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NOVEMBER 1,1918. FEDERAL RESERVE BULLETIN. 1081 First National Bank of Boston. The corporation entered into an agreement with the Federal Reserve Board to conduct its business in such manner and under such limitations and regulations as the Board may prescribe. Mr. Daniel G. Wing, president of the First National Bank of Boston, is also president of the First National Corporation, and all other officers and directors of the corporation are of
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  NOVEMBER  1,1918. FEDERAL RESERVE BULLETIN. 1081 First National Bank of Boston. The corporation enteredinto an agreement with the Federal Reserve Board toconduct its business  in  such manner and under suchlimitations and regulations as the Board may prescribe.Mr. Daniel G. Wing, president of the First NationalBank of Boston, is also president of the First NationalCorporation, and all other officers and directors of thecorporation are officers, directors, or stockholders of thebank. The general interest in the work of this corporationis indicated by the personnel of its board of directors,which is as follows:Edwin P. Brown, president, United Shoe Machinery Co.;  Robert F. Eerrick, Herrick, Smith, Donald  &  Farley;Henry Hornblower, Ilornblower   Weeks; John R. Ma-comber, Harris, Forbes   Co.; Andrew W. Preston, presi-dent, United Fruit  Co.:  C. G. Rice, U. S. Smelting, Refin-ing and Mining Co.; Edwin S. Webster, Stone   Webster;Albert B. Wells, treasurer, American Optical Co.; DanielG. Wing, president of the First National Bank of Boston. OFFICE IN NEW YORK. A branch office of the corporation is maintained at 14Wall Street, New York City, in charge of Mr. Arthur K.Hunt.  As  business develops, the corporation will establishother branches and agencies in foreign countries wherethey will be able to conform, closely to the banking prac-tices of their respective localities, as under the terms ofits charter the corporation can readily adapt itself tovaried conditions. Although operations have been con-ducted for only a few months, the corporation, through itsacceptance facilities, has already rendered substantialservice to our merchants engaged in foreign trade. Aconsiderable volume of imports from and exports to SouthAmerica, large shipments of silk from the Far East, sugarfrom the West Indies, wool and hides from Argentina, andvarious consignments for Europe have been handled inthis manner or through commercial letters of credit openedby the corporation.With a view to the development of our discount market,particularly in New England, the corporation conductsactive operations in the purchase and sale of prime accep-tances. An offering list is printed and distributed dailyto its customers throughout the country, and the closestcooperation between the New York and Boston marketsis maintained by a private wire between these two officesof the corporation. Report of War  inance  Corporation.Following is the second quarterly report ofthe War Finance Corporation submitted toCongress, for the quarter ending September 30,  1918: Jnlv 1,19  IS. Aug. 1, Sept. I,1918. I 3.018.Total capital paid in .S55, OCX) 000 JS70,000.000  : $H0.000,000.00Total bonds issued I  - Total bonds outstanding   „Total advan ces u ndo r foilowi n g  j  ; jsections: ' Section 7—   iParagraph J ; i 613,292.49Paragraph 2 i i 155.550  1.498,800.00 Section 8... i 250.000 550. 000.00Section 9 ;  3 ; 074.000  j  5,173 000  40,540)500.00Total advances i  3.074.000  j 5,578,  5oQ  j 43,202,592.49Collateral securities taken un-der the following sections:Section 7, paragraph 1—(a) United States Gov-ernment bonds..(6) Municipal bondsand notes(c) Other bonds andnotes (d)  Stocks833.097.12Total.Section 7. paragraph 2—  j (a)  United States Gov- jeminent bonds..;.(6) Municipal bonds ]and notes |.(c) Other bonds and jnotes i. (d)  Stocks .214,000 2,490.. GOO. 00 TotalSection  8— (a)  United States Gov-ernment bonds(5) Municipal bondsand notes(c) Other bonds andnotes (d)  StocksTotalSection. 9—(a) United States Gov-ernment bonds. . (b)  Municipal bondsand notes (c)  Other bonds andnotes (d)  StocksTotalfotal amount of advances out-standing under the followingsections:Section  7— Paragraph  1 Paragraph 2Section 8 Section  9 Total800,000 3,339,0004,139,000 3 ;  074, 000 3.074,000 244,000335,379335,379800,000 6,558,0007,358.000 140.550210,500 5,173,0005.560,0502,490,600.00 59,59,1, 21, 24, 708,812.91708,812.91 SOO,  000.00141,246.40941,246.40613.292.49483.800.00533.410.27553,000.00183.502.76 NOTE.—The  collateral securities listed above are given at their respec-tive face amount and figures are as of the opening  of  business on the daystated. State Bank  Membership in  New England.A study of Banks Incorporated UnderState Laws as Members of the Federal ReserveSystem has been prepared by Eussell B.Spear, assistant Federal Reserve agent, of November 1918    FEDERAL RESERVE BULLETIN. JANTJAIIY  1 1919. notes when delivered by the subtreasury and then toassort and package the notes for shipment to Washington.This matter was taken up at the recent transit and auditconference, and it was recommended that the formermethod be returned to.. The Federal Reserve Board has therefore informed theTreasurer of the United States that he may instruct assist-ant treasurers of the United States in subtreasury citiesthat hereafter all unfit Federal Reserve notes should beforwarded to Washington for redemption, and that ship-ping charges incident thereto will be paid by the issuingFederal Reserve Banks. The Treasurer of the UnitedStates will periodically call upon each Federal ReserveBank for reimbursement to coyer the shipping expense inconnection with the redemption of its own notes whichare received from the various subtreasuries for redemption. Identification  of Collection Items.The following letter, transmitted by Gov-ernor Harding to governors of Federal ReserveBanks under date of November  27,  provides forsome technical improvements in the presentmethod of forwarding items for collection: In connection with the privilege accorded memberbanks of forwarding for collection direct to FederalReserve Banks, items drawn on member banks and otherbanks on the interdistrict par list, the work of the sendingbanks would be greatly facilitated if all member institu-tions would have printed on their customers' checks, in aconspicuous and convenient place, the following legend: MEMBER F.  