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THE ESTABLISHMENT AND OPERATION OF
BRANCHES, AGENCIES AND CURRENCY FUNDS OF
FEDERAL RESERVE BANKS

Prepared i n
D i v i s i o n o f Examinations,
Board o f Governors
of the
Federal Reserve System
1938




TABLE OF CONTENTS
PART I
Organization History
Pag©
Introduction.....

...

.......

1

Dates o f establishment o f F e d e r a l Reserve branches,
agencies, end currency funds which were i n operat i o n as o f December 51, 1 9 5 7 . . . . .

5

L e g i s l a t i v e Background

5

.
%

The Work o f the Federal Reserve O r g a n i z a t i o n Committee
and the P r i n c i p a l Factors which I n f l u e n c e d i t s
S e l e c t i o n o f Reserve C i t i e s . . .

8

A t t i t u d e o f the Federal Reserve O r g a n i z a t i o n Committee
Toward the Establishment o f Branch O f f i c e s o f F e d e r a l
Reserve Banks
*

9

Some o f the E a r l y Problems o f the Federal Reserve Board the Establishment o f the New Orleans B r a n c h . . .

11

General A t t i t u d e o f t h e Board Toward the Establishment
o f Branches i n 1916 - the Memphis Agency

15

Branches i n the P a c i f i c Northwest - Standard Branch
By-Laws Adopted

17

Other Branches E s t a b l i s h e d During 1917

20

Memorandum Plan Branches - Chief Reasons f o r
Development.
Branch O f f i c e s E s t a b l i s h e d During 1918..

..
*

20
23

Branch O f f i c e s E s t a b l i s h e d During 1919
Branch O f f i c e s E s t a b l i s h e d During 1920 and 1921 Oklahoma C i t y Controversy

27

Board's Power t o D i s c o n t i n u e Branches - The McFadden A c t

30

Branches a t San A n t o n i o , Texas, and C h a r l o t t e , North C a r o l i n a

31

Havana Agency.

34

Currency Funds - Scran t o n , P e n n s y l v a n i a . . .

45




25

PART I I
Results o f Previous Branch and Agency
Surveys made Toy t h e Board
Page
Branch I n v e s t i g a t i o n o f 1924

.

Branch Survey o f 1930

.

50
55

Review o f Branches by Board 1 s F i e l d Examiner - 1935

55

Branch Survey o f 1936. . . . . . . . .

56
PART I I I

Current S t a t i s t i c a l Data and Comments i n
Connection w i t h the Operation o f Each o f
the Branches, Agencies and
Currency Funds
Federal Reserve Bank o f New York:
B u f f a l o Branch
.

59

Federal Reserve Bank o f P h i l a d e l p h i a :
Scranton Currency Fund

70

Federal Reserve Bank o f Cleveland:
C i n c i n n a t i Branch
P i t t s b u r g h Branch

74
84

Federal Reserve Bank o f Richmond:
B a l t i m o r e Branch
C h a r l o t t e Branch
Federal Reserve Bank o f A t l a n t a :
Birmingham Branch
Havana Agency
.........
J a c k s o n v i l l e Branch.
N a s h v i l l e Branch.
New Orleans Branch
Savannah Agency

.

94
103

.
.

112
121
130
140
149
159

Federal Reserve Bank o f Chicago:
D e t r o i t Branch

164

Federal Reserve Bank o f S t . L o u i s :
L i t t l e Rock Branch
L o u i s v i l l e Branch
Memphis Branch

175
184
193




Paffe
Federal Reserve Bank o f Minneapolis:
Helena Branch

202

Federal Reserve Bank o f Kansas C i t y :
Denver Branch.
Oklahoma C i t y Branch
Omaha Branch

217
228
237

Federal Reserve Bank o f D a l l a s :
E l Paso Branch.
Houston Branch
San Antonio Branch..

247
258
269

Federal Reserve Bank o f San Francisco:
Los Angeles Branch..
.
P o r t l a n d Branch
S a l t Lake C i t y Branch
S e a t t l e Branch
Spokane Branch

280
290
500
509
320







PART I

ORGANIZATION HISTORY

INTRODUCTION

Section 3 o f the Federal Reserve Act as o r i g i n a l l y enacted p r o v i d e d
that
"Each Federal reserve bank s h a l l e s t a b l i s h branch
banks w i t h i n t h e Federal reserve d i s t r i c t i n which
i t i s located
"
but gave the Board no a u t h o r i t y t o disapprove or t o i n i t i a t e a c t i o n i n conn e c t i o n w i t h t h e establishment o f a branch.

Notwithstanding the f a c t t h a t

i t had no s p e c i f i c a u t h o r i t y i n t h e m a t t e r , the Board i n the e a r l y days o f
the System was subjected t o s t r o n g pressure t o e s t a b l i s h branches i n s e v e r a l
c i t i e s throughout t h e l a n d but t h e Federal Reserve banks appeared t o be d i s i n c l i n e d t o open new o f f i c e s .

As a r e s u l t t h e r e was some a g i t a t i o n f o r

l e g i s l a t i o n making i t compulsory f o r t h e Board t o e s t a b l i s h branches and t o
f o r e s t a l l such a c t i o n t h e Board sponsored an amendment, which became
e f f e c t i v e on June 21, 1917, changing S e c t i o n 5 o f the Act t o read:
"The Federal Reserve Board may p e r m i t o r r e q u i r e any
Federal Reserve bank t o e s t a b l i s h branch banks w i t h i n the F e d e r a l Reserve d i s t r i c t i n which i t i s
located
"
P r i o r t o the passage o f t h e amendment o n l y one branch o f f i c e (New Orleans)
had been e s t a b l i s h e d but w i t h the change i n t h e law t h e number o f nev/ branches
increased r a p i d l y , f i v e b e i n g e s t a b l i s h e d i n t h e l a t t e r p a r t o f 1917; ten
d u r i n g 1918; f o u r i n 1919; two i n 1920, and one i n 1921; a t o t a l o f 23 branches
being i n o p e r a t i o n a t t h e end o f 1921.
Considerable doubt e x i s t e d d u r i n g t h i s p e r i o d as t o t h e a u t h o r i t y o f t h e
Board, once a branch had been e s t a b l i s h e d , t o r e q u i r e i t s discontinuance even
though subsequent developments c l e a r l y i n d i c a t e d t h a t i t s o p e r a t i o n was unnecessary.




This p o i n t was, however, C l a r i f i e d by t h e passage o f the McFadden

Act on February 25, 1927, which added a paragraph t o S e c t i o n 5 o f the F e d e r a l
Reserve Act s p e c i f i c a l l y a u t h o r i z i n g the Board t o r e q u i r e the discontinuance
o f any branch e s t a b l i s h e d under t h a t s e c t i o n .

Two a d d i t i o n a l branches (San

Antonio and C h a r l o t t e ) which had been approved s u b j e c t t o the passage o f t h e
McFadden A c t , commenced o p e r a t i o n s d u r i n g 1927, i n c r e a s i n g t h e number o f
branches t o 25.

No branches have been e s t a b l i s h e d since 1927.

Up t o December

51, 1937, no branch had ever been d i s c o n t i n u e d ; however, one agency, the
Havana Agency o f the Federal Reserve Bank o f Boston, and s e v e r a l currency
funds have been d i s c o n t i n u e d .
The m a t t e r o f the expense o f o p e r a t i o n o f brandies was, o f course, o f
primary importance i n t h e e a r l y days o f t h e System and as an inducement t o
o b t a i n branches, c l e a r i n g house banks i n a t l e a s t one c i t y o f f e r e d to raake up
any d e f i c i t i n expenses o f the branch f o r t h e f i r s t y e a r , w h i l e banks i n
o t h e r c i t i e s agreed t o r e d i s c o u n t paper i n s u f f i c i e n t amounts t o p e r m i t earni n g s t o cover any d e f i c i t , o r t o employ t h e branch t o conduct c l e a r i n g house
examinations, paying as compensation an amount equal t o t h e previous cost o f
conducting such examinations.

However,, w i t h the increased earnings o f t h e

Federal Reserve banks d u r i n g and immediately f o l l o w i n g the Great War, the
expense o f o p e r a t i o n g r a d u a l l y became o f l e s s importance i n connection w i t h
the establishment o f branches, the primary c o n s i d e r a t i o n l a t e r being the
r e n d e r i n g o f s e r v i c e t o member banks and through them t o commerce, i n d u s t r y
and a g r i c u l t u r e .
The f o l l o w i n g pages present i n some d e t a i l a general h i s t o r y o f t h e branch
q u e s t i o n and a review o f t h e p r i n c i p a l c o n s i d e r a t i o n s i n v o l v e d i n the s e l e c t i o n
o f t h e v a r i o u s Federal Reserve branch, agency, and currency fund c i t i e s ( P a r t 1)
t h e r e s u l t s o f previous branch surveys made by the Board ( P a r t 2 ) , and
p e r t i n e n t c u r r e n t s t a t i s t i c a l , data and comments i n connection w i t h the operat i o n o f each o f such u n i t s ( P a r t 3 ) .



2

-5-

Dates o f establishment o f Federal Reserve branches, agencies* and currency
funds which were i n o p e r a t i o n as o f December 51, 1957»
Federal Reserve Bank

Branch

Date E s t a b l i s h e d

New York

Buffalo

May 15, 1919

Cleveland

Cincinnati*
Pittsburgh*

January 10, 1918
A p r i l 22, 1918

Richmond
I!

Baltimore
Charlotte

March 1 , 1918
December 1 , 1927

Atlanta
!!

Birmingham*
Jacksonville*
Nashville*
New Orleans

August 1 , 1918
August 5, 1918
October 21, 1919
September 10, 1915

Chicago

Detroit

March 18, 1918

St. Louis

L i t t l e Rock
Louisville
Memphis

January 6, 1919
December 5, 1917
September 5, 1918

Minneapolis

Helena

February 1 , 1921

Kansas C i t y

Denver
Oklahoma C i t y *
Omaha

January 14, 1918
August 2, 1920
September 4 , 1917

E l Paso
Houston
San Antonio

June 17, 1918
August 4 , 1919
J u l y 5, 1927

Los Angeles
Portland
S a l t Lake C i t y
Seattle
Spokane

January 2, 1920
October 1 , 1917
A p r i l 1 , 1918
September 19, 1917
J u l y 26, 1917

t!

It

II

it

tt

tt

Dallas
tt
it

San Francisco
ti
it
tt

n

Agency
Atlanta
it

Havana
Savannah

September 1 , 1925
February 4, 1919

Currency Fund
Philadelphia

Scranton

October 26, 1925

* Operated on "Memorandum Plan"




3

FEDERAL

« w » s g g "SSXi K S

T




S

S S S W -

—

RESERVE DISTRICTS

LEGISLATIVE BACKGROUND
The Federal Reserve O r g a n i z a t i o n Committee 1 was d i r e c t e d under Section
2 o f the Federal Reserve Act

!t

t o designate n o t l e s s than e i g h t nor more than

twelve c i t i e s t o be known as Federal reserve c i t i e s " ; t o " d i v i d e the
c o n t i n e n t a l U n i t e d S t a t e s , e x c l u d i n g Alaska,, i n t o d i s t r i c t s , each d i s t r i c t

to

c o n t a i n o n l y one o f such Federal reserve c i t i e s " ; and t o a p p o r t i o n t h e d i s t r i c t s " w i t h due regard t o the convenience and customary course o f b u s i n e s s , "
I t was recognized t h a t i n so l i m i t i n g the number o f r e g i o n a l banks and d i s t r i c t s (as wass deemed necessary i n order t o i n s u r e a s t r o n g and manageable
d e ~ c e n t r a l i z e d banking system) c e r t a i n c i t i e s would be d i s a p p o i n t e d and many
t r a d e areas throughout t h e c o n t i n e n t a l U n i t e d States would s u f f e r some d i s advantages.

I n order t o minimise such disappointments .and disadvantages,

S e c t i o n 5, which read as f o l l o v / s , was i n c o r p o r a t e d i n t h e A c t :
"Each Federal, reserve bank s h a l l e s t a b l i s h branch banks
w i t h i n t h e Federal reserve d i s t r i c t i n which i t i s l o c a t e d
and may do so i n the d i s t r i c t o f any Federal reserve bank
which may have been suspended. Such branches s h a l l be operated
by a board o f d i r e c t o r s under r u l e s and r e g u l a t i o n s approved by
the F e d e r a l Reserve Board. D i r e c t o r s o f branch banks s h a l l
possess the same q u a l i f i c a t i o n s as d i r e c t o r s o f the Federal r e serve banks. Four o f s a i d d i r e c t o r s s h a l l be s e l e c t e d by the
reserve bank and t h r e e by t h e Federal Reserve Board, and t h e y
s h a l l hold o f f i c e during the pleasure, r e s p e c t i v e l y , of the
parent bank and t h e F e d e r a l Reserve Board. The reserve bank
s h a l l designate one o f t h e d i r e c t o r s as manager."
As w i l l be noted t h i s s e c t i o n s t a t e d t h a t "Each Federal reserve bank
s h a l l e s t a b l i s h branch banks", and t h a t the Federal Reserve Board*s a u t h o r i t y
i n the matter was l i m i t e d t o approval o f r u l e s and r e g u l a t i o n s under which
such branches would operate and t o the s e l e c t i o n o f t h r e e o f t h e seven branch
directors.

N o t w i t h s t a n d i n g these s p e c i f i c p r o v i s i o n s i n t h e law the Board,

Composed o f W. G. McAdoo, Secretary o f the Treasury
D, F. Houston, Secretary o f A g r i c u l t u r e
John S k e l t o n W i l l i a m s , Comptroller o f the Currency



in

the e a r l y years o f the System, was subjected t o s t r o n g pressure t o e s t a b l i s h
branches.

C e r t a i n i n d i v i d u a l s also contended the p r o v i s i o n r e l a t i n g t o the

establishment o f branches was mandatory and t h a t t h e F e d e r a l Reserve banks i n
d e l a y i n g a c t i o n on a p p l i c a t i o n s f o r branches were n o t f u l f i l l i n g t h e i r d u t y
under t h e A c t .

As a r e s u l t t h e r e was some a g i t a t i o n f o r l e g i s l a t i o n making i t

compulsory f o r the Federal Reserve Board t o e s t a b l i s h branches.

I n order t o

f o r e s t a l l such l e g i s l a t i o n and t o c l a r i f y the p r o v i s i o n r e l a t i n g t o the appointment o f d i r e c t o r s o f branches, the Board announced d u r i n g the e a r l y p a r t o f
1917 t h a t i t was seeking an amendment t o S e c t i o n 5.

On June 21, 1917, S e c t i o n

5 was amended g i v i n g t h e Board a u t h o r i t y t o " p e r m i t o r r e q u i r e " any Federal
Reserve bank t o e s t a b l i s h branches.

The amended s e c t i o n t h e n read:

"Sec. 5. The Federal Reserve Board may p e r m i t or r e q u i r e
any Federal Reserve bank t o e s t a b l i s h branch banks w i t h i n the
Federal Reserve d i s t r i c t i n which i t i s l o c a t e d o r w i t h i n the
d i s t r i c t o f any Federal Reserve bank which may have been suspended. Such branches, s u b j e c t t o such r u l e s and r e g u l a t i o n s
as t h e Federal Reserve Board may p r e s c r i b e , s h a l l be operated
•under the s u p e r v i s i o n o f a board o f d i r e c t o r s t o c o n s i s t o f n o t
more than seven nor l e s s than t h r e e d i r e c t o r s , o f whom a m a j o r i t y
o f one s h a l l be appointed by the Federal Reserve bank o f the
d i s t r i c t , and the remaining d i r e c t o r s by the Federal Reserve
Board. D i r e c t o r s o f branch banks s h a l l h o l d o f f i c e d u r i n g the
pleasure o f the F e d e r a l Reserve Board."
P r i o r t o the passage o f t h i s amendment o n l y one branch o f f i c e (New
Orleans) had been e s t a b l i s h e d .

A f t e r i t s passage the number o f branches

r a p i d l y increased; f i v e being e s t a b l i s h e d i n the l a t t e r p a r t o f 1917; ten
d u r i n g 1918; f o u r i n 1919; two i n 1920 and one i n 1921; a t o t a l o f t w e n t y - t h r e e
being i n o p e r a t i o n a t t h e end o f 1921.
As t h e s e r v i c e s rendered t o member banks were broadened, the o p e r a t i n g
expenses o f branches increased f a r beyond o r i g i n a l e s t i m a t e s .

I t became ap-

parent t h a t t h e establishment o f a d d i t i o n a l branches, many o f which were




6

sought s o l e l y because o f c i v i c p r i d e , would increase an a l r e a d y heavy burden
o f expense w i t h o u t m a t e r i a l l y improving t h e e f f i c i e n c y o f t h e Reserve System
as a whole.
The branch question was a l s o complicated by the f a c t t h a t considerable
doubt e x i s t e d as t o whether t h e Federal Reserve Board, once a branch was
e s t a b l i s h e d , had any a u t h o r i t y t o r e q u i r e i t s discontinuance even though subsequent developments c l e a r l y i n d i c a t e d t h a t i t s o p e r a t i o n was unnecessary.
The McFadden A c t , which became e f f e c t i v e on February 25, 1927, added a
paragraph t o Section 3, s p e c i f i c a l l y a u t h o r i z i n g t h e Board a t any time t o
r e q u i r e t h e discontinuance o f any branch a l r e a d y e s t a b l i s h e d , o r t o be
e s t a b l i s h e d , under t h a t s e c t i o n .

The amended s e c t i o n ( g i v i n g e f f e c t t o the

change i n the Board 1 s o f f i c i a l t i t l e under t h e Banking A c t o f 1935) then read
and s t i l l reads as f o l l o w s :
"Sec. 5. The Board o f Governors o f the Federal Reserve
System may p e r m i t o r r e q u i r e any Federal reserve bank t o est a b l i s h branch banks w i t h i n the Federal reserve d i s t r i c t i n
which i t i s l o c a t e d o r w i t h i n the d i s t r i c t o f any Federal
reserve bank which may have been suspended. Such branches,
s u b j e c t t o such r u l e s and r e g u l a t i o n s as the Board o f Governors
o f t h e Federal Reserve System may p r e s c r i b e , s h a l l be operated
under t h e s u p e r v i s i o n o f a board o f d i r e c t o r s t o c o n s i s t o f n o t
more than seven nor l e s s than t h r e e d i r e c t o r s , o f whom a m a j o r i t y
o f one s h a l l be appointed by the Federal reserve bank o f the d i s t r i c t , and the remaining d i r e c t o r s by the Board o f Governors o f
t h e Federal Reserve System. D i r e c t o r s o f branch banks s h a l l h o l d
o f f i c e d u r i n g t h e pleasure o f the Board o f Governors o f t h e Federal
Reserve System.
"The Board o f Governors o f the Federal Reserve System may
a t any time r e q u i r e any Federal Reserve Bank t o d i s c o n t i n u e any
branch o f such Federal Reserve Bank e s t a b l i s h e d under t h i s s e c t i o n .
The Federal Reserve Bank s h a l l thereupon proceed t o wind up the
business o f such branch bank, s u b j e c t t o such r u l e s and r e g u l a t i o n s as t h e Board o f Governors o f t h e Federal Reserve System may
prescribe."




7

Two a d d i t i o n a l branches ( C h a r l o t t e and Sail A n t o n i o ) , which had been
approved s u b j e c t t o the passage o f the McFadden A c t , commenced operations
d u r i n g 1927, b r i n g i n g the t o t a l t o t w e n t y - f i v e .
No a d d i t i o n a l branches have been e s t a b l i s h e d since 3.927.

Up t o Decem-

ber 51, 1957, no branch had ever been d i s c o n t i n u e d ; however, one agency, t h e
Havana Agency o f the F e d e r a l Reserve Bank o f Boston, and s e v e r a l currency fund
have been d i s c o n t i n u e d .
THE WORK OF THE FEDERAL RESERVE ORGANIZATION COMMITTEE AND THE PRINCIPAL
FACTORS WHICH INFLUENCED ITS SELECTION OF RESERVE CITIES.
Pursuant t o Section 2, the O r g a n i z a t i o n Committee e a r l y i n 1914 h e l d
p u b l i c hearings i n 18 o f t h e l e a d i n g c i t i e s o f the c o u n t r y , gave audience t o
c l e a r i n g house a s s o c i a t i o n s , chambers o f commerce and t o the r e p r e s e n t a t i v e s
o f more than 200 c i t i e s , end conducted an independent . i n v e s t i g a t i o n by b a l l o t
among 7,471 n a t i o n a l banks, which had f o r m a l l y assented t o t h e Federal Reserve
A c t , as t o t h e i r preference f o r Federal Reserve c i t i e s .

Thirty-seven

cities

asked t o be named Federal Reserve c i t i e s ; consequently, 25 o f them had t o be
disappointed.

I n announcing i t s d e c i s i o n , on A p r i l 2, 1914, t h e O r g a n i s a t i o n

Committee s t a t e d t h a t the f o l l o w i n g f a c t o r s , among o t h e r s , had governed i t s
selection:
" F i r s t . The a b i l i t y o f the member banks w i t h i n the d i s t r i c t
t o p r o v i d e the minimum c a p i t a l o f $4,000,000 r e q u i r e d f o r the
Federal reserve bank, on the basis o f 6 per cent o f t h e c a p i t a l
stock and surplus o f member banks w i t h i n the d i s t r i c t .
"Second. The m e r c a n t i l e , i n d u s t r i a l , and f i n a n c i a l connect i o n s e x i s t i n g i n each d i s t r i c t and the r e l a t i o n s between the
v a r i o u s p o r t i o n s o f t h e d i s t r i c t and the c i t y s e l e c t e d f o r the
l o c a t i o n o f the Federal reserve bank.
" T h i r d . The probable a b i l i t y o f the Federal reserve bank i n
each d i s t r i c t , a f t e r o r g a n i z a t i o n and a f t e r t h e p r o v i s i o n s o f the
Federal reserve a c t s h a l l have ^one i n t o e f f e c t , t o meet the
l e g i t i m a t e demands o f business, whether normal or abnormal, i n
accordance w i t h the s p i r i t and p r o v i s i o n s o f the F e d e r a l reserve
act.



" F o u r t h . The f a i r and e q u i t a b l e d i v i s i o n o f t h e a v a i l a b l e
c a p i t a l f o r the F e d e r a l reserve banks among t h e d i s t r i c t s created.
" F i f t h . The general geographical s i t u a t i o n o f the d i s t r i c t ,
t r a n s p o r t a t i o n l i n e s , and the f a c i l i t i e s f o r speedy communication
between the Federal reserve bank and a l l p o r t i o n s 0 f the d i s t r i c t .
" S i x t h . The p o p u l a t i o n , area, and p r e v a l e n t business a c t i v i t i e s o f t h e d i s t r i c t , A e t h e r a g r i c u l t u r a l , manufacturing, mining,
or commercial, i t s r e c o r d o f growth and development i n t h e p a s t
and i t s prospects f o r the f u t u r e . "
I n answer t o c r i t i c i s m s d i r e c t e d a t i t f o l l o w i n g i t s s e l e c t i o n o f
Federal Reserve bank c i t i e s t h e O r g a n i z a t i o n Committee i s s u e d a f u r t h e r

state-

ment on A p r i l 10, 1914, which read i n p a r t as f o l l o w s :
" F o l l o w i n g i t s p o l i c y declared a t the v e r y o u t s e t , the
committee refused t o be i n f l u e n c e d by t h e p u r e l y l o c a l and s e l f i s h claims o f c i t i e s o r i n d i v i d u a l s , and discharged t h e d u t y
imposed upon i t by Congress a f t e r exhaustive i n v e s t i g a t i o n and
study o f t h e e n t i r e c o u n t r y , w i t h unbiased minds and according
t o i t s best judgment. With so many c o n f l i c t i n g c l a i m s , somebody
had t o judge. Congress c o n s t i t u t e d the committee a c o u r t and
gave the Federal Reserve Board the power o f r e v i e w .
Disappointed
competitors should seek a remedy through the o r d e r l y processes the
law p r e s c r i b e d .
"Considerable comment has been occasioned by t h e f a i l u r e o f
t h e committee t o croate d i s t r i c t s suggested by New Orleans, w i t h
New Orleans as t h e l o c a t i o n f o r a reserve bank; by B a l t i m o r e , w i t h
B a l t i m o r e as t h e l o c a t i o n f o r a reserve bank; by Omaha, w i t h Omaha
as the l o c a t i o n f o r a reserve bank; and by Denver, w i t h Denver as
t h e l o c a t i o n f o r a reserve bank.
"The committee r e a l i z e d t h a t the d i v i s i o n o f the e o u n t i y i n t o
d i s t r i c t s was f a r more i m p o r t a n t and complex than the d e s i g n a t i o n
o f the reserve c i t i e s , and t h a t the l a t t e r d u t y was s u b s i d i a r y and
r e l a t i v e l y simple, w a i v i n g c o n s i d e r a t i o n s o f l o c a l p r i d e o r p r e s t i g e . I n a r r a n g i n g t h e d i s t r i c t s the c o n s i d e r a t i o n o f t h e charact e r and growth o f i n d u s t r y , t r a d e , and banking, no l e s s than the
t r a d i t i o n s , h a b i t s , and common understandings o f t h e people was
much more i n t i m a t e l y i n v o l v e d . "
ATTITUDE OF THE FEDERAL RESERVE ORGANIZATION COMMITTEE TOWARD THE ESTABLISHMENT OF BRANCH OFFICES OF FEDERAL RESERVE BANKS.
I n a d d i t i o n t o a p p l i c a t i o n s f i l e d w i t h t h e O r g a n i z a t i o n Committee f o r
d e s i g n a t i o n as Federal Reserve c i t i e s , a number o f c i t i e s had a p p l i e d f o r




9

d e s i g n a t i o n as branch c i t i e s , as provided f o r by S e c t i o n 5 o f the A c t .

