Federal Reserve Bulletin September 1915 - St. Louis Fed RESERVE BULLETIN ISSUED BY THE ... Digest of...

FEDERAL RESERVEBULLETIN

ISSUED BY THE

FEDERAL RESERVE BOARDAT WASHINGTON

SEPTEMBER, 1915

WASHINGTONGOVERNMENT PRINTING OFFICE

1915

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

FEDERAL RESERVE BOARD.

EX OFPICIO MEMBERS.

WILLIAM G. Me ADO O,

Secretary of the Treasury,Chairman.

JOHN SKELTON WILLIAMS,Comptroller of the Currency.

CHARLES S. HAMLIN, Governor.

FREDERIC A. DELANO, Vice Governor.PAUL M. WARBURG.

W. P. G. HARDING.

ADOLPH C. MILLER.

H. PARKER WILLIS, Secretary.

SHERMAN ALLEN, Assistant Secretary.

M. C. ELLIOTT, Counsel.


TABLE OF CONTENTS.

Page.Work of the Board 251Address by Hon. W. P. G. Harding 252Movement of crops 258Digest of warehouse laws 260State bank membership 263Gold settlement fund 264Discount rates 266Informal rulings of the Board 267Intradistrict clearance system 270Trustee powers granted 272Law Department 273General business conditions 278Gold imports and exports 286Distribution of rediscounts 288Acceptances - 292Federal reserve bank statements . - 294

,49


FEDERAL RESERVE BULLETINVOL. 1 SEPTEMBER 1, 1915 No. 5

WORK OF THE BOARD.

The work of the Federal Keserve Boardduring the month of August has been largelyconcerned with problems incident to the pro-tection of the crop situation as affected bywar conditions. The Board's general policywas outlined in its letter of August 3, 1915.Among the further steps taken in the devel-opment of its policy, particular interest willattach to a draft of regulations in preparationproviding for special rates on "commoditypaper'7; that is, notes, drafts, or bills of ex-change secured by terminal receipts, shippingdocuments, or warehouse receipts coveringapproved and readily marketable non-perish-able staples, and properly insured. It is ex-pected that "commodity paper" of this typewill prove its efficacy particularly in meetingthe seasonal demands of the great crop-moving districts for credit facilities.

Consideration has also been given to theextent of the assistance that the Federalreserve banks could render one another by wayof rediscounting in case any Federal reservebank should not be able to meet all the require-ments made upon it by its member banks outits own resources.

Because of the absence of some of the mem-bers upon their summer vacations it was foundconvenient to hold one meeting in New YorkCity, a central point that could readily bereached by all. This meeting was held onAugust 10, and at its close the following state-ment for the press was given out:

The Federal Reserve Board to-day held asession at the Federal Reserve Bank of NewYork. After the meeting was over it wasstated in response to questions that the meet-ing had been called for the purpose of clearingup matters of pending business which hadbeen held open on account of the absence ofseveral members of the Board from Washing-ton. As New York was within easy reach ofthose who were absent, a session in this citywas determined upon.

Those present were Governor Hamlin, Comp-troller of the Currency Williams, and Messrs.Miller, Warburg, and Harding.

Several State banks have been admitted tothe system after an examination of their con-dition by officers of the Federal reserve banks

[n which district they were located, and furtherinspection of reports of their condition by theFederal Reserve Board. A large number ofbanks have been granted trust powers.

New conditions which seem to be desirable]n connection with the admittance to the sys-tem of S tate banks have been worked out bythe Board and been put in final form.

Regulations for retiring national bank cir-culation and the refunding of United States2 per cent bonds have been under considera-tion, both by the Treasury Department andthe Federal Reserve Board. These regula-tions have not been completed, but substantialprogress has been made upon them.

State Banks and Trust Companies.

Several additional State banks and trustcompanies have been admitted to the Federalreserve system during the month of August,the number of such institutions which navejoined the system now being 24. The new in~stitutions admitted to membership duringAugust are as follows:

Broadway Trust Co., New York, N. Y.Old Colony Trust Co., Boston, Mass.Fidelity Trust Co., Kansas City, Mo.Elmhurst State Bank, Elmhurst, 111.Badger State Bank, Milwaukee, Wis.Fort Scott State Bank, Fort Scott, Kans.German-American Bank, Minneapolis, Minn.

New Orleans Branch.

Mr. Marcus B. Walker, of New Orleans, hasbeen elected a class "B " director for the branchof the Federal Reserve Bank of Atlanta to belocated in New Orleans, and has been named asmanager for that bank. The bank will openfor business on September 10.

251


252 FEDERAL EESEEVE BULLETIN. SEPTEMBER 1, 1915.

THE SOUTH'S COTTON PROBLEM.

ADDEESS BY HON. W. P. G. HARDING, MEMBEEOF THE FEDEEAL EESEEVE BOARD, AT BIR-MINGHAM, ALA., AUGUST 25, 1915.

One of the results of the consideration of thecotton situation by the Federal Reserve Boardand its members was an address made by Hon.W. P. G. Harding on August 25 at Birmingham,Ala.

During the course of his address Mr. Hard-ing read the following letter from the Presidentof the United States:

The WHITE HOUSE,Washington, August 23,1915.

My dear Mr. HARDING:Thank you sincerely for your letter of August 23. It

gives me just the information I desired.What interests me more is this: It is evident from what

you tell me that the country banks with whom the farmerand other producers directly deal, can get money at from4 to 4£ per cent, and that the question whether the bene-fit of this advantageous rate is to be extended to the farmeris in their hands. It is inconceivable to me that those whoare responsible for dealing directly with the producers ofthe country should be willing to jeopard the prosperity ofthe country itself by refusing to share with the producerthe beneficial rates now obtainable for money loans. Ithink that we can confidently expect that the banks inthe cotton States and in the agricultural regions generallywill content themselves with a rate not more than 1 or 2per cent above the rate which they themselves pay. Ihope that the facts which you have stated to me will be-come generally known among the producers of the countryso that they may feel themselves free to exact of the bankswith which they deal what they undoubtedly have a rightto expect.

Cordially and sincerely yours,WOODROW WILSON.

Mr. Harding said:A discussion of the cotton problem by a member of a

Government board, under conditions now existing, in-volves some delicate considerations, and it must be dis-tinctly understood that what I shall have to say is anexpression merely of my personal views, as far as it seemsproper for me to express them, and must not be regardedas reflecting the opinions of or as being binding in anymanner upon, any person or official other than myself.

Not since the days of the Civil War has cotton occupiedso prominent a place in international affairs as at present.By virtue of its use in the manufacture of propulsiveexplosives, its possession has become a necessity to thenations at war. Great Britain and her allies, havingpractical control of ocean transportation, announced,

some months ago, their purpose of preventing shipmentsof cotton from reaching Germany and Austria, eitherdirectly or through neutral countries. The orders incouncil which became effective last February, havearoused a great deal of protest in this country, the positionbeing taken that no belligerent had the right to interferewith the shipment of noncontraband goods from a neutralcountry to another neutral country. While these ordersin council have been the source of much irritation, it isclaimed that they have not been effective in accomplish-ing their object, and the marked increase in exports ofcotton from this country to Holland and Sweden, as wellas to Italy, up to the time that she also became involvedin the war, would indicate that Germany has been receiv-ing practically her usual amounts of cotton through neutralcountries. It is now a matter of public knowledge that theBritish Government and its allies have declared cotton anabsolute contraband, by which it is understood that it willbe subject to seizure, even when consigned to neutralcountries, unless the shipment is made in accordance withthe terms and limitations of the proclamation declaring itcontraband. As the annual takings of American cottonby Austria and Germany amount to about 3,000,000 bales,the attitude of Great Britain and her allies has createdmuch uncertainty in the cotton trade, and great apprehen-sion on the part of producers of cotton in the.South.

CERTAIN BASIC FACTS.

It is well, in discussing the present situation, to keepcertain basic facts before us. The Census Bureau, in itsBulletin of August 14, states that the world's productionof commercial cotton, exclusive of linters, grown in thecalendar year 1913,. as compiled from published reports,documents, and correspondence, was approximately22,255,000 bales of 500 pounds net, and that the consump-tion of cotton, exclusive of linters, in the United Statesfor the year ending August 31, 1914, was approximately21,223,000 bales of 500 pounds net. The Bulletin furthercalls attention to the fact that, except for the UnitedStates, cotton included in these figures refers almost ex-clusively to that used in spinning (and does not includelarge quantities which are consumed in the manufactureof felts, bats, etc.). It is, therefore, fair to infer that whilethere apparently remained a year ago out of the cottongrown in 1913, the equivalent of about 1,000,000 bales,the world's requirements absorbed practically the entireproduction of the year 1913.

The American crop grown that year was about 14,600,000bales, so that the amount grown in other countriesamounted to about 7,650,000 bales. The FinancialChronicle estimates the total visible supply of cotton inthe world on August 13, 1915, to be 4,255,773 bales, against2,991,413 bales on the corresponding date in 1914—anexcess in sight this year over last of about 1,250,000 bales.

Stocks in Great Britain are estimated at 500,000 balesmore than last year, while continental stocks are putdown as being 90,000 bales less. Stocks at Hamburg,Bremen and Trieste are placed at 45,000, against 352,000


SEPTEMBER 1, 1915. FEDERAL EESERVE BULLETIN. 253

at those points last year. Stocks at Genoa, Havre, andBarcelona show an increase of about 390,000 bales. Thestock of American cotton in sight on August 13 is placedby the Financial Chronicle as 2,940,776 bales, against1,561,413 bales on the same date in 1914, the distributionbeing as follows:

August 13. 1915

Liverpool stock | 1,097,000" r ' • ' 65,000

i 463,000196,036697,379418,115

Manchester stockContinental stockAmerican afloat for Europe.United States port stocks...United States interior stocksUnited States exports to-day I 4,246

Total American ..I 2,940,776 1,561,413

i Estimated.

COTTON PRODUCTION IN 1915.

Assuming that 22,250,000 bales represent the world'snormal consumptive power, and that the visible supplyis now 4,250,000 bales, it becomes necessary, in order tounderstand the situation, to make a rough estimate of thecotton production for 1915. It is, of course, admittedthat any estimate made at this time is merely a guess,from which the actual result may vary very widely, butit seems not unreasonable to assume figures based upon theaverage estimates of those well informed in the cotton tradeand upon the average production per acre for the past 10years. I think, therefore, that an estimate of 12,000,000bales for the present American crop will not be regardedas too low. It is even more difficult to form an estimate ofthe amount of cotton grown in other countries, but. takingthe figures for 1913 (7,600,000 bales) as a basis, and makingallowance for the reduced acreage reported in Egypt andIndia, it would seem that 6,000,000 bales would be a fairestimate for all other countries. This would give us a totalcrop available for the next 12 months, including what isnow in sight, of 22,250,000 bales. Conservative estimateslast year were that the war would reduce the world'srequirements of cotton by about 3,000,000 bales, yet theexports of American cotton for the season just ended wereabout 8,543,000 bales, as against 9,150,000 bales for thepreceding season—a difference of a little more than600,000 bales.

The declaration of contraband against cotton will per-haps be much more effective in keeping it out of Ger-many than were the orders in council, but, even if itbe true that the world's cotton requirements by reasonof the war will be curtailed 3,000,000 bales for the comingseason this would just about represent the amount thatwould usually go to Germany. The Census Bulletin ofAugust 14 shows that during the 12 months from August1, 1914, to July 31, 1915, the consumption of cotton in theUnited States amounted to 5,598,798 bales, against5,626,078 bales for the 12 months immediately preceding.

1914

625,00041,000

1513,00040,346

228,316113,751

The bulletin gives the following figures as representingcotton on hand in this country on July 31 :

Bales.

In consuming establishments 1, 401, 484In public storage and at compresses 1, 784, 812

Total 3,186, 296

which compares with 905,762 and 425,102 bales, or atotal of 1,330,864 bales, for July 31, 1914. The consump-tion of linters during the 12 months ending July 31 showsan increase over the preceding 12 months of nearly 100,000bales, the exact figures being 403,389 bales in 1915 against308,675 bales in 1914.

The exports of domestic cotton and linters during themonth of July, 1915, were nearly double those of July,1914, the month immediately preceding the outbreak ofthe war, the figures being 243,522 bales for July, 1915,against 126,211 bales for 1914. Of the total exported,58,944 bales went to Great Britain, against 43,777 balesin July, 1914; none to Germany, against 41,291 bales in1914; 27,209 bales to France, against 2,522 bales in 1914;52,969 bales to Italy, against 22,758 in 1914; 104,400 balesto other countries, against 15,863 in July, 1914. Thesefigures would indicate either a remarkable increase innormal exports to all other countries last month or elsethat Germany is getting her supplies of cotton throughthose countries. Cotton spindles active during July,1915, in this country are reported as 31,194,029, as against30,676,835 in July, 1914.

VALUE OP THE CROP.

I have seen no estimate of the commercial value of thecrop of 1914 from governmental agencies, but other ac-cepted authorities state that the value of the 1914 crop,which, including linters, amounted to nearly 17,000,000bales, was less by $386,000,000 than the crop of 14,588,591bales produced in 1913. The Office of Markets and RuralOrganization of the United States Department of Agricul-ture has advised the Federal Reserve Board that reportsfrom 3,485 public and private warehouses in the cotton-growing States show a storage capacity of about 10,281,000bales, and that similar reports from 823 cotton-mill ware-houses in the same States indicate a storage capacity of1,295,500 bales, so that, expressed in terms of flat or uncom-pressed cotton, the public, private, and cotton-mill ware-houses in the cotton-growing States in 1914 had an aggre-gate storage capacity of 11,577,465 bales. The board isfurther advised that during the present year efforts havebeen made to revise and complete the warehouse list,which, while still incomplete, includes at present 4,246warehouses in the cotton-growing States, which are dividedinto public warehouses and cotton yards numbering 3,188and private and miscellaneous warehouses numbering1,058. There are 58 public cotton warehouses outside ofthe cotton-growing States, making a total on the depart-ment's list at present of 4,304. Details are as follows:


254 FEDERAL RESERVE BULLETIN. SEPTEMBER 1, 191©.

Public and private warehouses and cotton-mill warehouses(estimated) in use in the cotton belt in 1914, together withthe storage capacity and the number of bales produced in1914, by States.

State.

Alabama..Arkansas..Florida.. .GeorgiaLouisiana.MississippiNorth Care

linaOklahomaSouth Care

linaTennessee.TexasVirginia...Ail others,

>-

>-

Total..

Public and pri-vate warehouses.

Num-ber.

581233

511,089

200167

149120

33731

49730

3,485

Storagecapacity

in Hatbales.

1,628,935714,780225,060

1,351,810809,600892,540

210,216540,600

1,156,760582,285

1,946,494219,890

10,281,970

Cotton-millwarehouses.

Num-ber.

6261

1516

18

326

16427

19

823

Storagecapacity

in flatbales.

62,0006,0001,000

412,5000,000

18,000

400,9957,000

300,00027,0003H.00019,000

1,295,495

Aggregatestorage

capacityof allware-

houses.

1,690,935720,780226,060

1,767.310815,000910,540

611,211547,600

1,456,760609,285

1,982,494238,890

11,577,465

1914 pro-ductionin run-

ning"bales.

1,731,751999,23790,648

2,723,094452,261

1,217,883

970,4791,232,638

1,560,195372,068

4,390,20025,277

140,109

15,905,840

Public, private, and miscellaneous warehouses and cottonyards in the cotton belt, listed as of Aug. 1, 1915.

State.

AlabamaArkansasFloridaGeorgia .Louisiana . . .MississippiNorth CarolinaOklahomaSouth Carolina. . . .TennesseeTexas .Virginia

Total

Publicwarehousesand cotton

yards.

45912129

82666

17212317419638

96024

3,188

Privateand mis-

cellaneouswarehouses.

1085222

466593590445413

10114

1,058

Total.

56717351

1,29212520721321825051

1,061.38

4,246

Recent inquiries sent out with the view of completingthe warehouse list, have resulted in the addition of alarge number of warehouses in the cotton-growing States.It appears that building activity in the last three monthshas been great, especially in Texas, and it is thought notat all unlikely that, before the present crop comes on themarket there will be 5,000 warehouses of all classes inthe South. Should this prove true, there will be storagecapacity in the Southern warehouses for not less than12,500,000 bales of flat cotton, while the cotton mill ware-houses will be able to take care of about 1,300,000 bales.

It is stated that there is the greatest diversity in thecharacter of these warehouses as to the materials used,cotton handling facilities, location, fire hazards, and otherpoints. Many of the storage companies are not properlyorganized and frequently their receipts are not consideredof much value as collateral. In many instances the

buildings are poorly constructed and so improperly locatedthat rates of insurance upon their contents are very high,but practically all the cotton mill warehouses are ofstandard construction with automatic sprinkler equip-ment, and carry very low rates of insurance.

The legal department of the Federal Reserve Board hasprepared an abstract of the laws of the cotton-producingStates, with especial reference as to whether or not thepledgee of a cotton warehouse receipt obtains the first lienon the cotton in question or whether his lien may be dis-placed by attachment or otherwise on account of anyindebtedness due by the owner of the cotton for labor,rent, or any other account. The counsel consulted, in thepreparation of the digest, legal representatives of the Fed-eral reserve banks of St. Louis, Richmond, Dallas, Atlanta,and Kansas City, and the consensus of their opinion seemsto be that the holder of a negotiable warehouse receipt isprotected from all claims of subsequent lien holders andsubsequent creditors of the original owner of the com-modity covered by the receipt. The rights of the pledgeeof a warehouse receipt are apparently superior to the unse-cured prior claims of the creditors of the pledger. Thepledgee's rights, however, would seem to be inferior to allvalid claims upon the commodity obtained prior to itsdeposit in the warehouse. Want of title in the pledgor willdefeat the lien of the pledgee, as would the nonexistenceof the cotton in the warehouse, for which latter, however,the warehouseman is liable.

In nearly all the Southern States the landlord is givena lien for rent and advances, which lien is superior tothe rights of the transferee of a negotiable warehousereceipt, and in many States the warehouseman is alsogiven a prior lien for charges. Some States require knowl-edge on the part of the transferee that the crop was grownon leased premises as a condition precedent to the recoveryof the landlord, while other States disregard this knowl-edge. The holder of a negotiable warehouse receipt ap-pears, as a rule, to acquire such title as the person negoti-ating the receipt to him had, or had the ability to convey,to a purchaser in good faith and for value. In other words,the transferee of a negotiable warehouse receipt has ex-actly the same rights as the purchaser where the cottonis sold and actually delivered, and is deemed in mosiinstances to be in actual possession of the cotton.

In view of difficulties that may arise in satisfying distantlenders as to the validity under all conditions of warehousereceipts for cotton offered them as collateral, it wouldeeem that, for the present at least, loans on cotton must befirst negotiated through local banks in the South. Thesebanks have now ample facilities which they have neverbefore enjoyed for rediscounting the notes taken againstsuch loans, and it is for them more than for any otheiagency to determine the policy of the South in regard tothe marketing of the present cotton crop.

I would not assume to give any advice, without fullknowledge in each specific case, either to the producer of


SEPTEMBER 1, 1915. FEDERAL RESERVE BULLETIN. 255

cotton as to the advisability of his withholding it from themarket, or to the merchant or to the banker as to the wis-dom of assisting in such an operation. These are mattersfor individual judgment, but I wish to call attention tothe fact that cotton is a commodity which has alwaysshown itself susceptible to marked and sudden fluctuationsin value. As a case in point, I may cite the 12 calendaryears, 1904-1914, both inclusive. In one of these years,1904, the difference between the high and low point inthe price of cotton was 10.41 cents per pound, or more than$50 per bale (according to official quotations on the NewYork Cotton Exchange). The least range of values oc-curred in the year 1906 in extreme fluctuations of 2.65cents per pound, or about $13 a bale, and the average an-nual fluctuation during the entire period of 12 years hasbeen 5.38 cents per pound, or about $27 per bale. Whilecotton at some time during some of these years has soldin the South around 6 cents per pound, the average priceduring any year would have been satisfactory to the cottonproducer. As a rule, the active marketing of cotton takesplace during three or four months of the year, althoughthe process of consumption is one that goes on during theentire 12 months.

The merchants and bankers of the South are well accus-tomed to making advances against crops still to be plantedor in cultivation, but they have usually been insistentthat as soon as the crop has ceased to be a potentiality andhas become a reality, that it be brought to market and soldas rapidly as possible. Other obligations of the farmers,such as for fertilizer, have, in many cases, been madepayable early in the fall, so, with all factors tending towardcongestion, the basic situation of the cotton market mustbe exceedingly strong to prevent a drop in price during thetime when the cotton of the most needy producers is beingmarketed. This year certainly no financial obstacles arein the way of more orderly methods in marketing the crop.I would not undertake, of course, to advise any individualas to the course that he should pursue in marketing hiscrop, but, viewing the situation as a whole, I am con-vinced that the results of a gradual marketing of the cropthis season will be far more satisfactory than would be thecase were the crop forced upon the market within a shortperiod.

