Vashon Island news-record. [volume] (Vashon, Wash.) 1919-1954, 1930-06-26
RESERVE SYSTEMS
DIVIDENDS ANALYzED
Bankers Find Increased Pay
rnents to Member Banks Would
Be Small Inducenent.

Various proposals that member
banks In the Federal Reserve System
should participate more largely in Its
net earnings through an increase in
the dividend rate above the present
fixed per cent would be a very
email financial inducement" to them,
Il ia declared In d recent study Of this
subject by the Economic Policy Com.
mission Of the American Bankers Az
ISOLATION. This Is shown, the commits.
sion says, by a theoretical forecast, on
the basis of the past six years, Of ad-
ditional earnings that would be dis
bursed to member banks during the
next ak years under two plans intro
duced In bills before the United States
Senate.
"The Fletcher bill provides that
Federal Reserve Bank earnings, after
present Q per cent dividends to mem.
bers and completion Of 100 per cent
surplus, should oil be distributed as
extra dividends TO the stakeholder
banks" the report says. "If the earn.
ings Of each Federal Reserve bank
were distributed among It's own mem.
bers there would be no extra divi.
dends in the Boston, New York Phila,
adelphia, Cleveland, Chicago and San
Francisco districts during the next
six years, but the other elk Federal
Reserve Banks would pay annual ex-
tras at the following rates: Richmond,
sos per cent; Atlanta, 400 per cent;
st. Louis, $50 per cent; Minneapolis,
s.51 per cent; Kansas City. 6.4s per
cent; Dallas. 1888 per cent.
"If the earnings were pooled and
paid out to all members in all districts
each member would receive an aver
age annual extra dividend Of .78 per
cent. Under this plan no franchise
tax as now would be paid by the Fed.
eral Reserve Banks to the Federal
Government.
Another Plan Anaiyxsd
aThe Glass bill. would provide that,
after present per cent dividends.
one-half the remainder should be paid
to member banks as an extra divi-
dend with the residue going to sur
plus and Federal Government as fran
chise tax. The average annual extras
to members would be as follows: Bos-
ton District, 2.51 per cent; New York,
| .ls per cent; Philadelphia, 3.05 per
cent; Cleveland, 200 per cent; Rich
mond, 3.26 per cent; Atlanta, 4.67 per
cent; Chicago, $50 per cent: st. Louis.
202 per cent; Minneapolis, l75 per
cent; Kansas City, a.74 per cent; Dali
Las, al per cent; San Francisco. 1.s7
per cent.
III those extra funds were pooled the
result would be an extra average an
nual dividend Of liza per cent for each
member. Under this plan the system
would still pay as now an annual fran
chise tax, amounting to $1,s41,sse on
| the average"
BY way Of concrete instance. the
report says, q member bank having
capital and surplus Of 100000, there
fore holding Federal Reserve Bank
stock amounting TO $4,000 on which II
is receiving $3.50 under the present 8
per cent dividend arrangement, would
with the addition Of each 1 per cent
to the dividend rate receive en- add
tional income Of $50 a yoar.
"It each member bank will figure
out for itself the dollarand-cents gair
| Il would enjoy we are confident II
will be agreed that the gains are small
as against the economic disadvantages
which can be pointed out" It con
cludes.