In

connection v/ith such a p p l i c a t i o n s the O r g a n i z a t i o n Committee s t a t e d ;
" I t i s no p a r t o f the d u t y o f the o r g a n i s a t i o n committee
t o l o c a t e branches o f the Federal Reserve banks. The law
s p e c i f i c a l l y provides t h a t 1 each Federal Reserve bank s h a l l
e s t a b l i s h branch banks w i t h i n the Federal r e s e r v e d i s t r i c t i n
which i t i s l o c a t e d 1 , A l l the m a t e r i a l c o l l e c t e d by the
committee w i l l be placed a t the d i s p o s a l of the Federal r e s e r v e
banks end the Federal reserve board when they are organized end
ready to consider the establishment o f branch banks."
While i t was n o t the d u t y o f the Organization Committee to designate
branch c i t i e s , experts appointed by t h a t Committee had considered the r e l a t i o n s h i p o f branch c i t i e s to reserve bank c i t i e s i n s o f a r as o p e r a t i n g and
accounting p o l i c i e s were concerned.

The suggestions o f these experts nnd

proposed branch by-laws were i n c o r p o r a t e d i n a c i r c u l a r to a l l F e d e r a l
Reserve banks (No. 8 , dated October 17, 1914).

I t was s t a t e d t h a t such sug-

g e s t i o n s had n o t been f i n a l l y approved by the Board and were o f f e r e d simply
as a basis f o r f u r t h e r d i s c u s s i o n and i n order to promote u n i f o r m i t y i n the
o r g a n i z a t i o n o f F e d e r a l Reserve banks.

This c i r c u l a r envisaged two classes

o f branches:
F i r s t , the establishment o f l o c a l o f f i c e s , w i t h o u t
banking machinery, the d i r e c t o r s o f which would c o n s t i t u t e
a subcommittee whose f u n c t i o n would be to pass on paper
submitted f o r r e d i s c o u n t , c e r t i f y i n g as t o i t s d e s i r a b i l i t y
or d i s a p p r o v i n g i t as the case might be, and t r a n s m i t t i n g
i t t o the head o f f i c e f o r a c t u a l r e d i s c o u n t , i . e . , a l i m i t e d
agency.
Second, the establishment o f a completely organized
branch bank w i t h a c l e a r l y d e f i n e d t e r r i t o r y and a p r o p o r t i o n a t e c a p i t a l i z a t i o n based upon the t o t a l c a p i t a l and
surplus o f the member banks i n such t e r r i t o r y , performing
almost a l l , i f n o t a l l o f the f u n c t i o n s >f the parent r e serve bonk and m a i n t a i n i n g records s i m i l a r to those recommended f o r the parent bank i n connection w i t h a l l such
f u n c t i o n s , i . e . , a f u l l - f l e d g e d branch.




I t was p o i n t e d out t h a t branches o f the f i r s t class would be the most
advantageous from the s t a n d p o i n t o f expense, since they would n o t i n v o l v e
adjustments i n t h e proposed c l e a r i n g system o r t h e development o f a system
o f accounting f o r t h e branch which would f i t i n t o t h e accounting system o f
the Reserve bank.

The q u e s t i o n was r a i s e d , however, as t o whether such

simple o r g a n i z a t i o n s would s a t i s f y t h e demands o f the communities i n which
t h e y were l o c a t e d and whether t h e y would p r o v i d e a s u f f i c i e n t a d d i t i o n t o t h e
mechanism o f t h e Federal Reserve System t o warrant t h e i r e s t a b l i s h m e n t .

In

connection w i t h branches o f t h e second c l a s s , i t was s t a t e d t h a t they should
be e s t a b l i s h e d o n l y i n c l e a r c u t , independent t r a d i n g areas, whose t e r r i t o r y
was an economic u n i t and whose member banks n a t u r a l l y stood i n close r e l a t i o n s h i p t o one another.

I I was s t a t e d , as a general p r i n c i p l e , t h a t i n no

event should a d i s t r i c t be completely d i v i d e d i n t o branch areas, w i t h the
p a r e n t bank e x e r c i s i n g no d i s t i n c t banking f u n c t i o n s except those o f o v e r s i g h t ; the t h e o r y being t h a t i n every d i s t r i c t t h e r e should be a s t r o n g
independent Reserve bank o r g a n i z a t i o n p e r f o r m i n g a c t u a l banking f u n c t i o n s and
d i r e c t l y r e d i s c o u n t i n g t h e paper o f a considerable number o f t h e member banks
i n c l u d e d i n such d i s t r i c t .
SOME OF THE EARLY PROBLEMS OF THE FEDERAL RESERVE BOARD - THE ESTABLISHMENT
OF THE NEW ORLEANS BRANCH.
The newly organized Federal Reserve Board r e c e i v e d a p p l i c a t i o n s from
v a r i o u s member banks asking f o r changes i n t h e s e l e c t i o n s made by the
O r g a n i z a t i o n Committee.

Baltimore member banks requested t h a t B a l t i m o r e

i n s t e a d o f Richmond be designated t h e Federal Reserve c i t y o f the F i f t h
D i s t r i c t ; P i t t s b u r g h member banks requested t h a t P i t t s b u r g h i n s t e a d o f
Cleveland be designated the Federal Reserve c i t y o f the F o u r t h D i s t r i c t ; member




It

banks i n the E l e v e n t h D i s t r i c t p e t i t i o n e d f o r the e s t a b l i s h m e n t of a branch
a t Nov/ Orleans and t h a t they be p e r m i t t e d to a t t a c h themselves t o such
branch; and member banks i n s e v e r e ! other s e c t i o n s asked t o be t r a n s f e r r e d
from one d i s t r i c t t o a n o t h e r .

These appeals were f i l e d under thr?t p o r t i o n

o f S e c t i o n 2 o f the A c t which p r o v i d e d :
"The d e t e r m i n a t i o n o f s a i d O r g a n i z a t i o n Committee s h a l l
n o t be s u b j e c t t o r e v i e w , except by the F e d e r a l Reserve
B o a r d . . . The d i s t r i c t s thus c r e a t e d may be r e a d j u s t e d and
new d i s t r i c t s may from time to time be c r e a t e d by the F e d e r a l
Reserve Board, n o t to exceed twelve i n number."
Hearings on the q u e s t i o n o f changing the l o c a t i o n s o f Reserve banks
and r e v i s i n g d i s t r i c t l i n e s were arranged f o r e a r l y i n 1915 and, f o l l o w i n g a
f o r m a l r e q u e s t by the d i r e c t o r s o f the F e d e r a l Reserve Bank o f A t l a n t a ,
steps were taken t o f o r m u l a t e r e g u l a t i o n s governing the o p e r a t i o n s o f a
branch a t New Orleans*

On May 4 , 1915, the Board announced the f i r s t

changes

i n d i s t r i c t l i n e s and on June 24, 1915, i s s u e d the f o l l o w i n g press statement
r e l a t i v e t o i t s a p p r o v a l o f the New Orleans Branch o f the F e d e r a l Reserve Bank
of A t l a n t a :
"While the Board has c a r e f u l l y considered the p r i n c i p l e s
which should be observed i n opening a branch o f the F e d e r a l
Reserve Bank o f A t l a n t a , i t i s n o t ready a t t h i s time t o p r o mulgate any g e n e r a l r u l e s a p p l i c a b l e t o r.ther p o i n t s , as i t
regards the p r o p o s i t i o n as somewhat e x p e r i m e n t a l .
" I t i s f e l t t h a t the experience gained i n t h i s case w i l l
have r.n i m p o r t a n t b e a r i n g upon the f u t u r e development o f the
branch-bank i d e a . I n c i d e n t a l l y i t may be mentioned thc'it the
banks comprised i n the New Orleans C l e a r i n g House A s s o c i a t i o n
have undertaken t o moke good f o r the f i r s t year o f o p e r a t i o n
any d i f f e r e n c e bet?/een the expense o f conducting t h e new branch
bank now proposed and the revenues to be d e r i v e d from i t .
"No d e f i n i t e assignment o f t e r r i t o r y has been made to the
New Orleans branch, b u t i t i s understood t h a t i t i s i n t e n d e d t o
assign to i t the member banks o f L o u i s i a n a and M i s s i s s i p p i i n




d i s t r i c t 6, and those of Mobile and Baldwin Counties, A l a .
The bonks i n the t e r r i t o r i e s so segregated w i l l d e a l w i t h
the New Orleans branch o n l y .
"The Board has d i r e c t e d t h a t the New Orleans branch s h a l l
conduct only o p e r a t i o n s i n the d i s c o u n t and purchase o f comm e r c i a l paper and acceptances and those r e l a t i n g to c l e a r i n g ,
c o l l e c t i o n , and exchange t r a n s a c t i o n s and t r a n s f e r s of funds.
The issue o f notes and the f u n c t i o n o f r e d i s c o u n t i n g w i t h
o t h e r Federal r e s e r v e banks, the purchase of U n i t e d States
bonds and n o t e s , and dealings i n warrants o f ' m u n i c i p a l i t i e s 1
are to be c a r r i e d on s o l e l y by the Federal Reserve Bank o f
A t l a n t a . A l l o p e r a t i o n s are t o be r e p o r t e d promptly to the
F e d e r a l Reserve Bank of A t l a n t a , and the Federal Reserve Board
i s t o be advised o f the same w i t h o u t d e l a y . The t r a n s a c t i o n s
o f the New Orleans branch w i l l be considered as the t r a n s a c t i o n s of the F e d e r a l Reserve Bank o f A t l a n t a and so r e p o r t e d
i n the statements o f the l a t t e r . "
The New Orleans Branch o f the A t l a n t a Reserve Bank, which comuenced
business on September 10, 1915, was d i s t i n c t l y a f u l l - f l e d g e d branch, s i n c e
i t was ^ i v e n a c l e a r l y d e f i n e d t e r r i t o r y and was a u t h o r i z e d to d i s c o u n t and
purchase commercial paper and acceptances, to c l e a r and c o l l e c t i t e m s ,

to

m a i n t a i n reserve accounts, and to handle exchange t r a n s a c t i o n s and t r a n s f e r s
o f funds.

The c a p i t a l stock of the Federal Reserve Bank o f A t l a n t a h e l d by

member banks i n the New Orleans t e r r i t o r y was a l s o regarded as c a p i t a l of
the branch f o r bookkeeping purposes and complete records o f earnings and
expenses were maintained.

I n approving the establishment o f the New Orleans

Branch the Board d i d n o t , however, abandon c o n s i d e r a t i o n o f the simpler form
o f o r g a n i z a t i o n h e r e t o f o r e mentioned, as i s evidenced by the f o l l o w i n g
excerpt taken from the 1915 Annual Report:
" I n v e s t i g a t i o n and experience have seemed to show t h a t ,
a t l e a s t f o r some years to come, the o r g a n i z a t i o n of branches
w i t h completely equipped o f f i c e s , v a u l t s , and the l i k e , and
w i t h r; f u l l s t a f f of s a l a r i e d o f f i c i a l s , x v i l l be too heavy en
expense f o r most of the Reserve banks, y e t , t h a t v a l u a b l e
s e r v i c e would be performed by l o c a l o f f i c e s o f the s e v e r a l




banks i n n o t a few p l a c e s . The Board has, t h e r e f o r e , had
under c o n s i d e r a t i o n t h e question whether e s t a b l i s h i n g l o c a l
agencies might n o t meet the requirements o f t h e case b e t t e r
than the more f u l l y organized branch o f f i c e . Competent l e g a l
o p i n i o n i s t o t h e e f f e c t t h a t t h e c r e a t i o n o f such l o c a l
o f f i c e s i s p e r m i s s i b l e under t h e terms o f the l a w , and the
Board b e l i e v e s t h a t i t may prove p r a c t i c a b l e t o meet banking
n e c e s s i t i e s i n many s e c t i o n s o f t h e country by t h i s means."
The question o f changing t h e l o c a t i o n o f Federal Reserve c i t i e s o f
D i s t r i c t s Four (Cleveland) and F i v e (Richmond) presented a more serious
problem and, as a d d i t i o n a l appeals f o r adjustments i n d i s t r i c t l i n e s were
c o n t i n u a l l y being r e c e i v e d , the a d v i s a b i l i t y o f r e d u c i n g the number o f
Federal Reserve d i s t r i c t s and r e v i s i n g d i s t r i c t l i n e s , i n such a manner as
t o s e t t l e a l l pending appeals, r e c e i v e d c o n s i d e r a t i o n .

Since t h e r e was some

doubt as t o the Board 1 s power i n t h e m a t t e r , the q u e s t i o n was submitted t o
the A t t o r n e y General o f the U n i t e d S t a t e s , who, on November 22, 1915,
rendered an o p i n i o n t h a t t h e Board had no power t o a b o l i s h a Federal Reserve
district.

The A t t o r n e y General a l s o r u l e d on A p r i l 4, 1916, t h a t the Board

was w i t h o u t a u t h o r i t y t o change t h e l o c a t i o n o f any Federal Reserve bank w i t h in a district.
These d e c i s i o n s l e f t o n l y two p o s s i b l e remedies f o r complaints o f
member banks concerning t h e geographical and economic aspects o f the System;
namely, t o make acceptable adjustments i n d i s t r i c t l i n e s or t o e s t a b l i s h
a d d i t i o n a l branches or l o c a l agencies o f Federal Reserve banks, which would
make Reserve bank f a c i l i t i e s more r e a d i l y a c c e s s i b l e t o the complaining
member banks.

Although the Federal Reserve Act d i d n o t s p e c i f i c a l l y a u t h o r i z e

the establishment o f agencies, counsel f o r the Board on October 5 , 1915,
expressed the o p i n i o n t h a t t h e r e was no l e g a l o b j e c t i o n t o the establishment
by Federal Reserve banks o f l o c a l agencies f o r the purpose o f e x e r c i s i n g




c e r t a i n s p e c i a l or p a r t i c u l a r powers, which the p a r e n t bank was a u t h o r i z e d
t o e x e r c i s e under the A c t .
GKiERAL ATTITUDE OF THE BOARD TOWARD THE ESTABLISHMENT OF BRANCHES I N 1916 THE MEMPHIS AGENCY.
There were no brruches o f Federal Reserve banks e s t a b l i s h e d d u r i n g the
year 1916.

However, the Federal Reserve Bank o f S t . L o u i s opened cn agency

i n Memphis, Tennessee, on September 25, 1916, which had as i t s sole f u n c t i o n
the custody o f c o t t o n warehouse r e c e i p t s pledged as c o l l a t e r a l to r e d i s c o u n t s
of l o c a l member banks.

This arrangement appeared d e s i r a b l e , since i t was

i m p r a c t i c a l to send such c o l l a t e r a l , which was s u b j e c t to f r e q u e n t
t i o n , to S t . L o u i s .

substitu-

This agency operated u n t i l January 20, 1917, end proved

o f g r e a t value to member banks and c o t t o n f a c t o r s i n Memphis.

The agency

a l s o operated d u r i n g the F a l l o f 1917 and the Spring o f 1918.
I n i t s Annual Report f o r 1916 the Board made the f o l l o w i n g g e n e r a l comment concerning branches and l o c a l agencies:
" I n view o f the experience gained from the o p e r a t i o n
o f the one branch bank i n the e n t i r e system, i t would seem
wise, i n c o n s i d e r i n g the establishment o f o t h e r branches,
to take i n t o account whether there i s an a c t u a l need f o r
them - immediate or p r o s p e c t i v e - growing out o f the added
convenience to the member banks which would n a t u r a l l y f a l l
w i t h i n the t e r r i t o r y a l l o t t e d t o the branch, or whether the
a p p l i c a t i o n f o r a branch i s p r i m a r i l y a m a n i f e s t a t i o n o f
l o c a l c i v i c p r i d e . I n j u s t i c e t o a l l the member banks i n
a d i s t r i c t where branches are sought to be e s t a b l i s h e d , i t
would be w e l l to a s c e r t a i n as n e a r l y as can be done i n
advance, whether the branch would be r e a l l y s e l f - s u s t a i n i n g ,
i . e . , whether the n e t p r o f i t s growing out o f i t s o p e r a t i o n
would exceed the n o t revenue t h a t would accrue i n any event
to the parent bank.
"The Board would welcome l e g i s l a t i o n s i m p l i f y i n g the
o r g a n i z a t i o n and o p e r a t i o n o f branch banks and reducing
the cost o f m a i n t a i n i n g them. This would enable the Federal
Reserve Banks b e t t e r to determine the q u e s t i o n o f branches.




"The Board has been informed t h a t some o f the F e d e r a l
Reserve Banks are ready t o e s t a b l i s h agencies or o f f i c e s
i n such c i t i e s i n t h e i r d i s t r i c t s as may r e q u i r e s p e c i a l
s e r v i c e s , such as the c o l l e c t i o n o f checks or the making
o f l o a n s on warehouse r e c e i p t s . An agency o f t h i s k i n d
was e s t a b l i s h e d by the Federal Reserve Bank o f S t . L o u i s
i n September a t Memphis, Tenn. This has proved convenient
to the banks o f t h a t c i t y i n the h a n d l i n g o f the c o t t o n c r o p . "
I t i s a l s o i n t e r e s t i n g t o note t h a t the Governors o f Federal Reserve
banks, a t t h e i r conference i n December 1916, passed the f o l l o w i n g r e s o l u t i o n
on the s u b j e c t o f branches and l o c a l agencies:
"That i t i s the sense o f the conference t h a t when cond i t i o n s i n a Federal Reserve D i s t r i c t appear to n e c e s s i t a t e
the establishment o f a d d i t i o n a l f a c i l i t i e s i n c i t i e s other
than t h a t i n which the Federal Reserve Bank i s l o c a t e d , such
f a c i l i t i e s should be provided through the means o f Agencies,
r a t h e r than through Branches, as contemplated by the Federal
Reserve A c t . "
The r e s o l u t i o n was brought to the a t t e n t i o n o f the Board by a Committee
o f Governors i n a l e t t e r dated January 50, 1917, and the f o l l o w i n g reasons
f o r i t s adoption were c i t e d :
" ( a ) The establishment o f branches would i n v o l v e l a r g e
expense which, i n the event s e v e r a l were necessary,
would be almost i f n o t q u i t e p r o h i b i t i v e .
(b) The establishment o f agencies would be much l e s s expensive, the d i f f e r e n c e being s u f f i c i e n t t o be o f
v i t a l importance.
(c) The establishment o f agencies would p e r m i t o f more
u n i f o r m i t y o f o p e r a t i o n , a l l being under the d i r e c t i o n
o f the Federal Reserve Bank.
(d) The establishment o f branches w i t h t h e i r semi-independent
o p e r a t i o n would undoubtedly tend to arouse c o n f l i c t i n
p o l i c y and r i v a l r y between s e c t i o n s .
(e) The establishment o f agencies would p e r m i t o f the d i s continuance o f any agency or o f f i c e which experience
proved to be unnecessary o r u n p r o f i t a b l e , w h i l e there
i s no p r o v i s i o n i n the Federal Reserve Act f o r the d i s continuance o f a branch once e s t a b l i s h e d , r e g a r d l e s s o f
how u n p r o f i t a b l e or unnecessary t h r t branch may prove to be.




( f ) The establishment o f agencies would p e r m i t o f the
expansion o f any one or a l l o f them i n t o f u l l y organi z e d branches whenever experience demonstrated the
expediency o f such a c o u r s e . "
As i n d i c a t e d Ijy the above r e s o l u t i o n and t h e preceding q u o t a t i o n from
the 1916 Annual Report both the Federal Reserve Board and the Governors o f
the s e v e r a l Reserve banks f e l t t h a t extreme c a u t i o n should be exercised i n
e s t a b l i s h i n g branches, c h i e f l y because o f the expense i n v o l v e d .

I t was a l s o

f e l t t h a t Section 3, which provided f o r t h e establishment o f branches, l a c k e d
clarity.

As p r e v i o u s l y p o i n t e d out t h e Federal Reserve Board, because o f

a g i t a t i o n f o r l e g i s l a t i o n making i t compulsory on i t s p a r t t o e s t a b l i s h
branches, sponsored an amendment t o S e c t i o n 3, which was enacted i n t o law on
June 21, 1917, under which the Board was a u t h o r i z e d t o " p e r m i t or r e q u i r e "
any Federal Reserve bank t o e s t a b l i s h a branch and under which the p r o v i s i o n s
r e l a t i n g t o t h e appointment o f d i r e c t o r s was c l a r i f i e d .

This amendment cen-

t e r e d r e s p o n s i b i l i t y f o r f u r t h e r development o f the Federal Reserve branch
system i n the Board and l e f t f o r i t s d e t e r m i n a t i o n the q u e s t i o n as t o whether
"branches", on the order o f t h e one a t New Orleans, or " a g e n c i e s " , such as
t h e one a t Memphis, should be e s t a b l i s h e d i n t h e v a r i o u s c i t i e s which up t o
t h a t time had a p p l i e d f o r branches.
BRANCHES IN THE PACIFIC NORTHWEST - STANDARD BRANCH BY-LAWS ADOPTED.
I t had been e v i d e n t f o r some t i m e , owing t o t h e g r e a t s i z e o f the
T w e l f t h D i s t r i c t and the d i s t a n c e between c i t i e s , t h a t the c r e a t i o n o f
branches or agencies i n the P a c i f i c Northwest would probably be necessary i n
order t o a f f o r d member banks i n t h a t s e c t i o n q u i c k e r access t o the d i s c o u n t
and c o l l e c t i o n f a c i l i t i e s o f the System.

I n f a c t , the O r g a n i z a t i o n Committee

recognized t h i s need and had i n d i c a t e d i n i t s r e p o r t t h a t i t might e v e n t u a l l y




17

become necessary to request l e g i s l a t i o n p e r m i t t i n g the establishment ^f a
t h i r t e e n t h Federal Reserve bank to serve t h a t t e r r i t o r y .

This need was

emphasized d u r i n g the l a t t e r p a r t of January 1917, when three s m r l l S t a t e
bonks i n S e a t t l e closed t h e i r doors.

There was temporary f e o r t h a t the

s i t u a t i o n might become more s e r i o u s , but the Federal Reserve Bank o f San
Francisco sent a r e p r e s e n t a t i v e to S e a t t l e , and l e t i t be known t h a t a l l o f
i t s resources v/ere a t the d i s p o s a l o f any l o c a l member banks which might
d e s i r e to convert e l i g i b l e assets i n t o means of immediate payment.
F o l l o w i n g t h i s i n c i d e n t the q u e s t i o n of Reserve bank f a c i l i t i e s

in

the P a c i f i c Northwest was c a r e f u l l y considered by the Federal Reserve Bank
o f San Francisco.

Late i n March 1917, Mr. A. C. M i l l e r , member of the

Federal Reserve Board, v i s i t e d t h a t bank and attended hearings a t which
bankers o f P o r t l a n d , S e a t t l e , and Spokane presented arguments as to t h e i r
need f o r branches.

F o l l o w i n g t h i s meeting the Board announced t h a t the

Federal Reserve Bank o f San Francisco had determined, w i t h i t s a p p r o v a l ,

to

e s t a b l i s h branches i n a l l three o f the above-mentioned c i t i e s and t h a t
d e t a i l s of t h e i r o r g a n i z a t i o n and management would be r e v e a l e d l a t e r .

It

was a l s o s t a t e d :
"Meantime the Board has been g i v i n g c a r e f u l c o n s i d e r a t i o n
to the question o f branches i n o t h e r d i s t r i c t s where member banks
have i n d i c a t e d a s t r o n g d e s i r e f o r the extension o f f a c i l i t i e s i n
t h i s way. For every such case the problem t o be met i s whether a
f u l l - f l e d g e d branch organized under the p r o v i s i o n s of the A c t ,
i n v o l v i n g the expense which n e c e s s a r i l y goes w i t h such an o r g a n i s a t i o n , i s c a l l e d f o r or whether a more simply organized agency
w i l l meet the requirements o f the s i t u a t i o n . The answer t o t h i s
q u e s t i o n depends i n each i n s t a n c e upon the c h a r a c t e r and volume
o f business developing a t the p o i n t to be served and the support
t o be expected from the bankers o f the community to be served by
the branch."




