Chapter XXXI: The Federal Reserve System (4)

RESOURCES. (continued) [In thousands of dollars.] ---------------------------+---------+---------+---------+---------+---------+ | May. | June | July | Aug. | Sept. | | 28. | 25. | 30. | 27. | 24. | | | | | | | ---------------------------+---------+---------+---------+---------+---------+ Gold coins and certificates| | | | | | in vault | 219,187 | 222,746 | 212,988 | 211,145 | 229,972 | Gold settlement fund | 23,426 | 31,360 | 52,140 | 55,930 | 59,050 | Gold redemption fund | 1,027 | 1,081 | 1,064 | 1,104 | 1,202 | |---------+---------+---------+---------+---------+ Total gold reserve | 243,640 | 255,187 | 266,192 | 268,179 | 290,224 | Legal tender notes, silver,| | | | | | etc. | 31,989 | 47,848 | 22,092 | 19,878 | 22,920 | +---------+---------+---------+---------+---------+ Total reserve | 275,629 | 303,035 | 288,284 | 288,057 | 313,144 | Commercial paper | 24,747 | 25,996 | 29,102 | 29,275 | 31,373 | Bankers' acceptances | 9,204 | 10,379 | 11,625 | 13,564 | 13,058 | United States Bonds | 6,947 | 7,601 | 7,923 | 8,836 | 9,328 | Municipal warrants | 23,094 | 11,509 | 16,107 | 25,808 | 24,945 | Federal Reserve notes, | | | | | | net assets | 7,765 | 9,124 | 11,029 | 12,491 | 14,866 | Due from other Federal | | | | | | Reserve Banks, net | 7,435 | 8,311 | 7,078 | 6,990 | 7,409 | All other resources | 5,426 | 5,501 | 5,904 | 4,962 | 3,577 | +---------+---------+---------+---------+---------+ Total resources | 360,247 | 381,456 | 377,052 | 389,983 | 417,700 | ---------------------------+---------+---------+---------+---------+---------+ LIABILITIES. ---------------------------+---------+---------+---------+---------+---------+ | May | June | July | Aug. | Sept. | | 28. | 25. | 30. | 27. | 24. | | | | | | | ---------------------------+---------+---------+---------+---------+---------+ Capital paid in | 54,158 | 54,200 | 54,181 | 54,689 | 54,748 | Government deposits | | | | | 15,000 | Reserve deposits, net | 292,050 | 311,349 | 306,183 | 316,989 | 329,941 | Federal Reserve notes, | | | | | | net liability | 10,921 | 12,617 | 14,965 | 16,738 | 15,348 | All other liabilities | 3,118 | 3,290 | 1,723 | 1,567 | 2,663 | ---------------------------+---------+---------+---------+---------+---------+ Total liabilities | 360,247 | 381,456 | 377,052 | 389,983 | 417,700 | ---------------------------+---------+---------+---------+---------+---------+

RESOURCES. (continued) [In thousands of dollars.] ----------------------------+---------+---------+--------- | Oct. | Nov. | Dec. | 29. | 26. | 30. | | | ----------------------------+---------+---------+--------- Gold coins and certificates | | | in vault | 218,224 | 245,986 | 266,546 Gold settlement fund | 61,960 | 73,830 | 77,293 Gold redemption fund | 1,222 | 1,252 | 1,124 +---------+---------+--------- Total gold reserve | 281,406 | 321,068 | 344,963 Legal tender notes, silver, | | | etc. | 37,058 | 37,212 | 13,525 +---------+---------+--------- Total reserve | 318,464 | 358,280 | 358,488 Commercial paper | 30,448 | 32,794 | 32,368 Bankers' acceptances | 13,619 | 16,179 | 23,013 United States Bonds | 10,505 | 12,919 | 15,797 Municipal warrants | 25,014 | 27,308 | 12,220 Federal Reserve notes, | | | net assets | 19,723 | 19,176 | 21,910 Due from other Federal | | | Reserve Banks, net | 8,533 | 14,053 | 20,767 All other resources | 3,645 | 4,633 | 6,547 |---------+---------+--------- Total resources | 429,951 | 485,342 | 491,110 ----------------------------+---------+---------+--------- LIABILITIES. ----------------------------+---------+---------+--------- | Oct. | Nov. | Dec. | 29. | 26. | 30. | | | ----------------------------+---------|---------+--------- Capital paid in | 54,838 | 54,846 | 54,915 Government deposits | 15,000 | 15,000 | 15,000 Reserve deposits, net | 343,554 | 397,952 | 400,012 Federal Reserve notes, | | | net liability | 13,918 | 13,385 | 13,486 All other liabilities | 2,641 | 4,159 | 7,697 ----------------------------+---------+---------+--------- Total liabilities | 429,951 | 485,342 | 491,110 ----------------------------+---------+---------+---------

FOOTNOTES:

[287] O. M. W. Sprague, _The Federal Reserve Act of 1913_, _The Quarterly Journal of Economics_, Vol. 28, No. 2, February, 1914, pp. 213-254.

