal value for all payments made to the bank, bank might modify this condition, with the whole of both at the head office of the bank in Berlin and at their treasury service; but the total amount of loans all branches of the bank located in Germany. outstanding to the post office and the railways together (g) Notes shall be payable to bearer at the head shall not exceed 200,000,000 gold marks. office of the bank in Berlin on presentation. The XI. Service of the reparation treasury notes shall also be payable on presentation at the other offices and branches of the bank to the extent per- The bank will receive on deposit sums paid for mitted by their cash reserves and monetary requirereparations, it being understood that the relationship ments. Payments may be made in any of the followbetween it and the committee intrusted with reparation ing forms, at the option of the bank: receipts shall be solely those of banker and customer. 1. German gold coins of the present legal standard This treasury service will proceed in conformity with of weight and fineness at par. the provisions of Annex — to the general report. The 2. Gold bars, in denominations of not less than maximum amount to be held on deposit for reparation 1,000 gold marks, and not more than 35,000 gold account shall at no time exceed 2 milliards of marks in marks, at their pure gold equivalent in German gold conformity with Section X (a) of this Annex, except coin of the present legal standard of weight and as otherwise provided therein. fineness. XII. Bank notes 3. Demand drafts, payable in gold or in foreign (a) The bank shall have the exclusive right of issuing currencies at current market gold values, and drawn and circulating bank notes in Germany during the on funds located abroad in solvent banks to be specified period of its charter. by the bank's statutes, provided that the premia above (6) The German Government may not itself issue the gold pars (or gold values, in the case of currencies any kind of paper money for circulation in Germany, not on a gold basis) charged by the bank for such during the period of the bank's charter, nor shall it drafts shall never exceed the amount necessary to cover permit any German State, commune, city, other shipping expenses, including interest for the time of transit, on gold bars shipped in substantial quantities governmental unit, corporation, or private individual 97417—24 5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

386 FEDERAL BESEB.VE BULLETIN MAT, 1924 from Berlin to the foreign financial center on which (b) No discount rate or rediscount rate shall be below the draft is drawn. 5 per cent per annum when the reserve mentioned in the The committee is of opinion, however, that, at the preceding paragraph shall have continuously for one inception of the bank, conditions will be unfavorable week or more been below 33J per cent of the bank-note for the application of the above rule of convertibility; liabilities there mentioned. in this event, this rule may therefore be temporarily (c) Whenever a deficiency tax is payable, a permodified by the affirmative vote of every member but centage equal to at least one-third of the percentage one of each of the following groups: rate of the tax payable shall be added to the bank's 1. The organization committee. discount rate and rediscount rate, in addition to any 2. The managing board. increase in the said rates required to comply with the 3. The general board. provisions of the preceding paragraph. In case of such modification, the bank shall make (d) The above-mentioned legal reserve may be kept all possible efforts and use all the means at its disposal in gold bars or gold coin at any office of the bank, and in order to maintain the rate of exchange of the mark or in the form of demand deposits made payable in at as near gold parity as possible. Furthermore, in gold or its equivalent at the rates at which the deposits case of modification of the above-mentioned rule of were made in banks of high standing located in foreign convertibility of notes, a return to convertibility will financial centers. be permanently established as soon as possible, by a (e) The bank shall also hold a special reserve of gold simple majority vote of the general board and of the and gold deposits of the same character required to be managing board' held against its notes in circulation to the amount of (h) While the bank shall not make reimbursement 12 per cent of its deposit liabilities. Whenever the for notes that have been lost or completely destroyed, above reserve is continuously for one week or more it shall replace worn or torn notes, on application, by below said 12 per cent, the bank shall pay a deficiency notes in good condition, at their nominal value; pro- tax of 4 per cent per annum on the amount by which vided that such replacement shall not be required in the reserve is less than 12 per cent and not less than 10 the case of any note unless the part of the note pre- per cent; a tax of 8 per cent per annum on the amount sented shall constitute more than one-half of the note. by which it is less than 10 per cent and not less than 8 (i) The notes of the bank shall bear the facsimile per cent; and a tax of 10 per cent per annum in addition to said 8 per cent for each 1 per cent by which the signature of the president and the seal of the compercentage figure is below 8 per cent. missioner. (/) In order to assure adequate liquidity in the assets XIII. Reserves securing the bank's deposit liabilities, the bank shall at (a) The bank shall always carry a normal reserve of all times hold in addition to its aforementioned gold at least 33f per cent of the total amount of its notes reserve of 12 per cent demand deposits in Germany and outstanding, subject to the following qualification: abroad, checks on other banks, and statutory notes and In exceptional circumstances the reserve against bills of a commercial character, payable at call or on notes may be reduced below 331 per cent, on the pro- time with maturities of less than 30 days to the amount posal of the managing board, by a decision of the gen- of not less than 30 per cent of the bank's total deposit eral board; but said decision of the general board shall liabilities. require the affirmative vote of every member of the (g) The above-mentioned reserves and the liquid board save one. In case of such a reduction in the assets above described shall be segregated for the reserve, the bank shall incur the following penalties, service of the bank's deposits. the proceeds of which it shall pay to the Reich: Whenever the reserve against notes shall be less than XIV. Profits 33| per cent of the notes outstanding and shall so con- The net profits of the bank, at the end of each finantinue for more than one week the bank shall pay the cial period, shall be employed as follows: following deficiency tax upon the amount by which the (a) Twenty per cent shall be transferred to surplus said reserve is less than 33J per cent of the notes out- or reserve until the bank's actual net paid-up capital standing. and surplus shall amount to 12 per cent of its average When the reserve is below 33 § per cent and not below liabilities on circulating notes, on the fifteenth day of 30 per cent, a tax of 3 per cent per annum. the six preceding months. If the ratio shall again When the reserve is below 30 per cent and not below fall below this 12 per cent, the above-mentioned allot- 27 per cent, a tax of 5 per cent per annum. ment of 20 per cent of the net profits to surplus or When the reserve is below 27 per cent and not below reserve shall continue. When and so long as the ratio 25 per cent, a tax of 8 per cent per annum. of the bank's net capital and surplus or reserve to ita When the reserve is below 25 per cent, a tax of 8 average liabilities on circulating notes, as above comper cent per annum plus 1 per cent per annum for each puted, shall exceed 12 per cent, the bank may use its 1 per cent the per cent tax figure is below 25 per cent. discretion as to the percentage of its net profits it will Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAI, 1924 FEDERAL EESERVE BULLETIN 387 transfer to surplus or reserve provided that the per- latter shall redeem the outstanding circulating notes centage thus transferred shall never exceed 20 per cent. in its new notes, at the rate of 1,000,000,000,000 (6) A sum shall be assigned to the payment of divi- marks to 1 gold mark. The old notes shall be immedends sufficient to pay 8 per cent per.annum on the diately withdrawn from circulation and canceled. bank's shares. (b) The Reichsbank, in case it is continued, shall (c) The balance of the net profits shall be divided meet the same reserve requirements against the outas follows: standing notes which it undertakes to exchange, in 1. One-half to the shareholders, in dividends or to accordance with the provisions of paragraph (a) of a special fund to be used for the maintenance of a this section, as are required to be held against bank uniform dividend policy. notes outstanding by Section XIII of this plan. 2. One-half to the Government, as a franchise tax (c) If the Reichsbank is to be liquidated, this for the bank's exclusive privilege of issuing circulating operation will be carried out by the new bank which bank notes. would be then set up, and which would have to assume (d) The dividends of the bank and other income responsibility for, or itself carry out, the exchanges derived from its capital shares owned by foreigners provided for in paragraphs (a) and (6) above. residing abroad shall be exempt from all German income taxes, present and future; provided that this . Penalties exemption shall not apply to general taxes imposed in A penalty in the form of fine or imprisonment or Germany upon the real property of the banks in gen- both shall be provided for the punishment of any eral. The bank, however, in consideration of the per- person or persons wilfully giving incorrect information, centage of profits accruing to the Government under directly or indirectly, to the president, the general paragraph (c) 2, shall not be subject to any corpora- board, the commissioner or his assistants. tion tax or business tax levied in Germany by the Reich, the States, or any other governmental unit. XIX. Measures to be taken by the German Government for the (e) Such privileges not inconsistent with this plan, execution of the plan now enjoyed by the Reichsbank, as may be specified All the undertakings which the German Governby the organization committee as desirable and advan- ment will have to enter into in connection with the tageous to the new bank shall be given to it. bank, for the execution of this plan, including the XV. Liquidation of the rentenbank assignment for the withdrawal of the rentenmark, of funds to be received from the rentenbank's mortages, The rentenmarks shall gradually be withdrawn shall be embodied in a special contract between the from circulation by the bank in accordance with the bank and the German Government. This contract provisions contained in the appendix attached. as well as the statutes of the bank shall be duly ap- XVI. DoUar-Schatzanweisnngen (treasury bills in dollars) proved by the German Parliament. (a) The German Government shall abandon all its rights to the proceeds from the liquidation of the APPENDIX TO ANNEX 1 Reichsbank (unless the present plan is put into execution by means of the transformation of the Reichs- THE LIQUIDATION OF THE HENTENBANK bank), In return for which the latter will give the (Appendix provided for in Section XV of the plan Government an undertaking to assume responsibility for the bank.) for the repayment of the said bills not in excess of The Deutsche rentenbank was founded, and its oper- 210,000,000 gold marks, under conditions to be settled ations regulated, by the decree of October 15, 1023. by the Reichsbank with the holders of these bills. The capital and the initial reserve were fixed by this (6) At the same time, in order to guarantee the good decree at 3,200,000,000 rentenmarks, to be furnished faith of this operation, that is to say, in order to guar- half by agriculture and half by industry and commerce, antee the Reichsbank against any loss resulting from including the banks. this operation, the German Government shall hand The rentenbank holds a general mortgage, expressed over to the Reichsbank gold bills for an amount equal in gold marks, on industrial, agricultural, and commerto and falling due at the same date as the dollar bills cial property, amounting to 4 per cent of the value of in circulation. As soon as the liquidation of these this property as assessed for the Wehrbeitraggesetz.6 dollar bills has been completed, the Reichsbank will These mortgages bear 6 per cent interest for the return to the German Government the portion (if any) benefit of the rentenbank. of the bills which it has received, and which has not The rentenbank is authorized to issue bank notes been employed in insuring the liquidation. expressed in rentenmarks up to the amount of the XVII. The Reichsbank capital and initial reserve (3,200,000,000 gold marks). (a) If the present plan is put into execution by * The amount of this mortgage already amounts to 3,700,000,000 gold means of the transformation of the Reichsbank, the marks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

388 FEDERAL RESERVE BULLETIN MAY, 1924 The rentenbank must open credits to the Reich dur- In so far as concerns this latter sum of 1,100,000,000 ing the two years following its foundation up to the the new bank (or the Reichsbank, if it is maintained) amount of 1,200,000,000 rentenmarks, of which would assume the obligation vis-a-vis the holders of 900,000,000 wiU bear 6 per cent interest and 300,000,000 these notes to redeem them gradually within 10 years. will bear no interest. The rentenbank is authorized To this effect the rentenbank would undertake to remit moreover to open credits to the Reichsbank and to to the bank, as fast as they came in, all sums received the private banks up to 1,200,000,000 rentenmarks, in from its debtors, whether from the property holders order to finance private economy. affected by the rentenbank mortgage or from the State, Up to the present the rentenbank has placed in up to the sum of 1,100,000,000. circulation: This undertaking of the rentenbank vis-a-vis the" 1. Seven hundred million, which have been delivered bank would be covered by all the mortgages and guarto the Reichsbank in order to provide for the credits antees which it holds, as well as by the guarantee of the to be granted by the latter to German manufacturers German Government itself. and merchants. This sum is therefore guaranteed by It should, moreover, be understood that all profits drafts or credits redeemable in rentenmarks. If and accruing to the Reich in virtue of its participation in when the rentenbank is liquidated, no attention need the bank would be assigned by priority to the amortizabe paid to them. tion of its debt of 1,100,000,000. 2. One milliard one hundred million rentenmarks As soon as the payments by the rentenbank or by which have been advanced to the Reich without any the Reich itself, as stated above, reach the figure of security but the signature of the latter, 900,000,000 of 1,100,000,000 the German Government and the rentenwhich bear 6 per cent interest per annum and 200,- bank will be released from all liability vis-a-vis the 000,000 bear no interest. bank. ANNEX NO. 2 TO THE REPORT OF THE FIRST COMMITTEE OF EXPERTS SUGGESTED INDEX OF PROSPERITY THE INDEX BASE BASIS OF COMPABISON 3. In computing the base, the average statistics for the three years 1927, 1928, and 1929 shall be taken 1. In addition to the standard contribution referred for (&) budget receipts and expenditure; for (e) poputo in paragraph 8 (c), there shall be paid for 1929-30 lation, and for (/) coal consumption per capita, and and following years a supplementary sum according to for the six years 1912 and 1913, 1926, 1927, 1928, and the growth in prosperity of Germany. This increase 1929 for the other categories (after appropriate adjustin prosperity for any year shall be measured by the ments for the differences in population and the altered extent to which the index, as defined below, on the gold values to make the three earlier years comparable statistics of the completed preceding year, exceeds the with the three later years in this respect). „ The percentaverage statistics of the base years. age change for each of these six groups, compared with the base, shall be separately computed and an COMPONENTS OP THE INDEX arithmetical average of the six percentage results taken 2. For the purpose of computing the index, the as the index. following statistics shall be employed: (a) The total of German exports and imports taken PAYMENT TO WHICH THE INDEX IS APPLIED together. 4. The index percentage shall be applied to the (b) The total of budget receipts and expenditure amount of the standard payment, viz, 2,500,000,000, taken together, including those of the States of Prus- to give the supplement for the year, except that for sia, Saxony, and Bavaria (after deducting from both the five years 1929-30 to 1933-34 it shall apply to sides the amount of the Peace Treaty payments 1,250,000,000, or one-half of the standard payment included in the year). only. (c) Railroad traffic as measured by the statistics MINUTE ADJUSTMENTS IGNORED of the weight carried. 5. The supplementary payment is to be reckoned (d) The total money value of the consumption of only for each completed half per cent of the index, sugar, tobacco, beer, and alcohol, within Germany i. e., an index average of 11.35 per cent would be (measured by the prices actually paid by the conreckoned as 11 per cent, sumer) . (e) Total population of Germany (computed from COMPUTATION OF SUPPLEMENT the last available census data, vital statistics and 6. For the year 1929-30, the computation of the emigration records). supplement shall be made after the end of that year by (f) The consumption of coal (and lignite reduced to comparing the statistics of 1929 itself with the index coal equivalent) per capita. base. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY. 1924 FEDERAL RESEBVE BULLETIN 389 year, in case of a claim that the general purchasing DEFICIENCIES power of gold as compared with 1928 has altered by 7. In the event of the index in any year producing, not less than 10 per cent to ask for a revision on the as the supplement, a minus quantity, the basis paysole and single ground of such altered gold value. ment should continue to be made, but subsequent The alteration to be made may apply both to the supplementary payments shall not accrue due until standard contribution and the supplementary payment. allowance has been made therefrom for such deficiency Failing mutual agreement, a decision should be given or "minus" payment of previous years. by an arbitral committee appointed by the League of Nations. After decision, the altered basis should stand DIFFICULTIES IN APPLICATION for each succeeding year until a claim be made by 8. Any disputed points upon the application of the either party that there has again been a change, since statistics of this index shall be referred to the financethe year to which the alteration applied, of not less section of the League of Nations for arbitration. than 10 per cent. The alterations under this paragraph should be made CHANGES IN THE VALUE OF GOLD by reference to such generally approved index numbers 9. The German Government and the Reparation of prices (German or non-German), singly or in com- Commission should each have the right in any future bination as the arbitration may decide. ANNEX NO. 3 TO THE REPORT OF THE FIRST COMMITTEE OF EXPERTS NOTE BY THE FIRST COMMITTEE OF EXPEETS • asked by the committee, especially as to the amount of net revenue which we considered they could yield Of the assets and revenues of the German Reich and for reparation purposes. We have now, as requested its constituent States subject to the application of by the committee, brought together in a single docuarticle 248 of the peace treaty, the German railway ment the essential portions of these reports, together system is undeniably the most important and also that which can be the most easily utilized for the purpose of with our own conclusions. reparation. We desire to thank the German Minister of Railways The German railway system comprises about 53,000 and his staff for the manner in which they have assisted kilometers of lines, and the rolling stock will very our inquiry in Berlin with information both verbal shortly amount to— and documentary. In the short time at our disposal it has naturally not been possible for us to push our Locomotive engines (excluding elecinvestigations very far, but we trust that the report tric and motor engines) 30, 850 which we now present is adequate for the purposes of Passenger vehicles 69, 253 the committee, and we think its substantial accuracy Wagons 748, 753 may be relied on. A considerable portion of this rolling stock is of recent construction. Two-thirds of the whole (18,000 CAPITAL INVESTED IN THE GERMAN RAILWAYS locomotives and 500,000 passenger vehicles and wagons) In a preliminary report we stated that the capital were brought into service in the last 10 years. The value of the German railways might safely be taken at rolling stock at present possessed by the German rail- not less than 20 milliard gold marks. An official pubway system is very superior both in quality and quan- lication shows that the debt of the several States tity to that which was in use before the war. specifically entered as railway debt, less that portion Speaking generally, it may be said that the equip- of it applicable to the ceded territories, amounted in ment of the German railways is modern and fully up 1914 to 17.93 milliard gold marks. In March, 1920, to the level of the latest improvements in railway at which date the railways were transferred from the technique. ownership of the several States to that of the German The capital cost of the system amounts to not less Reich, the invested capital was reckoned as 25 to 28 than 26 milliard gold marks. milliard gold marks. This large increase is explained The experts called in the services of eminent railway by the fact that at the date of the transfer— specialists, and requested them to make a study of (a) The value of the railways of the separate States the German railways; their report is attached. was written up to conform to the real amount of capital that had been invested in them, much of which had GENEBAL REPOET ON THE GERMAN RAILWAYS MADE never been or had ceased to be represented by railway TO THE FLBST EXPERT COMMITTEE debt. By Sir WILLIAM ACWOETH and M. LEVEKVE (&) There was added to the old capital the value of MARCH 26, 1924. the additions made during the war. Between March, In our earlier reports we described the situation of 1920, and March, 1923, the capital invested was further the German railways and replied to various questions increased to 25.86 milliard gold marks. The expendi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

390 FEDERAL RESERVE BULLETIN MAY, 1924 ture for the current year and that which will still tries the situation has now completely changed, and if need to be incurred in payment for commitments al- in other countries the railways have still not regained ready entered into will put the final figure well over financial equilibrium, experience sufficiently shows that 26 milliard gold marks. this phase is only temporary. And Germany has one The above figures represent capital invested, which special circumstance of the first importance in her is sometimes a very different thing from capital value. favor. On the railways of England and America the But in this case the capital value of the German rail- wages of the railway staff are, roughly, double what way system which comprises 53,000 kilometers, at they were before the war. No such advance has 500,000 gold marks per kilometer, may be taken to be taken place in Germany. On the contrary, the averfully equal to the capital invested. Now, a large part age wage is at present, we are informed, only 75 per of the system is double tracked; the lines, stations, cent of the pre-war wage. It is proposed in the curyards, and buildings have been constructed to a high rent year to increase this percentage to 93 per cent standard, and they are very amply equipped with up- of the pre-war average. But there is no prospect of to-date rolling stock. A comparison with the capital any such increase above the pre-war standard as has cost per kilometer of the railways of other important taken place in the two countries mentioned.- And countries, taking account of all the factors on both this for two reasons—the cost of living has not increased sides, gives good grounds for saying that the German in Germany, as it has there, and, as German wages in figure of investment is by no means an excessive rep- other occupations have not risen, railway wages do not resentation of actual cost. compare unfavorably. Naturally we do not suggest that a milliard of net NET REVENUE ATTAINABLE revenue is attainable at the outset. But we think a We think that a net annual revenue of one milliard substantial sum can be obtained very shortly, and that gold marks per annum can reasonably be expected from the full amount should be reached within a period of the German railways. This is very slightly more than three years. It should be arrived at in the manner the net revenue earned before the war; but it was then following: earned very easily. No attempt was made to maxi- During the war there was imposed in Germany, as in mize net revenue, which was much more than suf- other countries, a transport tax. This tax still conficient to meet the interest on the railway debt. tinues to be levied. It is included in the rates charged On the one hand, the tariffs were kept low, especially to the public but is paid over by the railways direct to for passengers. The guiding principle was, as has the finance ministry and forms therefore no portion been recently expressed in a brochure published by of the railway revenue. It is a tax on the gross receipts, Doctor Sarter, whose statement, as he is a highly and is fixed at 7 per cent on all receipts from freight placed official in the transport ministry, may be taken traffic other than coal, and at 10 per cent to 16 per cent, as authoritative: "The State railways ought primarily according to class, on passenger traffic. On the average to have regard to the progressive development of the it amounts to 6 per cent of the total gross receipts. economic life of the country and to treat the attain- It is estimated to produce in the year 1924, 227,000,000 ment of net revenue as only of secondary importance." gold marks. If in future years the traffic increases, or On the other hand, the operating expenses were if the same volume of traffic is charged at a higher rate, unduly high, the staff was unnecessarily large, and naturally the proceeds of the tax will increase propormagnificent stations and enormous shunting yards tionately. It seems safe to assume that its yield will were worked at great expense. Moreover, as is shown not fall below the present figure. Moreover, as it is by the figures which we have given above, the working levied on the gross and not on the net income, it is indeexpenses included year by year large sums for im- pendent of any variations in the cost of operation. If, provements and additions which might properly have as we recommend, the German railways in future are been charged to capital. required to pay over the proceeds of this tax to the It may be thought—seeing that for some years past Reparation Commission, the commission will have the gross receipts of the German railways have not from the outset a safe and important source of revenue covered their expenses, and that recently the expends at their disposal. ture was several times as great as the receipts, while There remains a sum of 800,000,000 gold marks in even now the earnings are only equal to the expend- round figures to be obtained, and it can, in our judgiture—that this estimate of ours is unduly sanguine. ment, be obtained as net profit on the railways, on con- But it is to be remembered that since the war al- dition that the tariffs are fixed at a reasonable level, most every country has gone through a similar experi- that the number of employees is reduced to a reasonence. Even in the United States, where there was no able figure, and that in all other matters curtailment of currency depreciation, the net income of the railways expenses is secured by econmical operation on business in 1920 was almost negligible; whereas in England, lines. where currency depreciation's quite small, the receipts Before the war the German railways spent 70 marks fell short of the expenses. But in both coun- for every 100 marks which they earned. In technical Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 391 railway language the "operating ratio" was 70 per cent. We shall revert to the matter of receipts and expendi- This was an unusually high ratio, especially having ture when we come to discuss the budget estimate for regard to the fact that the railways paid no taxes. It the year commencing April, 1924. was a good deal higher than the English ratio, much Meanwhile it may be useful to approach the subject higher than the ratio in France. But in every country from another point of view. there has been since the war, a marked increase in the One milliard is less than 4 per cent on the railway ratio, and we do not think that under post-war con- capital of 26 milliards. If we deduct the transport ditions the German railways can be expected to operate tax, which certainly does not exceed in amount the at a ratio so low as 70 per cent. Not only have they taxation levied on railways in other countries, the now to bear the transport tax, but though a great rise German railways are only required to earn a fraction in wages—the main cause of the rise of the operating over 3 per cent on their capital. And, as already ratio in other countries—is not to be expected in Gerstated, we have no reason to think that the German many, the increased cost of materials, coal, and steel railways are overcapitalized; 3 per cent can hardly be particularly, seems likely to be permanent. We think, regarded as an excessive rate of interest. however, that an operating ratio of 80 per cent ought In England the rates tribunal is required by statute to be attainable. We base this opinion in the first to permit the railways, provided that their manageplace on our investigation of German conditions, and ment is efficient and economical, to charge rates adeespecially on two facts. quate to produce a net income of, roundly, 1 milliard 1. That new rolling stock has been acquired in the gold marks on a capital somewhat less than that of last few years in such large measure that the need of the German railways. In America, the Interstate repairs and renewals will be exceptionally small for Commerce Commission, also acting under statutory some years to come, and authority, has decided that 51 per cent is a reasonable 2. That the recent very large expenditure on fitting return on railway capital and has authorized rates the freight wagons with continuous brakes should regarded as sufficient to produce this return. result in important operating economies. If the German railways are required to pay very In the second place, we think our knowledge of what little more than 3 per cent for reparations, they ought, has happened and is happening in other comparable under efficient and economical commercial managecountries justifies us in asserting in broad terms that, ment, to earn a substantial surplus over and above, given efficient and economical management, there is no which can be applied in relief of the general taxation apparent reason why the operating ratio should not be of the country. At the same time, it should be underbrought back in a short time to 80 per cent in Germany stood that the profits on railways, like those of other as it has already been brought back elsewhere. commercial undertakings, vary from year to year. In England and America, as we have said, the wages There are good times and bad times. The milliard of the staff have doubled, but the tariffs are only which we have assumed as a reasonable return must roughly 50 per cent above the pre-war tariffs. In the be regarded as an average one year with another. result, the operating ratio has become much higher than As we have already said, the full net revenue will before and stands at present at about 80 per cent. not be attained from the outset. A period of some But the remaining 20 per cent, calculated on a greatly years will probably need to elapse, for the German increased gross revenue, suffices to give a return of over traffic has been seriously affected by the occupation 4 per cent on the railway capital. of the Rhine-Ruhr railways. Now in Germany a gross revenue of 4,000,000,000 Time will be needed after the railways have been gold marks per annum is in sight at the present moment. reorganized as a united system to bring the new system With a gross revenue of 4,000,000,000 gold marks per into work and to reestablish completely the old traffic. annum and an operating ratio of 80 per cent, the net And this reorganization will mean expenditure. Furrevenue would be 800,000,000 gold marks. And this ther, the necessary reform of the management will take sum added to the 227,000,000 gold marks of the transtime to carry out and will not produce its full effect port tax yields a total of over 1 milliard gold marks. at once. And the whole of this sum can be made available For all these reasons and naturally without commitfor reparation. The fall of the mark has wiped out ting ourselves to mathematical accuracy we think it the pre-war railway debt; the plan before the comreasonable to estimate that the net revenue apart from mittee will, we understand, relieve the railways under the transport tax, and after providing for building up the new management of responsibility for the debts of an adequate reserve, will increase as follows: recently incurred; and capital has been so lavishly spent in the last few years that there can be no justifi- Gold marts. cation for further expenditure for some years to come. First year 400,000,000 In future years we assume that, under commercial Second year 550, 000, 000 management, new capital will not be spent, unless with Third and fourth years 700, 000, 000the assurance that the resulting profits or economies 750, 000, 000 will at least suffice to meet the interest. Fifth and subsequent years... 800,000,000 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

392 FEDERAL RESERVE BULLETIN MAT, 1924 Measures to obtain results adequate net revenue as of primary importance, while at the same time having regard to the progressive It is evident, in the first place, that the railways in development of the economic life of the country and common with every other German undertaking can being careful not to kill or even impair the productive only give satisfactory results if the currency is stabil- capacity of the goose that lays the golden eggs. ized and political and social tranquillity prevails. Moreover, as we have already said, the financial As for the measures to be taken to obtain the results result which we have mentioned can only be attained indicated above we may repeat: The railways must be on condition that the entire German railways are either worked as a commercial enterprise—that is to say, united in one system under a single management or with the determination, on the one hand, so to fix rates divided in a reasonable manner into several systems as to produce all the receipts that can be obtained, working in harmony, with the same tariffs and under and, on the other hand, to reduce the expenditure to the same general regulations. If we had to contema minimum. The management of the German railplate separate systems wholly out of harmony with ways has hitherto been far from working to this standeach other, the results obtained would certainly not ard. We shall show later that since the war the tariffs, correspond to our estimate of the net revenue obtainboth for passenger and freight, have been kept too low, able. with the object of encouraging industry and commerce, Though that estimate assumes the existence of an and especially of favoring German export. The tariffs undivided German railway system, it will of course be are still regarded as they were before the war, primarily understood that, in making this assumption we do as a weapon in the hands of German trade, and only not express any opinion as to the course of action secondarily as a source of railway revenue. which the allied Governments may think it desirable On the other hand, the expenditure on rolling stock to adopt or on the general question of military or and works of every kind has been extravagant since economic guarantees for reparation and security. the war, and the staff employed is at the same time Finally our estimate takes for granted that the railmuch too large and badly paid. ways will not be required to carry traffic for the Gov- It is, therefore, indispensable to make a radical ernment or the community unless their services are paid change in the policy followed by the railways hitherto. for at a commercial rate. Hitherto the German rail- But we do not believe that any German management ways have carried free for the post office not only will have the strength necessary to fight successfully mails but parcel traffic. The railways of Great Britagainst the traditional mental attitude unless there is ain receive at the present time from the post-office behind it the constant pressure of an expert control, payments for similar though smaller services amountestablished and maintained in the interests of the ing to more than 4,000,000 pounds sterling per annum. Allies, to supervise the management in the matter There are other instances of a similar kind, but of less both of tariffs and of expenditure. importance with which it is not necessary to deal here. We shall deal later with the question of the control in greater detail. FUTURE CAPITAL EXPENDITURE Further, we regard a complete change in the organi- We shall see later that the expenditure incurred zation as essential. We think that the recent estab- since the war for new works, and especially for rolling lishment of a separate undertaking, with a separate stock has been very large. It has in our judgment budget and with a certain measure of independence, gone much beyond the real needs of the railways. though it is a move in the right direction, does not go For rolling stock alone there has been charged against far enough. The undertaking, though separate, still the various budgets, a sum of more than 3 milliard remains a Government undertaking. In our judg- gold marks, which has enabled the railways to acquire ment it is necessary to go further and, while leaving to more than 18,000 new locomotives and more than Germany the ownership of the railways, to intrust the 400,000 new carriages and wagons. management for a period of years to a commercial We think, therefore, that, broadly speaking, the company, which will be German, but with a board of capital account can be entirely closed for some years directors containing representatives both of the share- to come without any injury to the railways. But at holders and of the creditor allied powers. the same time we must not fail to call attention to the What this period of years should be, how the com- statement of the German Government that the capital pany should be constituted, with what powers, and expenditure to be incurred in the year 1924 will with what rgstrictions is a matter which we under- amount to over 500,000,000 gold marks, and that to stand the committee itself will deal with. We need complete the program a further expenditure of 236,only urge that the company and its management must 000,000 gold marks will be required in 1925. We have adequate freedom in the matter both of tariffs think that this program ought to be examined in and operation. And if we may vary the phrase of detail, and very drastically cut down. Doctor Sarter, we think that a commercially managed Still, after a certain time it will no doubt be necessary railway company ought to treat the attainment of an to incur new expenditure in enlarging stations or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FBDEEAL RESERVE BULLETIN 393 building new lines. But as we have already said, a Receipts commercial administration will not embark on new The receipts for the budget in 1924 have been calcapital expenditure unless it is evident that it will be culated by assuming a traffic somewhat greater than directly reproductive. The cost can, therefore, be paid that in 1913, but less than that in 1921 and 1922, in either directly, out of increased net revenue, or, if which years the traffic was swelled by the activity it is sufficiently important to justify this course, by of trade due to the fall of the mark. loans charged on the increased revenue without trench- The figures are as follows: ing on the revenue pledged for reparations. THE RAILWAY BUDGET ORDINARY BUDGET Actual in Estimate for 1913 1924 It seems desirable to examine the estimate for the ordinary budget for the financial year from April 1, Passenger kilometers 35,122,000,000 40,000,000,000 1924, to March 31, 1925—in German financial matters Ton kilometers _ 57,251,000,000 60,000, 000,000 called the year 1924—which has been drawn up by the German administration. The passenger receipts have been calculated on the It has been drawn upon the supposition that the basis of the tariffs which were in force at the time Rhine - Westphalian Railways have been restored to when the budget was framed. Later on, when we German management. But even if and when this come to deal with tariffs, we shall point out that the happens, it is probable that there will be confusion at third and fourth class fares were too low, and that the the outset; a certain time must necessarily elapse first-class fares which affect only a trifling number of before the normal working can be resumed and the passengers, were too high. Since March 1 the third and fourth class fares have been increased by 36 per ordinary currents of traffic restored; and further, cent, and the first-class fares have been slightly recertain exceptional expenses will have to be incurred duced. We may assume that the result will be an which it is impossible to estimate exactly. increase in passenger receipts of 30 per cent, which This budget is, therefore, somewhat theoretical, and will raise the budget estimate of 850,000,000 to roughly may be considered as representing the results to be 1,100,000,000 marks. obtained in the year 1925 rather than in the year 1924. Subject to these reservations, we will proceed The freight receipts have been calculated on the to summarize and examine it. basis of an average charge of 4.5 gold pfennigs per ton kilometer. The tariffs in force last February, at the Ordinary budget including the Rhine-Westphalian time of our visit to Berlin, gave a higher average Railways receipt per ton kilometer of 5.5 gold pfennigs. But a- I. EXPENSES general reduction of 10 per cent was made on March 1, Gold marks and others are in contemplation with the special object Salaries and wages 1, 631, 007, 000 of encouraging national trade and industry. As we Cost of material: shall explain later, these reductions do not seem to us Supplies and con- Gold marks justified under present conditions. If rates were mainsumable stores 545,000,000 tained at a reasonable level, we may assume that the Maintenance of way freight receipts would be about 10 per cent above the and works 294,480,000 budget estimate of 2,700,000,000 marks; that is, they Maintenance and rewould amount to 2,970,000,000 marks. newal of rolling The receipts side of the budget would then be as. stock and mechanfollows: ical plant 394,000,000 Gold marks Other material costs_ 140,513,000 Passenger traffic 1, 100, 000, 000 Reserves 200, 000, 000 Freight traffic 2, 970, 000, 000 Interest and repay- Miscellaneous 130, 000, 000 ment of debt 325,000,000 Total 4,200,000, 000 1, 898, 993, 000 Expenses Total 3,530,000,000 As for the estimate of expenses for 1924, it is to be II. RECEIPTS noted that the expenditure for staff, 1,631,007,000 Passenger traffic 850, 000, 000 gold marks, represents about 54 per cent of the actual Freight traffic 2, 700, 000, 000 working expenditure of 3,005,000,000 gold marks. If Miscellaneous 130, 000, 000 we exclude interest and repayment of debt and reserve; Total - 3, 680, 000, 000 neither of which are properly included in working ex- Surplus 150, 000, 000 penses, this proportion is much the same as that on the railways of the adjacent countries. We pointed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

394 FEDERAL RESERVE BTJXLEHN MAY, 1924 out in previous notes that the staff was unreasonably system including the Rhine-Westphalian lines, under large. In 1919 there were 1,121,111 permanent staff normal conditions. Certainly they will not be obtained and workmen employed; at the end of 1923 the number in the year 1924, though they should be obtained very was still very nearly one million. They must have shortly thereafter. been extraordinarily badly paid, for the percentage of the wage bill to the total expenditure was reduced in the Interest and repayment of debt budgets of 1922 and 1923 to 29 per cent and 20 per The sum of 325,000,000 set down in the budget for cent, respectively, a figure absolutely abnormal. interest and repayment of debt during the year 1924 The expenditure for 1924 has been calculated on the is divided into: basis of a staff reduced to 793,000, although on the 1st Gold marks of January the number was still 936,800. A very Interest-... --_ -- 99,000,000 drastic reduction is therefore, implied, and is in fact Repayment.., 225,000,000 being carried through at this moment. But there Cost of administration 1, 000, 000 "will be no saving in money. Increase of wages will more than counterbalance the decrease in the number 325, 000, 000 of staff, for an increase of salaries and wages amounting to 18 per cent on the average is budgeted for. A This debt represents liabilities recently incurred, table of the variations in the average payment per for the old debt has practically disappeared. The employee per annum in gold marks is given below: total amount of the current debt is 312,000,000 marks. Particulars are given, in the reply of the Government to questions asked by the committee. There are Year Feb- Budget 1914 r 1 u 9 a 2 r 4 y e f s o t r i m 19 a 2 t 4 e short-term loans, overdue accounts, bills of exchange maturing, advances made by the ministry of finance or by the Reichsbank, and emergency currency issued Permanent stall 2,352 1,634 1,972 Workmen 1,331 1,060 1,338 by the railways which has to be redeemed. The interest Average. 1,718 1,293 1,595 charge for these debts is quite large. In certain cases Percentage of pre-war average 100 75 93 we are told that interest is running at the rate of onetenth of 1 per cent per diem, that is 36 per cent per We feel bound to say that the increase proposed is annum. Evidently debts of this kind should be paid entirely reasonable. The remuneration of the staff, off as soon as possible. especially in the upper and middle ranks, is quite In addition to these current debts amounting to inadequate, and, if good work is expected, it must be 312,000,000, it is estimated that further debt will paid at its market rate. need to be incurred as follows: A reserve of 200,000,000 marks has been included Gold marks Commitments for extraordinary exto provide for contingencies, a course which we can penses up to March 31, 1924 110,000,000 not other than approve. For the expenditure of the extraordinary The total expenses for the year 1924, including this budget during the financial year 1924 387, 000, 000 reserve and interest and repayment of debt, to which For expenditure which will be necessary we shall refer later, are set down in the budget as when the Rhine-Westphalian rail- 3,530,000,000 gold marks. With the tariffs on the ways are handed back - 200,000,000 basis which we have taken above, the receipts will be 4,200,000,000 gold marks. This would give a surplus of 670,000,000 gold marks. This surplus would be Total. 697,000,000 net profit because the reserve of 200,000,000 and Add debt already incurred .. 312,000,000 325,000,000 gold marks for interest and repayment of the new debt has been included in the expenses. Total debt.actual and anticipated 1, 009, 000,000 Further, it is to be remembered that the transport As we have said, the ordinary budget for 1924 protax represents in effect a further net profit from the vides an amount of 225,000,000 marks for repayment railways. If we reckoned this tax at 10 per cent on of debt. But it is evident that these expenditures the passenger receipts and at 7 per cent on the receipts charged on the extraordinary budget tend to increase from freight other than coal, we should obtain for 1924 rapidly, and it is therefore necessary to cut down the a figure of 276,000,000 gold marks. extraordinary budget. To this question we now turn. The total net income of the railways would then be •670+276=946,000,000 marks, which is very close to the milliard which we have suggested is attainable THE EXTRAOEDINAKY BUDGET within a few years. A budget of extraordinary expenditure has been But as we have said already, these results are applidrawn up for the interim period froni November 15, cable to the entire German railways worked as a single 1923, to March 31, 1924. It covered originally an Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL EESERVE BULLETIN 395 expenditure of 220,000,000, but was subsequently ROLLING STOCK reduced to 170,000,000 marks, divided as follows: Below is a comparison based on figures furnished to us Chapter I— Gold marks in Berlin, of the German railway rolling stock before Dwellings 8, 000, 000 the war and in 1924. We have ignored electric locomo- Additional rolling stock 77, 000, 000 tives and motor cars: Kunze Knorr brake 3, 000, 000 Miscellaneous 15,000,000 Steam lo- Car- Chapter II— comotives riages Wagons Doubling of road 6,000,000 Electrification 6,000,000 End of 1913 27,940 62,050 657,150 January, 1924 _ 29,966 67,800 723,100 Stations 32,000,000 Repair shops 13,000,000 Miscellaneous 10, 000, 000 Further rolling stock ordered last year from private firms and not yet delivered amounts to 884 locomo- Total 170,000,000 tives, 1,453 carriages, 25,653 wagons. Delivery of this These expenses are to be covered partly by credits stock was due by the beginning of May, but has been already available, and partly by new credits to an delayed owing to the occupation of the Rhur. It is amount of 110,000,000. not now expected to be complete till the end of the year. The ministry has also furnished us with a statement These figures show that the whole of the rolling of other extraordinary expenses which in their judg- stock handed over, either at the Armistice or together ment are still necessary for the financial year 1924. with the territory ceded under the treaty of peace, has We summarize them as follows: been replaced by new. Old and out-of-date rolling Chapter I—- aold marks stock, which could only be replaced to a very small ex- Dwellings 15, 000, 000 tent during the war, has been written off and replaced Additional rolling stock . . . 110, 000, 000 since 1920, and a considerable quantity of additional Electric rolling stock 20, 000, 000 rolling stock has been built. Kunze Knorr brake 28, 000, 000 It is worth while producing a table showing the loco- Miscellaneous 40, 000, 000 motives written off and replaced for each of the last Chapter II— 11 years: Locomotives New tracks 10,000,000 written off Doubling of road 13, 000, 000 1913 600 1914 379 Electrification 10, 000, 000 1915 •_.. 253 Stations 94, 000,000 1916 : 237 Repair shops 36,000,000 1917 220 Miscellaneous 11,000,000 1918 167 Total 387,000,000 1919 191 In addition to this expenditure of 387,000,000 marks 1920 . 690 in 1924, it is estimated that a further sum of 236,000,000 1921 1,849 will subsequently be required merely to complete 1922 . 1, 585 works already begun. This represents the final state 1923 1,500 of a program amounting altogether to 1,610,000,000 Total. .... 7, 671 marks. The same thing has happened with carriages and This estimated expenditure, which will have to be wagons. We give a table showing the new rolling covered by loans, has, so we are told, already been stock acquired since 1914: reduced to an absolute minimum. All the same, we think it ought to be reexamined point by point in order to stop or at least postpone work not absolutely Steam locomo- Carriages Wagons necessary, except where it has been carried to such tives a point that it had better be completed. The works and the rolling stock of the German rail- Delivered: 1914-1918 8,859 11,832 181,196 ways were very fully adequate before the war. Since 1919-1923 8,506 12,313 246,388 the war no money has been spared to enlarge works and Ordered but not yet delivered 884 1,453 25,653 buildings and to renew and even increase the rolling 18,249 25, 598 453,237 stock to an extent which will make it impossible to justify any new expenditure of this nature for some The result is that 18,249 locomotives and 478,835 years to come. We give below particulars as to the carriages and wagons, two-thirds of the entire stock, rolling stock which bear out this statement. have been built within the last 10 years, and that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