18

On J u l y 13, 1917, t h e Board announced arrangements f o r the o r g a n i z a t i o n o f a branch o f the Federal Reserve Bank o f San Francisco a t Spokane,
Washington.

As an evidence o f cooperation Spokane C l e a r i n g House banks

agreed t o employ the branch t o conduct c l e a r i n g house examinations, payi n g as compensation an amount equal t o t h e previous cost o f conducting such
examinations, and a l l l o c a l nonmember banks and t r u s t companies agreed t o
m a i n t a i n reserve d e p o s i t s w i t h t h e branch i n the same percentage as i f

they

were members and t o be s u b j e c t t o t h e same p e n a l t i e s f o r d e f i c i e n c i e s .

It

was also understood t h a t l o c a l nonmember banks and t r u s t companies would
take steps t o become members as soon as p o s s i b l e .

I t was f e l t t h a t these

concessions on t h e p a r t o f l o c a l bankers would reduce the n e t expense o f
o p e r a t i n g the branch and t h a t t h e System would be strengthened by the
accession o f new members.
The Spokane Branch commenced business on J u l y 26, 1917.

I n connection

w i t h i t s establishment standard branch by-laws, s u b j e c t t o minor changes because o f l o c a l c o n d i t i o n s , were drawn up and adopted by the Board.
these by-laws:

(a) A branch was assigned a s p e c i f i c t e r r i t o r y ;

Under

(b) t h e Re-

serve bank c a p i t a l c o n t r i b u t e d by banks i n such t e r r i t o r y was considered as
c a p i t a l o f the branch f o r bookkeeping purposes; (c) t h e reserves maintained
by banks i n such t e r r i t o r y were h e l d a t the branch} (d) t h e branch conducted
a l l c l e a r i n g and c o l l e c t i o n o p e r a t i o n s f o r banks i n i t s t e r r i t o r y ,

maintain-

i n g bookkeeping records i n c i d e n t a l t h e r e t o j (e) the branch was empowered t o
r e d i s c o u n t f o r member banks i n i t s t e r r i t o r y up t o a s p e c i f i e d amount subj e c t t o approval o f the Head O f f i c e ; ( f ) the branch could n o t engage f o r

its

own account i n open market t r a n s a c t i o n s except s u b j e c t t o the orders and f o r




the account o f the Head O f f i c e } and (g) the branch was supervised by a board
o f f i v e d i r e c t o r s , under d i r e c t c o n t r o l of the Heed O f f i c e , three o f whom
were appointed by the Reserve bank and two by the Federal Reserve Board.
OTHER BRANCHES ESTABLISHED DURING 1917
I n r a p i d succession branches were e s t a b l i s h e d i n Omaha on September 4,
1917, i n S e a t t l e on September 19, 1917, i n P o r t l a n d on October 1 , 1917, and
i n L o u i s v i l l e on December 3, 1917.

/ d l of these branches were e s t a b l i s h e d

on the sane general p l a n as the Spokane Branch.

I n each i n s t a n c e member and

nonmember banks i n these bronch c i t i e s evidenced a w i l l i n g n e s s to cooperate
w i t h the Federal Reserve bank o f t h e i r d i s t r i c t .

Omaha member banks passed

a r e s o l u t i o n agreeing, i f necessary, to r e d i s c o u n t w i t h the branch an amount
s u f f i c i e n t a t l e a s t to cover any d e f i c i t i n expenses; S e a t t l e and P o r t l a n d
bankers made approximately the same concessions as Spokane bankers had made;
and L o u i s v i l l e bankers, who had p r e v i o u s l y resented being a t t a c h e d to the S t .
Louis Reserve Bonk end who, as a r e s u l t , were s a i d to be h o s t i l e to the
•System as a whole, i n d i c a t e d a more f r i e n d l y a t t i t u d e toward the System.

In

the l a t t e r i n s t a n c e i t was deemed unwise to use the establishment of a branch
as a l e v e r t o b r i n g nonmenber banks i n t o the System, as was done i n the
P a c i f i c Northwest, although s e v e r a l banks i n d i c a t e d a v / i l l i n g n e s s to do so.
MEMORANDUM PLAN BRANCHES - CHIEF REASONS FOR DEVELOPMENT
During 1917 a p p l i c a t i o n s f o r branches a t C i n c i n n a t i and P i t t s b u r g h were
considered by the Federal Reserve Bank o f Cleveland and the Board.

A survey

o f the p r o s p e c t i v e t e r r i t o r i e s t o be assigned these branches i n d i c a t e d t h a t
reserve d e p o s i t s of member banks i n such t e r r i t o r i e s would i n the aggregate
exceed by approximately $24,000,000 the reserve deposits c a r r i e d w i t h the




Head O f f i c e a t Cleveland and t h a t , i n s o f a r as Federal Reserve bonk stock was
concerned, the two proposed branch zones would i n c l u d e member banks h o l d i n g
$1,800,000 more stock than the banks attached to the Head O f f i c e ; the p r o posed P i t t s b u r g h zone i t s e l f h a v i n g s u b s t a n t i a l l y l a r g e r member bank reserve
deposits and Reserve bank stock h o l d i n g s than the Head O f f i c e .

This s i t u a -

t i o n presented a problem which was n o t encountered i n the branches p r e v i o u s l y
e s t a b l i s h e d ; .that i s , the p o s s i b i l i t y of s e r i o u s l y c u r t a i l i n g Head O f f i c e
p r e s t i g e and thus i m p a i r i n g the s t r e n g t h and u n i t y so e s s e n t i a l to the conduct
o f l a r g e r System o p e r a t i o n s .

I n a d d i t i o n the survey i n d i c a t e d t h a t branches

as contemplated i n P i t t s b u r g h and C i n c i n n a t i would cost between $50,000 and
§60,000 a n n u a l l y ; whereas branches p r e v i o u s l y e s t a b l i s h e d were then o p e r a t i n g
or expected to operate a t a cost of approximately $25,000 per annum.
The f o l l o w i n g comments appearing i n a l e t t e r addressed to the Federal
Reserve Bank o f Cleveland (X-404) on September 21, 1917 (copies o f which were
sent to a l l Federal Reserve banks) r e f l e c t the a t t i t u d e of the Reserve Board
i n the m a t t e r :
"The more we study the subject the more c l e a r l y do we
see t h a t there axe two t h i n g s i n which banks i n i m p o r t a n t
c i t i e s away from the Federal Reserve c i t i e s are i n t e r e s t e d :
First,

A l i b e r a l supply o f Federal
Reserve notes which can be
r e l e a s e d q u i c k l y i n i n emergency; and

Second,

I n some cases, a t l e a s t , a
c o l l e c t i o n agency to operate
as a l o c a l and c o u n t r y c l e a r i n g
house,

" I f the o f f i c e r s of your bank can work out t h i s problem i n
a s a t i s f a c t o r y way i n C i n c i n n a t i , you w i l l have performed an
i m p o r t a n t s e r v i c e , n o t o n l y a t t h a t p o i n t , but w i l l be e f f e c t i n g a s o l u t i o n o f the problem f o r a number o f other p o i n t s .




Ol

There are perhaps ten o r f i f t e e n c i t i e s i n the U n i t e d States
which are j u s t i f i e d i n having such branches o f l i m i t e d power,
but v/hich are n o t j u s t i f i e d i n i n c u r r i n g the expense o f f u l l f l e d g e d branches. I t i s n o t a s u f f i c i e n t argument t o sayt h a t the l o c a l banks agree to f u r n i s h enough paper f o r r e d i s count to support a branch. What we are concerned w i t h i s to
render the necessary s e r v i c e a t a minimum o f c o s t . "
I n cooperation w i t h the Federal Reserve Bank o f Cleveland the Board
l a t e r announced the adoption o f an a l t e r n a t i v e set o f branch by-laws f o r
use a t C i n c i n n a t i and P i t t s b u r g h .

Branches e s t a b l i s h e d under these by-laws

are known as "memorandum plan branches", c h i e f l y because much o f the bookkeeping i n c i d e n t a l to t h e i r o p e r a t i o n i s performed a t the Head O f f i c e upon
r e c e i p t o f d a i l y t e l e g r a p h i c advices from the branch.
i m p o r t a n t p r o v i s i o n s o f these by-laws were:

Some o f the more

(a) such branches were to be

e s t a b l i s h e d on the theory t h a t they were o f f i c e s o f the p a r e n t bank, opened
f o r the convenience o f such member banks as n i g h t d e s i r e t o use them;
(b) such branches would be a l l o t t e d a c o l l e c t i o n zone, but member banks t h e r e i n could e l e c t t o continue t o do business d i r e c t w i t h the Head O f f i c e ;

(c)

such branches would forward a d a i l y t r a n s c r i p t o f a l l business transacted w i t h
banks e l e c t i n g t o c l e a r through them t o the Head O f f i c e ; the Head O f f i c e maint a i n i n g a l l i n c i d e n t a l bookkeeping r e c o r d s ; (d) such branches m i g h t , where the
circmistances warranted, give immediate c r e d i t f o r r e d i s c o u n t s tendered by
member banks i n t h e i r c o l l e c t i o n zone e l e c t i n g to submit them, s u b j e c t to
f i n a l approval by the Head O f f i c e ; (e) such branches would d e a l d i r e c t l y w i t h
a l l member banks i n t h e i r c o l l e c t i o n zones i n s o f a r as exchange t r a n s f e r s ,
currency shipments and cash d e p o s i t s and v/ithdrawals were concerned; and ( f )
such branches would n o t f o r bookkeeping purposes be assigned any t h e o r e t i c a l
capital.

The C i n c i n n a t i and P i t t s b u r g h Branches were a u t h o r i z e d to operate




under "memorandum p l a n by-laws" d u r i n g the l a t t e r p a r t o f 1317•
I n i t s Annual Report f o r the year 1917 the Board made the f o l l o w i n g
statement concerning branches:
"The p o l i c y o f the Board i n the establishment o f these
new branches had been to recognize the u n i t y and paramount
responsibility
the Federal Reserve Bank, w h i l e extending
f u l l f a c i l i t i e s t o the banks i n the t e r r i t o r y served by the
branch. 3y a v o i d i n g d u p l i c a t i o n s i n bookkeeping, and by cons o l i d a t e d c o n t r o l o f accounts a t the Federal Reserve Dank, i t
i s expected t h a t branches can be operated a t a comparatively
small expense."
BRANCH. OFFICES ESTABLISHED DURING 1918
The C i n c i n n a t i and P i t t s b u r g h Branches opened f o r business e a r l y i n
1918.

During the year "memorandum p l a n " branches were a l s o e s t a b l i s h e d i n

Denver, Birmingham, J a c k s o n v i l l e , and D e t r o i t and " f u l l - f l e d g e d "

branches

were placed i n o p e r a t i o n a t B a l t i m o r e , S a l t Lake C i t y , E l Paso, and Memphis;
the l a t t e r p r e v i o u s l y having been served by a temporary agency.
The a p p l i c a t i o n s o f Denver, J a c k s o n v i l l e , S a l t Lake C i t y , and E l Paso
were approved c h i e f l y because the t e r r i t o r i e s which i t was proposed they
should serve were r a t h e r remote from any Head O f f i c e or e x i s t i n g branch,
whereas the c i t i e s o f B a l t i m o r e , D e t r o i t , Birmingham, and Memphis were given
branches l a r g e l y because of t h e i r importance as f i n a n c i a l and commercial
centers.

I n connection w i t h a number of the a p p l i c a t i o n s f i n a l approval was

w i t h h e l d pending the accession to membership i n the System o f a d d i t i o n a l nonmember banks i n the c i t i e s or t e r r i t o r i e s to be served.

I t i s i n t e r e s t i n g to

note t h a t the D e t r o i t Branch was e s t a b l i s h e d c h i e f l y because of i n t e r v e n t i o n
by the Federal Reserve Board; the management o f the Federal Reserve Bank o f
Chicago on several occasions expressing o p p o s i t i o n t o the branch, b o t h because
o f the d i v i s i o n i n t e r r i t o r y which i t would e n t a i l and because the s e r v i c e




rendered by the Head O f f i c e was considered adequate.

Although the Board

d i d n o t " r e q u i r e " the Chicago Reserve Bank to e s t a b l i s h the branch,

the

f i l e s i n d i c a t e t h a t D e t r o i t bankers were r a t h e r d e f i n i t e l y assured i t would
be e s t a b l i s h e d sometime i n advance o f the date i t was approved by the Chicago
Reserve Bank.

A f t e r a s h o r t p e r i o d o f o p e r a t i o n the Denver and D e t r o i t

Branches were changed from "memorandum plan" to " f u l l - f l e d g o d "

branches.

The f o l l o w i n g statement i n r e g a r d to branches i s taken f r ; m the Annual
Report of the Board f o r the year 1918:
"While s e c t i o n 3 o f the Federal Reserve A c t as amended
June 21, 1917, a u t h o r i z e s the Federal Reserve Board to ' p e r m i t
or r e q u i r e 1 any Federal Reserve Bank to e s t a b l i s h branch banks
v d t h i n i t s d i s t r i c t , i t i s the p o l i c y o f the Board to have
n e g o t i a t i o n s f o r branch banks o r i g i n a t e between the community
a p p l y i n g and the Federal Reserve Bank, and t o review o n l y such
cases as may be r e f e r r e d t o i t a f t e r c o n s i d e r a t i o n by the d i r e c t o r s of the Federal Reserve Banks.
" A l l o f the branches have proved a g r e a t convenience t o
the communities served, and have tended to arouse a g r e a t e r
l o c a l i n t e r e s t i n the Federal Reserve System. Many o f them
have j u s t i f i e d t h e i r existence from the s t a n d p o i n t o f e a r n i n g s ,
while o t h e r s r e c e n t l y e s t a b l i s h e d have n o t y e t had an opport u n i t y o f demonstrating t h e i r a b i l i t y to s u s t a i n themselves.
I n some cases the establishment o f branches has been f o l l o w e d
by accession t o membership o f a number o f S t a t e banks i n the
l o c a l i t i e s served, and the usefulness o f the branches has
been g r e a t l y increased as a r e s u l t .
"The by-laws governing the branches are approved by the
Federal Reserve Board, and are u n i f o r m as f a r as r e c o g n i t i o n
o f the c o n t r o l and r e s p o n s i b i l i t y o f the Federal Reserve Banks
i s concerned, but d i f f e r i n some d i s t r i c t s as t o matters o f
a d m i n i s t r a t i v e d e t a i l . I n some cases the branch i s empowered
t o make r e d i s c o u n t s f o r the member banks assigned t o i t , w h i l e
i n o t h e r s the a c t u a l r e d i s c o u n t i n g o p e r a t i o n i s performed a t
the head o f f i c e , the member banks being &iven c r e d i t a t the
branch as o f the date on which the paper i s tendered t o t h e
branch. I n one case the earnings growing out o f r e d i s c o u n t s
are shown on the books o f the branch, w h i l e i n the o t h e r they
appear o n l y on the books o f the Federal Reserve Bank; conseq u e n t l y a comparative statement o f the earnings of the v a r i o u s
branches can n o t be given.




" C l e a r i n g operations and the c o l l e c t i o n of country checks
are engaged i n by the branch banks, and the head o f f i c e s are
r e l i e v e d o f a corresponding amount o f d e t a i l work.
" I t i s apparent, however, t h a t too g r a t a number o f
branches i n any one d i s t r i c t i n v o l v i n g a d i v i s i o n o f the
funds c f the Federal Reserve Dank w i l l tend t o i m p a i r the
e f f e c t i v e c o n t r o l o f the bank over i t s resources, and t h i s
f a c t , together w i t h the expense i n v o l v e d i n the o p e r a t i o n
o f branch banks, w i l l make i t impossible t o g r a t i f y the c i v i c
p r i d e o f many c i t i e s d e s i r i n g branches.
"There are, u n a v o i d a b l y , some advantages enjoyed by
member banks l o c a t e d i n Federal Reserve or branch bank c i t i e s
which arc n o t shared by banks i n other towns and c i t i e s , b u t
the Board i s endeavoring, as f a r as p o s s i b l e , to give equal
f a c i l i t i e s to a l l member banks, and has, t h e r e f o r e , a u t h o r i z e d
the Federal Reserve Banks to pay a l l charges on shipments o f
currency to or from member banks. A member bank, t h e r e f o r e ,
l o c a t e d a t a d i s t a n c e from i t s Federal Reserve Bank, i s thus
p u t i n as f a v o r a b l e a p o s i t i o n v / i t h respect t o currency t r a n s f e r s as a member bonk l o c a t e d i n the Federal Reserve c i t y , v / i t h
the exception o f the time i n v o l v e d i n t r a n s i t . "
The branches e s t a b l i s h e d d u r i n g 1317 and 1918 were d e c i d e d l y n o t the
simple, inexpensive agencies mentioned by the Board i n i t s 1916 Annual
Report and recommended by the Governors a t t h e i r F a l l Conference i n 1916.
Undoubtedly, the increased use o f Reserve bank f a c i l i t i e s by the government
and p r i v a t e i n t e r e s t s a f t e r : u r e n t r y i n t o the World War, as w e l l as a
d e s i r e on the p o r t o f the Board to expand the par c o l l e c t i o n system, was
r e s p o n s i b l e i n l a r g e measure f o r t h i s changed a t t i t u d e toward branches.

It

i s t r u e also t h a t the earnings o f the System had improved d u r i n g t h i s p e r i o d
and t h a t the establishment o f branches was o n l y one o f s e v e r a l steps taken
to improve the f a c i l i t i e s o f tho System f o r member banks and t o make membership i n the System uore a t t r a c t i v e to nonmembers.
BRANCH OFFICES ESTABLISHED DURING 1919
Federal Reserve f a c i l i t i e s were expanded d u r i n g the year 1919 through
the establishment o f f o u r a d d i t i o n a l branches; namely, a t L i t t l e Rock,




Houston, B u f f a l o , and N a s h v i l l e .

The c i t i e s o f L i t t l e Rock and Houston

were g i v e n " f u l l - f l e d g e d " branches; the former being approved o n l y a f t e r
L i t t l e Rock bankers had v i g o r u u s l y p r o t e s t e d t h a t a l i m i t e d power branch
would n o t meet the needs o f t h e i r community, which competed i n a degree
w i t h the c i t y o f Memphis.

B u f f a l o and N a s h v i l l e were given "memorandum

plan" branches, the l a t t e r being e s t a b l i s h e d "upon the understanding t h a t
the Board may decide to revoke t h i s d e s i g n a t i o n and consider a r e d i s t r i b u t i o n and r e d u c t i o n o f branches i n the A t l a n t a D i s t r i c t i f

the establishment

o f t h i s p a r t i c u l a r branch does n o t j u s t i f y i t s e l f i n the outcome".

The

reserve accounts o f member banks i n the B u f f a l o zone were subsequently t r a n s f e r r e d to the branch.
I n the c i t i e s o f L i t t l e Rock, B u f f a l o , ana N a s h v i l l e the establishment
o f the branch was used as an inducement to b r i n g e l i g i b l e l o c a l or nearby
nonmember banks i n t o the System.

Although Houston 1 s a p p l i c a t i o n was approved

on c o n d i t i o n a p p l i c a t i o n s f o r membership were r e c e i v e d and approved from a t
l e a s t t h i r t y e l i g i b l e nonmember banks, having combined resources of n o t l e s s
than $12,000,000, t h i s requirement was withdrawn when the Federal Reserve
Agent a t D a l l a s advised the Board t h a t i t might l e a d to misunderstandings
and prove very embarrassing t o h i s o f f i c e i n m a i n t a i n i n g a h i g h standard o f
membership.
During the e a r l y p a r t o f 1919, the Federal Reserve Bank of A t l a n t a ,
w i t h the approval o f the Board, a l s o e s t a b l i s h e d an agency a t Savannah,
Georgia.

The f u n c t i o n s of the agency were l i m i t e d t o supplying the currency

and c o i n requirements of member banks i n Savannah; a c t i n g as c u s t o d i a n of
s e c u r i t i e s pledged.by l o c a l member banks to secure r e d i s c o u n t s a t the A t l a n t a
Reserve Bank, h o l d i n g i n safekeeping s e c u r i t i e s belonging to l o c a l member




banks; and a r r a n g i n g f o r the s e t t l e m e n t o f l o c a l c l e a r i n g house balances
on the books o f the A t l a n t a Reserve Bank, by t e l e g r a p h i c advice t o A t l a n t a .
The A t l a n t a Reserve Bank also surveyed the currency s i t u a t i o n on the
I s l a n d o f Cuba d u r i n g the year 1919 and submitted a p l a n f o r redeeming
U n i t e d States currency then i n c i r c u l a t i o n on the I s l a n d w i t h i t s own n o t e s .
The v a r i o u s f a c t o r s which prompted t h i s survey and other steps l e a d i n g up to
the establishment o f agencies o f the Boston and A t l a n t a Reserve Banks i n
Havana, Cuba, w i l l bo discussed i n subsequent pages o f t h i s memorandum.
I n i t s Annual Report f o r the year 1919, the Board c o l l e d a t t e n t i o n
t o the statements i n i t s 1918 r e p o r t r e l a t i v e to the f a c i l i t i e s a f f o r d e d by
branches and t o the i m p r a c t i c a b i l i t y o f e s t a b l i s h i n g branches merely t o
g r a t i f y c i v i c pride.

I t was also p o i n t e d o u t , a p p a r e n t l y to discourage

f u r t h e r a p p l i c a t i o n s f o r branches, t h a t the p o l i c y which had been adapted o f
having the Federal Reserve banks pay a l l t r a n s p o r t a t i o n charges on shipments
o f currency made to and from member banks had been continued w i t h

satisfactory

r e s u l t s , and t h a t , except as to time i n t r a n s i t , member banks i n o u t l y i n g sect i o n s enjoyed the same f a c i l i t i e s i n the n a t t e r of currency t r a n s f e r s as member
barks i n Federal Reserve c i t i e s .
BRANCH OFFICES ESTABLISHED DURING 1920 AND 1921 - OKLAHOMA CITY CONTROVERSY
On December 31, 1921, there were t w e n t y - t h r e e branches o f F e d e r a l
Reserve banks i n o p e r a t i o n , those a t Los Angeles, C a l i f o r n i a , and Oklahoma
C i t y , Oklahoma, which were a u t h o r i z e d d u r i n g 1919, having been opened f : : r
business on January 2 and August 2, 1920, r e s p e c t i v e l y , and the branch a t
Helena, Montana, a l s o a u t h o r i z e d i n 1919, having been placed i n o p e r a t i o n on
February 1 , 1921.




The branches a t Los Angeles and Helena were opened on a

" f u l l - f l e d g e d " b a s i s , both s e r v i n g t e r r i t o r i e s which were remote from t h e i r
r e s p e c t i v e head o f f i c e s .

I n each i n s t a n c e , the establishment o f the branches

was preceded by entrance t o the System o f a number of nonmember banks.
Oklahoma C i t y 1 s a p p l i c a t i o n r e c e i v e d s p e c i a l c o n s i d e r a t i o n because the
Board also had b e f o r e i t a p p l i c a t i o n s from Muskogee and Tulsa, Oklahoma, both
o f which were l o c a t e d w i t h i n the Tenth' Federal Reserve D i s t r i c t .

Branches

had p r e v i o u s l y been opened i n Denver, Colorado, and Omaha, Nebraska, and the
q u e s t i o n as to j u s t where the demand f o r branches would stop n a t u r a l l y arose.
The Federal Reserve Board took the p o s i t i o n t h a t t h r e e branches would be the
maximum number t h a t could be expected i n the Tenth D i s t r i c t , and, i n s o f a r as
Oklahoma C i t y was concerned, i t was i n d i c a t e d t h a t i t had n o t occurred t :

the

Board t h a t a branch i n t h a t c i t y would be necessary because the d i s t a n c e to
Kansas C i t y was s h o r t .

However, i n March 1918 a q u e s t i o n n a i r e was sent by

the Board to a l l member banks i n Oklahoma t o a s c e r t a i n whether they p r e f e r r e d
a branch a t Tulsa or Oklahoma C i t y .

This q u e s t i o n n a i r e showed t h a t ,

although

Oklahoma C i t y was p r e f e r r e d by a m a j o r i t y o f banks d e s i r i n g a branch, more
than o n e - h a l f o f the member banks i n the State ( l o c a t e d i n the Tenth D i s t r i c t )
wanted the branch a t Tulsa or p r e f e r r e d to continue to do business w i t h the
Head O f f i c e .

T h e r e a f t e r a h e a r i n g was h e l d , w i t h a member ^ f the Board

a t t e n d i n g , a t which r e p r e s e n t a t i v e s o f both c i t i e s were given an o p p o r t u n i t y
t o argue the m e r i t s o f t h e i r a p p l i c a t i o n s .

At t h i s hearing the Oklahoma

bankers were advised t h a t e l i g i b l e State banks i n Oklahoma hru n o t supported
the System and t h a t a recommendation would be made t h a t the Board d e c l i n e both
a p p l i c a t i o n s and n o t reopen the d i s c u s s i o n u n t i l twnety or t w e n t y - f i v e subs t a n t i a l S t a t e banks became members.
Board acted a c c o r d i n g l y .




