Ample credit resources at reasonable rates are an indispensable factor in the development of a country and in the growth and prosperity of its business and productive enterprises. The primary purpose of the Federal reserve act was to so alter and strengthen our banking system that the enlarged credit resources demanded by the needs of business and agricultural enterprise will come almost automatically into existence, and at rates of interest low enough to stimulate, protect, and prosper all kinds of legitimate business, and to bring about ultimately a greater equality in interest rates throughout the country.

FEDERAL RESERVE BANKS AS FISCAL AGENTS.

Section 15 of the Federal reserve act provides that

*

The moneys held in the general fund of the Treasury may, upon the direction of the Secretary of the Treasury, be deposited in Federal reserve banks, which banks, when required by the Secretary of the Treasury, shall act as fiscal agents of the United States *

I have determined to appoint the Federal reserve banks depositaries and fiscal agents of the United States-effective January 1, 1916. In order that the reserve banks may not be embarrassed by the addition of an unduly large volume of business upon undertaking their functions in this connection, I have decided to make a beginning by transferring to each of the Federal reserve banks the funds of the Government now on deposit with the national banks in each of the cities in which a bank is located, thus giving to each of the reserve banks the funds held by the national banks in its own city. Each Federal reserve bank will be required to perform on behalf of the Government the services which are now rendered by the national-bank depositaries located in said cities, as well as any other services incident to or growing out of the duties and responsibilities of fiscal agents.

I have deferred action until this time in order that the organization of the Federal reserve banks might be completed and gotten into good working order through experience and practice, and with the hope that a satisfactory clearing and collection system would by this time have been evolved. I feel convinced, however, that I should not longer delay giving these banks the opportunity of performing these services for the Government and enlarging their field of usefulness.

CROP-MOVING DEPOSITS.

In August, 1913, I made an allotment of Government funds to the national banks in the crop-moving sections of the country as follows: To the South and Southwestern States, $22,550,000; to the Middle, Northwestern, Pacific, and Rocky Mountain States, $23,950,000, or a total of $46,500,000. These allotments were drawn

upon by the banks in those sections of the country to the extent of $37,386,000, all of which was returned to the Treasury on or before April 1, 1914. The Government received as interest, at the rate of 2 per cent, on these deposits $267,844.51.

In the fall of 1914 I made an allotment of funds for crop-moving purposes, these allotments being based upon replies received to a circular letter sent to all the national banks in the country in June, 1914, asking them to indicate their needs for the crop-moving season. These funds were distributed as follows: To the Southern States, $23,500,000; to the Western and Pacific States, $13,825,000. The total amount drawn by the banks from the Treasury was $23,135,844, all of which was repaid to the Treasury on or before July, 1915. The Government received as interest, at the rate of 2 per cent, on said deposits a sum amounting in the aggregate to $189,584.20.

In the year 1915, as before stated, $15,000,000 was deposited with the Federal reserve banks at Richmond, Atlanta, and Dallas. No deposits were made in the Federal reserve banks of St. Louis, Kansas City, Minneapolis, and other cities for crop-moving purposes, because, as already shown, they were not in need of funds for such purposes.

The following is a comparative statement of interest received on public deposits for the past five fiscal years:

1911

1912

1913

1914

1915

$41, 757.53 44, 462. 26

122, 218. 39

1, 409, 426. 07 1, 222, 379. 75

The increase in the amount of interest collected for 1913, 1914, and 1915 is due to the fact that, beginning with June, 1913, interest has been charged upon all public deposits at the rate of 2 per cent per

annum.

STOCK OF GOLD.

The unprecedented situation in Europe rapidly changed the United States from a debtor to a creditor nation. Although the panicky condition of the foreign exchange market caused large exports of gold to belligerent countries in September, November, December, 1914, and January, 1915, the balance of trade began early in the present calendar year to favor the United States and increased until, in November, it amounted to more than a billion and a half dollars. Our stock of gold coin and bullion increased from $1,805,876,580 on January 2, 1915, to $2,198,113,762 on November 1, 1915, by far the largest amount of this precious metal ever held by any one country. The indications at the time of writing this report were that our gold supply would be greatly augmented in the immediate future by further shipments from Great Britain, South Africa, Canada, and Australia,

It is interesting to note that the production of our own mines, including those in Alaska, for the calendar year 1914 totaled $94,531,800, an increase of $5,647,400 over the year 1913, and that the production in South African mines was $199,387,707, which is within a few million of the production of 1912 ($208,854,346) and of 1913 ($204,164,279), the record years for that country.

The following table shows the stock of gold coin and bullion in the United States each month from May 1, 1914, giving the increases and decreases as they occurred:

Stock of gold coin and bullion in the United States.

From September 2, 1914, to November 10, 1915-slightly over 14 months-policies have been written on war risks aggregating $89,245,052. The total number of policies written was 1,283, or an average of nearly 100 a month. The total net premiums received by the bureau amounted to $2,127,976.70.