E. B.  ( DISTRICT NO.   Collectible at par. It has been suggested that nonmember banks maintain-ing deposits with Federal Reserve Banks through whichtheir items are collectible, as well as all nonmember banksthat have agreed to remit at par for items sent to them byFederal Reserve Banks, should use a legend for theircustomers' checks as follows: F.  R. B. DISTRICT NO. Collectible at par.   If the above plan is adopted, it would obviate the presentnecessity of referring to the par list in order to first ascer-tain if the item in question is collectible through a FederalReserve Bank, and second, if  so,  to which district the itemshould be sent. It would also minimize the number of sent wrong items, and the consequent trouble andlabor of returning and rehandling. Ability to determineat a glance to which Federal Reserve Bank an item shouldbe sent would result in the saving of considerable time,and in many instances perhaps the elimination of employ-ees needed in other departments.In Federal Reserve districts where Federal ReserveBank branches are maintained it would be necessary, ofcourse, to suffix the district number with spme distin-guishing mark indicative of the branch; for instance, inthe Cleveland district, with branches at Cincinnati andPittsburgh, the suffix Cinn. or Pitts. It is believed that the adoption of this practice would notonly facilitate the clearing of items, but also would stimu-late interest in the availability of the Federal Reservesystem as a clearing medium. Report of War  Finance  Corporation The War Finance Corporation on December2 transmitted to Congress its annual report.Those portions of the report which are ofspecial significance as showing the exact scopeof the work performed are as follows: The corporation has received 99 applications for ad-vances to public utility companies, aggregating $175,- 595,113.  Of these applications 10, amounting to $2,522,- 642,  were under section 7 of the act, being made throughbanks, bankers, or trust companies, and 89 applications,amounting to  §173,072,471.  were for direct loans under sec-tion 9 of the act. Of these applications, 6 under section 7were approved, advances made to November 30 havingamounted to $1,942,642.4.9, and up to the same time 10direct advances were made amounting to §38,916,300. ofwhich $11,967,500 have been repaid.The details of advances to public utilities made by thecorporation are set forth in the table which is given below:: Advances  for the  benefit  of public utilities. 6: $1,960,842.49 ;  $1,942,642.49 §15,000.00 81,927,642.4910 40,245,750.00; 38,916,300.00| 11,967,500.00 26,948,800.0O ie 42,206,592.49' 40,858,942.49 11,982,500.00:28,876,442.49- While the amount advanced under section 7 has beenrelatively small, the potential relief afforded under thissection has established confidence. INDUSTRIALS. The corporation has considered many applications forloans to industrial enterprises, including coal mining com-panies and those engaged in the manufacture of war ma-terial. In many cases it was found that the funds requiredcould be secured through other governmental agenciesmore directly concerned in the applicant's output, and thecorporation made advances only in those instances wherethe security appeared to be adequate in any circumstances,regardless of the duration of the war, and where there wasa positive recommendation of the Government departmentor agency directly interested as to the necessity for theoperation. Many of these applications were made uponthe theory that the war would continue for a period of yearsand that the loan would be repaid out of profits, but thedirectors felt that they had  no  authority to absorb what maybe termed war waste, and avoided making loans whichinvolved any speculation as to the duration of the war orwhere the security would be impaired by the cancellationof war contracts. January 1919  JANUARY  1 1919. FEDERAL RESERVE BULLETIN. 29 MiSCELLANEOUS ADVANCES. During the summer it became evident that others besidespublic utilities and war industries were entitled to con-sideration by the corporation.The conservation and movement of crops and the pre-servation of fruits and vegetables used in the canningindustry, the necessity for relief of the great cattle-raisingindustry, all became increasingly apparent. In each caseit was found that announcement by the corporation of itsintention to afford relief aided in the restoration of confi-dence, so that the amount of money actually advanced bythe corporation was far less than srcinally estimated.For example, the canning industry was reported to be indesperate need of assistance. The Government had calledupon the canners for their maximum output, a large cropof vegetables and fruit had been raised, and the obligationsof the canning companies to farmers were very consider- able.  