This recommendation was made and the

Pressure f o r a branch c j n t i n u e d to be e x e r t e d ; Members o f Congress
and Secretary o f the Treasury McAdoo i n t e r e s t i n g themselves i n the m a t t e r .
The question was f u r t h e r complicated when a p p l i c a t i o n s f o r branches were
received from W i c h i t a , Kansas, and L i n c o l n , Nebraska, both o f which c i t i e s
were also i n the Tenth D i s t r i c t .

On J u l y 24, 1919, the d i r e c t o r s of the

Kansas C i t y Reserve Bank granted a hearing to r e p r e s e n t a t i v e s o f Oklahoma
C i t y , Tulsa, L i n c o l n , and W i c h i t a and t h e r e a f t e r voted n o t to e s t a b l i s h an
a d d i t i o n a l branch a t t h a t t i n e .

This d e c i s i o n was immediately appealed by

Oklahoma bankers, supported by Senator Robert L . Owen, and the Board agreed
to review a l l evidence submitted by and to hear committees from the f o u r
contending c i t i e s .
On or about the same time the Oklahoma C i t y C l e a r i n g House A s s o c i a t i o n
c i r c u l a r i z e d banks i n Oklahoma r e q u e s t i n g cooperation i n p r o t e s t i n g l a r g e
earnings of the Kansas C i t y Reserve Bank, the contemplated e r e c t i o n of a new
Reserve bank b u i l d i n g and the f a i l u r e o f the Reserve bank to e s t a b l i s h a
branch i n Oklahoma; and asking f o r endorsement of a plan to r e q u e s t the
t r a n s f e r o f the State o f Oklahoma to the Eleventh Federal Reserve D i s t r i c t
i f Oklahoma was n o t granted a branch.

I t would appear t h a t t h i s a c t i o n was

no more than an e f f o r t to embarrass the Kansas C i t y Reserve Bank end b r i n g
pressure t o bear on the Board.
The hearings on the appeal then before the Board were h e l d as scheduled
and based on the arguments made and b r i e f s submitted, the Board advised the
Kansas C i t y Reserve Bank t h a t i t appeared a l i m i t e d power branch i n e i t h e r
Tulsa or Oklahoma C i t y would be a convenience to member banks and the p u b l i c
i n the southern p o r t i o n of the Tenth D i s t r i c t .




The Board requested data

r e l a t i v e to m a i l f a c i l i t i e s and check c l e a r i n g , which was supplemented by
a p o l l o f a l l member banks i n Oklahoma as to t h e i r preference f o r a branch,
and on December 19, 1919, the Board announced t h a t i t had a u t h o r i z e d and
d i r e c t e d the Federal Reserve Bank o f Kansas C i t y to e s t a b l i s h a l i m i t e d
power branch a t Oklahoma C i t y , but t h a t i t reserved the r i g h t to d i s c o n t i n u e
such branch i f i t s o p e r a t i o n s were found t o be u n s a t i s f a c t o r y .

This p r o -

v i s i o n was s i m i l a r to t h a t s t a t e d i n connection w i t h the approval o f the
N a s h v i l l e Branch o f the F e d e r a l Reserve Bank of A t l a n t a .

The Oklahoma C i t y

Branch has always operated on the "memorandum p l a n " , although an e f f o r t has
been made on s e v e r a l occasions to have i t s f u n c t i o n s broadened.
BOARD1S POWER TO DISCONTINUE BRANCHES - THE McFADDEN ACT
As p r e v i o u s l y s t a t e d i n t h i s memorandum there was considerable doubt
as t o the Board's a u t h o r i t y to d i s c o n t i n u e branches under Section 3, as
amended June 21, 1917.

Because o f t h i s f a c t , the Board's Committee on

Branches was i n s t r u c t e d on September 26, 1925, t o d i r e c t the General Counsel
o f the Board to render an o p i n i o n as to the power o f the Federal Reserve Board
i n the matter o f d i s c o n t i n u i n g branch Federal Reserve banks, and as to the
power and a u t h o r i t y o f the board o f d i r e c t o r s o f a p a r t i c u l a r Federal Reserve
bank to d i s c o n t i n u e branches which i t had e s t a b l i s h e d .

The committee was also

requested to consider the a d v i s a b i l i t y of s u b m i t t i n g these questions t o the
A t t o r n e y General o f the U n i t e d s t a t e s f o r h i s o p i n i o n .

Counsel f o r the Board

was o f the o p i n i o n t h a t n e i t h e r the Federal Reserve Board nor a Federal Reserve bank had expressed or i m p l i e d power to d i s c o n t i n u e a branch which had
once been v a l i d l y e s t a b l i s h e d .
doubt i n the m a t t e r .

I t was admitted, however, t h a t t h e r e was some

Although t h i s o p i n i o n was given t o the Board d u r i n g the

l a t t e r p a r t of 1923, i t was n o t f o r m a l l y r e f e r r e d to the A t t o r n e y General




u n t i l January 25, 1926.

The A t t o r n e y General informed the Board, through

the S e c r e t a r y o f the Treasury> t h a t h i s a t t e n t i o n had been c a l l e d to the
f a c t t h a t the McFadden A c t , which was then under c o n s i d e r a t i o n ,

contained

a p r o v i s i o n expressly a u t h o r i z i n g the a b o l i t i o n o f branches, and t h a t h i s
o p i n i o n would be w i t h h e l d u n t i l a c t i o n on such l e g i s l a t i o n had been taken
by Congress, unless there was some reason making an immediate response
necessary.

The Board i n d i c a t e d t h a t there was no reason why the question

should n o t be d e f e r r e d u n t i l a f t e r Congress had f i n a l l y l e g i s l a t e d thereon.
The McFadden A c t , which added a paragraph to Section S,

specifically

a u t h o r i z i n g the Board to r e q u i r e the discontinuance o f branches, was
approved on February 25, 1927.
BRANCHES AT SAM ANTONIO, TEXAS, AND CHARLOTTE, NORTH CAROLINA
On February 23, 1927, the Board advised the Federal Reserve Bank o f
D a l l a s t h a t i t had approved the a p p l i c a t i o n o f D a l l a s d i r e c t o r s f o r a branch
a t San A n t o n i o , Texas, e f f e c t i v e upon the s i g n i n g o f the McFadden A c t .

On

February 25, 1927, s i m i l a r advice was sent t o the Richmond Bank r e l a t i v e
a branch a t C h a r l o t t e , N o r t h C a r o l i n a .

to

Both o f these a p p l i c a t i o n s had been

before the Board almost c o n t i n u o u s l y since 1919, and, inasmuch as t h e i r
establishment rounded out the Federal Reserve branch system as i t

exists

today, the steps l e a d i n g up to t h e i r establishment w i l l be reviewed a t some
length.
San A n t o n i o ' s a p p l i c a t i o n was f i l e d on March 6 , 1919, but was withdrawn
i n f a v o r of an a p p l i c a t i o n by Houston, when i t became apparent t h a t the Board
would n o t approve b o t h a p p l i c a t i o n s .

The withdrawal was only temporary, how-

ever, and s h o r t l y a f t e r the Houston Branch commenced o p e r a t i o n s San Antonio




ot

again p e t i t i o n e d f o r a branch.

I t s a p p l i c a t i o n was approved by the D a l l a s

d i r e c t o r s w i t h b u t one d i s s e n t i n g v o t e ; t h a t of the Federal Reserve Agent.
The Agent s t a t e d t h a t he had voted "no" f o r the f o l l o w i n g reasons:

(1)

the

Board had already s a i d i t would n o t e s t a b l i s h two a d d i t i o n a l branches i n the
Dallas D i s t r i c t ;

(2) soiae of the t e r r i t o r y sought by the San Antonio Branch

had a l r e a d y been assigned to Houston and some was being adequately served by
the Head O f f i c e , and (5) unless a f i r m stand was taken a p p l i c a t i o n s could also
be expected from A m a r i l l o , Shreveport and other c i t i e s .

He i n d i c a t e d t h a t the

managing o f f i c e r s o f the D a l l a s Reserve Bank were i n h e a r t y agreement w i t h
h i s views and t h a t t h e r e was no p r e s s i n g need f o r a branch.
1919, the Board advised the D a l l a s d i r e c t o r s t h a t i t

On October 20,

"does n o t b e l i e v e t h a t

the p u b l i c i n t e r e s t r e q u i r e s a branch bank a t San An tonic a t t h i s time and has,
therefore, withheld i t s approval"•

From 1920 t o 1925 sporadic e f f o r t s were

made t o o b t a i n a branch or even an agency or currency depot, b u t i n each
i n s t a n c e the Board i n d i c a t e d i t s u n w i l l i n g n e s s t o g r a n t such f a c i l i t i e s .

The

matter came t o a head i n the e a r l y p a r t o f 1927, when the D a l l a s d i r e c t o r s
again approved an a p p l i c a t i o n f o r a branch a t San Antonio and Congressional
l e a d e r s such as Senator Glass and Representatives Garner and Wurzbach added
t h e i r support t o San Antonio 1 s p e t i t i o n .

As s t a t e d h e r e t o f o r e t h e B o r r d f s

approval was f i n a l l y obtained, c o n d i t i o n e d on the passage o f the McFadden A c t ,
and the San Antonio Branch opened f o r business on J u l y 5, 1927.
During 1919 the Board r e c e i v e d a p p l i c a t i o n s f o r branches from c l e a r i n g
house a s s o c i a t i o n s i n Charleston, South C a r o l i n a and Wilmington, North
Carolina,

These a s s o c i a t i o n s were advised t h a t i t had been the Board's p o l i c y

t o have a l l a p p l i c a t i o n s f o r branches o r i g i n a t e a t the F e d e r a l Reserve banks




82

and t h a t , a c c o r d i n g l y , t h e i r a p p l i c a t i o n s should f i r s t be presented t o the
Federal Reserve Bank o f Richmond.

I n f o l l o w i n g up the m a t t e r , the Board

advised the Richmond Dank t h a t i n f o r m a t i o n had been r e c e i v e d t o the e f f e c t
t h a t banks i n North and South C a r o l i n a were desirous o f having a branch and
t h a t the Board wished to know whether the Richmond Reserve Bank had r e c e i v e d
any a p p l i c a t i o n s , and i f so, what conclusions had been reached r e g a r d i n g
them.

On December 11, 1320, the Richmond Reserve Bank r e p l i e d t h a t a p e t i t i o n

f o r a branch, a t a p o i n t y e t to be determined, had been submitted by committees
r e p r e s e n t i n g bankers o f N o r t h and South C a r o l i n a and t h a t a separate p e t i t i o n *
had also been made f o r a branch i n South C a r o l i n a .

The Board asked the

Richmond Reserve Bank to s e t t l e the matter one way or another i n order to
f o r e s t a l l requests f o r hearings a t Washington.

T h e r e a f t e r , hearings were h e l d

i n Richmond and a thorough i n v e s t i g a t i o n as t o the most d e s i r a b l e l o c a t i o n f o r
a branch i n the Carolinas was conducted by the Richmond Reserve Bank.

These

hearings and i n v e s t i g a t i o n s extended over a p e r i o d of three years and on
November 7 , 1924, the d i r e c t o r s o f the Richmond Bank requested permission t o
e s t a b l i s h a branch a t C h a r l o t t e , N o r t h C a r o l i n a .

Subsequently, the d i r e c t o r s

o f the Richmond Bank appeared before the Board i n an e f f o r t t o show cause why
t h e i r request should be granted.

On June 3, 1325, the Board's Committee on

Branches recommended d i s a p p r o v a l of the proposed C h a r l o t t e Branch.

The Board

concurred i n t h i s recommendation and so advised the Richmond d i r e c t o r s , who
expressed r e g r e t a t the B o a r d ' s a c t i o n and l a t e r requested a r e h e a r i n g i n the
matter.

A f t e r some disagreement as to the character o f the h e a r i n g ,

invita-

t i o n s were sent by the Board to r e p r e s e n t a t i v e s of C h a r l o t t e , Wilmington,
Spartansburg, G r e e n v i l l e , Columbia and Greensboro a d v i s i n g them t h a t a h e a r i n g




would be h e l d i n Washington on January 15, 1926, f o r t h e purpose o f d i s cussing the n e c e s s i t y f o r a branch i n t h e C a r o l i n a s and t h e proper l o c a t i o n f o r such branch, i f e s t a b l i s h e d .

This hearing emphasized the d i s a g r e e -

ment e x i s t i n g among the v a r i o u s c i t i e s and as a r e s u l t t h e p e t i t i o n o f the
Richmond d i r e c t o r s t o e s t a b l i s h a branch a t C h a r l o t t e was t a b l e d pending
the r e c e i p t from t h e A t t o r n e y General o f an o p i n i o n as t o t h e Board 1 s
a u t h o r i t y t o d i s c o n t i n u e branches.
t h i s o p i n i o n became unnecessary.

With the passage o f the McFadden Act
Vhe C h a r l o t t e a p p l i c a t i o n was reconsidered

and approved and a branch o f t h e Richmond Reserve Bank was opened i n t h a t
c i t y Qn December 1 , 1927.
The San Antonio and C h a r l o t t e Branches were organized and have always
operated on a " f u l l - f l e d g e d " b a s i s .
HAVANA AGENCY
During the p e r i o d o f m i l i t a r y occupation o f Cuba a t the t u r n o f the
century a l l customs, taxes and p u b l i c and p r i v a t e debts were, by o r d e r o f
the P r e s i d e n t o f t h e U n i t e d S t a t e s , made payable i n U n i t e d States currency
o r i n f o r e i g n g o l d c o i n a t s p e c i f i e d r a t e s o f exchange.

Under t h i s o r d e r

U n i t e d States currency became t h e c h i e f medium o f exchange on the I s l a n d .
This c o n d i t i o n was n o t changed by the Treaty o f 1905* since the new Cuban
Government, w h i l e having power t o set up a c e n t r a l bank and i s s u e i t s own
currency, also by a c t made U n i t e d States currenqy l e g a l tender f o r a l l p u r poses p u b l i c and p r i v a t e .
The P i a t t Amendment t o t h e Treaty o f 1905, reserved t o t h e U n i t e d
States the r i g h t t o i n t e r v e n e i n Cuban a f f a i r s t o preserve a s t a b l e government.

I t a l s o l i m i t e d the Cuban Government 1 s a u t h o r i t y t o c o n t r a c t p u b l i c




-34-

debts.

These p r o v i s i o n s o f f e r e d a measure o f s e c u r i t y t o American c a p i t a l

i n v e s t e d on the I s l a n d and encouraged an i n f l o w o f new c a p i t a l .

Trade

between the two c o u n t r i e s was f o s t e r e d , American Thanking i n t e r e s t s sought
and obtained r e p r e s e n t a t i o n i n the banking l i f e o f the I s l a n d , and banking
t r a n s a c t i o n s between the U n i t e d States and Cuba grew i n number.

This l e d

to a s u b s t a n t i a l increase i n the amount of U n i t e d States currency c i r c u l a t i n g
i n Cuba.
A f t e r the Federal Reserve System was e s t a b l i s h e d F e d e r a l Reserve notes
and Federal Reserve bank notes q u i t e n a t u r a l l y found t h e i r ?/ay t o the I s l a n d ,
forming a s u b s t a n t i a l p a r t o f i t s c i r c u l a t i o n .

However, since s h i p p i n g and

insurance charges on currency were h i g h , t r a n s f e r s o f notes were c h i e f l y
confined t o those o f l a r g e r denominations.

I n the absence o f any d e f i n i t e

program o f redemption, notes o f smaller denominations a l r e a d y on the I s l a n d ,
or which found t h e i r way t o the I s l a n d , continued t o remain i n c i r c u l a t i o n
even though f a r below the u s u a l standard o f f i t n e s s .
Because of p r o x i m i t y to Cuba, notes o f the Federal Reserve Bank o f
A t l a n t a c o n s t i t u t e d the b u l k of Federal Reserve notes on the I s l a n d .

The

A t l a n t a Bank, which had the smallest volume o f domestic c i r c u l a t i o n o f any
Reserve bank, regarded i t s Cuban c i r c u l a t i o n w i t h f a v o r , since the gold r e ceived i n exchange f o r such notes augmented i t s gold reserves and thus
broadened i t s investment and c r e d i t base.

With a view t o f u r t h e r expanding i t s

Cuban c i r c u l a t i o n , the A t l a n t a Reserve Bank i n 1919 surveyed the currency s i t u a t i o n on the I s l a n d and subsequently submitted to the Board a program f o r r e p l a c i n g $50,000,000 o f u n f i t U n i t e d S t a t e s n o t e s , then estimated to be c i r c u l a t i n g on the I s l a n d , w i t h i t s own n o t e s . I t was contemplated t h a t the eotchango
could be accomplished a t a p r o f i t * since t h e o r e t i c a l l y i t would b r i n g $50,000,000



o f gold i n t o the A t l a n t a Bank, $30,000,000 o f which, as excess gold r e serves, would be a v a i l a b l e f o r investment or as reserve f o r an a d d i t i o n a l
|75,000,000 i n c i r c u l a t i o n .

I t was p o i n t e d o u t t h a t t h i s program would

clean up the currency on the I s l a n d , although the estimated replacement
was based on notes o f $5 or over and d i d n o t contemplate the renewal of
notes o f smaller denominations, which were i n extremely poor c o n d i t i o n .
The Board took issue w i t h t h i s plan m a i n t a i n i n g t h a t by f a r the l a r g e r
p a r t of the paper money c i r c u l a t i n g i n Cuba c o n s i s t e d of N a t i o n a l Bank notes
and Federal Reserve notes and t h a t the redemption o f such n o t e s , other than
those o f t h e A t l a n t a Bank, by the A t l a n t a Bank would merely expand i t s gold
reserves and c o n t r a c t gold reserves of other F e d e r a l Reserve banks w i t h o u t
adding a p p r e c i a b l y to the System's gold h o l d i n g s .

The A t l a n t a Reserve Bank

was advised t h a t the Board d i d n o t f e e l t h a t the System would be strengthened
by such an exchange o f n o t e s .

I t was i n d i c a t e d t h a t Cuban branches o f

American banks might f i n d i t good business t o l o o k a f t e r the redemption o f
u n f i t notes on the I s l a n d *

I n i n v e s t i g a t i n g A t l a n t a ' s program i t was a l s o

p o i n t e d out t h a t Cuba was e n j o y i n g currency c i r c u l a t i o n a t no expense; t h a t
Cuba might w e l l bear the expense o f keeping such c i r c u l a t i o n f i t ;

that

A t l a n t a ' s program, i n s o f a r as the investment p r o f i t s were concerned, could
w e l l l e a d to i n f l a t i o n and to h a r m f u l c o m p e t i t i o n f o r d e s i r a b l e paper; and
t h a t A t l a n t a ' s computations were based on gold reserves o f 40% which, although
l e g a l , were abnormally low.

No a c t i o n was taken i n the matter by the A t l a n t a

Reserve Bank a t t h a t time.
During the l a t t e r ^ p a f c t o f 1920, the Cuban Government requested the
assistance of the S t a t e Department o f the U n i t e d States i n having e s t a b l i s h e d




36

i n Cuba a Federal Reserve agency f o r the redemption o f a l l o l d and
d e t e r i o r a t e d currency c i r c u l a t i n g on the I s l a n d , because i t was regarded
as dangerous t o p u b l i c h e a l t h .

This request was brought t o the a t t e n t i o n

o f the Federal Reserve Board by the Treasury Department and the Board
s t a t e d t h a t i t was n o t considered d e s i r a b l e t o e s t a b l i s h an agency i n Cuba,
b u t t h a t i t would be pleased t o work out some arrangement w i t h the Cuban
Government whereby t h e Cuban t r e a s u r y or Cuban banks would undertake t o
c o l l e c t and s h i p u n f i t notes t o the J a c k s o n v i l l e Branch o f t h e Federal Reserve Bank o f A t l a n t a f o r redemption.
On June 18, 1921, the Federal Reserve Bank of A t l a n t a , upon r e s o l u t i o n
of i t s d i r e c t o r s , decided t o i n v e s t i g a t e the f e a s i b i l i t y and d e s i r a b i l i t y of
e s t a b l i s h i n g an agency a t Havana, Cuba.

Follovting t h i s i n v e s t i g a t i o n the d i -

r e c t o r s of the A t l a n t a Reserve Bank passed t h e f o l l o w i n g r e s o l u t i o n s
"TPftiereas, should i n the d i s c r e t i o n and wisdom o f the Federal
Reserve Board, they consider the establishment o f a branch
or agency o f t h e Federal Reserve System i n Cuba, be i t
"Resolved, t h a t i n view o f the p r o x i m i t y o f the A t l a n t a bank
t o Cuba, and t h e i n t i m a t e business r e l a t i o n s of people i n our
d i s t r i c t , we ask t h a t a t the time your Board considers t h i s
m a t t e r , t h a t t h e Federal Reserve Bank o f A t l a n t a be allowed
the p r i v i l e g e o f a conference w i t h your Board as t o such branch
or agency being e s t a b l i s h e d under the j u r i s d i c t i o n o f the A t l a n t a
Federal Reserve Bank."
A t a l a t e r d a t e , w i t h t h e consent o f t h e Board, the A t l a n t a Bank
arranged t o handle a t i t s J a c k s o n v i l l e Branch exchanges o f u n f i t notes
forwarded from Cuba, provided the Cuban a u t h o r i t i e s assumed, the expense and
r i s k s i n c i d e n t a l t o such t r a n s a c t i o n s .

The Cuban Government was advised o f

t h i s arrangement, b u t delayed use o f the f a c i l i t i e s o f f e r e d a p p a r e n t l y because o f t h e expense i n v o l v e d .




I n an e f f o r t t o meet t h i s o b j e c t i o n the

A t l a n t a bank i n 1922 sought a u t h o r i t y t o designate the Havana Branch o f
the N a t i o n a l C i t y Bank o f New York as i t s agent i n Cuba, w i t h a view t o
having such branch m a i n t a i n a stock o f notes on the I s l a n d ; i t being u n d e r stood t h a t the N a t i o n a l C i t y Bank would absorb a l l s h i p p i n g and insurance
charges.

The Federal Reserve Board took the p o s i t i o n t h a t such d e s i g n a t i o n

should n o t be made except a t the request o f the Cuban Government.
request was made by the Cuban Government.

No such

Subsequently, the A t l a n t a Bank

handled one exchange, i n v o l v i n g $8,042,000 o f u n f i t one's and two's f o r
Cuban Government through i t s J a c k s o n v i l l e Branch.

the

I t was estimated, how-

ever, t h a t approximately $84,000,000 i n notes o f the A t l a n t a Bank, m o s t l y o f
l a r g e r denominations, had been shipped t o Cuba a t the request o f American
banks, such banks r e c e i v i n g currency from the I s l a n d which, i n s o f a r as
A t l a n t a was concerned, was r e t u r n e d through o r d i n a r y channels.
The Cuban s i t u a t i o n again came b e f o r e the Board on A p r i l 5, 1925, when
the d i r e c t o r s o f the Federal Reserve Bank of Boston passed a r e s o l u t i o n

di-

r e c t i n g the Governor o f such bank, w i t h the approval o f the Federal Reserve
Board, t o take immediate steps to e s t a b l i s h an agency o f the Boston Bank i n
Havana f o r the purpose o f conducting operations p e r m i t t e d under S e c t i o n
1 4 ( e ) ^ o f the Federal Reserve A c t .

Hearings r e g a r d i n g t h i s r e s o l u t i o n ,

attended by r e p r e s e n t a t i v e s of the Boston, A t l a n t a , New York and P h i l a d e l p h i a
Reserve Banks and p r i v a t e bankers, were h e l d i n Washington on A p r i l 50 and
May 7, 1925.
The establishment o f the agency was s t r o n g l y opposed by the New York and
A t l a n t a Reserve Banks; the former because i t b e l i e v e d the establishment of such

2

Authorizes the establishment o f agencies o f Federal Reserve banks i n
foreign countries "
wheresoever i t may be deemed best f o r the p u r pose o f purchasing, s e l l i n g , and c o l l e c t i n g b i l l s of e x c h a n g e . . . . . . "




a d i r e c t agency would c o n s t i t u t e a dangerous precedent and the l a t t e r
because i t b e l i e v e d the A t l a n t a d i s t r i c t by v i r t u e of a p r i o r

resolution

and geographic l o c a t i o n was e n t i t l e d t o f i r s t c o n s i d e r a t i o n .