AMPLE WAREHOUSE FACILITIES.

The South has now ample warehouse facilities forproperly caring for that portion of the crop on which loansare apt to be negotiated, and the banks can provide amplefunds either out of their own resources or by use of theircredit in rediscounting paper secured by cotton to enablethem to aid materially in conserving the values of thisgreat crop. It has often happened heretofore that thefarmer has been forced to sell his cotton to meet the de-mands of his creditors, or, in cases where he had no press-ing demands and found the price unsatisfactory, that hefound himself unable to negotiate loans upon his ware-

house receipts, unless, perhaps, at a very high rate ofinterest.

The bankers and merchants of the South have at thistime a great opportunity, as well as a great responsibility.They are in close and intimate contact with the producersthroughout the cotton belt and are in the best positionto advise and assist them in taking the steps necessaryto protect their interests, which are also the interests ofthe whole South. For the second time within recent yearswe have seen a large crop sell for far less money in theaggregate than a moderate crop brought the precedingyear. You have an opportunity of conserving the valuesof the South's greatest single asset—its cotton crop—andupon you, bankers and merchants of the South, rests theresponsibility of the weal or woe of a great agriculturalsection during the next 12 months and perhaps for years.Leading financiers of the country, in commenting uponpresent conditions, which are due in part to the Europeanwar, freely express the fear that the sudden prosperitythat has developed in some sections and along certainlines of industry, will be followed by a period of wildspeculation and inflation. The banking reserves of thiscountry are now very large, being considerably more than$1,000,000,000 in excess of legal requirements. The goldholdings of the United States, over $2,000,000,000, arelarger than those of any other two countries combined.Our trade balances are piling up at an unprecedented rateand will probably amount to a billion dollars during thelast six months of 1915. Rates for the best commercialpaper are very low, 4 per cent or less, and the southernbanks, should they be able to collect within the next 60days the amounts which they have out directly or indi-rectly on cotton, will be at an absolute loss to find a safeand profitable investment for their funds. What bettersecurity therefore, could a southern bank ask than theobligation of a merchant or farmer which he has beencarrying on a crop not yet existent—what better or moreliquid investment, I say, could a southern banker findthan to carry this same obligation along for a few monthsif necessary, secured by the actual cotton, properly ware-housed and insured, and certain of a market?

ACTION FOR ORDERLY MARKETING.

Such general action on the part of southern bankswould greatly facilitate the orderly and natural marketingof the crop and would, in a great degree, relieve what iscalled "distress cotton," by which term forced sales ofcotton, regardless of market conditions, have come to beknown. While the rule is not invariable, it very oftenhappens nevertheless that after the producers and thecountry merchants who have had most to do with growingthe crop, have sold their cotton, that the price advancesso that by planting time the stern resolve made by thefarmer a few weeks previous to reduce his cotton acreage50 per cent is modified under the influence of the higher

5554—15 2


256 FEDERAL KESERVE BULLETIN. SEPTEMBER 1, 1915.

prices that he hears about, with the result that the reduc-tion is very small. During the acute depression in cottonlast fall, perhaps all the farmers were determined to plantbut little cotton this year and in one State the legislatureplaced drastic restrictions upon the amount of land thatcould be planted in cotton, which restrictions, however,were afterward removed at a later session. With theimprovement that came in January, February, and March,the feelings of the farmers underwent a change. Salesof cotton were made at 9 cents and even higher, and,forgetting their recent plight, the farmers of the South,despite their bitter experience and regardless of all theadvice and warnings of the Department of Agriculture,the banks, and the merchants, reduced their cotton acreageonly about 15 per cent. Our experience last wintershould convince everyone that the economic law of supplyand demand is inexorable and unalterable. The situationat that time was indeed a most serious one and manydesperate remedies were proposed wjiich seemed to bejustified by conditions then existing. Valorizationschemes were proposed and much pressure was exertedupon Congress to authorize the purchase by the Govern-ment of a large amount of cotton at 10 cents per pound.When this proposition, however, was referred back tosome of the States for separate adoption on their part, itdeveloped that there was but little public sentimentbehind it. The situation last year, as was to be expected,finally worked itself out along natural and economic lines.Only 47 per cent of the crop came in sight by December31, against 70 per cent in ordinary years, and of the amountin sight perhaps 50 per cent was held unsold for accountof the producers or the country merchants. A demandgradually developed for cotton and the price advanced.

SITUATION GREATLY CHANGED.

The situation this fall is totally different from that whichconfronted us a year ago. The present crop can be han-dled successfully only along economic lines, and if we arereally suffering from an overproduction of cotton, the trueremedy to be applied is curtailment of production. Ex-perience has shown that the farmer is not impressed in thespring of the year by figures showing a large amount ofcotton in sight unless he himself owns some of this cotton.If the banks and merchants will carry cotton for farmersthis fall, the advances that they will make should preventa repetition of the chaotic credit conditions and generaltrade depression which resulted last year, and if satisfac-tory arrangements for marketing the crop can be madebefore spring that will b 3 good evidence that there has bacnno overproduction. If, on the contrary, a considerableportion of the crop has to be carried until planting timefor the farmers and the country merchants, a correspondingreduction in acreage will almost certainly result.

The farmers will not be disposed to plant heavily if theyhave a considerable amount of cotton on hand when the

planting time comes and a sharp reduction in acreage nextspring would most probably result in a demand for cottonand a corresponding advance in price, for the cotton spin-ner makes it his business to anticipate the future and tostudy carefully all the conditions relating to the produc-tion and marketing of cotton. As soon as the spinnerssee that there is likely to be a small crop produced byreason of greatly curtailed acreage, they will realize thatany surplus carried over will be necessary to prevent acotton famine in the fall.

Let it be remembered that the dread of the cotton spin-ners throughout the world—in the South, in New England,in Canada, in England, in Germany, in Italy, and inRussia—is a shortage in the supply of cotton, and that,while they naturally desire to purchase their stocks ofcotton at low prices, there comes a time, after their wantsfor some months ahead have been supplied, that theybecome interested in sustaining or even in enhancing thevalues of a commodity in which they have an owner'sinterest. They look ahead also and have learned by ex-perience that extreme low prices throughout a season willbring about a curtailment of the next crop, with advancesin price often out of proportion to the reduction of supplies.

OBJECT OF BRITISH GOVERNMENT.

We should also consider the object of the British Gov-ernment in issuing its orders in council and in its recentdeclaration placing cotton on the contraband list. Whyis that Government, engaged in the most gigantic war ofall history, with perhaps its very existence at stake, soanxious to prevent cotton from reaching the territory ofits enemies? Some have said that it is for commercialreasons, that the Government is actuated by a desire todepress the value of cotton in order that British spinnersmay obtain their stocks at a low cost. This theory doesnot stand in the cold light of reason.

Modern science within recent years has caused cotton tobecome the basis of the explosives which are absolutelynecessary in modern warfare. Cotton is used in the manu-facture of smokeless powder and in the production of thehigh explosives used by heavy field artillery and by thegreat guns on the mammoth battleships of the navies of thepresent day. The statement has been made that everytime a battleship of the class of the Queen Elizabeth firesher guns 12 bales of cotton are consumed. It is im-possible to form an estimate of the amount of cotton thatis used in the manufacture of explosives. Belligerentnations guard this secret closely, but our own Government,through the Census Bureau, is making careful investiga-tions and I understand that as soon as possible an estimatewill be made public, giving the amount of cotton consumedfor war purposes, including not only that used in makingpropulsive explosives, but the amount required for otherpurposes of war, such as wearing apparel for troops, fortents, and for hospital and Red Cross uses. Many unofficial


SEPTEMBER 1,1915. FEDEKAL BESERVE BULLETIN. 257

estimates have been made of the amount of cotton used forthese purposes, but they are practically of no value, as theestimates for explosives alone vary from 600,000 to3,000,000 bales a year. The figures that have been avail-able so far relate to the ordinary commercial consumptionof cotton and are somewhat misleading.

The amount of raw cotton in sight, when considered as afactor in the determination of prices, must be supple-mented by a knowledge of the stocks of manufacturedgoods on hand and by some idea of the amount of clothing,made entirely or partly of cotton, on the backs and in thewardrobes of the ultimate consumers. My information isthat at the present time manufactured stocks in the handsof merchants are small, and, in view of the severe econo-mies that have been practiced throughout the worldduring the past 14 months, it is reasonable to assume thatsupplies of clothing in the hands of the wearers are notlarge.

The very uses to which cotton is now being put, whichhave resulted in its being declared contraband, indicatea consumption of cotton which is of great importance inestimating the world's requirements. While the cottonused for clothing and other commercial purposes is notfinally consumed until the goods wear out, involving aperiod sometimes of two or three years, the cottcn that isused in explosives goes up in smoke forever the veryinstant a gun is fired. There is reason to believe thatboth the Germans and the allies are watching keenly thepresent cotton situation—that Germany is as anxious tohave cotton as the allies are to prevent her frcm obtainingit—and it is not inconceivable that there maybe evidencesbefore very long of internaticnal competition for thepossession of the South's great staple.

MAY MAKE FOREIGN PURCHASE.

It is at least a possibility that cotton will be purchasedin large quantities for foreign account and stored in thewarehouses of the South, to be shipped out as needed andas opportunities for shipments arise. No one has everaccused the Germans of being lacking in far-sightedness.Their ability to look into the future and to provide forevery contingency is marvelous. They are already lookingforward to what will happen when peace is restored andthat they will make a supreme effort to recover their losttrade with other nations can not be doubted.

Is it reasonable to believe that they would look withcomplacency upon the absolute control of the cotton mar-ket by the mills of England and America, permitting themto secure their supplies of cotton at very low prices, anddefer their own purchases until after peace is made andtake the chances of securing then their own stocks at muchhigher prices? Is it not reasonable to believe that theywill arrange to buy cotton as the spinners of other nationsbuy it, and can they not easily make arrangements to

have their purchases of cotton stored in this country fortheir account until they can transport it to their ownshores?

COLD, HARD PACTS.

I have not viewed this cotton situation in an optimisticlight. I have tried to keep before me the cold, hard facts,but the more I study the subject and the more informationthat I receive bearing upon it the more I am convincedthat the present situation, while calling for intelligentleadership and close cooperation, is by no means a desper-ate one. On the contrary, the immediate future has manyelements to inspire hope and confidence. The making of amarket is by no means a one-sided proposition. The buy-ers of cotton have a natural advantage in their greaterpowers of analysis, in their concentrated financial resources,in their ability to take their own time, but now, as always,the movements of southern producers are closely watchedand evidences of staying power on their part are effectivein market quotations.

COTTON SOUTH'S GREATEST ASSET.

Men of the South, your cotton crop is your greatest asset.The welfare of the South depends upon this crop beingmarketed at fairly remunerative prices. The prosperityor the reverse of the southern farmer means strength orweakness to the merchants and the bankers of the Southand vitally affects trade and industry throughout thisentire country. It is within your power, regardless of anyuntoward conditions that may exist, to protect your greatestasset, if you will only make intelligent and courageoususe of your opportunity. Let Southern bankers whereverpossible make liberal concessions in their usual rates oncommodity loans. High-interest rates means forced sales.Present conditions fully justify low rates and Southern bank-ers should be willing to forego temporary profits for the sakeof security and solidity in the future. I am sure that theFederal reserve banks may be depended upon under theirpower of rediscount to cooperate to the fullest extent withthe banks in taking care of the cotton crop, and this assur-ance is, of course, not confined tc cotton loans, but extendsto other staple commodities.

As a final wcrd, I wish to remind you that the cottonseason is upon us. Already the fields are white downwhere the gulf breezes blow, and soon the uplands, toov

will glisten in the autumn sunshine. Let me impressupon you that this is a time not for complaints or de-nunciation, but for wise leadership, cool judgment, firmresolve, and effective action. Bankers, merchants, andfarmers of the South stand together and act together foryour common good ! Do not sit supinely on the ginhousefloor to be smothered beneath a mass of cotton, but keepon top the heap, and feed it out at living prices to the-spindles and factories of a waiting world.


258 FEDERAL RESERVE BULLETIN. SEPTEMBER 1, 1915.

MOVEMENT OF CROPS.

Attention has been given by the FederalReserve Board to the crop-moving problem,and on August 3 the following letter was sentto the chairman of the board of directors ofeach Federal reserve bank:

SIR: There has been frequently in past sea-sons a congestion of farm products, accom-Eanied usually by high money rates, or at times

y actual difficulty in obtaining the necessaryfunds and credits for moving these crops.These conditions have been met for severalyears past by deposits made with banks by theSecretary of the Treasury for crop-moving pur-poses, and last year by the further expedient ofthe issue of emergency currency authorizedunder the act of May 30, 1908, as amended,now expired by limitation. The Federal re-serve act makes provision for meeting the de-mand for crop-moving funds, and is intended toguard against a recurrence of past stringencies.In order to forestall any possibility of conges-tion of crops this fall, or lack of accommodationto move them, the board calls the attention ofall Federal reserve banks to the provision in theFederal reserve act which have a special bear-ing on this subject.

Section 13 of the act gives specific permissionfor the rediscounting for member banks ofnotes, drafts, and bills of exchange secured bystaple agricultural products. The manifest in-tent of this provision is to enable producers tomarket their crops in a normal and effectivemanner. In view of the large surplus reservesnow held by the Federal reserve banks by mem-ber banks and by other banks throughout thecountry, there should be no difficulty in afford-ing the producers the assistance necessary toenable them to market their products in vol-ume corresponding to the power of the tradeto absorb them. In order to accomplish thisend, it is suggested that Federal reserve banksadopt a definite policy with reference to redis-counting paper secured by documents in satis-factory form evidencing the ownership ofstored agricultural products. Through such apolicy, together with proper methods of ware-housing, Federal reserve oanks can be a potentfactor in assisting the normal movement ofstaple agricultural products from the field tothe factory or to the consumer. It is recom-mended that regulations governing the redis-count of notes covering advances on such prod-ucts be issued by such of these Federal reservebanks whose members are actively engaged in

financing the movement of such crops to themarket. In so doing the object in view shouldbe to assist effectively, as above pointed out,in the normal movement of such products inorderly transfer to the consumer. The car-rying of products in behalf of speculators isnot permitted under the law, and memberbanks can not certify the notes of speculatorsas eligible since the act does not allow the re-discounting of notes, drafts, or bills of ex-change covering "merely investments."

Special attention is herewith directed to themarketing of the cotton crop. While the yieldof corn, wheat, and other cereals promises tobe large, there is every reason to expect thatthese products will find a market in an orderlyway. Cotton, however, is peculiarly sensitiveto abnormal conditions such as now exist inour export trade, and it is clearly in the com-mon interest that credits based upon this cropbe protected as far as possible from the dangerof demoralization such as existed during theautumn of 1914. No staple commodity is sub-ject to greater variations in price than is cot-ton, which during the past 12 years has shown,according to figures based upon official quo-tations on the New York Cotton Exchange, anaverage annual fluctuation of 5.38 cents perpound, the maximum price range during anyyear of this period being 10.40 cents per poundin 1904 and the minimum range 2.65 centsper pound in 1906. It should be noted, how-ever, that with two exceptions, there has beenno very great difference in the average priceof cotton for each of these 12 years, the ex-ceptions being the year 1905, when the aver-age price during the year in New York was9.80 cents per pound, the lowest of the 12-year period, and the other being the year1910, when the average price per pound was16.45 cents; but the average price for theentire 12-year period was 12 cents per pound.Sudden and violent fluctuations are clearly tothe advantage of neither the loaning banks,the producer, the manufacturer, nor the con-sumer. They offer, on the contrary, an invit-ing field for the speculator; and should theFederal reserve system, in making possible themore normal movement of the crop, be a con-tributing factor in reducing these fluctuations,it would have accomplished a great publicgood.

It is, therefore, recommended that, in pur-suance of the policy already indicated, the Fed-eral reserve banks communicate with theirmembers, and with others who may be inter-ested, for the purpose of directing attention



to the steps which must be taken to secure thenecessary cooperation. It is suggested thatthe Federal reserve banks point out to theirmembers, and to the public generally, that thosewho are engaged in cotton production, if theyintend to take advantage of the facilitiesoffered by the banks for carrying cotton,should begin at once to arrange for its properstorage and insurance as rapidly as ginned.Federal reserve banks should particularly pointout to their members that they are preparedto rediscount the notes of farmers and mer-chants secured by proper warehouse receiptsfor cotton and accompanied by evidence ofinsurance. Member banks offering these notesshould be prepared to state the grade and mar-ket value of the cotton securing paper, and thenotes should be of the usual collateral form,providing the right to call for additionalsecurity in event of material decline in themarket value. The amount to be advancedper bale would be left primarily to the judg-ment of the member bank.

It is further suggested that Federal reservebanks in the cotton States should call attentionof their members to the desirability of reserv-ing storage space in localities where warehousefacilities are inadequate for such cotton as willbe used as security for loans. While there isnot sufficient warehouse capacity in the Southto provide storage at any one time for the entirecotton crop, it is believed that there are amplefacilities for the proper storage of all cottonthat is likely to be pledged as security forloans. In a normal movement of the cottoncrop warehousemen at concentrating pointsestimate that the maximum storage requiredwill not exceed 20 per cent of the total receiptsfor the season. It should be made plain alsothat compliance with the essential features ofthe plan herein outlined, modified as circum-stances may demand, will be necessary for thenormal marketing of this year's crop and forthe proper protection of those who are in-terested in its movement, whether banks,producers, or manufacturers.

While there seems no reason to believe thatthe world's present and potential supply ofcotton is out of proportion to requirementsduring the next 12 months, it is neverthelessimportant, because of our lack of adequateshipping facilities as well as restrictions broughtabout by the war upon free exports to allcountries, that ample means be provided forthe proper handling and effective marketing ofcotton.

Similar steps may properly be taken byFederal reserve banks whose members arelikely to be called upon to finance other agri-cultural products, wherever there is availablea system of warehouses, elevators, or otherapproved means of storing and certifyingto given quantities of staple agricultural prod-ucts.

The Board calls particular attention to regu-lation P, recently issued, with reference tothe subject of "Trade acceptances." Suchtrade acceptances, when growing out of trans-actions involving the movement of staple agri-cultural products and being indorsed by amember bank, are eligible for rediscount witha Federal reserve bank in the manner indi-cated in said regulation, and their use shouldaid materially in the marketing of the crops ofthe country during the coming autumn.

The Board will be prepared from time totime to pass upon sucn special phases of thecrop moving problem as member banks maypresent to it through the Federal reserveagents, who are brought into contact withthe special conditions prevailing in the varioussections of the country, and it will adapt exist-ing regulations to such conditions as may haveto be met in facilitating the normal and eco-nomic movement of the staple agriculturalproducts of the country.

Respectfully,CHARLES S. HAMLIN,

Governor.

Deposits in Federal Reserve Banks.

This statement was issued by the Secretaryof the Treasury on August 20, relative to tiledeposit of Government funds in Federalreserve banks:

Secretary McAdoo to-day made clear hispolicy with regard to the deposit of Govern-ment funds in Federal reserve banks, asauthorized by the Federal reserve act. TheSecretary said that he would deposit funds inFederal reserve banks whenever the necessityarises and it can be done with benefit to thepublic interest. He pointed out that publicmoneys had not yet been deposited merelybecause the banks do not need them now andhave not yet found full use for their presentresources, which appear to be more thanadequate for the demand at this time.


260 FEDEKAL KESERVE BULLETIN". SEPTEMBER 1,1915.

Funds for Cotton Crop.

Secretary McAdoo, on August 23, issued thefollowing statement relative to deposits of fundsto care for the cotton crop:

Secretary McAdoo announced from NorthHaven, Me., to-day that, in view of the actionof the Allies in putting cotton on the contra-band list, he will, if it becomes necessary, de-posit $30,000,000 or more in gold in the Federalreserve banks at Atlanta, Dallas, and Richmondfor the purpose of enabling these Federal reservebanks to rediscount loans made on cotton se-cured by warehouse receipts by national banksand those State banks that are members of theFederal reserve system.

The Secretary said that in the exercise of thediscretion given to him by law the Governmentwill for the time being charge no interest onthese deposits in Federal reserve banks; thatsuch action is justified by the unusual situationrespecting cotton caused by the European war;that he considers it his duty to use every avail-able means in his power to help the cotton pro-ducer of the South in the circumstances; thatit is a matter of economic importance to theentire Nation that those who have produced thecotton crop shall have a fair opportunity todispose of it gradually and in an orderly mannerso they may not be forced, through inability tomarket their cotton gradually, to sell it atsacrifice prices.