Payments could not be made by the Governmentin advance of deliveries, and as the canning companieswere located mainly in small towns, the facilities of thelarger banks were not available to them. A cooperativesystem of warehousing was devised, and the corporationagreed to make advances upon the security of the ware-house receipts for the canned goods. The readiness of thecorporation to assist gave confidence to all connected withthe industry as well as to the banks, and it was found thatthe canning concerns were able in most cases to secure thenecessary financial assistance from the banks, so that theamount advanced by the corporation has been moderateand very much less than the canning industry had esti-mated to be necessary. The total advanced to cannerpwas $211,500, of which $56,000 has been repaid. ADVANCES TO CATTLE RAISERS. During the month of August the board, at the suggestionof the Secretary of the Treasury, investigated the neces-sity of extending financial aid to the cattle industry inthe West and Southwest, and especially in the drought-stricken areas of those sections. Two of the directors ofthe corporation, with counsel, proceeded to Kansas City,where, pursuant to previous appointment, a conferencewas held with officers of the Federal Reserve Banks ofKansas City and Dallas, and cattle raisers and representa-tives of cattle-loan companies, at which the question ofextending Government aid was fully discussed.In the drought-stricken sections stock cattle were beingsold for slaughter, and in other sections where more favor-able climatic conditions had prevailed breeding cattlewere being sold to packers because of the inability ofowners to hold them. The banks and cattle-loan com-panies were unable to extend their usual credits to cattle-men because of their inability to place cattle paper throughtheir accustomed channels due to the heavy volume ofGovernment financing.In order to preserve this breeding stock and to preventa serious shortage in our furture meat supply, the corpora-tion decided toinake when necessary directloans to cattleraisers, and established cattle-loan agencies at Dallas andKansas City to provide  the.  necessary machinery to handlethis business. Specific territory was assigned to each ofthese agencies, the chairman and governor of the Federalreserve bank at each place, with three others, constitutinga cattle-loan committee with authority to employ thenecessary inspectors, clerks, and accountants. Instruc-tions were given to receive applications and transmit tothe directors of the corporation at Washington such re-quests for advances on cattle as met with the agencies'favorable recommendation.A statement of the advances which have been madethrough the two cattle-loan agencies is given in the fol-lowing table:97522—19 5 Advances to  c ttle  raisers Kansas City agency:Section 9..Dallas agency:Section  i Section 9Total.Amount, j Repaid.Outstand-ing.«. 71I.764,998.74 £1.764,9   i '331,500.00 ;82,000.00 j 329,500.00 1 532 000.00   1.532 000.00 84  3 628 498.74 2 000.00 3 620 498.74 In addition to these advances, applications amounting to§2.821,090.50 have been approved, upon which advanceswill be made on the execution of the necessary papers.The act to enable the Secretary of Agriculture to carryout, during the fiscal year ending June 30, 1919, the pur-poses of the act entitled An act to provide further for thenational security and defense by stimulating agricultureand facilitating the distribution of agricultural products, and for other purposes, approved November  21,  1918, con-tains a paragraph which amends section 7 of the WarFinance Corporation act, so that the directors, at theirdiscretion, are now empowered to make advances to banksagainst agricultural loans or loans based on live stock to theextent of 100 per cent of the amount of such loans held bythe borrowing banks without requiring any security otherthan that pledged with the banks by the srcinal borrowers.This will add greatly to the ability of the banks and trustcompanies to take care of cattle raisers, and it will be thepolicy of the corporation to discontinue making directloans as soon as pending applications have had considera-tion. CROP-MOVING LOANS; The corporation announced in August that it was pre-pared to make advances to banks for crop-moving purposes,but as the banks generally were able to procure necessaryrediscounts from correspondent banks or from the FederalReserve Banks, applications for advances to facilitate cropmoving have been comparatively few. The loans of thisclass have amounted to 8113,500. RATES OF INTEREST. The capital stock of the War Finance Corporation isentirely owned by the Government, and the corporationis not operated for the sake of profit. In the case of direct loans,  the act provides that the rate of interest shall not beless than 1 per cent per annum in excess of the rate of dis-count for 90-day commercial paper prevailing at the timeof the advance at the Federal Reserve Bank of the districtin which the borrower is located. Minimum rates on di-rect loans, therefore, have necessarily been from 5f to 6per cent per annum, but the directors have found it neces-' sary to fix a rate approximating the going rate for loans ofthe class represented by the application; consequently therates of interest generally have been from 6 to 7 per cent,the lowest rate being 5 per cent for crop-moving loans,which are made under the provisions of section 7. Upondirect loans to cattle raisers in Texas, under section 9, theprevailing rate of 8 per cent was charged in order to avoidany unnecessary diversion of the business from normalchannels. Acceptances to 100 Per Cent*Since the issue of the December  BULLETIN the following banks have been authorized bythe Federal Reserve Board to accept drafts and January 1919
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