RELATIONS WITH STATE BANKS AND TRUST COMPANIES. The examinations of State institutions by their own banking departments have been recognized and accepted in applications for membership. We hope to carry such cooperation further, to the mutual advantage of the State banking departments, our State bank members, and ourselves. Of the nearly 1,500 State institutions in this district, only about one-third have the capital required for eligibility in the Federal Reserve system. Membership has received some consideration during the year among those eligible, but not to the extent desired. The President's appeal received some consideration, but was minimized as only a war incident, without due appreciation of our future responsibilities and increasing need for coordinating all our financial power. STATE LAWS ON RESERVES AND BANKERS' ACCEPTANCES. The following data relate to State laws regulating reserves required of State institutions, and power to issue bankers' acceptances; also proposed amendments regarding these powers, particularly as to reserves required of State institutions joining the Federal Reserve system: Maryland.-Banks of discount and deposit must keep on hand a reserve fund of 5 per cent of demand deposits in cash and 10 per cent in cash or reserve balances. Trust companies must keep on hand a reserve fund of 10 per cent of demand deposits in cash or in reserve balances and an additional 5 per cent in cash, reserve balances, or in registered bonds of the United States, Maryland, City of Baltimore, or some county or municipal corporation of Maryland. Member banks are required to keep only such reserves as are prescribed by the Federal Reserve Act. North Carolina.-Every banking institution must keep on hand a reserve fund of 6 per cent of its total deposits in cash and an additional 9 per cent in cash or reserve balances. We have suggested an amendment permitting member banks to keep only such reserves as are required by the Federal Reserve Act. South Carolina.-No reserve is required of State banks. West banking institutions are required to keep on hand a reserve of at least 6 per cent of their demand deposits in lawful money and an additional reserve of 9 per cent in lawful money or reserve balances. We have suggested legislation which will permit member banks to keep only such reserves as are required by the Federal Reserve Act. District of Columbia.-The provision of the Federal Reserve Act covering reserves applies to members in the District of Columbia. BANKERS' ACCEPTANCES. In Virginia and Maryland banks are authorized by State statutes to accept drafts growing out of transactions involving the exportation and importation, domestic storage or shipment of goods, substantially to the same extent that this power is given national banks by the Federal Reserve Act. Trust companies of the District of Columbia which are members have the power to accept drafts by virtue of the provisions of the Federal Reserve Act itself. In West Virginia, North Carolina, and South Carolina banks have no power to accept drafts drawn upon them, but in all of these States we have suggested legislation which will give them this power. FISCAL AGENCY OPERATIONS. The general scheme of organization for the third and fourth Liberty loans was practically the same as that adopted in the first and second loans that is to say, the governor of the Federal Reserve Bank was chairman of the district organization, consisting of the chairmen of the central Liberty loan committees of the several States and the publicity chairman of the district. The State committees consisted of members from the various important sections of each State, representing varied forms of industry. It was decided that the county should be made a unit of the organization, which had not been done in previous loans, the chairmen for the counties being appointed by the State chairmen, subject to the approval of the district chairman. Each of the county chairmen appointed committees to look after the publicity, the soliciting of subscriptions, and the handling of all work in connection with loans in their respective counties. District chairmen were appointed by several of the State committees to supervise the work in groups of counties. Before the beginning of each loan, the majority of States held conferences of their Liberty loan workers, and plans of organization were thoroughly worked out and definitely decided upon. All of the chairmen were volunteers, quite a number of whom not only contributed liberally of their time, but also paid all expenses incident to their work. The publicity committee for the district had its headquarters in Richmond, and the chairman of this committee had associated with him a chairman to look after the newspaper work, a chairman of a wholesale trade committee to work through the big wholesale houses of the district, and a chairman of a retail trade committee to handle similar work through the retail stores. The speakers' bureau for the fifth district had its headquarters in Washington, and arrangements for speakers for the different States were made by the chairman of that bureau direct with the State chairmen. Through this bureau the message was carried to the churches, schools, theaters, factories, and public gatherings. Apportionments to each of these loans