Secretary McAdoo said that one of his chiefobjects was to create a basis for such enlargedcredit in the South that the banks will haveample resources to extend to producers suchaccommodations that they will be able to carrycotton in warehouses for a reasonable length oftime until it can be marketed advantageously.IR order to accomplish this, he said that thenational and State banks which are members ofthe Federal reserve system should make loanson warehouse receipts for insured cotton at lowrates of interest; that the banks can well af-ford to carry cotton for producers at 6 per centespecially if they are able to rediscount cottonpaper at the Federal reserve banks at a muchlower rate than 6 per cent; that the creditresources of the banks of the country aregreater than ever before in our history and thatthere is no reason why the banks should not, incooperation with the merchants of the South,help the cotton producers with loans at lowrates in the present peculiar situation.

The Secretary said that the Federal ReserveBoard had a right to determine the rate ofinterest which the Federal reserve banks can

charge member banks on notes or loans securedby insured and warehouse cotton rediscountedwith Federal reserve banks. He has been un-able to consult his colleagues of the FederalReserve Board on account of his absence fromWashington but feels confident of their coopera-tion in every reasonable way.

Secretary McAdoo said that if it should ap-pear, however, that the object in view can beaccomplished with greater efficiency to the cot-ton producers, the merchants and the banks ofthe South by depositing Government funds inthe national banks direct instead of in theFederal reserve banks he would take thatcourse and make deposits in such nationalbanks as would give him the assurance that themoney so deposited or the credit based thereonwould be loaned on cotton insured or ware-housed and at a rate of interest not to exceed6 per cent.

The Secretary said he believed that therewas no occasion for alarm about the future ofcotton and that if the bankers and merchantswould cooperate with each other and with thecotton producers of the South in a spirit ofpatriotism and mutual regard for each other'swelfare the situation could be handled withhappy results to all concerned. He expressedthe earnest hope that this would be done.

Digest of Warehouse Laws.

There has been prepared by the FederalReserve Board a digest of the laws affectingwarehouse receipts in the Southern States.This is particularly interesting in connectionwith the handling of the cotton crop and isgiven below.

Alabama.—Warehouse receipts not stamped"not negotiable" may be transferred byindorsement and any person to whom theyare transferred must be deemed and taken tobe the owner of the things or property thereinmentioned as far as to give validit}r to anypledge, lien, or transfer, made or created byany person, with exception of following:

(1) Lien of landlord for rent or advances.(2) Lien created by contract, of which notice

is given by registration as prescribed by law.Arizona.—Warehouse receipts are made

negotiable by law and the holder is deemed theowner and in actual possession of propertycovered by receipt. Hence, he is protectedagainst subsequent liens.

Arkansas.—The holder of a negotiable receiptacquires such title to the goods as the person


SEPTEMBER 1,1915. FEDERAL RESERVE BULLETIN. 261

negotiating the receipt to him had, or had theability to convey, to a purchaser in good faithand for value, and, also such title to the goodsas the depositor or person to whose order thegoods were to be delivered by the terms of thereceipt had, or had the ability to convey to apurchaser in good faith for value and the directobligation of the warehouseman to hold pos-session of the goods for him according to theterms of the receipt. Title subject to lien oflandlord or laborer with or without notice onpart of purchaser that crop was grown onleased premises. Transferee of receipt getsno greater right than purchaser of cottonwhere it is actually delivered.

Florida.—Warehouse receipt negotiable byindorsement, which shall transfer to indorseetitle, right of possession, and remedies of eachindorser. Such receipt may be deposited ascollateral security. Does not make baileewarrantor of title.

Georgia.—Title to cotton in bonded publicwarehouses passes to purchaser or pledgee ofwarehouse receipt by delivery of receiptproperly indorsed.

NOTE.—Bill pending before present legisla-ture with a reasonable prospect of early pas-sage.

Illinois and Missouri.—The holder of a negoti-able receipt acquires such title to the goods asthe person negotiating the receipt to him had,or had the ability to convey, to a purchaser ingood faith and for value, and also such title tothe goods as the depositor or person to whoseorder the goods were to be delivered by theterms of the receipt had, or had the ability toconvey to a purchaser in good faith for valueand the direct obligation oi the warehousemanto hold possession of the goods for him accord-ing to the terms of the receipt. Transferee ofreceipt has no greater rights than purchaserwhere cotton actually delivered. Landlord'slien is good against transferee if he had knowl-edge that crop was grown on leased premises orif he had information which, if followed, wouldhave furnished him such knowledge.

Indiana and Kentucky.—Warehouse receiptsare negotiable and transferable by indorsement,in blank or by special indorsement, and withlike liability as bills of exchange now are andwith like remedy thereon. Transferee of re-ceipt has no greater rights than purchaser ofcotton where actual delivery is made. Land-lord's lien is good against transferee if he hadknowledge that crop was grown on leasedpremises or if he had information which, if fol-lowed, would have furnished him such knowl-edge.

Louisiana.—Public warehouse receipts arenegotiable and transferable by indorsement inblank or by special indorsement and deliveryin the same manner and to same extent as billsof exchange and promissory notes withoutother formality, and transferee or holder hassuch right and title therein and to propertyrepresented thereby as transferrer or depositorof the goods had, subject to lien of warehouse-man for storage or other warehouse charges.Holder of negotiable receipt would thereforehold product as against any subsequent lienholder. Unlawful to levy on warehouse goodsafter negotiable receipt issued against same.

Mississippi.—Warehouse receipt shall beconclusive evidence in the hands of a bona fideholder for value, whether by assignment, pledge,or otherwise, as against the person or corpora-tion issuing the same that the property has beenso received, and shall entitle such bona fideholder for value of such receipt to a delivery ofthe property so stored or deposited or to thevalue thereof. Landlord's lien is good againstpurchaser of crop grown on leased premiseswith or without notice on part of purchaserthat crop was so grown.

North Carolina.—All warehouse receipts arevalid and binding in the hands of all bona fideholders for value without registration, andwhen receipt is negotiable—i. e., has not word"nonnegotiable" on face—title to commodityshall pass to a purchaser or pledgee by indorse-ment and delivery to him of receipt. Pledgeeof warehouse receipt obtains a first lien oncommodity, subject to be displaced by follow-ing causes:

(1) Depositor did not have good title.(2) Valid lien on goods existing at time of

deposit.(3) General creditor of original depositor

who has acquired statutory or contract lienagainst such depositor prior to date of deposit.

(4) Nonexistence of commodity in ware-house, for which, however, warehouseman isliable.

Oklahoma.—Public warehouse receipts arenegotiable and transferable by indorsement inblank, or by special indorsement and delivery,in the same manner and to the same extent asbills of exchange and promissory notes, withoutother formality; and the transferee or holderof receipt shall be considered and held as theactual and exclusive owner to all intents andpurposes, subject only to the charges of ware-houseman for storage, etc. Transferee holdsproduct as against subsequent lien holder, andproducts covered by receipt are not subject toattachment, garnishment, or execution.


262 FEDERAL EESEKVE BULLETIN. SEPTEMBER 1, 1915.

South Carolina.—Negotiable warehouse re-ceipts—i. e., those not having word "non-negotiable" on face—may be transferred byindorsement and delivery to person or pledgeewho shall be. deemed owner of commodities sofar as to give validity to any pledge, lien, ortransfer made or created by such person orpersons. Pledgee of warehouse receipt obtainsa first lien on the commodity which can not bedisplaced except by following:

(1) Want of title in depositor at time ofdeposit.

(2) Valid lien upon commodity obtainedprior to deposit.

(3) Nonexistence of commodity in ware-house for which, however, warehouseman isliable.

Tennessee.—Warehouse receipts are negoti-able by written indorsements tnereon and de-livery in the same manner and to the sameextent as bills of exchange and promissorynotes and no clause condition or limitation,whether written or printed in said receipt shallbe held to limit negotiability or affect the rightof holder. The holder of a negotiable receiptacquires such title to the goods as the personnegotiating the receipt to him had, or had theability to convey, to a purchaser in good faithand for value, and, also such title to the goodsas the depositor or person to whose order thegoods were to be delivered by the terms of thereceipt had, or had the ability to convey to apurchaser in good faith for value and thedirect obligation of the warehouseman to holdpossession of the goods for him according to theterms of the receipt. Title subject to lien oflandlord or laborer with or without notice onpart of purchaser that crop was grown onleased premises. Transferee of receipt gets nogreater right than purchaser of cotton whereit is actually delivered.

Texas.—If negotiable warehouse receipt isasked, party placing products in warehouseshall advise warehouseman of any liens onproducts and if so warehouseman must statenature and amount of lien in blank space onreceipt. Holder of warehouse receipt is deemedthe owner of the product and in possession ofthe property and therefore subsequent liensplaced on the product do not affect the rightsof the holder of a negotiable receipt and productwould not be subject to attachment. Trans-feree's rights subject to landlord's lien, andwarehouseman's lien for charges and insurance.Holder protected unless party taking out re-ceipt committed fraud in concealing liens onproducts at time placed in warehouse.

Virginia.—The holder of a negotiable receiptacquires such title to the goods as the personnegotiating the receipt to him had, or had theability to convey, to a purchaser in good faithand for value, and also such title to the goodsas the depositor or person to whose order thegoods were to be delivered by the terms of thereceipt had, or had the ability to convey to apurchaser in good faith for value and thedirect obligation of the warehouseman to holdpossession of the goods for him according to theterms of the receipt. Where goods deliveredto warehouseman and negotiable receipt issuedthey can not thereafter while in possession ofwarehouseman be attached by garnishmentor otherwise or be levied upon under an exe-cution, unless the receipt be first surrenderedto the warehouseman or its negotiation en-joined. Pledgee of negotiable warehouse re-ceipt obtains a first lien on the commoditywhich can not be displaced except by following:

(1) Want of title or authority to bind ownerin person delivering goods to warehouse.

(2) Valid lien on commodity obtained priorto deposit.

(3) Nonexistence of commodity in warehousefor which, however, warehouseman is liable.

(4) Amount of advances made and liabilityincurred for which warehouseman claims alien which, in case of negotiable receipt, mustbe enumerated on face of receipt.

(5) Charges of warehouseman for storageoccurring subsequent to date of receipt.

Conditions for State Banks and Trust Companies.

After careful consideration, the FederalReserve Board has adopted thefollowing con-ditions to be made a part of certificates ofof approval of applications of State banksand trust companies. They cover mattersabout which inquiry has been made by Fed-eral reserve banks. The conditions are simplyprecautionary and are not to be construed asindicating opposition on the part of the FederalReserve Board to branches of these institutions.

(1) The following condition will be insertedin all certificates of approval:

"That, except with the approval of theFederal Reserve Board, there shall be nochange in the general character of the assetsof, or broadening in the functions now exer-cised by the such as will tend to affectmaterially the standard now maintained .andrequired as a condition of membership."



(2) The following condition will be insertedin all cases where the applying bank or trustcompany is authorized oy its charier or lawsof the State in which it is located to acceptdomestic drafts:

"That the shall in no case accept adomestic draft or bill of exchange unless it isbased on a transaction covering the ship-ment of goods, such transaction to be evi-denced at the time of acceptance by accom-panying shipping documents, or unless it issecured by a warehouse receipt covering read-ily marketable staples and issued by a ware-house independent of the borrower or by thepledge of goods actually sold: And providedfurther, That such bank shall not acceptdrafts or bills of exchange of any kind, domesticor foreign, to an amount which exceeds atany time in the aggregate more than one-halfof its paid-up and unimpaired capital stockand surplus, except that the Federal ReserveBoard may authorize such bank to acceptsuch drafts and bills to an amount not toexceed its capital stock and surplus."

(3)' The following condition will be insertedin all cases where the applying bank or trustcompan}^ is authorized by its charter or thelaws of the State in which it is located toestablish branches:

"That the establishment of additionalbranches, domestic or foreign, be subject tothe approval of the Federal Reserve Board."

Conditions (2) and (3) will not be insertedunless the applying bank has the legal rightto accept domestic drafts or to establishbranches at the time of admission. If, how-ever, the State law subsequently authorizeseither domestic acceptances or branch banks,the member bank could not at that time underthe provisions of condition (1) avail itself ofeither privilege except with the approval ofthe Federal Reserve Board. Condition sim-ilar to (2) and (3) will be imposed when thatsubsequent approval is given.

State Bank Membership.

The last issue of the Bulletin included Cali-fornia among the list of States which havepassed no law expressly authorizing Statebanks to become member banks. That wasan error. The California bank act providesin section 56 that:

Any bank organized and existing under thelaws of this State is hereby authorized andempowered to join or associate itself with any

5554—15 3

"national reserve association of the UnitedStates" or branch thereof, or any plan now orhereafter created or established by act of Con-gress, whether such banking or currency asso-ciation or plan be created by Congress underthe above or any other name. Nothing in thisact shall prohibit any such bank from joiningor associating itself with any such associationor plan or branch thereof nor from investingany part of its capital or surplus in the stockof such association, plan, or branch thereof inaccordance with the terms and provisions ofsuch act of Congress: Provided, however, Thatsuch investment shall in no case exceed theminimum amount required to join or associateitself with such association, plan, or branchthereof. Any bank joining or associating itselfwith such association, plan, or branch thereofshall have and exercise all powers not in con-flict with the laws of this State, which are con-ferred upon any member bank in any such"national reserve association of the UnitedStates" or branch thereof. Such memberbank and its directors, officers, and stockholdersshall continue to be subject, however, to allliabilities and duties imposed upon them byany law of this State and to all the provisionsof the "bank act."

Word has been received recently from theState authorities of New Mexico stating that alaw was passed by the legislature of that State,effective as of June 11, 1915, providing that—

Any incorporated State bank may apply tothe Federal Reserve Board for the right to sub-scribe to the stock of the Federal reserve bankorganized within the Federal reserve districtwhere the applicant bank is located and maybecome a stockholder of such bank and exerciseall of the powers of member banks in accordancewith the provisions of the act of Congress en-titled "Federal Reserve Act;" approved De-cember 23, 1913.

A revised list of those States which have en-acted laws expressly authorizing any Statebank to become a member bank follows:1

California, Idaho, Iowa, Kentucky, Louisiana,Maine, Massachusetts, Michigan, Minnesota,Mississippi, Missouri, Montana, Nebraska, NewJersey, New Mexico, New York, North Dakota,Ohio, Oregon, South Carolina, South Dakota,Texas, Utah, Virginia, and Washington.

i See page 150 of the July BULLETIN for extracts from these laws andpage 218 of the August BULLETIN for a list of those States in which theState authorities have ruled that any State bank may become a memberbank.



GOLD SETTLEMENT FUND.

There has been continued increase in the goldsettlement fund during the past month, thetotal amount held as of August 26 being$55,930,000. The amount of clearings foreach settlement since the report published inthe August issue of the Bulletin is shown inthe following table, the total, to and includingAugust 26, being $333,729,000, and the totalbalances $68,955,000, or 20.66 per cent of thetotal clearings. The net change in owner-ship of the gold held in the fund has amountedto $14,487,000, or 4.34 per cent of the totalclearings.

Amount of clearings.

Previously reportedSettlement of—

July 29Aug. 5Aug. 12Aug. 19Aug. 26

Total

Totalclearings.

$231,996,000

20,021,00025,275,00018,711,00020,027,00017,699,000

333,729,000

Balances.

$50,496,000

3,211,0004,594,0003,549,0003,290,0003,815,000

68,955,000

Changes in ownership of gold.

Federal reserve bank.

BostonNew YorkPhiladelphiaClevelandRichmondAtlantaChicagoSt. LouisMinneapolisKansas CityDallas . . . .San Francisco

Total

Total netdeposits.

$3,230,00015,000,0009,000,0002,470,0003,320,000

260,0005,770,0003,220,0001,400,0003,480,0001,650,0005,680,000

54,480,000

Balance,Aug. 26,

1915.

$4,831,00015,736,0001,244,0003,995,0004,370.0001,415,000

12,326,0002,512,0001,047,0003,523,0003,621,0001,310,000

55,930,000

Increase.

$1,601,000736,000

1,525,000900,000

1,155,0006,556,000

43,0001,971,000

14,487,000

Decrease.

$8,756,000

708,000353,000

4,670,000

14,487,000

The fund was audited on July 26 by a repre-sentative of the Federal Reserve Board and arepresentative of the Federal reserve banks,and a report submitted to the Board and tothe reserve banks, as follows:

JULY 26, 1915.The FEDERAL RESERVE BOARD,

Washington, D. C.SIRS: An audit of the money and accounts of the gold

settlement fund was made by the undersigned on July 26,1915, as of the close of business July 24,1915. All accountswere reconciled and found to agree with the records.

STATEMENT.

Assets:Gold order certificates $46,180, 000Gold order certificates held

by the cashier of theTreasury Department foraccount of the gold settle-ment fund 3, 320,000

$49, 500,000Liabilities:

Credit balances of the Fed-eral reserve banks asshown by the books wereas follows—

Federal Reserve Bank ofBoston 7, 707,000

Federal Reserve Bank ofNew York 11, 501,000

Federal Reserve Bank ofPhiladelphia 1, 671,000

Federal Reserve Bank ofCleveland 4, 256,000

Federal Reserve Bank ofRichmond 3, 212, 000

Federal Reserve Bank ofAtlanta 1,304,000

Federal Reserve Bank ofChicago 9, 329,000

Federal Reserve Bank ofSt. Louis 1,657,000

Federal Reserve Bank ofMinneapolis 1,187,000

Federal Reserve Bank ofKansas City 3, 611,000

Federal Reserve Bank ofDallas 3,698,000

Federal Reserve Bank ofSan Francisco 367, 000

49, 500,000

The gold order certificates were counted.A certificate was obtained from the cashier of the

Treasury Department setting forth that he held for theaccount of the gold settlement fund $3,320,000 in gold ordercertificates.

Statements were prepared of the accounts of the 12Federal reserve banks, and signed verifications were laterobtained.

The records show all transactions in detail, and werefound to be in excellent condition.

Proper safeguards have been provided for the care andcustody of the gold order certificates.

Respectfully submitted.(Signed) J. A. BRODERICK,

Representative Designated by the Federal Reserve Board.H.M.JEFFERSON,

Representative Appointed by the Federal Reserve Banks.


SEPTEMBER 1, 1915. FEDEKAL RESERVE BULLETIN. 265

Gold settlement fund—Summary of transactions July 22,1915, to August 26, 1915.

Federal ReserveBank of—

BostonNew YorkPhiladelphiaClevelandRichmondAtlantaChicagoSt. LouisMinneapolisKansas City. . . .DallasSan Francisco

Total


Boston. . . .New YorkPhiladelphiaClevelandRichmondAtlantaChicagoSt. LouisMinneapolisKansas CityDallasSan Francisco

Total


BostonNew YorkPhiladelphiaClevelandRichmondAtlantaChicagoSt. LouisMinneapolisKansas CityDallasSan Francisco

Total


BostonNew YorkPhiladelphiaClevelandRichmondAtlantaChicagoSt. LouisMinneapolisKansas CityDallasSan Francisco

Total

Balancelast state-

ment,July 22,

1915.

$7,707,0009,651,000

171,0004,256,0002,812,0001,304,0009,329,0001,657,0001,187,0003,611 0003,698,0001,017,000

46,400,000

Balancelast state-

ment,July 29,

1915.

$6,176,00014,733,0001,492,0004,127,0003,419,0001,425,0009,904,0001,013,000

971,0003,476,0003,354,0001,000,000

51,090,000

Balancelast state-

ment,Aug. 5,

1915.

$7,549,00010,915,0001,461,0004,283,0003,348,0001,376,000

12,323,0001,803,0001,389,0003,549,0003,194,000

500,000

51,690,000

Balancelast state-ment Aug.

12, 1915.

$6,352,00012,819,0001,213,0004,295,0003,216,0001,418,000

11,875,0002,042,0001,365,0004,336,0003,257,0001,002,000

53,190,000

Gold. i Transfers.

With-drawn.

$216,666"

500,000

710,000

Deposited.

$3,000,000

700,000

1,700,000

5,400,000

Gold.

With-drawn.

$500,000

500,000

Deposited.

S5o,"6o6"300,000

400,000

350,000

1,100,000

Gold.

With-drawn.

$500,000

500,000

Deposited.

:$i,*5o6,"666"

: : : : . : : : : : : :500,000

2,000,000

Gold.

With-drawn.

"$i6,'666*

10,000

Deposited.

$1,000,000

300,000

1,300,000

Debit.

$1,000,000

111,000

87,000

2,165,000

3,363,000

Credit.

$3,363,000

3,363,000

Transfers.

Debit.

"$1*666," 666"

30,000

1,325,000

2,355,000

Credit.

$1,000,0001,355,000

2,355,000

Transfers.