396 MAY, 1924 accordingly the rolling stock of the German railways the bulk of the traffic had hitherto passed, were is much superior to that which they possessed in 1914. withdrawn. Many of them have since been restored Replacement of rolling stock on this colossal scale has in a modified form. And this is only' the railway necessarily entailed enormous expenditure. We are side of the difficulty. unable to give the actual cost, for it is spread over The currency question complicates the whole story. various budgets. Tariff advances were at the outset made in the shape The figures which have been given to us show an of percentage increases of existing rates. Then came expenditure, up to the end of 1922 only, of 2,267,774,488 a period when an index figure was adopted with a marks. varying multiplicator. Finally in November, 1923, This figure does not include the cost of replacing the the tariffs were calculated on a gold basis. The result, rolling stock handed over to the allied powers in 1919, as we are informed, was that the freight tariffs were 1920, and 1921, which was paid for by special credit found to be on a level so high in comparison with the granted by the ministry of finance, amounting when capacity of the traffic to bear the rates, that reductions reduced to gold marks to 739,347,006. on a large scale became absolutely necessary. The replacement of rolling stock written off is charged We are far from satisfied that this was or is the case. against the ordinary railway budget. Additions to We feel convinced that further investigation would rolling stock are charged against the extraordinary support our general conclusions that the freight rates railway budget. have been, and are proposed to be reduced in a manner From November 15, 1923, to April 1, 1924, rolling and to an extent which can not be justified from the stock to an amount of 150,000,000 gold marks will be railway point of view, and that this has resulted from so charged. the training and mental attitude of the officials, who A further expenditure of 50,000,000 marks in the have been brought up to share the views expressed in ordinary budget and of 110,000,000 marks in the the quotation from Doctor Sarter which we have extraordinary budget is proposed for the year 1924. given above. At the same time we feel it necessary to utter a KtTNZB KNORB CONTINUOUS BRAKE note of warning, Our conclusion that freight tariffs The application of the Kunze Knorr continuous might be a good deal higher than the German officials brake to freight trains has also implied large expend- think they can profitably be is based mainly on the iture. It was decided in 1918, while the war was still average receipts per ton-kilometer to-day as compared going on, to adopt this policy in order to release a large with the pre-war figures. We are told that these number of brakesmen and to make possible an increase figures give a misleading impression of present-day of speed of freight trains, more especially of military facts, and numerous comparisons of certain imtrains. This policy has been energetically pursued portant rates and classes of rates, pre-war and postsince the war; on the one hand, all the new wagons war have been submitted to us, which would, if ordered have been fitted with continuous brakes, and typical, put a different complexion on the matter. on the other hand, the equipment of the old stock has In spite of these tables we still adhere to the opinion been pushed on. we have expressed. But the committee will appreciate The entire program is expected to be completed by that what we have said is only an expression of opin- April 1, 1925. The total expenditure will amount to ion, and can not claim to be a considered judgment 400,000,000 marks, of which 117,000,000 still remain based on fully ascertained statistical facts. to be paid. But it should be said that the Kunze We have found it impossible to satisfy ourselves Knorr Company has agreed to spread the payment how high the present German freight tariffs really are. over a period terminating only on October 1, 1926. The earliest documents submitted to us stated that the freight tariffs might be assumed to be double TARIFFS the pre-war tariffs. The facts do not seem to us to bear Freight.—A study of the freight tariffs of any out this statement. Before the war the freight charge country at any time involves prolonged investiga- per ton-kilometer averaged 3.36 gold pfennigs. It is tion of a vast mass of bewildering detail. To present estimated by the officials that in November, 1923, in brief outline the broad general effect is almost at the moment when the gold mark was substituted for impossible. Certainly the short time available has paper marks of indefinite value as the medium of not made the task possible for us. In Germany its payment for railway services, the average rate was difficulty is increased by various special circumstances. double the pre-war. In other words, according to the official estimate, the average rate in November, In 1921 the whole basis of the freight tariffs was 1923, should have been 6.72 pfennigs per ton-kiloaltered by the abandonment for a large part of the meter. But this in no more than an estimate, and we traffic of flat mileage rates, and the substitution theredoubt its accuracy. for of Stafeltarife, that is, rates under which the charge per mile decreases as the mileage increases. Simul- From this date there began a process which is still taneously, most of the exceptional tariffs, under which continuing of repeated and important reduction of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 397 rates regarded as excessive. There is statistical The effect of (1) will be permanent; the effect of (2) ground for believing that in the early part of January, will probably diminish with time; the effect of (3) 1924, the average rate was 5.89 pfennigs, an advance, will presumably be only temporary. We can not estithat is, not of 100 per cent but of 75 per cent above mate what proportion of the ascertained results has the pre-war average. On January 20 a number of been due to these three causes respectively. But it is important reductions came into force, and the estimate clear that, if in future years the tonnage does not based on such statistics as were available, was in the increase, while the average length of haul goes back middle of February that the then average rate was to anything approaching the pre-war figure, the effect 5.55 pfennigs, an advance on pre-war rates of 65 per on the railway revenue will be quite serious. cent. The reductions are, however, still going on, and Before we leave the question of freight tariffs, we some of them are of great importance. On March desire to make one observation. We have admitted 1 an all round reduction of 10 per cent was made on that the facts are obscure; that our investigations have a large part of the traffic. not been and could not be pushed very far. We The budget estimate of freight traffic receipts is have acknowledged that we have hesitated as to certain made on the assumption that the average freight rate conclusions. It may well be that, where we have exduring the year will have been brought down to not pressed a definite opinion, time will prove the opinion more than 4.50 gold pfennigs, which is equivalent to wrong. an advance over the pre-war tariffs of only 33 per cent. All this we have had in mind; it does not affect the No doubt this estimate errs, as was intended, on the thing which from the point of view of the committee is side of caution. the really important matter, that we retain the convic- On this policy we will make two observations. tion that the German railways can and should produce Taken as a whole, we have difficulty in believing that a net revenue of one milliard gold marks per annum all particular reductions made and proposed can be available for reparation. Our forecast may well prove justified. Even assuming that in certain cases reduc- erroneous on certain points, too optimistic in one tions have been and are desirable in the interest of direction, too pessimistic in others. But our estimate the railways, we feel convinced that reductions are is based on broader grounds than tariff details and to being conceded which need not be made, and that at it we adhere. least in some cases the percentage of reduction is Passenger tariffs.—The German railways have unnecessarily large. We have learned that excep- nominally four classes of passengers, but first-class tional tariffs involving great reductions, both for carriages are not run on local trains and fourth-class import of raw materials and for export of German carriages are not run on express trains. The fares produce, are being very freely introduced. The before the war were, respectively, at 7 pfennigs, 4.5 import rates for jute have been reduced by 25 per cent pfennigs, 3 pfennigs, and 2 pfennigs per kilometer. ( for raw cotton and raw wool by 50 per cent. A reduc- In April, 1917, the transport tax, amounting to 16 tion of the rate for miscellaneous wares exported by per cent, 14 per cent, 12 per cent, and 10 per cent on sea, amounting to 30 per cent, is on the point of coming the gross receipts from the four classes, respectively, into force, and a reduction of 30 per cent to 40 per cent was introduced. in the rates for steel and iron exported by sea is con- In spite of the tax, which is estimated to amount for templated. 1924 to 85,000,000 gold marks, the railway manage- There is a point in co nnection with the freight tariffs ment did not raise fares till September, 1923. At this and freight revenues which, though the precise facts date the fares were increased, including tax, to 19.6 are obscure, is of considerable importance. The pfennigs, 9.9 pfennigs, 3.3 pfennigs, and 2.2 pfennigs budget estimate for 1924 assumes, apparently with good per kilometer for the four classes, respectively. Therereason, that the ton-kilometers to be carried in 1924 fore, the third and fourth class fares were only increased will be roughly equal to those of 1913. But conditions by the amount of the tax, while the first and second have greatly changed in the interval. The number of class fares were more than doubled. The result of tons carried has fallen apparently by about 20 per fares so obviously out of proportion was to empty the cent, while the distance the average ton travels has higher classes. Accordingly in December last the increased in corresponding ratio. The German officials first and second class fares were reduced by one-third. adduce three main causes for the increase in the But even then the first-class fare was four times the average length of haul': third class and six times the fourth class. Naturally 1. The introduction in 1921 of Stafeltarife. the first class was absolutely empty, being used by 2. Changes in the previous currents of traffic con- 7 passengers out of 10,000, while 7 passengers sequent on the war and the establishment of new out of 100 traveled second class. A good deal more political frontiers. than half the passengers travel in the fourth class and a good deal more than one-third in the third class. 3. Diversion of traffic in consequence of the occupa- Seeing that a third-class passenger could till a few tion of the Rhine-Ruhr territory. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

398 FEDEEAL RESERVE BULLETIN MAT, 1924 weeks ago travel 30 kilometers and a fourth-class utive officers, whether charged with engineering or passenger 45 for 1 gold mark with an ordinary traffic management, were afflicted with what it is not ticket, and that more than half the total number of too strong to describe as megalomania. They repassengers in fact travel with season tickets issued at a garded it as due to the dignity of the German Reich rate roughly one-half of the ordinary rate—could travel, that buildings should be magnificent, that railway plant that is, respectively 60 and 90 kilometers for 1 mark— should be up to a very high standard, that such and it is not surprising to find it admitted that the rates such services should be given, and so on. They had for passenger traffic have been quite insufficient to never been taught the commercial necessity of cutting cover the working expenses. At length, as from the their coat according to their cloth. 1st of March, while the first-class fares have been Now the mere transference of the railways from further reduced to a level which may possibly secure a State to company management will not of itself alter few additional first-class passengers, the third and this mental attitude. A large part of the board will fourth class fares have been increased by 36 per cent. be German; the general manager will be German; and The fares of the four classes are now 9 pfennigs, 6 his responsible officials will be the same men who have pfennigs, 4.5 pfennigs, and 3 pfennigs per kilometer inspired and carried out the railway policy of the past. and the ratio between the classes is less unreasonable We think it therefore essential that a railway commisthan hitherto. sioner should be appointed by and on behalf of the We can hardly think that these new fares will be Allies to supervise and, if it should hereafter become unduly burdensome to the German public, seeing that necessary, to control in their interest the German the German third-class fares per kilometer will still be management. We will, therefore, in concluding this only half the corresponding fare either in England or report, deal with what in our opinion should be the in the United States. But the public have so long functions of the railway commissioner and the organibeen accustomed to be carried at noncommercial rates zation of his staff. that we think some falling off of traffic is to be expected, at least at the outset. We have accordingly esti- THE RAILWAY COMMISSIONER mated that a 36 per cent increase in fare will only The railway commissioner must be a person who produce a 30 per cent increase in receipts. is acknowledged in the railway world as being in the first rank. It must be left for him, when appointed, FUTURE CONTROL THE RAILWAY COMMISSIONER to say what assistance he needs, in order to be able It is evident from the facts and figures set out above to assume responsibility for control of all branches that the German Government has since the war run of railway management. It will be his duty also to the railways in a manner which can not be defended. consider how far it is necessary to have local repre- On the receipts side it has failed to raise the revenue sentatives in any or each of the districts into which which might have been and ought to have been raised. the German railway system may hereafter be divided. On the expenditure side it has spent capital not merely We assume that when appointed he will produce to on restoring the pre-war situation, but on betterments the board an outline of the organization and the staff of all kinds which under the existing conditions can not that he regards as necessary, and it will be for the be justified. The railways have not merely been board to approve his scheme. He must have the restored to their pre-war state of efficiency, but have right to receive, of course, all reports, statistical and been brought up to a much higher standard, a standard financial returns, proposals for extra-routine expendiwhich to the best of our knowledge is superior to that ture, whether on capital or revenue account, for of any other country. We are given to understand changes in tariffs or for the concession of exceptional that even inside the ministry itself this policy has been rates and the like, when they are of such importance severely criticised. The excuse is that the pressure as would normally require the sanction of the general on the one hand of the great manufacturers to keep manager. He must also have the right to call for their works going and to avoid a wholesale dismissal of any further reports, returns, and statistics, as he may employees, which might lead to revolts or even revo- think necessary, in order to enable him to form an lution, was too strong to be resisted; while on the other independent judgment. side, the poverty of the mass of the population was so Being in possession of full and up-to-date information, great that the Government was compelled to mainas to everything that is happening or is proposed, tain railway rates at a low level. Whatever may have his first duty will be to decide whether to approve been the reason, there can be no doubt of the facts. or disapprove. If he disapproves, or even hesitates to Our own view is that, while the reasons above had approve, he will discuss the matter with the general considerable weight, the action taken was by no means manager. He may be of opinion that things are wholly due to external pressure. The officials in the going wrong, or that a course of action inconsistent tariff section of the ministry were, as we have repeat- with the railways being able to earn a financial return edly said, only too ready to subordinate railway is likely to be adopted. In such a case it will be his interests to nonrailway circumstances. And the exec- duty, if he fails to induce the general manager to- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDEKAL RESERVE BULLETIN 399 modify his policy, to bring the matter to the attention It does not seem necessary to discuss in detail of the board in order that they may be in a position what would be the position of the commissioner if the to take such action as they think fit. It is to be hoped German railways failed to yield the net revenue fixed that, if the right man is appointed to the post, he will as reasonable for reparation purposes. We assume be able to work in entire harmony with the general man- that, broadly speaking, in this case the commissioner ager; and that the general manager, so far from resent- general will take over the functions of the general ing his interference, will welcome his support in putting manager, and that, in lieu of discussing with the general a stop on the one hand to unnecessary expenditure, manager or recommending to the board of directors, and in enforcing on the other hand the establishment he would be empowered to issue positive orders, and the maintenance of tariffs proper and adequate to whether for stopping expenditure which he considered secure for the railways as much net revenue as can unjustifiable or for an increase which he considered reasonably be obtained without unduly hampering the reasonable in existing tariffs. It is evident that it trade of the country. would be necessary to require the German Govern- A second function of the commissioner will naturally ment to agree in advance that, if payment on the be to make for the foreign members of the board agreed scale failed to be reached or even if there was serious danger that this failure would occur in reports on any points which they may regard as of the immediate future, the commissioner, as the represerious importance. We may suggest the reasonablesentative of the Allies, should be entitled to enter ness of the greatly reduced German export tariffs as into full control. a sample of this class of question. It is clear that the Allied Nations have a right to claim that the net W. M. ACWOBTH. revenue of the German railways should not be reduced G. LBVEBVE. in order to give to German manufactures an unreasonable advantage in overseas markets. ANNEX NO. 4 TO THE REPORT OF THE FIRST COMMITTEE OF EXPERTS CONCESSION OF THE WORKING OP THE RAILWAYS TO A necessary to prevent discrimination and to protect the COMPANY public, but such control shall never be exercised so as to impair the ability of the railroad company to earn CONCESSION OP THE WORKING OP THE RAILWAYS a fair and reasonable return on its capital value, The working of the Germany railways shall be including adequate provision for its bonds and prelegally transferred to a company by a fixed date. ferred shares, a return on its ordinary shares, and ade- The law will ratify the contract to be entered into quate reserves for all purposes including amortization between the German Government and the company of capital. The plan to accomplish the foregoing shall to which the concession is made. The contract will be worked out by the organization committee hereinprovide that no change can be made in the conditions after referred to. of the concession without the consent of the company The company shall as from the commencement of and the trustee for the bondholders referred to below. the concession be entitled to charge the tariffs then in The law will further provide that the company force. Thereafter the company shall be entitled to shall have a monopoly of all railway extension in vary the tariffs or any of them from time to time, Germany. subject to the provisions of articles 365 and 378 of The charter of the company will be annexed to and the treaty of Versailles. approved by this law. Before being submitted to the It shall be the duty of the organization committee to German Parliament the law will have to be approved settle the manner in which, subject always to the by the Reparation Commission. preceding provision, the control of the German Gov- The conditions under which the working of the ernment over the service and the tariffs shall be German railway system will be transferred to the exercised. company by this law shall be as set forth below. The term of the concession shall be at least of The company will be of German nationality. sufficient length to allow of the amortization of the The company shall be responsible for the working, bonds according to the provisions hereinafter conupkeep, and normal development of the railways, tained. On the expiration of the concession, the including rolling stock and equipment, and will be company shall return to the German Government free entitled, subject to the provisions hereinafter contained from all charge, the whole of the railway undertaking, as to the powers of the German Government and the including all rolling stock and equipment, in thoroughly railway commissioner, to conduct its business in such good and complete working order. manner as the company may think proper. As the consent of the German States is necessary The German Government shall have such control under the German law of 1920 for any alienation of or over tha tariffs and service of the railways as may be charge upon the German railways, the German Gov- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

400 FEDERAL BESBRVE BULLETIN MAT, 1924 ernment shall make in this respect all necessary Of the nine members of the board of directors arrangements with the States concerned. These appointed by the trustee, five may be German naarrangements shall be ratified by the law granting the tionals. concession. The chairman of the board will be elected for one This law shall confer upon the company the. right year by a three-fourths majority of the members of the to mortgage any property belonging to the railways. board and will be eligible for reelection as long as he It shall also contain an undertaking that neither possesses the necessary qualifications. the Reich nor the States nor any public authority As soon as the preference shareholders shall elect shall impose on the railway company any new direct directors, the chairman shall be chosen from the tax, whether upon receipts either gross or net, or directors so elected. upon movable or immovable property or in respect of He will in addition to his vote as a member of the the employees of the company or otherwise howsoever. board, have a second or casting vote. The general manager of the company shall be of THE RAILWAY COMPANY German nationality. He will not be eligible for a seat on the board. He ARTICLE I.—Capital of the company will be appointed by a three-fourth majority vote of The total capital which will be created, added to the the board. first mortgage bonds for 11 milliard marks gold referred He may be removed by the same majority. If, to below, will correspond to the capital cost of the however, his removal is requested by the commissioner German railway system (26 milliard marks gold). (provided for in Article III below) on account of Preference shares will be created to the amount of 2 violation of the charter of the company or of failure to milliard gold marks, bearing a fixed rate of dividend comply with the instructions of the board of directors, and entitled to participation in the profits of the railhe may be removed by a simple majority vote of the ways, after payment of the annual payments menboard. tioned below. This dividend and this participation, as Whatever decisions may be taken with regard to the also the terms on which the German Government may operation of the railways, it must be understood that pay off or repurchase these shares, will be fixed by any breaking up of the working of the system into local agreement between the German Government and the divisions must not in any event affect the financial and organization committee described below. tariff unity of the undertaking. These preference shares will be sold by the company for the profit of the German Government and of the ARTICLE III.—Commissioner company itself, one-fourth of the sum thus obtained The railway commissioner shall be a person accepted will be the property of the German Government and in the railway world as being in the front rank. three-fourths the property of the company. The He shall be appointed by a majority vote of the sales of shares will be made under such conditions that foreign members of the board of directors. the German Government will receive the whole sum He shall not be a member of the board. due to it within two years. If the German Govern- He will have an adequate staff of experts in railway ment so requires, the proceeds of the first sale of shares matters and in accountancy. may be reserved for its use. The commissioner will have a general right of in- The balance of the capital cost of the German rail- spection over the whole railway system and all the way system (viz, 13 milliard gold marks) will be railway installations and subdivisions, either in person represented by ordinary shares, to be owned by the by deputy. German Government and to be kept or sold by it as He shall also be entitled to receive all reports, stait prefers. tistical and financial returns, proposals for extraroutine expenditure whether on "capital" or "reve- ARTICLE3H.—Administration and management nue" account, for changes in tariffs or for the conces- The company will be administered by a board of sion of exceptional rates, and the like, which are of directors gf at least 18 members, who shall all be busi- such a nature as would normally require the sanction ness men of experience or railway experts. Half of of the general manager. these will be appointed by the German Government The railway commissioner will further be entitled to and half by the trustee referred to below. call for any other reports, returns, or statistics which As soon as preference shares are issued to the public, he may consider necessary in order to enable him to the holders of these shares shall be entitled to elect form an independent opinion. All this information four members of the board in place of four members shall be furnished promptly, fully, and accurately at appointed by the German Government. his request. If any measure in connection with con- The organization committee will also fix the dura- struction, operation, or tariffs tends substantially to tion of the terms of office of the directors of eachmenace the rights or interests of the bondholders or class. of the Reparation Commission, as defined below, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 401 in particular to endanger the payment at the due If in any year the German railways fail to realize dates, referred to in Article V below, he shall discuss receipts sufficient to allow of the payments above the question with the general manager. If he can mentioned (it being understood that the company not persuade the latter to change his line of conduct, may draw upon whatever reserves may be available he must lay the question before the managing board, for this purpose until such reserves are exhausted), in order that it may take any measures it may deem the railway commissioner shall have the right to take necessary. such action as the trustee for the bondholders may If the service of the bonds hereinafter mentioned is consider is necessary to protect the rights of the bondin jeopardy, the commissioner shall have regard to the holders, including the right to operate, to lease, or to provisions for the security of the bondholders herein- sell all or any of the railways and property subject to the mortgage or charge of the bonds. after contained. The expenses of the railway commissioner and his From and after the end of the fourth year from the staff shall be an operating charge upon the receipts of date of the formation of the company, the bonds the railways. shall be amortized, under the conditions to be deter- ARTICLE IV.—Bonds mined by the trustee with the approval of the Repara- The company shall forthwith, after its creation, tion Commission, by the application in each year of issue without payment and for the purpose of repara- such part of the annual payments above mentioned tion, to a trustee appointed by the Reparation Com- as shall not be required for the interest on the bonds. mission, first mortgage bonds to a nominal amount The German Government and the company shall of 11 milliard gold marks carrying interest at 3 per also be entitled at any time to pay to the trustee sums cent per annum for the first financial year of the com- additional to the above payments with the authorizapany, at 4 per cent plus a bonus of 25,000,000 for the tion of the Reparation Commission which shall ascertain from the transfer committee that the transfer second, 5 per cent for the third and subsequent years, of these additional funds does not disturb the transfer and to be amortized by a sinking fund as hereinafter of the annual payments. Any sums so paid shall be provided. applied first to the discharge of any interest in arrear Payment of these bonds shall be guaranteed by the and next upon six months' public notice in redeeming German Government and they shall be signed both at par all or any part of the bonds for the time being on behalf of the company and by the finance minister outstanding. acting on behalf of the German Government. The Reparation Commission shall be entitled, with These bonds shall be secured by a first registered a view to the mobilization of the bonds, to divide the mortgage or charge on the corpus and revenues of all same in any manner which it may think expedient immovable property used by or belonging to the into different classes with different rights—as to company present or future, and by a first floating priority of charge, rate of interest, repayment of charge on all its fixed and movable plant, rolling stock capital, and otherwise—against the annual payments and all installations. The company shall be authorto be made by the company, and to issue to the public, ized by the concession to create this mortgage and upon such terms and generally in such manner as the charge, the duration of which shall not be limited to commission may think proper, bonds, debentures, the period of the concession. debenture stock, certificates of indebtedness or other This mortgage and this first floating charge shall be securities of any nature secured upon the whole or expressed to be in favor of the trustee to be appointed any part of the bonds. by the Reparation Commission, provided always that The company shall not be able to issue other bonds the company and the German Government shall be than those referred to above without the authorization entitled at any time, with the consent of the trustee, of a three-fourths majority of the members of the to sell or dispose of any particular property used by board, of which majority two must be foreigners. the railway company which may be considered to be All payments of interest and capital in respect of no longer needed by the latter, upon such terms as to the bonds shall be free from all German taxation, the application of the proceeds of the sale as may be except in so,far as the persons entitled thereto may be agreed upon by the trustee. liable under German law to the payment of German The service of the bonds shall be assured by the direct taxation. following payments which shall be made to the trustee Subject as herein provided, the form of the said from the gross receipts of the company and before the bonds and all provisions as to the enforcement and ascertainment of any net profits; that is to say: repayment thereof, including drawings and giving time For the first financial year of the com- Gold marks for payment, shall be settled by the trustee with the pany. ,.. 350, 000, 000 approval of the Reparation Commission. For the isecond financial year ... 465, 000, 000 For the third financial year. . . 550, 000, 000 ARTICLE V.—Enforcement of Government guarantees For the fourth and subsequent financial If the company shall at any time make default in years.. 660, 000, 000 meeting the service of the bonds, the trustee may in 97417—24 6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

402 FEDERAL RESERVE BULLETIN MAT, 1924 lieu of or in addition to the measures mentioned in the The German Government shall in that case also have last preceding article present the accrued coupons or the right to purchase or repurchase the preference any bonds due for repayment to the commissioner of shares at par, plus dividend and arrears of dividend controlled revenues who shall pay them at their face if accrued. value out of the portion of the receipts of the assigned revenues falling to the share of the German Govern- ARTICLE IX.—Organization committee ment. The coupons and bonds so paid shall be in- A temporary committee with the title of the " Organicluded at their face value in the repayments made by zation committee of the German railway company" the commissioner of controlled revenues to the German shall be constituted in order to work out, subject to the Government. The amounts so paid may only be foregoing provisions, the details necessary for the repaid by the company to the Government after the creation of the German railway company and the exenecessary provision has been made for the current and the next coupons on the b^ids and for the fixed cution of this plan. The committee shall consist of dividend for the current year on the preference shares. two delegates appointed by the German minister of railways, the railway specialists, Sir William Acworth ARTICLE VI.—Transportation tax and M. Leverve, who are familiar with the discussions The company shall on behalf of the Government which have led to the adoption of this scheme, or a pay to the Reparation Commission the proceeds of nominee or nominees to be appointed by them jointly the transportation tax as at present levied, i. e., a tax together with a fifth member of neutral nationality of 7 per cent on the gross receipts from all freight to be chosen by the four thus appointed or, in default traffic other than coal, and a tax of 10 per cent to 16 of such choice, to be appointed by the Reparation per cent, according to class, on the gross receipts from Commission. all passenger traffic. This payment shall be made dur- This organization committee will come to an end as ing the first and each of the following years of the con- soon as may be after the railway company has been cession and until the conclusion of any extension, even constituted, the railway commissioner appointed and if in the course of the concession the whole of the this plan has been put into operation. The expense bonds have been paid off. of the committee and of their staff s'hall be an operating The rate of the transportation tax shall not be charge upon the receipts of the German railways. reduced during the whole of the concession. The proceeds of the tax may be employed by the trustee ARTICLE X.—Arbitration to secure the issue of a special series of bonds for 3 milliard gold mark, or thereabouts. The law to be enacted by the German Parliament shall provide that so long as the functions of the rail- ARTICLE VII.—Financial arrangements way commissioner hereinbefore mentioned shall not The bank account shall be kept at the new bank. have come to an end, if any dispute or difference should Payments by the company herein before prescribed arise between the Reparation Commission or any shall be paid to the account of the railway commis- government represented thereon, on the one side, and sioner. The latter shall transfer these sums to the the company and the German Government, or either credit of the agent for reparation payments. of them, on the other side, or between the company and the German Government, as to the interpretation ARTICLE Vm.—Anticipatory redemption of bonds of any provision of the said law, or of the charter of the If all the first mortgage bonds should be redeemed company, or of this plan, or as to anything to be done before the expiration of the term of the concession by under any of them respectively, whether in respect special subsidy by the German Government to the of the capital and obligations of the company or of its company, the Government shall be entitled to require external or internal management, or otherwise howthat the functions of the railway commissioner herein- soever, the same shall be referred to the decision of an before mentioned shall come to an end and that the arbitrator who, if the German Government so desires, foreign directors shall be replaced by German directors. shall be of neutral nationality to be nominated by the president for the time being of the Permanent Court of In default of other arrangements the transportation International Justice, and the decision of the arbitrator tax shall continue to be paid to the Reparation Comso appointed shall be final. mission. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 403 ANNEX NO. 5 TO THE REPORT OF THE FIRST COMMITTEE OF EXPERTS PLAN FOR INDUSTRIAL DEBENTURES trolled revenues, who shall purchase them at their nominal value, by means of the funds under his con- THE AMOUNT AND FORM trol which are destined to be paid over to the German Government. The commissioner will include the I. The German Government shall provide bonds or coupons for their nominal value in the "reversements" debentures of industrial concerns to a total nominal to the German Government, which will have recourse value of 5 milliards of gold marks, bearing 5 per cent against the defaulting debtor. interest and 1 per cent for sinking fund per annum. The German Government might, by means of sub- These bonds shall be the individual obligations of the sidies, encourage the repurchase of the bonds by the several concerns and shall be secured as to principal, mortgagors and thus free itself from its guaranty. interest, and sinking fund payments by a first mortgage on the plant and property of the respective concerns TAX-EXEMPTION PROVISION making them. The term "industrial concerns" shall include not IV. The said bonds and mortgages until redeemed only manufacturing concerns but navigation, mining, shall be exempt from taxation in Germany, unless and any other similar concerns which the organization they shall be held by German nationals, in which case they shall be taxed like other similar bonds and mortcommittee may indicate. gages so held by German nationals and without discrimination. DELIVERY TO TRUSTEE II. The mortgage bond,s or debentures above pro- TEMPORARY ORGANIZATION COMMITTEE vided for, with suitable coupons covering the interest V. A temporary organization committee shall be payments, shall be delivered by the German Governformed for the purpose of taking all necessary measures ment to the trustee to be appointed by the Reparation within the scope of the foregoing plan and for fixing Commission, who will hold them, collect the coupons the details of organization. This committee shall inthereon, paying the proceeds into the account of the clude a representative of the German Government, a agent for reparation payments, or dispose of them in representative of industry, two members appointed by whole or in part from time to time under the orders of the Reparation Commission and a fifth member of the Reparation Commission. The debtor may make neutral nationality to be chosen by the four thus approposals to the trustee for their immediate or gradual pointed, or in default of such choice to be appointed redemption, and the committee recommends that the by the Reparation Commission. trustee be empowered to give preference tio such proposals of redemption, and especially those of which the POWERS OF THE ORGANIZATION COMMITTEE redemption would be effected by the use of foreign currencies, before offering such bonds in the open market or VI. (a) The organization committee shall have all otherwise. In the event that no proposals of a satisfac- powers to work out the details of the plan in such tory plan of redemption are made to the trustee by any form as may be fair alike to the German Government, individual maker of the bonds within six months after to the industrial concerns and to the Reparation Comsuch bonds shall have been delivered to him by the mission, bearing in mind that it is the purpose and in- German Government, then the trustee, in his discretion, tent of the plan to insure for reparations account the but with due regard to the protection of the credit of payment of the 5 milliards of gold marks with interest the debtor, shall be free to dispose of the same in such thereon at 5 per cent per annum and a sinking fund of manner and on such terms as the Reparation Commis- not less than 1 per cent thereon, which in and of itself sion may authorize. will determine the maturity of the bonds. (6) The organization committee shall have the power to determine the form and character of the mortgages, GUARANTY BY GERMAN GOVERNMENT and, in case the concerns are too small to make indi- III. The German Government shall guarantee the vidual mortgage issues practical and desirable, the principal, interest, and sinking fund payments on such committee shall have the power to devise some method bonds; in consequence, in case of default the matured of handling them, or may waive them altogether, procoupons can be presented to the commissioner of con- vided the total sum of 5 milliards is maintained. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

404 FEDERAL RESERVE BULLETIN MAT, 1924 ANNEX NO. 6 TO THE REPORT OF THE FIRST COMMITTEE OF EXPERTS THE TRANSFER OP REPARATION PAYMENTS FROM GER- RESTRICTION ON PURCHASE BY THE CREDITORS MAN CURRENCY INTO FOREIGN CURRENCY AND THE V. The goods supplied by Germany to the creditor USE OF BALANCES NOT TRANSFERRED countries under paragraph IV (a) above and paid for TRANSFER COMMITTEE by the bank as above provided shall be for the sole I. The plan provides that all payments for the ac- use of the countries receiving them for their internal count of reparations, however derived, are to be first requirements, including the requirements of their colomade in the form of deposits in the bank, provided for nies and dependencies. The goods so delivered shall in the plan, to the credit of "The agent for reparation not be exported from the country receiving them, payments." The withdrawals from this deposit shall except by agreement between the committee acting be made by the agent for reparation payments only, unanimously and the German Government. under the direction of a committee composed of five VI. In addition to its powers under paragraph IV, members known as "the transfer committee." the committee may, on the instructions of the Reparation Commission and at the request of the creditor COMPOSITION AND SELECTION OF MEMBERS states, by debiting their accounts, transfer marks to II. The transfer committee shall be composed of six private individuals for the purpose of making purchases members; the agent for reparation payments shall be in Germany, such reinvestment not to be of a tempoa member and the chairman; the other five members rary character, and such property being of classes conshall be persons qualified to deal with foreign-exchange tained in a schedule agreed to between the committee questions. They shall consist of an American member, and the German Government and modified from time a French member, an English member, an Italian to time by similar agreement. In arriving at such member, and a Belgian member. Each of them shall agreement the German Government shall be required be appointed by the Reparation Commission, after to have due regard to the necessity for making maxithe member of the general board of the bank of the mum payments to its creditors, but it shall also be same nationality has been consulted. entitled to have regard to maintaining its control of its own internal economy. COOPERATION OF THE BANK III. The committee will be in contact with the presi- COOPERATION BY THE GEBMAN GOVERNMENT AND THE dent and the commissioner of the bank. BANK POWERS OF THE COMMITTEE VII. The German Government and the bank shall IV. The committee shall have power, and it shall be undertake to facilitate in every reasonable way within its duty: (o) To apply such bank balances for pay- their power the work of the committee in making ments for deliveries in kind and payments under the transfers of funds, including such steps as will aid in reparation recovery act, in accordance with the pro- the control of foreign exchange. When the committee gram established periodically by the Reparation Com- is of the opinion that the bank's discount rate is not mission, after consultation with the transfer committee in relation to the necessity of making important transas to the character and amount of such deliveries. fers, it shall inform the president of the bank, (6) To convert these bank balances into foreign currencies from time to time and after conversion to remit ATTEMPTS TO DEFEAT TRANSFER them in accordance with the instructions of the Repa- VIII. In the event of concerted financial maneuvers ration Commission. either by the Government or by any group, for the Both the foregoing powers (a) and (6) to be exercised purpose of preventing such transfers, the committee to the extent to which, in the judgment of the commay take such action as may be necessary to defeat mittee, the foreign exchange market will permit, such maneuvers; and in such circumstances it may without threatening the stability of the German suspend the operation of paragraph X, may accumulate currency. the funds or employ them in the purchase of any kind (c) To invest from time to time in bonds or other of property in Germany. loans in Germany such amounts as the committee may deem wise. The committee shall proceed to TAX-EXEMPTION PROVISION make these investments as soon as the amount of the credits exceeds the sum which the bank will keep on IX. The German Government shall not tax the deposit. On the other hand, the committee may sell deposits in the bank or goods purchased for the creditor the bonds which it has acquired or liquidate the loans countries pending removal, nor any securities or loans which it has granted whenever in its opinion the sums representing investment of funds pending transfer, may be converted into foreign exchange, or the bank nor any property purchased under the provisions of can accept additional deposits. the paragraph next preceding. This exemption does Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDEKAL RESERVE BULLETIN 405 not apply to property purchased under paragraph VI, that the conditions of transfer necessitate, and the but on the other hand, there should be no tax dis- standards of payment laid down in the plan shall crimination against such property. be resumed at any time when they can operate withf out the limits of accumulation herein laid down being PROVISIONS TOR LIMITATION OF ACCUMULATION exceeded. X. (a) When the accumulation of funds not trans- (6) The committee shall have power to suspend ferable under the provisions of subdivisions (6) and (c) accumulation before reaching 5 milliard gold marks, of paragraph IV shall have reached the sum of 5 mil- if two-thirds of its members are of the opinion that liard gold marks (whether represented by bank deposits such accumulation is a menace to the fiscal or economic or loans), the payment for treaty charges provided for situation in Germany or to the interests of the creditor shall be reduced to such an amount as will cover the countries. transfers and payments provided for under subdivi- (c) The committee shall, by a two-third majority, sion (6) and (c) of paragraph IV without additional have power to waive the limit accumulations under accumulation. Such partial suspense of Germany's the conditions provided for in paragraph VIII. obligations shall be operative only during the period ANNEX NO. 7 TO THE REPORT OF THE FIRST COMMITTEE OF EXPERTS NOTE ON THE CURRENCIES CIRCULATING IN 4. Darlehenskassenscheine.—(Bonds issued by the GERMANY IN JANUARY, 19248 Darlehenskassen during the war.) The issue reached its maximum figure in October, 1922 (14 milliard paper CHAPTER I.—PAPER-MARK CURRENCT marks); these bonds ceased to figure in the statements A. LEGAL TENDER as from August, 1923, when the circulation amounted 1. Reichsmarks.—Reichmarks are issued by theto only 11 milliard paper marks, corresponding to less Reichsbank under a privilege granted to it by the than 10,000 gold marks. banking law of -March 14, 1875. In 1913 the circulation of paper marks amounted to 2.1 milliard; on B. AUXILIARY INSTRUMENTS OP PAYMENT January 31, 1924, it had reached the figure of 483.7 1. Issue of secured notgeld.—The issue of notgeld trillion (English) paper marks, representing 483.7 mil- (emergency currency) was regulated by the law of July lion gold marks at the rate of 1 gold mark=l billion 17, 1922. This currency was issued with a view to paper marks. supplementing that issued by the Reich, the Reichs- 2. Notes of private banks.—Banks, which at the timebank, and the private banks of issue, the total value of the promulgation of the law of March 14, 1875, of which in circulation was constantly decreasing as a had the right to issue notes, have retained this privilege. result of the fall of the mark. The previous authoriza- The number of these banks, which was originally 32, tion of the minister of finance was necessary. The has decreased progressively; at the present time there notgeld was to be secured by a deposit in fixed values, are only four private banks, namely: Bayerische earmarked in favor of the Reich Minister of Finance, Banken, Sachsiche Bank, Badische Bank, Wurtem- and corresponding to the amount placed in circulation, bergische Notenbank. less the actual or estimated expenses of issue. This The total circulation of notes issued by these four asset was to remain at the Reichskreditanstalt at Berinstitutions amounted in 1913 to 140,000,000 gold lin, which would allow interest at 2 per cent less than marks. At the end of January, 1924, it represented the rate of discount of the Reichsbank. The cover about 100,000 gold marks. for the notgeld might also consist of three months 3. Reichskassenscheine.—These currency notes weretreasury bonds; but in this case it was the Reichsbank issued at the time of the formation of the Reichsbank which would issue the notgeld and accept the deposit (1875) in order to make it possible to place the fiduciary in treasury bond; offered as guarantee. circulation on a sound basis by means of the with- Authorization to issue notgeld was granted to public drawal of the State notes then in circulation. The and private organizations for a total figure which at issue was originally fixed at 120,000,000 gold marks, the end of 1923 amounted to 7.6 trillion paper marks, corresponding exactly to the war treasure (in gold) corresponding to 7.6 million gold marks. The circudeposited at Spandau. The circulation, which reached lation of this notgeld amounted on December 31, 1923, the figure of 320,000,000 in 1920, progressively de- to 3.4 trillion paper marks; that is, 3.4 million gold creased until August, 1923, when it still amounted to marks. An endeavor has since been made to withr 200,000,000 gold marks. At that date the Reichs- draw the notgeld from circulation; a decree of Jankassenscheine in circulation were completely with- uary 2, 1924, prescribed the complete withdrawal in drawn. certain unoccupied territories. On January 31, 1924, the circulation amounted to 1.4 trillion paper marks, * In the English text of this document the English system of numera- or 1.4 million gold marks. tion is followed throughout. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

406 FEDEBAL BESEBVE BULLETIN MAY, 1924 2. Issue of unsecured notgeld.—Numerous emergency preparations for the issue of the rentenmark not being currencies have been issued without authorization sufficiently advanced) to issue small denominations of from the German Government, and without the the gold loan. formation of a guarantee deposit, both by public and These small denominations were issued up to a total private organizations and even by private individuals. amount of 296,000,000 gold marks, 4,000,000 of which The amount of this notgeld issued without authoriza- were exchanged against rentenmarks in January, 1924, tion or guarantee and in circulation at the end of in accordance with the privilege granted to the holders January, 1924, is estimated by the German Govern- in this respect. ment as follows: As will be seen later, 10,000,000 of this gold loan Gold marks have been assigned as partial security for the notgeld In unoccupied territory 27, 600, 000 of a fixed value issued by the railways. In occupied territory 132, 000, 000 At the end of January, 1924, therefore, the circula- 3. Railway notgeld.—In order to cover the working tion was as follows: deficit, the Reich railways issued 114 trillion paper Gold marks Large notes 194, 000, 000 marks during 1922 and 1923. This currency was Small notes 292, 000,000 secured by a Reich deposit at the Reichsbank of 90,000,000 rentenmarks. At the end of January, Total 486,000,000 1924, 56,000,000 were still in circulation. 4. Notgeld secured by 6 per cent treasury bonds (6 per cent Schatzanweisungeri).—Since the small gold loan CHAPTER II.—INSTRUMENTS OF PAYMENT IN GOLD OE certificates proved insufficient for the monetary circu- AT A FIXED VALUE lation, the Provinces, towns, chambers of commerce, 1. Rentenmark.—-The rentenbank was created by and the larger industrial undertakings were given the decree of October 15, 1923. The method of crea- authority to create emergency currency on a gold mark tion and operation is known. basis, to be covered by gold loan certificates of large The issue of notes in rentenmarks began on Novem- denominations. Owing to the scarcity of the latter, ber 15, 1923. the authorities issuing notgeld were given permission According to the balance sheet of the rentenbank on to provide cover in the form of 6 per cent treasury January 31, 1923, the amount issued at that date was bonds expressed in dollars and gold marks, specially 1,374,000,000 rentenmarks. created for this purpose by the decree of October 20, The introduction of the rentenmark has stopped the 1923. These bonds fall due on December 1, 1932, and issue of notgeld of fixed value. are redeemable at par in German currency on a gold 2. Dollar treasury bonds {Dollarschatzanweisungen).— basis. The law of March 2, 1923, authorized the issue of dollar The total amount of notgeld thus secured (exclusive treasury bonds for a total amount of $50,000,000 of the notgeld issued by the railways and to which we (210,000,000 gold marks). These bonds, issued in will refer later) stood at 110,000,000 gold marks on denominations of from $5 to $100, do not bear January 31, 1924. interest, but are redeemable in gold at 120 per cent on This notgeld is to be gradually withdrawn from cir- April 15, 1926. culation against redemption in loan bonds or German These treasury bonds have been fully subscribed. currency. Redemption was to begin on January 15, They have been used in Germany as a means of pay- 1924, and it is hoped that the full amount will have ment. been called in not later than April 1, 1924. 3. Gold loan {Wertbestdndige Anleihe).—This loan 5. Treasury bonds and interim bonds issued by the authorized by the law of August 14, 1923, is for a States.—Certain States issued fixed value loans, some total sum of 500,000,000 gold marks, which has been of the certificates for which were of such small denomifully subscribed. The bonds are expressed in dollars. nations that they still serve as instruments of pay- The small denominations of from one-tenth to $5 do ment. The total value of these bonds amounts to not bear interest and are redeemable at 170 per cent about 50,000,000 gold marks. Attempts are being on September 2, 1935. Bonds for $10 or more bear made to recall these small denominations by convert- 6 per cent interest and are redeemable at par on the ing them into larger denominations. same date. These large denominations were issued 6. Certificates issued by the banks of Hamburg and first for a total sum of 164,000,000 gold marks. Sub- Schleswig-Holstein.—Two banks, the Hamburger Bank sequent issues of large denominations raised this figure von 1923 A. G. and the Schleswig-Holsteinische Goldto 204,000,000 gold marks. girobank A. G. were authorized by the Reich Minister In October, 1923, the monetary situation having of Finance to deliver, in exchange for currencies, "disbecome intolerable on account of the fall of the paper count certificates" (Verrechnungsscheine), which still mark, and wage earners having insisted upon being serve as instruments of payment. It is the intention paid in currency of fixed value, the Reich decided (the of the German Government to dispense with these Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL BESERVE BULLETIN 407 gold certificates as soon as a gold currency has been Approximate value in millions reinstated. The Hamburger Bank issued certificates of gold marks to the amount of 25,000,000 gold marks. No par- II. Instruments of payment exticulars are available regarding the amount issued by pressed in gold or having the Schleswig-Holsteinische Goldgirobank, but the fixed value: figure is inconsiderable. Rentenmarks (as per rent- 7. Notgeld issued by the railways.—In order to cover enbank return of 31/1/24) 1, 374. 0 their deficit, the German railways were authorized to Dollar treasury bonds issue, in addition to the paper mark notgeld referred (Dollarschatzanwe i s u nto above, notgeld having stable value to the amount gen, law of March 2, of 200,000,000 gold marks—10,000,000 of this issue 1923) 210.0 were secured by gold loan bonds, as explained above, Gold loan (Wertbestandige the remaining 190,000,000 being secured by 6 per cent Anleihe, law of August 14, treasury bonds, as already stated. The notgeld issued 1923) 486.0 by the railways amounted to 131,900,000 on January Notgeld secured by 6 per 31, 1924. This emergency currency is to be with- cent treasury bonds drawn from circulation by means of a loan to be issued (6 per cent Schatzanlater by the railways. weisungen, law of October 20, 1923) 110.0 TABLE OF INSTRUMENTS OF PAYMENT IN CIBCTJLA- Treasury bonds and in- TION IN GERMANY IN JANUARY, 1924 terim bonds issued by Approximate the States 50.0 value in millions Certificates issued by the of gold marks7 I. Instruments of payment expressed banks of Hamburg and in paper marks: , Schleswig-Holstein (Ver- Reichsbank notes (as per rechnungsscheme) 35. 0 return dated 31/1/24)... 483. 7 Notgeld issued by the rail- Notes of the four private ways and secured by banks of issue 0.1 6 per cent treasury Notgeld issued by the rail- bonds (10,000,000 of ways and secured by a which are secured by deposit of 90,000,000 gold loan) 131.9 rentenmarks at the Reichsbank 56.0 Total 2, 396. 9 Notgeld issued against the III. Denominational currency in rentendeposit of security in pfennigs 158. 0 currencies 1. 4 Notgeld issued without Grand total 3,255. 7 cover— In occupied territory. 132. 0 NOTE.—This total does not include the foreign cur- In unoccupied terri- rencies at present in Germany, which, according to the tory 27.6 estimate made by the Second Committee of Experts, would amount to 1,200,000,000 gold marks, a figure Total. 700.8 which has been confirmed by a German authoritative 1 Calculated on the basis of 1 gold mark=l billion paper marks. source. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

