Evening star., 1932-06-17
RESERVE SYSTEM
EARNINGS DECLINE
Gross Return During 1881
Reached Lowest Level
in Four Years.
BY EDWARD c. STONE.

BY EDWARD c. STONE.
The eighteenth annual report of the
Federal Reserve Board. made public
today, covering the whole system, states
that gross earnings of the Reserve Bank
during the calendar year 1881 reached
the lowest level since 1927, amounting
to s29,7O1 900, or $6,732,000 less than
during the previous II months.
Net earnings of s2972 900 remained
after deducting current expenses OF
S27,040,O00, and making adjustments
for depreciation on bank premises re-
serves for losses, etc. This compared
with S8,081 900 netted in 1880.
The reduction in the years gross was
attributable, the board pointed out, to
the decrease from 1925 to 2.20 per cent
in the average rate of earnings on bills
and securities. The average rate on
discounted bills declined from 1893 per
cent in 1880 to sol per cent on bills
bought in the open market from 2.0J
to 2.G4 per cent. and on Government
securities from 306 to 1856 per cent
Current expenses of the reserve banks
in 1881 were S1,303,000 less than the
previous year, the reductions being af-
fected principally in cost of printing
issuing and redeeming Federal Reserve
notes, and in expenditures for salaries
and insurance
None of the Federal Reserve banks
reported sufficient net earnings to paw
accrued dividends in full. the report
said, and four of the inStitutionS-Bos-
ton. Richmond, ST. Louis and Kansas
Clty-reported an excess over income.
Accordingly. dividends of all Federal
Reserve banks were paid entirely or
in part out of surplus.
In addition. the report said, a re-
serve for depreciation on United States
bonds in the amount of $8,158,000 was
charged direct to surplus account, aid
ing in the reduction of Sl5,2l6,000 to
$3.50 100000 in this item at the end
of the year.
Turn May Come Gradually.
what did the bankers at Hot
Springs have to say on the outlook
and what date did they set for sub
Stantial business improvement? That
question has been heard frequently in
the financial district since the con-
Vention ended.
1t is hard to answer Local bankers
made no attempt to fix date tor
the recovery Nobody knows that.
They did. however. take a hopeful
view of the situation and many eX-
pressed the opinion that in some ways
the recovery was already under way.
The turn will come slowly. all agree,
as all important adjustments take
time. But optimism was noted among
the financiers, as well as expressed by
the speakers
Some bankers believe there will be
no particular date for the turn. 1t will
be individual, they say. Individuals and
corporations will get their own affairs
Oh sound business basis at different
times. Some concerns have cut their
costs down faster than others. so Will
start profits and resumed dividends
quicker than others. Thousands OF cor
porations will have small profits at the
end of the present year. Many banks
are paying the same dividends they
paid before the slump.
Harry Hawes, head of the A. B. A,
named 8 or 10 encouraging signs at the
convention which, he is sure, mean
return to national prosperity. Merle
Thorpe always in close touch with
business and the outlook, declares no
new low standards of living are TO be
permanently established. Things are
going to pick up and go long way
back toward the point at which they
stood when the crash came. After one
JOI utpl cSSiUlI lIlC lul IL toiiIC 81
quickly that in six months Pittsburgh
manufacturers had to put out signs
saying, Men wanted" Others have
ended very rapidly, he says, When peo-
pie got over their unWarranted fear.
It will be the same again. he declares.
Building Association Dividend.
The regular per cent dividend, pay
able per cent semiannually, was de-
clared yesterday by the Prudential
Building Association, payable on July l
to shareholders of record as of June 5.
The association reports an increase
of 1868 per cent in the corporations
assets during the past II months, total
subscribed capital as of May 81 being
S3411.925.
Directors of the association are Lu-
ther c. Steward. Curtis Walker, John
b Colpoys, Hugh Reid, T. Howard
Duckett. Thomas E. Hampton, Thomas
D. Lewis, and Harvey L. Cobb.
Section Soon to Elect Chairman
The fiduciaries section of the District
Bankers Association will soon have a
new chairman for the coming year. The
sections executive council, which was
named at the Hot Springs Convention
is empowered with the selection of the
chairman to succeed Kenneth F. Brooks,
assistant trust officer of the Riggs Ma
tional Bank.
The executive council. as now made
up. consists of T. Stanley Holland as
sstant trust officer of the American Sc
Curity & Trust Co.; William E. Howard
assistant trust officer National Bank of
Washington; Leonard Marbury, assist
ant trust officer, Washington Loan &
Trust Co.: David Bonet, assistant trust
officer, National Savings & Trust Co.,
and Sidney F. Taliaferro, trust officer,
Riggs National Bank
Two other sections of the association
audit and safe deposit-will also Or
ganize for the year in few days.
Failures Decrease in the South.
In spite of the fact that the actual
number of business failures reported to
BradStreets for the week ended June 9
increased sharply. rising from 489 to
555, the adjusted index fell to 1898 per
cent of the 1928-30 average, the lowest
point of the year with the exception of
the first week in January. This was due
to the fact that the actual increase,
although 1875 per cent. was still less
than the normal expected gain of 155
per cent, causing the index TO continue
its decline of the two previous weeks
Number of failures increased in all
geographical regions except the South
Atlantic and South Central, which
showed small declines. The greatest
increases occurred in the Middle At
lantic and Pacific Coast sections. Con-
Nersely only two districts showed gains
in liabilities, those being the Central
and Pacific Coast, due mainly to the
suspension of a large bank IN each. The
New England section registered the
most marked decrease in liabilities