Debit,

$27 000

1,000,000

1,027,000

Credit.

$1,027,000

1,027,000

Transfers.

Debit.

$57,000

1,340,000

1,397,000

Credit.

.$1,397,000

1,397,000

Settlement of July 29,1915.

Netdebits.

$1,531,000

679,000

93,000

557,000216,000135,000

3,211,000

Totaldebits.

$4,810,0003,958,0002,561,000

358,000997,000261,000

3,410,0002,022,000

296,000794,000547,000

7,000

20,021,000

Totalcredits.

$3,279,0005,677,0001,882,000

439,000904,000493,000

3,985,0001,465,000

80,000659,000703,000455,000

20,021,000

Netcredits.

$1,719,000

81,000

232,000

575,000

156,666448,000

3,211,000

Settlement of Aug. 5,1915.

Netdebits.

$4,173,00031,000

371,00019,000

4,594,000

Totaldebits.

13,339,00010,110,000*3,804,000

276,000920,000461.000

3,647.0001,423,000

115,000-771.000402,000

7,000

25,275,000

Totalcredits.

$3,712,0005,937,0003.773,000'382,000549,000442,000

6,066,0002,213,000

133,000844,000742,000482,000

25,275,000

Netcredits.

$373,000

" " 1 6 6 * 6 6 6 "

2,419,666790,00018,00073,000

340,000475,000

4,594,000


Netdebits.

$1,197,000

" i , " 74*8," 666'

132,000

448,000

24,000

'3,549,000

Totaldebits.

$4,676,0004,783,0003,516,000

203,000656,000393,000

2,425,0001,122,000

63,000250,000611,000

13,000

18,711,000

Totalcredits.

$3,479,0005,660,0001,768,000

215,000524,000462,000

1,977,0001,361,000

39,0001,037,0001,174,0001,015,000

18,711,000

Netcredits.

$877,000

12,000

69,000

239,000

787,000563,000

1,002,000

3,549,000

Settlement of Aug. 19, 1915.

Netdebits.

$1,598,00*0916,00099,000

3,000

312,000

362,000

3,290,000

Totaldebits.

$2,908,0006,566,0002,760,000

137,000946,000449,000

2,152,0002,356,000

78,000865,000799,00011,000

Totalcredits.

$3,236,0004,968,0001,844,000

38,0001,878,000

446,0003,172,0002,044,000

115,000503,000

1,039,000744,000

20,027,000 | 20,027,000

Netcredits.

$328,000

932,000

1,020,000

37," 666"

240,000733,000

3,290,000

July 29,1915, bal-ance in

fund afterclearing.

$6,176,00014,733,0001,492,0004,127,0003,419,0001,425,0009,904,0001,013,000

971,0003,476,0003,354,0001,000,000

51,090,000

Aug. 5,1915, bal-ance in

fund afterclearing.

$7,549,00010,915,0001,461,0004,283,0003,348,0001,376,000

12,323,0001,803,0001,389,0003,549,0003,194,000

500,000

51,690,000

Aug. 121915, bal-ance in

fund afterclearing.

$6,352,00012,819,0001,213,0004,295,0003,216,0001,418,000

11,875,0002,042,0001,365,0004,336,0003,257,0001,002,000

53,190,000

Aug. 19,1915, bal-ance in •

fund afterclearing.

$6,680,00012,618,0001,297,0004,196,0004,148,0001,358,000

12,895,0001,730,0001,402,0003,974,0003,487,000

695,000

54,480,000


266 FEDERAL RESEKVE BULLETIN. SEPTEMBER 1, 1915.

Gold settlement fund—Summary of transactions July 22,1915, to August 26, 1915—Continued.

Federal KeserveBank of—

BostonNflw YorkPhiladelphiaClevelandRichmondAtlantaChicagoSt. LouisMinneapolisKansas CityDallasSan Francisco

Total

Balancelast state-

ment,Aug. 19,

1915.

$6,680,00012,618,0001,297,0004,196,0004,148,0001,358,000

12,895,0001,730,0001,402,0003,974,0003,487,000

695,000

54,450,000

Gold.

With-drawn. Deposited.

"§\, m\ 666"

150,666

300,000

1,450,000

Transfers.

Debit.

$10,0005,000

55,666100,000

300,000400,00037,000

787,000

1,694,000

Credit.

$1,542,666"

ioo,666

16,666"

37,666

5,000

1,094,000


Netdebits.

$1,839,000

1,6*3,666301,000

""*479; 656*

55,00088,000

3,815,000

Totaldebits.

$3,577,0003,820,0003,193,000

946,000894,000384,000

2,566,0001,280,000

98,0003S6,000553.000

2.000

17,699,000

Totalcredits.

$1,738,0005,401.0002,140,000

64% 000966,000496,000

2,087,0002,062,000

43.000298,000724,000

1,099,000

17,699,000

Netcredits.

$1,581,000

72,000112,000

782,000

171,0001,097,000

3,815,000

Aug. 26.1915, bal-ance in

fund afterclearing.

$4,831,00015,736,0001,244,0003,995,0004,370,0001,415,000

12,326,0002,512,0001,047,0003,523,0003,621,0001,310,000

55,930,000

BostonNew YorkPhiladelphia..ClevelandRichmondAtlantaChiraroSt. LouisMinneapolis...Kansas City. . .DallasSan Francisco.

DISCOUNT RATES.

Discount rates of each Federal reserve bank in effect August 26, 1915.

Date oflast

change ofrate.

Aug. 9July 22June 25Feb. 6June 25Apr. 30Jan. 23June 25May 18Aug. 13Aug. 5

...do

Maturitiesof 10 daysand less.

I

Maturitiesof over 10to 30 days,inclusive.

Maturitiesof over 30

to 60 days,inclusive.

Maturitiesof over 60to 90 days,inclusive.

Agricul-tural andlive-stockpaper over

90 days.

Trade acceptances.

To 60 days,inclusive.

Over 60to 90 days,inclusive.

?

Authorized rate for acceptances, 2 to 4 per cent.On March 10 the Federal Keserve Board fixed the following rates for rediscounts between Federal reserve banks:

3J per cent for maturities of 30 days or less; 4 per cent for maturities of over 30 days to 90 days, inclusive.


SEPTEMBER 1, 1915. FEDEKAL EESERVE BULLETIN. 267

INFORMAL RULINGS OF THE BOARD.Below are reproduced letters sent out from

time to time over the signatures of the offi-cers of the Federal Reserve Board, which con-tain information believed to be of generalinterest to Federal reserve banks and memberbanks of the system:

Stock Subscription of Insolvent Bank.

Your letter of July 3, with respect to theassessment of your bank for expenses, has beenreferred to counsel of the Board for opinion ofthe legal status of the matter. He has nowfiled a memorandum in which he states:

" I t appears that two banks, both of whichare members of the Federal reserve bank, arein the hands of a receiver; that these bankshave subscribed to 690 shares of the stock of theFederal reserve bank, but have only paid intheir first installment, amounting to $11,500.

"It is assumed from the letter of the Federalreserve agent that no repayments have beenmade to these insolvent banks, so that thebooks of the Federal reserve bank will showthe subscription of these banks as a part of thesubscribed capital of the Federal reserve bank.

" I t further appears that those banks whichwere transferred from one district to the otherwill subscribe to 319 shares of stock of theFederal reserve bank. The transfer of themembership of these banks was under an orderof the Federal Reserve Board made effectiveas of July 1, 1915. Section 10 of the Federalreserve act provides in part as follows: 'Thatthe Federal Reserve Board shall have power tolevy semiannually upon the Federal reservebanks, in proportion to their capital stock andsurplus, an assessment sufficient to pay itsestimated expenses/ etc.

"As the Federal reserve bank is liable to theinsolvent banks for their cash-paid subscrip-tions, and will not have the benefit of theirsubscriptions during the period the assessmentis intended to cover, I can see no legal objec-tion to permitting the Federal reserve bankto deduct from their subscribed capital stockthe 690 shares subscribed to by this two banks.In such case the Federal reserve bank of Rich-mond should be permitted to deduct the 319shares subscribed by the banks transferred toyour district, and this should be added to the

subscribed capital stock of the Federal reservebank."

I think this covers the points raised in yourletter, but if there are others on which youwish to be informed, please advise me.

JULY 28, 1915.

Dividends to Insolvent Banks.

Section 6 of the Federal reserve act pro-vides in part that—

"If any member bank shall be declaredinsolvent, and a receiver appointed therefor,the stock held by it in said Federal reservebank shall be canceled, without impairment ofits liability, and all cash-paid subscriptions onsaid stock, with one-half of one per centumper month from the period of last dividend,not to exceed the book value thereof, shall befirst applied to all debts of the insolvent mem-ber bank to the Federal reserve bank, and thebalance if any, shall be paid to the receiverof the insolvent bank.7'

You are advised that there seems to be noauthority vested in any Federal reserve bankto pay interest on cash-paid subscriptionsrefunded to any member bank which has beendeclared insolvent except under the provision"one-half of one per centum per month fromthe period of last dividend." The intent ofthis provision appears to be clearly that theinsolvent member bank shall have its propor-tion of any dividends which may have beenactually earned from the declaration of thelast dividend to the date of the cancellationof the stock held by it in the Federal reservebank.

As the Federal reserve bank of your cityhas not declared any dividends nor earnedany at this date it seems that you are entitledto receive only an amount equivalent to theactual cash-paid subscriptions, provided, ofcourse, all debts of the insolvent member bankto the Federal reserve bank have been paid.

As the stock held by the insolvent memberbank in the Federal reserve bank has beencanceled it is not seen how you as receiver areentitled to participate in the future earningsof the bank.

AUGUST 20, 1915.



Purchase of Municipal Bonds.

Your letter of July 19, in which you ask forauthority to take all or any part of an issue ofmunicipal bond3 up to $100,000, was presentedto the Federal Reserve Board at its meetingyesterday. I was directed to say to you that,in the judgment of the Board, each such caseshould be separately presented, and passedupon on its own merits.

JULY 29, 1915.

State Bank Branches. ., BlHYour letter of July 22 regarding the policyof the Board as to branches established byState member banks was presented to theBoard at its meeting yesterday morning, and Iwas instructed to say that the Board feels thatits recent letter to you on that subject probablycovers the situation sufficiently.

Answering your letter specifically, it wouldnot be the intent of the Federal Reserve Board,should you accept the proposed conditions, todeny to you or any other institution the right toadd additional branches, except for reasonssimilar to those set forth by you which mightinfluence your State banking department towithhold consent.

Trusting that this makes the position of theBoard sufficiently clear.

JULY 29, 1915.

When Applicant Bank is Member.

~iTY"our letter of July 28, asking a ruling as tothe step which consummates the admittanceof a member bank into the Federal reservesystem, has had consideration.

The date of the application and of its ap-proval by the Board would seem to be imma-terial, and it is felt that a member bank be-comes actively identified with the Federalreserve system when its stock in the Federalreserve bank has been issued and paid for andthe required reserve deposited.

AUGUST 11, 1915.

Crosstie and Lumber Exports.

I have received your letter of August 5,inclosing a communication relating to the dis-count of bills drawn for the purpose of pro-viding funds with which to export certaincross ties and lumber to Cuba.

As I understand the proposed transaction,the paper to be presented to you would be adraft drawn by certain brokers in Florida onsome New York firm, the proceeds to be usedfor the purchase and shipment of goods toCuba. The draft would be indorsed and pre-sented to you for rediscount by your memberbank before acceptance, and therefore wouldseem clearly within the provisions of section13, relating to the discount of commercialpaper, and regulation B, series 1915, if properlycertified to by the member bank as required inparagraph III of that regulation.

I do not understand how the question offoreign acceptances presents itself to your bankin this case, because at the time you receivethe draft for discount it is not accepted andwould come within the regulation quoted above.Even after acceptance it would seem to beeligible for rediscount as an acceptance basedon the exportation of goods as required by theact.

Under the facts as presented you would, ofcourse, charge the prevailing rate for 90-daycommercial paper and not that for accept-ances.

AUGUST 12, 1915.

Notes Used for Purchase of Merchandise.

I wish to acknowledge receipt of your letterof August 12, submitting a question referredto you by one of your member banks relatingto the eligibility of notes secured by collateralthe proceeds of which were used for the pur-chase of merchandise in the due course ofbusiness.

You are advised that the counsel for theBoard is of the opinion that any notes theproceeds of which have been used or are to beused for commercial purposes and which other-wise comply with the terms of regulation B,series 1915, are eligible for rediscount by yourbank.

The fact that commercial paper has the| additional security of collateral in no way

affects the eligibility of such paper, providingit complies otherwise with the provisions ofthe act and the regulations of the Board.

AUGUST 13, 1915.

Purchase of Government Bonds in Open Market.

Receipt is acknowledged of your letter ofAugust 10, and in reply you are advised that


SBrTBMBBB 1, 1915. FEDERAL EESERVE BULLETIN. 269

Federal reserve banks may, under the provi-sions of section 14, purchase Government bondsin, the open market, but the provisions ofsection 18, specifying that a Federal reservebank may be required to purchase such bondswhen offered for sale through the Treasurer ofthe United States by a member bank, do notbecome effective until December 23, 1915.

AUGUST 11, 1915.

No Authority to Act as Guardian.

The Federal reserve act authorizes theBoard to grant permits to national banks toact only as trustee, executor, administrator,and registrar of stocks and bonds, and not asguardian. Consequently, it is impossible forthe Board to give any national bank authorityto act as guardian. Incidentally, under thelaws of New York, permits can be granted tonational banks to act only as registrar of stocksand bonds.

JULY 21, 1915.

Agreements for Acceptance Credits.

The Federal Reserve Board and the Comp-troller of the Currency, at the instance of theFederal Reserve Bank of New York, have con-sidered the question whether a national bankcan enter into an agreement under which a lineof acceptance credit may be given by such bank,the credit extending for a period of nine monthsbut the individual drafts drawn upon the ac-cepting bank to be payable at 90 days7 sightand not to exceed the total amount specifiedin the letter of credit, and after referring thequestion to counsel of the Board for an opinionissued a ruling in substance to the effect that anational bank is authorized to enter into anagreement having more than six months torun, by the terms of which it obligates itself fora period of time specified in the agreement toaccept drafts drawn upon it, provided suchdrafts grow out of transactions involving theimportation or exportation of goods and thatthe individual drafts have not more than sixmonths' sight to run.

The restrictions of section 13 of the Federalreserve act would, of course, limit the totalamount of acceptances made by any one bank,including those described, to an amount equalin the aggregate to not more than one-hall ofthe paid-up and unimpaired capital stock andsurplus of the member bank, except that byauthority of the Federal Reserve Board, undergeneral regulation of the Board, a member bankmay accept for an amount not to exceed theamount of its capital stock and surplus.

It should be understood, of course, that the10 per cent limitation imposed by section* 5200of the United States Revised Statutes is notintended to apply to the mere acceptance ofa bill of exchange, but that the provisions ofsection 5200 of the United States RevisedStatutes would apply to the indebtednessarising between the drawer of the bill and theaccepting bank in case the drawer fails, tofurnish funds with which to meet the accept-ance at maturity.

It should also be understood that the limita-tion of six months specified under section 13 ofthe Federal reserve act applies to the draft butis not construed as applying to the agreementor letter of credit under which the draft isdrawn. This limitation of six months does,however, apply to specific drafts drawn undersuch agreements or letters of credit, and con-sequently, if the terms of the agreement orletter of credit imposed upon the holder forvalue of the draft any obligation to renew suchdraft at maturity so that the original draft withthe renewal thereof would remain an obligationof the accepting bank for a period exceedingsix months, such agreement would be ultravires.

The distinction emphasized in connectionwith this ruling is this: While a letter of creditor credit agreement may lawfully be made by anational bank which will extend by its termsfor a period exceeding six months, the agree-ment must not be of such a character as willimpose upon the holders of drafts acceptedthereunder any obligation to renew such draftsso that the period of acceptance shall exceedsix months in duration as to any specifieddraft.



Intradistrict Clearing System.

There have been 149 additions and 14 with-drawals from the intradistrict clearing systemsince the publication of the list of banks in thesystem in the August Bulletin.

Additions and withdrawals are shown in thefollowing table:

District.

No. 1. BostonNo. 2. New YorkNo. 3. PhiladelphiaNo. 4. ClevelandNo. 5. RichmondNo. 6. AtlantaNo. 7. ChicagoNo. 8. St. LouisNo. 9. MinneapolisNo. 10. Kansas CityNo. 11. DallasNo. f2. San Francisco

Addi-tions.

02120

10152

1701

99

With-drawals.

112110501020

The net gain of the system is 135 banks.The list by districts is as follows:

DISTRICT NO. 1.Withdrawn:

Merchants National Bank, St. Johnsburg, Vt.

DISTRICT No. 2.Additions:

Broadway Trust Co., New York City.First National Bank, Dunellen, N. J.

Withdrawn:Manufacturers National Bank, Newark, N. J.

DISTRICT NO. 3.Additions:

First National Bank, Canton, Pa.Withdrawn:

First National Bank, Ralston, Pa.First National Bank,.Wellsboro, Pa.


First National Bank, Paris, Ky.Lebanon National Bank, Lebanon, Ohio.

Withdrawn:First National Bank, Plumville, Pa.

DISTRICT No. 5.Withdrawn:

National Bank of Fairfax, Fairfax, Va.


First National Bank, Ozark, Ala.First National Bank, Midland City, Ala.Ben Hill National Bank, Fitzgerald, Ga.National Bank of Tifton, Tifton, Ga.

Additions—Continued.Citizens National Bank, Washington, Ga.First National Bank, Ad el, Ga.Commercial National Bank, New Orleans, La.Whitney-Central National Bank, New Orleans, La.First National Bank, Meridian, Miss.Manufacturers National Bank, Harriman, Tenn.


Second National Bank, Belvidere, 111.First National Bank, Chad wick, 111.Inter-State National Bank (Hegewisch), Chicago, 111.First National Bank, Dolton, 111.German-American National Bank, Pekin, 111.Ridgely National Bank, Springfield, 111.Citizens National Bank, Sycamore, 111.First National Bank, Tipton, Ind.City National Bank, Clinton, Iowa.Leavitt & Johnson National Bank, Waterloo, Iowa.First National Bank, Traverse City, Mich.First National Bank, Columbus, Wis.Commercial National Bank,, Madison, Wis.First National Bank, Madison, AVis.Germania National Bank, Milwaukee, Wis.

Withdrawn:Commercial German National Bank, Peoria, 111.National Exchange Bank, Anderson, Ind.First National Bank, Hammond, Ind.First National Bank, Boswell, Ind.First National Bank, Newton, Iowa.


American National Bank, Rogers, Ark.Farmers National Bank, Danville, Ky.


First National Bank, Little Falls, Minn.Merchants National Bank, Sauk Center, Minn.First National Bank, Slayton, Mian.Commercial National Bank, Bozeman, Mont.Silver Bow National Bank, Butte, Mont.First National Bank, Cut Bank, Mont.State National Bank, Miles City, Mont.First National Bank, Roundup, Mont.First National Bank, White Sulphur Springs, Mont.Merchants National Bank, Dickinson, N. Dak.First National Bank, Hillsboro, N. Dak.First National Bank, Lisbon, N. Dak.First National Bank, Rolla, N. Dak.The National Bank of Wahpeton, Wahpeton, N. Dak.First National Bank, Bristol, S. Dak.First National Bank, Fairfax, S. Dak.First National Bank, Gary, S. Dak.

Withdrawn:i First National Bank, Le Roy, Minn.


SEPTEMBER 1, 1915. FEDEEAL KESERVE BULLETIN. 271


First National Bank, Nogales, Ariz.Withdrawn:

Citizens National Bank, Arlington, Tex.Western National Bank, Fort Worth, Tex.

DISTRICT NO. 12.

CALIFORNIA.Additions:

Anaheim National Bank, Anaheim.First National Bank, Banning,First National Bank, Burbank.First National Bank, Chico.First National Bank, Clovis.First National Bank, Coalinga.National Bank of Coalinga, Coalinga.First National Bank, Compton.First National Bank, El Centre.First National Bank, Escondido.First National Bank, Eureka.Citrus National Bank, Exeter.First National Bank, Exeter.First National Bank, Fort Bragg.Farmers' & Merchants' National Bank, Fullerfcon.First National Bank, Fullerton.Farmers' & Merchants' National Bank, Han ford.Healdsburg National Bank, Healdsburg.First National Bank, Hollywood.First National Bank, Imperial.Farmers' & Merchants' National Bank. Livermore.First National Bank, Lodi.Exchange National Bank, Long Beach.National Bank of Long Beach, Long Beach.Continental National Bank, Los Angeles.First National Bank, Los Banos.Farmers & Merchants National Bank, Merced.First National Bank, Merced.First National Bank, Oakdale.First National Bank, Ocean Park.First National Bank, Orland.First National Bank, Oroville.First National Bank, Palo Alto.First National Bank, Paso Robles.Sonoma County National Bank, Petalmm.First National Bank, Pleasanton.Red Bluff National Bank, Red Bluff.Redding National Bank, Redding.First National Bank, Riverb&nk.First National Bank, Salinas.San Bernardino National Bank, San Bernardino.American National Bank, San Francisco.Anglo & London Paris National Bank, Sar. Francisco.First National Bank. San Francisdo.Croker National Bank, San Francisco.Merchants National Bank, San Francisco.Mercantile National Bank, San Francisco.First National Bank, San Jacinto.Marin County National Bank, San Rafael.California National Bank, Santa Ana.First National Bank, Santa Ana.First National Bank, Santa Barbara.