408 FEDERAL RESERVE BULLETIN MAT, 1924 ANNEX NO. 8 TO THE REPORT OF THE FIRST COMMITTEE OF EXPERTS PROVISIONAL SURVEY OF THE BTJDGET FOB 1924' I. GENERAL ADMINISTRATION OF THE REICH A. ORDINARY BUDGET In millions of— In millions of— Revenue Expenditure m G a o r l k d s Pounds Dollars G m o a l r d ks Pounds Dollars l.JTaxes on property, traffic, trao)e and 1. Interest on, and amortis. of debt of Emtransfer (direct taxes).-— - 4,004 200.2 1,001.0 156 7.8 39.0 2. Custom and excise duties (indirect taxes). 1,080 54.0 270.0 2. Provision for invalids, war pensions, etc. 810 40.5 202.5 3. Nontax revenues from public services 60 3.0 15.0 3. Army and Navy. . 460 22.5 112.5 4. Police . .. 208 10.4 52.0 5. Industrial and cultural purposes 28 1.4 7.0 6. TJnemployment'beneflt 600 25.0 125.0 7. Social and other expenditure 360 18.0 90.0 8. Finance and taxation departments - 380 19.0 95.0 9. General administrative expenses other than the above 250 12.5 62.5 10. Assignments to the States and corn- 1,800 90.0 450.0 Total of ordinary revenues 5,144 257.2 1,280.0 Total of ordinary expenditure 4,942 247.1 1, 235. 5 B. EXTRAORDINARY. BUDGET 1. Revenue from the mint. 90 4.5 22.5 1. For war damages and removal of effects 40 2.0 10.0 of the war 0.3 1.5 2. Other revenues 2. Public buildings - 2.2 11.0 3. Settlement of war expenditure 1.0 5.0 3.0 15.0 4. Settlement of expenditure for the Ruhr- Total of extraordinary revenues. 130 6.5 32.5 130 6.5 32.5 Total of extraordinary expenditure.. Total of A and B 5,274 2C3.7 1,318.5 5,072 253.6 1,268.0 Total of A and B II. EXECUTION OF THE TREATY OF VERSAILLES i 1. Cash reparation payments 52 2.6 13.0 (Discharge of debt due to the Reichsbanfc for redemption of an exchequer bill given to Belgium.) 2. Clearing office payments 6 0.3 1.5 3. Cost of armies of occupation 360 18.0 90.0 4. Rhineland commission 34 1.7 8.5 5. Other interallied commissions including reparation commission 18 0.9 4.5 6. Restitution, substitutions, and disman- 10 0 6 2.5 7. Home expenditure incurred by the carrying out of the treaty of Versailles 160 8.0 40.0 Total of expenditure 640 32.0 160.0 BALANCE I. General administration of the Reich. 5,072 253.6 1, 268. 0 II. Execution of the treaty of Versailles.. 640 32.0 160.0 Total of expenditure. 5,712 285.6 1,428.0 Revenues 5,274 263.7 1,318.5 Deficit.. 438 21.9 19.5 1 The figures of this table can only serve as a preliminary estimate and are given with all reserve. This estimate of the revenues assumes complete restoration of economic unity between occupied and unoccupied territory, renewed administrative and fiscal supremacy in occupied territory on the part of the Reich and the component States, that the taxes to be levied according to the general laws of the Reich and the States are once more directed into their treasuries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 409 ANNEX NO. 9 TO THE REPORT OF THE FIRST COMMITTEE OF EXPERTS COMPARATIVE POSITION OF DIFFERENT IN- In view of the circumstances mentioned above, any COMES DRAWN FROM DIVIDENDS IN THE estimates are attended with exceptional difficulties. YEARS 1920-21,1923-24, AND 1924-25 An attempt is made below to employ available bases for valuation as required in the questionnaire. QUESTION SUBMITTED TO THE GBEMAN GOVERNMENT The estimates given in the inclosed table showing BY THE FLEST COMMITTEE OF EXPERTS the charge on incomes from dividends of 50,000, 100,000, 500,000, and 1,000,000 gold marks fulfill the conditions Assume four men with incomes in gold marks: set forth in the questionnaire—• 15,000, 100,000, 500,000, 1,000,000; (a) wholly from (a) That the whole income is drawn from dividends dividends of German industrial companies; (6) oneof German industrial companies. half from German and one-half from foreign compa- (b) That half the income is drawn from German and nies. What amount of income tax (or its substitutes) half from foreign industrial companies. plus capital tax will be payable on the scales for It was necessary, in drawing up this table, to include 1920-21, 1923-24, 1924-25, respectively? in the calculation of the charges on income derived from dividends of German industrial companies, the REPLY OF THE GEEMAN GOVERNMENT taxes which had to be paid by the German companies For the following reasons it is impossible to make if they distributed dividends to the amounts in quesreliable estimates of the kind desired: tion; it must not be forgotten that this tax is deducted 1. Because the fiscal burden for 1920-21 can not be before the distribution of the dividends. In converting calculated owing to the influence of the depreciation the income in gold into paper marks and the taxes in of the currency. paper marks into gold marks, the rate of the dollar has 2. Because no assessment exists for 1923 based on been used as the basis. This was possible because the sliding scale rates for that year; indeed for 1923 income is indicated in gold, and therefore the calculation prepayments and payments of balance were collected of the tax at the dollar rate affords a basis for comwhich were regularly calculated on a coefficient of the parison. 1922 taxes and were therefore not entirely immune In making the calculation the following assumptions from the influence of the depreciation of the currency. have been made: 3. Because no income tax levied on a sliding scale I. For 1980-21.—The dividend has been paid to the exists so far for 1924; the prepayments for 1924 are taxpayer in 1920. The tax paid by the company has collected more according to external standards; the first been deducted from the profits which the company actual income for 1924 will not be assessed until 1925, made in 1919 and on which it paid the tax in 1920. A when it will be based upon a tariff which will be de- further prior charge consists of the 10 per cent tax on termined by law in the course of the year 1924. revenue from capital which was deducted from the Particulars concerning the form of the taxes will be German dividends of the taxpayer at the time of their found in the memorandum transmitted (see for 1920-21: receipt in 1920 and which he paid in 1921 for his English text, pages 81, 96; French text, pages 81, 97; foreign dividends. From the remaining revenue, after for 1923-24: English text, pages 83-84, 96; French deduction of the tax on revenue from capital, the taxtext, pages 84,97). Reference should be made to payer has paid his income tax for 1920 according to the statement concerning the budget estimates of the schedule. In estimating the actual fiscal burden, wages tax and the prepayments on the income and account has been taken of the fact that the income was corporation taxes for 1924 transmitted as V (a) II 1480, obtained in the year 1920, that the corporation tax and of February 16, 1924. the tax on revenue from capital were paid at the time of It should further be pointed out that income from receiving the dividends, that is also in 1920, and that on dividends to the amount mentioned existed in Ger- the other hand the tax on revenue from capital in many before the war to a limited extent only and is respect of foreign dividends and the income tax were unlikely to be found after 1922, owing to economic not paid until 1921, and were therefore paid in a developments during the period of depreciation of depreciated currency. On the basis of the average the currency. dollar rate, one gold mark was in 1920 equivalent to 15 paper marks and in 1921 to 24.9 paper marks. As early as 1920, there were only six taxpayers in Germany who had an income from investments of Example 1.—Let us assume the income from divifrom 3,000,000 to 10,000,000 paper marks, that is, dends in German companies in 1920 to be 50,000 gold from 200,000 to 667,000 gold marks and 66 with an marks =750,000 paper marks. Before distributing income from investments of from 1,000,000 to 3,000,000 750,000 paper marks, a company in 1920 had to pay paper marks, that is, about 67,000 to 200,000 gold an average tax of 127,500 paper marks. The 750,000 marks. From about the middle of 1922 income from paper marks due to the person receiving dividend investments had practically disappeared. were, upon receipt, reduced by 10 per cent; that is, by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

410 FEDERAL RESERVE BULLETIN MAY, 1924 75,000 paper marks. In 1920, therefore, 202,500 paper If, on the basis of the material at its disposal the marks were paid in taxes = 13,500 gold marks. From finance office can assume that the taxpayer had a gold the remaining 675,000 paper marks he had to pay the mark income of 50,000 or 100,000 marks, a charge of sum of 356,600 paper marks in income tax = 14,321 gold at least 25 per cent may be allowed for. marks in 1921. The total charge was therefore 27,821 If there are really cases of still higher incomes, a gold marks. charge of 35 per cent on 500,000 gold marks and of Example 2.—Let us assume the income from divi- 40 per cent on 1,000,000 gold marks will be paid. The dends in German companies in 1920 to be 25,000 gold total charge therefore amounts to 28 per cent in the marks = 375,000 paper marks and from foreign com- case of incomes of 50,000 and 100,000 gold marks panies 25,000 gold marks, making a total of 50,000 derived from dividends paid by German companies; gold marks =750,000 paper marks. Before distribut- if half of the income is derived from foreign companies ing 375,000 paper marks, German companies had, in half of the prior charge constituted by the corporation 1920, to pay an average tax of 63,750 paper marks = tax does not come into consideration and the total 4,250 gold marks. The 375,000 paper marks in Ger- charge therefore amounts to 26 § per cent. For man dividends due to the recipient were, upon receipt, incomes of 500,000 gold marks the total charge reprereduced by 10 per cent; that is, by 37,500 paper marks sents 38 per cent or 36i per cent, for 1,000,000 gold = 2,500 gold marks. marks 43 per cent or 41 i per cent. In 1920, therefore, 6,750 gold marks were paid in III. For 1924-25—-It is assumed that the dividend taxes. In 1921 the person drawing dividends had in for 1924 is distributed to the shareholders. The prior the first place to pay a 10 per cent tax on revenue charge indicated is the tax which the company has from capital on the 375,000 paper marks; that is, 37,500 paid as corporation tax prepayments and payment of paper marks = 1,506 gold marks. Furthermore, after balance for 1923. deduction of the tax on revenue from capital he had to The example of 50,000 gold marks has been calcupay on the remaining 675,000 paper marks an income lated as follows—1 gold mark was 449 paper marks, tax of 356,600 paper marks = 14,321 gold marks. In according to the average rates of exchange of the this case the 1921 taxes thus amount to 15,827 gold dollar for 1922; 50,000 gold marks therefore equal marks. Including the 1920 taxes the total charge is 22,450,000 paper marks. therefore 22,577 gold marks. First prepayment (under the currency depreciation II. For 1928-24.—It is assumed that the dividends law of March 20, 1923) 20 per cent =4,490,000 paper for 1923 have been distributed to the shareholders. marks, paid on May 25 (1 gold mark = 12,190 paper In the total prior charge the tax on fortunes has not marks) = 369 gold marks. been taken into account. Only the corporation tax Second prepayment (under the law for increases of which under the law of March 20, 1923, on the depre- July 9-August 11, 1923), 600X10 per cent = 1,347,000,ciation of currency, was paid by the company for the 000 paper marks, paid on August 25 (value of the gold business year 1922, which year was taken as the basis mark = 1,120,000) =1,203 gold marks. for the distribution of dividends, has been indicated Payment of balance on January 10, 1924 (under artias the prior charge. On the basis of the tariff the prior cle I, section 2, of the second fiscal emergency decree), charge amounted to 45 per cent. Owing, however, to 0.60 gold mark on each 1,000 marks of the 1922 fiscal the great depreciation of currency in 1923, the gold debt; the 1922 fiscal debt in respect of dividends value on the date of payment was insignificant. The amounted to 45 per cent of the sum of 22,450,000 paper prior charge has been indicated therefore at only 3 per marks indicated above; that is, to 10,102,500 paper cent, since the dollar rate at the time of the payment marks. Consequently, the final payment of 0.6 per of the tax, that is on April 25, amounted to 29,200, thousand in gold = 6,061 gold marks. The total prior namely about fifteen times the average dollar rate for charge, therefore, amounts to 7,633 gold marks. 1922 (1,885.78). In many cases, owing to delay in In the case of the person receiving the dividend the closing the balance sheet and t© the consequent delay only payments demanded are those to be paid as inin paying the taxes the prior charge was, as a result come-tax prepayments and as tax on fortunes in 1924. of the rapid depreciation of currency, much less than Ten per cent only is first- deducted at the source from 3 per cent. In the case of the person receiving divi- the revenue from investments as income-tax prepaydends, the tax indicated is that which he had to pay as ment; this is, therefore, 5,000 gold marks on 50,000 gold increased prepayments and payment of balance for marks. For the tax on fortunes it is assumed that the 1923. dividends paid by German companies average 1 per Since there was no proper assessment for income tax cent of the quoted value; even this computation must, on a sliding scale for 1923, the payments of balance however, be too high for a great many German comfor 1923 have been determined according to the tax- panies at the present time. payer's capacity to pay on the basis of his gold mark In the case of foreign companies it is assumed that payments in 1923, and in certain cases on the basis of the dividends amount to 5 per cent of the quoted value a lavish expenditure. of the share; 50,000 marks in dividends from German Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 411 companies, therefore, represent a quoted value of not come into consideration. The finance office is, 5,000,000 marks. however, entitled to collect prepayments from the tax- For the shareholders' payments in respect of the tax on payer with due consideration to his requirements. No fortunes this is valued at only half the quoted value— sum is, however, included in the inclosed table on this that is, 2,500,000 marks—since the company itself has account; for, as explained above, the calculations for to pay a tax on fortunes for which the fortune is assumed 1924-25 constitute only provisional tax payments, to be at least the total quoted value of the shares. which represent prepayments on the definitive income On a total fortune of 2,500,000 marks the tax on for- tax for 1924. For the 1924 income, the taxpayer will tunes amounts to 17,500 marks. The provisional still be assessed at the beginning of 1925, and he will charge on an income of 50,000 marks from dividends then have to make considerable postpayments, which from German companies is therefore as follows: are correspondingly higher in the case of income from foreign dividends from which no deduction at the Qold marks source has been made in Germany. No sum could be Tax on corporations 7, 633 included for postpayments, as the necessary regulations Deduction at the source from revenue must first be enacted by law during the course of 1924 from investments _•__ 5, 000 (in particular the rates of taxation). Tax on fortunes 17,500 Total 30, 133 Definitive charge Charge in If half the dividends come from a foreign company, respect of corporation the charge in respect of the tax on capital is as follows: tax and tax Corpora- on fortunes; Twenty-five thousand marks from German com- tion tax, nonrecurpanies. Quoted value 2,500,000 (1 per cent interest) Income in gold marks t e a n x u e o n f ro re m v- ti C on o r t p a o x r , a i - n- r i e n n t r e c s h p a e r c g t e half of which is counted; that is, 1,250,000 marks. c c a o p m it e a l t , a i x n , - co 1 m 92 e 3 - t 2 a 4 x, ta o x f i p n r c e o p m a e y Twenty-five marks from foreign companies. Quoted 1920-21 ments, 1924-25 value 500,000 marks (5 per cent interest) counted in full, since the company does not pay the tax on fortunes in Germany. 5 50 0 , , 0 0 0 0 0 0 1 2 _ 2 22 7 , , 8 5 2 7 1 7 1 1 4 3 , , 0 2 0 5 0 0 3 1 0 7 , , 1 6 3 9 3 1 The quoted value used for the tax on fortunes is 100,0001 .- - 57,586 28,000 60,266 100,000! 47,098 26,500 37,133 therefore 1,750,000 marks and the sum paid in respect 500,0001 -.-. 295, 707 190,000 313,830 of the tax 11,375 marks. 5 1 0 ,0 0 0 , 0 0 , 0 0 0 0 2 0 i 2 59 4 3 3 , , 3 2 5 6 7 7 : 4 1 3 8 0 2 , , 0 5 0 0 0 0 6 1 2 94 7 , , 6 4 6 1 0 5 As half of the dividends come from foreign com- 1,000,000 s 488, 477 415,000 388,830 panies, the deduction at the source on half the revenue from investments in this case also provisionally does i 2 H G a e l r f m f a ro n m c o G m e p rm an a i n e s a . nd half from foreign companies. REPORT OF THE SECOND COMMITTEE OF EXPERTS COVERING LETTER ing the amount of German exported capital and of bringing it back to Germany. We were convened in DEAR MR. CHAIRMAN: I have the honor to present Paris on the 21st of January, 1924, and we have held the unanimous report of the committee appointed by altogether 38 meetings, first in Paris, then in Berlin, the Reparation Commission to inquire into the amount and finally again in Paris. We have examined nuof German exported capital and to consider the means merous witnesses and have availed ourselves of the of bringing it back to Germany. services of trained economists, technical advisers and In laying before you the result of our labors may I expert accountants. We have also studied the pubbe permitted in the name of the committee to express lished works on the subject by well-known economists, the hope that our work may assist in solving the proband each member of the committee has furnished lems involved in the execution of the treaty of peace. reports on particular problems. I remain, yours faithfully. Our estimates relate to the 31st of December, 1923. R. MCKENNA. Later events may, of course, have either increased or THE CHAIRMAN, Reparation Commission. decreased the amount of German capital abroad. In our investigation of the amount of capital owned TEXT OP THE REPORT by Germans in foreign countries, we were confronted In pursuance of a decision of the Reparation by very considerable difficulties. There are many Commission of the 30th of November, 1923, we were ways by which Germans can acquire capital abroad, created a'committee to consider the means of estimat- but in most cases no precise figures can be given. It Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

412 FEDERAL RESERVE BULLETIN MAY, 1924is nearly always a matter of estimate, and the utmost a German of a mark bank balance creates at the we could hope to do with any degree of certainty was moment of sale a corresponding holding of a foreign to lay down limits between which the actual amount bank balance in Germany. The periodic totals of is to be found. The distance which divides these foreign balances shown in the books of the German limits marks the want of precision of the material at banks were disclosed to us, and with the assistance of our disposal. expert accountants we have been able to ascertain the One method of investigation, to institute an net proceeds expressed in gold derived from the sale inquiry through bankers and business men in those of marks. It is interesting to note that the foreign countries in which German capital is believed to be assets acquired in this way amounted to between seven, deposited or invested, was rejected by us at the outset. and eight milliards of gold marks, the whole of which We have availed ourselves of all information of a in consequence of the final devaluation of the mark public or official character supplied from countries was lost by more than one million foreigners who at outside Germany, but we were of opinion that it would one time or another were buyers of mark credits. be neither proper nor useful to request the disclosure This figure is one of the credit factors in estimating, of specific transactions which in general would have the final total. been entered into under an implied condition of Other principal sources of German foreign assets secrecy. Moreover, we felt that even though all have been the sale of goods, securities, real estate, obtainable information were freely given to us, it precious metals and mark bank notes; interest accumust be extremely defective, as much German capital mulations, tourist expenditure in Germany, German in foreign countries is certain in existing circumstances holdings in ceded territories in Poland, Dantzig, etc., to be hidden in various ways under assumed names. foreign money expended by the allied armies of occu- The method we have adopted is altogether different. pation, remittances from Germans abroad, earnings Our first step was to form an estimate of the total of shipping, railway and canal freights for foreign value of German capital abroad at the outbreak of goods in transit through Germany, insurance profits, war. etc. Next we considered what was the net reduction in On the other hand, German foreign assets have been this total at the time of the Armistice. We took into expended on the purchase of goods imported, cash payaccount on one side the balance of trade, advances by ments to the Allies, interest paid on German securities Germany to her Allies, loss by seizure and sequestra- held abroad, German tourist expenditure, etc. tion of property confirmed by the Versailles Treaty On all these heads of receipt and expenditure, the and loss through depreciation of the value of property German statistical records and estimates, official data, and securities. On the other side we considered the bankers, and business reports, and other similar evisales of German securities, the sales of gold, the accu- dence, have been subjected by us to the most critical mulation of interest, and finally the effect on the trade scrutiny, and their reliability has been tested by our balance of the imports into Germany from occupied examination of witnesses and inspection of original territories. These imports were commodities either sources of information. Our investigations and the requisitioned without payment, or paid for, in the evidence obtained led us to discard entirely the values case of Belgium and Poland, largely by marks which of German imports and exports as stated in the official remained in the country, and, in Roumania and occu- reports, and to revalue all commodities on the basis of pied France, as well as in Belgium and Poland, by the then current world prices with such allowances as local currencies which the German Government caused the special circumstances of German trade at the time to be printed and issued for the purpose. may have rendered necessary. Finally, starting from the basis of the remaining After a close examination of all the factors which pre-war German assets, we examined in detail the make up the total sum, we are of opinion that German various means by which Germans can have increased capital abroad of every kind, including capital of or diminished their capital abroad during the period varying degrees of liquidity and capital invested in from the Armistice to the close of the year 1923. participations in foreign companies and firms, and The reliability of our final estimate depends upon the after taking into account all credit and debit items, completeness of our examination of the different was at the end of the year 1923 not less than 5.7 elements which make up the total of German foreign milliard gold marks and not more than 7.8 milliard acquisitions and of the various ways in which such gold marks, and we think that the middle figure of 6f acquisitions may have been expended. milliard gold marks is the approximate total. The chief method by which Germans have acquired We draw special attention to the foreign currency foreign assets since the Armistice has been by the sale in Germany, which, though not included in our valuaof mark bank balances. Our estimate of the total tion of capital held abroad, is so closely akin to a foreign sum under this head has been obtained by a procedure asset that it must not be overlooked. It may indeed founded upon the principle that every foreign sale by be said that this currency, the total of which we esti- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 413 mate at not less than 1 milliard two hundred million Inflation must be permanently stopped. If the issue gold marks, is a German holding in the most liquid of currency is strictly confined within the true limits form for conversion into foreign assets. of national requirements on a stable basis of value, the On the other hand, on a broad view of German finan- German with capital abroad will feel assured that he cial capacity, the value of the property in Germany held will suffer no loss in bringing it home; the speculator by foreigners should not be left out of account. The can no longer look for a profit from the sale of marks. annual yield from this property, whether in the form of We have already seen in the case of Austria how, rent, interest, or dividends, is at present inconsiderable when the currency is fairly stabilized, the necessities and may at any time become subject to special taxa- of foreign trade tend to bring back existing foreign tion, particularly in the case of rent in respect of real balances. Restrictive legislation, which in the main estate purchased at the low prices current in recent has proved futile in preventing the export of capital, years. We estimate, after very close study of the becomes superfluous the moment there is no longer question, that the real estate and securities owned in any inducement to evade the law. It is indeed to be Germany by foreigners represent a value of from 1 to feared the laws purporting to compel the return of X\ milliard gold marks. capital would have the reverse effect to that which The committee have thought it desirable to give in might be wished. an annex to this report additional information in The method of securing a currency in Germany respect of their estimates of German assets abroad in capable of maintaining a sufficiently stable inter- 1914 as well as of the principal credit and debit factors, national value covers the whole question of budgetary both during and since the war, that have gone to make equilibrium and the establishment of a bank of issue on up the final total of German capital abroad. a sound basis. These matters, which fall outside the The second part of our inquiry was to investigate scope of our inquiry, have been referred by the Reparathe means of bringing exported capital back to Ger- tion Commission to another committee whose conmany. clusions we have the advantage of knowing. If effect is The so-called flight of capital in this instance was given to their recommendations, we think that a conin the main the result of the usual factors. It arose siderable part of the German assets now in foreign principally from the failure of the Government to countries will return in the ordinary course of trade. bring its budget into proper relation, and, as a cor- While we are of opinion that special legislation to rollary of such failure, from the raising of large loans prevent the export of capital or compel its return is and the direct issue of paper money. Secondly, it not required when a country's finance is on a stable was due to the action of speculators and timid investors basis, we recognize that in the case of Germany a who sold their marks against the currency of other period of transition must necessarily ensue before countries, while the exporters of goods retained abroad stability can be obtained and confidence restored. all that was possible of the proceeds of their sales. We suggest that during this period an amnesty should In the particular case under inquiry, however, the be granted for a limited time from the penalties flight of capital was accentuated by the attitude of imposed by extisting enactments and that special the people of Germany toward payments to her war terms be offered for subscriptions to Government creditors and was marked by new and ingenious loans made in foreign currencies. Well-conceived devices and schemes for evading restrictive legisla- measures of this kind would be helpful in hastening the tion and for cloaking the real ownership of foreign return of capital and the final restoration of financial balances. equilibrium in Germany, conditions which are essential The failure of the methods employed, both old and to the payment of reparation. new, demonstrates the final ineffectiveness of restrictive We desire to express our sincere thanks to the officers legislation when successful evasion is so richly re- of the Reparation Commission, and to the economists, warded. Neither legal enactment nor severe penalties statisticians, and expert accountants who have aided resulted in disclosure of assets abroad or hampered us, for whose valuable assistance we are greatly the flight of capital. We feel that this would have indebted. been true whether the Government had or had not REGINALD MCKENNA, Chairman. used its best endeavors to enforce the laws and regula- HENRY M. ROBINSON. tions. ANDRE LATJRENT-ATTHALIN. In our opinion the only way to prevent the exodus of MARIO ALBEBTI. capital from Germany and to encourage its return is ALBERT E. JANBSEN. to eradicate the cause of the outward movement. APRIL 9, 1924. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

414 FEDERAL RESERVE BULLETIN . MAY, 1924 ANNEX and compared. Taking into account all the factors of valuation, the committee has come to the conclu- SUMMARY sion that the figure of 28 milliard gold marks may be I. Assets abroad in 1914. accepted as representing the value of German assets II. Period of the war: abroad at the time of the declaration of war, it being a. Surplus of imports and Germany's ad. understood that this figure of 28 milliards comprises vances to her Allies; only the assets abroad belonging to German nationals b. Depreciation of pre-war foreign assets; residing in Germany and not those belonging to sequestration and liquidation measures; German nationals residing abroad. In this estimate c. Profits realized by Germany in occupied securities have been taken at their face value in gold territories; marks. d. Sale of gold and German securities; II. PERIOD OP THE WAB e. Return from German assets abroad. (a) SURPLUS OF IMPORTS AND GERMANY'S ADVANCES III. Post-war period: TO HER ALLIES a. Surplus of imports and cash payments made by Germany under the Peace The difficulty encountered by Germany in export- Treaty; ing her goods during the war, as well as her persistent b. Sales to foreigners of mark credits and endeavors to increase her imports by every possible banknotes; means, in order to provide for the requirements of c. Sales of gold; her armies, naturally produced a surplus of imports, d. Sales of German real property and German considerably in excess of the figures of the normal pre-war deficit. To this deficit in Germany's foreign securities; trade balance must be added the sums advanced by e. Expenditure by foreigners traveling in Germany to her allies to enable them to pay for their Germany and by Germans traveling imports, for which she received no corresponding abroad; return. The figure indicated for these two items may /. Expenditures by the armies of occupation; be considered to be reliable and amounts to an aggreg. Earnings from shipping, insurance, transit, gate sum of 15.2 milliard gold marks, subject to the etc.; modifications referred to in paragraph (c). h. Income from German investments abroad and from foreign investments in Germany; (6) DEPRECIATION OF PRE-WAR FOREIGN ASSETS; remittances made by Germans residing SEQUESTRATION AND LIQUIDATION MEASURES abroad; i. German private property in ceded terri- Various estimates of the reduction in German assets tories; abroad during the war as a result of depreciation have j. Foreign banknotes in Germany. been made by several economists, whose figures are generally based on an estimated total of from 20 to 25 I. ASSETS ABROAD IN 1914 milliard gold marks for German assets in 1914. Their estimates seem too low, if we take as a basis the figure The value of German assets abroad in 1914 has been of 28 milliards adopted by the committee for German estimated by different economists at sums varying assets abroad in 1914. This impression is moreover between 20 and 35 milliard gold marks. Beside these confirmed by information which the committee has unofficial estimates two estimates of an official nature, obtained by its own investigation. as well as a census, have been made by the German It"is impossible to adopt a definite figure in deter- Government. The earlier of these two official estimining the value of the assets seized and liquidated in mates is that made in 1905 by the imperial admiralty; the allied and associated countries. On the basis of inthe later one was supplied by the German Government formation obtained by the committee from the Governin 1924 in reply to a question raised by the second ments of the allied and associated powers as well as Committee of Experts, The census, which only from Germany, the committee has been able to esticovered securities, was made by the German Governmate at approximately 16.1 milliard gold marks the ment during the war, in August, 1916. reduction in German assets abroad during the war, as a In the question put to the German Government the result of depreciation and liquidation and sequestration committee not only asked for an estimate of the foreign measures. In adopting this figure no allowance has assets held by German nationals in 1914, but also been made for the fact that certain German assets requested it to submit its comments on the various abroad may have been utilized to cover the payment of estimates already made by German economists. imports, nor for the fact that German assets abroad All these documents—estimates of German economay have increased owing to the accumulation of the mists, and those of neutral, allied and associated interest accruing on these assets. These several items countries, official estimates and census, and the replies are discussed elsewhere. The above figure therefore of the German Government—have been examined Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 415 represents a net reduction in German assets abroad Finally, foreign assets were required by Germany, for which Germany during the war period received no especially in Belgium and France, notably by means of return. These assets underwent a further decrease in sequestration of securities, coupons, and other credits, value during the period following hostilities, which and these, like the bank notes mentioned above, decrease was taken into account. served in part to pay for imports from neighboring Lastly, the committee is of opinion that both during neutral countries. and since the war, the category of assets in neutral It must also be pointed out that when the German countries has likewise undergone a reduction in value, coal centrale in Belgium issued export licenses for coal and that in particular the greater part of such secu- for Holland, Switzerland, or Sweden, the German rities held by Germans has no longer a value equiv- authority kept for itself the foreign currency thus alent to their face value, even taking into account obtained,'and forced the mines to accept paper marks. the effect of the decline in the value of gold. The committee has adopted the figure of from 5.7 to 6 milliard gold marks as corresponding to that por- (c) PROFITS REALIZED BY GERMANY IN OCCUPIED tion of the profits derived from this exploitation of TERRITORIES Belgium, northern France, Poland, Lithuania, Ru- An examination of German economic measures taken mania, etc., representing imports for which no payment in Belgium during the war, to which the attention of was made and which, in consequence, had not been the committee was called, suggested that substantial allowed for in her balance of accounts. profits had accrued to Germany from the exploitation of occupied territories. Consequently, the committee (d) SALE OF GOLD AND GERMAN SECURITIES has made a careful study covering not only German The sale of gold and securities was the principal operations in Belgium and northern France but also means whereby Germany paid for her imports during those in Poland and Rumania. the war. The export of gold, which took place mainly No attention has been paid to the purely military during the early years of the war, reached a total aspects of these operations, such as, for instance, amount of 1 milliard gold marks. requisitions intended to provide for the partial subsist- As regards German securities, widely diverging ence of the German occupying troops. Quite apart estimates have been made of the amounts sold. In from such matters, however, it was found that the our opinion the total figure is not far from 1 milliard profits realized by Germany by requisitions and by gold marks. other methods in occupied territories are closely connected with the deficit of the German balance of trade. (e) RETURN PROM GERMAN ASSETS ABROAD With the help of German official documents, in par- The revenue which Germany derived from her assets ticular reports by the military administration drawn abroad was very considerably diminished immediately up during the war and German memoranda estimating after the declaration of war and further reductions the value of war damages, the committee has asceroccurred during the period of hostilities. tained that the profits realized by Germany were It should, indeed, be noted that interest ceased to principally obtained as follows: be paid on the assets held by Germany in countries Germany obtained in occupied territories considerwith which she was at war. Some of these assets able quantities of commodities which, through the were sold during the war and the depreciation of others operation of centralized importing companies specially became very marked toward the end. created for this purpose, were transported to Germany On the other hand, the industrial securities, parfor internal consumption. Most of these goods were ticularly those of neutral countries, continued to pay either not paid for at all, or were paid for in paper interest at rates frequently higher than before the war. marks which were subsequently left in the country While the committee has been unable to determine and amounted in the case of Belgium to 6 milliard exactly the variations for each year of the war in the paper marks, or were purchased through the medium revenue derived from German assets abroad, it has at of issues of local paper currency. The special object least been able to make an estimate which may be taken of such issues, according to a statement by the German as very nearly accurate. staff, was to enable Germany and her allies to receive goods from occupied territories free of charge during the III. POSTWAR PERIOD whole period of hostilities. (a) SURPLUS OF IMPORTS AND CASH PAYMENTS MADE. By requisition or in exchange for paper marks or BY GERMANY UNDER THE PEACE TREATY local currency Germany also obtained considerable quantities of the currency of invaded countries. Thus, One of the main causes of the reduction of German in the north of France the German military authorities assets abroad during the postwar period arose from imposed on towns fines and levies for which payment the necessity for Germany to cover the deficit in her was required in German money, gold coin, or notes of trade balance and to meet the cash payments which the Bank of France. had to be made to the Allies under the Treaty of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

416 FEDERAL BESEBVE BULLETIN MAT, 1924 Versailles. These two items together amount to be- gains accruing to German economy as a whole. The tween 9 and 10 milliard gold marks. data furnished by the banks were submitted to careful As already stated in the report, the figures given in checking by the expert accountants, and it was found the official German foreign trade statistics are quite that they had been correctly compiled. inaccurate for certain periods. This observation ap- Credits in German marks were purchased by the plies particularly to the figures originally published. citizens of a great many nations, but the largest For this reason, it was necessary to revise completely amounts were taken by the citizens of a relatively the balance given for every year. Taking into ac- restricted group of countries. count the various factors entering into the calculation, The methods used in determining the value of the the committee is of opinion that this revision has made assets acquired by the German banks in this way were it possible to reach a figure more nearly equal to the subjected to an interesting check which consisted of actual excess of imports than had been the case in taking a single account of a foreigner who had engaged previous reports dealing with this question. The fixing in speculative operations on a considerable scale, and of the amount of the deficit in the trade balance is of converting the figures of the transactions to a gold true importance, since any valuation that is to be made basis for every day on which any debit or credit entry of German assets remaining abroad largely depends was recorded. The results indicated that there was on the figure finally adopted for that deficit. no tendency for this detailed method of conversion to The cash payments made by Germany to the Allies— yield results materially different from those found by to the Reparation Commission, under the reparation the more general mass methods that it was necessary recovery act, payments to the clearing office, etc.— to employ in computing the figures for Germany as a do not give rise to dispute. whole. When the whole inquiry, which was of considerable {6) SALE TO FOREIGNERS OF MARK CREDITS AND length, had been completed it was found that Germany BANK NOTES had profited by the sale of mark credits by an amount of from 7 to 8 milliards of gold marks. In addition the Germany has acquired foreign assets in large sale of paper marks in foreign countries had resulted in volume since the armistice through opening credit profits amounting to from 600 to 700 millions of gold accounts in her banks for the benefit of foreigners. marks, or a total from these two sources of 7.6 to 8.7 These credits were paid for by the foreigners in the milliards of gold marks. money or credits of other countries, and as they underwent a constant skrinkage in real value through the depreciating value of the mark, German economy (c) SALES OP GOLD profited largely from the transactions. The com- German official statistics record sales abroad by mittee made a careful study of the values so acquired Germany principally in the years 1919-1921 and 1923 by an investigation, with the aid of expert accountof gold to a total amount of lj milliard gold marks. ants, of the mark credit balances on foreign account in The accuracy of these figures is not disputed. the principal banks of Germany during the postwar years. (<2) SALES OF GERMAN REAL PROPERTY AND GERMAN It was found that there had been during this five- SECURITIES year period more than a million individual accounts of this kind. In most cases the mark credits of these During the period characterized by the rapid depreaccounts had not been immediately utilized and had ciation of the mark, sales of real property to foreigners undergone a process of shrinkage through the de- reached an unwonted development in Germany. preciation of mark values that amounted to a veritable In estimating the proceeds of such sales, the comevaporation. mittee had before it various statistics indicating in The work of the expert accountants was directed to detail the number and amount of sales of real property determine as nearly as possible the aggregate amount to foreigners since the war in some of the principal of the shrinkages in these very numerous accounts towns of Germany, and also in districts of varying that was due to the depreciation of the value of -the economic character. mark. With this end in view the leading banks in As regards securities, Germany was able during the •Germany were asked to transcribe from their books first part of the post-war period to market some of her the data showing the credit balances and the amounts securities abroad, but as soon as her financial position of debits in the accounts of all foreigners at the close became more uncertain most of these transactions of each month from the end of 1918 to the end of 1923. were suspended. After the sums indicated had been converted to In the aggregate the committee considers that sales gold equivalents at the current rate of exchange, it of German real property and securities to foreigners was possible to draw close inferences as to the total amounted to about 1J^ milliard gold marks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 417 below that produced by German assets abroad before (e) EXPENDITURE BY FOREIGNERS TRAVELING IN GERthe war. The assets held abroad by Germany since MANY AND BY GERMANS TRAVELING ABROAD the war represent indeed only a small and for some During the five years which have elapsed since the part unproductive fraction of her pre-war holdings. armistice, considerable sums have been spent in Ger- It is true, on the other hand, that the payments which many by large numbers of foreigners who have traveled Germany has had to make since 1919 in respect of and lived in the country. Our estimate of the expendi- German securities held by foreigners have been inconture by these travelers was facilitated by the official siderable. After a careful study of the question, the statistics kept by the largest German towns and by the committee came to the conclusion that a set-off of the special report on the subject supplied by the German two items—income from German investments abroad Government. The committee was able to obtain a and income from foreign investments in Germany— fairly exact idea of the number of foreigners who came resulted in a small balance in Germany's favor for to Germany during the period in question, the average the whole of the post-war period. length of their stay and the daily expenditure of each The remittances sent to Germany by German traveler. nationals residing abroad and German connections As against this, numerous German travelers belongand sympathizers amount to a considerable figure in ing mostly to the wealthier classes have stayed in Germany's favor. foreign countries, especially in the last two or three years. Their expenditure has to be deducted from the (i) GERMAN PRIVATE PROPERTY IN CEDED TERRITORIES expenditure by foreigners in Germany referred to above, and very considerably reduces the amount of Most of the valuations of German property abroad the German assets realized from that source. have taken little or no account of the value of German private property in the ceded territories of Silesia, (/) EXPENDITURE BY ARMIES OP OCCUPATION Posen, Danzig, etc. During the post-war period, a certain sum has been These properties are included in our own estimate realized by Germany through the expenditure in in so far as, according to the definition adopted by the foreign currency, or in marks bought with foreign committee, they are owned by Germans residing in currency, by the troops occupying German territory. Germany. Although it is very difficult to determine Each of the Governments having or having had with any precision the extent of these properties, the armies of occupation in Germany has supplied the committee considered that it should not exclude from committee with a detailed estimate of the expenditure its valuation certain industrial assets, particularly made by the officers and men or by the various army those in Upper Silesia. services. These estimates were checked in several ways by a series of calculations relating to each army's 0) FOREIGN BANK NOTES IN GERMANY different methods. The results of these different There is in Germany a large quantity of foreign calculations have been combined. bank notes (dollars, florins, Scandinavian crowns, Swiss francs, pounds sterling, and more especially in the {g) EARNINGS FROM SHIPPING, INSURANCE, TRANSIT, ETC. occupied territory, Belgian and French francs). The Earnings from shipping, insurance, commissions, exceptional plight of the German mark has influenced transit, were an important source of German income Germans in acquiring stable currencies wherever prior to 1914, but during the war such earnings in possible and on a large scale. These foreign notes great measure disappeared. In the five years 1919- have remained in the country instead of finding their 1923 some of the lost ground has been regained, par- way abroad again through the normal channel of trade, ticularly in the field of shipping and insurance, and as would have been the case in ordinary circumstances. the committee has taken this item into account. Various estimates of the total amount of such notes were made in Germany, particularly towards the end {h) INCOME FROM GERMAN INVESTMENTS ABROAD AND of 1923. The committee has compared the different FOREIGN INVESTMENTS IN GERMANY—REMITTANCES estimates with the information which it collected in MADE BY GERMANS RESIDING ABROAD Germany and other countries. In its opinion, the The total amount of the income produced by German value of the foreign notes existing in Germany at the assets abroad since 1919 is of course substantially end of 1923 amounted to about 1.2 milliard gold marks. 97417—24—7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

