FEDERAL RESERVE BULLETIN AUGUST, 1928 ISSUED BY THE FEDERAL RESERVE BOARD AT WASHINGTON The Return to Gold Amalgamation of Currencies in Great Britain New French Currency Law Reserve Requirements of Central Banks UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON 1928 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis FEDERAL RESERVE BOARD Ex officio members: ROY A. YOUNG, Governor. EDMUND PLATT, Vice Governor, A. W. MELLON, Secretary of the Treasury, Chairman. ADOLPH C. MILLER. CHARLES S. HAMLIN. J. W. MCINTOSH, GEORGE R. JAMES. 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. RUE. District No. 4 (CLEVELAND) HARRIS CREECH. District No. 5 (RICHMOND) JOHN F. BRUTON, Vice President. District No. 6 (ATLANTA) _ P. D. HOUSTON. District No. 7 (CHICAGO) FRANK O. 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 BANKS Federal Reserve Bank of— Chairman Governor Deputy governor Cashier Boston Frederic H. Curtiss W. P. G. Harding. W. W. Paddock... W. Willett. New York... Q. W. McGarrah Benj. Strong. J. H. Case J. W. Jones.i L. F. Sailer Ray M. Gidney.* G. L. Harrison J. E. Crane.1 E R. Kenzel W. B. Matteson.i A. W. Gilbart L. R. Rounds Philadelphia R. L. Austin Geo. W. Norris__ Wm. H. H itt C. A. Mcllhenny. W. G. McCreedy.* Cleveland George DeCamp E. R. Fancher... M. J. Fleming H. F. Strater. Frank J. Zurlinden. Richmond Wm. W. Hoxton George J. Seay... C. A. Peple Geo. II. Keesee. R. II. Broaddus..._ John S. Walden, jr.' Atlanta Oscar Newton Eugene R. Black. Hugh Foster M. W. Bell. Creed Taylor Chicago Wm. A. Heath J. B. McDougal.. C. R. McKay W. C. Bachman.* John H. Blair K. C. Childs.' J. H. Dillard.' D. A. Jones.1 O. J. Netterstrom.1 St. Louis Wm. McC. Martin D. C. O. M Attebery—. A. H. HailU F. N. Hall.' S. F. Gilmore.1 G. O. Hollocher.2 C. A. Schacht.» 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. Gen try.» San Francisco. Isaac B. Newton. J. U. Calkins... Wm. A. Day Wm. M. Hale. Ira Clerk i 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 b anch R. E. Towle. Kansas City: Cincinnati branch C F McCombs L H Ear hart Pittsburgh branch J. C. Nevin. Denver branch J. E. Olson. Richmond: Oklahoma City branch C. E. Daniel. Baltimore branch A. II. Dudley. Dallas: Charlotte branch Hugh Leach. El Paso branch. W. 0 Ford Atlanta: Houston branch D. P. Reordan. New Orleans branch Marcus Walker. San Antonio branch M. Crump. Jacksonville branch. W. S McLarin, jr. San Francisco: Birmingham branch A. E. Walker. Los Angeles branch W. N. Ambrose. Nashville branch 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. St. Louis: Spokane branch D. L. Davis. Louisville branch W. P. Kincheloe. Memphis branch 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. in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis TABLE OF CONTENTS Page Review of the month—The return to gold 541 Completion of monetary reconstruction—Forms of gold basis—Redistribution of gold—Reserve position of central banks—Stability of the exchanges—Convergence of money rates. Annual report of the Federal Reserve Board 544 Earnings and expenses of Federal reserve banks , 611 The return to gold—Summary, by countries 562 Reserve requirements of central banks in foreign countries 563 Amalgamation of currencies in Great Britain 564 Text of British currency and bank notes act, 1928 565 New French currency law and administrative conventions 570 New balance sheet of the Bank of France 576 Annual report of the National Bank of Hungary 577 Annual report of the Bank of Norway 580 Annual report of the National Bank of Rumania 583 Annual report of the National Bank of Albania 585 National summary of business conditions 545 Financial, industrial, and commercial statistics: Reserve bank credit 546 Monetary gold stock and money in circulation 547 Discount rates and money rates 548 Member bank credit 550 Bankers' balances 551 Bankers' acceptances and commercial paper outstanding 551 Brokers' loans 552 Commodity prices, security prices, and security issues 553 Production, employment, and trade 554 Industrial production 555 Facto.ry employment and pay rolls 556 Building 557 Trade and distribution 558 Bank suspensions and commercial failures 560 July crop report 561 Financial statistics for foreign countries: Condition of central banks 588 Condition of commercial banks 590 Discount rates of central banks 590 Money rates 591 Gold exports and imports 592 Foreign exchange rates 593 Price movements 594 Changes in National and State bank membership _*> 597 Fiduciary powers granted to national banks 597 Detailed banking statistics for the United States 598 IV Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis FEDERAL RESERVE BULLETIN VOL. 14 AUGUST, 1928 No. 8 REVIEW OF THE MONTH option of redeeming its notes either in gold or in drafts upon gold standard countries. Under Reestablishment of the gold standard in France on June 25 signalizes the practical com- the recently accomplished monetary reform in pletion of the world's monetary France, the legal basis for a full gold standard has been established, but for the present the Completion of reconstruction< Currencies of monetary recon- Bank of France has been given the option of struction nearly all the principal coun- paying out gold only above a certain minimum tries now bear a definite rela- amount, which has been fixed at 215,000 francs, tionship to gold, and their gold parities are in or $8,400, an amount similar to the minimum the majority of cases established by law, though established in England. A summary of the in a few countries they are maintained solely status of monetary reform in about 30 foreign as a matter of administrative practice. The countries appears elsewhere in this issue of the return to gold has reduced the danger of wide BULLETIN, which contains also an article on fluctuations in foreign exchange, thus removing the recent amalgamation of the Treasury and the obstacles to international trade arising Bank of England currencies in Great Britain from uncertainty of currency values, and re- and the text of the laws and conventions moval of barriers against the free movement adopted in connection with the return of France of gold has brought the money markets of the to a gold basis. world into closer relationship; as a consequence, That the progress of the gold standard during money rates and commodity prices, once more the past year has been accompanied by the subject to the same influences throughout the withdrawal of a considerable commercial world, tend to be in closer inter- national alignment. of golddStribUti°n volume of gold from the United The return to a gold basis has taken different States was indicated in this forms in different countries. A complete gold review for July. The following table shows gold holdings of the central banks and Govern- standard—characterized by ab- Forms of gold sence f aU restrictions on gold ments of principal countries in mid-year, 1924- basis. to 1928, and changes for the four-year period. imports or exports, full redeem- ability of notes in any amount in gold, and CENTRAL GOLD HOLDINGS unlimited obligation of the mint to purchase [End of June figures. In millions of dollars] ! and sell gold at a fixed price—exists in practice Increase (+) or only in the United States. Other countries decrease Country 1924 1925 1926 1927 1928 (-) have followed Great Britain in adopting the between 1924 and gold bullion standard under which the central 1928 bank is under obligation to redeem its notes United States 1 4,095 3,962 4,056 4,202 3,732 -363 only in bullion or bars of a specified minimum France 710 711 711 2 875 1,136 +426 Great Britain ..-- 624 765 731 740 838 +214 weight (400 ounces, worth about $8,000, in Argentina 458 461 451 452 616 +158 Japan 599 586 570 544 542 -57 Great Britain).