5554—15—-4

| Additions—Continued.I Farmers' & Merchants' National Bank, Santa Cruz.; Merchants' National Bank, Santa Monica.

Santa Rosa National Bank, Santa Rosa.I Sonora National Bank, Sonora.i National Bank of Tulare, Tulare.i Pajaro Velley National Bank, Watsonville.

Wliittier National Bank, Whit-tier.i First National Bank, Willows.

First National Bank, Winters,i First National Bank, Woodland.

; ARIZONA.I Additions:

First National Bank, Yuma.

IDAHO.i Additions:

First National Bank, American Falls.First National Bank, Ashton.First National Bank, Briggs.First National Bank, Burley.First National Bank, Cottonwood.First National Bank, Mountain Home.

OREGON.Additions:

Astoria National Bank, Astoria.First National Bank, Baker City.Harney County National Bank, Burns.Ben ton County National Bank, Oorvallis.First National Bank of Southern Oregon, Grants Pass.,First National Bank, Hermiston.Hillsboro National Bank, Hillsboro.First National Bank, Klamath Falls.La Grande National Bank, La Grande.First National Bank, Lebanon.McMinnville National Bank, McMinnville.First National Bank, Merrill.First National Bank, Milton.Ontario National Bank, Ontario.First National Bank, Portland.Roseburg National Bank, Roseburg.First National Bank, St. Johns.First National Bank, Tillamook.

Additions:First National Bank, Nephi.Utah National Bank, Ogden.

WASHINGTON.Additions:

First National Bank, Auburn.Bellingham National Bank, Bellingha-m.First National Bank, Burlington.Farmers National Bank, Colfax.Montesano National Bank, Montesano.First National Bank, North Yakima.Yakima National Bank, North Yakima.National Bank of Palouse, Palouse.United States National Bank, Vancouver.Baker-Boyer National Bank, Walla Walla.First National Bank, White Salmon.



Trustee Powers.

Applications from the following banks forpermission to act under section 11 (k) of theFederal Reserve Act have been approved sincethe August Bulletin, as follows:

DISTRICT NO. 1.

Trustee and registrar of stocks and bonds:Amoskeag National Bank, Manchester, N. H.

Trustee, executor, administrator and registrar of stocks andbonds:

Pittsfield National Bank, Pittsfield, Mass.First National Bank, Marlboro, Mass.City National Bank, Bridgeport, Conn.City National Bank, South Norwalk, Conn.

DISTRICT No. 2.

Registrar of stocks and bonds:Harriman National Bank, New York City.

DISTRICT No. 3.

Trustee, executor, administrator, and registrar of stocks andbonds:

First National Bank, Pen Argyle, Pa.First National Bank, Princeton, N. .T.

-DISTRICT No. 4.


Mt. Sterling National Bank, Mt. Sterling, Ky.Trustee and registrar of stocks and bonds:

National City Bank, Akron, Ohio.First National Bank, Hamilton, Ohio.

Trustee:First National Bank, Oakmont, Pa.

DISTRICT NO. 5.


Merchants-Mechanics National Bank, Baltimore, Md.Farmers and Merchants National Bank, Frederick, Md.First National Bank, Oxford, N. C.Central National Bank, Spartanburg, S. C.Empire National Bank, Clarksburg, W. Va.First National Bank, Fairview, W. Va.First National Bank, Grafton, W. Va.Parkersburg National Bank, Parkersburg, W. Va.Fauquier National Bank, Warren ton, Va.

Trustee, executor and administrator:Montgomery County National Bank, Rockville, Md.Madison National Bank, Madison, W. Va.

DISTRICT NO. 6.

Trustee, executor, administrator, and registrar of stocksand bonds:

Exchange National Bank, Fitzgerald, Ga.Trustee, executor and administrator:

First National Bank, Piedmont, Ala.First National Bank, Gadsden, Ala.

DISTRICT No. 7.

Tnir fee, executor, administrator, and registrar of stocks andbonds:

National City Bank, Chicago, 111.First National Bank, Marion, Ind.Howard National Bank, Kokomo, Ind.First National Bank, Independence, Iowa.First National Bank, Stan ton, Iowa.Commercial National Bank, Waterloo, Iowa.

DISTRICT No. 9.

Trustee, executor, administrator, and registrar of stocksand bonds:

First National Bank, Ellendale, N. Dak.First National Bank, Colman, S. Dak.Security National Bank, Sioux Falls, S. Dak.Ashland National Bank, Ashland, Wis.Commercial National Bank, Appleton, Wis.

Trustee, executor, and administrator:Negaunee National Bank, Negaunee, Mich.First National Bank, Webster, S. Dak.

DISTRICT NO. 10.


First National Bank, Kemmerer, Wyo.Trustee, executor, and administrator:

First National Bank, Jewell City, Kans.First National Bank, Utica, Nebr.

DISTRICT NO. 11.


Consolidated National Bank, Tucson, Ariz.Trustee, executor, and register of stocks and bonds:

First National Bank, Fort Worth, Tex.

DISTRICT NO. 12.


Bank of California, N. A., San Francisco, Cal. (Reg-istrar only in California).

Beilingham National Bank, Bellingham, Wash.National Bank of Commerce, Seattle, Wash.


SEPTEMBER 1, 1915. FEDEBAL RESERVE BULLETIN. 273

LAW DEPARTMENT.The following opinions of counsel have been j

authorized for publication by the Board sincethe last edition of the Bulletin:

Liability of Stockholders of State Banks Which Have |Become Member Banks. j

i

There is no provision in the Federal reserve act; imposing jdouble liability on the stockholders of State banks or trust jcompanies which become members of a Federal reserve Ibank. j

JUKE 5, 1915. jSIB: The question has been raised whether or j

not the stockholders of a State bank or trustcompany which becomes a member of the Fed-eral reserve system are, by reason of such mem-bership, subject to the double liability pro- jvided for national banks in section 5151,Revised Statutes.

This section reads in part as follows: !

The shareholders of every national banking jassociation shall be held individually responsi- jble, equally and ratably, and not one for an-other, for all contracts, debts, and engage-ments of such association, to the extent of theamount of their stock therein, at the par valuethereof, in addition to the amount invested insuch shares * * *.

Section 9 of the Federal reserve act, relatingto State banks and trust companies which aremembers of the Federal reserve system, pro-vides that such banks shall be subject to theprovisions of sections 5188, 5200, 5201, 5208,5209 and to certain other Federal laws. Nei-ther section 9 nor any other section of the Fed-eral reserve act provides that such bank shallbe subject to the provisions of section 5151above referred to. In the absence, therefore,of any affirmative enactment to this effect, itis clear that State banks or trust companieslocated in a State the laws of which do notprovide that the stockholders shall be subjectto double liability, may become members ofthe Federal reserve system without subjectingtheir stockholders to this liability.

In this connection, however, it may be properto call attention to the fact that section 2 of theFederal reserve act provides that—

"The shareholders of every Federal reservebank shall be held individually responsible* * * for all contracts, debts, and engage-ments of such bank to the extent of the amountof their subscriptions to such stock at the parvalue thereof in addition to the amount sub-scribed/'

This provision subjects the State bank ortrust company which becomes a member toliability double the amount of their subscrip-tion to the stock of the Federal reserve bank,but this imposes no individual liability on theshareholders of such State bank or trust com-pany.

Respectfully,M. C. ELLIOTT, Counsel.

To Hon. C. S. HAMLIN,Governor Federal Reserve Board,.

Deposits of Gold or Lawful Money by a Federal ReserveAgent with the Federal Reserve Board.

Gold, gold certificates, or lawful money deposited hythe Federal reserve bank with its Federal reserve agent forthe purpose of reducing its liability for outstanding notesmay legally be deposited by such agent with the FederalReserve Board.

JUNE 23, 1915.SIR: The question has been raised whether

gold, gold certificates, or lawful money depos-ited by a Federal reserve bank with its Federalreserve agent for the purpose of reducing itsliability for outstanding Federal reserve notes,may legally be deposited by such agent to hiscredit with the Federal Reserve Board; orwhether a Federal reserve bank may legallyreduce its liability for outstanding notes bytransferring funds held in its name in the goldsettlement fund to the credit of the Federalreserve agent.

Section 16 provides that "The Federal re-serve agent shall hold such gold, gold certifi-cates, or lawful money available exclusively forexchange for the outstanding Federal reservenotes when offered by the Federal reservebank of which he is a director."

This section indicates that Congress intendedthe funds deposited with the Federal reserveagent in this manner to be held " available''



exclusively for the exchange of outstandingFederal reserve notes when offered by the Fed-eral reserve bank. The main question forconsideration is, therefore, whether funds de-posited with the Federal Reserve Board to thecredit of the Federal reserve agent—whetherby transfer of credit by the Federal reservebank or by actual deposit of the Federal reserveagent—are funds held by the agent "available77

for the exchange specified in this section.The wording of the act does not indicate that

Congress intended to require the Federal re-serve agent to hold these funds actually in hisown possession or in a vault under his charge.If the funds are "available" when required bythe agent to effect the transfer for which theyare intended by the act, it would seem thatboth the spirit and letter of the law aro com-plied with.

Under the proposed plan each Federal re-serve agent will open an account with theFederal Reserve Board and, instead of keepingthe gold or gold certificates in his own posses-sion, will make a deposit to his credit with theBoard. Telegraphic directions will be sufficientto make a transfer of the credit to the Federalreserve bank in any case where notes are offeredto the Federal reserve agent by such Federalreserve bank for the purpose of exchange.

This plan, like the act, presupposes that thebank will itself redeem the notes when pre-sented over its counter for redemption. Whensuch notes are then offered to the agent by thebank for exchange, he will, instead of returningthe gold or gold certificates deposited with him,telegraph instructions to the board to makethe transfer to the Federal reserve bank on thebooks of the gold settlement fund.

There would seem, therefore, to be no legalobjection to the proposed plan. As previ-ously stated, the funds are "available" for theexchange, and that is all that is required bylaw, no provision being made as to how andwhere they shall be kept.


To Hon. CHARLES S. HAMLIN,Governor Federal Reserve Board.

Government Depositories.There is nothing in the Federal reserve act which

authorizes the Secretary of the Treasury to use State bankswhich have become member banks as depositories 4oipublic monies generally, though they may be made de-positories for postal savings funds.

JULY 8, 1915.SIR: This office has been requested to give

an opinion on the question of whether or notState banks upon joining the Federal reservesystem become eligible to act as Governmentdepositories for any Government funds otherthan postal savings deposits.

In order to determine this question it is nec-essary to review those acts of Congress whichrelate specifically to the deposit and custodyof public monies. The act of June 3, 1864, asamended, the act of March 4, 1907 (see RevisedStatutes, section 5153) provides in part asfollows:

All national banking associations shall bedepositories of public money under such regu-lations as may be prescribed by the Secretary.

The act of June 25, 1910, Chapter 386, :>6Statutes, 814, prescribes that the funds re-ceived at postal savings depository offices ineach city, town, village, or other locality, shallbe deposited in solvent banks located therein,

! whether organized under national or Statelaws, which are willing to receive such depositsunder the terms of the act and the regulationsmade by authority thereof. The word "bank "as used in the law includes savings banks andtrust companies doing a banking business.(See Regulations for the guidance of qualifiedhanks and others concerned issued ~by the Boardof Trustees, Postal Savings System, effectiveJuly 1, 1913.)

The Federal reserve act, section 15, providesin part that—

The moneys held in the general fund of theTreasury * * * may, upon the direction ofthe Secretary of the Treasury, be deposited inFederal reserve banks; * * * and therevenues of the Government or any part thereofmay be deposited in such banks. * * *No public funds of the Philippine Islands, or ofthe postal savings, or any Government funds,shall be deposited in the continental United



States in any bank not belonging to the systemestablished feythis act: Provided, however, Thatnothing in this act shall be construed to denythe right of the Secretary of the Treasury touse member banks as depositories.

It has been suggested that the proviso lastabove quoted gives to fche Secretary of theTreasury the right to designate State bankswhich become members of the Federal reservesystem as Government depositories. It isclear, however, from an examination of theacts in force prior to the passage of the Federalreserve act, that the Secretary of the Treasurywas without power to designate any bank, otherthan a national bank, as a Government deposi-tory, and while the use of the word " memberbank" in the proviso quoted would seem toindicate that Congress intended to includeState bank members, it failed to affirmativelyvest the power to designate State banks in theSecretary of fche Treasury.

In order, therefore, to reach the conclusionthat State banks may be designated under thelaw, it is necessary to interpret this proviso asan affirmative enactment vesting this right inthe Secretary. Such an interpretation wouldbe clearly contrary to the rules of constructionlaid down by the Supreme Court of the UnitedStates. In the case of Minis v. United States(15 Peters, 423-445), Justice Story, in deliver-ing the opinion of the court, says—

" I t would be somewhat unusual to find en-grafted upon an act making special and tem-porary appropriations any provision which wasto have a general and permanent applicationto all future appropriations. Nor ought suchan intention on the part of the legislature to bepresumed, unless it is expressed in the mostclear and positive terms, and where the lan-guage admits of no other reasonable interpre-tation. The office of a proviso generally iseither to except something from the enactingclause, or to qualify or restrain its generality,or to exclude some possible ground of misin-terpretation of it, as extending to cases notintended by the legislature to be brought withinits purview. A general rule, applicable to allfuture cases, would most naturally be expectedto find its proper place in some distinct andindependent enactment."

This case is cited with approval in the latercase of Austin v. United States (155 U. S., 431).

In the absence, therefore, of any specificprovision in the Federal reserve act vesting inthe Secretary of the Treasury the right todeposit Government funds in State banks whichare members of the Federal reserve system, itseems clear that he has no greater right to des-ignate such banks as depositories than he hadprior to the passage of the Federal reserve act.

This conclusion is further borne out by anexamination of the bill as it passed the Houseand as it was amended by the Senate andadopted in conference. Under the provisionsof the House bill the Secretary was requiredto deposit in Federal reserve banks all fundsexcept funds held for the redemption of circu-lating notes. By the Senate amendment theSecretary is permitted to deposit such funds inFederal reserve banks, and the proviso referredto, read in connection with the context of thissection, was clearly intended merely to author-ize the Secretary to continue to use nationalbanks as Government depositories if in his dis-cretion he finds this necessary or advisable.

I am, therefore, of the opinion that whilethe use of the words "member bank,77 insteadof national bank, in the provision abovequoted, would seem to indicate an intentionon the part of Congress to broaden the powersof the Secretary of the Treasury in this regard,such an interpretation is not consistent withthe rules of construction laid down by ourcourts, and that member banks can accord-ingly be used as depositories to no greater ex-tent than they were used prior to the passageof the act. In other words, State banks be-coming members of the Federal reserve sys-tem may continue to be designated as deposi-tories for postal savings funds, and nationalbanks may continue to be designated as de-positories for such funds and for public moneysgenerally.

Respectfully,M. C. ELLIOTT, Counsel,




Transactions Involving the Importation or Exportation ofGoods.A transaction in order to be the basis of a draft or bill

eligible for acceptance by a member bank must itselfinvolve the importation or exportation of goods. A trans-action, wholly independent of the transaction coveringthe importation or exportation of goods, is not sufficientbasis for an acceptance under the terms of section 13.

JUNE 11, 1915.SIR: The following inquiry has been sub-

mitted to this office for an opinion: A domesticcorporation, which for convenience will bedesignated "Company A," enters into a con-tract with another domestic corporation, desig-nated "Company B," to furnish material to beused by Company B in the manufacture ofproducts which Company B is under contractwith a foreign purchaser to export. Query:Can a national bank accept a draft or bill ofexchange drawn by Company A and accom-panied by the necessary documents ?

In other words, assuming that such anacceptance complies with the other necessaryprovisions of law and the regulations of theBoard made pursuant thereto, can such anacceptance be said to be based upon the impor-tation or exportation of goods ?

The exact language of that part of section 13which is involved is as follows:

Any member bank may accept drafts or billsof exchange drawn upon it and growing out oftransactions involving the importation orexportation of goods.

From the facts stated it does not appearthat Company A, which draws the draft, hasany contract or is under any obligation todeliver the material supplied by it elsewherethan in the United States. There is no privityof contract as between the foreign purchaserand Company A; .on the contrary, CompanyA has an independent contract with CompanyB, bothbeing domestic corporations, and whendelivery of the material in question is made toCompany B and the purchase price paid, thetransaction is completed whether the goods inquestion were exported or not. The mere factthat the material furnished is ultimately in-tended for export in some form can not be said

to merge the two transactions into one and thetransaction between Company A and CompanyB, which is wholly independent of the trans-action between Company B and the foreignpurchaser, could not be said to involve theexportation of the goods in question.

While the language used in section 13, andabove quoted, is broad enough to justify amember bank accepting a draft or bill of ex-change for goods or other articles purchased orproduced in connection with a definite contractfor export, even though the shipment may notbe a continuous or immediate one, it seemsclear that the transaction on account of whichthe draft or bill of exchange is drawn must it-self involve the exportation of the goods inquestion. By analogy the same principlesmust be applied to import transactions.



Deposit of Federal Reserve Notes for Credit or Redemp-tion.

A Federal reserve bank receiving Federal reserve notesissued by another Federal reserve bank may return suchnotes to the issuing bank either for redemption or forcredit.

JULY 30, 1915.SIR: The question has been asked whether a

Federal reserve bank receiving Federal reservenotes issued by another Federal reserve bankhas the option, on returning such notes to theissuing bank, to demand redemption in gold orlawful money or to demand a credit for suchnotes.

Section 16 provides in part as follows:Whenever Federal reserve notes issued

through one Federal reserve bank shall be re-ceived by another Federal reserve bank, theyshall be promptly returned for credit or redemp-tion to the Federal reserve bank through Miichthey were originally issued.

Inasmuch as this section provides that Fed-eral reserve notes are redeemable in gold or



lawful money by the Federal reserve bankthrough which they were issued, it is clear thatthe option to accept a credit in lieu of gold orlawful money is vested in the holder of suchnotes—that is to say, in. the Federal-reservebank returning them to the bank of issue.The returning bank may therefore elect tohave them credited to its account or may re-quire the Federal reserve bank to which theyare sent to redeem them in gold or lawfulmoney.



Waiver of Demand, Notice and Protest.

The acceptor of a bill of exchange is the principal debtor.The law requires that notice of demand and protest begiven to parties secondarily liable in case of dishonor.This right to receive notice is a personal one which maybe waived by the parties entitled thereto—that is, thedrawer and indorsers; but such waiver has no effect onthe acceptor, or principal debtor.

FEBRUARY 13, 1915.SIR : The attached letter raises a question as

to the effect of waiver of demand, notice, andprotest upon the obligation of an acceptor of adomestic draft or bill of exchange discountedby a member bank under the provisions ofsection 13 of the Federal reserve act.

An acceptor of a draft or bill is the partyprimarily liable, and the drawer and endorsersare merely sureties. (4 Am. & Eng. Encl.,470, 2d ed., and cases cited.) In other words,his liability is the same as that of the maker ofa note. He is the principal and not a collateraldebtor. (Blair v. Bank of Tennessee, 11Humph. (Tenn.), 88.)

The requirement that the holder makedemand on the acceptor at maturity and givenotice of dishonor is provided for the benefit of

persons secondarily liable, such as the draweror endorser, and is intended to protect suchsecondary party from the risk of loss whichmay occur because of delay in demanding pay-ment from the party primarily liable or becauseof the fact that he has no notice that his prin-cipal has failed to pay. (Stanley v. McElrath,86 Calit Kep., 457.)

In other words, the law provides that theholder must demand payment at maturity andthat in case the bill is not paid by the acceptoron demand other parties subsequently liablemust be given notice, in order that they maytake any necessary steps to protect themselves.If they are not notified of demand and dis-honor, they are entitled, as sureties, to con-clude that the bill has been paid and that theyare released. The acceptor, or primary debtor,on the other hand, is not entitled to notice, and,unlike the drawer or endorser, is not released onfailure of presentment and demand at maturity.(Daniel on Negotiable Instruments, 4th ed.,vol. 2, p. 52; Hayes v. Northwestern Bank ofVirginia, 9 Gratt (Va.), 127.)