The Federal

Advisory Council a l s o reviewed the matter and made the f o l l o w i n g recommendations
"While the Council i s i n f u l l sympathy w i t h the ends t h a t
the Board i s t r y i n g t o a t t a i n , i t b e l i e v e s t h a t the p l a n as now
contemplated v/ould not prove successful i n a c t u a l o p e r a t i o n and
t h a t what the Board d e s i r e s t o achieve can and should be accomp l i s h e d by o t h e r and simpler means which would n o t i n v o l v e t h e
ominous step o f p e r m i t t i n g Federal Reserve Banks t o e s t a b l i s h
o r g a n i z a t i o n s o f t h e i r own i n f o r e i g n c o u n t r i e s
a step which
i n the o p i n i o n of t h e Council was n o t contemplated by t h e Act
a step f o r which the t r a d i t i o n s o f the i m p o r t a n t European c e n t r a l
banks would g i v e no p r e c e d e n t . "
P r e s i d e n t Harding and members o f h i s Cabinet b e l i e v e d t h a t a Federal Reserve
agency i n Cuba would a i d i n the expansion of American commercej the President
expressing hope t h a t i t v/ould be p o s s i b l e to s a t i s f a c t o r i l y a d j u s t the cont e n t i o n between Boston and A t l a n t a .

The American Ambassador t o Cuba a l s o

urged e a r l y a c t i o n t o e s t a b l i s h such an agency i n order t o f o r e s t a l l the
establishment o f a Cuban bank of i s d u e , which was considered h i g h l y und e s i r a b l e , and, t o check, i f p o s s i b l e , the a b s o r p t i o n o f the I s l a n d ' s p r i v a t e
banks by Canadian i n t e r e s t s .

He a l s o f e l t t h a t such an agency would b r i n g

about r e d u c t i o n i n the abnormally h i g h d i s c o u n t r a t e s maintained on the
Island,
The Federal Reserve Board, having decided t o e s t a b l i s h an agency i n
Cuba, arranged a f u r t h e r h e a r i n g i n the matter a t which r e p r e s e n t a t i v e s o f
the Boston and A t l a n t a Reserve Banks were requested t o be p r e s e n t .

This

h e a r i n g was h e l d d u r i n g May 1923 and on June 28, 1923, the Board announced
t h a t i t had decided t o approve a p l a n under which the Federal Reserve Banks




o f Dos ton and A t l a n t a were t o open agencies i n Havana.

This p l a n was i n -

corporated i n a r e s o l u t i o n adopted by the Board on June 27, 1925, and
amended on J u l y 50, 1925.

While i t gave the Federal Reserve Bank o f Boston

p r i o r i t y i n the purchase and sale o f a l l cable t r a n s f e r s and b i l l s

arising

out o f our trade w i t h Cuba, except such b i l l s as o r i g i n a t e d i n or were drawn
upon banks or other drawees i n the S i x t h Federal Reserve D i s t r i c t , i t

re-

served t o the A t l a n t a Bank the r i g h t to supply the currency i n v o l v e d i n such
t r a n s a c t i o n s or otherwise e n t e r i n g i n t o c i r c u l a t i o n on the I s l a n d ,

Each

agency was a u t h o r i z e d to perform t r a n s a c t i o n s o f the type to be handled by
the other o n l y w i t h the permission or upon the r e f u s a l o f the o t h e r t o do so.
On September 1 , 1923, agencies o f the Federal Reserve Banks o f Boston
and A t l a n t a were opened i n Havana,

The Boston Agency operated w i t h a s m a l l

personnel and a t comparatively small expense, since i t s a c t i v i t y was conf i n e d to the purchase and sale o f cable t r a n s f e r s , which were c o l l e c t e d or
p a i d , as the case might be, by the A t l a n t a Agency.
Agency showed, a f a i r p r o f i t .

Consequently, the Boston

On the o t h e r hand the A t l a n t a Agency, which

had no source of income, was r e q u i r e d to m a i n t a i n a r e l a t i v e l y large, personnel
to handle currency payments and r e c e i p t s on the I s l a n d , and i n a d d i t i o n had
to absorb p r i n t i n g , s h i p p i n g and insurance charges i n c i d e n t a l t o the r e p l a c e ment o f such currency.
There was considerable f r i c t i o n between the two agencies r e g a r d i n g the
scope o f t h e i r a c t i v i t i e s and the d e s i r a b i l i t y o f c o n s o l i d a t i n g the agencies
soon became apparent.

I n A p r i l 1926 the Boston Agency a t the request o f banks

i n Cuba, which were experiencing or threatened w i t h r u n s , sold cable t r a n s f e r s aggregating $32,900,000 payable i n Havana.




The A t l a n t a Agency had on

hand l e s s than $7,500,000 o f currency and was unable promptly t o complete
these t r a n s f e r s j some of which v/ere delayed two or t h r e e days pending the
a r r i v a l of a d d i t i o n a l currency by s p e c i a l t r a i n , plane and boat from
Atlanta.

S h o r t l y a f t e r t h i s i n c i d e n t the Federal Reserve Bank o f Boston

addressed a l e t t e r t o t h e Board o u t l i n i n g the u n s a t i s f a c t o r y f e a t u r e s o f
the e x i s t i n g s i t u a t i o n i n Cuba and s t a t i n g t h a t , unless t h e Board was d i s posed t o c o n s o l i d a t e the two agencies under i t s d i r e c t i o n and c o n t r o l ,

its

agency i n Havana should be d i s c o n t i n u e d .
The Board reviewed t h e q u e s t i o n and on December 22, 1926, passed a
r e s o l u t i o n a u t h o r i z i n g t h e Federal Reserve Bank of Boston t o d i s c o n t i n u e
i t s Havana Agency, e f f e c t i v e January 1 , 1927, and a u t h o r i z i n g the Federal
Reserve Bank o f A t l a n t a t o assume the f u n c t i o n s p r e v i o u s l y performed by the
Boston Agency.

On January 27, 192.7, the Board also passed a r e s o l u t i o n r e -

d e f i n i n g the f u n c t i o n s t o be performed by the A t l a n t a Agency. Subsequently,
the Federal Advisory C o u n c i l considered the question o f the establishment
and maintenance of t h e Havana Agency and reached the f o l l o w i n g c o n c l u s i o n ,
which was brought t o the a t t e n t i o n of a l l Federal Reserve banks on May 26,
1927 (X-4860)s
"The Federal Advisory Council recognizes t h a t i t i s n o t
advisable t o d i s c o n t i n u e the Crib an Agency a t t h i s t i m e . The
C o u n c i l , however, wishes t o r e i t e r a t e the view t o which i t has
given expression on s e v e r a l occasions i n the p a s t , t o wits
t h a t i t does n o t b e l i e v e i t t o be good p o l i c y f o r the Federal
reserve banks t o e s t a b l i s h agencies o f the character o f t h e
Cuban Agency o u t s i d e o f t h e C o n t i n e n t a l U n i t e d S t a t e s . The
C o u n c i l , t h e r e f o r e , suggests t o the Federal Reserve Board t h a t
i t study the whole problem t o the end t h a t , i f p o s s i b l e , some
p l a n be devised which may be an e f f e c t i v e s u b s t i t u t e f o r the
present arrangement. 11
While the operations o f t h e Cuban agency were reviewed from time t o time
between the years 1927 t o 1935 no a c t i o n was taken t o d i s c o n t i n u e or c u r t a i l




<£1

i t s functions.

I n f a c t on January 2, 1929, the Board broadened the f u n c t i o n s

o f the agency t o p e r m i t d i r e c t exchanges o f ner or f i t currency f o r United
S t a t e s c o i n tendered by the Treasurer o f the Republic of Cuba, or any banking
i n s t i t u t i o n doing business i n Havana.
A p e r i o d o f p o l i t i c a l u n r e s t began i n Cuba i n 1955, when P r e s i d e n t
Machado was deposed from the presidency.

P o l i t i c a l f a c t i o n s sought c o n t r o l of

the government, c o n s t i t u t i o n a l forms were abandoned and r i o t s and s t r i k e s
ensued.

I n view of t h e r i s k s a r i s i n g from these c o n d i t i o n s , as w e l l as the

f a c t t h a t t r a n s p o r t a t i o n f a c i l i t i e s between the J a c k s o n v i l l e Branch and Cuba
had improved, the A t l a n t a Reserve Bank on June 8 , 1954, passed a r e s o l u t i o n
under which t h e Board was requested t o permit discontinuance o f the Havana
Agency.

On J u l y I S , 1954, the Board h e l d a meeting i n Washington, which was

attended by r e p r e s e n t a t i v e s of American and Canadian banks having o f f i c e s
Cuba, t o consider the m a t t e r .

A l l the bank r e p r e s e n t a t i v e s present a t t n i s

meeting were of t h e o p i n i o n t h a t the agency should be continued.
Department of the U n i t e d S t a t e s

in

The State

also urged t h a t the agency be continued u n t i l

more s t a b l e c o n d i t i o n s p r e v a i l e d i n Cuba.

I n view o f the e x i s t i n g sentiment,

the A t l a n t a d i r e c t o r s reconsidered the q u e s t i o n and advised the Board t h a t the
A t l a n t a Bank would cooperate i n a System o p e r a t i o n of t h e agency and t h a t ,
i n t h e i r o p i n i o n , such an arrangement would be a proper s o l u t i o n o f the problem.
On October 51, 1954, the Board addressed a l e t t e r t o a l l Federal Reserve banks
o u t l i n i n g A t l a n t a ' s p o s i t i o n i n regard t o the agency, s t a t i n g t h e suggested
s o l u t i o n t o the problem, and r e q u e s t i n g advice as t o t h e i r a t t i t u d e toward
p a r t i c i p a t i o n w i t h the other Federal Reserve banks i n the o p e r a t i o n s of the
agency by the F e d e r a l Reserve Bank of A t l a n t a on a System b a s i s .




A l l o f the

42

banks e v e n t u a l l y agreed t o p a r t i c i p a t e i n the operations of t h e agency under
the f o l l o w i n g conditionss

(a) the A t l a n t a Bank would defray a l l u s u a l o p e r a t i n g

expenses, since the c i r c u l a t i o n o f i t s notes i n Cuba a t times worked t o i t s
advantage; (b) a l l o f the Reserve banks would share i n the n e t p r o f i t s o f the
agency, i f any

t h e i r r e s p e c t i v e shares t o be determined by the amount of

t h e i r c a p i t a l and s u r p l u s ; (c)

any l o s s ( n o t covered by c o l l e c t i b l e

insurance)

due t o c i v i l commotion, war, r i o t , i n s u r r e c t i o n , r o b b e r y , e t c . , would be shared
by a l l o f the Reserve banks

t h e i r r e s p e c t i v e shares t o be determined by the

amount o f t h e i r c a p i t a l and s u r p l u s ; (d) the A t l a n t a Bank would provide c e r t a i n
s p e c i f i e d types and amounts o f insurance; (e) the A t l a n t a Bank would alone be
r e s p o n s i b l e f o r the o r d i n a r y operations o f the agency, would f u r n i s h each
Reserve bank w i t h statements covering operations o f t h e agency a t n o t l e s s than
monthly i n t e r v a l s , and would n o t , w i t h o u t t h e consent o f the other Reserve banks
and t h e Board, make any change i n the n a t u r e or extent ox agency o p e r a t i o n s .
On May 25, 1955, the Board addressed a l e t t e r t o a l l Federal Reserve
banks (X-9217) s t a t i n g t h a t f o r m a l agreements r e l a t i n g t o the o p e r a t i o n o f the
Havana Agency as a System agency had been executed and exchanged between each
Reserve bank and the A t l a n t a Reserve Bank and t h a t t h e Havana Agency would begin
o p e r a t i n g under the new arrangement on June 1, 1955.
During 1955, the Cuban Government began i s s u i n g i t s own currency.

This

money c i r c u l a t e d f r e e l y on the I s l a n d and i t s use, t o g e t h e r w i t h p r e v a i l i n g
adverse economic c o n d i t i o n s , s e r i o u s l y a f f e c t e d the earnings o f the Havana
Agency.

Faced w i t h a s e r i e s o f increased o p e r a t i n g d e f i c i t s , the A t l a n t a

d i r e c t o r s on February 14, 1936, again passed a r e s o l u t i o n t o request the
Board's permission t o d i s c o n t i n u e the agency a t such time as such a c t i o n
could be taken w i t h o u t unduly a f f e c t i n g t h e banking and business i n t e r e s t s




o f Cuba, o r , as an a l t e r n a t i v e t h a t some plan be formulated under which
the agency might be operated w i t h o u t i n c u r r i n g a s u b s t a n t i a l o p e r a t i n g l o s s .
A new t r e a t y between t h e U n i t e d States and Cuba was r a t i f i e d by the
United States Senate on May 51, 1936.

This t r e a t y superseded t h a t of 1905

and under i t the United States abandoned, t h e r i g h t t o i n t e r v e n e i n the i n t e r n a l
a f f a i r s of Cuba, as was p o s s i b l e under the P i a t t Amendment t o the e a r l i e r
treaty.

F o l l o w i n g t h i s a c t i o n the A t l a n t a d i r e c t o r s again reviewed the Cuban

s i t u a t i o n arid on September 11, 1956, passed a r e s o l u t i o n s i L i i l a r t o the one
passed e a r l i e r i n the y e a r , and on January 11, 1957, submitted a r e v i s e d form
of agreement t o the Board under which each Reserve bank would bear a pro r a t a
share o f any d e f i c i t a r i s i n g from o p e r a t i o n of the agency.

No a c t i o n was

taken regarding t h i s r e v i s e d agreement.
The matter o f t h e discontinuance of the Havana Agency was, however, again,
considered by the Board i n December 1957, a t which time a conversation

was

had w i t h the Under Secretary o f S t a t e t o determine the a t t i t u d e of the
S t a t e Department toward the p o s s i b l e discontinuance o f the Havana Agency.
The Under Secretary s a i d a t the time t h a t the Cuban Government had had a
t e c h n i c a l commission studying w i t h the S t a t e Department and the Treasury Department c e r t a i n reform measures t o be undertaken by the Cuban Government w i t h
regard t o i t s currency system, c e n t r a l banking p o s s i b i l i t i e s , e t c . , and u n t i l
t h e two governments had reached a d e c i s i o n as t o v?hat i t was d e s i r a b l e t o do
i n a r a t h e r f a r reaching program, hoped v e r y much t h a t the Federal Reserve
System would take no a c t i o n t o t e r m i n a t e the agency a t Havana.

The Under

Secretary s a i d t h a t i f any f u r t h e r a c t i o n i n the matter could be d e f e r r e d f o r
a t l e a s t another s i x months, i t would bo appreciated by the S t a t e Department,




M

and i n a l e t t e r dated January 7 , 1938, the Board advised P r e s i d e n t Newton
o f A t l a n t a of the conversation w i t h the Under Secretary o f S t a t e and s t a t e d
t h a t unless f u r t h e r advice was received from t h e S t a t e Department before
J u l y 1 , 1S58, and i n the absence of f u r t h e r developments, the Board would
take the matter up again w i t h the State Department a t t h a t time and advise
Mr. .Newton of t h e r e s u l t s .
A f t e r the e x p i r a t i o n o f t h e s i x months 1 p e r i o d f u r t h e r

conversations

regarding the matter were had and correspondence exchanged w i t h t h e State
Department and although the S t a t e Department suggested t h a t the q u e s t i o n of
d i s c o n t i n u i n g t h e Agency again be d e f e r r e d , t h e Board under date o f August
3, 1938, adopted a r e s o l u t i o n a u t h o r i z i n g and d i r e c t i n g t h e F e d e r a l Reserve
Bank o f A t l a n t a t o d i s c o n t i n u e the maintenance and o p e r a t i o n o f the Agency
a t Havana as soon as p r a c t i c a b l e and i n no event l a t e r than the close o f
business December 51, 1958.
I n f o r m a t i o n submitted by the Board's Examiners i n connection with,
an examination of t h e Havana Agency as of January 28^ 1938, i n d i c a t e s t h a t
t h e r e i s now an almost complete absence o f American money i n a c t i v e
t i o n i n Cuba,

circula-

i t having been supplanted by the Cuban currency placed i n c i r -

c u l a t i o n beginning i n 1955.

This s i t u a t i o n has n a t u r a l l y r e s u l t e d i n a

decided " d r y i n g up" of a c t i v i t i e s a t t h e Agency,
CURRENCY FUNDS - SCRANTQN» PENNSYLVANIA
P r i o r t o January, 1922, member banks i n Scranton, Pennsylvania, and the
immediate v i c i n i t y , when ca3.1ed upon t o meet heavy p a y r o l l s or o t h e r emergencies, v/ere sometimes inconvenienced by the l a t e a r r i v a l of currency from
the Federal Reserve Bank of P h i l a d e l p h i a , due t o poor r a i l f a c i l i t i e s .

In

order t o c o r r e c t t h i s s i t u a t i o n , the Federal Reserve bank entered i n t o an
agreement w i t h the F i r s t N a t i o n a l Bank of Scranton whereby such bank was made



45

custodian o f a $1,000,000 currency fond which could be dravn a g a i n s t by member
banks i n Scrsnton and i t s v i c i n i t y , whose currency shipments d i d n o t a r r i v e on
schedule5 the fund being reimbursed when the delayed shipment a r r i v e d .

Under

the agreement the fund was c a r r i e d i n a safe d e p o s i t box ut the F i r s t N a t i o n a l
Bank^ such bank p l e d g i n g marketable investments w i t h the Reserve bank as
s e c u r i t y and assuming a l l l i a b i l i t y f o r l o s s e s , except on shipments t o and from
the Reserve bank.
This agreement remained i n e f f e c t u n t i l October 1923, a t which time the
fund was increased t o $2,000,000 and a new agreement was executed which
provided t h a t ;
(1) The fund should be under the j o i n t custody of s i x persons
appointed by the F i r s t N a t i o n a l Bank, any two o f whom
would have the p r i v i l e g e of access.
(2) Withdrawals could be made by the F i r s t N a t i o n a l Bank or by
i t f o r o t h e r l o c a l member banks s u b j e c t t o p r i o r approval
o f the Reserve bank.
(5) Deposits could be received f o r c r e d i t t o the reserve accounts of p a r t i c i p a t i n g member banks, the Reserve bank t o
be given immediate t e l e g r a p h i c advice of such d e p o s i t s ,
(4) Confirmation of a l l withdrawals and deposits should be
made t o the Federal Reserve bank d a i l y by l e t t e r .
(5) The F i r s t N a t i o n a l Bank should pledge w i t h the Federal
Reserve bank s e c u r i t i e s having an aggregate .aarket value
of at least
000,000.
(6) I n the event the fund exceeded
000,000 the Reserve
bank could r e q u i r e the shipment t o i t of such excess or
the pledge of a d d i t i o n a l s e c u r i t y .
(7) Any losses o c c u r r i n g w h i l e shipments of currency were i n
t r a n s i t t o t h e F i r s t N a t i o n a l Bank were t o be borne by the
Reserve bank, whereas losses o c c u r r i n g a f t e r a r r i v a l were
t o be borne by the F i r s t N a t i o n a l .




(8) The agreement might be terminated by e i t h e r p a r t y upon f i v e
days 1 w r i t t e n n o t i c e and, i n the event the F i r s t N a t i o n a l
Bank f a i l e d to comply w i t h the terms o f the agreement, the
Reserve bank could s e l l any or a l l of the s e c u r i t i e s pledged
as c o l l a t e r a l t o the fund t o p r o v i d e f o r any l o s s i t might
sustain.
I n connection w i t h the establishment o f the fund the Federal Reserve
Bank of P h i l a d e l p h i a s t a t e d t h a t a s u b s t a n t i a l saving i n postage and insurance
charges would r e s u l t from i t s o p e r a t i o n , since a c t u a l shipments of currency
t o the Scranton a r e a would be h e l d t o a minimum.

I t was a l s o p o i n t e d out

t h a t p a r t i c i p a t i n g banks would be able t o reduce the amount o f cash c a r r i e d
i n t h e i r own v a u l t s , c a r r y a higher aggregate o f earning assets,and save i n t e r e s t
which was t h e r e t o f o r e l o s t on currency i n t r a n s i t .

I t was i n d i c a t e d t h a t

Scranton banks would very l i k e l y apply f o r a branch, i f

the fund was n o t

established.
On October 5, 1923, the Board voted t o i n t e r p o s e no o b j e c t i o n t o the
establishment o f the proposed fund.

Since e a r l y r e p o r t s f i l e d by the

Federal Reserve Bank o f P h i l a d e l p h i a covering operations o f the fund i n d i c a t e d t h a t i t was r e n d e r i n g s a t i s f a c t o r y and economic s e r v i c e , the Board
subsequently requested the P h i l a d e l p h i a Reserve Bank t o forward a d e t a i l e d
account o f i t s o p e r a t i o n " i n order t h a t i t s use may be extended t o o t h e r
c i t i e s and other D i s t r i c t s " .

A currency fund s i m i l a r t o t h a t a t Scranton

was a l s o operated a t Johnstown, Pennsylvania, from June 25, 1924, u n t i l
March 13, 1955.
Currency funds o f a more o r l e s s temporary n a t u r e , some of which were
n o t operated under c o n t r a c t and which remained i n o p e r a t i o n f o r p e r i o d s
ranging from s e v e r a l days t o about one y e a r , have been e s t a b l i s h e d d u r i n g
p e r i o d s of f i n a n c i a l s t r e s s or f o r o t h e r reasons i n Boise and Twin F a l l s ,
Idaho; Bangor, Maine; H a r t f o r d and New Haven, Connecticut; C h a r l e s t o n , South




47

C a r o l i n a ; Sacramento, C a l i f o r n i a , and Miami and Tampa, F l o r i d a .
eleven currency funds have been operated.

In

all

Only one, t h a t a t Seranton,

Pennsylvania, i s a c t i v e a t present.
The use o f currency funds f e l l i n t o d i s f a v o r when i t became apparent
t h a t , i n one i n s t a n c e a t l e a s t , the fund was being used by banks as a subs t i t u t e f o r t i l l cash.

The Board's a t t i t u d e toward such abuse, as w e l l as

i t s i m p l i c a t i o n s , was p o i n t e d out i n a l e t t e r dated December 28, 1928, addressed t o t h e Federal Reserve Bank o f Atlanta?
"The Board t h i n k s t h a t upon r e f l e c t i o n , your d i r e c t o r s
w i l l agree t h a t i f t h e Miami p l a n (which, a t the present t i m e ,
i s a s u b s t i t u t e f o r t i l l cash) i s n o t promptly stopped, the
p r a c t i c e w i l l spread t o such an e x t e n t t h a t i t w i l l become n o t
o n l y burdensome, but probably p r o h i b i t i v e . "




m




PART I I

RESULTS OP PREVIOUS BRANCH AND AGENCY
SURVEYS MADE BY THE BOARD

BRANCH INVESTIGATION OF 1924
During the e a r l y post-war years the earnings of the Federal Reserve
banks were abnormally high and e a s i l y sustained the tremendous increase i n
the expenses of the System a r i s i n g from the operation of branches and the
broadening of services rendered f r e e to member banks.

However, as the

business of the country declined t o more normal l e v e l s , the earnings of the
Federal Reserve banks also decreased.

This reduction i n earnings was,

quite obviously, not o f f s e t by a corresponding reduction i n operating costs,
because such costs were of a more or less f i x e d nature.