418 FEDERAL RESERVE BULLETIN MAT, 1924 LAW DEPARTMENT Exercise of fiduciary powers by national banks in and, in accordance with this request, the Solici- Missouri tor General filed a brief and made an oral argu- There is published below the opinion of the ment in the case on behalf of the United States Supreme Court of the United States, in the case as amicus curise. of State ex rel. Burnes National Bank of St. On April 28 the Supreme Court of the United Joseph v. Duncan, which reverses the decision States rendered its decision, reversing the deof the Supreme Court of Missouri and up- cision of the Supreme Court of Missouri, and holds the right of national banks in Missouri holding that "whatever may be the State law, to exercise trust powers. national banks having the permit of the Fed- The Burnes National Bank had been named eral Reserve Board may act as executors if as executor under a will and had made applica- trust companies competing with them have tion to the probate court having jurisdiction that power." The opinion of the court was for appointment as such executor. On Jan- rendered by Mr. Justice Holmes, and Mr. Jusuary 29, 1923, the probate court refused to tice Sutherland rendered a dissenting opinion issue letters testamentary to the national bank in which Mr. Justice McReynolds concurred. on the ground that under the laws of Missouri Both the court's opinion and the dissenting the bank was not authorized to act as executor. opinion are published below. The national bank applied to the Supreme Court of Missouri for a writ of mandamus SUPREME COURT OF THE UNITED STATES requiring the probate court to appoint it as No. 762.—OCTOBEB TERM, 1923 executor. On January 4, 1924, the Supreme Court of Missouri rendered a decision uphold- The State of Missouri at the relation of the Burnes ing the decision of the probate court and de- National Bank of St. Joseph, Plaintiff in Error, v. A. B. Duncan, Judge of the Probate Court of nying the writ of mandamus. The opinion of Buchanan County, Missouri. In Error to the the State court was to the effect that the exer- Supreme Court of the State of Missouri. cise of trust powers by national banks in Missouri is in contravention of State law. The [April 28, 1924] court considered the provision in section 11 (k) Mr. Justice HOLMES delivered the opinion of the Court. of the Federal reserve act that the exercise of The relator, the Burnes National Bank of St. Joseph, trust powers by national banks shall not be was appointed executor by a citizen of Missouri who considered in contravention of State law when died on November 22, 1922, leaving a will. The bank applied to the proper probate court for letters testa- State institutions which compete with national mentary, but was denied appointment on the ground banks are permitted to exercise such powers, that by the laws of Missouri national banks were not but failed to apply this provision, arguing that authorized to act as executors. Thereupon it applied it is not controlling and that trust companies in to the supreme court of the State for a writ of mandamus to the judge of the probate court and an alter- Missouri do not compete with national banks in native writ was issued. The respondent demurred, the sense contemplated by the statute. the demurrer was sustained and the* peremptory writ The case was promptly appealed to the was denied. Mo. A writ of error was allowed by the Supreme Court of the United States, was chief justice of the State court. The bank claims the capacity to fill the office under the statutes of the advanced on the docket, and was argued United States. on April 11. In view of the fact that na- By the act of September 26, 1918, c. 177, § 2, 40 tional banks were created as instrumentalities Stat. 967, 968, amending § 11 (k) of the Federal Reof the Federal Government, and trust powers serve Act, the Federal Reserve Board was empowered "To grant by special permit to national banks applywere granted to them in order to enable ing therefor, when not in contravention of State or them to continue to exist in competition with local law, the right to act as trustee, executor, ad- State banks and trust companies exercising such ministrator * * * or in any other fiduciary capacity in which State banks, trust companies, or other powers, the case was of great importance to the corporations which come into competition with na- Federal Government as well as to national tional banks are permitted to act under the laws of the banks. At the suggestion of the Federal Re- State in which the national bank is located." If the serve Board and the Comptroller of the Cur- section stopped there the decision of the State court might be final, but it adds the following paragraph, rency, therefore, the Secretary of the Treasury "Whenever the laws of such State authorize or permit requested the Department of Justice to. inter- the exercise of any or all of the foregoing powers by vene in the case on behalf of the United States; State banks, trust companies, or other corporations Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL KESEBVE BULLETIN 419 which compete with national banks, the granting to SUPREME COURT OF THE UNITED STATES and the exercise of such powers by national banks shall not be deemed to be in contravention of State or local No. 762.—OCTOBER TERM, 1923 law within the meaning of this act." This says in a The State of Missouri, at the relation of The Burnes roundabout and polite but unmistakable way that National Bank of St. Joseph, Plaintiff in Error, v. whatever may be the State law, national banks having A. B. Duncan, Judge of the Probate Court of the permit of the Federal Reserve Board may act as Buchanan County, Missouri. In error to the executors if trust companies competing with them Supreme Court of the State of Missouri. have that power. The relator has the permit, competing trust companies can act as executors in Mis- [April 28, 1924] souri, the importance of the power to the sustaining of competition in the banking business is so well known Mr. Justice SUTHERLAND, dissenting. and has been explained so fully heretofore that it does The real question here, as I understand it, is not not need to be emphasized, and thus the naked ques- whether Congress may safeguard national banks tion presented is whether Congress had the power to do against ordinary State legislation of a discriminative what it tried to do. character, but whether Congress may intrude upon and The question is pretty nearly answered by the prohibit the exercise of the governmental powers^ of a decision and fully answered by the reasoning in First State to the extent that such exercise discriminates National Bank of Bay City v. Fellows, 244 U. S. 416. against such banks in favor of competing State cor- That case was decided before the amendment to the porations. The authority of the Fellows case, I think, Federal reserve act that we have quoted and came is pressed too far. The statute there under review here on the single issue of the power of Congress when simply made national banks competent to act as executhe State law was not contravened. It was held that tors, etc., "when not in contravention of State or local the power "was to be tested by the right to create the law." The statute did not attempt to override the bank and the authority to attach to it that which was will of the State in that respect, but expressly recogrelevant in the judgment of Congress to make the nized its control and authority. The State supreme business of the bank successful." 244 U. S. 420. The court conceded that the powers thus conditionally power was asserted and it was added that "this ex- conferred by the Federal statute, in fact, would not be cluded the power of the State in such case, although in contravention of the State law, but held that Conit might possess in a general sense authority to regulate gress was without constitutional authority, because the such business, to use that authority to prohibit such functions sought to be given to such banks were subbusiness from being united by Congress with the bank- jects of State regulation. That view of the matter was ing function." 244 U. S. 425. Now that Congress has rejected; but, putting aside some expressions not expressed its paramount will this language is more necessary to the decision, I do not think the case can be apposite than ever. The States can not use their most regarded as authority for the conclusion apparently characteristic powers to reach unconstitutional results. now reached: that Congress may so limit the power of a Western Union Telegraph Co. v. Kansas, 216 U. S. 1.State, against its expressly declared will to the contrary, Pullman Co. v. Kansas, 216 U. S. 56. Western Unionthat it may confer the right to act as executors and Telegraph Co. v. Foster, 247 U. S. 105, 114. There isadministrators upon State corporations which compete nothing over which a State has more exclusive authority with national banks, only upon condition that the same than the jurisdiction of its courts, but it can not escape right be conferred upon the latter. Certainly that its constitutional obligations by the device of denying precise question was not there presented for decision. jurisdiction to courts otherwise competent. Kennedy It is fundamental, under our dual system of governv. Supreme Lodge of the World, 252 U. S. 411, 415. So ment, that the Nation and the State are supreme and here—the State can not lay hold of its general control independent, each within its own sphere of action; of administration to deprive national banks of their and that each is exempt from the interference or conpower to compete that Congress is authorized to sustrol of the other in respect of its governmental powers, tain. and the means employed in their exercise. Bank of The fact that Missouri has regulations to secure the Commerce v. City of New York, 2 Black. 620, 634; safety of trust funds in the hands of its trust companies South Carolina v. United States, 199 U. S. 437, 452, does not affect the case. The power given by the act et seq.; Farrington v. Tennessee, 95 U. S. 679, 685. of Congress purports to be general and independent "How their respective laws shall be enacted; how of that circumstance and the act provides its own they shall be carried into execution; and in what safeguards. The authority of Congress is equally tribunals, or by what officers; and how much discretion, independent, as otherwise the State could make it or whether any at all shall be vested in their officers, nugatory. Since the decision in First National Bank are matters subject to their own control, and in the of Bay City v. Fellows, 244 U. S. 416, it generally hasregulation of which neither can interfere with the been recognized that the law now is as the relator other." Tarble's case, 13 Wall. 397, 407-8. Except contends. In re Turner's Estate, 277 Pa. 110, 116.as otherwise provided by the Constitution, the sov- Estate of Stanch field, 171 Wis. 553. Hamilton v. State, ereignty of the States "can be no more invaded by 94 Conn. 648. People v. Russell, 283 111. 520, 524. In the action of the General Government than the action re Mollineaux, 179 N. Y. Supp. 90. Fidelity National of the State governments can arrest or obstruct the Bank & Trust Co. v. Enright, 264 Fed. Rep, 236. course of the national power." Worcester v. Georgia, 6 Pet. 515, 570. Judgment reversed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

420 FEDERAL RESERVE BULLETIN MAY, 1924 In Bank of Commerce v. City of New York, supra, is plainly the assertion of a governmental policy upon pages 633-4, a tax case, this court said: "That govern- a matter within its exclusive control, with which the ment whose powers, executive, legislative, or judicial, Federal Government has no authority to meddle. * * * are subject to the control of another distinct Congress may, of course, confer upon national banks government can not be sovereign or supreme, but the capacity to act as administrators and executors, subordinate and inferior to the other. This is so but I do not think it is within the constitutional aupalpable a truth that argument would be superfluous. thority of that body to make such legislation binding Its functions and means essential to the administra- upon the State against its will. The decision just tion of the government, and the employment of them, rendered perhaps does not go that far; but it does are liable to constant interruption and possible anni- uphold the power of Congress to impose its will upon hilation. * * * But of what avail is the function the State in this respect if the State, in the exercise of or the means if another government may tax it at its exclusive authority over the devolution of estates discretion? It is apparent that the power, function, of deceased persons, permits any corporation which or means, however important and vital, are at the competes with national banks to exercise the powers mercy of that government. And it must be always mentioned. This contingency seems to me a slender remembered, if the right to impose a tax at all exists distinction upon which to found a denial of the State's on the part of the other government, 'it is a right power. It may be conceded that a State is precluded which in its nature acknowledges no limits.' And the from enforcing legislation which discriminates against principle is equally true in respect to every other national banks, in respect of private banking or busipower or function of a government subject to the ness operations; but a very different situation is precontrol of another." sented when the discrimination arises in respect of the governmental operations of the State. A State, for It is settled beyond controversy that the right of a example, can not be sued in its own courts without its State to pass laws, to administer them through courts consent; but is it powerless to consent to such suits by of justice, and to employ agencies for the legitimate financial corporations of its own creation except upon purposes of State government can not be taxed, Veazie condition that it extends a similar privilege to com- Bank v. Fenno, 8 Wall. 533, 547; and that rule is but an peting national banks? Legislation requiring all resiapplication of the general and broader rule, which fordents of a State to deposit their funds only in State bids any interference by the Federal Government with institutions would undoubtedly be bad against Federal the governmental powers of a State. The settlement legislation to the contrary; but is it beyond the power of successions to property on death is a subject within of the State legislature to subject public moneys— the exclusive control of the States and entirely beyond State, county or municipal—to such a restriction? the sphere of national authority. See Tilt v. Kelsey, A State may not unconditionally require private debts 207 U. S. 43, 55-6; Plummer v. Coler, 178 U. S. 115,137. to be paid only in gold and silver; but, in the exercise Upon the death of the owner his property passes under of its sovereign power of taxation, it may limit the the control of the State and remains there until all just payment of taxes to gold and silver, if it sees fit, in charges against it can be determined and paid and spite of a Federal law making currency a legal tender, those who are entitled to become its new owners can and, as this court has said: "It is not easy to see upon be ascertained. The duty and power of the State to what principle the National Legislature can interfere provide a tribunal for the accomplishment of these ends, with the exercise, * * * of this power." Lane Tilt v. Kelsey, supra, it follows, can not be abridged by County v. Oregon, 7 Wall. 71, 77. In my opinion, the Federal legislation. exercise of the powers conferred upon trust companies The right of the owner to direct the descent of his by the legislation here under review is governmental property by will or permit it under statute, as well as in its nature; and the fact that the statute discriminates the right of a legatee, devisee, or heir to receive the in that matter against national banks (as, also, it does property, are rights exclusively derived from and regu- against State banks) is a negligible incident, which lated by the State. Plummer v. Coler, supra, page 137.does not affect the validity of the statutory limitation. During the process of administration the estate, in contemplation of law, is in the custody of the court exer- The probate courts of a State have only such powers cising probate powers, and of this court the executor or as the State legislature gives them. They are wholly administrator is an officer. Yonley v. Lavender, 21 beyond the jurisdiction of Congress, and it does not Wall. 276, 280. "An administrator appointed by a seem to me to be within the competency of that body, State court is an officer of that court; his possession of on any pretext, to compel such courts to appoint as the decedent's property is a possession taken in obe- executor or administrator one whom the State law dience to the orders of that court; it is the possession has declared shall not be appointed. of the court. * * *" Byers v. McAuley, 149 U. S. The particular invasion here sanctioned may not be 608, 615. of great moment; but it is a precedent, which, if carried In the present case the State legislature, as con- to the logical extreme, would go far toward reducing clusively determined by the State supreme court, has the States of the Union to the status of mere geographiexcluded not only national banks but State banks cal subdivisions. The case is one', to use the phrase from assuming the functions of executors and admin- of Mr. Justice Brewer in Fairbank v. United States, 181 istrators, which functions, for reasons satisfactory to U. S. 283, 291-2, for the application of the maxim, itself, it has allowed trust companies to exercise. This obsta principiis, not de minimis non curat lex. determination of the State to grant the right to one I am authorized to say that Mr. Justice MCRETNOLDS and not the other, when it might have excluded both, concurs in this dissent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDEEAL RESERVE BULLETIN 421 State Banks and Trust Companies Fiduciary Powers Granted to National Banks During the month of April the Federal Reserve The following list shows the State banks and trust Board approved applications of the national banks companies which were admitted to membership in the listed below for permission to exercise one or more of Federal reserve system during the month ending April the fiduciary powers named in section 11 (k) of the 28, 1924, on which date 1,604 State institutions were Federal reserve act as amended, as follows: members of the system: (1) Trustee; (2) executor; (3) administrator; (4) registrar of stocks and bonds; (5) guardian of estates; ADMISSIONS (6) assignee; (7) receiver; (8) committee of estates of lunatics; (9) in any other fiduciary capacity in which State banks, trust companies, or other corporations Total Capital Surplus resources which come into competition with national banks are permitted to act under the laws of the State in which the national bank is located. District No. 4 Newton State Bank, Newton Falls, District Powers Ohio $25,000 $5,000 $229,331 Place No. Name of bank granted Toledo Trust Co., Toledo, Ohio... 1,500,000 1,000,000 6,623,48S District No. 8 Thomaston, Me 1 Georges National Bank.._1 to 3, 5, 8 Producers State Bank, Siloam Springs, Fairport, N. Y 2 Fairport National Bank... Ito9 Ark 25,000 3,250 116,847 Red Bank, N. 3 2 Na C t o io . n o a f l B B e a d n k B a a n n d k . Trust 1 to 9 District No. 9 At N la . n J t . ic Highlands, 2 At t l i a o n n t a i l c B H an ig k h . lands Na- !4to8 Bradley Bank, Tomahawk, Wis 60,000 14,000 974,157 T B a ri m dg a e q t u o a n , , P N a . J __ _. 3 3 B Fi r r i s d t g e N to at n io N na a l ti o B n a a n l k Bank. 1 I t t o o 9 9 District No. 11 S Pe c n h s u a y c l o k l i a ll , H F a la v . e . n, Pa. 3 6 C . itiz . e ns d a o n d . Pe .. oples Na- I I t t o o 9 9 Guaranty State Bank, Kosse, Tex 25,000 3,700 204,000 tional Bank. Guaranty State Bank, Emory, Tex 17, 500 92, 423 St. Petersburg, Fla... 6 Central National Bank & 4 to 9 Trust Co. Liberty State Bank, Soper, Okla . 15,000 84, 56c Ann Arbor, Mich 7 First National Bank 1 to 9 District No. U O A e n l n w a e , i 1 n 1 , 1 Iowa 8 7 First N d at o io nal Bank . . 5 It t o o 7 9 Bank of Beaverton, Beaverton, Oreg 25,000 7,000 492,056 L St i . n t P o a n u , l , I n M d inn _ _. 8 9 Twin Ci d t o ies Nat. Bank... 1 I t t o o 7 9 Denver, Colo.1 10 American National Bank Ito7 Enid, Okla 10 Enid National Bank. 1 CHANGES Eaton, N. Mex 10 National Bank of N. Mex 2\nd 3 Mount Vernon, 12 Skagit National Bank Ito4 Wash. District No. 7 Merchants & Savings Bank, Kenosha, • Approval effective Mar. 29,1924. Wis. (voluntary liquidation; ab- New National Bank Charters sorbed by a national bank) $100,000 $23,000 «, 903,150 District No. 9 The Comptroller of the Currency reports the following increases andf reductions in the number and Security State Bank, Dillon, Mont, capital of national banks during the period from (voluntary liquidation) 50,000 188,000 March 22 to April 25, 1924, inclusive: District No. 10 Num- Amount American Bank & Trust Co., Denver, ber of of Colo, (converted into a national banks capital bank) - , 600, 000 250, 000 10,696,600 District No. 11 New charters issued.. _. . 19 $2,710 000 Restored to solvency 0 0 Security State Bank, Portales, N. Mex. Increase of capital approved 30 4,737,500 (insolvent) 25,000 4,000 316, 200 Citizens State Bank, Alice, Tex. Aggregate of new charters, banks restored to (merged with nonmember) 60,000 20,000 385,000 solvency, and banks increasing capital 49 7,447,500 District No. 12 Liquidations 32 4 165 000 Reducing capital _ 2 55,000 Molson State Bank, Molson, Wash, (closed) _-. 35,000 10,000 245,000 Total liquidations and reductions of capital.. 34 4,220, 000 Valley Bank, Fresno, Calif. (Taken over jointly by Pacific Southwest Consolidations of national banks under act of Trust & Savings Bank, Los Angeles, Nov. 7,1918 _ 1 75,000 Calif., and the Bank of Italy, San Francisco, Calif.) 900,000 80,000 13,408,990 Aggregate increased capital for period 7,447,500 Reduction of capital owing to liquidations, etc 4,220, 000 Change of title.—The Lowry Bank & Trust Co. of Georgia, Atlanta, Net increase. . . _ 3,227,500 Ga., has changed its title to Trust Company of Georgia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

422 FEDERAL EESBRVE BULLETIN MAY, 1924 BUSINESS STATISTICS INDUSTRIAL STATISTICS IN THE UNITED STATES Definite recessions occurred in business large decline during March, largely because of activity during March. The index of manu- decreases in shipments of grains, dairy prodfacturing production, shown on the chart ucts, and vegetables, which were unusually below, increased, due to the greater number heavy in February. of working days in March than in February. Revisions in index of production in hasic The index of production in basic industries, industries.—Since the presentation of the corrected to allow for such seasonal variations, Board's "Index of production in basic indusdeclined from 120 to 116. Textiles showed tries" in the December, 1922, BULLETIN, a the greatest decline. Decreased output of number of revisions have been made in the bituminous coal was entirely responsible for original data used in some of the series. The the drop in the mineral index. The index of revised figures for the general index from 1913 agricultural movements had an abnormally to date are given in the table below. INDEXES OF INDUSTRIAL ACTIVITY PER CENT f MONTHLY AVERAGE.1919 =100 ) 175 — MANUFACTURING PRODUCTION • MINERAL PRODUCTION 150 AGRICULTURAL MOVEMENTS 125 125 100 \ 75 75 50 50 25 25 1919 1920 1921 1922 1923 1924 REVISED INDEX NUMBERS OF PRODUCTION IN BASIC INDUSTRIES [Corrected for seasonal variations. Monthly average, 1919=100] 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 102 90 78 110 119 103 107 116 84 86 121 120 February -_ - . -- . 100 92 82 116 114 105 100 115 85 91 120 120 95 94 87 114 116 112 96 115 81 95 125 116 April. 101 93 91 111 119 114 99 108 79 86 124 May ----- - - 99 88 90 113 123 115 93 105 77 92 127 95 88 95 114 118 111 93 107 77 94 122 July 96 89 97 109 112 116 102 105 74 95 121 93 82 96 112 111 114 103 102 79 95 120 96 85 103 113 110 112 105 102 79 100 114 97 81 104 116 116 106 101 99 83 107 118 November _ _ -. -- - . 92 77 108 120 118 106 98 95 86 116 116 92 77 116 116 112 108 103 90 83 116 111 96 86 96 114 116 110 100 105 80 98 120 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 423 INDEX OF EMPLOYMENT IN MANUFACTURING INDUSTRIES 1 [Not corrected for seasonal variations. Monthly average, 1919—100] Metals and Gen- products Textiles and products L b u e m r - Paper Foods Leather Stone, To- C c h a e l m s iin e d ra e l x G in r d o e u x p s I a t r u e o d e n l G in r d o e u x p . F r a ic b s - P u r c o t d s - p u a r c n o t d d s - v c e le n s i- par in nin g dt- p u ar c no t dd s - p u ar c no t dd s - c g al l na a dy ss , bp u ar c oc t cd s o- p u a r c n o t d d s - 1919 average 100 100 100 100 100 100 100 100 100 100 100 100 100 100 1920 average 104 110 110 100 98 103 96 105 110 101 92 103 99 101 1921 average 83 67 67 96 97 94 81 72 96 96 83 86 98 76 1922 average 90 76 75 96 93 101 107 76 99 96 89 99 95 73 1923 average 101 93 93 102 103 101 120 100 105 103 91 110 91 79 1923 February 101 92 92 105 106 104 118 98 104 99 97 98 94 80 March... 103 95 94 107 107 107 121 101 106 99 96 104 94 81 October 101 92 92 99 99 100 120 100 105 109 90 114 90 79 November 100 91 91 98 100 96 119 100 106 110 89 111 • 92 78 December 99 90 89 98 100 96 118 95 107 108 86 109 92 78 1924 January 98 89 89 97 96 98 118 95 106 104 86 105 89 78 February 99 91 90 98 97 100 123 2 95 106 102 87 106 87 78 March 99 92 91 97 94 100 123 '95 106 101 87 110 85 78 • This table contains for certain months the index numbers of employment, together with group indexes for its important industrial components. The general index is a weighted average of relatives for 33 individual industries. The method of construction was described in detail, and indexes for the above groups since January, 1919, were published on pages 1272-1279 of the BULLETIN for December, 1923. ! Revised. » Preliminary. INDEX OF PRODUCTION IN BASIC INDUSTRIES« [Index and relatives for each industry adjusted for seasonal variations.2 Monthly average 1919=100] Iron and steel Textiles Food products Year and month index Animals slaughtered Lumber Pig iron in S g te o e t l s Cotton Wool W fl h o e u a r t m S e u lt g in ar gs Cattle Calves Sheep Hogs 1919 average 100 100 - 100 100 100 100 100 100 100 100 100 100 1920 average.. 105 119 118 98 89 84 90 86 103 86 91 101 1921 average 80 55 58 92 98 92 97 76 97 103 95 75 1922 average 98 88 102 103 98 95 132 86 106 87 106 102 1923 average -. 120 131 128 110 110 96 111 91 114 92 131 124 1923 February 120 134 138 119 113 96 127 93 123 89 102 110 March 125 134 141 118 116 108 121 93 109 102 140 132 October 118 118 118 111 106 91 165 89 126 85 150 134 November 116 111 109 113 104 84 138 82 122 79 141 137 December. 111 117 107 96 100 87 97 81 121 87 116 129 1924 120 120 130 112 99 89 97 95 133 98 119 136 February 2 120 132 145 102 100 100 127 94 137 93 116 130 March 116 132 145 92 101 107 115 90 112 90 132 124 Coal Nonferrous metals Tobacco products Year and month m B in it o u u - s * An c t i h te ra- Copper Zinc le S a o th le er N p e ri w n s t - Cement P le e u tr m o- Cigars r C e i t g te a s - f t M a o c b a t a u n c r u c e - o d 100 100 100 100 100 100 100 100 ioo 100 100 1920 average 122 »102 105 102 82 110 127 117 114 100 93 1921 average 89 3103 39 46 3 81 89 121 124 98 113 90 1922 average. __ . „ 87 S62 82 79 79 105 139 146 100 119 98 1923 average 118 109 122 113 84 108 174 191 99 144 96 1923 February 118 126 110 108 87 109 189 171 99 139 99 March., „ __ 118 128 115 124 92 112 178 175 99 137 93 October 112 108 128 107 81 103 165 203 106 153 95 November.. 106 103 131 113 80 107 180 209 104 145 98 December 100 105 128 118 72 101 174 192 88 138 85 1924 122 111 132 126 73 106 239 183 98 176 113 February 2- 123 118 131 112 3 71 107 192 3189 94 140 98 March.. 101 111 121 122 65 103 187 185 90 143 91 ' This table contains for certain months the index numbers of production in basic industries which are shown in the chart at the bottom of page 332, together with the series of relatives used in constructing the index. In making the final index the relatives are adjusted to allow for seasonal fluctuations and are weighted. The method of construction was described in detail and all relatives for each series since January, 1913, were published on pages 1414-1421 of the BULLETIN for December, 1922. ' Industry relatives and general index for February, 1924, given an additional adjustment to allow for 29th day. ' Revised. 4 The bituminous coal series has been entirely revised. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

424 FEDERAL RESERVE BULLETIN MAY, 1924 INDEXES OF INDUSTRIAL ACTIVITY1 COMMODITY MOVEMENTS—Continued [No seasonal correction. Monthly average 1919—100] 1924 1924 1923 March February March 1924 1923 Grain and Flour—Continued March Fe a b r r y u- J a a r n y u- March Fe a b ry ru- To R ta o l c k v y is i M ble o u su n p ta p i l n y s o a f t g c r l a o i s n e e o a f s t m o o f n t t h h e (000 omitted): Wheat (bushels) 62,715 68,005 48,911 Agricultural movements 80 2 95 104 80 Corn (bushels).- 27,284 20,517 31,011 Livestock _. 93 99 121 92 Oats (bushels) 17,739 19, 011 26,180 Animal products 90 U01 98 120 Grains 87 120 91 95 Receipts at 9 seaboard centers (000 Cotton 33 41 83 39 37 omitted): Vegetables- 138 123 120 150 Wheat (bushels) _ , 12,482 13,816 14,932 Fruits 92 102 90 90 Corn (bushels) 3,893 2,975 5,848 Tobacco 75 133 239 62 106 Oats (bushels) 1,414 1,301 2,114 Mineral production _ 126 128 136 134 117 Rye (bushels) 877 408 2,495 Anthracite- 110 104 108 128 106 Barley (bushels) 1,274 1,255 1, 290 Bituminous 103 118 131 121 109 Petroleum 189 2 176 179 178 154 Total grain (bushels). 19,940 19, 755 26, 679 Pig iron 136 121 118 138 118 Fl.our (barrels). 2,105 1,945 2,034 Copper.- 128 127 132 121 102 Zinc .- 122 112 126 124 108 Total grain and flour (bushels) ... 29, 414 28, 505 35, 833 Lead 145 M24 114 «126 2106 Silver 121 115 111 129 100 Stocks at 8 seaboard centers at close of Manufacturing production—. 127 «123 2 122 134 116 month (000 omitted): Iron and steel 145 131 126 143 122 Wheat (bushels) 4,171 4,659 8,549 Vehicles 156 148 129 147 117 Corn (bushels) __ 1,772 1,007 4,131 Textiles 100 106 116 126 120 Oats (bushels) _ 901 849 2,428 Food products 105 105 109 108 94 Rye (bushels) _ 1,082 1,020 4,012 Lumber 141 132 128 147 112 Barley (bushels) 1,532 1,555 1,902 Paper and printing 120 » 117 122 126 113 Leather and shoes 102 2 96 98 125 106 Total grain (bushels) 9,458 9,090 21,022 Petroleum refining 180 166 172 156 142 Cement and brick 140 2 123 118 142 111 Wheat flour production (barrels), Tobacco - 109 103 118 112 100 (000 omitted) 10, 578 10,286 10,607 Rubber tires ... 159 154 152 184 153 Livestock 1 For description and early figures see March, 1924, Bulletin. Receipts at 57 principal markets (head, 2 Revised. 000 omitted): Cattle and calves _._ 1,526 1,429 1,475 COMMODITY MOVEMENTS 4,726 5,214 4,831 Sheep _- 1,353 1,388 761 38 56 Horses and mules (43 markets) M 1 a 9 r 2 c 4 h Fe 1 b 9 r 2 u 4 ary M 1 a 92 rc 3 h Total- 7,643 8,087 7,126 Shipments at 52 principal markets (head, 000 omitted): Grain and Flour H C o a g tt s le and calves 544 2, 5 0 3 9 0 4 546 Receipts at 17 interior centers (000 Sheep _ 647 674 637 omitted): Horses and mules (43 markets) 37 55 57 W Co h r e n a t ( b ( u b s u h s e h l e s l ) s) 1 2 8 9 , , 2 0 8 5 9 9 4 2 5 1 , , 6 4 6 3 7 3 2 2 5 4 , , 6 2 7 3 2 0 Total 3,052 3,354 2,920 Oats (bushels) _ 18,704 21,331 21,124 Shipments of stockers and feeders from Rye (bushels) 1,677 1,938 3,679 33markets (head, 000omitted): Barley (bushels) 2,993 3,381 3,403 Cattle and calves 172 167 195 Hogs 49 46 62 Total grain (bushels). 70, 722 93,750 78,108 82 106 114 Flour (barrels) 2,005 2,024 2,328 Total 319 371 Total grain and flour (bushels) ... 79, 743 102,859 88,584 Slaughter at principal markets under Shipments at 14 interior centers (000 Federal inspection (head, OOOomitted): omitted): Cattle 665 W C O o a h r t e s n a ( ( t b b u ( u b s s u h h s e e h l l s e s ) l ) s) _ 1 1 1 5 2 5 , , , 4 6 4 6 7 5 1 6 0 1 2 14 0 2 , , , 5 0 3 2 0 1 0 5 1 1 1 1 3 4 7 , , , 6 0 5 7 8 2 7 4 1 H C Sh a o e l g v e s e p s 4, 3 5 7 3 7 6 5, 3 9 0 4 0 1 6 6 2 1, 3 9 8 7 6 3 7 8 8 Rye (bushels) _ _ 1,026 421 94,r Barley (bushels) 2,052 2,081 1,881 Total- 6,447 6,933 6,871 Meats, cold-storage holdings, first of fol- Total grain (bushels). 46, 665 49, 338 48,115 lowing month (pounds, 000 omitted): Flour (barrels) _ 3,194 3,166 4,007 Beef 93, 225 97,874 90, 502 Pork products 1,015, 683 946,788 864,674 Total grain and flour (bushels) 61,039 63,586 66,147 Lamb and mutton 1,771 2,175 6,635 Exports of certain meat products Stocks at 11 interior centers at close of (pounds, 000 omitted): month (000omitted): Wheat (bushels) 53, 717 62, 471 37, 952 Canned 124 106 105 Corn (bushels) 20,263 15,330 22,974 Fresh 150 259 348 Oats (bushels) 14,413 16,328 20,647 Pickled or other cured. 1,630 1,605 2,312 Rye (bushels) 18,804 17,919 13,368 Hog products— Barley (bushels) 1,352 1,204 1,778 Bacon _ 31,713 41,005 40, 549 Hams and shoulders... 30,170 35, 296 25,892 Total grain (bushels). 108,549 112. 252 96,719 Lard 100, 726 99,910 109,187 Pork, pickled 2,760 3,001 3,325 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 425 COMMODITY MOVEMENTS—Continued COMMODITY MOVEMENTS-Continued 1924 1924 1923 1924 1924 1923 March February March March February March Dairy Products Fuel and Power Receipts at 5 principal markets (000 omitted): Coal and coke (short tons, 000 omitted): B Ch u e tt e e s r e ( ( p p o o u u n n d d s s ) ) 4 1 0 2 , , 7 8 4 1 1 0 4 1 8 6 , , 2 24 6 3 0 5 1 0 5 , , 4 5 0 7 9 3 A Bi n t t u h m ra i c n i o te u s c o co al a l p p ro ro d d u u ct c i t o io n n _ 3 8 9 , , 1 9 1 0 4 9 4 7 5 , , 6 7 2 2 1 5 4 9 6 , , 3 80 8 2 2 Eggs (cases) 1,196 999 2,124 Coke- Poultry (pounds) 16,893 27,447 17,154 Beehive coke production 1,343 1,211 1,749 Cold-storage holdings first of following By-product coke production 3,220 2,981 3,256 month (000 omitted): Petroleum, crude (barrels, 000 omitted): Creamery butter (pounds) 7,830 9,837 4,824 Production 59,504 55,454 56,132: American cheese (pounds) 28,234 35, 223 14,465 Stocks at close of month ;38, - 258,738 569 44 453 Producing oil wells completed Poultry (pounds) 76,035 93,528 94,872 (number) 1, 904 1,248 Oil refineries: Other Agricultural Products Production (000,000 omitted)— Cottonseed (tons): Crude-oil run (barrels) 53 50 47 Received at mills 82,353 156,875 51,865 Gasoline (gallons) 743 678 631 Crushed 233,948 338, 077 202, 858 Kerosene (gallons) 200 197 191 Stocks at mills at close of month 234,121 385, 716 154:, 103 Gas and fuel oils (gallons) 1,114 1,025 971 Cottonseed oil (pounds, 000 omitted): Lubricating oils (gallons) _ 101 94 91 Production 100,189 62, 726 Stocks (000,000 omitted)— Stocks 110,115 128, 518 59, 328 Crude-oil run (barrels) 37 31 Oleomargarine consumption (pounds, Gasoline (gallons) 1,571 1,374 1,259 000 omitted) 23,345 23,617 19,722 Kerosene (gallons) 345 317 283 Tobacco sales at loose-leaf warehouses Gas and fuel oils (gallons) 1,509 1,551 1,254 (pounds, 000 omitted): Lubricating oils (gallons) 251 256 235- Dark belt, Virginia. 2,757 3,688 2,955 Bright belt- Electric power produced by public Virginia 2,599 6,024 819 utility plants (kilowatt hours, 000,000 North Carolina 3,858 16, 670 8,514 omitted): Burley 6,240 14,949 5, 256 Produced by water power 1,711 1,560 1,71S Western dark 8,653 6,688 J5,082 Produced by fuels 3,272 3,318 3,009 Sale of revenue stamps for manufacture of tobacco, excluding Porto Rico and Total 4,878 4,728 Philippine Islands (000 omitted): Cigars (large). 515, 895 498,796 571, 515 Metals Cigars (small) 51,905 44,696 49,955 Cigarettes (small) 5, 268, 7034, 854, 527 5, 043,327 Iron and steel: Manufactured tobacco (pounds) 31,356 31, 219 Pig iron production (long tons, 000 Fruit shipments (carloads): omitted) 3,461 3,075 3,524 Grapefruit .- 2,752 2,660 2,825 Steel ingot production (long tons, Oranges .. 8,602 8, 345 000 omitted). 4,146 3,781 4,047 Lemons 897 644 668 Unfilled orders, United States Steel Apples 6,162 7,995 5,362 Corporation (long tons, 000 omit- Vegetable shipments: ted).. _ 4,783 4,913 7,403. White potatoes (carloads) 22,091 19,862 22,917 Fabricated structural steel orders Onions (carloads).,. 1,898 2,092 1,413 (tonnage) 184,600 189,800 241,800- Rice (pounds, 000omitted) 81,890 92,655 65,448 Steel castings bookings (net tons)... 97,962 70,829 143,564 Sugar, all ports (long tons): Silver production (troy ounces, 000 Receipts 612,070 465,796 674,775 omitted) _ 5,727 5,427 6,110 Meltings 477,600 401,000 505, 300 Copper production (pounds, 000 omit- Raw stocks close of month 528, 602 442,969 491,021 ted) 128, 560 128,260 121,562: fishery Products Zinc( pounds, 000 omitted): Production 95,550 87,866 97,462. Fish landed by American fishing ves- Stocks, close of month 64,148 74,384 20,042 sels, total catch (pounds, 000 omitted) 17, 577 17, 309 15, 590 Shipments 105,786 94,876 99,148 Cold-storage holdings, frozen and cured f o i m sh i , t te o d n ) 15th of month (pounds, 000 42, 653 55,410 34,390 Tin D (p e o li u v n e d ri s e , s 0 0 to 0 f o a m ct i o t r t i e e d s ): 10,214 19,813 14,862: Stocks, close of month 4,036 7,398 9,110. Forest Products Lumber: Textiles Number of mills— National Lumber Manufac- Cotton (bales, 000 omitted): turers' Association 560 565 587 Sight receipts 421 453 Southern Pine Association 182 181 180 American spinners' takings 312 283 422: West Coast Lumbermen's As- Stocks at mills 1,498 1,578 2,035 sociation. 120 125 127 Stocks at warehouses.__ _ 1,984 2,485 2,380- Production (feet, 000,000 omitted)— Visible supply 2,365 2,785 2,335 National Lumber Manufac- Consumption by mills 484 turers' Association 1,275 1,210 1,355 Spindles active during month (000 508 624 Southern Pine Association 410 391 431 omitted) 32,392 West Coast Lumbermen's As- Spindle hours active during month 32,684 35,498. sociation 394 433 495 (000 omitted) 7,073 Ship N m a e ti n o ts n a ( l f eet L , u 0 m 00 b ,0 e 0 r 0 o M mi a t n te u d f ) a — c- Finished cotton fabrics: 7,304 9,531 Naval st W S o o r s t e e u u o s s t r c t h e i a a e r C t t s r i 3 n o ' o a A s n P s o s t i u s n o t L e h c u e i A a m rn t s i b s o p o e n c o rm i r a t t e s i : n o ' n s . As- 1, 3 4 24 0 8 9 2 8 1, 3 4 21 6 1 6 3 7 1, 4 5 4 3 6 7 8 7 9 F F O S i i h r o n n d i m i i p e s s m r h h i s t e e e t r d d e n e d t c s s y e ) t . o i a ( . v c c r e a d k d s s s e ( s ( b y ) c i a a l s r l e e d s d s ) , 0 ( 0 y 0 a r o d m s, i t 0 te 0 d 0 ) 8 8 4 4 6 5 0 3 , , , , 4 1 3 9 6 1 0 4 9 0 0 8 8 8 4 4 1 7 5 5 , , , , 6 8 8 8 8 5 2 8 0 6 3 3 1 1 4 6 2 1 1 0 0 5 , , , ,4 4 8 1 5 4 2 4 6 1 7 2 . Spirits of turpentine (casks)— Knit underwear (dozens): Receipts 1,802 5,078 5,431 Production 363,390 345,707 412,591 Stocks at close of month 23, 487 33,698 14,596 New orders received 110,300 216,865 296,328. Rosin (barrels)— Shipments 318,349 358,498 498,694 Receipts 18,173 50,610 48,445 Cancellations 5,623 4,204 4,571 Stocks at close of month... 226,775 261,109 222,501 Unfilled orders end of month.. 1,017, 501 1,409,219 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

426 FEDERAL RESERVE BULLETIN MAT, 1924 COMMODITY MOVEMENTS—Continued COMMODITY MOVEMENTS—Continued 1924 1924 1923 1924 1924 1923 March February March March February March Textiles—Continued Building Materials—Continued Wool: Consumption (pounds, 000 omitted) 47,630 50,633 62,859 Brick—Continued Percentage of active machinery to Silica bricktotal reported- Production _ 22,489 17,355 16,793 Looms wider than 50-inch reed Shipments _ _.. 22,011 18,247 17,804 space ; 72.1 71.4 86.3 Stocks at close of month 44,093 41,407 44,481 Looms 50-inch reed space or less. 79.6 80.7 86.1 Paving brick— Sets of cards 85.5 812 90.7 Production __ 23,459 21,074 Combs. 81.8 80.2 91.4 Shipments __ 14,393 8,457 Spinning spindles, woolen 84.4 82.4 90.0 Stocks, close of month 137,459 121,018 Spinning spindles, worsted 78.0 77.6 93.7 Orders received __. 37,441 17,648 Percentage of active hours to total Unfilled orders, close of month- 90,861 68,208 reported- Cement (barrels, 000 omitted): Looms wider than 50-inch reed Production ___ 10, 370 9,880 71.4 71.4 92.9 Shipments _ 8,995 5,933 10,326 Looms 50-inch reed space or less 66.3 66.5 85.7 Stocks at close of month 18,190 16,815 13,045 Sets of cards - 98.9 94.5 103.9 Oak flooring (feet, 000 omitted): Combs 90.6 94.0 117.2 Production. 32,659 29,033 32,236 Spinning spindles, woolen 92.0 89.6 98.6 Shipments _ _ 30, 547 30,441 34,964 Spinning spindles, worsted 73.5 76.9 102.1 Orders booked _ 26,021 28,688 39,641 Men's and boys' garments cut: Stocks at close of month _ 40, 627 38,222 25, 297 Men's suits, wholly or partly wool- 682,107 757,447 967,516 Unfilled orders __ 51,281 53,052 65,823 Men's suits, all other materials 105,831 108, 756 158,526 Maple flooring (foot, 000 omitted): Men's separate trousers, wholly or Production 10,070 9,752 12,344 partly wool 638,959 638,077 876, 872 Shipments _ _ 9,186 15,329 Men's trousers, all other materials.. 481,849 487,587 498,520 Orders booked 7,383 8,653 18,321 Men's overcoats 139,567 119,142 155,471 Stocks, close of month 23,008 22, 747 23,161 Boys' suits and separate pants 609,510 721,470 731,200 Unfilled orders 17,625 19,534 42,434 Boys' overcoats and reefers 19,823 15, 478 21,294 Enameled ware (number): Eaw silk: Baths- Consumption (bales) 26,543 29,804 33,515 Shipments 104,842 88,841 92,473 Stocks at close of month (bales) 30,375 40,226 39,436 Stocks, close of month 54,684 52,581 40,200 Imports (pounds, 000 omitted) 2,004 3,505 4,509 New orders 117,911 137,246 116, 514 Hosiery (dozen pairs, 000 omitted): Lavatories- Total, all classes 4,793 4,787 Shipments 134,910 121,878 104,876 Men's 1,983 2,021 Stocks, close of month 108,496 98,668 50,127 Women's 1,703 1,657 New orders _ 129,119 148,414 148,121 Sinks- Hides and Leather Shipments _ 143,891 128,036 114,677 Sa m le o s n o th f ( r n a u w m b h e id r, e s 0 0 a 0 n o d m s i k tt i e n d s ) : during N St e o w ck o s, r d c e lo rs s e of mont _ h . _ _. 1 9 4 0 5 , , 2 5 1 5 0 6 1 9 5 0 5 , , 1 5 5 0 6 9 1 6 4 1 9 , , 3 1 9 4 1 4 C K G Ca a o ip l t a f t s t s l k e k a i i n n h n d s s i d k e id s... 1 1 , , 5 3 7 1 1 2 7 4 2 4 2 3 1 1 , , 8 2 8 1 4 3 6 4 1 9 8 2 1 2, ,2 5 7 1 1 3 0 5 8 6 2 6 Misc S S N e t h e l o l i w a c p n k m o e s, o r e d n u c e l s t o s r s s w e a o r f e m - ont _ h 7 5 7 3 7 1 , , , 4 9 3 9 6 5 4 4 0 9 6 5 3 7 3 , , , 7 8 8 1 8 5 7 5 6 5 6 5 4 7 6 , , , 6 3 3 5 4 3 9 2 2 Cabretta 17 36 102 Sheep and lamb • 2,808 3,064 3,262 Miscellaneous Manufactures Stocks of raw hides and skins at close of Chemicals: mo C C K C G S n h a a a i o t p e l t b h a f t e s t r s l p k e e k ( a i n t i a n n h n t u a n s d i s m d d k e b l s i a e d m r . , b 000 omitted):' 7 6 1 , , , 1 1 9 6 6 9 9 1 0 0 5 3 3 2 8 4 8 1 , , , 8 5 4 8 9 2 3 3 9 9 2 7 6 2 1 7 8 , , , , , 5 7 0 7 6 9 1 1 4 7 8 6 0 9 9 9 0 6 Woo A M P S C d h r c o o e o p i e n m t p d t u h s a m u i l u a t p t e c n m t e e t n o ( i p d s l t o ) s t h o n i ( o f o g . r n a t l l l t o i o m n n s e s ) ): (pounds, 000 2 7 16 2 0 4 1 7 0 1 1 4 , , , , , 5 2 1 2 8 0 0 6 7 4 5 7 0 2 7 6 1 1 8 9 1 1 6 9 8 3 1 5 , , , , , 1 2 1 3 5 6 8 7 6 0 1 3 8 1 3 7 3 2 9 1 5 5 1 1 3 3 4 4 , , , , , 4 7 4 2 9 5 7 7 0 6 7 7 7 7 0 Production of leather (000 omitted): Stocks, close of month... 139, 035 122,191 111, 823 S S o k s l i i e v d e e r s l s e ) a ( t d h o e z r e ns (b ) acks, bends, and 1,22 3 5 4 1,2 3 4 0 3 1,72 4 0 2 Pape N r e ( w s P h s r o p o r d r t i u t n o c t t n - i s o ) n : 119, 098 118,364 129,294 Oa st k u ffe a d n ) d union harness (sides 135 125 145 S St h o i c p k m s, e n cl t o s se of mont _ h 1 3 2 0 4 , , 8 1 5 3 3 8 1 3 1 0 6 , , 3 6 1 3 4 2 1 2 3 0 2 , , 1 2 9 9 9 2 Boots and shoes, output (pairs, 000 Book paper— omitted): i Production 82,824 77,100 96,087 Men's 7,304 7,865 8,691 Stocks, close of month 32,511 34,307 31,480 Women's _ 8,696 8,220 9,584 Paper board— All other - 10, 592 10,366 12,026 P St r o o c d k u s c , t c io lo n se of month 11 3 1 1 , , 9 8 4 2 0 5 11 35 0 , , 1 4 1 9 3 2 200,000 Total. 26, 591 26,451 30,301 Wrapping paper— Production 50,002 51, 710 86, 776 Building Materials Stocks, close of month 56,016 58,750 43,213 Brick (number, 000 omitted): Fine P r p o a d p u e c r t - ion 25,974 25, 595 35,144 Clay S S N U P t h r f n e o i o i w f r c p d i e k l m u l o s e b c e r d r t a d n i i t o e t o c s r c n r k s l d o - e s r e s , o c f l m os o e n o th f , month. 21 6 5 5 7 2 7 5 9 8 , , , , , 8 7 1 6 5 7 9 2 1 5 8 4 2 9 1 20 5 6 7 5 1 9 7 7 9 , , , , , 5 6 6 5 7 1 1 0 9 5 1 6 0 4 5 1 1 6 7 9 5 1 0 6 9 9 8 , , , , , 6 4 3 2 1 2 5 8 3 8 4 6 4 0 0 A Ru dv b I N M e b m r e e t a r p w i g s S o ( a i s p n r t z p o t g o i a s c n u p k e ( ( n e a s s p d r , g o s s a c u , l t n o e 0 s 0 d l e 0 s i n , o o e 0 f m s 0 m , 0 i 0 t o o 0 te n m 0 d t h o i ) — t : m te i d t ) ted): 1 3 4 0 8 2 6 4 , , , , 2 3 4 4 4 1 3 6 1 9 4 5 3 7 8 1 0 , , , 9 6 5 4 4 8 5 4 9 10 3 6 5 6 2 9 , , , , 0 2 9 0 8 0 7 2 1 2 8 3 Face P S S U b r t h n o o r i f c i d p i c k l u m l k s e c d e » t i i n — n o o t s n r s h d .. e e . d rs s , close of month.. 3 3 9 6 4 2 2 2 , , , , 1 2 2 6 7 4 8 5 4 6 0 7 2 2 9 5 8 1 5 7 , , , , 1 4 6 5 9 8 1 0 6 3 7 0 1 3 8 3 0 3 2 2 2 , , , , 3 7 5 6 7 4 2 7 7 1 2 4 Tire C P s n o a tu e n n u r d P s e u m r t r o m u s a d . b t p u i e t c c i s o t t i n ( i o n r n u e m b s y - b er t , i r 0 e 0 0 o m m an it u t f e a d c ) - : 3 3 6, , 9 4 0 2 9 8 33 3 , , 4 2 6 3 6 8 41 3 , ,8 5 6 9 6 4 'Figures for February and January, 1924; February, 1923. Shipments, domestic., 2,902 2,771 3,323 !Not comparable with previous years after September, 1923. Stocks, close of, month 5,763 5,363 5,671 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 427 COMMODITY MOVEMENTS—Continued COMMODITY MOVEMENTS—Continued 1924 1924 1923 1924 1924 1923 March February March March February March Miscellaneous Manufactures—Contd. Transportation—Continued Tires and tubes—Continued Vessels cleared in foreign trade (tons,. Inner tubes- 000 omitted): 4,219 4,030 4,875 2,002 1,917 1,817 Shipments, domestic 3,421 3,269 3,828 2,537 2,683 2,833 Stocks, close of month.. ... . 8,158 7,487 7,741 Solid tires— Total 4,539 4,600 4,672 Production 61 54 80 Percentage of American to total... 44.1 41.7 41.9 Shipments, domestic 50 42 177 Stocks, close of month-. 174 168 266 Automobiles: BUILDING STATISTICS Production (number)— Passenger cars 348, 287 336, 284 319, 527 Trucks 33, 061 30, 399 34,063 Building permits issued in 168 cities, Ship B D B m y y r e i v n r b a e t o s i a a l — w w t a a (m y y s a c c a ( h n r i u l n o m e a s b d ) e s) r) » 8 4 5 1 4 3 , , 5 2 5 4 8 0 5 6 0 4 52 2 , , 6 4 2 8 2 1 4 7 4 4 62 4 1 , , , 9 9 9 8 8 0 8 3 8 gr N ou u p m e B N d b o e e b w s r t y o o Y n f F o e ( p r 1 d k e 4 e r r ( c m a 2 i l t 2 i i e r t c e s s i ) - s ti e e r s v ) e districts: 2 2 0 , , 5 7 6 9 2 9 8 1 , , 0 2 1 7 2 2 1 1 3 , , 9 1 9 18 3 Philadelphia (14 cities) 3,682 1,880 3,308 Locomotives (number): Cleveland (12 cities) 5,241 3,082 6,411 Domestic shipped 128 92 269 Richmond (15 cities) 3,832 2,905 4,232 Foreign completed.: - . ... 4 7 13 Atlanta (15 cities)-- 3,740 3,133 3,251 Chicago (19 cities) 12,610 6,998 10,735 Total 132 99 282 St. Louis (5 cities) 3,110 2,035 2,746 Minneapolis (9 cities) 1,721 789 1,417 Unfilled orders- Kansas City (14 cities) 2,773 2,063 3,086 494 466 2,214 Dallas (9 cities) 2,783 2,380 2,589 Foreign 40 33 102 San Francisco (20 cities) 13, 562 12,217 13,358 Total 534 499 2,316 Total 76,415 46,766 66,244 Vessels built in United States and offi- Value of permits (dollars, 000 cially numbered by the Bureau of omitted)— Navigation: 84 45 67 N Bo ew st o Y n o ( r 1 k 4 ( c 2 it 2 i e c s i ) ties) 2 1 1 3 7 , , 3 2 1 7 9 5 13 8 0 , , 8 2 2 8 8 6 1 1 5 0 8 , ,3 9 9 8 7 5 21, 782 3,950 24,978 Philadelphia (14 cities) 23,335 9,973 31,845 Cleveland (12 cities) ... 23,511 12,735 23,264 Transportation Richmond (15 cities).... 15,790 11,223 14,156 Freight carried by Class I railways:2 A Ch tl i a c n ag ta o ( ( 1 1 5 9 c c i i t t i i e e s s ) ) 5 8 8 , , 1 8 1 6 4 2 3 8 7 , , 1 5 4 5 2 0 5 7 9 , , 5 4 1 6 7 3 Net ton-miles, revenue and non- St. Louis (5 cities) 8,709 6,002 8,641 re venue (000,000 omitted) 35,962 34, 514 32,618 Minneapolis (9 cities) 4,231 2,998 5,574 Net tons per train 706 666 672 Kansas City (14 cities) 8,353 6,344 10,952 Net tons per loaded car 27.6 27.7 28.2 Dallas (9 cities) 8,474 6,267 11,450 San Francisco (20 cities) 39,361 34,176 40,203 Revenue freight loaded and received f o r m om it te c d o ) n : nections (cars loaded, 000 Total. . 429,334 274,624 382,447 Classified by nature of products- L G C C i o o r v a a k e i l e n st o a c n k d — gra . in products 7 1 1 0 5 3 7 8 8 3 8 2 1 7 0 3 9 5 5 7 2 4 1 1 8 3 6 8 3 8 9 4 3 Buil B d y i 0 n 0 F g B 0 e c o d o o s e m n t r o i a t t r n l t a e r c e d t s ) s e — r a v w e a d r i d s e tr d i : cts (dollars, 1 2 6 8 8 , , 9 8 7 9 3 5 1 1 0 6 6 , , 4 7 8 7 7 3 9 2 8 5 , , 4 0 1 7 2 9 F O M o r e e r r e c s h t a p n r d o i d s u e, c t 1 s . c. 1 1,0 3 8 5 5 6 1 1 3 9 3 3 7 9 2 1 1,0 3 4 6 3 1 0 6 P C h le il v a e d la e n lp d hia _ 2 4 25 7 3 , , , 4 0 3 0 1 1 9 5 1 3 2 1 0 4 8 , , , 2 5 1 9 1 2 8 5 1 3 5 3 1 0 2 , , , 1 7 2 4 9 6 7 3 5 Miscellaneous . 1,400 1,255 1,461 29,421 23,055 25,538 Total . 3,964 3,785 4,122 S C t h . i L ca o g u o is . _ 2 6 4 0 , , 8 4 2 0 6 6 4 1 5 8 , , 7 0 7 5 0 3 6 1 9 7 , , 8 9 6 6 8 1 10,828 6,941 15,259 Classified by geographical divi- 12,150 7,408 11,277 sions— 979 920 1,026 Total (10 districts) 431,234 297,421 367, 599 Allegheny „ _ 836 778 903 171 182 162 S N C S o o e o u u n r t t t t h h h ra e w w l r e n e w s s t t e e . e s r r t n n e - r n _., - 6 5 2 5 6 3 6 1 9 3 3 2 6 4 5 2 6 4 0 9 6 7 2 1 6 2 6 5 0 4 6 1 9 9 0 3 By fe e c R I t n l , e a d s s 0 u s i 0 d e s 0 s t e r n o i o a t m f i l a i l c t t o e b n d u s ) i — t l r d u in ct g i s on (square 4 1 4 4 0 , , , 2 3 0 2 8 0 5 9 0 2 3 7 8 , , , 9 7 0 6 8 3 1 7 7 3 9 7 9 , , , 8 2 6 8 8 7 6 6 3 Educational. 4,615 4,838 4,092 Total 3,964 3,785 4,122 Hospitals and institutions. ..... 1,669 989 1,172 Freight-car surplus (number): Social and recreational 1,753 1,014 1,643 Total 195, 205 131, 221 13,157 Religious and memorial 1,231 819 892 Bos 66,040 54,332 2,644 Public. 240 330 274 Coal 100,982 51, 230 3,980 Freight-car shortage (number): Total (27 States)* 68,425 48,036 64,920 Total .. 833 6,083 73,535 Box 362 2,276 34,068 Coal 240 2,891 31,061 * Includes miscellaneous building contracts as well as groups shown. Bad-order cars (total)5 172, 748 168,782 206, 312 1 Figures for February and January, 1924; February, 1923 2 Partly estimated. * Condition first day of following month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

