Federal Reserve Bulletin March 1916
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FEDERAL RESERVE BULLETIN ISSUED BY THE FEDERAL RESERVE BOARD AT WASHINGTON MARCH, 1910 WASHINGTON GOVERNMENT FEINTING OFFICE 1916 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis FEDERAL RESERVE BOARD. EX OPPICIO MEMBERS. CHARLES S. HAMLIN, Governor. FREDERIC A« DELANO, Vice Governor. WILLIAM G. MCADOO, PAUL M. WARBURG, Secretary of the Treasury, W. P. G. HARDING. Chairman. ADOLPH C. MILLER. JOHN SKELTON WILLIAMS, Comptroller of the Currency. H. PARKER WILLIS, Secretary. SHERMAN ALLEN, Assistant Secretary. M. 0. ELLIOTT, Counsel. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis SUBSCRIPTION PRICE OF BULLETIN, The Federal Reserve Bulletin is distributed without charge to member banks of the system and to the officers and directors of Federal Reserve Banks. In sending the Bulletin to others the Board feels that a subscription should be required. It has accordingly fixed a subscription price of $2 per annum. Single copies will be sold at 20 cents. Foreign postage should be added when it will be required. Remittances should be made to the Federal Reserve Board. Member banks desiring to have the Bulletin supplied to their directors may have it sent to not less than ten names at a subscription price of $1 per year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE OF CONTENTS. Work of the Board .... 99 Meeting of Advisory Council -#- - • -• - 100 Information on trade acceptances i., .. .1 100 Address by Hon. P. M. Warburg 102 Gold settlement fund 108 Discount rates . 110 Informal rulings of the Board Ill Law department. 114 Statements for the press 121 Fiduciary powers granted 122 Additions to and withdrawals from intradistrict clearing system 121 Cost of bank examinations 122 Chart showing paid-in capital and reserve deposits of Federal Reserve Banks ... 123 Business conditions throughout the 12 Federal Reserve districts • 124 Distribution of discounts, by sizes and maturities . 136 Acceptances .. 141 Federal Reserve Bank statements w 143 Gold imports and exports 147 Earnings on investments of Federal Reserve Banks 149 IV Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis FEDERAL RESERVE BULLETIN VOL. 2 MARCH 1, 1916 No. 3 WORK OF THE BOARD. Completion and publication of its second annual report, including in the volume the re- The Board has had under advisement during ports of Federal Reserve Agents and full sta- the past month the question of statements to be tistics regarding the activities of the several madeby Statebankmembers andhas determined banks during the past year, have occupied the that in all cases where the form of statement attention of the Board during the early part of prescribed by State banking departments is the month of February, the advance copy of satisfactory and the member bank so advised, the report being released for publication on the it shall be regarded as fulfilling the require- 12fch of the month, while the completed issue ments of the Federal Reserve Act with refer- was distributed on the 25th. ence to a statement, the Comptroller of the The Board has prepared and made ready for Currency concurring in this view. Whenever, publication a revised draft in simplified form therefore, a call is simultaneously made by the of its regulations relating to rediscounts on be- Comptroller of the Currency and the State half of member banks, and its instructions banking department, the State member banks governing the conduct of member banks in so merely prepare a, copy of the statement and far as established by the Federal Reserve Act. forward it under oath to the Comptroller of the These revised regulations will be th& first num- Currency. In those cases where the call for ber of the series of 1916, and will supersede all condition made by the State banking depart- other regulations relating to the same subject. ment falls upon a date different from that The text of amendments to the Federal Re- made by the Comptroller, the State member serve Act, designed to put into effect the rec- banks may fill out a blank identical with that ommendations made in the report to Congress, prescribed by the State banking department un- have been carefully considered and tentatively der the conditions hereinbefore stated. Effort adopted by the Board. is, however, being made to obtain simultaneous Further consideration has been given to the action by State banking departments in order development of the system of check clearance that Federal and State calls may fall on the and collection pending the receipt of an opin- same date whenever possible. ion from the Attorney General of the United The question of refunding Government 2 per States in answer to the questions put to him cent bonds into 3 per cent bonds has received by the Board. A definite ruling with reference further and detailed investigation during the to the question of clearances and collections month and has been carefully studied by the will probably be issued at an early date. officers of the Treasury Department with a view On February 25 the Board, after having to developing a policy to be jointly adopted by given careful consideration to the petition of the Treasury Department and the Federal Re- certain banks in Louisiana to be transferred serve Banks. A definite announcement on the from the Federal Reserve Bank of Dallas to subject will be made in the near future, March the New Orleans Branch of the Federal 31 being the date at which actual allotment of Reserve Bank of Atlanta, passed the following bonds under the $25,000,000 provision of the resolution: Federal Reserve Act must be made to Federal Resolved, That all of Louisiana north of the Reserve Banks, while the question of refunding parishes of Vernon, Rapides, and Avoyelles will become of immediate and urgent interest remain in the Eleventh Federal Reserve Dis- directly after such allotment has been made. trict, and that the remaining part of the State of 99 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 100 FEDERAL RESERVE BULLETIN. MARCH 1,1916. Louisiana now in the eleventh district be Information on Trade Acceptances. transferred to the Sixth Federal Reserve Dis- trict, and the banks therein allotted to the There was sent out by the Federal Reserve New Orleans Branch of the Federal Reserve Bank of Cleveland under date of January 20, Bank of Atlanta. a printed letter on trade acceptances which so Mr. W. B. Newsome, of Dallas, has been well covers the matter that it is reprinted elected a class C director and designated as below. deputy Federal reserve agent at Dallas, Tex. Since the Federal Reserve Board issued its circular and regulation relating to "trade ac- ceptances/' constantly increasing interest in Meeting of Advisory Council. this form of commercial paper is being mani- Members of the Advisory Council of the Fed- fested by alert and resourceful bankers, manu- eral Reserve Board held the first meeting for facturers, wholesalers, and dealers. Briefly, the "trade acceptance7' is a draft of 1916 in the Board room on February 15. This definite maturity, drawn, to order on a buyer gathering was preceded by a meeting of the by a seller, and bearing across the face of the executive committee held on February 14. instrument the signed acceptance of the buyer, The Federal Reserve Board met with the coun- without qualification or conditions. cil on the afternoon of February 15 and re- There can be no question of the desirability ceived its report and suggestions. of developing this class of credits in the United States, in the interests of banking, commerce, The interesting development of the meeting and industry. In all modern banking systems, of the council was a reconsideration of its ac- the acceptance is the most desirable form of tion at the last previous meeting when it went investment, and it is the most satisfactory upon record as favoring a reduction of the capi- method of settlement in the business world. The directors of the National Association of tal stock of Federal Reserve Banks. There have Credit Men have recorded their belief "that been changes in the membership of the coun- trade acceptances present conveniences, and cil, and when the matter of reduction of stock economies which should appeal to the en- was again considered a recommendation was couragement and support of commercial credit made to the board that for the present no re- grantors/' and that "the trade acceptance system would eliminate certain serious evils duction should be urged. A minority report which have developed with the increase of was, however, presented. Reports of condi- commercial credits on an open-account system tions in the several districts as to industrial and of which the unearned discounts, the activity and the banking situation werejorally abuse of sales terms, and the assignment of made. accounts receivable are the more prominent." Acceptance is of benefit to the seller of goods Those members of the council present at the in a great many ways, among which the follow- meeting were: Mr. Daniel G. Wing, Boston; ing are noteworthy: Mr. Levi L. Rue, Philadelphia; Mr. W. S. Rowe, (1) It completes the transaction, joining the Cleveland; Mr. J. W. Norwood, Richmond; payment with the shipment or invoice; Mr. Charles A. Lyerly, Atlanta; Mr. J. B. For- (2) It eliminates open-book accounts, and substitutes bills receivable, or actual cash from gan, Chicago; Mr. C. T. Jaffray, Minneapolis; discounted bills, in the assets of the seller; Mr. E. F. Swinney, Kansas City; Mr. T. J. (3) It gives to the seller additional credit Record, Dallas; Mr. Herbert Fleishacker, S^an facilities, in that such business paper dis- Francisco.