[288] [The country has been divided into twelve districts in each of which a Federal Reserve Bank began operations November 16, 1914.]

[289] After the Reserve Banks have been in operation long enough to be running smoothly, not a few branches will doubtless be organized. Branches are to have boards of directors, three of the members of which are to be chosen by the Federal Reserve Board, and four by the directors of the parent Reserve Bank. Branches are to be operated under rules and regulations approved by the Federal Reserve Board.

[290] State banks and trust companies are eligible for membership, if they have a sufficient capital to entitle them to become national banks in the places where they are situated. On becoming member banks, they must comply with the provisions of the national banking law regarding reserves, examinations (the state examinations may be accepted), and various other general provisions of the national banking law.

[291] In case subscriptions by the banks of a district are inadequate, stock is to be offered to the general public; and if the response of the public is inadequate, the stock is to be taken by the Government of the United States. Neither privately owned nor government stock is entitled to voting power. [In no district were subscriptions by the banks "inadequate."]

[292] The inability of the Pujo money trust committee to secure desired information from the banks evidently occasioned the following clause: "No bank shall be subject to any visitatorial powers other than such as are authorized by law, or vested in the courts of justice, or such as shall be or shall have been exercised or directed by Congress, or by either House thereof, or by any committee of Congress of either House duly authorized."

[293] [Several of the more important regulations of the Federal Reserve Board are contained in Appendix B.]

[294] The law regarding the examination of national banks is recast. The only important changes are that hereafter all examiners are to be paid salaries, and that the Federal Reserve Banks are empowered to conduct special examinations of member banks.

[295] Adapted from Joseph French Johnson, _Fundamental Weakness of the Glass-Owen Bill_, an address delivered before the Economic Club of New York City, Monday evening, November 10, 1913.

[296] Although the address in part here reproduced was delivered as a criticism of the Glass-Owen Bill, one of the measures that led up to the passage of the Federal Reserve Act, that criticism, as a result of a few slight changes made, applies with almost equal force to the Federal Reserve Act itself. The preceding article by Professor Sprague answers with striking directness Professor Johnson's trenchant argument.--EDITOR.

[297] [It is commonly held that ample controlling power has been conferred upon the Federal Reserve Board by the act as finally passed. It is of interest that Senator Owen listened to the address of which an adaptation is here given.]

[298] John Skelton Williams, Comptroller of the Currency, "Democracy in Banking," an address delivered before the annual convention of the North Carolina Bankers' Association in the House of Representatives at the capitol at Raleigh, May 13, 1914. Printed in _Congressional Record_, 63d Congress, 2d Session, Vol. 51, pp. 10150-53.

[299] F. M. Taylor, _The Elasticity of Note Issue under the New Currency Law_. _The Journal of Political Economy_, Vol. 22, No. 5, May, 1914, pp. 453-463.

[300] _Second Annual Report of the Federal Reserve Board_, p. 16. 1916.

[301] _First Annual Report of the Federal Reserve Bank of New York_, pp. 19, 20. 1916.

[302] Thomas Conway, Jr., _The Financial Policy of the Federal Reserve Banks_, _The Journal of Political Economy_, Vol. 22, No. 4, April, 1914, pp. 319-331.

[303] _First Annual Report of the Federal Reserve Bank of New York_, pp. 34-36. 1916.

[304] Second Annual Report of the Federal Reserve Board, pp. 313, 314. 1916.

[305] _Ibid._, pp. 134-6.

[306] _Ibid._, pp. 23-25.

[307] [For regulations issued by the Federal Reserve Board see Appendix B.]

[308] _Second Annual Report of the Federal Reserve Board_, pp. 134. 135, 1916.

[309] _Ibid._, pp. 14-17.

[310] _Ibid._, p. 18.

[311] _Ibid._, pp. 21, 22.

[312] _Ibid._, pp. 45, 46.