428 FEDERAL RESERVE BULLETIN MAT, 1924 WHOLESALE AND RETAIL TRADE STATISTICS OF THE UNITED STATES WHOLESALE TRADE IN THE UNITED STATES, BY LINES CHANGE IN CONDITION OF WHOLESALE TRADE, BY LINES AND DISTRICTS—Continued [Average monthly sales 1919=100] Percentage change i G n e d r e a n e l x - c G er r i o e - s Meat g D oo ry ds Shoes H w a a r r d e - Drugs i s w n a i l t e h s M — a a s r c c o h m , p 1 a 9 r 2 e 4 d , 1923 Febru- March, J F a e n b u r a u r a y ry 7 7 8 6 7 7 5 4 6 6 0 1 1 9 0 5 1 5 5 7 7 8 8 9 3 1 10 1 7 3 a 19 ry 2 , 4 1923 March 86 81 65 108 82 109 121 April 79 80 61 86 62 112 106 May 80 81 64 83 68 118 107 Shoes—Continued. June 84 88 68 88 64 114 107 Chicago district 35.5 -32.8 July... 80 81 66 88 51 100 106 St. Louis district 82.1 -18.3 August 89 86 70 114 69 106 111 Minneapolis district 4.7 -31. S September.. 92 90 76 117 71 106 115 San Francisco district.. 2.5 -14. & October 97 98 76 112 75 117 129 Hardware: November.. 85 93 65 90 59 102 111 United States 13.7 -6.8 December.. 72 76 65 66 48 90 New York district 24.2 4.0 Philadelphia district... 19.6 -4.3 1924 Cleveland district 8.8 -11.6 January 80 ,79 66 98 47 91 116 Richmond district -1.2 -14.9 February... 78 76 63 99 48 90 110 Atlanta district -7.3 -16.2: March 79 79 62 90 62 101 118 Chicago district 26.9 -6.4 St. Louis district -3.1 -19.8 Minneapolis district 35.7 -3.3 Kansas City district... 6.5 -23.9 CHANGE IN CONDITION OF WHOLESALE TRADE, BY LINES Dallas district 3. 6 2.5 AND DISTRICTS San Francisco district.. 6.3 -7.2 Drugs: United States 7.5 -1.9 Percentage change New York district 8.1 2.9 in March, 1924, Philadelphia district... 9.7 6.0 sales as compared Cleveland district 6.3 -5.0 with— Richmond district 4.1 -1.7 Atlanta district 3.4 -.6 Chicago district 9.9 -11.2 F a e 19 r b y 2 r , 4 u- M 1 a 9 r 2 c 3 h, S K D t a a . l n L l s a o a s u s d i C s i s i d t t r i y i s c t t d ri i c s t t . r . ict... 6 8 1 . . . 7 7 5 - - 1 1 1 0 0 0 . . . 5 3 3 San Francisco district.. 8.4 3.8 Furniture: Groceries: Richmond district .3 -10.9 U B N P C R A C M S K h o t n l e i h t a . i e c l i w s i i n n a l v L h c t t a n s o e n a e m o d a Y e d n t g l s u a e a a o o o i d S l n p n C s r p d d i o d t k d s h i a i d l i s t t t i s d i i d y r t d s e a s t r i i i r s i t c s i s s i d r d c d t t t c t i r t r i i r c i t i i s s i s t c c c t t t t t r r t r i i i c c c t t t . . . . . . . . - 1 - 1 3 7 5 1 3 2 1 1 . . 9 . . . . . . . . . 1 9 7 0 4 6 6 3 0 4 2 - - - - - - - - 2 5 7 - 4 2 4 2 1 2 . . . . . . . . . 8 8 . . 8 5 3 4 2 9 5 2 6 Agri A S K D S U A M D S c t a a u t a a n t a . i n l n l l l n l n i a a L l t l t s n a u n a n F F e o a s s e r t d t r r u s a a a a a a d d i l p n S n s C i d i d o i c s c s t i i i m d a t i t i l s s t r s r s i i t y t t i s i p s e c c r r c c t s i o o i l t r t d c d c e i t t i m c i d d s s t i i t t e s s r r n t t i i r r t c c i i s c t t c : . . t t . . . . . . . - - 1 1 2 - 3 8 - 1 1 7 1 9 1 1 . 1 . 7 . 2 . 7 . 0 . . . . . 7 1 6 6 8 6 7 - - - 1 - 2 - - - - 1 4 6 3 1 8 6 6 5 4 7 6 . . . . . . . . 4 3 3 . 4 6 . 2 3 4 7 2 Dry D S g a a o n l o l a d F s s r : a d n i c s i t s r c ic o t . district. -3 4 . . 8 3 2 6 . . 4 4 Stat N i P o h e n i w e la r y Y d : e o l r p k h i d a i s d tr i i s c t t rict.. 1 13 5 . . 6 8 - 8 .5 .4 -9.3 -17.0 Atlanta district -0.1 -5.9 N R A M P C C St h i h l e t . i c e l i w i n a l L v c h n a n a e m o Y d e g t l u a a a e o o o i p n l n s r d p o d d k d i h d l i s i s i d i d t d s a s t r i r i i t i s s i s r d c d t c t i t r t i r c r t i i s i i t s c c c t t t t r t r i i c c t t . . _ . . . - - - - 3 2 1 - - — 8 8 2 0 0 3 2 6 . . . . . . . 5 0 1 7 8 4 . 4 8 - - - - - - - - 1 2 2 1 2 2 2 2 1 1 0 4 5 5 8 5 . . . . . . . . 6 5 5 5 5 4 0 6 A M W M u a e o t c n m o N S S N h ' s a a e s i e e n n n u n w w c e p ' l s F F o p Y t Y r r t o c l a a h i o o l o n n e i o r r l n s c c k t k s : g h i i : s s : i d d c c n i i o o g s s t t : r r d d i i i i c c s s t t t t r ri i c c t t . . 2 1 1 5 8 7 0 . . . . 2 9 9 0 - - 1 - 1 5 4 5 . . . . 8 1 9 4 K Da a l n l s a a s s d C is i t t r y i ct district.. - - 2 1 8 3 . . 8 2 - - 1 1 7 1 . . 0 1 Diam N o ew nd Y s: ork district . 7.7 -22.6 San Francisco district. 1.1 -16.0 Jewe N lr e y w : York district -24.5 -23.5 United States 28.9 -24.5 New York district 14.0 -17.1 New York district... 55.0 -10.5 Philadelphia district.. .3 -7.1 Philadelphia district. 26.9 -32.2 Electrical supplies: Richmond district... 12.0 -24.1 Philadelphia district.. -7.7 -23.3 Atlanta district 19.7 -28.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 429 RETAIL TRADE, BY REPORTING LINES [Average monthly sales 1919=100] Sales without seasonal correction Sales corrected for seasonal variation Numof report- 1924 1923 1924 1923 ing firms Mar. Feb. Jan. Dec. Nov. Oct. Mar. Mar. Feb. Jan. Dec. Nov. Oct. Mar. Department stores _ . 333 115 102 110 202 142 148 124 115 127 124 125 126 132 124 Mail-order housesl .- 4 106 96 99 118 122 134 112 92 101 99 97 97 105 97 Grocery chains . 29 199 199 204 201 202 200 205 184 199 203 193 200 194 190 Five-and-ten-cent chains - - 5 163 140 126 331 176 180 162 173 179 174 183 169 167 171 10 149 143 141 185 141 152 145 149 150 145 152 149 149 145 Cigar chains 3 136 124 119 193 134 138 135 141 138 136 142 133 130 140 Shoe chains . - - 6 118 93 99 171 131 139 145 123 131 132 132 119 123 151 Music chains 4 99 97 84 214 149 137 96 107 110 100 114 123 114 104 Candy chains. ._ 4 181 166 154 261 174 185 187 • 188 187 183 177 183 180 195 1 Index of sales of grocery chains revised. Comparable index numbers for all months since January, 1919, may be obtained from Division of ^Research and Statistics, Federal Reserve Board. DEPARTMENT STORE SALES, BY FEDERAL RESERVE DISTRICTS [Average monthly sales 1919=100] Sales without seasonal correction Sales corrected for seasonal variation Num- District of re- 1924 1923 1924 1923 portfirms Mar. Feb. Jan. Dec. Nov. Oct. Mar. Mar. Feb. Jan. Dec. Nov. Oct. Mar. United States 333 115 102 110 202 142 148 124 115 127 124 125 126 132 124 Boston 24 113 101 120 210 146 144 127 114 132 132 131 134 129 128 New York 64 117 101 118 213 152 159 124 115 125 129 129 131 134 122 Philadelphia 22 120 111 111 203 169 154 133 130 130 122 130 132 139 145 27 124 116 115 210 144 156 139 123 141 123 131 133 143 138 Richmond 19 • 105 86 88 188 124 130 115 103 112 109 109 108 116 113 Atlanta .- _- 35 95 83 85 168 120 132 105 97 105 104 103 104 114 108 67 122 112 112 208 148 153 128 120 135 132 138 134 141 127 23 93 74 87 154 110 119 105 96 102 102 106 102 105 108 Dallas. 21 94 82 85 158 112 125 99 88 98 99 97 98 110 93 San Francisco 31 134 121 132 236 146 160 135 135 152 148 150 144 147 136 DEPARTMENT STORE STOCKS, BY FEDERAL RESERVE DISTRICTS [Average monthly sales 1919=100] Stocks without seasonal correction Stocks corrected for seasonal variation Number District of re- 1924 1923 1924 1923 porting firms Mar. Feb. Jan. Dec. Nov. Oct. Mar. Mar. Feb. Jan. Dec. Nov. Oct. Mar. United States 286 138 126 116 123 149 146 128 137 135 130 133 133 131 127 24 128 115 111 123 145 142 120 128 122 122 129 128 127 120 ei 129 118 112 121 145 142 123 125 124 124 128 128 129 120 Philadelphia 13 164 152 133 145 176 176 148 162 162 145 148 159 158 146 26 138 126 114 123 149 145 121 136 136 132 130 132 130 120 19 134 121 104 112 142 141 124 127 129 123 126 126 122 117 Atlanta 22 123 119 109 107 133 134 119 123 122 121 118 119 118 119 Chicago . _. .... 55 WO 144 128 140 171 164 149 164 156 142 153 154 147 152 15 109 102 95 98 118 118 113 107 105 108 108 110 109 110 Dallas 19 126 118 107 109 130 131 115 126 127 125 129 117 115 115 29 142 131 125 123 147 143 128 141 138 136 135 134 131 127 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

430 FEDERAL RESERVE BULLETIN MAY, 1924 INDUSTRIAL STATISTICS FOR FOREIGN COUNTRIES ENGLAND GERMANY 1924 1923 1924 1923 Febru- January December Febru- Feb- Jan- ary ary March ruary uary March Exports: Iron and its manufactures Production: (metric tons) 147,029 129,190 134,411 198,977 Coal (thousand long tons) 128,754 22,672 20,788 1 27, 577 Machinery and electrical Pig iron (thousand long tons) 668 613 637 634 supplies (metric tons) 26, 695 27,039 37,676 34,437 Steel ingots and castings (thou- Dyes and dyestuns (metric sand long tons) 825 768 803 tons) 8,663 7,670 8,739 12,077 Raw cotton, visible supply2 Coal (metric tons) .. 68,923 96,544 129, 638 120,947 (thousand bales).! 1,033 1,117 1,024 Imports: Exports: Raw wool (metric tons) 19, 217 12,310 5,958 10,240 Iron and steel and manufactures Silk, half manufactured (thousand long tons)...;. 331 338 j 368 (metric tons) 450 317 374 244 Cotton manufactures (million Cotton (metric tons) 28,193 16,509 22,302 19,030 yards) 357 400 357 340 Iron ore (metric tons) 43, 877 87,560 70, 299 269,382 Coal (thousand long tons) 5,190 5,075 5,441 7,180 Coal (metric tons) 1, 232, 244 1,086,728 1, 541, 716 1,421,832 Imports: Raw cotton (million pounds) 97 145 222 124 Raw wool (million pounds) 115 84 61 78 1924 1923 Raw hides, wet (thousand pounds) 8,500 9,148 6,338 4,7 Transportation: March February January March Ships cleared with cargo3 (thousand tons). 5,096 5,101 6,054 Freight-train receipts (thousand Ship arrivals in Hamburg pounds sterling) _ 8,074 10, 345 (thousand net. reg. tons) 1,071 1,134 1,179 1,381 Freight-train traffic (million ton- Unemployment: miles) 1,434 1,695 Applicants for every 100 Unemployment: positions 331 545 614 245. Among trade unionists (per cent). 7.8 8.1 8.9 12.3 Number receiving State aid- 1,172,646 1,440, 206 1,532,065 190,008 In insured trades (per cent) 9.9 10.7 11.9 11.5 Business failures 58 46 29 30 In 1 d 0 e 0 x of security prices, Dec, 1921= 114.2 114.3 112.2 116.4 I C n a d p e 2 i x t 5 a o l d f i s o s s e m u c e e u s s r t i ( i t c b y i l s p l t i r o o i n c c k e m s s , : a l J r a k n s u ) - .. UO.O 2 147. 8 640 C l a i p n i g t ) al issues (thousand pounds ster- 21,101 33,189 6,995 38, 515 ary 5,1923-1 2,037.8 2,398.0 2,405. 7 ' Five weeks. 1 Last week of month figures; in millions. 1 End of month figures. 2 In million gold marks. s Figures include Irish Free State. CANADA FBANCE 1924 1923 1924 1923 March Fe a b ry ru- Ja a n ry u- March Feb- Jan- March ruary uary March. Production: Pig iron (thousand tons) 78 60 64 66 Crude steel (thousand tons) 95 71 41 89 Production: Railway receipts (thousand dollars).. 35,144 30,429 31,412 32,212 Coal i (thousand metric tons) » 3, 649 4,928 3,051 Unemployment among trade union- Pig iron (thousand metric tons).. 640 590 586 316 ists (percent) _ 7.8 7.5 6.8 Crude steel (thousand metric tons) 573 555 541 316 Business failures (number) i 56 65 64 77 Expo C r o s ts t a t : n o d n b s a t l o e c s k ) s at Havre * (thou- 132 151 128 125 Au ( B t t h o h o n o d u ri s z s a e a n d l d e s c d a ( o p th i l t l o a a u l r s s o a ) f 1 n n d e w do l c l o a m rs) panies _ 1 9 5 , , 7 1 7 5 7 3 1 1 3 2 , , 2 2 2 5 2 5 8 1 6 7 , , 3 81 6 1 1 1 1 8 8 , , 7 4 9 6 8 8 To to ta n l s ) volume (thousand metric 2,484 2,325 1,770 Se 2 c 0 u r i i n ty d u p s r t i r c i e a s l , s a t v o e c r k a s ge market price, 94.5 94.1 92.3 100.9 Imp T or o t t s a : l volume (thousand metric Re a c n e d i p P ts o rt o f A w rth he u a r t (t a h t o u F s o a r n t d W bu il s l h i e am ls) 2,542 3,874 12,662 5,992: Ra to w n s) cotton for consumption 4,822 4,396 3,933 - 4,102 Re T c o e r i o pt n s t o o f a l n i d v e W sto i c n k n i a p t e s g t : ockyards in (metric tons) 30,125 31,779 19,867 Cattle (number). 38,572 33,439 41,800 36, 429 Raw silk(metrictons) 924 1,218 285 Hogs (number) _ 73,325 69, 915 81,037 45,756 Coal (thousand metric tons) 4,664 2,483 2,247 2,053 Transportation: Ships cleared with cargo (thou- Febru- Janu- Decem- Februsand tons) 2,046 2,238 2,467 ary ary ber ary Railway receipts (thousand francs). 588,968 519,061 516,463 Freight-car loadings (average Exports: daily number) 63,228 61,609 57,362 56,972 Planks and boards (million feet).. 140,360 121,959 161,597 123,535 Unemployment: Preserved fish (thousand pounds) 8.606 10,519 10,478 7,272 Number in Paris receiving aid4- _ 250 395 596 588 Wood pulp (thousand pounds)... 107,388 111, 406 143,347 100,929 . Demands for employment not Wheat (thousand bushels) 11,770 12,322 57,378 7,129 filled (number men in France)*. 7,113 8,438 8,454 6,599 Imports: Coal (thousand tons) 1,420 1,344 1,416 1,601 Raw cotton (thousand pounds) _. 8,111 13,798 11,097 12,426 ' Coal and lignite, including Lorraine and the Saar. Machinery (thousand dollars) 1,767 1,919 2,169 2,033 1 Excluding the Saar district. »Bale of 50 kilos. End of month figures. < End of month figures. > Average for weeks reported. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 431 FOREIGN TRADE OF PRINCIPAL COUNTRIES UNITED STATES FOREIGN COUNTRIES [Thousands of dollars] 1924 1924 1923 1924 1924 1923 Cumu- Cumu- Cumu- Cumu- lative lative lative lative Febru- through through Febru- through through March ary last last March ary last last month month month month noted noted noted noted France (million francs): IMPORTS Imports 3,623 3,714 10,224 6,955 By classes of commodities: Neth E e x r p la o n r d ts s (million guilders): 4,355 3,918 10,973 6,561 T C o r f u a ta c d l t e u ri m ng ate _ ri als for manu- , 3 1 2 0 0 2 , ,1 6 5 1 7 6 3 1 3 1 2 7 , , 3 5 2 4 2 0 9 3 4 2 8 5 , , 6 1 6 1 2 3 1,0 4 3 1 0 1 , , 5 2 9 1 4 8 Unit I E e m x d p p o o K r r t t i s s n gdom (thousan _ d £ 1 13 8 2 7 1 1 8 2 6 5 3 5 7 5 4 1 501 Foodstuffs in crude condition. 34,465 30,540 97, 636 95,508 sterling): M Fo u m a o f n a d a u n s c f t u t a u u f c f a r f t i c s u n t r u g e p r . s e a . d r f t o l r y u s o e r i w n h m o a ll n y - 6 5 7 6 , , 1 2 7 9 5 4 5 66 8 , , 6 7 5 6 0 3 1 1 8 6 0 4 , , 8 6 5 4 7 3 1 1 4 9 0 3 , , 9 1 3 0 4 9 Can I E R a m d x e a e p p x o o ( p r r th t t o s s o rt u s s ands of _ dollars): 1 6 1 0 1 2 3 , f , 1 7 7 0 0 2 1 3 9 9 6 13 7 6 , , , 9 7 2 7 0 3 4 5 1 3 1 0 3 9 1 9 3 , , , 2 3 6 4 1 9 3 3 3 2 18 2 7 5 8 3 , , , 7 6 3 0 7 7 7 5 0 M M s i a s u n c m u el f p l a a t c i n o t e u n o re u s s ready for con _ - 59 1 , , 5 0 1 1 1 4 57 2 , , 3 8 4 8 4 1 174 6 , , 4 9 9 2 2 4 18 3 6 , , 7 0 9 3 4 2 Indi I E a m x ( p p m o o i r r l t l t s i s o n rupees): _ 8 93 6 , , 9 6 2 1 2 5 6 6 2 8 , , 1 3 3 3 4 2 2 2 1 3 5 2 , , 3 6 0 2 2 4 2 2 2 0 5 2 , , 0 2 6 7 8 5 By c T o o u t n a F t l r r i E a e n u s c : r e o . p - e-- 8 1 5 3 , , 7 2 9 5 9 4 13,587 27 37 2 , , 6 6 5 9 9 3 31 3 4 9 , , 6 0 8 6 3 3 Japa I E n m x p p (m o o r r i t l t l s s i on yen): ^ 4 1 1 9 4 3 3 1 5 8 7 2 1,1 6 4 0 1 1 939 I U G ta n e l r i y m ted an K y ingdom 28 9 5 , , , 5 9 4 0 8 6 2 2 0 3 1 4 5 2 , , , 6 7 5 0 1 3 0 6 5 9 3 1 3 7 3 , , , 8 9 0 3 9 1 0 4 3 1 3 2 1 6 9 8 , , , 2 1 2 6 6 6 2 9 4 Sou I t E h m x p p A o o f r r r t t ic s s a (thousand £ ster- 3 1 0 2 6 0 2 10 9 4 1 8 33 1 5 1 3 5 4 0 0 5 Total North America __ 114, 344 98, 884 288, 425 262, 577 ling): Tota A C l r a S g n o e a u n d t t h i a n . A a - . m . eric _ a 3 4 1 5 1 3 , , , 9 3 7 7 5 4 4 9 9 3 36 6 3 , , , 0 0 4 1 1 2 8 8 5 1 1 0 1 2 0 8 1 , , , 7 4 3 1 6 7 5 6 5 1 9 3 3 1 5 6 , , , 9 5 5 6 4 9 9 5 3 Swe I E d m e x n p p o o ( r r m t t s s illion kronor): 4 5, , 6 9 6 41 4 4 6, , 9 9 7 2 3 0 2 1 0 4 , , 0 7 0 9 3 3 1 1 2 8 , , 2 4 2 1 6 3 T T o o t t a a J l l a p A A a s f n r ia i c a a. n .. d _ Oceania 6 1 6 6 , , 1 6 3 1 4 9 9 2 7 1 6 , , , 9 3 1 8 2 3 0 8 2 24 7 1 7 , , 0 2 7 7 4 9 2 3 7 7 9 , , 8 5 7 3 0 9 I E m xp p o o r r t t s s 9 6 0 9 9 5 1 9 2 19 8 7 4 2 1 8 7 4 5 EXPORTS Febru- January By classes of commodities: Total _ 339, 674 366,134 1,101, 004 983,751 Belgium and Luxembourg (mil- Crude materials for manu- lion francs): F F o o f o o a d d ct s s u t t u u r f f in f f s s g . in p a c r r t u ly d e o c r o n w d h it o io ly n. 8 14 5 , , 4 9 3 6 6 8 1 1 1 3 3 , , 9 8 2 6 7 2 3 4 3 2 2 , , 6 0 8 4 7 7 2 7 5 0 9 , , 7 1 4 9 8 3 Den I E m m x a p p r o o k r r t t ( s s million kroner): 1 1 , , 0 4 8 3 2 8 1,338 2 1, , 9 7 4 7 8 5 1 1 , , 7 0 3 7 3 3 M u m a f n a a u n c f t u a u f c r a i t c n u t g r u e r s e d for use in man- 4 5 9 0 , , 8 0 2 5 5 9 5 5 2 0 , , 2 3 8 7 7 4 1 15 6 5 1 , , 0 4 6 3 0 1 1 1 5 2 5 8 , , 5 5 9 7 5 3 Germ I E m x an p po o y r r t t ( s s million gold-marks): 1 1 6 6 9 7 1 1 6 4 7 7 3 31 3 5 4 3 2 0 3 5 5 By c M M R T o o e s u i a e u s t n n a c x m u t l e p r f l p i E o l a e a t r c u s i n t o t : s r e u o n o r p e u e s s ready for con- 1 1 3 6 0 8 9 , , , 1 4 5 6 6 4 9 2 3 7 7 6 2 1 0 2 0 7 7 , , , 5 4 6 7 5 3 2 9 9 3 9 3 57 2 2 1 1 , , , 9 8 8 5 3 4 8 9 7 3 5 4 1 1 9 2 7 3 , , , , 3 4 9 7 6 8 7 9 8 6 5 8 I N ta o l r y w I E I E m m x x ( a m p p p p y o o o o i ( l r r r r m l t t t t i s s s s o il n li l o ir n e k ): roner): 1 1 , , 1 5 4 7 0 6 6 1 5 1 6 9 1,1 4 5 6 3 6 6 1 8 1 2 1 , , , 2 9 7 8 8 4 2 9 7 3 7 7 1 2 1 , , , 0 5 6 6 1 3 3 7 0 9 2 2 I F G t r a e a l r n y m c a e ny 3 2 1 1 6 3 , , , 1 1 8 6 2 7 7 7 9 4 1 1 9 9 5 , , , 0 9 8 8 4 8 0 6 9 1 4 2 6 6 4 5 , , , 8 2 9 7 1 5 5 3 3 7 3 5 5 9 7 , , , 0 5 5 4 4 5 5 8 8 Braz I E i m l x p ( p m o o r i r l t t l s i s o .. n . milreis):1 1 7 0 8 5 1 7 0 6 0 2 1 0 5 5 4 111 Tota U C l n a N i n t o e a r d d t h a K . . A in m gd er o ic m a 8 4 5 9 , , 9 2 9 2 4 2 7 7 4 1 4 5 , , , 3 1 0 3 5 0 4 7 7 2 2 13 3 1 4 1 6 , , , 9 0 9 0 0 7 9 9 9 2 2 1 1 4 4 8 3 7, , , 1 6 9 3 6 8 7 5 5 Aus I E tr m a x l p p i o a o r r ( t t s s thousand £ sterling): 219 2 35 2 4 8 2 3, , 2 2 9 7 7 0 1 2 , , 6 3 5 3 3 2 T T o o t t a a A l l r A S g o s e i u n a t t h i a n n A a d . m . O er c i e c a a nia _ 2 5 8 3 6 , , , 2 2 6 9 1 3 7 5 5 2 5 8 8 4 , , , 7 1 4 2 7 5 8 0 1 2 7 2 0 1 5 1 , , , 9 8 5 8 0 4 2 9 2 1 2 6 4 8 5 6 " , , , 2 6 1 7 0 0 4 5 2 I E m x p p o o r r t t s s.. 1 1 2 5 , , 0 5 5 1 3 2 1 1 3 0 , , 7 5 1 5 2 5 2 2 5 6 , , 6 2 0 2 8 4 2 2 3 2 , , 5 8 6 6 9 1 Japan 21,629 20, 837 90,103 54,648 1 Figures for November and December and cumulative through Total Africa 4,381 5,451 16, 871 13,903 December, 1923 and 1922. The following tables present the Federal Reserve Board's index numbers of the monthly volume of foreign trade of the United States, and monthly fluctuations in ocean freight rates prevailing between this country and principal European trade regions. For methods of construction of these indexes, reference may be made to the FEDERAL, RESERVE BULLETINS for July, 1920, and August, 1921. FOREIGN TRADE INDEX INDEX OF OCEAN FREIGHT RATES [1913=100] [January, 1920=100] 1924 1923 1924 1923 March F a e r b y ru- Ja a n ry u- De b c e e r m- March April March Fe a b ry ru- Ja a n ry u- April Imports: United States Atlantic ports Total 195.3 222.7 182.2 175.1 262.4 to— Exp B P C o r r a o o t w n s d : s u u m c m e a r e t s e r ' s r i ' g a g o l o s o o d d s s 1 2 1 6 5 6 9 1 5 . . . 4 1 3 3 1 1 2 6 6 3 8 5 . . . 7 0 1 2 1 1 3 6 4 3 8 9 . . . 4 1 4 2 1 1 4 2 8 1 4 2 . . . 4 0 0 2 3 21 1 4 8 4 8 . . . 5 0 5 U N Fr n e e t i n h te c e d h rl a K A n i t d n la s g n d t o i a c m nd Bel- 2 2 6 8 . . 5 1 2 2 9 5 . . 6 9 2 2 5 9 . . 3 9 2 2 7 5 . . 5 4 2 2 2 4 . . 6 2 T E P C r a o o o w t n a d s l u u m c m e a r e t s e r ' r s i g ' a g o ls o o o d d s s 1 1 9 6 2 5 0 9 9 5 . . . . 4 1 8 3 1 1 9 7 8 3 4 8 4 4 . . . . 4 1 9 7 1 1 1 7 4 0 6 9 2 1 2 . . . . 9 0 2 3 1 1 1 1 3 0 5 1 3 3 0 4 . . . . 7 9 0 8 1 1 8 6 4 4 1 7 4 3 . . . . 9 3 4 6 S M A c l g e a l i d n u E i d m t u e i r n r o r a p a v n e ia ean 2 2 2 2 3 4 0 5 . . . . 7 5 5 3 2 2 2 2 0 4 3 1 . . . . 5 8 8 1 2 2 2 1 3 5 9 5 . . . . 4 8 9 0 2 2 2 2 4 2 0 4 . . . . 9 6 2 5 2 2 2 2 2 2 1 2 . . . . 6 0 9 3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

432 FEDERAL RESERVE BULLETIN MAY, 1024 FINANCIAL STATISTICS OF PRINCIPAL FOREIGN COUNTRIES ENGLAND CANADA [Millions of dollars] [Millions of pounds sterling] 1924 1923 1924 1923 Feb- Jan- Decem- February uary ber ruary Feb- Jan- Chartered .banks: March ruary uary March Gold coin and bullion ' 54 54 54 72 Current loans and discounts . 1,173 1,177 1,183 1,206 Money at call and short notice.._ 300 289 291 270 Bank of England: Public and railway securities 465 436 427 377 Gold and silver, coin and bullion.. 155 155 155 155 Note circulation _ . 163 157 180 157 Bank notes in circulation • 103 103 104 102 Individual deposits _ 2,000 1,993 2,040 1,997 Currency notes and certificates... 282 277 280 286 Gold reserve against Dominion notes. 102 103 114 133 Total deposits.... 127 124 122 133 Dominion note circulation 227 231 249 247 Nine London clearing banks: Bank clearings 2 1,272 1,387 1,574 1,067 Money at call and short notice... 94 92 100 104 1 Not including gold held abroad. a Total for month. Discounts and advances 1,009 1,032 1,053 992 Investments ^_ 336 341 346 333 FRANCE Total deposits 1,603 1,633 1,674 1,596 [Amounts in millions of francs] Total clearings _. 3,379 3,205 3,467 3,315 Government floating debt: 1924 1923 Treasury bills 628 651 616 Inde T T x e o m t n a u p l f m o l r o b a a e r t y r i n a o g d f v d a e f n o b c r t e e . i . s g n exchang _ e 1 77 8 4 6 , 1 7 6 9 9 7 8 1 2 7 7 6 8 1 1 9 0 4 March r F u e a b r - y u Ja a n ry - March value of the pound sterling 127.7 127.6 125.4 126.0 Bank of France: Gold reserve' 3,677 3,677 3,677 3,672 1 Less notes in currency note account. S W il a v r e a r d re v s a e n r c v e e s to the G _ overnment _22, 2 7 9 0 8 0 23,1 2 0 9 0 8 22,8 2 0 9 0 7 23,1 2 0 9 0 2 Note circulation. 39,950 39, 345 38,834 37,188 Total deposits _ 3,242 2,331 2,346 2,066 ITALY Clearings, daily average of Paris banks 1,794 1,490 1,417 755 Savings banks, excess of deposits (+) [Millions of lire] or withdrawals (—) +2 + 18 + 17 +44 Price of 3 per cent perpetual rente 55.32 56.60 54.00 57.25 Not including gold held abroad. 1924 1923 JAPAN [Millions of yen] Feb- Jan- De- February uary cember ruary 1924 1923 Feb- Jan- Banks of issue: March ruary uary March Gold reserve .. 1,122 1,120 1,118 1,127 1,838 1,832 1,848 1,994 Bank of Japan: N N Lo o o a t t n e e s c c i i a r r n c c u d u l l a a d t t i i i s o o c n n o u f f o o n r r t s t c h o e m S m ta e t r e ce 7 8 7 , , , 4 7 8 8 4 5 4 9 2 7 9 7 , , , 0 6 7 1 6 5 9 9 0 8 9 7 , , , 1 7 4 4 5 9 4 4 1 8 8 9 , , , 1 0 5 1 3 7 7 6 2 L A R o e d a s v e n a r s n v c a e e n f s d o o r d n n i s o f c o t o e r s e u i n ' g t n s bills.. 1,0 5 2 6 0 0 1 2 1 1,0 4 1 5 6 9 8 9 2 1,0 5 1 5 8 8 7 9 1 1,0 2 1 5 4 0 7 1 9 Total deposits.. 2,517 2,573 2,581 2,675 Note circulation 1,347 1,349 1,520 1,238 Leading private banks: Government deposits 511 471 372 463 Cash 1,116 . 850 Private deposits 46 39 45 29 7 3 , , 9 4 5 6 3 3 9 3 , , 1 6 9 4 6 7 Toky C o a s b h a n on k s h : and 127 106 118 190 Total deposits _ .... 11,2 2 7 9 7 2 1 1 2 3 . 7 2 . 3 1 2 3 6 6 2 T T T o o o t t t a a a l l l l c d o l e e a p a n o r s i s n it g s s 2 2 1 , , , 4 2 8 4 2 3 9 8 8 2 2 1 , , , 3 4 8 0 5 2 0 1 0 2 1 1 , , , 3 8 9 7 2 7 2 8 5 2 2 3 , , , 2 2 1 5 1 4 6 6 3 i Gold abroad, gold coin and bullion in Japan. DISCOUNT RATES OF CENTRAL BANKS [Prevailing rates with date of last change] Country Rate I s n in e c 2 e e — ct Country Rate I s n i n e c f e f — ect Country Rate I s n i n e c f e f — ect Country Rate I s n in e c f e f — ect P.O.. P.ct. P. cl. P.ct. Austria 9 Sept. 4,1922 Esthonia P Jan. —,1919 Japan 8.03 Nov. —, 1923 Rumania -. 6 Sept. 4,1920 B B e u l l g g i a u r m ia f>i J J a u n n . e 2 1 2 4 , , 1 1 9 9 2 1 3 9 F Fr in an la c n e d 6 M Ja a n. r . 1 6 7 , , 1 1 9 9 2 2 4 4 L L i a t t h v u ia ania 8 6 S F e e p b t . . 2 1 7 6 , ,1 1 9 9 2 2 4 2 S S o p u ai t n h Africa 6 5 M De a c r . . 2 2 9 3 , , 1 1 9 9 2 2 2 3 Czechoslo- Germany UO Dec. 23,1923 Netherlands 5 Jan. 24,1924 Sweden ? Nov. 9,1923 vakia f Mar. 10,1924 Greece Jan. 1,1923 Norway 7 Nov. 10,1923 Switzerland- July 14,1923 Denmark Jan. 17,1924 Hungary & July 25,1923 Poland 96 Jan. 25,1924 Yugoslavia.. June 23,1922 England July 5,1923 Italy. July 11,1922 Portugal 9 Sept. 12,1923 6 1 On Rentenmark and stable currency loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 433 PRICE MOVEMENTS IN PRINCIPAL COUNTRIES FEDERAL RESERVE BOARD WHOLESALE PRICE INDEXES In March the Federal Reserve Board whole- meaning that British prices in general are equal sale price index for the United States declined to American prices; it merely demonstrates 3 points to 160. In England prices were un- that, measured by any common standard, changed at 180; in Canada they declined 1 the relative change in the price levels of point to 147; in France, rose 14 points to 483; the two countries since 1913 is practically and in Japan they were unchanged at 200. identical. At 160, the American average is at its lowest In France the rapid rise of the exchange in since April, 1922. At 180, British prices are the last half of March exceeded the precipitous at their highest since October, 1921. Adjusted decline of the first half, leaving the average by the rate of exchange, however, British gold for the month slightly higher than for February. prices stand at 158, a figure virtually the same As a result, the index of prices for the month as the American. During the last two years in French currency rose 3 per cent over the British prices on a gold basis have closely preceding month. Converted to a gold basis paralleled the movement of the American at the average rate for the month of $0.0468, index, the smallest dispersion occurring in the the general index at 117 was materially below early part of the year and the greatest in Sep- British or American prices, a fact true of all the tember, October, and November, a phenome- groups except imported goods, which was only non evidently reflecting seasonal pressure on 1 point below the corresponding group in the the exchange. This is not to be interpreted as United States. FEDERAL RESERVE BOARD WHOLESALE PRICE INDEXES 1913 = 100 550 500 ON PAPER CURRENCY BASIS CONVERTED TO GOLD BASIS 1*50 400 350 300 250 zoo V ISO Conoda 100 100 1920 1921 1922 1923 1920 1921 1922 1923 97417—24 8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