The right of other parties than the acceptorto receive notice is a personal one, and if it isnot desired may be waived, but such waiver canin no way affect any one other than the personmaking it. Such person merely surrenders aright afforded him by the law for his ownprotection.

It seems, therefore, that a waiver of demand,notice, and protest on a bill discounted by amember bank under the provisions of section 13can have no effect on the acceptor of such bill.He remains liable just as though the formalitydue the person making the waiver had beencomplied with.


To HON. CHARLES S. HAMLIN,Governor Federal Reserve Board.



GENERAL BUSINESS CONDITIONS.

General business and banking conditions aredescribed in reports made by Federal reserveagents for the 12 Federal reserve districts.

Below are given in detail digests of conditionsin the various districts substantially as reportedby Federal reserve agents.

DISTRICT NO. 1—BOSTON.

Outside of increased emergency orders, whichare being felt directly or indirectly in all linesof trade, there is practically no change overconditions as reported a month ago. While acomparison of the clearing-house statement ofthe Boston banks shows a slight reduction fromthat of the same period last month, the surplusis still so large and the demand from borrowersso slight that there are no material changes inthe money rates. Money is accumulating inthe country banks, and they not only have beenless frequent borrowers of their city correspon-dents, but have been in the market for outsidepaper.

While early in the month a slight hardeningtendency was noticeable in the money market,the month is ending with conditions much thesame as previously reported. Call money tobrokers is freely offered at 3 per cent; sixmonths commercial paper, 3£ to 4 per cent;loans to country banks, 3 to 4 per cent; townnotes, 2^ per cent; bank acceptances, 2J to 2 |per cent; excess reserve in Boston banks$41,411,000, a decrease of $4,563,000 from thesame date last month. Exports and importsfor the month of July compare with a year agoas follows: Exports for July, 1915, $9,104,337;imports for July, 1915, $12,891,505. Exportsfor July, 1914, $5,246,599; imports for July,1914, $14,886,723.

Unsettled conditions of labor in the largemanufacturing centers is causing much concernto the manufacturers. Attracted by the higherwages paid by certain firms, operatives arechanging and some manufacturers are findingit difficult to keep up their forces.

The retail dealers and the department storesreport their business below normal, largely due

to the cold and rainy weather which prevailedthroughout New England during the first halfof the month. This is the season of the yearwhen the tourist trade is an important factorwith them, and this is much smaller than inprevious years. The shore and mountainresorts are also rather quiet for midsummer.

The farmers and produce men throughoutNew England have had their crops damagedto a considerable extent by the elements, espe-cially hay and corn, and potato rot hasappeared in many sections. The farmers inAroostook County, Me., however, where thepotato yield is the important crop, report thisto be satisfactory.

The reports of the shoe and leather trade,while showing a spotty condition, on the wholeindicate a slight improvement, but outside ofwar orders, business is little better than 60 percent of normal.

The reports from New Bedford and otherfine-goods centers continue favorable, andalthough coarse goods mills are not up tonormal, still they are reasonably well employed.The dye situation and the uncertainty of thenew cotton crop are important factors. Thereports from the woolen-mill centers are quitesatisfactory. Even the general line of goods isreported to be in better demand.

Building operations in New England showcontracts for the year up to August 4 of$108,767,000, the largest amount shown atany time during the past 15 years, with theexception of the year 1912.

DISTRICT NO. 2—NEW YORK.

Wet weather has continued during July. Insome sections the rainfall was 6 inches against1£ inches in July, 1914. Hay was considerablydamaged, but in most places other crops arereported in excellent condition. Retail tradereflected the seasonal quietness, but wholesalehouses reported good business and satisfactorycollections.

Industry was more active, particularly iniron, steel, machinery, wool, and leather.Foreign orders are still the leading stimulus.Labor unrest appeared in various places but



the differences were adjusted in most cases andsome long standing strikes were settled. Sub-urban real estate is dull; in New York City aslow improvement continues.

The New York bank clearings in July totaled$8,695,413,567, an increase of $514,928,945over July, 1914. Other statistics comparedfor the same periods show: Building permitsissued, 50 for structures to cost $4,097,080,a gain of 7 in number but a decrease of $508,270in amount; new incorporations, 84 with author-ized capital $27,400,000, an increase of 28 innumber and $12,330,000 in amount; New YorkState failures, 207 with liabilities of $2,479,510,a decrease of 37 in number and $5,276,715 inliabilities; transactions on stock exchange,bonds $56,489,500, an increase of $4,792,500;stocks 14,326,813 shares, an increase of 6,436,-214 shares and of 3,426,000 shares over June.

A noteworthy volume of business was alsotransacted on other exchanges and some ex-traordinary price movements occurred in anumber of listed and unlisted stocks.

On July 31 the combined figures of themembers of the New York Clearing Houseshow, loans $2,577,944,000, deposits $2,695,-302,000, and excess reserves $180,384,050.Compared with June 26, loans increased$101,647,000, and deposits $112,738,000, butexcess reserves decreased $12,868,000. Moneyrates remained practically unchanged; bankers'acceptances 21

3g- to 2 | per cent, and prime com-mercial paper 3J to 4 per cent with occasionalsales at 3 per cent. Recent noteworthy hap-penings are the Canadian loan of $45,000,000taken in New York, the movement of $19,-534,000 gold and an unstated amount of secur-ities from London to New York via Halifax,and the extreme decline in rates of exchangeon sterling and continental bills. The quo-tations for checks touched: Sterling, 4.64J;francs, 6.02J; marks, 80J; lire, 6. 55.

DISTRICT NO. 3—PHILADELPHIA.There has been little change in business con-

ditions in this district. The expected generalimprovement has not appeared and the out-

look is uncertain. Emergency business con-tinues to give employment to iron and steelconcerns and some wool and worsted mills upto almost full capacity, and it is hoped thatthis will soon create activity in other lines ofbusiness.

Rates for money remain very low; funds con-tinue to accumulate in the banks and excessreserves are higher than ever before. Thereis little demand for time or call money, therates for both being 3J to 4 per cent. Com-mercial paper is scarce, with the rates rangingfrom 3 to 4 per cent.

Crops are generally reported to be satisfac-tory, but heavy rains and continued wetweather have done considerable damage insome sections. The prices of fruits and vege-tables are in many instances low, due appar-ently to underconsumption. As we under-stand the production of these has not beenabove the average. Through certain channelsof distribution not over 50 per cent of goodsare being sold as compared with former years.

Railroad freight traffic is increasing and theroads are employing more men in their shops.Considerable improvement is noted in thecement business, due to some extent to exportsto South America.

Apart from emergency orders, textile millsare operating at 60 to 70 per cent capacity.Hosiery mills are doing a little better thanother lines. The lack of dyestuffs continuesto be a serious factor.

Although a slight increase is reported in coalmining, the mines are onty working on halftime. Petroleum refiners and manufacturersof oil products are working full time; businessis reported good and the prices are advancing.

Shoe manufacturers report business as slug-gish and disappointing. Leather is high andprices are advancing. The grocery trade isdull; canned goods are selling at very lowprices, in some cases below cost. Large tobaccodealers and cigar manufacturers are busy.Drugs and chemicals continue to advance inprice.


280 FEDERAL EESERVE BULLETIN. SEPTEMBER 1, 1915.

The prices of lumber continue low. Newmunicipal work and some increase in the con-struction of factories and dwellings will prob-ably mean a greater consumption of lumberthis year than last year, and the outlook seemsbetter. Hotels and amusement companies atseashore and mountain resorts report businessbelow the average.

Stocks of almost all kinds in dealers' handsare low. Orders for goods are for small quan-tities, suggesting that business is being con-ducted most conservatively. Financial con-ditions everywhere seem to be sound, and thecountry is ready to take advantage of anyimprovement in general trade conditions.

DISTRICT NO. 4—CLEVELAND.

Gains indicated in last month's report are beingheld in this district, although there has been nodecided advance in conditions of 30 days ago.Exceptions are the cloak and knitting industry,where pay rolls in a number of instances arehighest in the history of the business; the glasstrade, especially in pressed ware, and the coalbusiness in Pennsylvania, West Virginia, andKentucky. The coal situation in Ohio stillremains unsatisfactory. Prices and volume inthe other three States are better. Pig iron andbillets are slightly stronger, both in price anddemand. Domestic trade has not reachednormal. Purchasing by railroads and othersources is only intermittent. A shifting in theplacing of business is noted, due to concernsbeing filled with urgent orders and placing theirbusiness in new channels, and corporationswhich have refused foreign orders expect tobenefit by this shifting to a considerable degree.

Deposits show an increase, averaging about 4per cent over the June 23 call of the Comp-troller. Loanable funds are plentiful, butbankers as a rule are not investing in outsidepaper at the low prevailing rates. Paper offeredby note brokers ranges from 3J to 4 per cent.Banks' over the counter rate varies form 4J to6 per cent. Large banks in reserve cities aremeeting the reserve bank rate in lending theircorrespondents.

Pay rolls are larger due to increased produc-tion noted last month.

The crops are suffering somewhat from toomuch moisture, but the falling off is from theanticipated crop. It is likely that the yieldin this district will equal last year's with theaverage price of all farm products 1 per centhigher than a year ago and 11 per cent higherthan two years ago.

Jobbing and retail trade is spotty, but gen-ally a better feeling prevails. Down trade onthe lakes is good on account of demand for oreby reason of resumption of many furnaces.The lake carriers' estimate of 40,000,000 tonswhich navigation down the lakes would receive,has been increased to 43,000,000 tons throughthis new demand from additional furnaces.Difficulty is experienced in getting return car-goes owing to accumulation of coal on docksnot yet entirely absorbed.

Collections in the wholesale and jobbing,trade are slower, due to the late harvest. Retailcollections in the city show improvement.

DISTRICT NO. 5—RICHMOND.

Readjustments compelled or induced bychanged conditions have reached a stage inthis district at which their effect upon itsgeneral trade is beginning to be evident.Labor of all classes seems to be very well em-ployed, while there is a strong demand forskilled mechanics. In the increasing numberof cities within this district in which manufac-turing is developing, pay rolls are "muchheavier than was the case sixty days ago.The retail trade is just beginning to feel theeffect, as wages received to date have in largemeasure been used in liquidating indebtednessincurred during a preceding period of idleness.August is always a quiet month in many retaillines, and the fact that some little improve-ment is noticeable in comparison with Julypossibly reflects a change of conditions whichwill be gradually accentuated.

The larger jobbing distributing centers inthe district are almost as greatly dependentupon cotton as is the territory in which the


SEPTEMBER 1, 1915. FEDERAL BESBKVB BULLETIN. 281

staple is actually grown. In consequence,general trade collections, while comparativelylight as is usual in midsummer, are not dis-appointingly small.

In the Carolinas it seems to be very widelyappreciated that this year there can be noexcuse for a repetition of the experiences oflast fall. The knowledge that there are nowat hand well organized agencies competent toassist in the gradual liquidation of cotton, freefrom undue pressure upon the farmers, hashad a most steadying influence and will makefor the marketing of the staple at prices sub-ject only to the universal law of supply anddemand, and freed from artificial or hystericalconditions. Banking facilities now availableas a matter of routine will, in permitting thegenerous use of cotton as collateral whendesired, enable the growers rapidly to liquidateseasonal indebtedness to mature in the fall,and such a condition should make for theadvantage not only of the banks and merchantsimmediately identified with the farmers, butin turn with distributors of all kinds who havedone business with the cotton section.

Cotton milling has been somewhat unevenin that while many properties have been doingwell, the minority has not fully met its expec-tations.

Some of the more southern of our tobaccomarkets have opened at prices which seem tobe satisfactory to all concerned, and betterthan have been expected in view of a verygenerous stock carried over from last year.The quality is better than was the case lastseason.

From both the Carolinas come reports ofsatisfaction with the result of experiment ingreater diversification than heretofore prac-ticed. Well-distributed rains insure the prom-ise of a generous corn crop of excellent quality,while for the same reason abundant grass andhay crops will insure to those raising live stockvery much better return for their labor thanwas the case last year.

Lumber is least responsive to change for thebetter in all of the larger lines. The trade is

still in a depressed condition, which, while noworse than has been the case for some time inthe past, does not show any improvement.Building trades and woodworkers generally,such as furniture manufacturers, show no spe-cial improvement.

Sections largely given over to white potatoesand vegetable truck have been disappointed inprices, and in consequence liquidation in suchsections has not met expectations.

Coal is working into a better position. Whilethe tonnage has greatly increased, to the bene-fit of labor, the increased profits in the busi-ness have been limited largely to those oper-ating on a generous scale. Continued exportdemands in connection with the gradual butsure increase from domestic manufacturers,promise well for the immediate future.

Money is easy, with little demand for creditexcepting in continuance of indebtedness out-standing since the planting season. Thereshould be some further demand during the next30 days from the cotton territory for use inconnection with saving the crop, but the totalamount of such credit should not be great andcan be easily supplied.

Viewing the situation in the district as awhole, favorable facts and promises, both actu-ally and comparatively with the recent past,so outweigh single unfavorable situations as toinspire a feeling of confidence.

DISTRICT NO. 6—ATLANTA.

The most prominent feature in the businessmovement in the sixth Federal reserve districtis the strong revival of the iron industry of theBirmingham district. The increased opera-tions, due to a steady advance in the price ofpig iron and finished products, have necessi-tated the blowing-in of a number of additionalfurnaces, some of which have been idle formany months. With this renewed activitylabor is fully employed and the effect is beingreflected in the general lines of trade.

Jobbers and merchants are looking forwardto a good fall trade, though their advance buy-



ing is very conservative. With the coming ofSeptember and some definite disposition of thecotton situation the mercantile lines will as-sume a more normal condition.

Rains have been general throughout the dis-trict, crops are reported in good condition, andthe outlook very gratifying.

New Orleans has under construction a mod-ern storage warehouse with a capacity of1,000,000 bales; Atlanta an additional ware-house capacity of 200,000 bales. Reports indi-cate a storage capacity in the district of 3,500,000to 4,000,000 bales, and no fear is felt as to theability to take care of the cotton crop from theviewpoint of storage; nor from a standpoint offinance, in view of the assurance that the cot-ton in the district can be easily financed throughthe Federal reserve bank of Atlanta.

Savannah and Jacksonville report largestocks of naval stores on hand, with slightmovement in the trade. Whilo the domesticlumber market is dull, there has been an in-creased demand for exportation within the past30 days. Plans are under way to organize a$3,000,000 shipbuilding plant, to be locatedat Savannah or Brunswick, Ga.

Passenger and freight traffic do not appearto keep pace with the general improvement,but a more optimistic feeling prevails with therailroads in view of the brightening up of theindustrial situation and the movement of theincoming cotton crop.

DISTRICT NO. 7—CHICAGO.

August developments in the seventh districtshow the general business advance. Weatherconditions have not been entirely seasonableand retarded harvesting and retail activity at afew points. Good pasturage is general. Bet-ter than average crops prevail over the district,but the quality will not average as high asusual. Grains are being marketed in increas-ing volume.

In iron and steel the leading interests haveall of their furnaces and rolling mills runningto full capacity. Other manufacturing linesare making a good showing, particularly in

railroad equipment, hardware, machinery, andbuilding lumber.

Reports from Detroit, Indianapolis, andother automobile centers indicate unusualdemand for new models and enlargement offactory facilities.

The large orders placed throughout the dis-trict, together with the general increased manu-facturing and building activity, have made agood demand for labor at fair wages. Skilledlabor is especially in demand.

General merchandise markets have beenlargely attended by active buyers who areanticipating good fall and winter business.

Easy money conditions favor conservativeexpansion in business. Discount rates remainabout the same, the minimum for commercialpaper being 3J; over the counter loans rangefrom 4 to 5 per cent. Banks are carryingheavy reserves and collections are good.

DISTRICT NO. 8—ST. LOUIS.

Business conditions in this district remainapproximately as outlined in the report for themonth of June. Changes noted have been forthe better, and there seems to be a still moreclearly defined feeling of confidence, especiallyamong wholesale interests. The volume ofunfilled orders on hand apparently is more sat-isfactory than shipments, although early buyersare reported to be liberal in their purchases.This increased demand would seem to indicatean increase of activity in the manufacturinginterests, which should be noticeable in thenext few months. Manufacturers in this dis-trict whose product is available for export con-tinue to feel the demand from foreign sources.

Climatic conditions during July were in themain favorable for the development of agricul-tural products. The temperature was belowthe normal throughout the district with morethan the average rain fall, in the northern sec-tions and less than the normal in the southernsections. Reports from the cotton producingsections indicate an excellent crop with thepercentage of condition well above that of1914 and of the 10-year average. Reports



on the tobacco crop indicate a normal develop-ment to this date. Reports on the wheat cropindicate a satisfactory harvest. Wheat inMissouri seems to have been damaged morethan in any other State of this district, but inMissouri as well as the other States, the cropwill be considerable above the five-year aver-age. Corn reports indicate that the crop willbe considerably larger than in 1914 and willshow a really large gain over the five-yearaverage. The same may be said of the oatsand fodder crops. Reports on the small-fruitcrops and truck-farm products indicate thatthe supply is plentiful, with the prices moderate.

The live-stock market continues to show theactivity which was noted in the last fewreports.

Banking conditions show little or no changeduring the past 30 days. The rate of discountin St. Louis seems to be stationary at from 4£to 5 per cent. There is an active demand forgood commercial paper, but little of this classin the market at a rate to tempt the bankers.

Changes noted in general conditions duringthe past month seem to be for the better. Anincrease of activity is noted in general business,and with the promise of an excellent harvestconditions should continue to improve.

DISTRICT NO. 9—MINNEAPOLIS.

Clear weather during August has been of thegreatest benefit over the ninth district in per-mitting farmers to proceed with the harvest ofa very large small-grain crop. Over the entireterritory the harvest is practically completedand thrashing is in progress in many localities.The first new wheat reached the Minneapolismarket about the middle of the month and wasof fine quality and good color. Grain ship-ments are now beginning to move in larger vol-ume and during the first half of September willbecome very heavy.

The favorable weather during August, withmany clear, warm days, has made a remarkableimprovement in the corn crop throughout theentire district. The southern half of Wiscon-sin, the southern half of Minnesota, and the

corn-growing portion of South Dakota reportthat soil conditions were such that the warmweather brought a substantial growth of thecrop and a period of very rapid development.In these districts corn will not be far below anaverage crop. In the more northerly sectionsof Wisconsin, Minnesota, and North Dakotathere is yet some doubt as to whether corn willmature, but it is making good progress and willhave an opportunity to make a fair crop in caseit is not injured by early fall frosts.

It is early to determine the accuracy of thereports that are now coming in with referenceto the yields of small grains, but there isdependable evidence that the small-grain totalsin the Northwest this year will be very largeand that the crop will average with the bestcrops of former years. There is no furtherapprehension on the score of yield, or quality,and attention is now turning to the marketconditions and particularly to the exportsituation.

Wholesale and retail business is respondingpromptly to the favorable influence of the largecrop and a brisk fall business in all lines isanticipated.DISTRICT NO. 10—KANSAS CITY.

There have been no important changes ingeneral conditions prevailing throughout Dis-trict No. 10 during the past 30 days, except aslightly increased demand for money on ac-count of the harvests and general crop moving,although the thrashing season has been verymuch retarded on account of continued rainsand storms.

Fluctuations in the price of wheat haverather discouraged the marketing of that cereal,which, together with the unseasonable weatherpreventing thrashing of the grain, has made themovement of that commodity slow. Thislikely will cause an increased demand for moneyfor carrying purposes. Deposits in banksthroughout the district are probably greaterthan they were at this time last year, the di-rect result of the sale of live stock, agriculturaland mineral products to supply foreign de-mands therefor.



In the southern portion of the district corn ismade and has proven a record crop, and thegeneral condition of that crop throughout thedistrict will show at least 80 per cent averagestand and yield. The milling industry is thriv-ing and shows continued activity.

The unusually wet summer has produced anexceptionally fine pasturage for stock, and grasscattle are moving to the markets. Sheep andlambs are beginning to move from the ranges tothe Missouri River markets, and are bringingthe highest prices ever known for this season ofthe year. The horse and mule market con-tinues active, and at one small town in Mis-souri not long since over 25,000 of these animalshad been collected for shipment.

The greatest fruit crop ever raised in thesouthern portion of this district has been largelylost because of lack of canning facilities, andmuch of the peach crop will go to waste. Or-chardists in some parts of the territory are feed-ing the fruit to hogs and are giving it away toall comers.

Coal mining shows an increased activity byreason of the demand for early storage coal andin anticipation of the thrashing season, whilelead and zinc mining shows unusual life on ac-count of prevailing high prices. An added im-petus has been given the oil industry on ac-count of a 20 cents per barrel increase in price,and if present prices continue the output ofthis commodity will become normal at an earlydate.

