The Carbon County news. [volume] (Red Lodge, Mont.) 1924-1931, 1930-07-03
RESERVE SYSTEMS
DIVIDENDS ANALYzED
Bankers Find Increased Pay
ments to Member Banks
Would Be Small InduCement.

Various proposals that member
banks in the Federal Reserve Sys-
TEN should participate more largely
il its net earnings through an in
crease in the dividend rate above
the present fixed G per cent would
be q very small financial induce
ment" to Them it is declared in q
recent study Of this subject by the
Economic Policy Commission of
the American Bankers Association.
This is shown, the commission
says, by a theoretical forecast, on
the basis Of the past six years, Of
additional earnings that would be
disbursed to member banks during
the next six years under two plans
introduced in bills before the United
States Senate.
1.-THE Fletcher bill provides that
Federal Reserve Bank earnings,
after present 6 per cent dividends
to members and completion of a
100 per cent surplus, should all be
distributed as extra dividends to
the stakeholder banks" the report
says. "If the earnings Of each
Federal Reserve bank were distrib-
Gted among it's own members there
would be no extra dividends in the
Boston, New York, Philadelphia,
Cleveland, Chicago and San Fran
cisco districts during the next six
years, but the other six Federal
Reserve Banks would pay annual
extras at the following rates: Rich
mond, COS per cent; Atlanta, 400
per cent; St. Louis, $50 per cent;
Minneapolis, 9.51 per cent; Kansas
lily, 5.4S per cent; Dallas, 4.S3 per
cent.
"If the earnings were pooled and
paid out to all members in all dis
tricts each member would receive
an average annual extra dividend
of rs per cent. Under this plan
no franchise tax as now would be
paid by the Federal Reserve Banks
to the Federal Government.
Another Plan Analysed
"The Glass bill would provide
that, after precent 6 per cent divi-
dends, one-half the remainder
should be paid to member banks
as an extra dividend with the resi-
due going to surplus and Federal
Government as franchise tax. The
average annual extras to members
would be as follows: Boston Dis
trict, 2,51 per cent; New York, AS
per cent; Philadelphia, 2.O5 per
cent; Cleveland, 209 per cent;
Richmond, 1926 per cent; Atlanta,
ACT per cent; Chicago, 800 per
cent; st. Louis, 2.O2 per cent; Min
neapolis, Ats per cent; Kansas
City, ETA per cent; Dallas, 3.31 per
cent; San Francisco, 1877 per cent.
IF these extra funds were pooled
the result would be an extra aver
age annual dividend of 1.73 per
cent for each member. Under this
plan the system would still pay as
now an annual franchise tax,
amounting to $1,941, 1896 on the aver
age"
By way of concrete instance, the
report says, a member bank having
capital and surplus of 100000,
therefore holding Federal Reserve
Bank stock amounting to $4,000 on
which it is receiving $3.50 under
the present 6 per cent dividend ar
rangement, would with the addition
Of each / per cent to the dividend
rate receive an additional income
of $50 year.
"If each member bank will figure
out for itself the dollar-and-cents
gain it would enjoy we are conf
dent it will be agreed that the
gains are small as against the eco.
nomic disadvantages which can be
pointed out" it concludes.