434 FEDERAL RESERVE BULLETIN MAY, 1924 The tables below give the all-commodities and "converted to a gold basis." The latter and group index numbers of wholesale prices in figure takes into account the depreciation of the five countries included in the Federal Re- the foreign currency in terms of the American serve Board's indexes. In the first table the dollar (or gold) and the series indicates relaall-commodities index for each country is tive price levels in the several countries when shown both in terms of the paper currency all prices are expressed in dollars. FEDERAL RESERVE BOAED WHOLESALE PRICE INDEXES FOR ALL COMMODITIES On paper currency basis Converted to gold basis Year and month U S n ta i t t e e s d England France Canada Japan U S n ta i t t e e s d England France Canada Japan 1913, average. 100 100 100 100 100 100 100 100 100 100 1919, average 211 241 207 235 211 219 198 241 1920, average 239 310 512 250 240 239 233 187 223 242 1921, average 149 198 344 167 181 149 156 133 150 175 1922, average 158 165 319 149 182 158 150 136 147 175 1923, average 164 170 394 150 188 164 159 124 147 183 1923 January 168 166 346 148 176 166 158 120 147 172 February 166 168 380 152 183 166 162 121 150 178 March 169 173 398 155 185 169 166 131 152 180 April 170 175 390 156 185 170 167 135 153 181 May _--. 167 173 386 155 187 167 164 133 152 184 June 164 171 394 153 186 164 162 129 150 183 July 159 168 391 151 183 159 158 119 147 179 August 159 164 391 150 179 159 154 115 146 176 September 163 165 404 149 190 163 154 123 145 186 October 163 166 404 147 196 163 154 125 145 192 November 163 171 416 145 199 163 154 119 142 193 December 163 177 427 144 205 163 159 116 140 193 1924 January 163 178 445 146 205 163 156 108 142 185 February 163 180 469 148 200 163 160 107 144 182 March 160 180 483 147 200 160 158 117 143 172 FEDERAL RESERVE BOARD WHOLESALE PRICE INDEXES FOR GROUPS OF COMMODITIES i Grouped by stage of Grouped by Grouped by stage of Grouped by manufacture origin manufacture origin Year and month m c t A o o ie m d l s l i - - t E e m r a i a w a - ls d g u P o c r o e o d r - s s' g s C e o u o r o m s n d ' - - s g m D o t o i e o c d s - - s p g I o o m r o t d - e s d g p o E o o x r d - t s Year and month m c A t o o i m e U d s i - - te E m r a i a a w - ls d g u P o c r o e o d r - s s' g s C e o u o r o m s n d ' - - s g m o D t o i e o c d s - s - p g I o o m r o t d - e s d g p E o o o x r d - t s UNITED STATES FKANCE—contd. 1923 1924 March 169 184 165 155 171 153 193 January 445 459 469 417 424 548 489 163 166 159 163 165 147 196 February 469 478 485 453 443 595 522 163 167 157 162 165 148 199 March 483 484 506 474 459 597 524 1924 CANADA January 163 169 156 160 165 -• 143 196 February 163 169 158 157 164 148 189 1923 160 166 158 154 161 146 179 March 155 141 166 173 152 173 151 November. 145 127 169 163 141 165 134 ENGLAND December 144 126 168 161 139 165 131 1923 1924 March 173 178 158 179 174 169 185 January 146 128 166 166 143 166 133 171 171 162 182 171 173 177 February 148 131 168 168 146 167 135 177 179 168 183 175 184 187 March 147 129 167 168 145 166 132 1924 JAPAN January. _ 178 178 169 186 177 179 186 February 180 182 167 191 180 182 185 1923 180 183 167 187 180 178 185 March 185 194 190 178 184 193 212 November 199 202 194 199 199 199 205 FRANCE December 205 213 201 201 205 205 211 1923 1924 March 398 427 426 349 389 442 421 January. 205 222 203 196 204 211 215 416 427 448 387 403 482 443 200 214 202 192 199 205 211 427 442 456 395 410 509 460 March 200 211 203 193 200 199 207 1 Complete descriptions of these index numbers may be found in the following issues of the BULLETIN: United States—May and June, 1920, June, 1921, and May, 1922; England—February, 1922; France—August, 1922; Canada—July, 1922; Japan—September, 1922. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

435 MAY, 1924 FEDERAL RESERVE BULLETIN WHOLESALE PRICES IN THE UNITED STATES INDEX OF THE BUEEAU OF LABOR STATISTICS [1913=100]^ Bureau of Labor Statistics groups Federal Reserve Board groups All Raw materials m c it o o i m e d s - - F p u r a c o r t d m s - Foods C c a l i l o n n o t g d t h h - s l F i a i g n u n h g e d t l - M m p u a r e e c n o t t t d a d a s l - l : B m r u i i a n a i t l g l d e s - - C d i a c r h n u a e d l g m s s - g H n f o i i u o n s o r u g h d - s - s e n c M e e o l i l s u a - - s Crops p A u m r c n o a t i d - s l - F p u r o c o r t d e s - st p M u e r c r o i a t n d s l - - T m r r i o a a a w t t l a e s l - g P d e o u r r o o s c d ' - - - s g s C e o u o r o m s n ' d - - s 1922 average 149 133 138 181 218 122 124 176 117 145 125 185 207 158 128 151 1923 average 154 141 144 200 185 145 189 131 183 123 122 210 185 159 141 156 1923 March 159 143 143 201 206 149 198 135 185 127 174 123 227 202 167 148 156 October 153 144 148 199 172 142 182 129 183 120 172 122 197 171 155 139 159 November.. 152 145 148 201 167 141 181 130 176 118 179 115 196 167 154 138 159 December.. 151 145 146 203 162 142 178 130 176 116 181 115 191 165 153 136 158 1924 January 151 145 143 200 142 181 132 176 117 182 115 194 170 185 136 156 February... 152 142 143 196 180 143 182 131 176 114 176 116 195 177 156 139 164 March 150 137 141 191 181 144 182 130 175 113 165 118 194 179 154 137 153 WHOLESALE PRICE LEVELS IN PRINCIPAL COUNTRIES ALL-COMMODITIES INDEX NUMBERS [Pre-war=100] England Year and month g B iu e m l- g B a u ri l a - C v z a s e l k c o i h - a o- m D a e r n k - Bo o a f rd Statist France S G F t B a e e t u r d i m r s e e t a r i a c a n u a l y l ; Italy " N l a e e n r t d - h s - ( ti C N w a h n o a r i r y a i - s ) - Poland Trade 1923 Gold basis March 482 2,828 1,028 199 160 156 424 96.8 587 156 229 988,500 April 480 2,757 1,032 200 162 158 415 89.5 588 156 231 1,058,900 July 504 2,408 969 207 157 147 407 88.8 566 145 235 3,070,000 August 529 2,292 959 207 155 147 413 85.8 567 142 231 5, 369,000 September. 514 2,265 958 202 158 150 424 101.7 569 145 234 7,302, 200 October 515 2,263 974 205 158 150 421 117.9 563 148 237 27, 380,700 November. 531 2,412 965 207 161 156 443 139.0 571 153 242 68, 642, 700 December.. 545 2,. 597 210 163 157 459 126.2 577 154 244 142, 301,000 1924 January... 580 2,711 991 210 165 161 495 117.3 571 156 250 252, 611,000 February. 642 2,658 1,028 223 167 163 544 116.2 573 158 260 248,430,000 March 625 1,036 227 165 161 500 120.7 579 156 266 245,278,000 228 441 ApriL EUROPE—continued NOETH AMERICA ASIA AND OCEANIA Year and month Spain Sweden Sw la it n z d er- U S n ta i t t e e s d Canada Au l s ia tra- (S C h h h a a i i n n ) a g- D In E u d a t i s c e t h s c I ( n u C d t a t i a l a - ) (T Ja o p k a y n o) Ze N a e la w nd ( E C g a y ir p o t ) A So fr u ic th a 1923 March 171 168 181 159 155 163 159 203 181 196 174 136 April _ 174 168 186 159 157 168 158 178 196 174 133 126 July 170 162 180 151 154 180 155 194 170 192 176 123 124 August 171 162 175 150 154 175 153 191 171 190 175 120 September... 174 162 173 154 155 172 157 193 174 210 177 123 October 171 161 181 153 153 171 156 194 174 212 176 129 125 November... 173 160 182 152 153 173 157 197 177 209 175 134 December 176 160 183 151 154 174 158 207 179 210 173 136 1924 January _ 178 161 183 151 157 174 157 205 172 211 175 133 131 February 180 162 183 152 157 170 160 178 208 135 March. 162 180 150 154 158 179 206 136 April 182 154 The foreign index numbers of wholesale prices are cabled to the Federal Reserve Board by the various foreign statistical offices. Index numbers of commodity groups for most of the countries are also available in the office of the Division of Research and Statistics of the board, and may be had upon request. Wherever possible the indexes have been shifted from original bases to a 1913 base. Further information as to sources, number of commodities, and period of the month to which the figures refer may be found on page 48 of the January, 1924, issue of the BULLETIN. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

436 FEDERAL RESERVE BULLETIN MAT, 1924 RETAIL FOOD PRICES AND COST OF LIVING IN PRINCIPAL COUNTRIES [July, 1914=100, except where noted] European countries Other countries United S ci t ( t a i f e i t l e s s ) ( A n V t a r u i i ) e s a n - i - i P g n B r i c u o e e m l v s - - )2 C v o z a s e l k c o i h - a - to E ( l 6 w a n 0 n n g 0 d s - ) F (P r a a r n i c s e ) c m i G ti ( a e 7 e n s 1 r ) y - » Italy c N la i e t e n ( i r 6 t e d - h s s - ) to N w w (3 o a n 1 r y - s) S d (M r p i a d a i ) n - ' d to S e w n w n e (4 - s) 8 to S l z a w ( w e 3 n r n i 3 d - t s - ) c C i a t ( a i d 6 e n a 0 s - ) to t A r w ( a u 3 l n s 0 i - a s) ( I B b n a o d y m i ) a - to N l Z a w ( e 2 e n n a w 5 d - s) A t S o f o w r ( u i 9 n c t s a h ) 1 INDEX NUMBERS OF RETAIL FOOD PRICES 1923 Mar 139 11,637 % 171 321 3,315 523 149 214 156 145 145 149 141 117 Apr 140 12,935 96 168 320 3,500 530 149 212 158 143 146 150 142 117 May 140 13,910 96 162 325 4,620 535 147 214 161 140 148 148 143 118 June 141 14,132 98 160 331 9,347 531 145 213 165 138 162 146 142 118 July 144 12,911 103 162 321 46, 510 518 145 218 164 137 164 148 142 116 Aug 143 12,335 109 165 328 670,485 143 220 162 142 165 149 143 115 Sept 146 12, 509 115 168 339 6 17. 3 142 218 163 141 161 149 145 115 Oct 147 12,636 117 172 349 6 4,301. 0 145 217 162 144 157 147 146 117 Nov 148 12,647 121 173 355 6 862,000.0 149 221 166 144 156 147 147 120 Dec 147 12,860 124 176 365 6 1, 512,000 149 226 167 145 156 152 147 118 1924 Jan. 146 13, 527 126 175 376 ' 127 150 230 168 145 155 154 150 120 Feb.... 144 13, 821 130 177 384 117 151 239 167 145 153 151 122 Mar 141 13,930 128 176 392 120 152 241 167 143 147 122 Apr.... 13, 838 167 120 143 1 COST-OF-LIVING INDEX NUMBERS 1923 (8) (•) C) (u) Mar 154 10,151 408 926 176 324 2,854 493 173 237 178 166 158 151 154 143 131 Apr 155 10, 897 409 927 174 2,954 492 180 163 160 150 155 143 131 May . 156 11, 440 413 928 170 3,816 490 178 161 163 147 153 144 131 June 156 11, 513 419 933 169 334 7,650 491 174 236 170 161 166 146 151 145 131 July.... 157 10,903 429 921 169 37, 651 487 172 160 166 146 153 145 130 Aug .. 156 10,496 439 892 171 586, 045 483 178 161 164 148 154 146 130 Sept 157 10, 841 453 903 173 331 • 15.0 487 173 230 178 165 164 148 154 147 131 Oct . 158 11,027 458 901 175 6 3, 657. 0 502 174 165 164 149 152 148 132 Nov 157 11,149 463 898 175 6 657, 000.0 502 177 164 167 150 153 148 133 Dec 158 11,249 470 909 177 3456 1, 247,000 499 178 231 182 164 168 150 157 149 133 1924 Jan 157 11,740 480 917 177 » 110 510 178 163 169 150 158 150 133 Feb 156 11,940 495 917 179 104 517 190 162 168 149 156 134 Mar 156 11,996 510 178 365 100 521 236 162 168 148 153 134 Apr 11,977 498 173 110 150 1 July, 1914=1. 1 April, 1914, base. a August, 1913-July, 1914=1. * 1914 base. 6 New series; 1921=100. • Millions. 7 German index numbers for 1923 are related to a 1913 average (base=100). Beginning with January, 1924, the index numbers have been derived from gold prices, related to average prices for the period August, 1913, to July, 1914 (base=100). ' Massachusetts Commission on the Necessaries of Life. » Milan, first half of 1914=100. "1910-11=100. " 6 months' moving average. Information as to the number of foods included and the items entering into the cost of living indexes is available in the board's office. The original bases of the indexes have been shifted to July, 1914, wherever possible. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 437 BANKING AND FINANCIAL STATISTICS CONDITION OF FEDERAL RESERVE BANKS EARNING ASSETS, CASH RESERVES, TOTAL DEPOSITS, FEDERAL RESERVE NOTE CIRCULATION, AND RESERVE PERCENT- AGES FOR MARCH AND FEBRUARY, 1924 [Daily averages. Amounts in thousands of dollars] Federal reserve notes Total earning assets Total cash reserves Total deposits in circulation Eeserve percentages Federal reserve bank March February March February March February March February March February Boston 67,057 65,773 279, 918 277,977 128,736 128, 797 204,784 201,950 83.9 84.0 New York 179,712 203, 608 987,148 944,463 748, 764 719,860 371,461 379,441 88.1 85.9 Philadelphia 82,409 86,444 260,990 252,156 116,490 116,870 204,319 199,320 81.4 79.7 Cleveland 92,516 90,963 322,109 317, 646 166,876 164,056 226, 663 224,012 81.8 81.9 Richmond _. 62,441 53,376 94,645 108,249 64,042 65,224 85, 467 89,041 63.3 70.2 Atlanta _- 61,148 55,450 132,442 134,220 60,441 59,301 133, 792 131,301 68.2 70.4 Chicago 126,242 106,955 525,090 558,944 293, 953 285, 234 335,169 358,005 83.5 86.9 St. Louis 46,217 41,291 104,231 111,096 72,920 73,956 69,145 70,003 73.4 77.2 Minneapolis 34,031 87,045 89,009 50,023 48,185 67,223 65,685 74.2 78.2 Kansas City 48,044 44,509 102,342 105,356 79,870 79,315 64,452 64,475 70.9 73.3 Dallas.: 60,206 60,382 46,655 50,109 59,668 44,344 45,089 46.2 47.8 San Francisco--- 91,751 84,152 280,262 290,057 152,267 154,013 206,218 78.1 80.5 Total: 1924 951,774 921,588 3,222,877 3,239, 282 1,991,066 1,954,479 2,013,515 2,034, 540 80.5 81.2 1923 1,178,919 1,152,862 3,190,625 3,208,682 1,960,540 1,969,757 2,253,189 2,244,733 75.7 76.1 1922, 1,191,013 1,215,221 3,095,762 3,070,045 1,794,895 1, 814,446 2,195,131 2,176,529 77.6 76.9 1921 2, 735,784 2,869,233 2,403,470 2,343, 537 1, 808,529 1,804,476 2,979,486 3,068,578 50.2 149.6 1920 3,211, 936 3,154, 054 2,058,293 2,053,422 2,032,787 2,002,503 3,040,440 2,946,863 142.7 143.3 1919 2,318,422 2,225,686 2, 202,368 2,183,641 1,951,752 1,855,124 2,503,350 2,462,941 »51.6 •52.5 i Calculated on basis of net deposits and Federal reserve notes in circulation. RESOURCES AND LIABILITIES OF EACH FEDERAL RESERVE BANE ON WEDNESDAYS, MARCH 26 TO APRIL 16, 1924 RESOURCES [In thousands of dollars] Total Boston Y N o e r w k d P e h lp il h a i - a C la le n v d e- m Ri o c n h d - Atlanta Chi- L S ou t. is M ap in o n li e s - K C an it s y as Dallas F c S i r s a a c n n o - Gold with Federal reserve agents: Mar. 26 2,082,659 187,852 635,878 179,809 203,340 44,781 101,778 320, 560 66,089 58,851 55,840 18,776 209,105 Apr. 2..._ 1,974, 624 190,195 535,836 179,009 203,372 43,094 100,993 320,502 63,006 58,493 55,085 18,148 Apr. 9 1,984,054 187,169 535,796 182,108 203,501 41,491 112,849 320,433 65,114 58,706 54,372 18,628 203,887 Apr. 16 1,997,364 198,774 535,747 187,014 203,966 111,839 300,368 64,213 58,216 54,000 22,086 221,372 Gold redemption fund with Tj: S. Treasury: Mar. 26 56,945 5,922 12,375 3,892 4,157 3,057 6,141 1,947 2,551 3,237 1,830 3,177 Apr. 2 50,533 5,420 9,196 6,016 2,460 4,723 3,207 5,090 2,537 2,530 3,504 1,907 3,943 Apr. 9 57,223 7,711 7,695 10,567 2,882 5,217 3,121 4,061 2,863 1,997 3,719 1,816 5,674 Apr. 16 56,715 5,295 5,929 13,421 5,051 5,592 3,273 3,024 3,187 2,180 3,612 1,814 4,337 Gold held exclusively against Federal reserve notes: Mar. 26 2,139,604 196,511 641,800 192,184 207,232 104,835 326,701 68,036 61,402 59,077 20,606 212, 282 Apr. 2 _...2,025,157 195,615 545,032 185,025 205,832 47,817 104,200 325,592 65,543 61,023 20,055 210,834 Apr. 9 2,041,277 194,880 543,491 192, 675 206,383 46, 708 115,970 324,494 67, 977 60,703 58,091 20,444 209,461 Apr. 16 2,054,079 204,069 541,676 200,435 209,017 45,361 115,112 303,392 67,400 60,396 57,612 23,900 225,709 Gold settlement fund with Federal Reserve Board: Mar. 26 605,918 62,105 129,935 30,907 98,682 36,406 10,002 121,639 15,386 10,986 38,650 9,956 41,264 Apr. 2 709,581 71,462 217,049 43,363 91,102 33, 252 13j 019 117,142 17,999 13,993 41,867 10,469 38,864 Apr. 9 672,888 69,956 177,993 34,717 90,511 36,860 14,349 120,006 18,035 11,916 41,263 14,096 43,186 Apr. 16 671,222 64,210 213,063 25,258 73,163 35,197 16,672 131,379 15,085 12,759 32,200 13,391 Gold and gold certificates held by bank: Mar. 26 377,422 18,177 183,270 40,475 12,401 6,744 7,662 53,562 6,294 9,384 3,555 12,446 23,452 Apr. 2 357,029 17,998 166,501 40,359 12,154 5,846 7,594 50,996 6,457 9,433 3,521 12,512 23,658 Apr. 9 389, 281 18,553 192,132 41,598 12,084 5,869 55,726 6,757 9,451 3,547 12,577 24,118 Apr. 16 379,585 18,470 186,270 40,713 12,358 5,568 7,052 52,198 6,903 9,491 3,640 12,673 24,349 Total gold reserves: Mar. 26 3,122,944 376,793 955,005 263,566 318,315 122,499 501,902 89,716 81,772 101,282 43,008 276,998 Apr. 2.. 3,091,767 285,075 928,582 268,747 86,915 124,813 493,730 84,449 103,977 43,036 273,356 Apr. 9 3,103,446 283,389 913,616 268,990 308,978 89,437 137,188 500,226 92, 769 82,070 102,901 47,117 276, 765 Apr. 16 3,104,886 286,749 941,009 266,406 294,538 86,126 138,836 486,969 89,388 82,646 93,452 49,864 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

438 FEDERAL RESERVE BULLETIN MAY, 1924 RESOURCES AND LIABILITIES OF EACH FEDERAL RESERVE BANK ON WEDNESDAYS, MARCH 26 TO APRIL 16, 1924—Con. RESOUECES—Continued [In thousands of dollars] Total Boston Y N o e r w k d P e h lp il h a i - a C la le n v d e- m R o ic n h d - Atlanta c C a h g i o - Lo S u t. is M ap in ol n i e s - K C an it s y as Dallas F c S i r s a a c n n o - Reserves other than gold: Mar 26 100,107 8,081 28,180 2,777 8,152 2,679 10,781 10,380 13,085 1,021 4,478 6,616 3,877 Apr. 2 99,564 8,128 27,105 4,003 7,764 2,849 10,849 9,828 13,446 797 4,449 6,238 4,108 Apr. 9 97,975 6,988 26,399 3,261 6,276 3,486 10,973 10,072 13,702 1,117 4,530 6,568 4,603 Apr. 16 100,404 8,764 26,570 3,340 6,719 4,526 10,564 9,240 14,228 1,304 4,502 6,469 4,178 Total reserves: Mar. 26 3,223,051 284,874 983,185 266,343 326,467 94,767 133,280 512,282 102,801 82,793 105,760 49,624 280,875 Apr. 2 3,191,331 293,203 955,687 272,750 316,852 89,764 135,662 503,558 103,445 85,246 108,426 49,274 277,464 Apr. 9 3,201,421 290,377 940,015 272,251 315,254 92,923 148,161 510,298 106,471 83,187 107,431 53,685 281,368 Apr. 16 3,205,290 295,513 967,579 269,746 301,257 90,652 149,400 496,209 103,616 83,950 97,954 56,333 293,081 Nonreserve cash: Mar. 26 51,054 4,047 11,783 2,096 3,124 2,848 7,288 5,224 4,201 745 3,097 3,273 3,328 Apr. 2 46,599 3,408 10, 539 2,047 4,110 2,330 6,723 4,578 3,848 538 2,706 2,716 4,056 Apr. 9 49,351 3,334 13,430 2,037 2,994 2,447 5,848 5,299 4,052 714 2,777 2,801 3,618 Apr. 16 48,750 3,423 11,411 2,073 4,094 2,456 5,368 5,986 3,934 701 3,045 2,896 3,363 Bills discounted: Secured by U.S. Government obligations— Mar 26 214,656 12,887 77,637 26,937 22,362 18,427 7,874 21,618 11,785 671 2,478 572 11,408 Apr. 2 239,063 13,412 87,968 30,302 24,389 18,479 9,533 26,802 10,936 2,005 2,260 517 12,460 Apr. 9 _ 228,280 11,137 90,340 26,970 30,115 17,724 8,704 21,444 9,758 834 3,061 976 7,217 Apr. 16 190,419 10,391 50,770 25,949 28,428 19,551 6,636 19,045 10,906 2,805 3,255 1,677 11,006 Other bills discounted— Mar. 26 267,659 9,625 16,225 11,777 18,981 37,348 37,199 38,209 22,240 12,153 18,422 8,282 37,198 Apr. 2 290,597 11,988 23,394 13,300 18,119 39,316 38,629 42,385 25,285 11,693 18,846 9,273 38,369 Apr. 9 301,279 11,092 40,836 10,991 22,933 36,942 32,670 45,716 20,842 11,715 20,588 9,766 37,188 Apr. 16 279,151 12,043 24,805 14,041 28,976 38,801 32,411 36,840 21,438 12,108 22,454 10,502 24,732 Total bills discounted— Mar. 26 482,315 22,512 93,862 38,714 41,343 55,775 45,073 59,827 34,025 12,824 20,900 8,854 48,606 Apr. 2 529,660 25,400 111, 362 43,602 42, 508 57,795 48,162 69,187 36,221 13, 698 21,106 9,790 50,829 Apr. 9 529,559 22,229 131,176 37,961 53,048 64,666 41,374 67,160 30,600 12,549 23,649 10,742 44,405 Apr. 16 469,570 22,434 75, 575 39,990 57,404 58,352 39,047 55,885 32, 344 14,913 25,709 12,179 35,738 Bills bought in open market: Mar. 26 202,458 19,154 39,245 14,163 20,614 2,395 9,581 30,056 6,245 8,087 8,449 28,077 16,392 Apr. 2 213, 772 18, 710 55,160 14,669 19,913 2,488 8,785 31, 259 5,806 7,045 8,331 26,130 15,476 Apr 9 197,606 20,403 49,757 12,852 19,314 2,287 7,772 30,465 5,634 5,008 7,135 20,992 15,987 Apr. 16 176,680 14,664 52, 550 10,986 17,601 2,011 7,092 26, 776 5,183 4,053 5,856 15,437 14,471 U. S. Govt. securities- Bonds— Mar. 26..—. 18,801 542 1,202 549 918 1,191 154 4,426 7,651 382 1,785 1 Apr. 2 18, 331 642 1,202 549 918 1,191 100 4,426 7,239 382 1,780 2 Apr. 9 18, 273 542 1,202 549 917 1,191 113 4,426 7,168 382 1,780 3 Apr. 16 18,855 542 1,202 549 917 1,190 100 4,426 7,514 632 1,780 3 Treasury notes— Mar. 26 176, 704 13,975 35,246 20, 321 21, 767 2,703 3,726 23, 353 4,603 4,434 10,686 14,921 21, 069 Apr. 2 _ 184, 887 15,083 37,508 20,321 22,463 2, 703 3,726 25,211 4,857 5,226 10,856 15, 214 21,719 Apr. 9 _- 187, 615 15, 732 39,789 20, 321 22, 516 2,703 1 24, 729 4,876 7,099 12, 751 15, 329 21, 769 Apr. 16 193,327 15,433 39,942 21,106 23,457 2,962 1 26, 061 5,136 7,644 13,335 15, 600 22, 650 Certificates of indebtedness— A A A M p p p a r r r r . . . . 2 9 1 2 6 6 6 6 6 5 1 3 1 4 , , , , 6 4 7 0 3 8 5 1 7 5 1 5 4 5 4 5 , , , , 7 9 4 3 1 8 7 6 2 0 1 6 1 1 1 1 5 5 4 6 , , , , 3 0 2 6 9 2 5 9 7 0 1 4 2 2 2 1 , , , , 6 1 1 1 0 1 1 1 2 2 2 2 7 7 6 7 , , , , 6 9 4 5 0 9 8 9 1 6 3 0 1 1 1 , , , 2 2 2 9 3 3 3 7 1 1 1 3 1 1, , 4 4 8 7 2 8 1 1 1 9 1 1 0 , , , , 0 5 4 6 7 0 3 2 6 1 3 2 2 2 2 1 , , , , 8 0 0 0 3 4 0 5 0 7 1 8 4 3 4 3 , , , , 1 3 9 0 7 5 3 8 0 1 7 2 3 3 4 3, , , , 9 1 3 3 1 2 8 4 0 4 1 4 3 3 3 3 , , , , 1 1 0 0 1 6 6 5 6 8 6 9 5 5 4 5 , , , , 1 7 2 2 8 2 9 8 8 4 7 8 Total U.S. Govt securities- Mar. 26 257, 256 19,297 51,845 22,982 30,168 5,125 5,358 39, 280 6,611 16, 255 14,312 19,765 26,258 Apr. 2 264,855 21, 537 54,404 22, 982 30, 971 5.125 5,308 40, 070 6,904 15,816 14, 619 20,110 27,009 Apr. 9 268,903 21,750 67,242 22,982 31,034 5,125 114 40,777 6,927 18,349 17,257 20,277 27,069 Apr. 16 266, 667 20,326 65,164 23,257- 31, 370 5,125 101 39, 563 6,966 19, 095 17,877 20,446 27, 377 Municipal warrants- Mar. 26 61 51 Apr. 2 51 51 Apr. 9 51 51 Apr. 16 51 51 Total earning assets- Mar. 26 942,080 60,963 184,952 75,910 92,125 63,295 60,012 129,163 46,881 37,166 A 661 56,696 91,256 Apr. 2 1,008, 338 65,647 220,926 81,304 93,392 65,408 62, 255 140, 516 48,931 36,559 44,056 56,030 93,314 Apr. 9 996,119 64,382 238,175 73, 846 103,396 62,078 49,260 138,402 43,161 35,906 48,041 52,011 87,461 Apr. 16 912,968 57,424 183,289 74,284 106,375 65,488 46,240 122,224 44,493 33,061 49,442 48,062 77, 586 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 439 RESOURCES AND LIABILITIES OF EACH FEDERAL RESERVE BANE ON WEDNESDAYS, MARCH 26 TO APRIL 16, 1924—Con. RESOURCES—Continued [In thousands of dollars] San Total Boston Y N o e r w k d P e h lp il h a i - a C la le n v d e- m Ri o c n h d - Atlanta c C a h g i o - L S ou t. is M ap in o n li e s -. City Dallas F c r is a c n o - 5% redemption fund—Federal reserve bank notes: Mar. 26 28 Apr. 2 28 Apr. 9 28 Apr. 16 28 Uncollected items: Mar. 26 557,304 48,545 118,425 51,879 56,071 51,455 25,698 74,771 29,485 11,748 31,142 20,127 37,958 Apr. 2 586,085 56,474 130,553 57, 790 56,457 81,073 30,286 11,244 31,001 21,564 37,296 Apr. 9 577,583 48,122 124,936 51,286 54,887 50,472 26,157 75,944 36,793 11,997 34,506 23,634 38,849 Apr. 16 713,559 63,994 167,083 67,484 70,736 60,475 28,410 91, 539 40,263 13, 263 26,552 45,221 Bank premises: Mar. 26 55,864 4,312 14,373 1,113 9,117 2,528 2,702 8,264 1,660 2,484 4,595 1,911 2,805 Apr. 2 55,876 4,312 14,375 1,113 9,117 2,528 2,702 8,264 1,661 2,492 4,595 1,911 2,806 Apr. 9 55, 985 4,312 14,375 1,113 9,117 2,528 2,709 8,264 1,702 2,542 4,595 1,911 2,817 Apr. 16 56,164 4,312 14,380 1,113 9,117 2,528 2,709 8,264 1,790 2,627 4,595 1,911 2,818 All other resources: Mar. 26 21,486 95 2,959 262 291 402 981 157 5,882 846 4,810 4,203 Apr. 2 , 21, 398 84 3,023 267 284 406 898 520 153 5,890 823 4,823 4,227 Apr. 9 22,420 83 3,227 276 297 409 1,727 519 152 5,816 1,076 4,640 4,198 Apr. 16 , 21,802 85 3,638 287 303 337 1,705 463 151 5,703 1,051 3,903 4,176 Total resources: Mar. 26 4, 850,867 402,836 1,315, 677 397,603 487,195 215,295 229,961 730,302 185,185 140,818 189,101 136,469 420,425 Apr. 2 , 4, 909, 655 423,128 1, 335,103 415,271 480, 212 208, 695 231,328 738, 509 188,324 141,969 191,607 136, 346 419,163 Apr. 9 4, 902,907 410,610 1,334,158 400,809 485, 945 210,857 233,862 738,726 192,331 140,162 198,426 138, 710 418,311 Apr. 16— 4, 958,561 424,751 1,347,380 414,987 491,882 221,936 233,832 724,685 194,247 144,305 194,626 139, 685 426,245 LIABILITIES Federal reserve notes in actual circulation: Mar. 26 1,982,706 204,265 363,857 201,292 227, 315 83, 330 134,194 324,084 67, 789 66, 729 63,872 43,270 202,709 Apr. 2 1,987,262 207, 779 365, 515 206,443 222, 583 135,894 319, 450 67,851 67, 256 63, 812 43,860 204,015 Apr. 9 1, 981, 638 205,970 362, 695 204, 864 228,198 82,013 138, 628 312,358 66,881 67,293 64,525 43,780 204,433 Apr. 16 1, 966, 349 207,127 359,728 207,279 223,416 80,794 140,009 302,803 66, 615 64,453 43,501 203,728 Federal reserve bank notes in circulation—net: Mar. 26 382 382 Apr. 2 374 374 Apr. 9 365 365 Apr. 16 356 356 Deposits: Member bank reserve account- Mar. 26 1. 912, 411 118,153 725, 981 113, 063 161, 526 61,812 56,229 281, 601 69,858 48,142 75,196 53,833 147,017 Apr. 2 1,933,113 126, 532 738,874 117, 537 157,588 59,974 56,384 280,822 71, 905 49,016 75, 236 53,989 145,256 Apr. 9 1,934,999 123, 350 747, 734 113,572 161,046 61, 755 56, 602 280,799 72,469 46,790 74,079 53,143 143,660 Apr. 16 1,940,810 129, 415 736, 330 116,155 163,381 54,978 71,307 49,220 73,921 52,706 148, 786 Government— Mar. 26 75,191 8,297 22,282 4,349 8,097 3,661 5,712 9,176 2,400 1,505 2,295 3,181 4,236 Apr. 2 109,838 10, 505 23,497 9,017 12,875 2,876 5,553 27, 066 2,495 1,516 6,434 1,911 6,093 Apr. 9.... 98,841 10,102 20,406 6,912 11, 765 1,688 4,288 30, 697 2,832 1,632 3,296 2,543 2,680 Apr. 16 49, 711 1,883 10,054 2,212 4,042 2,702 9,470 2,280 2,161 3,540 2,178 3,123 Other deposits— Mar. 26 19, 514 247 10,958 231 159 108 1,229 397 345 547 219 4,076 Apr. 2 19, 413 194 10, 548 314 87 166 1,155 675 384 435 349 4,126 Apr. 9.... 21, 227 143 12,629 269 877 89 121 1,367 375 451 351 200 4,355 Apr. 16 21,064 235 11, 321 372 1,199 207 155 1,469 465 421 395 181 4,644 Total deposits- Mar. 26 2, 007,116 126,697 759, 221 117,643 170, 621 65,632 62,049 292, 006 72, 655 49,992 78, 038 57,233 155,329 Apr. 2.... 2, 062,364 137, 231 772, 919 171,443 62,937 62,103 309,043 75,075 50,916 82,105 56,249 155,475 Apr. 9 2,055, 067 133, 595 120, 753 173, 688 63, 532 61,011 312,863 75,676 48,873 77,726 55,886 150,695 Apr. 16 2,011,585 131, 533 757, 705 118, 739 170,646 66,634 57,835 293,165 74,052 51,802 77,856 55,065 156,553 Deferred availability items: Mar. 26 513,762 47,147 100,203 47,993 51,939 47,879 18,849 67,086 28,910 11,981 32,509 21,670 37,596 Apr. 2 513,463 53, 437 104, 778 51,303 44,491 18,408 62,873 29,582 11,696 31,049 21,953 34,997 Apr. 9 519,305 46, 325 44,498 46,811 19,280 66,439 33, 942 11,877 41, 506 24,759 38,493 Apr. 16 634,333 61,382 137,755 68,271 60,388 56,057 21,052 81,717 37,475 13,771 37,692 27,417 41,356 Capital paid in: Mar. 26 110,831 7,915 29,733 10,138 12,482 5,845 4,509 15,080 5,070 3,455 4,519 4,194 7,891 Apr. 2 110,859 7,915 29,793 10,151 12,482 5,841 4,515 15,078 5,068 3,446 4,500 4,185 7,885 Apr. 9 110,837 7,915 29,796 10,148 12,482 5,839 4,530 15,092 5,068 3,436 4,492 4,184 7,855 Apr. 16 110, 869 7,915 29,799 10,150 12,556 5,836 4,523 15,105 5,065 3,436 4,450 4,179 7,855 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

440 FEDERAL EESERVE BULLETIN MAI, 1924 RESOURCES AND LIABILITIES OF EACH FEDERAL RESERVE BANK ON WEDNESDAYS, MARCH 26 TO APRIL 16, 1924—Con. LIABILITIES-Continued [In thousands of dollars] Total Boston Y N o e r w k d P e h lp il h a i - a C la le n v d e- m Ri o c n h d - Atlanta c C a h g i- o L S ou t. is M ap in o n li e s - K C an it s y as Dallas F c S i r s a a c n n o - Surplus: Mar. 26 220,915 16,390 59,929 19,927 23,691 11,672 8,950 30,426 10,072 7,484 9,496 7,577 15,301 Apr. 2 220,915 16,390 59,929 19,927 11,672 8,950 30,426 10,072 7,484 9,496 7,577 15,301 Apr. 9 220,915 16,390 59,929 19,927 23,691 11,672 8,950 30,426 10,072 7,484 9,496 7,577 15,301 Apr. 16 220,915 16,390 59,929 19,927 23,691 11,672 8,950 30,426 10,072 7,484 7,577 15,301 All other liabilities: Mar. 26 15,155 422 2,734 610 1,147 937 1,410 1,620 1,177 667 2,143 1,599 Apr. 2 ... 14,418 376 2,169 579 1,117 950 1,458 1,639 676 1,171 645 2,148 1,490 Apr. 9 14,780 415 2,290 619 1,190 990 1,463 1,548 692 1,199 681 2,159 1,534 Apr. 16 14,154 404 2,464 621 1,185 943 1,463 1,469 687 1,197 679 1,590 1,452 Total liabilities: Mar. 26 4,850, 867 402,836 1,315,677 397,603 487,195 215,295 229,961 730,302 185,185 140,818 189,101 420,425 Apr. 2 4,909,655 423,128 1,335,103 415,271 480,212 208,695 231,328 738,509 188,324 141,969 191,607 136,346 419,163 Apr. 9 _... 4,902,907 410, 6101,334,158 400,809 485,945 210,857 233,862 738,726 192,331 140,162 198,426 138,710 418,311 Apr. 16 4,958, 661 424,751 1,347,380 414,987 491,882 221,936 233,832 724, 685 194,247 144,305 194,626 139,685 426,245 MEMORANDA Ratio of total reserves to deposit and Federal reserve note liabilities combined—per cent: Mar. 26 80.8 86.1 87.5 83.5 82.0 63.6 67.9 83.2 73.2 70.9 74.5 49.4 78.4 Apr. 2 78.8 85.0 83.9 81.8 80.4 61.6 68.5 80.1 72.4 72.1 74.3 49.2 77.2 Apr. 9 79.3 85.5 82.2 83.6 78.4 74.2 81.6 74.7 71.6 75.5 79.2 Apr. 16 80.6 87.3 82.7 76.4 61.5 75.5 83.3 73.5 70.9 57.2 81.3 Contingent liability on bills purchased for foreign correspondents: Mar. 26 11,033 2,960 1,105 1,333 650 501 1,698 553 410 524 433 Apr. 2 11,230 3,511 1,056 1,274 621 479 1,622 533 392 501 414 827 Apr. 9 14,002 4,097 1,355 1,633 796 615 2,082 685 503 531 1,062 Apr. 16 17,343 5,048 1,682 2,029 763 2,584 850 624 798 659 1,318 MATURITY DISTRIBUTION OF BILLS, CERTIFICATES OF INDEBTEDNESS, AND MUNICIPAL WARRANTS HELD BY THE 12 FEDERAL RESERVE BANKS COMBINED [In thousands of dollars] Wit d h a i y n s 15 16 d a to y s 30 31 to 60 61 d a to y s 90 d F m a r y o o s n m t t o h 9 s 1 6 m O o v n er t - h 6 s Total Bills discounted: Mar. 26.- 292,787 43,014 68,572 51,597 6,520 482,315 Apr. 2 328,040 46,807 69,120 58,382 2i;420 5,891 529,660 Apr. 9 332,846 49,386 68,009 50,652 22,289 6,377 529, 559 Apr. 16 - 282,473 44,925 63,410 47,872 25,132 5,758 469, 570 Bills bought in open market: Mar. 26 41,161 49,817 21,884 1,507 202,458 Apr. 2 107,651 39,321 44,359 20,890 1,551 213,772 Apr. 9 97,253 42,871 42,177 14,570 735 197,606 Apr. 16 90,964 35,261 37,859 11,829 767 176,680 V. S. certificates of indebtedness: Mar. 26 9,136 52,615 61,751 Apr. 2 1,040 196 51,132 61,637 Apr. 9 1,125 9,265 46 52, 579 63,015 Apr. 16 9,547 44,938 54,485 Municipal warrants: Mar. 26 51 51 Apr. 2 51 Apr. 9 51 Apr. 16 -. 5? Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 FEDERAL RESERVE BULLETIN 441 FEDERAL RESERVE NOTES FEDERAL RESERVE AGENTS' ACCOUNTS ON WEDNESDAYS, MARCH 26 TO APRIL 16, 1924 [In thousands of dollars] San Total Boston Y N o e r w k d P e h lp il h a i - a C la le n v d e- m Ri o c n h d - Atlanta C ca h g i- o L S ou t. is M ap in o n li e s - K C an it s y as Dallas F ci r s a c n o - Net amount of Federal reserve notes received from Comptroller of the Currency: Mar. 26._ 3,452,025 324,339 942, 286 274, 436 295, 953 131, 200 224, 798 537, 516 110, 649 105,897 78,340 337,809 Apr. 2 3,448,762 334,082 933, 526 275,637 294, 784 130,013 228,572 533, 369 109, 566 89, 724 105,702 77, 712 336, 075 Apr. 9 3,426, 670 331,056 928,320 275, 536 291,114 129,870 228,428 108, 674 89,617 104,988 77,192 333,392 Apr. 16. 3,409, 911 327,660 921, 556 277,442 290,179 129,147 228, 619 523,805 107, 773 89,127 105,617 76,650 332,336 Federal reserve notes on hand: Mar. 26 962,082 101,300 282, 060 49,320 51,090 39,190 75,497 177,180 27,300 17,405 30,127 81,520 Apr. 2 975,602 110,100 282,060 46,920 49,090 38,190 78,937 183,780 27,300 18,135 29,643 29,927 81,520 Apr. 9 959,347 104,100 282,060 48, 920 43,470 38, 360 77,302 182,380 27, 300 17, 525 29, 643 29,127 79,160 Apr. 16-- 964,567 102,100 282,060 47,120 44,570 39,360 75, 892 188, 780 27, 300 17,525 29,143 28,657 82,060 Federal reserve notes outstanding: Mar. 26 2, 489,943 223,039 660, 226 225,116 244,863 92,010 149,301 360,336 83,349 71,397 75,804 48, 213 256,289 Apr. 2 2, 473,160 223, 982 651,466 228,717 245,694 91,823 149,635 349,589 82,266 71,589 76,059 47, 785 254, 555 Apr. 9___ 2,467,323 226,956 646,260 226,616 247,644 91, 510 151,126 346,103 81, 374 72,092 75, 345 48, 065 254,232 Apr. 16 2,445, 344 225,560 639,496 230,322 245,609 89,787 152,727 335,025 80,473 71, 602 76,474 47,993 250,276 Collateral security for Federal reserve notes outstanding: Gold and gold certificates— Mar. 26. 329, 729 35,300 238, 531 14,000 8,780 2,400 9,985 13,052 7,681 Apr. 2 329, 729 35,300 238, 531 14,000 8,780 2,400 9,985 13,052 7,681 Ajjr. 9 329,729 35,300 238,531 14,000 8,780 2,400 9,985 13,052 7,681 Apr. 16 329, 729 35,300 238, 531 14,000 8,780 2,400 9,985 13,052 7,681 Gold redemption fund- Mar. 26 119,989 14,552 31,347 14,420 12, 560 3,486 8,378 6,915 4,104 1,799 3,480 3,595 15, 353 Apr. 2. 113, 724 11,895 31, 305 14,620 12, 592 1,799 7,593 6,857 4,021 1,441 4,725 2,967 13,909 Apr. 9. 124,769 18,869 31,265 13,719 12, 721 3,196 6,449 6,788 4,129 1,654 4,012 3,447 18,520 Apr. 16 116,157 15,474 31, 216 14,625 13,186 1,474 5,439 6,723 3,228 1,164 3,640 2,905 17,083 Gold fund—Federal Reserve Board- Mar. 26 1,632, 941 138,000 366,000 151, 389 182, 000 41,295 91,000 313, 645 52,000 44,000 52, 360 7,500 193, 752 Apr. 2 1,531,171 143,000 266,000 150,389 182, 000 41,295 91,000 313,645 49,000 44,000 50,360 7,500 192,982 Apr. 9 1,529,556 133,000 266,000 154,389 182,000 38, 295 104, 000 313, 645 51,000 44,000 50,360 7,500 185,367 Apr. 16 1,551,478 148,000 266, 000 182,000 38,295 104,000 293, 645 51,000 44,000 50,360 11, 500 204,289 Eligible paper- Amount required— Mar. 26- 407,284 35,187 24,348 45, 307 41,523 47, 229 47,523 39, 776 17,260 12,546 19,964 29,437 47,184 Apr. 2... 498, 536 33, 787 115, 630 49,708 42,322 48,729 48,642 29,087 19,260 13,096 20,974 29,637 47,664 Apr. 9... 39,787 110,464 44,508 44,143 50,019 38,277 25,670 16,260 13,386 20, 973 29,437 50, 345 Apr. 16.. 447,980 26, 786 103, 749 43,308 41, 643 50,018 34,657 16,260 13,386 22,474 25,907 28,904 Excess amount held— Mar.. 26. 246,846 6,479 93,252 625 20,426 9,871 6,109 49,845 20,838 7,339 8,807 6,522 16,733 Apr.2... 215, 654 10,323 37, 367 1,556 18, 701 10, 926 7,158 71, 089 20,566 6,860 7,992 6,706 17,410 Apr. 9-.. 223, 576 2,845 64,348 1,269 26, 766 6,413 9, 680 71,622 17, 582 3,413 1,697 8,758 Apr. 16,. 172,804 10, 312 12,822 1,722 32, 945 9,467 4,134 47,618 18,981 4,988 8,531 1,295 19, 989 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

