Evening star., 1921-06-05
BANKERS ANTICIPATE ACTION OF
MpORTBY SECRETARY MELLON
Look for Wise Recommendations From
Successful FinancierTreasury Gould
Well Use Part of Foreign Debt.


government forms. For the purpose
Of handling the details of the trans
action the Polish government has
designated the Guaranty Trust Com
pany of New York its agent in Amer
lea for distributing these official
forms to banks and remittance agents
throughout the United States for clear
ing remittanceS and for computing
Jointly with the Polish government
the rates of exchange.
It is the ambition of the Polish
government to make this service as
broad as possible in the interests of
its people in the United States. Any
reputable banker remittance agent
may obtain the necessary government
blanks by making inquiry of the
guaranty Guar n.y.. Trust Company Of New
Broadway. New York city.
Profits Of Reserve Banks.
The Bache Review makes the fol-
lowing interesting comment on the
earnings of the federal reserve re-
gional banks:
The federal reserve banks have a
net paid-in capital of $9i.234.OO The
current net earnings of the twelve
over current expenses-totaled $751;
40S.031 for the year 1920. In 1919
they earned $S2.03S.7s5. These earn
ings constitute 9S.2 per cent on the
average paid-in capital in 1919. and
1907 per cent on the capital in 1920.
If we combine the paid-in capital
and the deposits. or reserve balances
Of all the banks-namely. $1.924,S33.-
000-the rate of these current net
earnings works out at 7.9 per cent for
the system as a whole. On this basis
earned II per cent; the New York
bank, 7.2 per cent. and the Dallas
bank-the low fate-5.6 per cent.
The following list shows the per
cent earned on capital for the year
Boston. 1878; New York. 217.4: Phil
adelphia, 116.S; Cleveland. 11s: Rich
mond, 1903: Atlanta. 162; Chicago.
Chicago. 1855; st. Louis. 124.3: Min
neapolis: 1915: Kansas City. 1898:
Dallas. ss.s. and San Francisco. 1891.
Dividends at the rate of per cent
were paid by sthe Federal Reserve
Bank during the year. Under the
reserve act all net earnings. after de-
duction of 6 per cent cumulative
dividend, must be paid into a sur
plus fund until this fund shall have
reached 100 per cent of the total sub
scribedt capital. and thereafter 16 per
cent of such net earnings is to be
carried, to surplus (so-called SUPER
surplusJ. while the remainder is to
go as a franchise tax to the gov
In 1920. the federal reserve banks
carried $76,16s.2S7 to normal surplus.
and in addition nine banks. whose
normal surplus accounts had reached
100 per cent of the subscribed capital.
carried $6.747.727 to super-surplus &C
count.
At the opening of 1921 the total
surplus of the federal reserve banks
stood at s202 2.036.367. or 1912 per cent
Of the banks total subscribed capital.
For the several reserve banks. the
n of tot had
capital showed the following per-
centages:
Boston. 1o1.s per cent: New York.
1910 per cent; Philadelphia, 1902 per
| cent: Cleveland. $40 per cent; Rich
mond. 1902 per cent: Atlanta, 1929
Louis. 95.6 per cent; Minneapolis,
1908 per cent: Kansas City, 1923 per
cent; Dallas, 1875 per cent, and San
Francisco, 1025 per cent.
A Suggestion.
The change in the federal reserve
act on March 5, 1919. was a wise one.
as it operated to make the system
than ever, diverting a large extra
per cent of earnings to strengthen
ing the great institution. instead Of
! paying huge sums into the United
/ States Treasury, to be spent by Con-
gress.
l
amendment, having now reached Q
| surplus of 100 per cent of its capital.
the overflow going partly to buud UP
q super-surplus and partly TO be paid
as franchise tax to the government. it
| may once more become a question
worthy of deliberation whether this
franchise money could not be better
used than to pour it into depository
the United States Treasury-which
has always had some Of the absorp-
tive qualities of rat hole. and has
especially exhibited these attributes
during and Since the war.
On this matter. we venture a sug-
gestion to the effect that with this
| overflow of earnings. instead of pay
ing the amounts into the Treasury. a
fund be established to, in some way.
benefit the member banks as a whole !:
| tions, but for the purpose. let us say.
/ of liQuidating the liabilities of fall
ed member banks. whose assets have
not fully taken care of their debts.
This could be done at first under some
pro rata or percentage arrangement.
reached proportions large enough 20
| fully pay up unliQuidated liabilities
| as they occurred.
Such guarantee fund against the
| incidence of disaster would constitute
a most desirable measure to foster
system. extending to its outer and ac-
| cidentally damaged edges.
| 1t would not be aGguarantee Of de-
posits as usually understood. but
would very probably have the good
effect of leading all financial insti-
tutions eligible to membership in the
federal reserve system. who had not
yet Joined, to do so.
| The Busy Man.
| John Floyd Cissel, chairman Of trans
portation and hotel assignments for
the District Bankers Association 10 q