I n an e f f o r t to

adjust the System to t h i s changed condition the Board i n 1922 appointed a
Committee on Economy and E f f i c i e n c y t o study means of reducing expenses.
I n connection with t h i s study the Board, during the l a t t e r p a r t of 1923,
instructed i t s Standing Committee on Branches of Federal Reserve banks t o
make a thorough i n v e s t i g a t i o n of Federal Reserve bank branches with a view
to reporting thereon and recommending to the Board the p r i n c i p l e s by which
i t should be guided i n passing upon future applications f o r branches and
determining which of the e x i s t i n g branches had j u s t i f i e d t h e i r establishment.
Pursuant to the above i n s t r u c t i o n s , a l e t t e r ( S t . 3915, dated January
29, 1924), reading i n part as follows was addressed to the Chairman o f each
Federal Reserve bank having branches:
*

*

*

*

*

*

*

*

" I n order t h a t the Board may be i n possession of data essential
to the completion of i t s study i n regard to the operation of
Federal Reserve branch banks i t w i l l be appreciated i f you w i l l
furnish i t a t your e a r l y convenience with a report containing
the following information:




50

"A. Statement, based on functional expense reports, showing
the annual cost of maintaining each of the 21 functions l i s t e d on
page 32 of the q u a r t e r l y functional expense report form E, t o gether with figures i n a p a r a l l e l column showing the estimated
net saving t h a t could be effected i f the branch were discontinued
and the work taken over by the head o f f i c e .
"B. Statement as to whether or not i n your opinion and t h a t
of the o f f i c e r s of the bank any one or more of the functions now
being performed by the branch could be discontinued and the work
taken over by the head o f f i c e without slowing up the work of
member banks to a greater extent than would be warranted by the
saving, to be effected i n the expenses of the Federal Reserve banks,
together with an estimate of the probable annual saving,
"C. Statement expressing the opinion of your Board of d i r e c tors as to whether any of your branches or any of the functions
now being performed by them should be discontinued.
"In addition to the information s p e c i f i c a l l y requested we s h a l l
also welcome a f u l l expression of your views regarding any phase
of Federal Reserve branch banking which you think should be considered by the £oard, especially as to the d e s i r a b i l i t y of somewhat broadening the functions of Federal Reserve branch banks."
The r e p l i e s to t h i s l e t t e r were received and tabulated by the Division
of Bank Operations and the r e s u l t i n g figures were submitted to the Board's
Committee on Branches, together with a covering memorandum, on July 24, 1924.
I t i s i n t e r e s t i n g to note t h a t a t that time i t was estimated the elimination
of the twenty-three branches then operating would save the System approximately
$3,000,000 per annum, or a l i t t l e over one-half of the annual operating cost
of the branches, without considering the question of branch o f f i c e buildings.
However, the o f f i c e r s and directors of a l l Federal Reserve banks having
branches were of the opinion t h a t none of t h e i r branches should be discontinued or t h e i r functions c u r t a i l e d .
The r e s u l t s of t h i s investigation were presented to the Federal Reserve
Board by Mr. James, Chairman of the Committee on Branches, on July 25, 1924,
with the following statements




51

"The importance of reducing the expenses o f the System i s so
obvious t h a t I submit t h i s r e p o r t have the close study o f each
member o f the Board.
"My own conclusions are t h a t , i n the l i g h t o f the r e t u r n s , the
p o s s i b l e savings t o the System by a b o l i s h i n g the Branches,
estimated a t an excess o f $5,000,000 per annum, l a r g e as the
sum appears to be, does n o t warrant the c l o s i n g o f any o f the
Branches. N e i t h e r do I b e l i e v e i t advisable t o change cny o f
the f u n c t i o n s now performed by the Branches a t t h i s time.
" I f e e l t h a t the work o f the Board's Committee on S a l a r i e s ,
Expenditures and E f f i c i e n c y w i l l n o t b r i n g t o the a t t e n t i o n o f
the o f f i c e r s and d i r e c t o r s o f the twelve banks the u r g e n t
n e c e s s i t y o f s t r i c t economy, but w i l l p o i n t the way to cons o l i d a t i o n o f e f f o r t and may be the means o f having the banks
o f t h e i r own v o l i t i o n c u r t a i l i n g some o f the l e a s t necessary
f u n c t i o n s a t Branches.
" A t an e a r l y meeting o f the Board, I wish to move 1 t h a t t h i s
r e p o r t be r e c e i v e d , noted and f i l e d , w i t h o u t a c t i o n as d i s c o n t i n u i n g any o f the Federal Reserve Branch Banks. 1 "
I n c o n j u n c t i o n v&th the v:ork o f the Board's Committee on Branches,

the

Governor* s Conference o f 1924 also discussed the p r i n c i p l e s which should be
c o n t r o l l i n g i n the establishment o f branches o f Federal Reserve banks.

After

a thorough review o f the s u b j e c t , the Conference adopted the f o l l o w i n g consensus:
"That branch banks should be e s t a b l i s h e d only when the Federal
r e s e r v e banks were n o t able to p r o v i d e d i s t a n t member banks
w i t h s a t i s f a c t o r y s e r v i c e , and o n l y i f the aggregate resources
o f the d i s t r i c t t o be served and the saving o f time to member
bonks i n t h a t d i s t r i c t i n the matter o f c o l l e c t i o n s , discounts
and supplying currency j u s t i f y . I n other words, e s s e n t i a l
s e r v i c e , r a t h e r than expense, i s the prime c o n s i d e r a t i o n . The
conference f e l t , however, t h a t i n no case should branches be
e s t a b l i s h e d i f agencies (money depots and t r a n s i t depots) can
s a t i s f a c t o r i l y answer the purpose."
On June 5, 1924, the Committee on Branches recommended t h a t the Board
adopt, as a matter of p o l i c y , the above consensus and n o t i f y the Federal
Reserve banks o f such a c t i o n .




Although the Committee's recommendation

was discussed by the Board on June 18, 1924, and January 12, 1925, a d e f i n i t e
p o l i c y regarding branches was not formally adopted.
BRANCH SURVEY OF 1950
On February 27, 1930, the Federal Reserve Board adopted the following
resolution:
"Resolved, t h a t the Governor arrange f o r a survey and study
of the subject of branch Federal reserve banks with a view of
informing the Board under what circumstances the establishment
or maintenance of branch Federal reserve banks i s j u s t i f i e d
from an economic and public service standpoint; the purpose
of such survey t o be t o enable the Board to formulate a d e f i n i t e
p o l i c y with reference to Federal reserve branch banks i n the
l i g h t of experience gained through the actual operation of
e x i s t i n g branches, and also to enable i t to determine whether
any of the e x i s t i n g branches of Federal reserve banks should be
c u r t a i l e d i n t h e i r functions or discontinued i n the i n t e r e s t of
economy and e f f i c i e n c y . "
The survey contemplated i n t h i s resolution was undertaken by the Board 1 s
Division of Bank Operations and a memorandum was submitted to the Board on
A p r i l 4, 1931.

This memorandum included a chronological summary of a l l data

i n the Board 1 s general f i l e s i n connection with applications f o r branches,
banking and business data regarding a l l branch c i t i e s , a resume of branch
functions and the volume of branch operations, and a review of the 1924 branch
survey.
The memorandum contained no recommendations as to discontinuing or
c u r t a i l i n g any of the branches.

I t was pointed out t h a t , with few exceptions,

branches had been established i n c i t i e s located a t some distance from t h e i r
respective head o f f i c e s and t h a t , excluding c i t i e s which were i n close p r o x i mity to a Federal Reserve c i t y , there were few non-branch c i t i e s i n the
United States comparable as to population, loans and investments of member
banks, bank debits or manufacturing a c t i v i t y with the c i t i e s i n which branches




53

had been established.

I t was stated t h a t "before any d e f i n i t e conclusions

are reached as to the circumstances which would j u s t i f y the establishment
of a Federal Reserve branch from an economic or public service staadpoiiit"
the Board should have more d e f i n i t e information i n regard to banks which
were not w i t h i n overnight mail time of a Reserve bank or one of i t s branches
and banks which were w i t h i n overnight mail time of more than one Reserve
bank or branch.

I t was, therefore, recommended t h a t the Reserve banks be

requested to furnish the Board with the name, l o c a t i o n , and loans and i n v e s t ments of each member bank which was not w i t h i n overnight mail time from a
Federal Reserve bank or one of i t s branches and a set of maps showing by
colored l i n e s the boundaries of the t e r r i t o r y i n each d i s t r i c t which was
w i t h i n overnight mail time from the Federal Reserve bank and from each branch,
i f any.
Mr. Smead's memorandum was reviewed by the Board and on A p r i l 22, 1931
(X-6871), a l e t t e r , requesting the suggested a d d i t i o n a l information was sent
to a l l Federal Reserve banks.

The information was received, analyzed and

subsequently presented to the Board on September 23, 1931 (Memo:
to Governor Meyer).

M r . Smead

As shown i n t h a t memorandum there were a t t h a t time 695

member bank points, having t o t a l loans and investments of $403,000,000 which
were not w i t h i n overnight mail time of a Federal Reserve bank or branch.

This

represented 9.9 per cent of the t o t a l number and about 1 . 2 per cent of the
aggregate loans and investments of a l l member banks.

About 95 per cent of

these member bank points were towns of less than 5,000 population? the e n t i r e
group being c l a s s i f i e d as follows:




54

Population

Number of Towns
164
211
125
91
68
25
9
4
695

Less than 500
500 to 1,000
1,000 t o 1,500
1,500 t o 2,500
2,500 t o 5,000
5,000 to 10,000
10,000 to 25,000
25,000 to 40,000

I t was s t a t e d t h a t because o f poor

toxin

service

many towns i n close

p r o x i m i t y t o a Federal Reserve c i t y d i d n o t have o v e r n i g h t n a i l s e r v i c e *
On the other hund, based on i n f o r m a t i o n which was f u r n i s h e d by the A t l a n t a
and Kansas C i t y Reserve Banks, i t was shown t h a t i n such d i s t r i c t s a subs t a n t i a l number o f member banks were w i t h i n o v e r n i g h t m a i l time o f from two
to f i v e Federal Reserve c i t i e s .
I t does n o t appear t h a t any d e f i n i t e p o l i c y i n regard to branches wxs
f o r m u l a t e d by the Board, or t h a t a c t i o n was taken t o d i s c o n t i n u e any s p e c i f i c
branch, as a r e s u l t o f t h i s survey.
REVIEW OF BRANCHES BY BOARD1S FIELD EXAMINER - 1955.
On or about May 1, 1955, Mr. James (Board member) addressed a memorandum
to the Secretary o f the Board expressing the view t h a t something should be
done about the problem o f useless branches.

As a r e s u l t , Mr. Drinnen,

then

i n charge o f the Board's examination f o r c o on the road, was asked t o i n c l u d e
i n r e p o r t s ox examination of Federal Reserve banks comments as to the s e r v i c e s rendered by the v a r i o u s branches and the n e c e s s i t y f o r t h e i r continuance.
A resume o f the comments appearing i n such r e p o r t s r e g a r d i n g a l l branches,
except Helena, w i l l be found i n p a r t throe o f t h i s memorandum.
The o p e r a t i o n s

the Helena Branch were n o t reviewed by the Board's

examiners, since the Board had a l r e a d y requested the Minneapolis Reserve Bank




55

to survey the o p e r a t i o n s o f t h a t branch and to r e p o r t on the n e c e s s i t y f o r
i t s continuance.

The memorandum submitted i n regard to the Helen*

Branch

wa$ c i r c u l a t e d among the members o f the Board and was discussed at a Board
meeting on December 12, 1934, w i t h the f o l l o w i n g r e s u l t , as shown by the
minutes:
"Governor Eccles mentioned the q u e s t i o n o f the d i s c o n tinuance o f the Helena branch o f the Federal Reserve B^nk o f
Minneapolis which has been h e l d on the docket w i t h o u t a c t i o n
since October 25, 1933, and he stated t h a t he f e l t t h a t the
present i s an inopportune time to A&ve c o n s i d e r a t i o n to steps
looking
toward the discontinuance o f a branch o f a Federal
reserve bank.
"Mr. Hamlin moved t h a t the matter be l a i d on the t a b l e .
Carried."
A d i s c u s s i o n o f subsequent developments r e g a r d i n g the Helena Branch i s
a l s o i n c l u d e d i n p a r t three o f t h i s memorandum under "Helena Branch".

In

1937 the Board approved, an expenditure by the F e d e r a l Reserve Bank o f
Minneapolis f o r the c o n s t r u c t i o n o f a new b u i l d i n g f o r the Helena Branch,
which a c t i o n may perhaps i n d i c a t e t h a t no f u r t h e r c o n s i d e r a t i o n w i l l ,

at

l e a s t f o r the time being, be given t o the matter o f the discontinuance o f the
branch.
SURVEY OF BRANCHES MADE BY RESERVE BANKS IK 1956.
The Board's l e t t e r o f March 25, 1936 (X-9532), addressed to the Chairman
o f .all Federal Reserve banks, r e q u e s t i n g a thorough survey o f t h e i r o r g a n i z a t i o n s i n the i n t e r e s t of economy and e f f i c i e n c y , contained the f o l l o w i n g s t a t e
ment i n r e g a r d to branches:
"•
I n making these s t u d i e s i t i s i m p o r t a n t t h a t c a r e f u l
thought be given to the o p e r a t i o n s now handled by branches o f
Federal Reserve banks w i t h p a r t i c u l a r r e f e r e n c e t o the necess i t y f o r the branches. I f the branches are considered necessary
a review o f t h e i r operations should be made t o determine whether
any o f the o p e r a t i o n s now b e i n g handled by them could be t r a n s f e r r e d t o the head o f f i c e a t a s u b s t a n t i a l saving i n o p e r a t i n g
cost and w i t h o u t i m p a i r i n g the services which the System i s
now r e n d e r i n g t o member banks and through them to commerce,
i n d u s t r y and a g r i c u l t u r e . "




The q u e s t i o n o f branches was also discussed a t the Conference of
P r e s i d e n t s , held i n Washington on May 26, 1936, and i t was voted " t h a t each
Reserve bank having branches or agencies make

a separate r e p o r t t o the

Board o f Governors expressing i t s views on t h i s s u b j e c t . "
I n accordance w i t h the Board* s l e t t e r and t h i s r e s o l u t i o n , the Federal
Reserve banks have submitted statements, some i n much g r e a t e r d e t a i l than
o t h e r s , r e l a t i n g t o each of t h e i r branches.

D e t a i l e d comments as t o the

conclusions each hank reached w i l l bo found i n p a r t three : f t h i s memorandum
and s u f f i c e i t to say a t t h i s p o i n t t h a t none o f the Federal Reserve banks
having branches d e f i n i t e l y recommended a t t h a t timo t h a t any of i t s branches
be d i s c o n t i n u e d , a l t h o u g h c e r t a i n o f the Reserve banks f e l t t h a t expenses
could be somewbxt reduced by c o n v e r t i n g them t o "memorandum plan" branches
w h i l e o t l i e r Reserve banks i n d i c a t e d t h a t they would be w i l l i n g to g i v e cons i d e r a t i o n to the discontinuance o f c e r t a i n o f t h e i r branches p r o v i d e d t h a t ,
as a System p o l i c y m a t t e r , other bronchus comparably s i t u a t e d and of equal
importance, were a l s o d i s c o n t i n u e d .




57




PART I I I

CURRENT STATISTICAL DATA AND COMMENTS IN
CONNECTION WITH THE OPERATION OF EACH OF
THE BRANCHES, AGENCIES AND
CURRENCY FUNDS

BUFFALO BRANCH - FEDERAL RESERVE BANK OF NEW YORK
(a) C i t y o f B u f f a l o
B u f f a l o , w i t h a p o p u l a t i o n o f 575,076, i s t h e t h i r t e e n t h l a r g e s t c i t y
the United States and t h e second l a r g e s t c i t y i n New York S t a t e .

in

I t i s located

i n t h e extreme western p a r t o f the S t a t e , on Lake E r i e , and i s s a i d t o serve
a t r a d e area having a r a d i u s o f 45 m i l e s .

Twelve r a i l r o a d s , i n c l u d i n g a l l o f

the l a r g e r n o r t h e a s t e r n roads, have t e r m i n a l s i n the c i t y and i t i s a l s o served
by a number o f n a v i g a t i o n l i n e s and s e v e r a l n a t i o n a l a i r l i n e s .
The B i e n n i a l Census o f Manufactures shows t h a t E r i e County, i n which B u f f a l o
i s l o c a t e d , had 1,217 manufacturing establishments which had an output valued a t
$609,559,000 d u r i n g t h e year 1955. The p r i n c i p a l manufactures were automobiles,
automobile p a r t s , f l o u r and g r a i n products, i r o n and s t e e l , machinery and c a s t ings , chemicals, t e x t i l e s and f u r n i t u r e .
ing.

There was also considerable meat pack-

According t o the Census of American business t h e r e were i n t h e same area

10,666 r e t a i l and 953 wholesale establishments which enjoyed sales aggregating
$244,905,000 and $565,049,000, r e s p e c t i v e l y , d u r i n g the year 1935.
Banking f a c i l i t i e s i n B u f f a l o as o f December 51, 1956, were p r o v i d e d by
f o u r S t a t e banks, two n a t i o n a l banks, t h r e e mutual savings banks and one i n d u s t r i a l bank.

These i n s t i t u t i o n s had deposits aggregating $556,553,000, as o f

December 31, 1936, and o f t h i s amount $322,958,000 was c a r r i e d w i t h f i v e l o c a l
member banks.

The bulk of the commercial banking business o f t h e c i t y i s done

by t h r e e r e l a t i v e l y l a r g e State member banks, each of wnicli has a number o f
branches.
Debits t o i n d i v i d u a l accounts i n banks of the c i t y aggregated |2,985,354,000
d u r i n g the year 1956, o r approximately $10,000,000 f o r each banking day.




(b) Branch T e r r i t o r y and F u n c t i o n s :
The B u f f a l o Branch was e s t a b l i s h e d May 15, 1919, and serves the ten most
w e s t e r l y c o u n t i e s i n the S t a t e o f New York.

These counties comprise a p p r o x i -

mately 15$ o f the l a n d area o f the Second Federal Reserve D i s t r i c t and have
approximately 11% o f i t s t o t a l p o p u l a t i o n .

Approximately 12% o f a l l banks i n

the Second D i s t r i c t ore w i t h i n t h i s area.
As o f December 31, 1956, t h e r e were 128 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and of t h i s number 70, i n c l u d i n g 47 n a t i o n a l and 25
S t a t e i n s t i t u t i o n s , were members o f the System.

The f o l l o w i n g f i g u r e s taken

from r e p o r t s o f c o n d i t i o n as o f the same date show the s i z e o f member bank
f o o t i n g s i n the branch zone as compared to those o f the Second D i s t r i c t as a
whole:
No. Member
Banks

Second D i s t r i c t
B u f f a l o Zone

789
70

Loans
and
Investment

§11,850,881
482,540

Capital
and
Surplus
t
(000 omitted)
&L,703,341
65,049

Total
Deposits

$14,801,487
552,197

There are o n l y f o u r branch zones i n the e n t i r e System having l a r g e r member bank*
f o o t i n g s then the B u f f a l o zonej namely, Los Angeles, P i t t s b u r g h , D e t r o i t and
Cincinnati.
The B u f f a l o Branch renders s u b s t a n t i a l l y the same s e r v i c e to member banks
i n i t s t e r r i t o r y as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s and
disbursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , non-cash
c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and loans to member banks are concerned.
The reserve accounts o f member banks i n the branch zone are maintained a t the
Branch.

However, c o n t r o l accounts f o r a l l Branch operations are c a r r i e d on the

books o f the Head O f f i c e ; the Branch m a i n t a i n i n g o n l y a memorandum general l e d g er.

The Branch m a i n t a i n s no non-banking departments such as Bank Examination,




Bank R e l a t i o n s , L e g a l , Research or F i s c a l Agency departments, although c e r t a i n
o f such f u n c t i o n s are performed a t the Branch f o r the Head O f f i c e ,
As o f March 20, 1957, member banks i n the branch aone had balances w i t h
the Reserve bank as f o l l o w s :
Number o f
Banks
City of Buffalo
Remainder o f Zone
Total

5
65
70

Reserve
Balances

Deferred
Balances

Capital
Stock

$55,977,100
24,240,200
$58,217,500

#5,081,500
2,225,100
$5,506,400

$1,097,700
856,100
$1,955,800

Bills
Discounted

B u f f a l o i s 456 t r a i n m i l e s (9 h r s . - 45 mins.) from New York C i t y .

$

21,000
$21,000
On any

business day t r a i n s l e a v e B u f f a l o a t 7 P.M. or l a t e r which a r r i v e i n New York
a t or before 8 A.M. on the succeeding day, i . e . , o v e r n i g h t m a i l time. There are
twelve branch c i t i e s nearer t o t h e i r r e s p e c t i v e head o f f i c e s than i s B u f f a l o
and a l l o f such c i t i e s are w i t h i n o v e r n i g h t m a i l time o f such head o f f i c e s . Outstanding examples are P i t t s b u r g h (158 m i l e s - 5 h r s . and 20 m i n s . ) , B a l t i m o r e
(157 m i l e s

4 h r s . and 21 mins.) and Birmingham (168 m i l e s - 5 h r s . and 50

mins.).
The New York Reserve Bank advises t h a t banks i n the branch zone, o t h e r
than those l o c a t e d i n B u f f a l o and i t s immediate v i c i n i t y , d e a l w i t h the Branch
by m a i l and t h a t under normal c o n d i t i o n s such banks would n o t be s e r i o u s l y i n convenienced by discontinuance o f the Branch, since they are a l s o w i t h i n o v e r n i g h t m a i l time from New Y o r k .

I t i s apparent t h a t discontinuance o f the

Branch would c u r t a i l the s e r v i c e rendered to banks l o c a t e d i n and near B u f f a l o .
These banks now have an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h the Branch i n s o f a r
as d e p o s i t s and withdrawals o f c u r r e n c y , w i r e t r a n s f e r s and borrowings are concerned and would have to adapt t h e i r present p r a c t i c e s t o a new s i t u a t i o n
under which o v e r - n i g h t m a i l communication w i t h the Head O f f i c e would be necessary.



.61

While there are ten c i t i e s i n the Second D i s t r i c t , other than Buffalo and
New York, with a population of over 100,000, only one such c i t y , Rochester, i s
w i t h i n the Buffalo Branch zone.

Rochester had a population of 328,132 and i s

66 t r a i n miles (2 hrs. 33 rains.) from Buffalo and 370 t r a i n miles (7 h r s . )
from New York.

Other r e l a t i v e l y large c i t i e s i n the Buffalo zone are Niagara

F a l l s and Jamestown with populations of 75,000 and 45,000 respectively,
(c) Branch Building:
The Buffalo Branch has occupied i t s present quarters a t 270-276 Main
S t r e e t , since May 1928.

The following figures show the o r i g i n a l cost and the

carrying value, as of March 20, 1937, of the branch premises:
Book Value
3-20-37

Cost
Land

$255,000(*)

Building, v a u l t & v a u l t equipment

720,707
143.826
£864.553

Furniture and other equipment

$255,000
198.950
453,950
8455.950

( * ) Estimated value, remainder of purchase p r i c e included i n cost of
building.
(d) Earnings - Branch's Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r the years 1931 to
1937, i n c l u s i v e , were as follows:
Year

Earnjings

1931
1932
1933
1934
1935
1936
1937

$192,600
487,900
240,300
41,300

2,600
1,700
2,900

These f i g u r e s are incomplete since, tinder the present accounting proc-adure,
the Branch does not receive any c r e d i t f o r income received by the Head O f f i c e



.62

on investments, a p o r t i o n of which i s made p o s s i b l e by the c a p i t a l stock i n vestment and reserve balances o f banks i n the branch zone.
The amount o f income shown on the books o f the Branch depends almost
e n t i r e l y on the e x t e n t o f borrowing by member banks i n the branch zone.
Income from t h i s source amounted to $479,100 i n 1932, whereas i t was only
$1,400 i n 1937.
(e) Branch Personnel:
The r e p o r t o f examination o f the Federal Reserve Bank o f New York, as o f
March 20, 1937, shows the f o l l o w i n g i n regard t o s a l a r i e s and personnel a t the
B u f f a l o Branch:
March 20, 1937
Number
Amount
Officers
Employees




4
122
126

£ 33,500
180,914
6214,414

January 4 . 1936
Number
Amount
4
127
131

$ 32,900
189,874
$222,774

Decrease
Number
Amount
5
5

§

600 ( I n c . )
8,960
£8,560

.63

( f ) Branch Expense by Functions:
The expenses of the Buffalo Branch by functions during the past six years,
as shown i n Functional Expense Reports, were as follows:
1952
General Overhead
Controllable
$ 28,054
Non-con t r o l l a b l e
32,246
Provision of space
46,358
Provision of Personnel
8,172
General. Service
42,604
Postage
21,649
Insurance
2,972
Loans, rediscounts,etc. 15,451
7,913
Securities
Currency & Coin
42,456
Check c o l l e c t i o n
44,874
Non-cash collections
14,525
Accounting
51,139
F i s c a l Agency
2,533
—
Legal
Auditing
3,466
Bank Relations
1,657
Bank Examinations
17
S t a t i s t i c a l & Analyt-'l
322
Total Expense
$346,368
Less - Reimbursable
Fiscal Agency Exp.
Net Expense
£346,568

1955

$ 27,427
40,802
47,708
7,716
43,644
22,520
3,040
16,718
8,036
41,951
46,073
14,227
30,437
2,478

1954

1955

1956

1957

$ 27,617
224
46,178
45,366
49,072
23,291
958
7,921
7,055
78,971
42,083
16,201
32,285
8,952

5,889
5,209
11
546
$560,252

$ 27,701 $ 27,511
37,643
211
44,895
46,242
24,597
55,560
48,815
55,505
23,184
25,271
1,879
1,543
13,711
13,682
9,238
7,484
81,997
42,843
42,238
42,056
15,230
14,581
30,850
35,705
5,179
11,885
—
505
5,125
6,471
2,574
2,055
5
16
571
582
$572,699 $401,595

560
$595,251

5,480
1,562
34
535
$559,511

£560,252

£572,699

587
£592,844

556
£558,755

-

£401,595

-

5,222
1,497
—

$ 27,860
212
54,988
11,871
49,846
21,621
788
7,775
5,879
77,180
42,758
14,790
29,458
8,898
-

There were f i v e branches i n the System which operated a t a higher aggregate
annual cost than the Buffalo Branch i n 1957; namely, Pittsburgh, Eos Angeles,
Baltimore, Cincinnati and D e t r o i t .

However, viewed as a whole the operations

performed a t each of these branches were i n l a r g e r volume.
(g) Volume of Operations a t Buffalo Branch:
The following i s a comparison of the volume of operations i n various departments of the Buffalo Branch and the Head O f f i c e during the l a s t six months
of 1936:




.64

B u f f a l o Branch
Discount Department:
Notes rediscounted
C o l l a t e r a l notes discounted
I n d u s t r i a l advances
Branches with l a r g e r volume:

Head O f f i c e

1,230
27
702
157
Denver, Omaha, San Antonio and E l Paso.