442 FEDERAL RESERVE BULLETIN MAY, 1924 EARNING ASSETS HELD BY THE FEDERAL RESERVE BANKS AND EARNINGS THEREON, MARCH, 1924 [Amounts in thousands of dollars] Total Boston Y N o e r w k d P e h lp il h a i - a C la le n v d e- m Ri o c n h d - At t l a an- Chicago L S ou t. is M ap in o n li e s -K C an it s y as Dallas F c S r is a a c n n o - HOLDINGS ON MAR. 31, 1924 Total earning assets 1,009,050 75,939 214,633 81,978 89,531 68,343 63,364 134,007 53,990 36,801 42,872 57,236 90,356 Bills discounted for members. 517,885 34,534 94,834 43,981 38,902 60,679 48,797 63,518 41,202 13,353 19,971 9,826 48,288 Bills bought in open market. 228,247 21,076 64,024 14,964 20,086 2,539 8,960 31,486 6,040 7,744 8,430 27,439 15,459 U. S. securities . 262,867 20,329 55,775 22,982 30,543 5,125 5,607 39,003 6,748 15, 704 14,471 19, 971 26,609 All other earning assets 51 51 Bills Discounted Customers' paper secured by Government obligations 2,587 510 302 504 287 225 121 471 11 72 1 83 Member bank collateral notes: Secured by Government 226,362 15,137 77,309 30,281 20,875 20, 597 9,196 22,400 14,120 1,540 2,089 606 12, 212 4,603 65 32 85 102 254 25 445 3,595 Commercial paper, n. e. s 208,320 18,189 16,568 12, 782 15,811 33, 936 31, 521 25, 074 19,350 1,604 5,657 3,325 24,513 55, 310 529 570 518 622 4,024 6,941 15,285 6,115 7,960 5,117 2,533 5,096 14,906 1 4 373 38 281 552 1,757 7,011 2,883 2,006 Bankers' acceptances, im- 108 108 Bankers' acceptances, do- 160 160 Trade acceptances, domestic- 5,529 168 397 94 652 1,605 548 536 594 227 33 675 Total discounted bills. 517,885 34,534 94,834 43,981 38,902 60, 679 48,797 63, 518 41,202 13, 353 19,971 9,826 48,288 Bills Bought Bankers' acceptances: 96,897 10,133 26,135 6,001 11,465 91 1,572 12, 720 2,830 2,586 4,285 10,988 8,091 77,849 5,.57O 19,736 4,651 6,193 255 4,902 10,303 2,192 3,196 2,642 13, 487 4,822 40,842 4,503 12,849 3,398 1,785 2,193 2,383 6,151 723 1,605 1,003 1,846 2,403 11,402 870 4,097 1,014 593 103 2,312 295 357 500 1,118 143 Trade acceptances: Foreign, imports.-. 1,257 1,207 50 Total purchased bills.. 228,247 21,076 64,024 14,964 20,086 2,539 8,960 31,486 6,040 7,744 8,430 27,439 16,459 Purchased Bankers' Acceptances by Classes of Acceptors 72,365 10,050 18,746 5,940 4,110 100 2,425 13,623 2,202 2,880 2,186 6,352 3,751 72,260 5,634 19,880 4,086 4,337 3,621 15, 514 2,320 1,762 2,389 7,895 4,822 Nonmember banks and banking corporations 38,898 4,021 11, 667 1,897 3,637 2,181 2,641 2,253 1,064 1,362 1,425 5,246 1,514 26,933 1,232 7,222 1,890 5,692 258 114 96 141 339 1,251 5,082 3,616 Branches and agencies of foreign banks 16,534 139 5,302 1,151 2,270 159 313 1,401 1,179 2,864 1,756 U. S. Securities 18,424 542 1 202 549 918 1,191 301 4,426 7,127 382 1,784 2 181,494 14,490 37, 409 20,321 22, 035 2,703 3,726 24,298 4,701 4,686 10, 708 15,098 21, 319 Certificates of indebtedness. . 62,949 5,297 17,164 2,112 7,690 1,231 1,580 10,279 2,047 3,891 3,381 3,089 5,288 Total TJ. S. securities.. 262, 867 20,329 55,775 22,982 30, 543 5,125 5,607 39,003 6,748 15,704 14,471 19,971 26,609 DAILY AVERAGE HOLD- INGS DURING MARCH Total earning assetsi 951, 774 67,057 179, 712 82,409 92,516 62,441 61,148 126, 242 46, 217 34,031 48,044 60,206 91, 751 479, 369 27,493 79, 831 41,895 38,189 54,625 46,182 58,855 34, 562 14, 570 25,196 9,811 48,160 Bills bought 229, 650 21, 936 40,194 16, 780 27, 676 2,691 9,592 34,140 6,132 6,729 9,867 33, 500 20, 414 TJ. S. securities 242,682 17,629 59, 645 23, 703 26,651 5,125 5,374 33,247 5,523 12, 732 12,981 16, 895 23,177 EARNINGS DURING MARCH Total earning assets * 3,477 244 632 304 338 235 230 460 173 125 179 217 340 1,831 105 305 160 146 209 176 225 132 56 96 37 184 Bills bought 814 77 140 60 99 10 35 121 22 23 35 119 73 U. S. securities 832 62 187 84 93 16 19 114 19 46 48 61 83 ANNUAL RATE OF EARNINGS Total earning assets ' 4.30 4.29 4.14 4.34 4.30 4.42 4.43 4.29 4.40 4.34 4.38 4.24 4.36 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 Bills bought . . . . .. 4.17 4.16 4.10 4.17 4.21 4.30 4.25 4.18 4.15 4.13 4.15 4.18 4.21 4.04 4.13 3.69 4.17 4.12 3.68 4.17 4.02 4.08 4.25 4.32 4.22 4.21 1 Including municipal warrants as follows: Philadelphia—daily average holdings, $31,502; earnings, $122; annual rate of earnings, 4.56 per cent; also including Federal intermediate credit bank debentures, as follows: New York—daily average holdings, $41,935; earnings, $147; annua 1 rate of earnings, 4.14 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

, 1924 FEDERAL RESERVE BULLETIN 443 DISCOUNT AND OPEN-MARKET OPERATIONS OF THE FEDERAL RESERVE BANKS FOR MARCH, 1924 [Amounts in thousands of dollars] Total B to o n s- Y N o ew rk P p d h h e i i l l a a - - C la le n v d e- m Ei o c n h d - la A n t t - a c C a h g i o - L S ou t. is n M e l a i i p s n o - - K C s a a it n s y - Dallas F c S i r s a a c n n o - Volume of Operations Total discount and open-mar- 2,494,849 179,778 1,174,424 169, 776 139,849 182,921 86, 545 212, 582 88,673 30,033 54,849 24,837 150,582 Bills discounted for member 1,709,329 117,779 667,831 143,648 113,876 180,883 75,186 145,040 80,905 11,872 36,850 8,143 127,316 Bills bought in open market.. 197, 714 22,090 99,099 9,402 8,303 1,616 8,107 18,479 3,890 2,720 3,181 7,524 13,303 Bills bought from other Federal reserve banks 5,654 2,648 3,006 U.S. Securities bought in open 582,101 39,909 404,846 16,675 17, 670 422 3,252 49,063 3,878 12,435 14,818 9,170 9,963 Municipal warrants bought 51 51 Bills Discounted Customers' paper secured by Government obligations 1,878 312 186 342 202 216 47 379 1 169 24 Member bank collateral notes: Secured by Government 1,302,064 79,709 610,097 113,248 76,075 138,308 29,126 100,820 43,968 8,660 23,388 2,199 76,466 Otherwise secured 8,713 185 69 202 243 395 50 412 7,157 Commercial paper, n. e. s 357,946 37,306 56,807 29,890 36,189 38,295 42,067 36, 507 29,104 1,215 7,626 2,765 40,175 23,761 277 484 248 274 2,245 2,943 7,347 3,829 1,266 1,740 930 2,178 6,350 1 36 265 9 112 326 309 3,870 891 531 Demand and sight drafts (based on agricultural products) 4,176 28 100 3,003 26 7 934 78 Bankers' acceptances, domestic 75 75 Trade acceptances: Foreign _ . , 108 108 Domestic 4,258 174 407 76 518 1,680 420 76 296 12 599 Total bills discounted... 1,709,329 117,779 667,831 143,648 113,876 180,883 75,186 145,040 80,905 11,872 36,850 8,143 127,316 Average rate (365-day basis)— 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 Average maturity (in days) 14.03 8.79 6.24 10.12 13.40 11.09 36.20 29.74 30.06 37.47 30.69 54.99 18.76 Total reduced to a common maturity basis (exclusive of demand and sight drafts) 1,705,154 73,805 297,172 103,610 108,769 143,043 193,754 307,460 166,926 31,640 80,596 28,262 170,117 Per cent of total 100.0 4.3 17.4 6.1 6.4 8.4 11.3 18.0 9.8 1.9 4.7 1.7 10.0 Number of member banks on Mar. 31 9,819 421 846 726 876 628 533 1,432 631 956 1,126 848 796 Number of banks accommodated during the month 3,516 213 373 308 278 305 272 591 261 207 307 164 247 Per cent accommodated... 35.8 60.6 44.1 42.4 31.7 48.6 51.0 41.3 41.4 21.7 27.3 18.2 31.0 Bills Bought in Open Market Bankers' acceptances: 144,905 13,866 75,688 5,924 7,161 670 6,543 11,289 3,038 2,230 2,579 6,418 9,499 41,149 5,711 17,129 2,750 867 946 1,464 6,263 802 353 477 923 3,464 Dollar exchange 9,761 2,513 4,383 728 275 100 927 50 137 125 183 340 Trade acceptances, foreign 1,899 1,899 Total bills bought.- 197, 714 22, 090 99,099 9,402 8,303 1,616 8,107 18,479 3,890 2,720 3,181 7,524 13,303 Distribution,^ rates charged (360-day basis): Z% per cent 1,626 1,626 3% per cent 4,064 2,721 1,041 302 4 per cent 126,335 6,876 92, 471 4,305 3,25l 2,249 6,348 1,459 1,653 1,740 2,877 3,099 45, 668 9,512 4,331 4,959 3,476 2,416 9,400 1,956 1,067 1,430 3,770 3,351 4^ per cent 13, 750 1,263 165 138 1,230 1,616 38 1,726 475 11 575 6,513 iVa per cent 1,505 60 133 305 985 22 4J^ per cent 4,746 12 1,999 34 2,363 20 318 4% per cent 20 20 Average rate (365-day basis)— 4.16 4.12 4.09 4.15 4.21 4.31 4.24 4.22 4.18 4.14 4.14 4.17 4.21 Average maturity (in days) 31.53 23.14 17.94 48.93 61.56 38.47 45.77 63.47 56.85 43.64 46.14 63.07 36.18 Total reduced to "a common maturity basis 197, 714 16, 255 56,372 14,590 16,208 1,971 11, 767 37,194 7,012 3,764 4,655 12, 662 15,264 Per cent of total 100.0 8.2 28.5 7.4 8.2 1.0 5.9 18.8 3.6 1.9 2.4 6.4 7.7 U. S. Securities Bought in Open Market U. S. bonds 3,833 1,152 418 2,206 50 5 2 Treasury notes 75, 778 7,054 21,085 6,925 1,140 16, 682 2, 521 4,205 2,448 7,251 6,467 Certificates of indebtedness 502, 490 32,855 383, 761 16,675 10, 745 422 960 31,963 1,357 6,024 12,320 1,914 3,494 Total U. S. securities bought 582,101 39,909 404,846 16, 675 17,670 422 3,252 49, 063 3,878 12,435 14,818 9,170 9,963 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

OPERATIONS OF THE FEDERAL RESERVE CLEARING SYSTEM DURING MARCH, 1924 [Numbers in thousands. Amounts in thousands of dollars] Items d i r n a w ow n o n n d b is a t n r k ic s t located Items Total items w It a e r m de s d fo t r o - w Ite a m rd s e d fo t r o - Total item du s p h l a ic n a d t l i e o d n , s including Number N m u be m o r n b t e b h r a nk o s f a n t on en m d e m of br F an e c d h er a a n l d re d se is rv tr e i c b t a n n u k m o b r er res b I e n r r a v F n e c e h b d e a c r n i a t k y l or; O e b r r u b a a t a l n s n r i c d e k h s e e o c r F i r v t e y e d- T d of r r S a e U w t a a n s t n u e i t r s o e e n d r d e u x h c p a l l n u ic s d a i l v t e i e d o , n o s f s F e a b r e n r v d o d a e e t n h r t c b h a e h a l r e e n i r s r k e s - b b a i d p n r n a i a s k s n r t a s c e r m i h n o c e r t e t s to Number Amount b a o e m t f r e o b m n n a d e t n h m o k f - s On li s p t ar p N ar o t l is o t n 1 I 2 if No. 1—Boston 715 824, 210 4,420 476,724 13413,919! 5,269 1,314,853 227 51, 314 5,496 5,108 1,366,167 1,293,474 421 428 232 234 No. 2—New York 2,689 4,366,277 5,134 705,690 1,063 122,841 5,194,808 1364 150,245 5, 389 10, 277 10,794 5,350,442 6,050,875 759 727 279 264 Buffalo 245 122,768 515 57,904 14 2,623 774 183,295 105 21, 664 19, 553 912 224, 512 238,739 87 87 81 80 No. 3—Philadelphia 1,396 900,932 2,667 343, 622 148 20,960 4,211 1,265,514 807 103,683 4,818 4,309 1,309,197 1,325,412 726 715 518 491 No. 4—Cleveland 7S2 470,889 I,1""" 187,260 90 5,489 2,505 663,638 87 8,675 12,486 2,643 2,584 684,799 629,476 310 311 514 517 Cincinnati 323 388, 350 973 92,744 73 9,865 ' 492,659 41 5,802 1,446 1,370 506,944 512,117 223 226 313 314 Pittsburgh _ 745 713,445 1,125 112, 752 50 5,075 l'92O 831,272 48, 323 10,278 2,046 1,831 889,873 825,085 343 345 251 256 No. 5—Richmond 160 336,366 2,095: 310,517 53 5,274 2,308 652,157 182 67,263 7,656 2,531 2,733 727,076 756,806 467 472 564 697 660 558 Baltimore 339 250, 748 8621 77,447 57 16, 962 1,258 345,157 167 41,803 8,415 1,498 1,451 395,375 360,461 161 167 267 262 2 No. 6—Atlanta 137 112,135 4441 47,438 45 3,773 626 163,346 29 8,794 4,638 688 700 176,778 206,242 222 226 79 89 445 "455 Birmingham 68 56,242 246 19, 659 15 1,838 • 329 77,739 23 14, 973 35,556 384 378 128,288 127, 221 94 93 34 33 147 145 Jacksonville 77 100,398 259 28,815 14 1,431 350 130,644 77 13, 295 2,114 438 377 146,053 125, 871 67 79 74 60 149 148 Nashville 79 99,799 278! 27, 679 16 1,258 373 128,736 15 3,903 1,150 395 356 133,789 118, 722 92 89 148 146 159 157 New Orleans 97 136, 572 170: 18, 514 36 4,285 303 159,371 50 13,097 602 360 355 173,070 102,177 58 55 46 50 224 224 No. 7—Chicago 1,628 1,105, 973 4,5931 408,068 399 46, 372 6,620 1,560,413 518 36,393 2,045 7,153 6,738 1,598,851 1,717, 713 1,304 1,318 3,8003,981 132 Detroit 415 401,185 798 77,506 39 3,907 1,250 482,597 20 3,406 3,610 1,276 967 489,613 571,405 128 123 250 260 17 No. 8—St. Louis 586 369, 763 1,617 89,837 139 8,113 2,342 467,713 61 5,804 904 2,414 2,249 474,421 488,330 405 394 1,610 1,688 48 Little Rock 58 42,204 357J 21, 704 10 2,055 425 65,963 1 254 584 436 499 66,801 75,947 73 72 202 237 33 Louisville 130 160, 743 513! 27,161 40 4,042 689 191,946 19 2,152 161 710 740 194,259 203,422 94 95 345 349 5 Memphis 93 36, 668 209: 12, 368 13 1,494 315 50,530 2 283 238 319 341 51,051 61,252 59 59 161 186 185 159 No. 9—Minneapolis 319 142,766 1,560; 82,505 64 6,730 » 1,! ' 237,387 20,136 149 2,038 2,222 257,672 259,598 802 823 1,732 2,399 571 177 Helena _ 32 12,142 104 6,166 8 1,365 144 19,673 1,737 703 151 181 22,113 30,448 154 187 131 184 5 7 No. 10—Kansas City 442 271,682 1,578 99,299 104 11,166 2,124 382,147 22,812 5,215 2,228 2,429 410,174 412, 751 325 328 1,367 1,409 2 Denver ___ 174 48, 755 363 35, 661 27 3,519 564 87,835 16,485 11,453 662 711 115, 773 124, 679 159 162 218 244 5 Oklahoma City 78 48,293 68,186 11 1,676 1,178 118,155 9,950 9,939 1,250 1,322 138,044 165, 755 403 417 376 408 7 Omaha 138 00,835 39,297 33 3,929 2 104,358 . 4,596 4,777 847 927 113, 731 133,216 239 247 853 891 176 156 No. U—Dallas 161 180,137 1,674 172, 705 33 4,508 1,1 357,350 7,030 7,144 1,992 1,895 371,524 365,901 652 660 650 721 94 55 El Paso 59 13,652 124 9,126 15 1,475 198 24,262 2,068 935 225 238 27, 255 30, 746 55 63 34 57 Houston . 72 55,199 464 42,802 12 1,105 548 99,106 2,793 1,419 571 526 103,318 113,137 141 139 241 254 No. 12—San Francisco... 375 428,300 653 46,544 67 14,152 1,095 487,996 4,425 2,575 1,161 1,329 494,996 497,134 185 188 221 265 Los Angeles 598 240,863 2,425 157,978 60 23,515 3,083 422,354 15,987 9,127 3,223 2,692 447,468 403, 858 155 156 200 191 Portland 93 98, 776 298 16,994 20 5,160 411 120,930 5,047 6,115 466 406 132, 092 86,943 136 136 132 135 Salt Lake City 70 35,845 467 24,797 16 553 63,711 2,656 582 fill'. 67,656 69,293 148 160 101 101 Seattle 160 53,871 282 20,245 28 470 83,039 4,194 5^990 539 505 93,223 91,859 67 66 83 92 Spokane 77 23,100 215 10,341 12 1,405 304 34,846 3,679 2,215 340 308 40,740 38,265 105 109 139 147 Total: March ....13, 59112,709, 883 40,840 3,974,951 2,058 373,273!57,407'17,065,490 4,300 727,302!808190,326 62,515 60,9 il 17,983,11818,603,330 9,819 9,922116,24617,692 3,142 2,285 February 11,268 11,275,007 36,808 3,523,0412,412 297,193 50,501 15,101,395.3,875 640,4991725 168, 582 55,101 49, 7) 15,910,476 14,026,763 9,857 9,917jl6,33717,724 3,084 2,282 < Incorporated banks other than mutual savings banks. * Includes items drawn on banks in other Federal reserve districts forwarded direct to drawee banks as follows: Cincinnati, 12,000 items, $1,700,000; Minneapolis, 5,000 items, $5,386,000; Omaha, 1,000 items, $297,000. Total, 18,000 items, $7,383,000. NOTE.—Number of business days in period for Baltimore, Birmingham, New Orleans, Dallas, El Paso, and Houston was 25; for other Federal reserve bank and branch cities, 26 days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 EBDEEAL BESEB.VE BULLETIN 445 GOLD SETTLEMENT FUND INTER-BANK TRANSACTIONS FROM MARCH 20, 1924 TO APRIL 16, 1924, INCLUSIVE [In thousands of dollars] Changes in ownership of gold through Transfers Daily settlements transfers and settle- Balance in Federal reserve bank ments f c u lo n s d e a o t l period Debits Credits Debits Credits Decrease Increase Boston 6,500 745,319 769,194 17, 375 64, 210 New York 4,000 70, 500 2, 365,984 2, 233,678 65,806 213,063 Philadelphia.. 5,000 634, 497 652,181 12,684 25,258 Cleveland 12,000 546, 784 562,077 3,293 73,162 Richmond 7,000 2, 000 429,420 433, 219 1,201 35,197 Atlanta 4,000 236,277 263, 259 22,982 16, 672 Chicago 38,500 1, 055,657 1,085, 541 8,616 131,379 St. Louis 5,000 449, 534 443,019 1,515 15, 086 Minneapolis 1,000 500 146,934 148,067 12, 759 Kansas City... 1,000 4,000 332, 682 328,411 1,271 32,199 Dallas 2,000 1,000 202, 261 214, 333 11,072 13,391 San Francisco.. 3,000 1,000 252, 887 265,257 10, 370 38, m Total four weeks ending- AA pr. 1166, 11992244 84,000 84,000 7, 398,236 7, 398,236 78,409 78,109 671, 220 M A ar. 1 19 9 ,,, 1 1 924 9 1 4 8, , 3 0 0 0 0 0 9 1 4 8 , , 3 0 0 0 0 0 7 6 , , ' 3 8 6 5 1 3 , , 8 8 2 2 32 7 6, , 8 3 5 6 3 1 , ,8 2 8 3 2 2 606, 748 Apr. 19, 1923 66,000 66, 000 6,881,012 6,881,012 624,207 Mar. 15,1923 DISCOUNT RATES OF FEDERAL RESERVE BANKS IN EFFECT APRIL 30, 1924 Paper maturing— After 90 days After 6 but Within 90 days but within 8 within 9 months months Federal reserve bank Commercial, Secured by a a n g d r ic li u v l e t s u t r o a c l k , U G n o i v te e d r n S m ta e t n e t s ac B ce a p n t t a e n r c s e ' s acc T ep ra ta d n e ces A an g d r i l c iv u e lt s u to r c a k l' a A n g d r i l c iv u e l s tu to r c a k l paper, n. e. s. obligations paper paper Boston New York.... Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis.. Kansas City.. Dallas San Francisco 1 Including bankers' acceptances drawn for an agricultural purpose and secured by warehouse receipts, etc. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

446 FEDERAL RESERVE BULLETIN MAT, 192* CONDITION OF REPORTING MEMBER BAxNKS IN LEADING CITIES PRINCIPAL RESOURCES AND LIABILITIES OF ALL REPORTING MEMBER BANKS IN EACH FEDERAL RESERVE DISTRICT ON WEDNESDAYS FROM MARCH 19 TO APRIL 9, 1924 [In thousands of dollars] Total Boston Y N o e r w k d P e h l i p l h a- ia C la le n v d e- m Ri o c n h d - la A n t t - a Chicago L S ou t. is M ap i o n l n is e- K C a i n t s y as Dallas F c S r is a a c n n o - Number of reporting banks: Mar. 19 756 110 104 67 Mar. 26. 756 110 104 67 Apr. 2 756 110 104 67 Apr. 9 ._.. 755 110 104 67 Loans and discounts, gross: Secured by U. S. Government obligations- Mar. 19 207, 241 11,362 74,849 12,034 24,426 8, 918 8,892 33,322 9,428 3,902 3,068 11,032- Mar. 26 207, 564 12,837 71, 667 12,532 23, 602 9,799 8,361 35,354 9,439 3,686 6,165 3,083 11, 039 Apr. 2 223, 738 11,968 90,934 12,620 23, 576 9,196 8,299 34,210 9,234 3,520 6,103 3, 066 11, 012 Apr. 9 227, 642 11,815 92,406 11, 654 23,857 10, 284 8,552 34,931 9,530 3,518 6,622 3,339 11,134 Secured by stocks and bonds- Mar. 19 3,912,901 226, 0711,683,485 262,603 409, 323 129,005 68,459 604,028 146,440 43,592 86, 760 63,096 190,039 Mar. 26 3, 859, 638 230, 998 1, 636, 296266,362 400,254 126, 567 67,035 606,612 143, 652 44,709 84,427 62,606 190, 120J Apr. 2 3,887, 210 243, 302 1,,656,840 268, 416 402,105 126,967 69,199 589,474 144, 781 47,334 85,""" 62, 516 191, 241 Apr.9 3,829,657 244,9811, 584,551 271,563 407,161 128, 032 69,428 588,975 145,153 46,348 87,059 64, 025 192, 381 All other loans and discounts— Mar. 19 _ 7,993,337 621,412 614,244 357,982 703, 740 331, 529 347,066 1,155,117 311,771 196, 495 324, 556 213, 400 816, 025. Mar. 26 7,997,853 611,996611 2i 621,911 359, 663 711.945 332, 785 348, 652 1,151,841314, 751193,840 325, 005 213, 372 812,127 A A p p r r . . 9 2 7 7 , ,991, 286 6 60 0 0 6 , , 7 4 9 2 7 92, 598,889 3 36 6 3 2 , , 9 9 9 3 5 3 7 7 1 2 6 2 . , 9 4 4 4 6 6 3 3 3 3 5 7 , , 5 4 7 6 0 5 3 3 5 50 0 , , 3 8 9 3 2 7 1 1 , , 1 1 6 5 7 3 , , 1 5 3 0 5 4 3 3 1 1 3 3 , , 6 34 4 5 81 1 9 9 6 4 , . 5 4 9 5 4 0 3 3 1 2 9 6 , , 1 2 0 8 7 6 2 21 1 2 4 , , 6 2 6 2 1 6 8 8 1 1 6 6 , , 2 3 9 33 7 : Total loans and discounts: Mar. 19 __ .2,113, 479 858,845 4, 372, 578632,619 , 137, 489469, 452 424,417 1, 792, 467467,639 243,989 417, 324 279\, 564 ,1 .017,096 Mar.26 _ .2,065, 055 855,, ,7 96 , 638, 557 1, 135,801469,151 424,048 1, 793,807 467,842 242, 235 415,597 279I,, 0611, !013,286 Apr. 2 _ .2,102,234 885651,, 769969 4, 329,874 643,969 1, 142,627471,628 427,890 1, 777,188 467, 663247, 304 417, 245 2791,,808 1., 018, 550' Apr.9 .2, 055,929 885671,, 569993 4,346, 663 647, 212 ,153,464 475,886 428,817 1, 791, 041 468,028 244, 460 412,967 280,025 1., 019, 848 U.S. pre-war bonds: , 593 4,276, 588 Mar. 19 _ 270,376 12,944 50, 556 10, 679 48,258 28,972 14,761 23,809 14,981 9,081 11,828 19, 266 25, 241 Mar.26 270, 926 13,032 50, 579 10, 679 48,254 28,822 14, 761 23,807 14,981 9,081 11,928 19,166 25,836 A A p p r r . . 9 2 _ 2 2 7 7 1 2 , , 7 86 5 7 4 1 1 3 3 , , 1 0 6 7 4 8 5 5 1 1 , , 2 4 7 3 9 4 1 10 0 , , 6 6 7 7 9 9 4 48 8 , , 2 2 6 3 1 1 2 2 8 8 , , 8 8 2 2 2 2 1 1 4 4 , , 7 7 2 2 6 6 2 2 3 3 , , 8 8 6 3 3 3 1 15 4 , , 9 5 8 1 1 6 9 9 , , 0 0 8 7 1 1 1 1 2 2 , , 0 0 3 4 1 1 1 19 9 , , 4 1 6 7 7 0 2 2 5 5 , , 8 7 8 8 3 3 XT. S. Liberty bonds: Mar. 19 1, 037,876 80, 683 468, 719 46, 452 108, 791 27,154 14, 455 106, 532 23, 598 14, 782 37, 789 12,512 96, 409 Mar.26 1, 053, 526 80,100 477, 639 49,817 109,280 26, 790 14,340 110,128 23,338 15, 072 37,614 12, 814 96, 594 Apr.2 1,058, 314 78,201 481, 424 49, 769 108, 017 27,938 14,207 108,680 27,168 15, 252 37, 785 12,918 96, 965- Apr.9 1, 064, 729 78,402 499, 384 48, 742 108,300 27, 275 14, 576 102,488 23,897 15,259 37,807 12, 505 96,094, U.S. Treasury bonds: Mar. 19 73,044 4,321 21,198 2,702 4,800 2,200 1,437 12,619 5,353 780 2,929 1,439 13, 266, Mar.26 71,887 4,296 20,900 2,763 4,472 2,255 1,438 12,406 5,429 780 2,889 1,365 12,904 Apr.2 67,343 4,330 20, 630 2,730 4,449 2,146 1,439 12,137 1.441 780 2,966 1,440 12,855- Apr.9 71,645 4,321 21, 724 2,717 4,223 2,146 1,432 12,166 4,390 780 2,966 1,440 13, 340 U. S. Treasury notes: Mar. 19 768,884 20,571 398,178 37,183 54, 010 9,650 7,: 119, 940 16,872 29,939 16,005 15, 081 44,187 Mar.26 758,327 17,793 398,110 32,931 52, 866 8,012 5,484 127,887 15,850 29, 642 15, 893 14,095 39, 764 Apr.2 754,454 18, 596 396, 280 32,643 53, 512 7,982 5,290 128, 511 14,930 30,247 15, 575 13,864 37,024 Apr.9 736,864 18,448 384,616 32, 541 52,047 7,853 4,859 123,211 15, 211 30,305 15,271 13,874 38, 628 U. S. certificates of indebtedness: M A A M p p a a r r r r . . . . 2 9 2 1 6 9 _ 1 1 1 1 2 3 3 1 4 2 8 4 , , , , 0 6 5 6 5 3 6 1 7 4 6 5 6 8 6 , , , 5 7 0 9 6 5 7 8 0 3 3 3 3 8 1 2 9 , , , , 1 1 1 7 6 6 7 5 8 4 7 2 1 7 7 6 2 , , , , 1 1 9 1 5 8 9 3 8 1 9 7 1 8 1 9 8 , , , , 4 6 2 3 5 4 7 5 5 6 7 8 4 2 2 2 , , , , 1 7 7 7 7 1 5 2 9 7 8 4 4 3 4 , , , 6 9 2 3 0 6 1 2 9 2 2 2 2 3 2 6 1 , , , , 4 3 5 3 1 4 6 3 3 1 6 2 1 3 7 3 3 , , , , 3 2 7 4 3 9 9 9 0 5 2 7 4 4 3 , , , 6 2 3 1 9 2 4 7 7 2 1 1 1 , , , , 1 4 7 6 6 8 3 7 6 9 0 4 4 5 5 , , , , ' 8 5 3 91 4 2 2 1 1 9 0 3 7 , , , , 2 6 1 6 4 2 4 3 9 7 9 0 - Other bonds, stocks, and I securities: Mar. 19 2, 218,109 168, 264 782, 482186, 762 306, 693 53,514 38,907 337,814 89,546 23,940 55,998 13,781 160,40& Mar.26 2, 227,470 169, 591 787,889 188, 496 307,009 52, 927 340, 636 88, 983 24,849 54,473 14,949 158, 983 Apr.2 _... 2,250, 617 170,422 803,612 188,395 306, 036 52,975 41, 599 341, 270 89,206 24,199 55,241 14, 389 163, 273 Apr.9 _ _.. 2, 252, 545 170,797 808, 279189, 413 305,180 52, 283 41,867 338,218 88,817 24,107 54,925 15, 765 162, 894 Total loans and discounts and investments: Mar. 19 _ 16,620,383 1,152,225 6,124,879928, 536 1, 671,399 595,121 506,183 2,419, 522625, 781327,125 544, C I, 336 1, 376, 237 Mar.26 16, 579, 7571,148, 658 6,103, 743930,,, 4246167, 328 590, 715 502,665 2,432,003619, 753325,986 540,068 347,3981,371,016 Apr.2 16, 629,350 1,153,094 6,139, 065935, 343 1, 671, 357594, 208 509, 782 2,413, 215618, 674330,160 542, 573 347,180 1, 374, 699 Apr.9 16, 568,636 1,149,530 6,074,189 938,3011, 679, 722 510, 539 2,413, 370619, 356327, 450 537,466 347, 910 1, 373, 814 Reserve balance with F. R. banks: Mar. 19 1,482, 880 84, 25' 712,153 70, 833 105, 323 35, 675 • 36, 097199,147 42,832 23,440 45, 642 24, 750 102, 731 Mar.26 1, 414,945 76, 751 655,215 67,983 109, 030 35,244 33,151 206,402 40,872 22, 656 45,043 26,225 96, 373 A A p p r r . . 2 9 1 1 , , 4 43 3 5 9 , , 1 5 0 7 7 9 8 8 4 2 , , 7 8 3 4 0 4 6 6 6 7 5 4 , , 8 8 9 7 7 3 6 7 8 1 , , 2 2 8 4 3 2 1 1 0 0 4 9 , , 0 3 2 9 3 7 3 3 4 5 , , 8 7 3 7 1 1 3 33 3 , , 4 7 9 9 9 1 2 2 0 0 6 5 , , 1 6 2 4 0 0 4 4 3 3 , , 9 7 4 3 9 8 2 2 3 1 , , 4 8 7 9 3 2 4 43 4 , , 9 7 5 9 8 9 2 2 6 4 , , 8 2 9 7 5 1 9 9 5 5 , , 2 5 6 0 2 8 Cash in vault: Mar. 19 __. 273, 777 19,154 77,299 14,988 29, 755 13,403 10, 656 53,160 7,413 5,628 12,174 9,217 20,930 Mar.26 280, 773 19,156 77,348 14, 640 35,373 13, 465 10,163 53, 624 7,536 5,905 12, 547 9,771 21, 245 A Ap p r r . . 2 9 2 2 8 6 2 9 , , 0 2 7 1! 6 1 20 9 , , 1 0 9 1 5 2 7 79 5 , , 9 0 5 8 4 3 1 1 3 5 , , 1 3 4 4 8 1 3 2 0 8 , , 6 4 3 2 8 1 1 1 2 3 , , 2 2 3 5 6 3 1 1 0 0 , , 1 5 5 2 4 5 5 5 3 5 , , 5 4 8 0 3 4 7 7 , , 6 3 7 4 4 4 5 6 , , 5 3 0 5 7 3 1 1 3 2 , , 8 6 6 0 3 3 9 9 , , 2 3 8 4 7 2 2 21 0 , , 7 6 1 6 3 0 Net demand deposits: Mar. 19 11, 418; 194 796, 541 4,994, 591665, 499 892, 570 328,244 275, 5321, 523,303351, 977 210,091 410, 316 233, 632 735, 898 Mar.26 11,170,968 780,076 4, 823,924 659, 528 883, 296 328,330 269, 4721, 520,130343,869 208, 427 408,461 232,061 713, 394 Apr.2..... 11, 245, 812 795,888 4, 872,000 662, 914 890, 674 330, 341 274, 312 1,493, 295349, 049 213,489 405, 753 235,279 722, 818 Apr.9 11,163,442 794,069 4, 802, 678669, 361 881, 383 333,307 277, 938 1, 493, 880357, 301 211, — 388,935 231,951 720, 942 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 447 PRINCIPAL RESOURCES AND LIABILITIES OF ALL REPORTING MEMBER BANKS IN EACH FEDERAL RESERVE DISTRICT ON WEDNESDAYS FROM MARCH 19 TO APRIL 9, 1924—Continued. [In thousands of dollars] Total Boston Y N o e r w k d P e h lp il h a i - a C la le n v d e- m Ri o c n h d - la A n t t - a Chicago L S ou t. is M ap i o n l n is e- K C a i n t s y as Dallas F c S r is a a c n n o - Time deposits: Mar. 19 , 4,194,133 285,376 914,618 129,368 622,640 160,310 178,938 808,718 202,472 83,768 131,137 89,825 586,963 Mar. 26 4, 235,397 289,517 942,163 129,130 627,651 160,631 178,300 810,001 201,886 131,363 87,616 593,155 Apr. 2 __. 4,230,384 285,123 940,672 130,383 625,748 162,070 178,718 811,335 201,976 83,344 131,259 86,345 593,411 Apr. 9-._ 4, 241,000 285, 689 943,482 130,232 626,931 165, 601 179, 739 814,580 200,037 84,301 131,596 86,248 592, 664 Government deposits: Mar. 19 245, 451 16, 614 68, 342 28,482 33,046 8,642 8,435 32,595 6,080 5,920 3,951 9,261 24,083 Mar. 26 237,430 15,801 65,890 27,821 31,775 8,372 8,891 31, 607 6,798 5,830 3,850 8,908 22,887 Apr. 2 237, 535 15,803 65,890 27,821 31,774 8,372 8,951 31,747 5,798 5,825 3,850 8,907 22,797 Apr. 9 237,168 15,803 65,890 27,821 31, 774 8,374 8,951 31,414 5,761 5,825 3,850 8,908 22, 797 Bills payable and rediscounts with F. R. banks: Secured by XJ." S. Governmentobligations— Mar. 19 75,022 2,798 15,210 10,541 4,842 10, 231 7,351 3,876 6,191 2,715 1,131 150 Mar. 26 124,560 3,005 61,830 8,234 10,137 8,329 6,116 12,145 6,185 115 603 50 7,811 Apr. 7 _ , 159,751 3,638 76,300 11, 266 11, 787 8,822 7,925 18, 756 5,646 1,565 670 50 13,326 Apr. 9 145,480 2,951 75,725 8,533 18,086 7,923 8,149 13,307 4,567 115 1,655 500 All other- Mar. 19... 130,564 4,967 7,220 3,945 14,423 22,628 19,523 11,134 12,347 8,172 3,204 22,112: Mar. 26 128,726 3,973 7,765 5,178 11,961 24,414 18,829 13,569 10,862 1,007 5,588 2,382 23,198 Apr. 2 140,169 10,107 6,434 11,145 24,946 19, 789 17,198 13,985 718 6,310 3,290 19,838 Apr. 9 160,050 5,790 33,092 4,127 15,275 22,909 13,727 19,493 870 8,205 3,501 23, 565 BANKERS' BALANCES IN FEDERAL RESERVE BANK CITIES Due to banks: Mar. 19 2,128,702 115,8001,080, 755174,139 43,040 28, 361 11,758 362,483 78,850 48,147 91,309 28,612 65,448- Mar. 26 1,984,873 112, 238 963,972 158,457 42,108 27, 259 10, 721 364,175 72,104 48,412 82,474 26,597 76,356 Apr. 2 2,045, 306 122,373 983, 249168,853 42,931 28,130 11,251 374,869 73,384 48,973 83,475 29,419 78,399' Apr. 9 1,996,215 113, 111 972,367 159, 562 42,310 28,857 12,884 355, 503 73,409 47,245 85,989 25, 219 79, 75» Due from banks: Mar. 19 526,516 32,265 80, 983 57,437 21,357 13, 323 9,014 161,197 24,137 16, 857 36,504 27,666 45, 776 Mar. 26 478,819 38,619 68, 324 50,499 24,337 12,806 8,360 132,972 23,857 19,780 33,690 20,405 45,170 Apr. 2... 493,613 32,941 76,968 53,579 25,189 13, 263 7,838 146,918 26,254 15,432 33,113 20,121 41,997 Apr. 9 479, 241 30,246 70, 290 53,117 29,747 12, 760 9,903 136,615 24,403 18,700 35,656 17, 581 40, 223- REPORTING MEMBER BANKS IN NEW YORK CITY AND CHICAGO [Amounts in thousands of dollars] Banks in New York City Banks in city of Chicago Mar. 19 Mar. 26 Apr. 2 Apr. 9 Mar. 19 Mar. 26 Apr. 2 Apr. 9 Number of reporting banks 67 67 67 67 48 48 Loans and discounts, gross: Insured by United States Government obligations __ 67,361 64,430 83,789 85,244 24,749 27,058 25,944- Secured by stocks and bonds 1,482,491 1,441,106 1,456, 468 1,388,649 446,317 450,437 433, 916 433,159v All other loans and discounts. 2,299,385 2,306,392 2,282,684 2,283, 723 655,182 655,092 655,090 667,205 Total loans and discounts.- _ 3,849, 237 3,811,928 3,822,941 3,757,616 1,126, 248 1,132, 587 1,113,988 1,126,308. United States pre-war bonds.. 39, 502 39, 525 40,025 40,129 4,198 4,198 4,195 4,195. United States Liberty bonds.. 404,780 410,980 416, 965 49, 966 53, 773 53, 610 47,753 United States Treasury bonds 13,720 13, 414 13, 481 14,695 5,025 5,058 4,762 4,753 United States Treasury notes 371, 778 372,139 370, 221 358,390 79, 048 87,298 89, 018 83,543 United States certificates of indebtedness 28,528 36, 551 37,014 30,000 15,933 14,556 13,885 13,864 Other bonds, stocks, and securities. 566,501 572,269 583,935 589,107 158,796 161,383 162,160 159,071 Total loans, discounts, and investments. 5, 274,046 5, 256,806 5,284, 582 5,226,185 1,439, 214 1, 458,853 1,441,618 1,439,487 Reserve balance with Federal reserve banks.. 661, 611 603,460 615,083 625, 640 135,993 141,624 140, 799 138, 631 Cash in vault 63,161 63, 276 60, 780 64, 758 27,891 28,284 27, 687 28, 931 Net demand deposits 4, 492,074 4, 328, 664 4, 364,625 4,302,294 1, 010,179 1,023,044 994,334- Time deposits _ 616,185 643,372 641, 393 643,081 371, 501 371,660 372,131 373,403 Government deposits.. __ _. 61, 021 58,754 58, 754 58,754 14,431 14,018 14, 018 14,018- Bills payable and rediscounts with Federal reserve banks: Secured by United States Government obligations _ 2,650 45,825 60,400 64,500 1,185 6,585 13,008 9,120 Allother _ 4,126 4,189 6,007 29, 714 2,600 2,456 5,558 3,835 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

