The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-08-05
SURPLUS SHOWN BY
U. S. RESERY BANKS
Most Of Profits Of the System
Come From RediscOunt-
ing Paper.
EARNINGS 4.3 PER CENT,

WASHINGTON, Aug. "A first COM
paratlve statement Of the earnings and
expenditures Of the twelve Federal re-
serve banks from the organization Of
the system on November l6 last year
to June 30 was made public to-day by
the Federal Reserve Board. II shows
that the earnings were s91s.5ss.5s or
$685. 900 above current expenses. The
report says
During that period expenditures Of
about s1.17T,00 were incurred. but OF
this sum s37s.922 was for organization
expenses. $202.l36 for equipment and
s302.l59 for the cost OF preparing Fed
eral reserve notes. These expenditures
hould be distributed over a period per-
haps Of several years Of operation. Cur
rent expenses during the seven and one
half months were ss9t.l11.
The earnings OF the syvtem during
June were sl63.741.07. or more than one
third greater than the average monthly
earnings for the seven and one-half
months since November Is. 1914. Cur
rent expenses for June were. however.
only sl~22.47392. which Is less than 3
per cent. in excess OF the average
monthly current expenses OF the banks
TO June 80. These figures furnish a
basis of comparison between conditions
at this time and the average for the en-
tire period covered by h statements OF
expenses and earnings.
Earnings Are Above Expenses.
THE statement shows average earn
ings for what may be roughly termed
the first one-half year OF the operation
Of the system OF 4.3 per cent. on capital.
against an average percentage Of cur
ron expenses TO capital OF ~ per cent.
The Federal Reserve Bank OF Richmond
reports 10 per cent. OF net earnings, by
which is meant total earnings less cur
rent expenses. and the Federal Reserve
Bank of Atlanta earnings of 6.l per cent.
THE net earnings OF the Federal Re-
serve Bank OF Dallas for the same
period are "a per cent. Gradual growth
In the financial strength OF the banks
IL seen in the fact that for June earn
ings in excess OF current expenses were
shown by the Federal reserve banks OF
Boston and San Francisco besides the
three Southern banks. which SHOW excess
and Chicago banks. which show excess
OF earnings over current expenses for
the entire period under consideration.
'Of the total So per cent. was from
notes discounted. over "a per cent. from
municipal warrants. a little over 10
per cent. from acce2tances. about s per
cent. from United States bonds. and
less han / per cent. from miscellaneous,
mainly exchange operations.
"Oyer 81 per cent. OF the total earn
!ngs are credited to the three Southern
banks. the earnings OF the Richmond
bank being exceeded only by those OF
the New York bank. whose paid in
capital Is. however. almost % per cent.
in excess OF the combined paid-in capital
OF the three Southern banks. In all four
banks. viz. New York. Richmond. Chi.
cago and Atlanta. each reports over
$780, 600 OF total earnings for the seven
and one-half months under DISCUSSION.
These four banks. as we'll as Dallas,
show an excess OF earnings over cur.
rent expenses.
Most Fronts From Rediscounts.
while nearly 60 per cent. OF the
total earnings OF all the banks IL de
rived from red!scounts OF commercial
paper. this percentage Is very close to
100 In the case OF the three Southern
banks and much less for the Eastern
banks. whose principal earnings are
from funds invested In municipal war.
rants. This IL particularly true OF tn.
New York bank. whose earnings from
investments IN the latter class OF paper
constituted over so per cent. OF its tota'
earnings. The Boston and Philadelphia
banks report about so per cent. ant
Cleveland over ~ per cent. OF all earn
lngs from this class OF business.
"The Western banks, including Sar
Francisco. show without exception
larger earnings from investments IL
United States bonds than from invest
ments In municipal paper. which IL H.
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