The district is practically free of labor dis-turbances and all classes of skilled and un-skilled labor are generally employed.

DISTRICT NO. 11—DALLAS.

August has proven a most unfavorablemonth for this district. Almost the entireterritory has suffered from drought and blister-ing weather. This served to cut short thecorn crop over very considerable areas, par-ticularly in north and northeast Texas andOklahoma. It has tended materially to reducethe yield of cotton. The chief sufferers arethe central and north central belts, which pro-

duce the great bulk of the staple. No rain fellhere for almost six weeks;.* Rain has, however,recently fallen, averaging from 3 to 7 inchesover almost the entire district. Open cottonhas been heavily damaged in the southern endof our territory. By way of compensation itmay serve to produce a fall crop, provided frostdoes not come too early.

Only a few days have passed since the hurri-cane and it is accordingly impossible to esti-mate the losses incurred by the railroads, thecities, and t*he country lying in its path.Rather heavy totals are certain.

It is believed that the warehouse discussionhas worked most beneficially throughout thisdistrict and that cotton will be held in storageuntil the demand reaches the point of actuallycalling it out, and that it will not be sacrificed.

The mining interests of the State have beenvery much stimulated through the high pricescurrent for copper and lead. Great activityprevails in our western section on this account.The price of oil has risen from 5 to 10 centsduring the past month. The lumber interestsare still complaining, although a reasonablevolume of sales seems to indicate that evenhere there is a wave of improvement. Somelumber concerns have been cutting prices.

There has been no change in the demand forfunds. The reserve city banks are easy andare experiencing only a light demand from theircountry correspondents. Prevailing rates arefrom 5 to 6 per cent.

General business conditions have been stead-ily improving, as the bankruptcy records show,and the retail merchant is reporting bettervolume while buying a little more freely. Job-bers in this district are beginning to feel theimproved conditions. Much depends on theworking out of our cotton crop. In hardly anyother part of the country is liquidation of debtsso wholly dependent on a single product.

DISTRICT NO. 12—SAN FRANCISCO.

In its foreign trade this district is sufferingrofm the unsettled condition of the exchange



markets and from the lack of ships, which latterwill be accentuated by the impending transferof the Pacific mail steamers from trans-Pacificto Atlantic service. While the total exportand import business has been practically doublethat for like periods last year, there seems goodground for believing that this may suffer im-portant curtailment.

Lumber is in slightly better demand, butprices are the lowest in the history of the indus-try on the Pacific coast. Sales are reported atless than the cost of production. Productionof petroleum in the California fields is now ata rate of approximately 250,000 barrels per day.Although consumption is slightly greater ,theamount in storage is so large and competitionso keen that prices are depressed. Coppermining is very active and prices high.

New building is at a low ebb, and a good dealof unemployment is reported. Railroads arebusy and have increased their shop forces. In-creased earnings are shown, but in this districtare chiefly due to the passenger department.

The Valencia orange crop has largely beengathered and is being marketed at very satis-factory prices. Lemons, however, have ac-cumulated in warehouses and have moved veryslowly at low prices. Hot weather in the Eastwould stimulate the demand. In deciduousfruits the raisin industry is reported as flour-ishing and the situation as to prunes reasonablysatisfactory; but conditions are unsatisfactory

as to other fruits, including apples in Oregonand Washington.

The yield of wheat in California has probablynot been more than 40 per cent of expectation,but in other parts of the district the yield hasbeen good and the acreage large, resulting in alarge exportable surplus. Transportation diffi-culties are causing slow marketing and muchwarehousing. The barley crop is reportedgood. Hops are selling at prices as high as 15cents. Cattle, mules, horses, sheep, wool, areall commanding good prices.

Credit demands are light, and there are con-siderable excess reserves throughout the dis-trict. The deposits of the clearing house banksin San Francisco (member and nonmember)are at a record point and some $30,000,000 inexcess of the corresponding time last year.Exposition attendance is heavy, and hotelbookings are reported increasingly heavy intoOctober. Retail trade has undoubtedly beenstimulated in San Francisco by the presence ofa large number of visitors, but jobbers reportbusiness as rather halting. Bank deposits inSan Francisco have undoubtedly been increased,directly or indirectly, because of the exposi-tion; but it seems a fair inference that the dis-tribution of such temporary deposits after theclose of the exposition will not cause importantdisturbance, inasmuch as these funds, for themost part, have not been employed in industryor trade.


286 FEDEBAL BESEBVE BULLETIN.

GOLD IMPORTS AND EXPORTS.

Imports of gold, by customs districts, Jan. 1 to Aug. 20, 1915.

[In thousands of dollars.]

For week endingJuly SO.

Ore and base bullionBullion, refinedUnited States co in . . . .Foreign coin

Total .

For week endingAug. 6.

Ore and base bullionUnited States mint or

assay office barsBullion refinedUnited States coin..Foreicn coin

Total

For week endingAug. IS.


assay office barsBullion, refined .Un /ted States coinForeign coin

Total

For week endingAug. 20.


assay office barsBullion refinedUnited States coin.. .Foreign coin

Total

Jan. 1 to Aug. SO.

Ore and base bull ion..United States mint or

assay office barsBullion, refinedUnited States coinForeign, coin

Total

Mai

ne a

nd N

ewH

amps

hire

.

1

21,000

21,000

1

21*000

21,001

Mar

ylan

d.

""56"

50

New

Yo

rk.

20127

2

149

5

lfil1,637

3

1,806

28

1491610

203

1

215496

49

761

323

7,04319,7644,066

31 196

1 P

orto

Ric

o.

Flo

rida

.

. . . .

1

New

Orl

eans

.1

1

Ari

zona

.

8

8

3

El

Pas

o.

12

12

2

1

3

1

13

108

25

43

253

. . . . .

254

14

32

1

33

264

419

3

13

4

17

5

5

10

95

1,298

8

683 1,401

Lar

edo.

. . . .

Ala

ska.

7

7

23

183

4

4

200

207

207

7

7

236

1,505

1,741

San

Fra

ncis

co.

95

12,467

2,503

78

973

1,051

30

873

903

15

2,518

2,533

433

7,18322

18,590

26,228

Sou

ther

n C

ali-

forn

ia.

. . . .

1

1

7

1

8

Was

hing

ton.

121123

244

62

115

177

84

84

67

109

176

2,616

1,2936

408

4,413

Buf

falo

.

236

236

143

143

58

58

230

230

3,624

2

49

3 675

Dak

ota.

= ~

—

67

67

Mic

higa

n.

31

31

32

32

32

32

26

26

1,053

1,053

St.

Law

renc

e.

1,168

1,1G8

1 913

1,913

178

4 632

4,810

6,3658,131

80, .r>565,254

106,306

Ver

mon

t.

" " 3 "

3

Tota

l.

511270

12,469

3,251

348

1,168460

1,637976

4,589

246

1,913373

21,016883

24,431

383

178330497

7,199

8,587

8,976

6,36726,882

127,40828,494

198,127



Exports of gold, by customs districts, Jan. 1 to Aug. 20, 1915.

[In thousands of dollars.!

For week ending July SO.

United States mint or assay officebars

Bullion refined, domesticUnited States coinForeign coin .

Total

For week ending Aug. 6.

Ore and base bullionUnited States mint or assay office

barsBullion refined domesticUnited States coin

Total


Ore and b-ise buUionBullion, refined, domesticUnited States coinForeign coin

Total



bars.Bullion, refined:

DomesticForeign

United States coinForeign coin .

Total

Jan. 1 to Aug. 20.


barsBullion, refined:

Domestic .Foreign

United States coinForeign coin

Total

MaineandNew

Hamp-shire.

2

2

NewYork.

1,002365

1 307

2250

°5">

1,000250

1,250

5,3803 439

8,819

Hawaii.

23

23

Alaska.

3

3

7

7

SanFran-cisco.

oo

8

61

61

Wash-ington.

53

8

24

17

41

CO

.

3

190

13

67

270

Buffalo.

52

7C

O C

M

15

1

1

Dakota.

1

31

62079

74

4

4

Mich-igan.

2

2

6

1

7

i

Du-luthandSu-

perior.

1

1

St.Law-rence.

1

1

1

5

5

coco

17

Ver-mont.

1

1

11

11

Total.

57

1,005365

1,382

27

134

17

61

122

250

255

11,012250

11,262

199

36

4820

15,5433,451

19,297

1 Includes $1,000 for Montana and Idaho.


288 FEDEKAL EESEKVE BULLETIN. SEPTEMBER 1, 1915.

DISTRIBUTION OF REDISCOUNTS.

The total amount of commercial paper, ex-clusive of acceptances, rediscounted during themonth of July was $13,238,200, compared with$13,404,000 in June and $12,145,700 in May.The number of notes rediscounted was 10,155in July, as against 10,734 in June and 9,558in May.

The three southern banks handled about 70per cent of the entire number and about 64 percent of the entire amount of the commercialpaper rediscounted during the month. The av-erage size of all notes discounted by the Federalreserve banks during July was $1,304, as against$1,249 in June and $1,271 in May. This aver-age varied between $867 for the Kansas Citybank and $2,277 for the San Francisco bank.Of the total number of notes rediscounted inJuly about 26.7 per cent, and of the totalamount about 52.3 per cent, were notes inamounts of $1,000 to $5,000. Small notes (inamounts up to $250) constituted about 30 percent of the total number, though only 3.3 percent of the total amount of notes rediscountedduring the month. Over 79 per cent of thenumber of small notes (up to $250) was dis-counted by the three southern banks.

Of the total amount of notes rediscountedduring the month, 0.8 per cent was reported as10-day paper, 12.2 per cent as 30-day paper,34.1 per cent as 60-day paper, 40 per cent as90-day paper, and 12.9 per cent as paper ma-turing after 90 days from the date of redis-count. These percentages vary for the indi-vidual banks, the average maturity of the

paper offered for rediscount being as a rulehigher in the South than in the other sectionsof the country. Thus the proportion of 30-daypaper rediscounted by the three southern bankswas less than 45 per cent of the combinedamount of 10-day and 30-day paper redis-counted by all the banks, as against 64 per centshown as their share of total rediscounts.Dallas, whose proportion of total rediscountsfor the month is 16.1 per cent, is credited withthe discount of less than 1 per cent of the30-day paper.

The four eastern banks report about 32 percent of »the combined amount of 10-day and30-day paper rediscounted, as against 10.5 percent of the total rediscounts for the month. Ofthe total amount of paper rediscounted duringthe month by the three southern banks, about45 per cent was 90-day paper, as against 21 and32 per cent in the case of the eastern banks, andthe western banks except San Francisco, re-spectively. Of the total amount of agricul-tural and live-stock paper with maturities ex-ceeding 90 days, about 60 per cent was redis-counted by the three southern banks and about24 per cent by the Chicago and Minneapolisbanks.

The rediscount of 10-day paper at the special3 per cent rate is reported only by the Boston,New York, and Philadelphia banks, though thelower rate was also in force during the monthin the St. Louis and San Francisco districts.The number of banks accommodated increasedfrom 785 in June to 796 in July, and now standsat 10.5 per cent of the total number of memberbanks.



Commercial paper, exclusive of bank acceptances, rediscounted by each of the Federal reserve banks during the month ofJuly, 1915, distributed by sizes.

NUMBER OF PIECES AND AMOUNTS.


Bank.

BostonNew YorkPhiladelphia..ClevelandRichmondAtlantaChicagoSt. LouisMinneapolis...Kansas City...DallasSan Francisco.

Total . . . .

To $100.

13.123.420.710.1

277.7141.823.620.630.966.4

150.322.4

29.838.451.520.6

501.6266.862.250.279.083.4

245.348.9

137259279172

3,2121,874333310469742

201.6334.0483.1373.0354.3991.0662.1466.8800.3643.3136.2792.5

35.020.061.310.3

254.6138.7

923

PERCENTAGES OF AMOUNTS OF EACH CLASS TO TOTAL.

BostonNew York .PhiJadel phiaCleveland . . . .RichmondA tlantaChicagoSt. LouisMinneapolisKansas C itvDallas . . .San Francisco

Total

To $100.

Per cent.0.3

. 1

. 5

. 1

.6

.9

. 1

. 5

.7

.6

. 5

Over$100 to$250.

Per cent.1 02.41.11.12.53.7, 7

1.81.16.14.3.9

2.7

Over$250 to$500.

Per cent.6.57.04.32.76.47.13.64.43.9

10.37.02.8

6.1

Over$500 to$1,000.

Per cent.14.811.510.7

5.511.513.49.4

10.89.9

14.511.56.2

11.2

Over$1,000 to$2,500.

Per cent.23.026.121.614.819.522.224.123.421.124.322.915.9

21.1

Over$2,500 to$5,000.

Per cent.44.525.931.631.934.633.330.426.135.220.525.928.0

31.2

Over$5,000 to$10,000.

Per cent.9.9

17.421.533.216.914.726.428.721.222.015.928.7

19.1

Over$10,000.

Per cent.

9.68.7

10.78.04.75.34.37.61.6

11.917.5

8.1

Total.

Per cent.100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0100.0

100.0

Commercial paper rediscounted during July by each of the Federal reserve banks, distributed by States and maturities as ofdate of rediscount.


Districts and States.

District No. 1—Boston:ConnecticutMaineMassachusettsNew HamnshireRhode IslandVermont

Total

District No. 2—New York:New JersevNew York

Total

Numberof member

banks.

7470

170561848

436

131481

612

Numberof banks

accommo-dated.

322

5

12

416

20

Papermatur ingwithin 10

days.

10.0

2.5

12.5

23.12.0

25.1

Papermatur ing

after 10davs butwithin 30

days.

2.022.0

23.2

47.2

13.230.4

43.6

Papermatur ingafter 30

davs bu twithin 60

days.

1*6.835.0

4.0

49.0

104.8

5.8151.8

157.6

Papermaturingafter 60

davs butwithin 90

days.

JL9.7

4.5

8.1

32.3

39.766.6

106.3

Papermatur ing

after 90days.

4.8

4.8

1.4

1.4

Totalcommercialpaper re-

discounted.

43.367.08.5

82.8

201.6

81.8252.2

334.0



Commercial paper rediscounted during July by each of the Federal reserve banks, distributed by States and maturities as ofdate of rediscount—Continued.


District No. 3—Philadelphia:DelawareNew Jersey . .Pennsylvania

Total

District No. 4—Cleveland:KentuckyOhioPennsvl vaniaWest Virginia

Total

District No. 5—Richmond:District of ColumbiaMarylandNorth CarolinaSouth CarolinaVirginiaWest Virginia

Total.

District No. 6—Atlanta:Alabama . .FloridaGeorgiaLouisiana . . . .MississippiTennessee. . . . . .

Total

District No. 7-Chicago:IllinoisIndianaIowaM ichiganWisconsin

Total

District No. 8—St. Louis:ArkansasIllinoisIndianaKentucky . . .Mississi ppiMissouriTennessee

TotalDistrict No. 9—Minneapolis:

MichiganMinnesotaMontanaNorth DakotaSouth DakotaWisconsin

Total

District No. 10—Kansas City:ColoradoKansasMissouriNebraskaNew MexicoOklahomaWyoming

Total

Numberof member

banks.

2470

533

627

7237730214

705

131008071

136103

503

9255

1155

1897

382

3121973487449

980

601566169177920

462

3127764

15211287

723

12121652

2119

30933

951

Number •of banks

accommo-dated.

717

24

mm Io

12

24

*•* 0

$ 45m 46" 56

11

164

28184611

33

127

1010282

50

142124396

59

3186

1275

51

5193

121

32

72

Papermaturingwithin 10

days.

14.351.5

65.8


days butwithin 30

days.

28.9130.9

159.8

P5.713 9.1147.2

192.0

13.7337.798.5

115.714.7

580.3

13.832.635.7

2.091.2

175.3

8.010.070.25.0

93.2

38.85.8

.2

1.518.3

64.6

18.0.1

1.5

9.9

29.5

5 261.31.55.2

34.1

107.3


days butwithin 60.

days.

60.3108.1

168.4

61.325.216.9

103.4

34.8418.1727.4523.059.0

1,762.3

138.9101.9178.944.68.8

282.0

755.1

12.064.7

149.119.8

245.6

61.97.16.0

.23.78.2

39.7

126.8

28.9187.3

28.810.132.5

287.6

2.988.75.8

20.0

90.9

208.3


davs butwithin 90

days.

31.957.2

89.1

13.322.428.3

64.0

17.9677.9480.7466.6150.8

1,793.9

254.5193.9233.610.038.1

179.9

910.0

20.6107.272.3

200.1

30.821.633.7

.821.611.885.1

205.4

7.120.911.982.126.049.7

197.7

1.969.7

.519.6

122.6

214.3

Papermaturingafter 90days.

12.61.0

13.6

.584.8

102.029.8

. 7

217.8

40.85.2

86.3

18.3

150.6

7.421.494.4

123.2

39.222.2

2.15.51.0

70.0

88.326.0

138.524.48.3

285.5

11.95.2

.516.61.6

77.6

113.4

Totalcommercialpaper re- '

discounted.

135.4347.7

483.1

110.369.3

103.4

373.0

66.91,518.51,408.61,135.1

225.2

4,354.3

448.0333.6534.554.648.9

571.4

1,991.0

48.0203.3386.024.8

662.1

170.756.739.71.2

27.427.0

144.1

466.8

54.0296.637.9

250.960.5

100.4

800.3

21.9224.9

8.361.41.6

325.2

643.3



Commercial paper rediscounted during July by each of the Federal reserve banks, distributed by States and maturities as ofdate of rediscount—Continued.


District No. 11—Dallas:ArizonaLouisianaNew MexicoOklahomaTexas

Total

District No. 12—San Francisco:AlaskaArizonaCaliforniaIdaho . . . . . . . .NevadaOregonUtahWashington

Total

Numberof member

banks.

6252842

537

638

1

26557IQ862378

527

Numberof banks

accommo-dated.

n6

12109

136

378

7

5

57


days.


davs butwithin 30

days.

1.413.4

14.8

65.911.8

27.0

104.7


days butwithin 60

days.

106 56.0

15.5230.9

358.9

114.713.4

66.1

39.7

233.9


days butwithin 90

days.

181 213.980.2

838.1

1,113.4

251.135.0

36.5

45.3

367.9

Papermaturing

after 90days.

164 222.421.3

441.2

649.1

55.213.4

11.9

5.5

86.0

Totalcommercial

paper re-discounted.

451 942.3

118.41,523.6

2,136.2

486.973.6

114.5

117. 5

792.5

RECAPITULATION.

Districts and cities.

Districts:No 1—BostonNo. 2—New YorkNo. 3—Philadelphiaj^o 4—Cleveland .No. 5—RichmondNo. 6—AtlantaNo. 7—ChicagoNo 8—St LouisNo. 9—MinneapolisNo. 10—Kansas CityNo. 11—Dallas .No. 12—San Francisco

Total

Percent

Numberol member

banks.

436612627765503382980462723951638527

7,606

Numberof banks

accommo-dated.

12202424

16412750595172

13657

796

10.5


days.

12.525.165.8

103.4_ _


dnys butwithin 30

days.

47.243.6

159.8192.05S0.3175.393.264.629.5

107.314.8

104.7

1,612.3

12.2


days butwithin 60

days.

104.8157.6168.4103.4

1,762.3755.1245.6128.8287.6208.3358.9233.9

4,512.7

34.1

Papermaturingafter 60"

davs butwithin 90

days.

32.3106.389.164.0

1,793.9910.0200.1205.4197.7214.3

1,113.4367.9

5,294.4

40.0

Papermaturingafter 90days.

4.81.4

13.6217.8150.6123.270.0

285.5113.4649.186.0

1,715.4

12.9

Totalcommercialpaper re-

discounted.

201.6334.0483.1373.0

4,354.31,991.0

662.1466.8800.3643.3

2,136.2792.5

13,238.2

100.0

Per eonV.

1.52,53.72.8

32.915.05.03.56.14.9

16.16.0

100.0


292 FEDEEAL RESERVE BULLETIN. SEPTEMBER 1, 1915.

Amounts of commercial paper held by each of the Federal reserve banks on the last Friday of the month of July, distributedby maturities.


Federal reserve bank.

BostonNew YorkPhiladelphiaClevelandRichmond ..AtlantaChicago . . . .St. LouisMinneapolisKansas CityDallasSan Francisco

Total..Per cent

Papermaturing

within10 days.

107.0126.2125.1

1,116.3651.9145.9

109.092. 3

724! 2314.1

3,512.012.1

Papermaturing

after10 days but

within30 days.

167.5184.1214.3324.7

1,894.0943.7370.9297.3144.6354.5882.1383.2

6,160.921.2

Papermaturing

e.fter30 days but

within60 days.