were assigned to each individual banking institution and trust company in the district, based on total banking resources, as of December 31, 1917, the latest figures available, the county apportionments being based on banking resources and population. The fifth district's quota for the third loan was $130,000,000, and the total subscriptions aggregated $186,259,050, an oversubscription of 43 per cent. The individual subscribers numbered 858,358. The district's quota in the fourth loan was $280,000,000, a sum which seemed staggering at the outset, but when the last subscription was received, the total had mounted to $352,685,200, an oversubscription of 26 per cent, which was exceeded only by the Boston district. The number of subscribers to the fourth loan was approximately 1,226,000. Subscriptions during 1918 for United States tax certificates and certificates in anticipation of the third, fourth, and fifth Liberty loans and for the third and fourth Liberty loan bonds are shown in Schedule 10. This gives the total number of banks in the district, the number of banks subscribing, the amount of subscriptions, payments made in cash and by credit in the war loan deposit account. Certificates sold totaled $267,398,500, and third and fourth Liberty loan bonds sold amounted to $538,944,250, making the total of Government securities sold during the year $806,342,750. The deposit, of Treasury funds with subscribing banks in the war loan deposit account and the gradual withdrawal of these funds as needed has made it possible to handle Government business without disturbance in the general financial situation. Sales of war-savings stamps and thrift stamps during the year have aggregated $10,926,000, as shown in Schedule 11. The opportunity for loans offered by the War Finance Corporation has been availed of through us in only one case. This was a loan for $8,000 to the Bank of Youngsville, S. C., about September 30. It was secured by customers' notes for $11,000, secured by an equal amount (par value) of Liberty loan bonds, and was paid about December 12. THE CAPITAL ISSUES COMMITTEE. The Federal Reserve Board appointed three of its members as the Capital Issues Committee, and these gentlemen, acting with an advisory committee, requested all persons issuing securities in amounts exceeding $500,000 to submit their applications to the committee and be guided by its advice as to whether it was compatible with the national interest to issue the securities. In order to facilitate the work of the committee, it appointed district committees, whose duty it was to investigate and report upon the issues of securities submitted to the Capital Issues Committee. Each of these district committees was composed of the chairman of the board of the Federal Reserve Bank, the governor of the Federal Reserve Bank, and other members selected from among the bankers and business men of the district. The district capital issues committee appointed for the fifth district was as follows: DISTRICT COMMITTEE. Caldwell Hardy, chairman, Richmond, George J. Seay, vice chairman, Rich- E. L. Bemis, Richmond, Va. ASSOCIATE MEMBERS. B. H. Griswold, jr., Baltimore, Md. This same committee continued to serve after the passage of the War Finance Corporation Act. That act required the Capital Issues Committee to pass upon all securities when the amount of such securities, together with all other securities issued by the same issuing principal since April 5, 1918, exceeded $100,000. The committee required all applicants to submit their applications simultaneously to the Capital Issues Committee and to the district committee, which latter committee investigated and reported to the Capital Issues Committee. The district committee, in carrying out its duty to investigate, referred the application to its nonresident committeeman nearest to the applicant's place of business, and also wrote to bankers and others, inquiring into the financial and personal standing of the applicant and the economic and industrial condition in the vicinity in which he proposed to operate. The report of the examining committeman and all other data was then submitted to the resident committeemen, who met weekly in the Federal Reserve Bank, and a report was forwarded to the Capital Issues Committee. As the need of conserving capital became more pressing during the summer, the Capital Issues Committee requested persons issuing securities in amounts less than $100,000 to submit their plans to the district committee and be guided by its judgment. Submission of these smaller amounts was entirely voluntary, but almost all parties to whose attention this request was brought gladly acceded to it, and the district committee passed upon 42 applications of this class, the larger number of which were by cities and towns issuing small blocks of securities. A statement showing the number of applications submitted and the action taken on them is given below; also an analysis showing the amount of securities approved and the reasons for their approval, and also the amount disapproved: The above tabulation shows the securities approved or disapproved prior to November 11. After that date the committee in some measure relaxed the strictness of its ruling, and many applications previously disapproved were reconsidered and approved. |