The losses paid aggregate $744,128, being for the Evelyn, Carib, Greenbrier, William P. Frye, and certain Navajo cargo. Salvage of $48,143.68 has been received on account of the Evelyn, however, making the net losses $695,984.32. Possible further salvage remittances are to come. The net losses paid, deducted from the premiums received $2,127,976.70-leave a surplus of premiums received of $1,431, 992.38.

The administration of the bureau has been most economical, the total expenses of organizing, printing, stationery, etc., together with the salaries of the entire force, amounting to only $20,482.91 up to November 1, 1915. The amount appropriated for the expenses being $100,000, there remains a balance of $79,517.09.

The possible outstanding claims are estimated at $250,000, and the total amount of insurance at risk on November 10 was $6,943,480.

1,283 POLICIES ISSUED FROM SEPT. 2, 1914, To Nov. 10, 1915.

Total amount insured_.

Premiums on same_

Total amount at risk (on Nov. 10, 1915).

Known losses to date (paid).

Possible outstanding claims_

Salvage received to date___

Net losses (paid)__.

Total expenses of bureau to Nov. 1, including salaries of entire

force

Total premiums received__

Net losses paid---.

$89, 245, 052, 00

2, 127, 976. 70

6, 943, 480. 00 744, 128. 00 250,000.00

48, 143. 68

695, 984. 32

20, 482.91

2, 127, 976. 70 695, 984. 32

Surplus premiums on hand____.

PAN AMERICAN FINANCIAL CONFERENCE.

1, 431, 992. 38

The diplomatic and consular appropriation bill approved March 4, 1915, authorized the President to extend an invitation to the Governments of Central and South America to be represented by their ministers of finance and leading bankers at a conference with the Secretary of the Treasury in Washington with a view to establishing closer and more satisfactory financial relations between the countries of Central and South America and the United States. It also gave the Secretary of the Treasury authority to invite, in his discretion, representative bankers of the United States to participate in such conference, and appropriated $50,000 for the expenses of the conference and for the entertainment of the foreign conferees.

In pursuance thereof, a conference was held in the city of Washington on the 24th day of May, 1915, in the building of the Pan American Union, at which 18 of the Central and South American Republics were represented. A large number of representative bankers and business men of the United States were invited and attended the conference, which continued its sessions from the 24th to the 29th of May, 1915. A full report of the proceedings has been published and distributed.

I feel confident that results of a very far-reaching and beneficial character have been secured by the work already done, and that additional and highly beneficial results will flow from the work which has been organized and undertaken in connection with the proceedings of the conference. We have an extraordinary opportunity to enlarge our trade interests and financial influence in all of the Central and South American countries, and the relations established between their representatives and those of this country by the Pan American Financial Conference are sure to increase and strengthen

friendly and commercial relations with all of the countries concerned.

I strongly recommend that the Congress make an appropriation of $50,000 for the purpose of holding a second Pan American Financial Conference in the city of Washington in 1917. In my report to the President (copy of which is attached as Exhibit D to this report) I recommended that such a conference be held in 1916, but in view of the fact that it is proposed to have a meeting of the International High Commission, appointed as a result of the action of the Pan American Financial Conference, in Buenos Aires in April, 1916, for the purpose of considering and taking steps to bring about uniformity of laws relating to bills of exchange, commercial paper, bills of lading, uniform classification of merchandise, customs regulations, consular certificates and invoices, port charges, uniform regulations for commercial travelers, etc., it has seemed best to hold the second Pan American Financial Conference in Washington in the year 1917.

All of the steps taken in connection with future financial conferences and the meeting of the International High Commission on Uniformity of Laws in Buenos Aires, in April, 1916, have been taken with the approval of the President and with the cordial cooperation and assistance of the Secretary of State. In fact, a large part of the success of the conference of 1915 has been due to the cordial and effective assistance rendered by the State Department.

The forthcoming meeting in Buenos Aires of the International High Commission on Uniformity of Laws promises results of very great importance to all of the countries involved, as well as to the United States. Nearly all of the Governments of Central and South America have appointed international high commissions to attend the Buenos Aires conference.

I respectfully recommend that a small appropriation be made for the purpose of enabling the United States section of the International High Commission to carry on the important work intrusted to it by the recent Pan American Financial Conference. The sum of $25,000 will, I believe, be sufficient for this purpose.

INCOME TAX.

For the fiscal year ended June 30, 1915, the total receipts from personal income tax were $41,046,162.09, an increase of $12,792,627.24 over the preceding year. The total receipts from corporation income tax for the fiscal year ended June 30, 1915, were $39,144,531.71, a decrease of $3,983,208.18. The increase in the personal income-tax receipts was due in great measure to the fact that the collections for the fiscal year 1915 were for a period of 12 months, whereas the collections for the fiscal year 1914 were for 10 months, and also to the