98.3196.0215.6132.0

3,267.91,702. 8

484.3341.9484.0365.2

1,637.2532.7

9,457. 932.5

Papermaturing

after60 days but

within90 days.

36.297.735.179.6

1,625.11,161.0

219.4207.9397.5236.2

2,267.2358.7

6,721.623.1

Papermaturing

after90 days.

3. 82.6

i9-4457.9346. 5264.2145.0578.5111.9

1,137.3182.7

3,249.811.1

Total.

305.8587.4591.2680.8

8,361.24,805.91,484.7

992.11,713.61,160.16,648.01,771.4

29,102.2100.0

ACCEPTANCES.

Acceptances, by classes, held by the Federal reserve banks each week.

Date.

1915.July 26..Aug. 2 . .Aug. 9 . .Aug. 16.Aug. 23.

Memberbanks.

$5,165,0005,350,0005,499,0005,713,0005,868,000

Nonmember banks.

Trustcompanies.

$4,832,0005,407,0005,869,0006,200,0006,181,000

Statebanks.

$20,00020,00020,00020,00020,000

Privatebanks.

$367,000352,000417,000461,000457,000

Total.

$10,384,00011,129.00011,805,00012,394,00012,526,000

Acceptances indorsed by member banks: Trust companies' acceptances, $176,000; private banks' acceptances, $8,000; total, $184,000.

Distribution of acceptances held by Federal reserve banks according to schedules on hand Aug. 16, 1915, by classes ofacceptors and sizes.

Class of acceptors.

Member banks...Trust companies.State banksPrivate banks

Total..

Per cent. —

To $5,000.

a

$232,624247,554

20,000

500,178

4T0

Over $5,000to $10,000.

$758,869461,399

87,032

1,307,300

105

Over $10,000to $25,000.

74 $1

181

,236,6251,882,825

20,000227,782

3,347,232

2775

Over $25,000to $50,000.

47 $1

27

" 3

77

1,817,971990,611

101,065

2,909,647

23T5

Over $50,000to $100,000.

13 $1.

29

a<

.,078,7851,222,047

2,300,832

1876

Over $100,000.

14

$588,0001,415,605

2,003,605

Total.

316 $5,712,8746,200,041

20,000435,879

66012,368,794

100.0

Percent.

46.250.2

.13.5

100.0


SEPTEMBER 1, 1915. FEDEBAL EESEBVE BULLETIN. 293

Amounts of accep ces held by the several Federal reserve banks at close of business on Fridays from July20, 1915.


to Aug.

Acceptances maturing within 10days:

July 30Aug. 6Aug. 13Aug. 20

Acceptances maturing after 10 daysbut within 30 days:

July 30Aug. 6Aug 13Aug. 20 . .


July 30Aug. 6Aug. 13Aug 20

Acceptances maturing alter 60 daysbut within 90 days:

July 30Aug. 6 . .Aug. 13Aug. 20

Total:July 30.Aug. 6Aug. 13Aug. 20

Bos-ton.

26467

121

667267385307

520505527989

1,0361,235

U,217941

2,2232,2712,1962,358

NewYork.

286270191714

6921,3582,0271,654

2,4542,1671,7191,966

2,1052,0472,1131,744

5,5375,8426,0506,078

Phila-delphia.

78103

119

113194297581

721998993598

505272234217

1,4171,4741,5271,515

Cleve-land.

48

3710686

6994

193163

245220102165

362351401414

Rich-mond.

At-lanta.

Chi-cago.

74

1842

18425145

8990

198246

426485450412

607617717745

St.Louis.

29

47658075

4671

126163

269-244174150

362380380417

Minne-apolis.

139

6

15175843

356990

152

158113

8855

221208236256

Kan-sas

City.

28174

17

162315942

154593

156

190145

97180

395395249395

Dallas.San

Fran-cisco.

24100

36

125134139191

232123184150

120178130176

501535453553

Total.

551827279

1,084

1,8392,1453,2023,024

4,1814,1624,1234,583

5,0544,9394,6054,040

11,62512,07312,20912,731

1 Includes $58,000 of acceptances maturing after 90 days but within 3 months.

Total amount of acceptances purchased by each of the Federal reserve banks from Feb. 19 (date of first purchase) to June 30,1915, and for the month of July, distributed by maturities.


Acceptances maturing within 30days:

Feb. 19 to June 30 .July

Total .


Feb. 19 to June 30. . ,July

Total

Acceptances maturing after 60 daysbut within 3 months:

Feb 19 to June 30July

Total

Grand total

Boston.

23517

252

2,8991,046

3,945

4,197

NewYork.

539

539

1,543276

1,819

8,1451,977

10,122

12,480

Phila-delphia.

10943

152

368237

605

1 876521

2,397

3,154

Cleve-land.

64

64

59833

631

732265

997

1,692

Rich-mond.

At-lanta.

Chi-cago.

141

141

31071

381

1,524426

1,950

2,472

St.Louis.

67

67

22624

250

162276

438

755

Minne-apolis.

10

10

11913

132

397178

575

717

KansasCity.

41

41

614

65

634190

824

930

Dallas.San

Fran-cisco.

61

61

63323

656

1,112120

1,232

1,949

Total.

1,03243

1,075

4.093698

4,791

17,4814,999

22,480

28,346


294 FEDERAL RESERVE BULLETIN. SEPTEMBER 1, 191fl.

FEDERAL RESERVE BANK STATEMENTS.

Resources and liabilities of each of the Federal reserve banks and of the Federal reserve system at close of business on Fridays,July SO to Aug. 20.


RESOURCES.

Gold coin and certificatesin vault:

July 30August 6August 13August 20

Gold settlement fund:July 30August 6August 13August 20

Gold redemption fund:July 30August 6August 13August 20

Legal tender notes, silver,etc.:

July 30August 6August 13August 20

Total reserve:July 30August 6August 13August 20

Commercial paper:July 30Aug. 6 |Aug. 13 !Aug. 20

Bank acceptances:July 30Aug. 6...Aug. 13Aug. 20

United States bonds:July 30Aug. 6Aug. 13Aug. 20

Municipal warrants:July 30Aug. 6Aug. 13Aug. 20 ,

Federal reserve notes, netassets:


Due from other Federalreserve banks, net:


All other resources:July 30Aug. 6Aug. 13Aug. 20 ,

Total resources:July 30Aug. GAug. 13Aug. 20

Boston.

$8,8859,0368,9359,064

7,1767,5496,3526,680

NewYork.

$114,326112,441113,219113,521

13,73310,91512,81912,618

55• 555555

298 12,736485 15,726829 | 11,020715 17,573

16,36517,07616,12216,465

306266252211

2,2232,2712,1962,358

140,850139,137137,113143,767

587496466486

5,5375,8426,0506,078

491491 ,491 |

2,4942,3672,4572,647

419357448430

1,311352941

905873957931

24,02324,05323,86423,533

5,6887,1617,2117,056

6,2637,6S96,5377,191

327322349363

159,252160,647157, 726164,941

Phila- Cleve-delphia. land.

$12,41611,601512,5S09,090

1,4921,4611,213i,2y7

37373737

3,2912,9343,1103,324

17, 23616,03816,94013,748

591637509572

1,4171,4741,5271,515

340340340340

1,8431,9091,9721,981

90115104387

1,1951,5171,0984,367

396572664671

23,10822,60223,15423,581

$13,47013,21713,25613,302

4,1274,2834,2954,196

1,0331,0531,0501,076

18,63018,55318,60718,574

681633589

302351401414

660696753

1,5121,7671,8031,782

72331267183

609357759

468297386227

23,08123,23723,16323,224

Rich-mond.

S3,8323,8793,8S34,109

3,7193,3483,2164,298

305325325345

110109141120

7,9667,6617,5658,872

8,3618,6688,0228,694

651679

1,290240

178228146127

17,15617,23617,62317,933

At-lanta.

S3,4823,4913,5063,469

1,4251,3761,4181,358

225225225225

405458449502

5,5375,5505,5985,554

4,8054,6444,6334,676

230245193

149106111131

10,49110,53010,58710,554

Chicago.

$24,83823,00623,45024,316

9,90412,32311,87512,895

2,4072,4032,6852,365

37,14937,73238,01039,576

1,4851,4481,3371,236

607617717745

3,7253,7783,8263,903

1,8732,0432,1232 107

2,3702,3842,4052 418

5,5432,7413,7842,800

185156134165

52,93750,90252,33652,950

St.Louis.

$7,6517,6897,6507,650

1,0131,8032,0421,730

35353535

752723601423

9,45110,25010,3289,838

9921,0411,0421,090

362380380417

242242242242

638622652696

11010611575

421648

1,347

2,6532,0992,1781,550

14,86915.38814,93715,255

Minne-apolis.

$5,7855,8145,7955,827

1,371' 1,389

1,3651,402

30303030

3544

7,1897,2387,1947,263

1,7141,7471,8261,894

221208236256

1,0251,0251,0251,027

488549569551

534424353137

177108138156

58616061

11,40611,36011,40111,345

KansasCity.

$6,4056,2065,8965,397

3, 4763,5494,3363,974

37373737

488477477460

10,40610,26910,7469,868

1,1611,1121,1901,334

395395249395

930930930931

446557613602

491848116394

452394480358

14,28114,50514,32413,882

Dallas.

$3,4643,4173,2343,056

3,3543,2943,5573,487

313313313313

556538572549

7,6877,5627,6767,405

6,6486,5416,6346,776

254340317120

547374

124

14,64314,51614,70114,425

SanFran-cisco.

$8,4348,0208,2937,150

1,3501,0001,002

995

21212121

13556

9,8189,0469,3218,172

1,7711,6201,5091,571

501535453553

1,0011,0011,0001,001

1,1251,1251,1581,131

1,1711,1721,0371,919

8561,6811,7532,027

79828469

16,32216,26216,31516,443

Totalfor

system.

$212,988207,822209,697205,951

52,14052,29053,49054,930

1,0641,0841,0841,104

22,09224,91620,94927,117

288,284286,112285,220289,102

29,10328,85328,60929,020

11,62512,07312,20912,731

7,9238,5038,6078,740

16,10718,10018,55818,553

11,02912,57811,26ft12,740

17,07815,987M,02816,805

5,9045,2635,6234,777

377,053377,469374,120382,468

1 Items in transit, i. e., total amounts due from less total amounts due to other Federal reserve banks.


SEPTEMBER 1, 1915. FEDERAL EESEEVE BULLETIN. 295

Resources and liabilities of each of the Federal reserve banks and of the Federal reserve system at close of business on Fridays,

July SO to Aug. 20—Continued.


LIABILITIES.

Capital paid in:July 30Aug. 6Aug. 13Aug.20

Reserve deposits, net:July 30Aug.6Aug. 13Aug. 20

Federal reservenotes.netliability:

July 30Aug.6Aug. 13Aug. 20

Due to other Federal re-serve banks, net:


AH other liabilities:July 30Aug.6Aug. 13Aug. 20

Boston.

$4,8024,8024,8024,802

19,22119,25119,06218,404

NewYork.

$10,82410,98210,98210,982

142,411144,355138,900146,697

4,490

Phila-delphia.

$5,3655,2755,2745,274

17,74317,32717,88018,307

Cleve-land.

$5,9515,9435,9445,944

17,13017,29417,21917,280

Rich-mond.

$3,3623,3643,3653,364

7,8397,7388,0187,811

5,8556,0276,1286,640

At-lanta.

$2,4162,4172,4182,418

5,1645,2725,2025,172

2,8282,7952,9192,917

Chicago.

$6,6066,6156,6156,616

46.33144,28745,72146,334

St.Louis.

$2,7952.7P52,7962,796

12,07412,59312,03412,459

Minne-apolis.

$2,4272.4252,4302,430

8,9798,9358,9718,915

[KansasCity.

$2,9523,0113,0173,017

10,77910,80810,52110,168

550683786697

Dallas.

$2,7572,7592,7562,755

6,1145,8046,0156,036

5,7325,9155,8905,593

SanFran-cisco.

$3,9243,9243,9323,931

12,39812,33812,38312,512

Totalfor

system.

$54,18154.31554,33154,329

306,183306,002301,926310,095

14,96515,42015,72315,847

3,769

3275,9045,271

1,527

107

1,6411,9401,991

Total liabilities:July30 24,023Aug.6 24,053Aug. 13 23,864Aug.20 ! 23,533

159,252160,647157,726164,941

23,10822,60223,15423,581

23,08123,23723,16323,224

100107112118

17,15617,23617,62317,933

10,49110,53010,58710,554

52,937 14,80950,902 I 15,38852,336 14,93752,950 15,255

11,40611,36011,40111,345

14,28114,30514,32413,882

14,64314,51614,70114,425

16,32210,26216,HI516,443

1,7231,7322,1402,197

377,052377,469374,120382,468

CIRCULATION OF FEDERAL RESERVE NOTES.

Federal reserve notes is-sued to the banks:

July 30Aug.6Aug. 13Aug.20

Federal reserve notes inthe hands of the banks:

July30Aug. 6Aug.13Aug. 20

Federal reserve notes incirculation:

July30Aug.6Aug. 13Aug.20

Gold and lawful moneydeposited with Federalreserve agents:

July 30.Aug.6Aug. 13Aug. 20

Carried to net liabilities:July 30Aug.6Aug. 13Aug.20

Carried to net assets:July 30Aug. 6Aug. 13Aug. 20

$4,4204,4204,6204,620

419357448430

4,0014,0634,1724,190

4,4204,4204,6204,620

419357448430

$47,72050,12050,12051,720

6,4637,8896,7077,361

41,25742,23143,41344,359

47,52049,92049,95051,550

6,2637,6896,5377,191

$2,9303,0 303,1303,650

90115104387

$4,7004,8004,8004,900

307331267183

2,840 4,3932,915 4,4693,026 | 4,5333,263 1 4,717

2,9303,0303,1303,650

90115104387

4,7004,8004,8004,900

72331267183

$8,4008,8008,800

2,3002,3002,3001,900

5,8556,0276,1286,640

$5,5005,5005,5005,600

245 522473 555372 431260 ! 433

8,155 I 4,9788,327 i 4,9458,428 , 5,0698,540 5,167

2,150 !2,150 j2,150 !2,250 !

2,828 !2,795 '2,919 !2,917 |

$4,3804,3804,3804,380

2,3702,3842,4052,418

2,0101,9961,9751,9(52

4,3804,3804,3804,380

$626626626626

11010611575

516520511551

626626626

2,370 I2,3842,405 I2,418 !

11010611575

$4,4004,4004,4005,000

534424353737

$4,1004,4004,7005,400

140107

4293

3,«66 3,9603,976 4,2934,047 i 4,6964,263 ! 5,107

4,4004,4004,4004,400

534424353137

3,4103,6103,9104,410

5506S3786697

$8,6159,2159,4559,955

33330065

362

8,2828,9159,3909,593

2,5503,0003,5004,000

5,7325,9155,8905,593

$2,0402,0402,0403,040

1.1711,1721,0)571,919

Sfi81,0031,121

2,0402,0402,0403,040

1,1711,1721,0371,919

$ 97,831101,731102,571107,691

12,70414,21312,30814,858

85,12787,51890,26392,833

81,19184,67685,80689,726

14,96515,42015, 72315,847

11,02912,57811,26612,740



Statement of Federal reserve agents1 accounts at close of business on Fridays, July 30 to Aug. 20.[In thousands of dollars.]

Federal reserve notes re-ceived from the Comp-troller:


Federal reserve notes re-turned to the Comp-troller:


Amount of Federal re-serve notes chargeableto Federal reserve agent:

July 30Aug.6Aug.13Aug. 20

Federal reserve notes inthe hands of the agentat close of business Fri-day:


Federal-reserve notes is-sued to the Federal re-serve bank, less notesreturned to the agentfor redemption andcancellation:


Held by the Federal re-serve agent:

In reduction of liabil-ity on outstandingnotes-

Gold coin andcertificates—


Lawful money-July 30Aug.6Aug. 13Aug. 20

As security for out-standing notes—

C o m m e r c i a lpaper *—


Held by the Treasurer ofthe United States:

Gold redemptionfund-


Total:July 30..Aug.6..Aug. 13.Aug. 20.

Boston.NewYork.

$11,80011,80011,80011,800

100100100100

11,70011,70011,70011,700

7,2807,2807,0807,080

i Amount of commercialpaper turned over tothe Federal reserveagent:


4,4204,4204,6204,620

4,4204,4204,6204,620

4,4204,4204,6204,620

$49,84051,84054,80054,800

49,51,54,54;

2,1,4,3,

840840800800

120720680080

47,72050,12050,12051,720

47,52049,92049,95051,550

200200170170

47,72050,12050,12051,720

200200170170

Phila-delphia.

$5,3405,4805,480

30170170170

5,3105,3105,3108,310

2,3802,2802,1804,660

2,9303,0303,1303,650

2,9303,0303,1303,650

Cleve-land.

$6,4006,4006,4006,400

6,4006,4006,4006,400

1,7001,6001,6001,500

4,7004,8004,8004,900

4,4654,5604,5604,655

2,9303,0303,1303,650

235240240245

4,7004,8004,8004,900

Rich-mond.

$9,1609,1609,800

10,000

9,1609,1609,80010,000

760360

1,0001,200

8,4008,8008,8008,800

2,3002,3002,3001,900

6,1006,5006,5006,900

8,4008,8008,8008,800

6,7397,1017,2727,561

At-lanta.

$8,5008,5008,5008,500

8,5008,5008,5008,500

3,0003,0003,0002,900

5,5005,5005,5005,600

2,1502,1502,1502,250

3,3503,3503,3503,350

5,5005,5005,5505,600

Chicago.

$9,3809,3809,3809,380

120120120120

9,2609,2609,2609,260

4,8804,8804,8804,880

4,3804,3804,3804,380

4,2604,2604,2604,260

120120120120

4,3804,3804,3804,380

3,3513,3503,3573,352

St.Louis.

$3,4003,4003,4003,400

3,4003,4003,4003,400

2,7742 7742,7742,774

626626626626

626

626626626

Minne-apolis.

KansasCity.

$5,0005,0005,0005,000

5,0005,0005,0005,000

600600600

4,4004,4004,4005,000

4,4004,4004,4004,400

600

4,4004,4004,4005,000

602

$6,0006,0006,8006,800

$11,89511,90011,90013,900

6,0006,0006,8006,800

1,9001,6002,1001,400

4,1004,4004,7005,400

3,4103,6103!, 9104; 410

690790790990

4,1004,4004,7005,400

691790791990

Dallas.

$10,00010,00010,00010,000

11,89511,89511,89513,895

3,2802,6802,440*3,940

8,6159,2159,4559,955

2,5503,0003,5004,000

5,7525,9025,9555,955

313313

8,6159,2159,4559,955

5,8365,9906,0126,177

SanFran-cisco.

10,00010,00010,00010,000

7,9607,9607,9606,960

2,0402,0402,0403,040

2,0402,0402,0403,040

2,0402,0402,0403,040

Total.

$136,715138,860143,260148,460

250395395395

136,465138,465142,865148,065

38,63436,73440,29440,374

97,831101,731102,571107,691

81,07184,31685,44889,361

16,09216,74216,76517,965

668673360365

97,831101,731102,571107,691

16,81717,43117,60218,852


INDEX.

Page.Acceptances 292, 293Address by Hon. W. P. G. Harding 252-257Business conditions, general 278-285Cotton crop, funds for 260Discount rates 266Federal reserve bank statements 294-296Gold imports and exports 286,287Gold settlement fund 264-266Informal rulings of the Federal Reserve Board.. 267-269

Stock subscription of insolvent bank 267Dividends to insolvent banks 267Purchase of municipal bonds 268State bank branches 268When applicant bank is member 268Cross-tie and lumber exports 268Notes used for purchase of merchandise 268Purchase of Government bonds in open market. 268No authority granted to act as guardian 269Agreements for acceptance credits 269

Intradistrict clearance system 270,271

Page.Law department 273-277

Liability of stockholders of State banks whichhave become member banks 273

Deposits of gold or lawful money with the Fed-eral Reserve Board 273

Government depositories 274Transactions involving the importation or ex-

portation of goods 276Deposits of Federal reserve notes for credit or

redemption 276Waiver of demand, notice, and protest 277

Movement of crops 258New Orleans branch bank, date for opening 251Rediscounts, distribution of 288-292State banks and trust companies admitted 251State banks, conditions relating to 262State bank membership, laws regarding 263Trustee powers granted 272Warehouse laws, digest of 260,262Work of the Board 251


Federal Reserve Bulletin September 1915 - St. Louis Fed RESERVE BULLETIN ISSUED BY THE ... Digest of...

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Transcript of Federal Reserve Bulletin September 1915 - St. Louis Fed RESERVE BULLETIN ISSUED BY THE ... Digest of...