Safekeeping:
Member bank securities 12-31-36
02,673,000
$839,135,000
Branches with larger volume: Cincinnati, Pittsburgh, Baltimore,
Jacksonville, Nashville, New Orleans, D e t r o i t ,
L i t t l e Rock, L o u i s v i l l e , Denver, Oklahoma C i t y ,
Omaha, Houston and San Antonio.
Currency & Coin:
1 . Number of b i l l s received and counted
18,132,000
305,069,000
Branches with larger volume: Pittsburgh, Baltimore, Detroit and Los Angeles
Cost per one thousand units handled
65 cents
63 cents
Branches with higher u n i t cost: Cincinnati, Helena, Denver, E l Paso,
Portland, S a l t Lake City and Spokane.
2. Number of coins received and counted
18,594,000
506,649,000
Branches with l a r g e r volume: Cincinnati, Pittsburgh, Baltimore and Los
Angeles.
Cost per one thousand units handled
11 cents
11 cents
Branches with higher u n i t cost: A l l branches have a higher u n i t cost
except Baltimore, New Orleans, Memphis and
Oklahoma City.
Check Collection:
1. Number of c i t y checks (clearings) received 2,043,000
32,032,000
Branches with larger volume: Pittsburgh, Baltimore, D e t r o i t and Los Angeles
Cost per one thousand u n i t s handled
01.86
$3.05
Branches with higher u n i t cost: L o u i s v i l l e , Helena, Denver, Oklahoma C i t y ,
E l Paso, Houston, Los Angeles, S e a t t l e , S a l t
Lake C i t y , Spokane and Portland.
2. Number of country checks (outgoing) received 4,206,000
46,806,000
Branches with larger volume: Cincinnati, Pittsburgh, Baltimore-, D e t r o i t ,
L o u i s v i l l e , Oklahoma C i t y , Omaha and Los Angeles
Cost per one thousand units handled
02.91
$2.82
Branches with higher u n i t cost: Los Angeles, Portland and Seattle.
Non-cash Collections
1. Number of c i t y collections handled
17,142
37,843
Branches with larger volume: Baltimore, D e t r o i t , L i t t l e Rock, Memphis,
Omaha and Los Angeles.
Cost per u n i t handled
17.6 cents
32 cents
Branches with higher u n i t cost: Cincinnati, Pittsburgh, D e t r o i t , Los
Angeles, Portland and S e a t t l e .




B u f f a l o Branch

Head O f f i c e

2. Number o f country c o l l e c t i o n s handled
22,755
477,035
Branches w i t h l a r g e r volume: S a l t Lake C i t y and Spokane.
Cost per u n i t handled
1 6 . 1 cents
7.8 cents
Branches w i t h higher u n i t c o s t : N a s h v i l l e , Los Angeles and P o r t l a n d .
3. Number o f coupon (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
5,106
551,736
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , D e t r o i t ,
Omaha and Los Angeles.
Cost per u n i t handled
13.5 cents
7.7 cents
Branches w i t h higher u n i t c o s t : C h a r l o t t e , J a c k s o n v i l l e , D e t r o i t ,
L o u i s v i l l e , Memphis, Helena, E l Paso, Los
Angeles, P o r t l a n d , S a l t Lake C i t y and
Spokane.
A schedule showing the volume o f operations of the B u f f a l o Branch f o r the
years 1931 to 1936, i n c l u s i v e , i s attached to t h i s memorandum.
(h) Survey o f B u f f a l o Branch by Board 1 s Examiners - 1953.
During the course o f an examination of the Federal Reserve Bank of New
York, made as o f May 27, 1933, the Board 1 s F i e l d Examiners reviewed the operat i o n s o f the B u f f a l o Branch w i t h a view to expressing an opinion as to the
n e c e s s i t y f o r i t s continuance.

The r e p o r t of t h a t examination contains the

f o l l o w i n g comment:
"The B u f f a l o branch i s one o f the seven l a r g e s t branches
i n the System ( s i x t h i n number of employees), and, i n the
opinion o f your examiner, i t s continuance appears j u s t i f i e d
i n view o f the importance o f the branch c i t y and t e r r i t o r y and
the volume o f operations handled as compared w i t h s i m i l a r i n dices f o r other Federal reserve branch banks."
( i ) Survey o f B u f f a l o Branch made by Federal Reserve Bank of New York 1956.
As requested i n the Board's l e t t e r o f March 25, 1936 (X-9532) the Federal
Reserve Bank o f New York c a r e f u l l y reviewed the operations o f i t s B u f f a l o
Branch.

Based on o p e r a t i n g costs of $401,000 f o r the year 1955, i t was e s t i -

mated t h a t a n e t saving of 0215,000 per annum would r e s u l t i f a l l branch




66

operations were transferred to the Head O f f i c e ; that t h i s saving would be
increased to $233,000 per annuo i f the branch building were immediately d i s posed o f , since t h i s would eliminate carrying charges on the building,

esti-

mated to be about $18,000 per year; and that an a d d i t i o n a l $30,000 per annum
might be saved i f a currency s t a t i o n (which would reduce the expense of
currency shipments) were established i n Buffalo, making an estimated saving of
$245,000 per annum i f the building were retained, or $263,000 per annum i f
were disposed o f .

it

Relative to the l a t t e r estimate, i t was stated the establish-

ment of a currency station would not be advocated u n t i l a broader survey,
developing the extent to which other c i t i e s i n the d i s t r i c t might demand s i m i l a r
service as a r e s u l t of such action, had been conducted.
I t was admitted that operation of the Branch was of m a t e r i a l benefit under
normal conditions to banks located i n and near the C i t y of Buffalo and that i n
times of emergency banks i n outlying sections of the zone, such as i n Rochester,
would f i n d i t s existence advantageous*

The conclusion was reached, however,

that discontinuance of the Branch would not seriously i n t e r f e r e with the service
being rendered to member banks i n the d i s t r i c t , and, through them to commerce,
industry and a g r i c u l t u r e .
I t was pointed out that a strong protest could be expected from member
banks i n the zone, p a r t i c u l a r l y i n Buffalo, i f i t became known that d i s continuance of the Branch was seriously contemplated.

I n t h i s connection,

attention was called to the f a c t that banks i n the Buffalo area have never been
p a r t i c u l a r l y enthusiastic about the Federal Reserve System; t h a t p r i o r to the
establishment of the Branch very few State i n s t i t u t i o n s i n such area were
members; and t h a t any attempt to discontinue the Branch would revive whatever
l a t e n t prejudices s t i l l existed i n the area and possibly lead to some




.67

withdrawals from membership.

I t was s t a t e d t h a t t h i s would be e s p e c i a l l y t r u e

i f comparable branches i n o t h e r d i s t r i c t s were n o t d i s c o n t i n u e d .

For t h i s

reason i t was s t a t e d t h a t discontinuance o f t h e B u f f a l o Branch would be f a v o r e d
only i f , as a matter o f System p o l i c y , o t h e r comparable branches i n the Sty-stem
were d i s c o n t i n u e d a t the same time.
The f o l l o w i n g observations were made concerning the a d o p t i o n o f a u n i f o r m
System p o l i c y :
* *We assume t h a t savings c o u l d be e f f e c t e d i n conn e c t i o n w i t h p r a c t i c a l l y a l l branches o f Federal r e s e r v e
banks which would be comparable w i t h the f i g u r e s c i t e d above
f o r the B u f f a l o Branch. We a l s o assume t h a t , as a p r a c t i c a l
m a t t e r , the o n l y banks m a t e r i a l l y b e n e f i t i n g from the operat i o n o f such branches are the banks l o c a t e d w i t h i n the branch
c i t i e s , and t h a t , i n most i n s t a n c e s , the banks i n t e r r i t o r y
o u t s i d e o f the branch c i t i e s do n o t b e n e f i t m a t e r i a l l y , by
reason o f the e x i s t e n c e o f the branches, unless they are more
than o v e r n i g h t m a i l time from the head o f f i c e c i t i e s o f t h e i r
d i s t r i c t s . Broadly speaking, i t would seem t o u s , t h e r e f o r e ,
t h a t i f a new p o l i c y i s t o be adopted w i t h r e s p e c t t o branches
o f Federal reserve banks i t should be a u n i f o r m System p o l i c y ,
and probably ought t o be based upon the continuance, except i n
s p e c i a l circumstances, o f o n l y those branches which are more than
approximately t w e l v e . h o u r s m a i l time from the head o f f i c e .
If
such a p o l i c y can be adopted f o r the System as a whole, we would
recommend t h a t the B u f f a l o Branch o f t h i s bank be d i s c o n t i n u e d
as a p a r t of such program."




.68

BUFFALO BRANCH
VOLUME OF OPERATIONS

Currency
Received
Bills

and

Co in
Received
and

Checkst Handled
Gov»t

Non Cash
Collection items
All
Gov't

Fiscal Agency

Transfer
of

Coupons

m&r

Oirect

JEuate

Other

tomin.

Checks

3,832,000

9,269,000

283,000

13,38**,000

1*8,810

107,353

539

-

2f,72**

29,3f1,000

**,0(6,000

7,517,000

262,000

11,795,000

59,660

II**,80**

517

-

I7,9**9

37,176,,000

36,1*09,000

3 , 37**, 000

6,**3I,000

299,000

10,10**, 000

67,**3**

95,**82

H85

-

15,225

512

39,569,000

31,233,000

3,382,000

6,816,000

848,000

11,0**6,000

78,233

86,13*1

**,769

70

12,871

1935

112

39,518,000

36,561,000

3,7*»7,000

7,**32,000

357,000

f1,536,000

H 3,000

89,000

10,788

682

12,366

1936

67

37,703,000

36,009,000

**,**0**,000

8,067,000

**70,000

12,9** 1,000

85,000

89,000

1,273

**8**

1I,000

fiiie

Hntmtei

193)

**,I3**

**3,585,000

35,939,000

1932

k,3S7

**0,2**9,000

1933

2,366

193*1

Pa. w f c t s L .

S i i i

l a l i i

^ ^ t f f . l t a u t t a d

( i n thousands

G&

of do 1i ars)

1931

1*76,888

23t,22**

3,569

1,6**6,797

687,313

1*8,90**

2,383,0!**

1,1*03

52,3t**

1,089

m

2,021,968

1932

821,129

209,53f

2,671

l,2**9,783

**90,200

33,** I1*

1,773,397

1,876

*»7,18**

1,719

-

!,2**5,185

1933

**57,527

203,398

3,157

1,263,059

**67,557

3**, 139

1,76**, 755

2,379

35,9**6

630

-

1,183,810

193*1

6**, 712

185,516

3,325

I,****0,I28

580,025

50,509

2,070,662

2,7**8

37,173

2,1****

133

830,597

1935

**,630

181,935

3,326

1,523,**I0

67**,0**5

**8,77t

2,2**6,226

3,55**

****,297

6,733

**H6

896,**07

1936

3,29**

16*1,125

3,1*11

1,709,371

792,053

6**, 637

2,566,061

2,90**

55,608

308

391

933,8**9




CURRENCY FUND. SCRAM TON, PA, - FEDERAL RESERVE BANK OF PHILADELPHIA
(a) C i t y o f Scranton
Scranton, w i t h a p o p u l a t i o n o f 143,433, i s t h e f i f t y - f i f t h l a r g e s t
i n t h e U n i t e d States and the t h i r d l a r g e s t c i t y i n Pennsylvania.

city

I t i s located

i n the n o r t h e a s t e r n p a r t o f t h e S t a t e on the Lackawanna R i v e r and i s s a i d t o
serve a t r a d e area extending approximately t w e n t y - f i v e m i l e s i n a l l d i r e c t i o n s .
T r a n s p o r t a t i o n f a c i l i t i e s are provided by f i v e r a i l r o a d s , i n c l u d i n g the E r i e ,
Delaware & Hudson and the Delaware-Lackawanna & Western, and a l s o by a number
o f motor coach l i n e s and a i r

lines.

Scranton i s the center o f the g r e a t e s t a n t h r a c i t e coal r e g i o n i n the
United S t a t e s ; mines honeycombing the c i t y and surrounding t e r r i t o r y .
are a l s o l a r g e s i l k , c o t t o n and woolen m i l l s o p e r a t i n g i n the c i t y .

There
According

t o the B i e n n i a l Census o f Manufactures f o r t h e year 1935 t h e r e were 287 manuf a c t u r i n g establishments l o c a t e d i n Lackawanna County, i n which Scranton i s
s i t u a t e d , which had an output valued a t $43,171,193 and p a y r o l l s
$11,687,557 d u r i n g t h e y e a r .

totaling

The Census o f American Business l i s t s 4,290

r e t a i l and 293 wholesale concerns i n the same area.

These f i r m s enjoyed s a l e s ,

aggregating $78,.020,000 and $50,306,000, r e s p e c t i v e l y , d u r i n g 1935.
Banking f a c i l i t i e s i n Scranton are provided by seven S t a t e nonmember
banks, t h r e e n a t i o n a l banks and one t r u s t company.

As o f December 31, 1936,

these i n s t i t u t i o n s had d e p o s i t s aggregating $105,241,000 and o f t h i s amount
$90,042,000 was c a r r i e d by t h e t h r e e l o c a l member banks.
D e b i t s t o i n d i v i d u a l accounts i n banks o f the c i t y amounted t o $554,002,000
d u r i n g t h e year 1936; or an average of approximately $1,847,000 f o r each
banking day.




(b) Establishment and Operation o f the Fund:
I n t h e e a r l y days o f t h e System banks l o c a t e d i n and near Scranton, which
were c a l l e d upon t o meet heavy p a y r o l l s , were f r e q u e n t l y embarrassed by the
l a t e a r r i v a l o f currency shipments from t h e Federal Reserve Bank o f P h i l a d e l p h i a
due t o poor r a i l connections between the two c i t i e s .

As a r e s u l t t h e r e was

a r a t h e r i n s i s t e n t demand f o r t h e establishment o f a branch o f the Reserve bank
a t Scran t o n .

I n an e f f o r t t o remove the cause o f complaint and thus f o r e s t a l l

demands f o r a branch, the Reserve bank, w i t h t h e Board's a p p r o v a l , on January
23, 1922, deposited $1,000,000 i n the custody o f the F i r s t N a t i o n a l Bank o f
Scranton t o take care o f delayed shipments o f currency.

A f t e r the establishment

o f the fund any member bank i n Scranton or i t s immediate v i c i n i t y , whose currency
shipment f a i l e d t o a r r i v e on t i m e , might withdraw from the fund an amount equal
t o the a n t i c i p a t e d shipment and reimburse t h e fund when the shipment a r r i v e d .
The o r i g i n a l fund proved successful and on October 9 , 1923, a new agreement
was drawn up i n c r e a s i n g i t t o $2,000,000 and broadening i t s scope. The p r i v i l e g e s
o f the f u n d , both o f d e p o s i t and w i t h d r a w a l , were extended t o a l l member banks
i n Scranton and i t s v i c i n i t y , i n c l u d i n g banks i n such c i t i e s as Wilkes-Barre
and P i t t s t o n , Pennsylvaniaj however, i t i s r e p o r t e d t h a t o n l y the t h r e e member
banks i n Scranton now use t h e fund.

The F i r s t N a t i o n a l Bank o f Scranton, as

c u s t o d i a n , assumes a l l l i a b i l i t y f o r l o s s , except on shipments t o and from the
Reserve bank, and has pledged r e a d i l y marketable s e c u r i t i e s w i t h a v a l u e i n excess
o f $2,000,000 w i t h t h e Reserve bank as s e c u r i t y .

The currency

on hand i n Scranton

i s considered a p a r t o f t h e cash balance o f t h e Reserve bank and i s k e p t under
d u a l c o n t r o l o f o f f i c e r s o f the F i r s t N a t i o n a l Bank i n c e r t a i n s p e c i f i e d compartments i n i t s v a u l t , s u b j e c t t o examination a t any time by examiners f o r the
Board, the Comptroller o f t h e Currency, o r t h e Reserve bank.




Operations o f the

.71

fund are l i m i t e d s t r i c t l y t o currency t r a n s a c t i o n s , which are r e p o r t e d t o the
Reserve bank d a i l y by telephone and entered on i t s books

receipts or w i t h -

drawals b e i n g charged o r c r e d i t e d , as the case may be, t o the reserve accounts
o f the member banks i n v o l v e d .

The F i r s t N a t i o n a l Bank has a u t h o r i t y t o s i g n

f o r the Reserve bank i n a l l t r a n s a c t i o n s a f f e c t i n g the f u n d , b u t withdrawals can
be made o n l y w i t h the approval o f the Reserve bank,
(c) A c t i v i t y o f the Fund:
The f o l l o w i n g schedule 3hows the e x t e n t t o which the fund has been used
i n recent y e a r s :
Movement Of Currency Between Scranton

Movement Of Currency Between Federal
Reserve Bank and Scranton

Year

Deposits

Withdrawals

Shipped
t o Fund

193S
1954
1935
1956
1937

#10,764,000
11,506,900
9,652,000
10,628,000
9,765,000

$28,446,000
53,957,400
28,728,000
26,807,000
26,050,000

$18,100,000
22,645,000
25,415,000
20,655,000
22,950,000

Received
from Fund
$1,261,000
145,500
4,454,000
6,550,000
6,451,000

(d) Estimated Saving R e s u l t i n g from Operation o f Fund:
The f o l l o w i n g f i g u r e s submitted by the Federal Reserve Bank o f P h i l a d e l p h i a
i n d i c a t e the estimated saving e f f e c t e d through o p e r a t i o n o f t h e Scranton Currency
Fund d u r i n g the year 1937j t h e amount saved i s , o f course, governed by the e x t e n t
t o which the fund i s used:
Cost
A c t u a l cost o f shipping $22,950,000 i n currency
from F.R.B. t o Fund

$3,901.50

A c t u a l cost o f s h i p p i n g $6,431,000 i n m u t i l a t e d
currency from Fund t o F.R.B.

2,250.85

T o t a l cost of Fund
Cost o f shipments i f member banks had withdrawn
from and deposited w i t h F.R.B. i n s t e a d o f
Fund ($35,795,000)




Saving on s h i p p i n g
Saving on h a n d l i n g
T o t a l Saving

$6,152.35

$7,842.85
6,152.35
$1,690.50
250.00
$1,940.50

The F i r s t N a t i o n a l Bank o f Scranton assumes the c o s t o f c l e r i c a l work
necessary i n h a n d l i n g d e p o s i t s t o and withdrawals from t h e fund.
(e) A t t i t u d e o f t h e Federal Reserve Bank o f P h i l a d e l p h i a toward
Continuance o f Fund:
During an examination o f t h e Federal Reserve Bank o f P h i l a d e l p h i a , made
as o f September 19, 1956, t h e Board's Examiners discussed w i t h t h e management
the need f o r continuance o f a Currency Fund a t Scranton.

On October 10, 1936,

A s s i s t a n t V i c e President Donaldson addressed a l e t t e r t o t h e Board* s Examiner
o u t l i n i n g t h e b e n e f i t s and savings d e r i v e d from o p e r a t i o n o f t h e f u n d , both
by member banks i n Scranton and by the Reserve bank.

From the general tenor

o f the l e t t e r i t waa apparent t h a t t h e Reserve bank favored continuance o f
t h e f u n d , although a d e f i n i t e statement t o t h a t e f f e c t wau n o t made.




.73

CINCINNATI BRANCH - FEDERAL RESERVE BAfiK OF CLEVELAND
(a) C i t y o f C i n c i n n a t i
C i n c i n n a t i , w i t h a p o p u l a t i o n o f 451,160, i s the seventeenth

largest

J
c i t y i n the U n t i e d States and t h e second l a r g e s t c i t y i n Ohio.

I t i s located

i n the extreme southwestern p a r t o f the S t a t e , on t h e Ohio R i v e r , and serves
a t r a d e area which extends SO m i l e s t o the n o r t h , 53 m i l e s south, 62 m i l e s
east and 45 m i l e s west.
m e t r o p o l i t a n area.

There are approximately 1,016,000 i n h a b i t a n t s i n the

Nine r a i l r o a d s , o p e r a t i n g nineteen t r u n k l i n e s , serve the

c i t y , .including the B. & 0 . , Pennsylvania, Chesapeake & Ohio, E r i e , N o r f o l k &
Western and New York C e n t r a l .

I n a d d i t i o n t r a n s p o r t a t i o n f a c i l i t i e s are a f -

forded by water routes on the Ohio River and by a i r l i n e s .
According t o the B i e n n i a l Census o f Manufactures Hamilton County, i n which
C i n c i n n a t i i s l o c a t e d , had 1,488 manufacturing establishments i n 1955, which
had an o u t p u t valued a t $489,786,000.

The c h i e f manufactures were foundry and

machine shop products, soap, c l o t h i n g , f u r n i t u r e , e l e c t r i c

refrigerators,

bread and bakery p r o d u c t s , p l a n i n g m i l l products and copper, t i n and sheet
i r o n work.

There i s a l s o a s u b s t a n t i a l amount o f meat packing and p r i n t i n g

and p u b l i s h i n g c a r r i e d on.

According t o the Census o f American Business t h e r e

were i n t h e same area 8,686 r e t a i l and 1,446 wholesale establishments which
enjoyed sales aggregating $250,778,000 and $513,520,000, r e s p e c t i v e l y ,

during

the year 1955.
Banking f a c i l i t i e s i n C i n c i n n a t i as o f December 51, 1956 were

provided

by eleven S t a t e banks (7 members), f o u r n a t i o n a l banks and one M o r r i s Plan bank.
These i n s t i t u t i o n s had d e p o s i t s aggregating $570,244,000, as o f t h a t date and o f
t h i s amount $554,609,000 was c a r r i e d w i t h t e n l o c a l member banks m a i n t a i n i n g
reserve c i t y balances; t h e r e being one o t h e r R e l a t i v e l y small member bank i n the




.74

c i t y which i s a u t h o r i z e d t o c a r r y country bank reserves.

Three o f the l a r g e r

S t a t e member banks were o p e r a t i n g an aggregate o f f o r t y - s i x branch o f f i c e s
w i t h i n the c i t y

limits.

Debits t o i n d i v i d u a l accounts i n banks o f the c i t y aggregated $4,013,955,000
d u r i n g the year 1936, o r an average o f approximately $13,300,000 f o r each banki n g day.
(b) Branch T e r r i t o r y and Functions*
The C i n c i n n a t i Branch was e s t a b l i s h e d January 10, 1918, and serves t r a n t y f i v e counties i n southern Ohio and the p o r t i o n of the S t a t e o f Kentucky i n c l u d e d
i n D i s t r i c t Four*

This t e r r i t o r y represents 40$ o f t h e ' l a n d area o f t h e d i s -

t r i c t and has approximately 26% o f i t s t o t a l p o p u l a t i o n . Approximately 29$ o f
a l l banks i n the F o u r t h D i s t r i c t are w i t h i n t h i s area®
As o f December 31, 1936, t h e r e were 372 banks, e x c l u s i v e o f mutual s a v i i ^ s
banks, i n t h e branch zone and o f t h i s number 164, i n c l u d i n g 146 n a t i o n a l and
18 State i n s t i t u t i o n s , were members o f the Federal Reserve System*

A l l but 2

o f t h e nonmember i n s t i t u t i o n s i n the branch zone were on the par l i s t *

The

f o l l o w i n g f i g u r e s taken from r e p o r t s o f c o n d i t i o n as o f the same date show the
s i z e o f member bank f o o t i n g s i n t h e branch zone as compared t o those o f the
F o u r t h C i s t r i c t as a whole:

Fourth D i s t r i c t
Branch Zone

No. Member
Banks

Loans
and
Investments

627
164

$2,822,103
491,639

Capital
and
Surplus
(000 o m i t t e d )
$427,865
72,543

Total
Deposits
$3,517,299
641,378

There are o n l y t h r e e branch zones i n the e n t i r e System having l a r g e r bank member f o o t i n g s than t h e C i n c i n n a t i zone^ namely, P i t t s b u r g h , Los Angeles and
Detroit.
The C i n c i n n a t i Branch i s operated on the "memorandum plan 11 • A l l g e n e r a l
ledger accounts, as w e l l as accounts o f member banks, nonmember c l e a r i n g banks



.75

and o t h e r Federal Reserve banks, are maintained a t the Head O f f i c e , which a l s o
maintains a l l expense r e c o r d s . A t r a n s c r i p t o f a l l e n t r i e s a f f e c t i n g the a c counts o f banks i n the branch zone i s sent t o the Head O f f i c e d a i l y by w i r e *
Member banks i n the branch zone may f o r w a r d t h e i r d i s c o u n t o f f e r i n g s e i t h e r t o
the Branch or t o the Head Office® O f f e r i n g s r e c e i v e d by the Branch are examined t o see t h a t the paper i s t e c h n i c a l l y i n order and the amount o f each
o f f e r i n g i s w i r e d t o the Head O f f i c e *

Immediate c r e d i t i s g i v e n where the

c o l l a t e r a l c o n s i s t s o f U* S. Government o b l i g a t i o n s *

C r e d i t on a l l o t h e r

o f f e r i n g s i s d e f e r r e d u n t i l f i n a l approval by t h e Head O f f i c e , b u t upon approval
the c r e d i t i s made e f f e c t i v e as o f the date the o f f e r i n g was r e c e i v e d by the
Branch.