448 FEDERAL RESERVE BULLETIN MAY, 1924 DEPOSITS OF ALL MEMBER BANKS NET DEMAND AND TIME DEPOSITS OF MEMBER BANKS IN EACH FEDERAL RESERVE DISTRICT, ARRANGED BY SIZE OF CITIES AND TOWNS [In thousands of dollars] Banks in cities and towns having population of— Federal reserve districts T m b o e a t m a n l k b a s e l r l Les 5 s ,0 0 th 0 an 5 1 ,0 4 0 ,9 0 9 9 to 15 9 , 9 0 , 0 9 0 9 9 to an 10 d 0 , o 0 v 0 e 0 r T m b o e a t m a n l k b a s e l r l Le 5 s , s 0 0 th 0 an 5 1 ,0 4 0 ,9 0 9 t 9 o 15,000 to a 1 n 0 d 0 , o 0 v 0 e 0 r Increase (+) or decrease (—) since preceding Amount on March 26,1924 monthly report HKT DEMAND DEPOSITS Boston 1,198,151 39,286 63,970 190,403 904,492 -14,094 -213 -326 -12,856 New York 5,406,973 155,771 101, 020 269,000 4,881,182 +16,311 -1, 781 -2,322 -3,809 +24, 223 Philadelphia 1,035,633 129, 204 70, 516 126, 547 709,366 +4,010 -713 +638 -2, 213 Cleveland 1, 373,024 153, 499 123, 815 193,249 902, 461 +1,483 -1,334 -3,640 -1,365 +7,822 Richmond 550,456 99,447 64,926 157,119 228, 964 -13,304 +879 -1, 322 +1,385 -14, 246 Atlanta 503,475 72,440 65,977 166,265 198, 793 -14,045 -2,292 -1,504 +62 —10,311 Chicago 2,172,537 198,195 119,006 354,495 1, 500,841 +35,110 -603 +3, 770 +6, 566 +25,377 St. Louis 635,996 113,636 70,147 84,223 367,990 -7,009 -1, 598 -605 -1, 262 -3, 544 Minneapolis 413,952 103,082 71,990 69,460 169,420 +10,922 +1,443 +2, 308 +614 +6, 557 Kansas City 738,708 180,311 115,756 168,465 274,176 -523 -4,207 +483 +4,450 -1, 249 Dallas 568,800 176,712 99,307 112, 565 180,216 -25, 682 -13,917 -4, 470 -6,133 -1,162 San Francisco 1,216,923 159,954 81,689 138, 618 -24,835 -1,268 +674 -7,211 -17,030 Total: Mar. 26,1924 15,814,628 1, 581, 537 1,048,119 2,030,409 11,154, 563 -31, 656 -19, 079 -7,554 -6, 391 +1,368 Feb. 27,1924 15, 846, 284 1,600, 616 1,055, 673 2,036,800 11,153,195 -96, 562 -25, 603 -17, 471 -9, 674 -43, 814 Jan. 23,1924 15,942,846 1.626,219 1,073,144 2,046,474 11,197, 009 +112, 543 -39, 802 -17,157 -7,997 +177,499 TIME DEPOSITS Boston 637,392 50,776 68,429 154,409 363,778 +13,208 +362 +963 +3,289 +8, 694 New York 1, 750, 663 245,246 141,127 362,825 1,001, 465 +50,217 +2,619 +1, 318 +2,158 +44, 222 Philadelphia 676, 705 210, 733 112,488 189,436 164,048 +143 +643 +763 -240 -1,023 Cleveland 1,169,002 185,182 132,620 183,975 667, 225 +2,017 +856 +894 +2,994 -2, 727 Richmond 454,463 132,491 84,347 127,952 109, 673 +2,085 +241 +723 -1,235 +2, 356 Atlanta 335,050 51,815 46,101 128, 770 108,364 +10,961 -107 +657 +9,005 +1,406 Chicago 1, 589, 788 240,918 147,090 368,342 833,438 +8, 646 +1, 777 +1, 483 +3, 289 +2, 097 St. Louis _ 407,875 68, 972 43, 637 64, 717 230, 549 +1, 777 +602 +560 -309 +924 Minneapolis 400,852 186,875 96, 212 56, 815 60, 950 -2,875 +45 +65 -646 -2,339 Kansas City. 293, 369 89, 224 57,347 62,547 84, 251 +932 +162 +349 +739 -318 Dallas i 155, 257 18,740 24, 690 54, 718 57,109 -1,968 +892 +437 +1, 633 -4,930 San Francisco 1,025, 747 100,097 47, 078 92, 316 786, 256 +5,820 -1,491 +260 -3,319 +10, 370 Total: Mar. 26,1924 8,896,163 1, 581, 069 1,001,166 1, 846, 822 4, 467,106 +90,963 +6, 501 +8, 472 +17,358 +58, 632 Feb. 27,1924 8,805, 200 1, 574, 568 992, 694 1,829,464 4,408,474 +111, 407 +5,105 +10, 746 +21, 753 +73, 804 Jan. 23, 1924. 8, 693, 793 1,569,463 081,949 1,807-711 4, 3.f4. 870 +108,530 +16.319 +1S, 779 +22. 976 +50. 456 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAY, 1924 ' FEDERAL BESEEVE BULLETIN 449 EARNINGS AND DIVIDENDS OF STATE BANK AND TRUST COMPANY MEMBERS ABSTRACT OF EARNINGS AND DIVIDENDS REPORTS OF STATE BANK AND TRUST COMPANY MEMBERS OF THE FEDERAL RESERVE SYSTEM FOR THE LAST SIX MONTHS5OF 1923, ARRANGED BY FEDERAL RESERVE DISTRICTS [In thousands of dollars] D b N a is ( n o 3 t k . r 6 i s 1 c ) t D b N a i ( s 1 n o t 4 . k r 3 i s 2 c ) t D b N a i ( s n o 6 t k . r 6 i s 3 c ) t D b N a i ( s 1 n o t 1 . k r 8 i s 4 c ) t D b N i a s ( n o 6 t . k r 5 i s 5 c ) t D b N a i ( s 1 n o t 3 . k r 9 i s 6 c ) t D b N a i ( s 3 n o t 6 . k r 8 i 7 s c ) t D b N i a ( s 1 n o t . 2 k r 5 i s 8 c ) D b N i a ( s 1 n o t 0 k . r 7 i s 9 c ) t D b N a i o s ( n 3 t . k r 5 i 1 s c ) 0 t D b N i a ( o s 1 n . t 9 k r 0 1 i s c 1 ) D b N a i ( o s 1 n t . 9 k r 1 5 i s c 2 ) U b S T ( a 1 n t o n , a 5 i t k t t 8 a e e s 7 l s d ) Capital stock paid in. 33, 350 227,825 35,424 79,375 17, 462 31,376 112,862 37,980 7,752 9,150 13,105 70,567 676,228 38, 389 195,105 59,993 94, 565 11,393 20,254 88,550 24,384 3,133 3,528 4,701 28, 458 572,453 . Totalcapitalandsurplus. 71,739 422,930 95,417 173,940 28,855 51, 630 201, 412 62,364 10,885 12, 678 17,806 99,025 1,248,681 Gross earnings: Interest and discount. . . 17, 514 89, 347 12,978 30, 455 4,907 10,443 48, 563 13, 016 2,988 3,280 3,325 33,140 269, 956 Exchange and collection 29 533 22 92 74 471 537 485 54 28 211 319 2,855 260 3,482 129 388 98 236 1 591 528 73 181 30 345 7,341 Other earnings 2,057 20,504 3,351 9,292 723 1,746 6,422 j 1,820 221 877 186 4,911 52,110 Total gross earnings 19, 860 113, 866 16, 480 40,227 5,802 12, 896 57,113 15, 849 3,336 4,366 3,752 38, 715 332, 262 Expenses: Salaries and wages 3,633 22,575 3,074 7,486 1,171 2,649 11, 464 3,219 730 916 1,073 9,582 67, 572 Interest and discount on borrowed money 291 1,650 268 546 361 1,055 1,015 784 116 211 193 556 7,046 Interest on deposits ^.. 7,969 36,843 4,503 15,159 1,623 3,268 19, 340 4,620 1,206 1,310 623 13, 424 109,888 Taxes 1,290 5,043 948 1,903 436 969 3,918 1,074 174 229 275 1,664 17, 923 Other expenses. . 1,988 13,806 1,774 4,278 674 1,943 7,159 2,135 404 878 650 4,961 40,650 Total expenses . 35,171 79,917 10, 567 29,372 4,265 9,884 42,896 11,832 2,630 3,544 2,814 30,187 243,079 N R e e t c e o a v rn e i r n i g e s s sin o c n e l c a h s a t r r g e e p d o -o r f t l .. 4,689 33, 949 5,913 20,855 1,537 3,012 14, 217 4,017 706 822 • 938 8,528 99,183 447 2,701 416 359 174 336 919 446 106 128 231 1,307 7,570 Total net earnings and 5,136 36,650 6,329 21, 214 1,711 3,348 15,136 4,463 812 950 1,169 9,835 106, 753 Losses charged off: On loans and discounts 1,737 5,914 389 1,744 422 1,364 4,324 1,512 513 768 871 1,763 21,321 On bonds, securities, etc.. 319 1,443 539 1,445 153 48 1,080 311 5 16 20 895 6,274 232 1,328 168 550 126 461 565 134 72 46 241 817 4,740 Total losses charged off., 2,288 8,685 1,096 3,739 701 1,873 5,969 1,957 590 830 1,132 3,475 32,335 Net addition to profits 2,848 27,965 5,233 7,475 1,010 1,475 9,167 2,606 222 120 37 6,360 64,418 Dividends declared 2,310 17,999 3,433 5,371 879 1,908 7,100 2,266 230 509 3,722 46,281 Batio of dividends declared to capital stock (annual basis)— 554 per cent . 13.9 15.8 19.4 13.5 10.1 12.2 12.6 11.9 5.9 11.1 10.5 13.7 Ratio of dividends declared to capital and surplus (annual 8.5 6.4 8.5 7.2 6.2 6.1 7.4 7.0 7.3 4.2 8.0 7.5 7.4 Ratio of net profits to capital and surplus (annual basis)— 6,2 7.9 13.2 11.0 8.6 7.0 5.7 9.1 8.0 4.1 1.9 12.8 10. il .4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

450 FEDERAL RESERVE BULLETIN MAT, 1924 MONEY IN CIRCULATION APRIL 1, 1924 [Source: United States Treasury Department circulation statement) Money Money in circulation held byltbe Kind ot money m St o o n ck ey o 1 f U Tr n e i a te s d u r S y ta a t n e d s Apr. 1,1924 the Federal re- Mar. 1,1924 Apr. 1,1923 serve system' Amount Per capita Gold coin and bullion > $4,368,156,633 $3,960,094, 760 $408, 061,873 $3.63 $416,047,426 $410,102,015 Gold certificates- '(1,083,015,249) 395, 762, 730 687, 252,519 6.12 633,252,539 319,068,349 Standard silver dollars 500,369,769 445,167,771 55,201,998 .49 55, 909,940 59,063,380 Silver certificates •(404,439,896) 37, 327,119 367,112,777 3.27 368,750,342 338,914,547 Treasury notes of 1890..... '(1,433,426) 1,433,426 .01 1,436,526 1,470,783 Subsidiary silver 277, 542,755 25,903, 634 251,639,121 2.24 251,537,367 241,980,239 United States notes.. 346, 681,016 41,834,969 304,846,047 2.72 302,404,083 294,307, 542 Federal reserve notes 2,476,245,570 487, 661,018 1,988, 584,552 17.70 2,030,818,226 2,232,448,351 Federal reserve bank notes. 12,172,170 584, 568 111,587,602 .11 12,090, 612 25,869,544 National bank notes 776,334,042 39,192,915 737,141,127 6.56 735,530,685 732,451,040 Total 8,757,501,955 '5,433,529,484 4,812, 861,042 42.85 4,807,777,746 4, 655, 675,790 Comparative totals: Mar. 1,1924 8,797, 775,557 J5,436, 695,553 4,807, 777,746 42.85 Apr. 1,1923 8,455,125,364 8 4,870,341,989 4, 655, 675, 790 41.98 Nov. 1,1920 8,326,338,267 5 3,394, 764,761 5, 628, 427,732 52.36 Apr. 1, 1917 5,312,109,272 « 3,896, 318,653 4,100, 590, 704 39.54 July 1, 1914 3, 738, 288,871 ' 1,843,452,323 3,402,015,427 34.35 Jan. 1,1879 1,007,084,483 » 212,420,402 816, 266, 721 16.92 1 Includes United States paper currency in circulation in foreign countries and the amount held by the Cuban agencies of the Federal reserve banks.. 1 Includes money held by the Cuban agencies of the Federal reserve banks of Boston and Atlanta. 3 Does not include gold bullion or foreign coin outside of vaults of the Treasury, Federal reserve banks1, and Federal reserve agents. 4 These amounts are not included in the total since the money held in trust against gold and silver certificates and Treasury notes of 1890 is included under gold coin and bullion and standard silver dollars, respectively. 6 Includes gold held in trust against gold certificates and standard silver dollars held in trust against silver certificates and Treasury notes of 1890, the aggregate of which should be deducted from the sum of money held by the United States Treasury and the Federal reserve system and money in circulation to arrive at the stock of money in the United States. The amounts of such gold and silver held in trust as of the date of this statement are shown in parentheses in the first column. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDERAL RESERVE BULLETIN 451 DEBITS TO INDIVIDUAL ACCOUNTS BY BANKS IN SELECTED CITIES [In thousands of dollars] MONTHLY SUMMARY FOR BANKS IN 141 CENTERS 1921 1923 Number Federal reserve district of centers January February March January February March No. 1—Boston 2,189,052 1,973, 432 2,147,057 2,197,997 1,889,899 2,222,086 No. 2—New York 22, 814,899 20, 511, 857 22, 227,152 22, 763, 018 19, 595, 761 23, 231, 53S No. 3-Philadelphia.... 1, 925, 455 1, 723,139 1, 873,812 1, 914,857 1, 648, 925 1, 926, 493 No. 4—Cleveland- 2, 227, 515 2, 006, 249 2,173, 881 2, 305, 963 1, 949, 930 2, 206, 665 No. 5—Richmond 733,878 650, 035 699,209 746, 047 631, 628 737, 293 No. 6—Atlanta 1, 047, 405 947, 847 987, 094 1,005, 714 827,440 991, 806 No. 7—Chicago 4, 701, 940 4,178, 246 4, 807, 897 4, 810, 899 4, 383, 817 4, 828, 041 No. 8—St. Louis 1,130, 859 981, 669 1, 062, 671 1,178, 722 952,802 1,112, 395 No. 9—Minneapolis 565, 332 523, 317 584, 764 647, 312 510, 811 600, 805 No. 10—Kansas City__. 1, 003, 769 937, 931 1, 020, 873 1,202, 253 996, 426 1,199,481 No. 11—Dallas 567, 222 493, 840 492,894 605, 258 .494, 600 547,188 No. 12—San Francisco.. 2, 590, 948 2, 470, 230 2, 662,187 2, 374, 873 2, 043,173 2, 581, 355 Total.. 141 41, 498, 264 37, 397, 792 40, 739, 481 41, 752,913 35, 925, 212 42,185,143 New York City- 1 22,113,958 19,886, 015 21, 546,482 22, 087,156 19, 019, 491 22, 541, 298 Other cities 140 19, 384 306 17, 511, 777 19,192, 999 19, 665, 757 16, 905, 721 19,643,846 WEEKLY SUMMARY FOR BANKS IN 247 CENTERS 1924 1928 Number Week ending- Week ending- Federal reserve district of centers included Mar. 19 Mar. 26 Apr. 2 Apr. 9 Apr. 16 Mar. 21 Mar. 28 Apr. 4 Apr. 11 Apr. 18 No. 1—Boston 16 564, 686 510,995 576, 131 534, 280 585, 618 569,955 472,192 593, 896 504,762 630, 567 No. 2—New-York 13 5, 210, 003 5, 294, 749 5, 553, 668 4, 874, 538 5, 328, 847 5,339,141 4, 815, 390 5, 206,836 4, 895, 346 5, 326, 208 No. 3—Philadelphia 18 514, 539 478, 210 507, 927 440, 417 543,940 498, 020 462, 706 507, 345 462, 613 517,404 No. 4—Cleveland 23 639,156 582, 638 638, 460 587, 567 704, 838 615,268 580, 666 654,208 689, 887 651,829 No. 5—Richmond __ 23 282, 446 250, 344 290,138 276, 909 280, 922 286, 022 254,180 287,107 269,883 286,080 No. 6—Atlanta 24 246, 818 220, 947 256, 565 237, 713 256, 650 239, 246 214,442 233,019 215,812 232, 217 No. 7—Chicago 35 1,170,926 1,167, 233 1, 211,888 1,055, 136 1,153, 278 1,174,991 1,068,435 1, 211, 234 1, 072, 220 1,194,842 No. 8—St. Louis. 12 284, 919 243,847 272, 707 248, 360 278, 756 285, 663 254,430 279,863 267, 790 290, 593 No. 9—Minneapolis__ __ 15 148,034 134, 084 131, 765 134, 755 138,094 156, 964 127, 395 142, 989 148,731 161,096 No. 10—Kansas City 27 252, 226 252, 195 246, 409 243,395 267, 336 278, 275 272, 374 290, 890 289, 035 307, 241 No. 11—Dallas 15 136,332 122, 142 130, 256 130, 069 138,419 156, 725 134, 224 142, 310 145, 714 161, 412 No. 12—SanFrancisco 26 656,866 581, 403 612,848 563, 520 628, 018 607, 955 530,139 562, 855 572, 871 598, 298 Total _ 247 10, 106,951 9, 838, 787 10, 428, 762 9, 326, 659 10, 304, 716 10, 208, 225 9,186, 573 10,112, 552 9, 534, 664 10, 357, 787 BANK DEBITS FOR FEDERAL RESERVE BANK AND BRANCH CITIES No. 1—Boston 381, 838 348, 957 384,330 360,930 396,835 400, 608 319,047 407,492 331,951 434,090 No. 2—New York ,927,012 5,031,599 5,236,234 4, 601,907 5,029,478 i, 058, 843 4,572,565 4, 892,196 4, 634,721 5,029,019 Buffalo 73,131 62,528 73, 618 65,555 75,418 68,940 60,305 75,466 68, 949 78,633 No. 3—Philadelphia.-. 383,652 358, 894 369,042 310,966 414,516 379,439 348, 507 373,785 341,301 386, 530 No. 4—Cleveland 157,450 125,949 156,224 142,101 205, 353 144,305 125,191 172, 847 192, 674 151,873 Cincinnati 80,159 72,458 74, 396 69,239 92,145 92, 602 76,971 84,891 94, 520 90,154 Pittsburgh 209,792 204, 558 211,440 181, 678 189, 652 193, 369 199,451 188, 680 185, 614 198,645 No. 5—Richmond 27,797 27,192 28,880 27, 887 29, 556 30,085 27,381 28,363 25,321 30,119 Baltimore 90,642 73,764 98,149 79,269 83,017 89,100 80,400 93,700 85,021 91,335 No. 6—Atlanta _. 36,936 31,499 31,874 32.189 34,138 36,791 28,236 33,560 29,030 32,395 Birmingham... 27,489 25,747 28,948 26,455 26,870 22, 653 22,399 25, 557 23,445 24,768 Jacksonville 14,548 13,427 14,358 13, 846 19,238 14,663 11,862 13,785 14,132 14,689 Nashville 20,182 15,334 16,225 17.190 19,117 18,112 15, 706 17,462 17,368 17, 647 New Orleans. _. 74,933 68,748 96,282 76,238 81,141 69,343 69,099 68,103 61,208 No. 7—Chicago 691,410 707, 432 787,922 646,354 679, 330 705, 385 648,516 792, 087 637,205 715,947 Detroit.". 180,487 189,344 157,301 129, 215 185, 552 184, 448 150,193 133, 876 140,820 173,762 No. 8—St. Louis.---.. 169,682 140, 517 166,504 142,877 162,067 160,928 143,957 159,176 150,892 169,944 Little Rock.... 15,016 12,451 12, 293 14,310 15,064 14,000 12,907 13, 568 16,603 14,136 Louisville 42,925 36,324 36,383 34,427 41,841 37,483 33,259 35, 278 36, 372 40, 879 Memphis 30,774 28,276 30,890 29,724 32,727 43,576 38,747 43,402 33,182 34, 612 No. 9—Minneapolis 73,467 71,028 66,047 65, 361 70,765 73,107 64,790 69,407 74,118 79,445 Helena 1,762 2,303 1,973 2,145 1,901 2,001 2,017 1,888 1,933 2,115 No. 10-KansasCity... 74,201 65,082 68,155 64,150 76, 703 81, 695 75,124 79,215 76,996 90,163 Denver 34,494 51,064 39, 512 42,474 36,640 37,888 35,601 40,795 39,356 38,387 Oklahoma City 16,815 14,544 13,642 14,665 16,292 20,268 19,972 18, 652 18,435 19, 389 Omaha 45,684 41,015 41,882 43,019 41,519 45,942 47,118 51,913 51,032 53,207 No. ll-Dallas 38,904 36,023 41,078 39,236 39,012 39,379 32,243 34,584 34,739 36,339 El Paso 7,784 7,262 7,014 7,481 7,785 9,098 6,885 7,333 7,271 9,381 Houston 28,813 23,927 25,093 23,114 27,740 21,655 29, 556 22,328 24,564 No. 12-San Francisco.. 197,614 166,987 190, 615 172,223 198, 376 200, 695 179,173 172, 270 179,005 190,452 Los Angeles 210, 602 178,686 183, 250 165,503 175, 460 166, 513 145,381 161,115 154, 603 161, 838 Portland 36, 771 36,161 42,841 37,385 41,442 33, 962 .33,973 37,708 38,044 Salt Lake City_ 14, 586 12, 521 17,590 14,813 14,173 14,269 12,723 13, 613 14,081 14,239 Seattle 53,588 45,463 42,538 37,211 53,475 46, 453 35, 214 38,411 41,832 42,410 Spokane _._ 13,147 10, 543 10,167 10,461 14,792 12, 465 10, 648 9,812 12,420 12,108 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MONEY RATES PREVAILING IN LEADING CITIES to The following table shows the customary rates charged on loans and an entire month, while the latest figures cover only a week. Attention discounts in the various cities in which Federal reserve banks and their is also called to the fact that the method of reporting the rates has been branches are located, as reported by representative banks. These somewhat modified and that slight changes in the rates may reflect these rates are not averages but are those rates at which the bulk of paper of modifications. each class is handled by reporting banks. Where it appears from the Rates on customers' commercial paper reported as prevailing during reports that no one rate clearly covers the bulk of the paper handled, the week ending April 15, 1924, were somewhat lower than those for a range of the rates most commonly charged is given. In making com- the week ending March 15, 1924, in several eastern cities. Otherwise parisons between the rates charged during 1024 and rates charged at there was little variation between these two periods in rates charged by earlier periods, it should be borne in mind that the earlier rates refer to banks. Customers* prime commercial paper Interbank loans Lo L a i n b s e r s t e y c u b r o e n d d b s y Loans secured by stocks and bonds w L a o r a e n h s o u se se c u r r e e c d e i b p y ts Cattle loans 30-90 days 4-6 months Denialid Time District and city We i e n k g e - nd- M i e n o n g d n - — th We i e n k g e - nd- M i e n o n g n d - - th We in ek g — end- M i e n o n g n d - - th We i e n k g e - nd- M i e n o n g n d - - th We i e n k g e - nd- M i e n o n g n d - t - h We i e n k g e - nd- M i e n o n g n d - - th We i e n k g e - nd- M i e n o n g n d - t - h We i e n k g e - nd- M i e n o n g n d - t - h Apr. Mar. Apr. Apr. Mar. Apr. Apr. Mar. Apr. Apr. Mar. Apr. Apr. Mar. Apr. Apr. Mar. Apr. Apr. Mar. Apr. Apr. Mar. Apr. 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 15, 1924 1924 1923 1924 1924 1923 1924 1924 1923 1924 1924 1923 1924 1924 1923 1924 1924 1923 1924 1924 1923 1924 1924 1923 No. 1—Boston 5 5 51 5 5 51 5 5 5 5 5 51 44 44 51 Vt 51 No. 2—New York 4J-5 5 5 -54 4J-51 5-51 5 -6 5 5 -54 5-6 5 5 -54 5 41-54 4-54 4J-6 5 -54 5 -5* 5 -6 5 -51 5 -54. Buffalo 54-6 54-6 6 ' 6 6 6 5 -54 6 5 -6 6 5 -6 54-6 6 51-6 54~6 6 6 6 No. 3—Philadelphia.. " 5 5 -51 5 5 -51 51 5 6 61 5 5 5 41 fi 5 5 51 5 No. 4—Cleveland 54-6 6 6 54-6 6 6 5 -54 5 -54 5 -6 5-6 6 6 6 6 6 6 a 54-6 6 7 Pittsburgh. . 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 "fi 6 6 Cincinnati... 6 6 6 6 6 54 5-54 5454-6 5 -54 51-6 6 5J-6 54-6 6 54-6 6 6 6 No. 5—Richmond. 51 54-6 6 54-6 6 6 5 -W 5 -5- 54 >> 6' 54-6 6 51-6 54-6 6 54-6 54-6 6 6 6 No. 6— B B A i a t r l l m t a i n m in ta o g r h e am . . 5 6 - - 7 6 5 6 - - 7 6 54 6 6 6 5 - - 7 6 54 6 5 - - 7 5 6 4 6 f 5 -6 5 5 * - - 6 6 6 51 5 5 5 - - - 6 6 6 5 5 - - 5 6 6 4 5 6 6 4 5 6 1 - - 7 5 6 1 6 -7 5 6 4 6 5 6 4 6 * - 7 6 6 -7 6 5 a 1 6 5 4 - - 7 6 6 5 6 1 - - 7 6 6 7 Jacksonville 7 7 6 -7 7 7 6 -7 6 6 6 6 7 -8 6 6 6 -7 6 6 7 -8 6 6 7 New Orleans._ 54-6 61-6 5J 6 6 6i 54-6 54-6 4| 51-6 51-6 6 6 6 5i 6 6 -61 6 6 6 Nashville • 6 " fi 7 6 fi 7 6 6 5 -6 5 -6 6 6 6 6 7 54-6 54-6 7 No. 7—Chicago 5-54 5-54 5 -54 5 -54 5 -51 5-51 5 -51 5 5 5 -54 5 5 ? 54 54 5-51 54-6 5-54 54 54 No. 8— D St e . t r L o o it uis.. 5 -5 5 4 1 6 5 -5 5 4 1 6 54 54-6 51 f 54 5 5 ~ 1 - -6 6 6 6 5 6 4 54-6 51 6 6 <? 54 5 6 1 5 5 4 1 - - 6 6 54-6 6 6 6 6 6 54 Louisville _ 6 6 6 6 6 5 54 6 5 -6 6 6 6 6 6 6 6 6 Little Eoek 6 6 6 6 6 6 6 6 6 6 6 6 6 -7 6 -7 6 6-7 7 6 6 -7 6 -7 7 6-7 6 7 No. 9—Minneapolis 54 5454-6 51-6 54 54 51 51 51 51 51 5 61 No. 10—Kansas City 6 6 6 6 6 6 6 6 8 6 6 6 8 6 6 6 6 6 8 6 8 6 6 8 6 8 7 8 6 6 6 6 5i-6 51-6 6 6 -61 6 -7 6 54-6 6 64 6 a6 61-7 6 -64 61 87 7 -8 61 Denver 6 6 6 -7 6 6 6 -7 6 -7 7 6-7 6 6 6 6 6 6 6 6 6 6-7 7 6 -7 6-7 6 6-7 Oklahoma City 6 -7 6 -7 7 6 -7 6 -7 7 6 6 6 6 6 8 6 6 8 6 6 8 6 6 8 7-8 8 8 No. 11—Dallas. 5 5 5 -6 5 -51 5 -6 5 -6 51 6 6 64 6 6 64 6 6 64-7 8 6 -7 7-8 7 El Paso . 8 8 g 8 8 g 8 7 -8 8 8 8 8 8 8 8 8 8 -8 8 8 g^ 8 8 g Houston 6 6 54-7 6 -7 6 44-6 44-54 44 51-6 6 -7 5 51-6 7 6 51-7 6 -r 6 6 6 -7 7 6-8 7 -8 7 No: 12—San Francisco 51-6 51-6 54.-6 6 51-6 54-6 51-6 54-6 51 6 54-6 51-6 " 51 6 51-6 54-6 6 6 6 6 6 6 P S o ea rt tt l l a e nd 6 -64 6 7 6 6 6 6 6 6 g 6 6 6 6 6 -7 6 6 -7 7 6 -7 7 6-6J 6-7 61 Spokane 6 -7 6 -7 7 6 6 61-7 6 -7 6 -7 •• 7 6-7 - 7 7 8 61-7 7 -8 7 7 7-8 77 8 6-7 7 -8 8 L S o al s t A La n k g e e le C s ity 6 -6 6 4 6 -6 6 4 7 6i 6 6 7 4 6 - 6 61 7 61 6 6 6 6 6 6 6 -7 6 61-7 6 616 -7 64-7 61 6 -7 64-7 61-6f 6 -7 61- 7 7 7 6! 8 7 7 7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MAT, 1924 FEDEBAL RESERVE BtTLLBTInr 453 GOLD AND SILVER IMPORTS AND EXPORTS IMPORTS INTO AND EXPORTS FROM THE UNITED STATES, DISTRIBUTED BY COUNTRIES GOLD SILVES COUNTB1ES March— Nine m M o a n rc t h h — s ending March— Nine m M o a n rc th h s — ending 1923 1924 1923 1924 1923 1924 1923 1924 IMPORTS $1,115,469 $3, 561,829 $987 France » $4,005,014 $3, 433,103 20,789,147 19, 882, 762 $55, 717 $1, 059 133,275 $82,955 Germany 2, 359, 059 29,707 25, 544, 566 55,764 1, 226,142 Greece 4,798, 294 21,156 5,600, 000 15, 644, 247 13, 200, 077 1, 791 543, 692 168 11, 732 611 Spain 48, 655 40, 013 312 98,933 78, 754 Sweden..., 1, 326,938 44, 426 1,180 1,926 England _ 391,409 19,326, 794 107, 911, 597 166, 990, 763 ! 7.228 185, 731 109,045 Canada- 4,113, 344 5, 295,630 29, 667,978 35, 035, 647 475,716 286, 222 6,280, 343 4, 891, 803 Central America 182,027 121,346 2,196, 386 1, 637, 752 130,246 161,198 1,131, 019 1,345,605 Mexico 443, 521 487,378 4, 045, 096 5,381,116 2, 644, 030 3,890, 218 32,206, 794 43,744,767 West Indies 12, 027 48,018 491, 544 608, 290 13, 081 11, 609 192,949 129, 700 Argentina .. .. 1, 748, 785 80, 056 9, 719, 503 4,860 30,152 48,029 Bolivia . 949 5,183 18, 276 51,713 3,056 594,645 351, 722 Chile 1,753 21,429 116, 041 264,928 10,329 92, 501 1, 512, 382 1,089,603 Colombia 292, 393 199, 028 4, 239,125 2,963,032 9,475 10,093 144,679 116, 696 Peru... _ 169,361 272, 071 1,311, 362 2, 024,626 1,132, 053 1,717, 715 6, 604,363 11,149, 368 Venezuela - 35,361 24,071 496, 779 501,728 41 50 1,860 6,079 China 90,966 5,895,896 4,120,117 6,000 11, 457 16,924 15, 740 Dutch East Indies 208,057 1, 586,669 1,905,134 81, 029 619,140 739,307 Philippine Islands... . 108, 313 178, 589 812,926 1,372, 893 1,474 2,525 10, 925 19,812 British Oceania 276,020 61,285 1, 352,396 2, 750, 661 242 109 1,430 2,015 Egypt 175, 585 3, 271, 242 2,149, 256 183 12, 730 15,802 Portuguese Africa .. 4,148 7,643 612,819 516, 377 7,588 13,446 162,160 65,508 All other. .. 107,660 471, 595 922,202 5,118, 816 7,330 7,405 126,810 289,489 Total 15,951, 357 34, 322,375 209, 311,346 305, 352, 756 4, 626,376 6, 220, 934 50,158,063 65, 522, 269 EXPORTS 2 660 000 2, 660, 000 19,000 90,000 1,645 525 Spain 20,000 1,500 1,500 3 579 1,358, 445 29, 703 England 9,572 143,828 7,884 203,805 353,698 7,378,690 5,478,398 Canada 102,180 167, 209 21,872,613 1, 460,324 146,433 164,004 1,388,040 1,253, 728 Central America 1,000 544 4,494 58, 675 Mexico 583,640 410,876 3, 680, 479 2, 388,870 203, 003 130,173 1, 393,818 1,184,410 West Indies 899 23,525 2,073 37, 627 22,976 500,000 700, 666 1,235 10,000 4,738 Peru .. 192, 000 975,000 201,600 501, 600 412, 500 646,000 British India 6,900,089 13,394,018 1, 310, 728 1,430, 211 4, 551, 613 1,055,489 30,171,588 China 350,200 40,000 2, 651,192 2,327, 617 16,672, 506 29,830,459 Dutch East Indies 75,000 84,440 37, 690 2, 862,800 1,384,350 33, 767 205,163 6,505, 296 1,678, 034 36,500 35,500 1,277,898 All other 48,600 56, 530 40, 640 4,225 65,202 5,574 66,452 Total 10,392,100 817,374 46,993,812 7,955, 099 4, 731, 705 8, 355, 278 44,490, 179 72, 648,881 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

454 FEDERAL RESERVE BTTL-L-ETJlsr MAT, 1924 FOREIGN EXCHANGE RATES [Noon buying rates for cable transfers in New York as published by Treasury. In cents per unit of foreign currency] COUNTRIES INCLUDED IN COMPUTATION OF INDEX 1 Per cent of par' Apr. 1 to 21, inclusive March Par Monetary unit of ex- March April change March Low High, Aver- Low High A a v g e e r- F w o e u e r k th w Fi e r e s k t S w ec e o e n k d T w h e i e r k d General index. 60 61 58 Belgium.- Franc. 19.30 4.7200 5.4200 5.1050 3.1600 4. 3300 3. 8650 22.18 25.31 26.18 27.86 20.03 Denmark Krone. 26.80 16. 4400 16. 6600 16. 5794 15. 3000 16. 2100 15. 6788 58.84 61.70 61.90 61.99 58.50 France.- Franc. 19.30 5.6600 6. 3500 6. 0106 3. 4900 5. 5200 4. 6812 28.01 30.00 30.92 32.51 24.25 Great Britain Pound 486. 65430. 2000438. 2300433. 6456426. 3200430. 3600429. 0631 88.26 88.67 89.03 89.62 88.17 Italy.. Lira 19.30 4. 3600 4. 4600 4. 4267 4.1300 4. 3800 4. 2769 22.42 22.88 22.92 23.01 22.16 Netherlands Florin.. 40.20 36. 9800 37. 2800! 3.7168 36. 8600 37. 2800 37. 0650 91.86 92.25 92.59 92. 53 92.20 Norway Krone 26.80 13. 6200 13. 8800 13 7606 13. 3100 13. 7900 13. 5527 50.95 51.14 51.31 51.58 50. 57 Spain Peseta 19.30 13. 0300 14.1000 13. 5300 12.1300 13. 5800 12. 7327 67.66 69.15 69.63 71.54 65.97 Sweden. Krona __. 26.80 26. 3400 26. 4900 26. 4144 26. 0500 26. 4900 98.70 98.67 98.59 98.43 98.09 Switzerland Franc 19.30 17. 3800 17. 6300 17. 5333 17. 2200 17. 4400 17. 2900 89.52 90.48 90.82 91.23 89.59 Canada Dollar 100.00 97. 8678 98. 2926 97. 9917 96. 5167 97. 6895 97.41 97.89 98.12 97.96 96.96 Argentina Peso (gold) 96.48 74. 6300 75. 6900 75.1200 75. 2700 77. 5900 76. 5527 78.90 78.01 77.94 77.63 79.35 Brazil Milreis. 32.44 11. 0200 11. 4400 11. 2150 10. 4900 12. 0600 11. 4462 34.61 34.44 34.73 34.55 35.28 Chile Peso (paper) _. ' 19. 53 9. 8400 10. 7400 10. 3267 9. 4200 10.1200 9. 7712 49.02 51.25 52.75 54.63 50.03 China Shanghai tael, 2 66. 85 69.1600 70. 0200 69. 6544 69. 5800 70. 3600 69. 9965 104. 54 104.02 104. 03 104.54 104.71 India Rupee__ 48.66 29. 8600 30. 6500 30. 2389 29. 6600 29. 9600 29.8623 61.50 61.65 62.14 62.74 61.37 Japan _ Yen 49.85 40. 2500 42.1200 41. 5089 41. 9300 44. 8000 42. 9015 84.25 84.36 84.01 81.43 86.06 OTHER COUNTRIES Austria 20.26 0.0014 0. 0014 0. 0014 0. 0014 0. 0014 0.0014 0.01 0.01 0.01 0.01 0.01 Bulgaria Lev . .- 19.30 .7131 .7378 .7287 .7263 .7488 .7375 3.82 3.79 3.78 3.76 3.82 2 9425 2. 9805 2 9631 2. 8791 2 9930 2. 9015 Finland Markka 19.30 2. 5027 2. 5111 2. 5071 2. 4996 2. 5188 2. 5074 12.99 12.99 12.99 13.00 12.99 Germany-. .. Reichsmark 23.82 • . 0215 ' . 0222 3 .0219 3.0213 3 . 0223 3.0220 Greece 19.30 1 7054 1. 9277 1. 7766 1. 4513 1. 7331 1. 6297 8 73 8 94 8 96 9 72 8 44 Hungary .. TfrnTifi 20.26 .0013 .0015 .0014 .0012 .0024 .0015 .01 .01 .01 .01 .01 Poland ' 0109 1. 0116 1 . 0114 1.0108 ' . 0122 '. 0113 Portugal Escudo 108. 05 3.1000 3. 2300 3.1417 3.0400 3. 2400 3.1262 2.90 2.91 2.91 2.91 2.89 Leu .. 19.30 .5083 .5230 .5184 .5157 .5296 .5225 2.69 2.67 2.70 2.70 2.71 Yugoslavia Dinar 19.30 1.2377 1. 2445 1. 2380 1. 2172 1. 2609 1. 2372 6.35 6 40 6 41 6 43 6.41 Cuba . Peso 100.00 100. 0273 100. 0625 100. 0510 99. 9594 100. 0719 100. 0505 100. 06 100. 05 100.05 100. 05 100.05 do • 49.85 48.1667 48. 2917 48. 2685 48. 0781 48. 3125 48.2309 96.78 96.79 96.86 96 83 96.75 Uruguay - do 103.42 77. 0000 77. 7200 77. 3600 75. 4900 77. 5600 76. 6927 74.39 74.63 74.79 74.99 74.16 China 2 48.11 50 1100 50. 9200 50. 4233 50. 1500 50. 5900 50. 3858 104. 56 104. 55 104 63 105. 23 104. 73 Hongkong Dollar. 1 47. 77 50. 4600 51. 4700 50. 9661 50. 3000 50. 6400 50. 4927 106. 86 105. 96 106. 67 107. 45 105. 70 Straits Settlements. Singapore dollar - 56.78 50.0600 50. 6500 50. 3756 49. 9700 50. 5000 50.2777 88.58 88.49 88.76 88.91 88.56 1 Based on average. 21913 average. 1 In cents per billion. * In cents per thousand. SILVER [Average price per fine ounce] London (converted at average rate of exchange) _ New York - Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

INDEX Page Acceptance market 345 Great Britain—Continued Acceptances held and purchased by. Federal reserve banks 442 Retail food prices and cost ofliving _.. 436 Agricultural movements, index of 424 Wholesale prices. _ 434,435 Agriculture, monthly - - 333,425 India: , • Australia: Cost of living and retail food prices 436 Foreign trade — — 431 Foreign trade '__ 431 Retail food prices and cost of living 436 Wholesale trade.. '. _. 435 Whole prices -. 435 Industrial statistics: Automobile, production of... 340,427 Foreign countries 430 Bank credit - 333 United States 424-427 Belgium: Iron and steel production. _ 339,425 Cost ofliving and retail food prices 436 Italy: Foreign trade _ - 431 Financial statistics. _ 432 Wholesale prices _ . 435 Foreign trade 431 Building statistics... 341,426,427 Retail food prices and cost ofliving 436 Business and financial conditions: Wholesale prices ._ ... 435 Abroad 350 Japan: United States.-.. 332-348,422-429 Financial statistics _ 432 Business failures - 344 Foreign trade 431 Canada: Wholesale prices 434,436 Cost ofliving and retail food prices 436 Law department: Financial statistics 432 Decision of Supreme Court on right of national banks in Mis- Foreign trade 431 souri to exercise fiduciary powers . 418-420 ' Index of industrial activity 430 Leather industry ^ 341,426 Wholesale prices 434 Livestock industry •..'• 335,424 Chain-store statistics 343,429 Lumber industry 340,425 Charters issued to national banks 421 Mail-order houses, retail trade of . ..343,429 Checks clearing and collection _ -.. 444 Manufacturing: Coal and coke production 336,425 Condition, by industries 338 Committees on German reparation, report of 325,351 Index of production .. 424 Commodity movements. 424-427 Member banks: Condition statements: Condition of ._ 446 Federal reserve banks 437-440 Earnings and dividends of State bank members 449 Member banks in leading cities 446 Metals u 337,425 Cost of living, principal countries 436 Mineral products, index of: 424 Cotton manufacturing 338,425 Mining. 336 Cotton, raw 334,425 Money in circulation .. 450 Czechoslovakia: Money rates 344,445,452 Retail food prices 436 National banks: Wholesale prices '. 435 Charters issued to 421 Dairy products. 336,425 Fiduciary powers granted to . 421 Dawes committee report to Reparation Commission 351 Supreme Court decision on right of national banks in Mis- Debits to individual account 451 souri to exercise fiduciary powers... _ 418-420 Denmark: Netherlands: Foreign trade 431 Cost of living and retail food prices 436 Wholesale prices . ^ 435 Foreign trade 431 Department-store business 343,429 Wholesale prices. 435 Deposits: New Zealand: Savings 345 Retail food prices and cost ofliving 436 Time and demand, of member banks 448 Wholesale prices 435 Discount and open-market operations of the Federal reserve banks 443 Norway: Discount rates: Cost ofliving and retail food prices 436 Central banks 432 Foreign trade 431 Federal reserve banks 445 Wholesale prices 435 Prevailing in various centers ._ 452 Ocean freight rates . 431 Earning assets held by Federal reserve banks 442 Petroleum industry . 337,425 Earnings and dividends of State bank members 449 Prices: Employment, United States 343,423 Food, in principal countries 436 England. (See Great Britain.) Advance in, during last 12 months 349 Failures, commercial.- . 344 Wholesale 332,343,349,433-435 Federal reserve note account _.- 441 Production in basic industries, index of 332,422,423 i Fiduciary powers: Revision of __ 422 Granted to national banks 421 Report of experts to Reparation Commission: Supreme Court decision on right of national banks in Mis- Summary of _ 325-331 souri to exercise 418-420 Text of full report. 351-417 Financial statistics of principal foreign countries 432 Reserve ratio of Federal reserve banks _ 437 Food manufacturing 338 Retail trade 343,429 Food prices in foreign countries 349,436 Savings deposits-. . 345 i Foreign exchange 348,454 Shoe industry 341,426; Foreign trade: Silver imports and exports . 347,453 Principal foreign countries _ __. 431 South Africa: United States 346,431 Foreign trade 431 France: Retail food prices and cost ofliving _ 436 Cost of living and retail food prices 436 Wholesale prices... 435 Financial statistics .. _. 432 Spain: Foreign trade _ 431 Cost of living _ 436 Index of industrial activity _ 430 Wholesale prices.- 435 Wholesale prices ... 434,435 State banks: Freight rates, ocean _._ _. _ 431 Admissions to system _ _ _ 421 Fruit crop and shipments.. _ 335,425 Earnings and dividends of _ 449 : Germany: Supreme Court, decision of, on right of national banks in Missouri Cost of living and retail food prices 436 to exercise fiduciary powers 418-420 Foreign trade _ 431 Sweden: Index of industrial activity 430 Cost of living 436 Reparations, report of expert committee on _ 351 Foreign trade 431 Wholesale prices _ _ _.. 435 Wholesale prices 435 Gold imports and exports :__ 347,453 Switzerland: Gold settlement fund transactions 445 Retail food prices and cost ofliving 436 -rain and flour._ 333,424 Wholesale prices. 435 heat Britain: Textile industry _. : ...... 338; 425 Financial statistics 432 Time deposits of member banks 448 Foreign trade : 1 _ 431 Tobacco industry 335,425 Gold imports and exports - 347 Transportation _. 342,427 Index of industrial activity. .._._ --,-,- 430 Wholesale trade...-,..----,..,,-,..„.,.,,,„-,-.-.--—- 332,342,428 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE DISTRICTS \ MINN, j MINNEAPOLIS " KANSAS CI KANS. ATLANTA Birmingham BOUNDARIES OF FEDERAL RESERVE DISTRICTS BOUNDARIES OF FEDERAL RESERVE B'RANCK TERRITORIES % FEDERAL RESERVE BANK CITIES - • FEDERAL RESERVE BRANCH CITIES O FEDERAL RESERVE BANK AGENCY Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis