Federal Reserve Bulletin September 1928
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FEDERAL RESERVE BULLETIN SEPTEMBER, 1928 ISSUED BY THE FEDERAL RESERVE BOARD AT WASHINGTON Reserve Bank Credit and the Banking Situation Condition of All Member Banks Italian'jCurrency Legislation UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON 1I2S Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis FEDERAL RESERVE BOARD Ex officio members: ROT A. YOXJNG, Governor. EDMUND PLATT, Vice Governor. A. W. MELLON, ADOLPH C. MILLER. Secretary of the Treasury, Chairman. CHARLES S. HAMLIN. J. W. MCINTOSH, GEORGE H. JAMBS. Comptroller of the Currency. EDWARD H. CUNNINGHAM. WALTER L. EDDY, Secretary. WALTER WYATT, General Counsel. J. C. NOELL, Assistant Secretary. E. A. GOLDENWEISER, Director, Division of Research E. M. MCCLELLAND, Assistant Secretary. and Statistics. W. M. IMLAY, Fiscal Agent J. F. HERSON, CARL.E. PARRY, Assistant Director, Division of Re- Chief\ Division of Examination, and Chief Federal search and Statistics. Reserve Examiner. E. L. SMEAD, Chief, Division of Bank Operations. FEDERAL ADVISORY COUNCIL District No. 1 (BOSTON) ARTHUR M. HEARD* District No. 2 (NEW YORK) . JAMES S. ALEXANDER. District No. 3 (PHILADELPHIA) L. L. RUB. District No. 4 (CLEVELAND) HARRIS CREECH. District No. 5 (RICHMOND) i ._ JOHN F. BRTJTON, Vice President. District No. 6 (ATLANTA) P. D. HOUSTON. District No. 7 (CHICAGO) FRANK 0. WETMORE, President. District No. 8 (ST. LOUIS) _ W. W. SMITH. District No. 9 (MINNEAPOLIS) „ THEODORE WOLD. District No. 10 (KANSAS CITY).«. p. W. GOEBEL. District No. 11 (DALLAS) _ ___ B. A. MCKINNEY. District No. 12 (SAN FRANCISCO)— F. L. LIPMAN. II Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis OFFICERS OF FEDERAL RESERVE BANES Federal Reserve Bank of— Chairman Governor Deputy governor Cashier Boston... Frederic H. Curtiss ..... W. P. G. Harding. - W. W. Paddock W. WUlett New York. G. W. McOarrah BenJ. Strong - . J. H. Case...- J. W. Jonea.» L.F. Sailer Ray M. Ufdney.i • * U. L. Harrison J. E. Crane.» E K. Keniel W. B. Matteson.i A. W. Gilbart L. R. Huuuds Philadelphia R. L. Austin Geo. W. Norrls Wm. U. H at C. A. Mcllhenny. w n MAPMAIID I Cleveland Qeorge DeCamp £. R. Fancher .-*. * M. J. Fleming H. F. Strater. Richmond Wm. W. Hoxton .. George J. Seay C. A. Peple Geo. D. Keese*. R. H. Broaddus John S. Walden, Jr.« Atlanta Oscar Newton Eugene R. Black Hugh Foster M. W. Bell. Chicago Wm. A. Heath J. B. McDougal C. R. McKay W. 0. Bachman.' John H. Blair K. C. Childs.* J. U. DfUard.i D. A. Jones.' 0. J. Nctterstrom*1 St. Louis Wm. McC. Martin D. C. Bfggs -. 0. M. Attebery A. H. Halll.* F. N. HalU 8. F. Gllmore.1 G. 0. Hollocher.i C. A. SchachU Minneapolis John R. Mitchell. W* B. Geery B. V. Moore Gray Warren. Harry Yaeger Frank C. Dunlop.1 Kansas City M. L. McClure W. J. Bailey C. A. Worthington J. W. Helm. Dallas C. C. Walsh Lynn P. Talley. R. R. Gilbert Fred Harris. R. B. Coleman W. D. Gentry.» Ban Francisco Isaac B. Newton J. IT. Calkins...* Wm. A. Day Wm. M. Hale. Ira Clerk * Assistant deputy governor. > Controller. MANAGING DIRECTORS OF BRANCHES OF FEDERAL RESERVE BANKS Federal Reserve Bank of— Managing director Federal Reserve Bank of— Managing director New York: Minneapolis; Buffalo branch W. W. Schneckenburger. Helena branch R. E. Towle* Cleveland: Kansas City: Cincinnati branch C. F. McCombs. Omaha branch L. H. Earhart. Pittsburgh branch........... J. C. Novin. Denver branch .... J. E. Olson. Richmond: Oklahoma City branch C. E. Daniel. Baltimore branch.. A. IT. Dudley* Dallas: Charlotte branch.* . Hugh Leach. El Paso branch W. 0. Ford. Atlanta: D. P. Reordan New Orleans branch .. Marcus Walker. SaHouston Antonin branch.o branch. M. Crump. Jacksonville branch W. S. McLarin, Jr. San Francisco: Birmingham branch ... ... A. E. Walker. Los Angeles branch W. N. Ambrose. N ash villa branch . • „ -T -, „,-J-. B. Fort, Jr. Portland branch R. B. West. Chicago: Salt Lake City branch . W. L. Partner. Detroit branch...* W. R. Cation. Seattle branch C. R. Shaw. Spokane branch.. ......... D. L. Davis. 8t. LouisLouisvill: e branch-..—. • W. P. Kincheloe. W. H. Glasgow. Little Rock branch A. F. Bailey. SUBSCRIPTION PRICE OF BULLETIN THE FEDERAL RESERVE BULLETIN is the board's medium of communication with member banks of the Federal reserve system and is the only official organ or periodical publication of the board. The BULLETIN will be sent to all member banks without charge. To others the subscription price, which covers the cost of paper and printing, is $2. Single copies will be sold at 20 cents. Outside of the United States. Canada, Mexico, and the insular possessions, $2.60; single copies, 25 cents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE OF CONTENTS Page Review of the month—Reserve bank credit and the banking situation 613 Reserve bank and member bank credit—Position of reserve banks—Composition of the reserve bank portfolio—Conditions in the bill market—Distribution of documents—Position of New York City member banks. Condition of all member banks 6l8, 673 Annual report of the Netherlands Bank --T 638 Italian currency legislation 641 National summary of business conditions 621 Financial, industrial, and commercial statistics: Reserve bank credit 622 Monetary gold stock and money in circulation 623 Discount rates and money rates 624 Member bank credit 626 Bankers1 balances *. ._ — 627 Bankers* acceptances and commercial paper outstanding - 627 Brokers' loans _ -» 628 Commodity prices, security prices, and security issues 629 Production, employment, and trade 630 Industrial production 631 Factory employment and pay rolls 632 Building - 633 Trade and distribution 634 Bank suspensions and commercial failures 636 August crop report 637 Financial statistics for foreign countries: Condition of central banks : 645 Condition of commercial banks ± 647 Discount rates of central banks 647 Money rates 648 Gold exports and imports.- i ... 649 Foreign exchange rates __ 650 Price movements 651 Industrial statistics for England, France, Germany, and Canada 654 Rulings of Federal Reserve Board: Liability incurred by a member bank through issuance of cashier's check for Federal reserve exchange purchased 656 Balances in foreign branches of American banks carried in foreign currency but repayable in dollars.- 656 Law department 657 Changes in national and State bank membership 1 " 658 Fiduciary powers granted to national banks 658 Detailed banking statistics for the United States.- 659 IV Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis FEDERAL RESERVE BULLETIN VOL. 14 SEPTEMBER, 1928 No. 9 REVIEW OF THE MONTH Total reserve bank credit outstanding in the third week of August averaged $1,470,000,000, Volume of reserve bank credit, after increas- showing an increase of $370,- ing rapidly for several months, declined in 000,000 over the corresponding recent weeks, but was still at a period in 1927. This increase Reserve bank higher level for this season of in reserve bank credit was brought about by a bankcTedit.1^ the year than at any time ^ loss of $467,000,000 from the country's stock the past six years. Compared of monetary gold, offset in part by a decrease of with a year ago bills and securities of the re- $107,000,000 in the demand for currency. serve banks were larger by about $400,000,000, Changes for the year in other factors in the reflecting a greater outflow of gold, offset in reserve bank position have been of relatively part by a decrease in the demand for currency. minor importance. Growth of member bank credit, which has been As a*consequence of the loss of gold during rapid for the year, has not given rise to an in- the year the ratio of reserves of the Federal crease in reserve requirements, and conse- reserve banks to their combined note and de- quently in demand for reserve bank credit by posit liabilities declined from 78.5 per cent on member banks, owing to the fact that the en- August 24,1927, to 69.6 per cent on August 22 tire growth in member bank deposit liabilities of this year. The present ratio for the system has been in time deposits, while, owing largely as a whole, furthermore, represents an average to gold exports, net demand deposits showed a of the ratios for the 12 Federal reserve banks, which range from 46.6 per cent for the Federal decrease for the year. Since the middle of May 1 loans and investments of member banks in Reserve Bank of St. Louis to 76.5 per cent for leading cities, which are about 65 per cent of the Federal Reserve Bank of Boston. The the loans and investments of all member banks, amount of reserves held by the Federal reserve have declined. Whether this decline is repre- system in excess of its legal requirements^ of sentative of changes in the condition of all 40 per cent against Federal reserve notes in member banks, it is impossible to say. The circulation and 35 per cent against deposits decline for banks in leading cities has repre- was about $1,300,000,000 on August 22. The sented reductions in the banks' holdings of amount of gold legally required by the reserve investments and in their loans on securities. banks, however, is measured under present Notwithstanding this liquidation, the banks of conditions not by their reserve requirements the country approach the season of heaviest alone, but also by their requirements of col- demand for bank credit and currency in con- lateral against outstanding Federal reserve nection with the financing of the movements of notes, which under the law must be covered up crops to market and of the autumn trade—with to 100 per cent by gold or eligible paper a greatly increased volume of loans and invest- pledged with the Federal reserve agent.&The ments and a heavy indebtedness at the reserve volume of Federal reserve notes outstanding banks.