The Branch holds s e c u r i t i e s o f banks i n i t s zone i n safekeeping, b u t

has no nonbanking departments such as Bank Examination, Bank R e l a t i o n s , L e g a l ,
Research o r F i s c a l Agency departments*
As o f September 2 , 1937, member banks i n the branch zone had balances w i t h
the Reserve bank as f o l l o w s :
No.of Reserve
Banks Balances
City of Cincinnati
10 $45,414,424
Remainder o f Zone
157 54.240.555
Total
167 $79.654.957

Deferred
Balances
$7,855,588
1.270.206
$9.125.794

Capital
Stock
$1,156,800
1.060.350
$2.217.150

Bills
Discounted
$509.657
$509.657

C i n c i n n a t i i s 262 t r a i n m i l e s (7 h r s . and 40 mins.) from Cleveland*

On

any business day t h e r e are s e v e r a l t r a i n s which leave C i n c i n n a t i a t 7 P.M* or
l a t e r and a r r i v e i n Cleveland b e f o r e 8 A.M. on t h e succeeding day, i . e . ,

over-

n i g h t m a i l time* There are f o u r branch c i t i e s c l o s e r t o t h e i r r e s p e c t i v e head
o f f i c e s than i s C i n c i n n a t i ; namely, P i t t s b u r g h , B a l t i m o r e , Birmingham and Omaha.
These c i t i e s a l s o enjoy speedier communication by r a i l w i t h t h e i r head o f f i c e s *
I n a l l t h e r e arc f o u r t e e n branch c i t i e s which are as w e l l s i t u a t e d as C i n c i n n a t i
from the s t a n d p o i n t o f o v e r n i g h t m a i l between the hours o f 7 P.M. and 8 A.M*




I t i s apparent t h a t discontinuance o f the Branch would c u r t a i l the
s e r v i c e rendered t o banks l o c a t e d i n and near C i n c i n n a t i . Such banks now enjoy
an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h the Branch i n s o f a r as d e p o s i t s and w i t h drawals o f c u r r e n c y , w i r e t r a n s f e r s and borrowings c o l l a t e r a l e d by government
bonds are concerned and, i f the Branch were c l o s e d , would have t o d e a l w i t h the
Head O f f i c e by m a i l .

A study o f the C i n c i n n a t i Branch zone made i n December 1953,

d i s c l o s e d t h a t t h e r e were 105 member bank p o i n t s i n the zone and t h a t o n l y 7
o f such p o i n t s were n o t w i t h i n o v e r n i g h t m a i l time o f the Branch, whereas 37
were n o t so s i t u a t e d w i t h r e s p e c t t o the Head O f f i c e .

The same s i t u a t i o n u n -

doubtedly s t i l l p r e v a i l s and consequently i t may be s a i d t h a t discontinuance
o f the Branch would a l s o a f f e c t the type o f s e r v i c e rendered t o a s u b s t a n t i a l
number o f banks i n o u t l y i n g s e c t i o n s of the branch zone.
Other than Cleveland and C i n c i n n a t i t h e r e are s i x c i t i e s i n Ohio w i t h
a p o p u l a t i o n i n excess o f 100,000; namely, Toledo, 290,718; Columbus, 290,564;
Akron, 255,040; Dayton 200,982, Youngstown, 170,002 and Canton, 104,906. Only
one o f those c i t i e s (Dayton) i s l o c a t e d i n the C i n c i n n z t i Branch zone.

There

a r e , however, f o u r o t h e r c i t i e s i n the branch zone w i t h a p o p u l a t i o n o f over
50,000; namely, Hamilton and S p r i n g f i e l d , Ohio, and Covington and L e x i n g t o n ,
Kentucky.

One o r more member banks are l o c a t e d i n each o f these l a r g e r branch

zone c i t i o s .
(c) Branch B u i l d i n g :
The C i n c i n n a t i Branch occupies q u a r t e r s i n t h e Chamber o f Commerce B u i l d i n g
a t the corner o f 4 t h and Race S t r e e t s a t an annual r e n t a l o f $60,000 under a
loase which does n o t e x p i r e u n t i l 1952®

The l a n d upon which t h i s b u i l d i n g stands

was purchased as a s i t e f o r a branch b u i l d i n g , b u t was subsequently leased f o r a
p e r i o d o f 99 y e a r s , renewable f o r e v e r , v / i t h an o p t i o n t o purchase a t $600,000,




t o the Chamber o f Commerce a t $30,000 per annum.

The branch q u a r t e r s were

remodeled and equipped by the Branch, a t i t s expense, and have been occupied
since January 5, 1928.

The f o l l o w i n g f i g u r e s r e f l e c t the o r i g i n a l c o s t and

the c a r r y i n g v a l u e , as o f September 2 , 1957, o f the Branch's investment i n
the premises:
Cost
Land
A p p r e c i a t i o n based on lease
Quarters
F i x e d machinery & equipment
Total

$380,744
^380,744
262,455
89.241
$752.420

Book v a l u e
9-2-57
$267,000
355«000
$600,000
150,074
2.975
$755.049

Hie Federal Reserve Bank o f Cleveland advises t h a t the r e n t which i s
p a i d t o the Chamber o f Commerce by the Branch i s a v e r y i m p o r t a n t f a c t o r

in

the o p e r a t i o n s o f t h a t o r g a n i z a t i o n , which has had considerable d i f f i c u l t y
meeting i t s requirements f o r i n t e r e s t and overhead.

For t h i s reason i t

in

is

f e l t t h a t some l o s s would bo i n c u r r e d i n c a n c e l l i n g the Branch 1 s l e a s e , i n the
event the Branch were d i s c o n t i n u e d , and t h a t the s i t u a t i o n would be f u r t h e r complicated i f

the Chamber o f Commerce was unable to f u l f i l l the terms o f i t s lease

on the l a n d .

I n a d d i t i o n , i t i s p o i n t e d o u t t h a t the v a u l t , f i x e d machinery

and equipment used by the Branch could n o t bo s o l d r e a d i l y and consequently
would have p r a c t i c a l l y no v a l u e .
(d) Earnings - Branch Bookps
No r e c o r d o f earnings i s maintained a t the C i n c i n n a t i Branch as i t

is

operated on the "memorandum p l a n " ,
(o) Branch Personnel:
The r e p o r t o f examination o f t h e Federal Reserve Bank o f Cleveland,
as o f September 2, 1937, shows the f o l l o w i n g i n regard t o s a l a r i e s and personnel
a t the C i n c i n n a t i Branch:



.78

Septenber 2 . 1957
Nunber
Amount
Officers
Eaployees

4
142
146

§23,300

221.000
0244.300

August 29. 1956
Nunber
Anount
4
135
139

0 23,700

212.200
0235.900

Increase
Nuiuber Anount
-

7_
7

0

400(deca}

8.800
$8.400

O f f i c e r s and employees whose s a l a r i e s and wages are r e i r i b u r s a b l e are n o t
i n c l u d e d i n the above f i g u r e s .

N e i t h e r does the above t a b l e i n c l u d e f i v e en-

ploy ees, w i t h annual s a l a r i e s t o t a l i n g 06,570, who l e f t the s e r v i c e o f t h e
Branch p r i o r t o August 29, 1936, b u t who were then r e c e i v i n g d i s n i s s a l wages,
( f ) Branch Expense by F u n c t i o n s :
The expenses o f t h e C i n c i n n a t i Branch by f u n c t i o n s d u r i n g the p a s t s i x y e a r s ,
as shown i n F u n c t i o n a l Expense Reports, were as f o l l o w s :

1932

1933

0 20,876 $ 21,720
Controllable
28,869
20,047
Non-controllable
73,990
104,487
-^Provision o f space
7,816
7,793
P r o v i s i o n o f personnel
71,449
68,032
General Service
17,591
20,819
Postage
4,867
5,359
Insurance
3,822
3,722
Loans, r e d i s c o u n t s , e t c .
4,480
4,182
Securities
51,008
52,402
Currency & c o i n
69,527
65,736
Chock c o l l e c t i o n
11,951
10,561
Non-cash c o l l e c t i o n s
27,628
28,710
Accounting
4,612
5,100
F i s c a l Agency
Legal
6,113
6,944
Auditing
Bank R e l a t i o n s
0
26
F.R. Note Issues
140
169
Statistical & Analytfl
$420,769 0409,767
T o t a l Expense
Less - Reinbursable
—
—
F i s c a l Agency Expense
0420.769 0409.767
Net Expense

1934

1935

0 21,524 0 18,473
28,573
69
72,626
69,609
25,852
33,657
74,048
73,902
22,160
24,211
1,761
2,553
3,401
2,448
4,302
6,172
52,446
80,641
68,276
65,977
12,639
10,643
27,271
28,107
8,036
33,754

1936

0 17,400
37
64,690
40,700
67,750
24,832
2,225
1,652
5,879
79,444
61,354
10,331
25,401
27,719

1937

0

17 ,276
23
70 ,065
10 ,127
66 ,267
25 ,326
2 ,209
1 ,719
G,374
77 ,478
63 ,180
9 ,329
25 ,522
24 ,066

-

-

-

-

7,593

6,963

5,975

—

-

-

5 ,759
4 ,453

13
108
174
164
0431,317 0456,739

106
160
164
0435,659 0400 ,333

5.426
2.565
0420.752 0451.313

7.355
6 ,149
0428.304 0403 t 134

Represents t h e n o t expense - incdne f r o n r e n t a l s having been deducted.




.79

There were three branches i n the System which operated a t a h i g h e r annual
cost than the C i n c i n n a t i Branch i n 1957; namely, P i t t s b u r g h , Los Angeles and
Baltimore.

However, viewed as a whole the o p e r a t i o n s performed a t these branches

were i n l a r g e r volume.
(g) Volume o f Operations a t C i n c i n n a t i Branch:
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s i n v a r i o u s d e p a r t ments o f the C i n c i n n a t i Branch and the Head O f f i c e d u r i n g t h e l a s t s i x months
o f 1956:
C i n c i n n a t i Branch
Safekeeping
Member bank s e c u r i t i e s 12-51-56
$17,055,000
Branches w i t h l a r g e r volume: P i t t s b u r g h , D e t r o i t , B a l t i m o r e and
Omaha.

Head O f f i c e

$154,546,000

Currency & Coin
1* Number o f b i l l s r e c e i v e d and counted
15,025,000
27,550,000
Branches w i t h l a i g e r volume: B a l t i m o r e , D e t r o i t , Los Argeles
B u f f a l o and P i t t s b u r g h .
Cost per one thousand u n i t s handled
71 cents
61 cents
Branches w i t h h i g h e r u n i t c o s t : Helena, E I Paso, S a l t Lake C i t y and
Spokane
2. Number o f coins r e c e i v e d and counted
22,685,000
22,588,000
Branches w i t h l a r g e r volume: Los Angeles, B a l t i m o r e and P i t t s b u r g h
Cost per one thousand u n i t s handled:
20 cents
24 cents
Branches w i t h h i g h e r u n i t c o s t : P i t t s b u r g h , Helena, Omaha, E l Paso,
San A n t o n i o , P o r t l a n d , S a l t Lake C i t y ,
S e a t t l e and Spokane.
Check C o l l e c t i o n
1 . Kuriber o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
1,865,000
5,545,000
Branches w i t h l a r g e r volume: B u f f a l o , P i t t s b u r g h , B a l t i m o r e , D e t r o i t
and Los Angeles.
Cost per one thousand u n i t s handled
$1.80
$1.82
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , L o u i s v i l l e , Helena, Denver,
Oklahoma C i t y , E l Paso, Houston, Los
Angelqp, P o r t l a n d , S a l t Lake C i t y ,
S e a t t l e , and Spokane




.80

C i n c i n n a t i Branch
Check C o l l e c t i o n ( c o n t f d )
2# Number o f country checks (outgoing) r e c e i v e d
7,868,000
Branches w i t h l a r g e r volume: P i t t s b u r g h and B a l t i m o r e .
Cost per one thousand u n i t s handled
#2.57
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , D e t r o i t , Los Angeles,
P o r t l a n d , S a l t Lake C i t y , S e a t t l e ,
and Spokane*

Head O f f i c e

Non-cash C o l l e c t i o n s
1 . Number o f c i t y c o l l e c t i o n s handled
14,061
Branches w i t h l a r g e r volume: B u f f a l o , B a l t i m o r e , D e t r o i t , L i t t l e
Rock, Memphis, Denver, Omaha, Houston
and Los Angeles.
Cost per u n i t handled
30*5 cents
Branches w i t h h i g h e r u n i t costs P i t t s b u r g h and P o r t l a n d .

12,547,000
$2.50

21,159

25.9 cents

2 . Number o f country c o l l e c t i o n s handled: None handled by branch.
3« Number o f coupons (except Government) and country
s e c u r i t y c o l l e c t i o n s handled
5,416
Branches w i t h l a r g e r volume: P i t t s b u r g h , B a l t i m o r e , D e t r o i t ,
Omaha, and Los Angeles.
Cost per u n i t handled
3#6 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches, except P i t t s b u r g h .

46,887

15.2 cents

A schedule showing the volume o f o p e r a t i o n s o f the C i n c i n n a t i Branch f o r
the years 1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f C i n c i n n a t i Branch by Board 1 s Examiners - 1933
During t h e course o f an examination o f the Federal Reserve Bank o f Cleveland,
made as o f December 30, 1935, the Board 1 3 F i e l d Examiners reviewed the o p e r a t i o n s
o f t h e C i n c i n n a t i Branch and expressed t h e o p i n i o n t h a t i t s continuance was
warranted i n view o f the s i z e and importance o f the branch c i t y and the volume
o f o p e r a t i o n s handled.

A t t h $ t time t h e r e were 375 banks i n the branch zone

and 212 o f them, i n c l u d i n g 9 i n t h e C i t y o f C i n c i n n a t i , were members o f the
System.

Then, as a t p r e s e n t , the" C i n c i n n a t i Branch was one o f the s i x most

a c t i v e branches i n the Sjystem*




.81

( i ) Survey o f C i n c i n n a t i Branch made by Federal Reserve Bank o f Clevel a n d - 1956
A survey o f o p e r a t i o n s a t the C i n c i n n a t i Branch was made by the Federal
Reserve Bank o f Cleveland, as requested i n the Board*s l e t t e r o f March 25,
1936 (X-9552)• Tho Board was advised i n a l e t t e r dated October 29, 1956 t h a t ,
as a r e s u l t o f t h i s survey, the continuance o f the C i n c i n n a t i Branch appeared
t o be f u l l y j u s t i f i e d and t h a t no s e r i o u s c o n s i d e r a t i o n should be g i v e n t o i t s
discontinuance f o r the present a t l e a s t * Hie f o l l o w i n g f a c t o r s were c i t e d i n supp o r t of t h i s conclusion:
1 . That discontinuance o f t h e Branch would r e s u l t i n some
saving i n s a l a r y expense, b u t would e n t a i l much added
expense a t the head o f f i c e ; the n e t saving being d i f f i c u l t
to estimate.
2* That the losses which would be sustained on r e a l e s t a t e
h o l d i n g s , leases and equipment i f the C i n c i n n a t i Branch
were d i s c o n t i n u e d would more than absorb any saving which
might be e f f e c t e d over a p e r i o d o f years*
5* That the n a t u r a l t r e n d o f business i n the C i n c i n n a t i area
i s toward t h a t c i t y .
4* That check c o l l e c t i o n and c l e a r i n g o p e r a t i o n s are f a c i l i t a t e d by the Branch because bonks i n the t e r r i t o r y f i n d i t
convenient t o s e t t l e i n C i n c i n n a t i exchange*
5* That a s u b s t a n t i a l numboj? o f c i t i e s i n t h e branch zone are
two or more days remove4 from t h o Head O f f i c o by m a i l and
t h a t check c o l l e c t i o n s and currency shipments would be
g r e a t l y delayed i f they were handled from Cleveland.
6 . That member banks i $ Ohio and Kentucky would s e r i o u s l y obj e c t t o the l o s s of the s e r v i c e s which they now enjoy and
t h a t , as a matter o f c i v i c p r i d e , bankers and business men
i n C i n c i n n a t i would s t r o n g l y oppose any move t o d i s c o n t i n u e the Brarj^h*




CINCINNATI BRANCH
VOLUME Of OPERATIONS
Nuafrer of Pieces Handled
Currency

Coin

Received

Received

and

Bi M s
Pate
1931

teanisl

-

1932

Non Cash
Gov't

Gov't

and
SMfitftd

Collection Items

Checks Handled

£ i i i

Country

Checks

Total

Aft

F i s c a l Agency
Tr t r a w l

Coupons

Othec

Pines!

taw_
fast

Transfer
of

fMt)4§

30,501,000

51,389,000

3,70*4,000

13,385,000

966,000

18,055,000

785,137

38,8*47

21,3*48

26,773,000

*46,60*4,000

3,6*4*4,000

11,5*45,000

991,000

16,180,000

790,859

37,132

10,031

2

17,8*4*4

19,1*4 5

-

1933

-

28,520,000

MO,356,000

3,219,000

I0,*f75,000

1,176,000

1*4,870,000

85*4,952

38,76*4

37,206

320

15,6*4*4

193*1

-

27,80*1,000

Mi,863,000

3,067,000

12,005,000

2,076,000

17,1*48,000

893,811

3*4,13*4

70,209

2,9*46

13,179

1935

-

28,73*4,000

*49,5*40,000

3,518,000

13,83*4,000

1,687,000

19,039,000

757,000

33,000

107,655 32,7*42

10,683

1936

-

30,522,000

*46, 6*45 , 000

3,693,000

15,162,000

1,129,000

19,98*4,000

669,000

36,000

8 , 9 8 3 IO,*48*4

10,000

Aaounts Handled
( i n thousands of d o l l a r s )
1931

-

122,537

5,393

1,936,763

890,732

I33,*493

2,960,988

12,909

*48, 760

27,*493

1932

-

99,*48*4

*4,*453

l,*459,l*49

66*4,795

105,556

2,229,500

13,339

*46,92*4

20,885

too

381,683

1933

-

125,909

7,736

1,352,11*4

68*4,198

116,792

2,153,10*4

l*4,*435

59,58*4

*46,658

1,222

330,156

193**

-

102,852

5,705

1,5*4^4,362

8*41,305

1*42,621

2,528,288

1*4,776

69,289

56,101

3,952

35*4,758

1935

-

I0t,*479

5,320

1,702,187

1,00*4,37*4

1*49,01*4

2,855,575

12,602

99,929

92,926 2*4,585

360,616

107,697

*4,925

1,905,337

1,182,172

169,333

3,256,8*42

I2,*437

96,836

3*4,611

9,919

*4*46,2*48

1936

QD




571,071

-

PITTSBURGH BRANCH - FEDERAL RESERVE BANK OF CLEVELAND
(a) C i t y o f P i t t s b u r g h
P i t t s b u r g h , w i t h a p o p u l a t i o n o f 669,817, i s the t e n t h l a r g e s t c i t y i n
the U n i t e d S t a t e s and the second l a r g e s t c i t y i n Pennsylvania.

I t i s located

i n the southwestern p a r t o f the State a t the p o i n t where the Monongahela and
Allegheny j o i n the Ohio R i v e r and serves a r e t a i l trade area extending a p p r o x i mately 50 m i l e s i n a l l d i r e c t i o n s .
i n t h i s area.

There are approximately two m i l l i o n people

Twenty-two r a i l r o a d s enter the c i t y , the major systems being

the Pennsylvania, P i t t s b u r g h & Lake E r i e , B a l t i m o r e & Ohio, and B u f f a l o ,
Rochester & P i t t s b u r g h .

The c i t y a l s o has an e x c e l l e n t m u n i c i p a l l y owned a i r -

p o r t and i s served by a number o f n a t i o n a l a i r l i n e s .
According t o the B i e n n i a l Census o f Manufactures f o r the year 1955, there
were i n Allegheny County, i n which P i t t s b u r g h i s s i t u a t e d , 1 , 4 7 4 manufacturing
establishments which had an o u t p u t valued a t $703,465,000 d u r i n g t h a t y e a r . The
p r i n c i p a l manufactures were i r o n and s t e e l , machinery and c a s t i n g s ,

electrical

machinery and apparatus, glass and glassware, chemicals, and c l a y p r o d u c t s .
There was a l s o considerable canning, meat packing, baking and petroleum r e f i n ing.

The Census o f American Business shows t h a t i n the same area t h e r e were

13,928, r e t a i l and 1,755 wholesale establishments which had sales aggregating
$395,170,000 and $729,764,000, r e s p e c t i v e l y , i n 1955.
Banking f a c i l i t i e s i n P i t t s b u r g h as o f December 51, 1956, were provided
by t h i r t y - t w o S t a t e banks (8 members), e i g h t n a t i o n a l banks and one mutual
savings bank.

These i n s t i t u t i o n s had deposits aggregating $1,215,156,000 as

o f t h a t date and o f t h i s amount $1,057,929,000 was c a r r i e d w i t h the s i x t e e n
l o c a l meBiber banks, f o u r o f which are l o c a t e d i n o u t l y i n g s e c t i o n s o f the c i t y
and authorized t o c a r r y country bank r e s e r v e s .




.84

D e b i t s t o i n d i v i d u a l accounts i n banks o f t h e c i t y aggregated $8,676,891,000
d u r i n g t h e year 1956, or approximately $29,000,000 f o r each banking day.
(b) Branch T e r r i t o r y and Functions:
The P i t t s b u r g h Branch was e s t a b l i s h e d A p r i l 22, 1918, and serves n i n e t e e n
counties i n western P a m s y l v a n i a and s i x counties i n n o r t h e r n West V i r g i n i a .
These c o u n t i e s comprise about 20$ o f the l a n d area o f the F o u r t h Federal Reserve D i s t r i c t and have approximately 50$ o f i t s t o t a l p o p u l a t i o n .

Approxi-

mately Z0% of a l l banks i n t h e F o u r t h D i s t r i c t are w i t h i n t h i s area.
As o f December 51, 1956, t h e r e were 575 banks, e x c l u s i v e o f mutual savings
banks i n t h e branch zone and o f t h i s number 244, i n c l u d i n g 219 n a t i o n a l and
25 State i n s t i t u t i o n s , were members o f t h e Federal Reserve System.
nonmember banks i n t h e branch zone were on the par l i s t .

A l l o f the

The f o l l o w i n g f i g u r e s

taken from r e p o r t s of c o n d i t i o n as of t h e same date show the s i z e of member
bank f o o t i n g s i n the branch zone as compared t o those o f t h e F o u r t h D i s t r i c t as
a whole:

Fourth D i s t r i c t
P i t t s b u r g h Zone

No. Member
Banks

Loans
and
Investment

Capital
and
Surplus
(000 omitted)

627
244

$2,822,105
1,365,336

$427,865
225,056

Total
Deposits

$5,517,299
1,531,155

There i s no branch zone i n the System having l a r g e r member bank f o o t i n g s than
the P i t t s b u r g h Zone.
The P i t t s b u r g h Branch i s operated on the "memorandum p l a n " .

A l l general

l e d g e r accounts, as w e l l as accounts of member banks, non-member c l e a r i n g banks
and o t h e r Federal Reserve banks, are maintained a t the Head O f f i c e , which also
maintains a l l expense records.




A t r a n s c r i p t o f a l l e n t r i e s a f f e c t i n g the

accounts o f bonks i n the branch zone i s sent t o the Head O f f i c e d a i l y by w i r e .
Member banks i n the branch zone may f o r w a r d t h e i r d i s c o u n t o f f e r i n g s e i t h e r
t o the Branch or to the Head O f f i c e .

O f f e r i n g s r e c e i v e d by the Branch are

examined t o see t h a t the paper i s t e c h n i c a l l y i n order and the amount o f each
o f f e r i n g i s wired t o the Head O f f i c e .

Immediate c r e d i t i s given where the

c o l l a t e r a l c o n s i s t s o f U. S. Government o b l i g a t i o n s .

C r e d i t on a l l o t h e r

o f f e r i n g s i s d e f e r r e d u n t i l f i n a l approval by the Head O f f i c e , but upon app r o v a l the c r e d i t i s made e f f e c t i v e as o f the date the o f f e r i n g was r e c e i v e d by
the Branch.

The Branch holds s e c u r i t i e s o f banks i n i t s zone i n safekeeping.

The Branch maintains no non-banking departments such as Bank Examination, Bank
R e l a t i o n s , Legal, Research or F i s c a l Agency departments.
As of September 2, 1937, member banks i n the branch zone had balances w i t h
the Reserve bank as f o l l o w s :

City ef Pittsburgh
Reminder o f Zone
Total

No. o f
Banks

Reserve
Balances

16
224

$153,643,900
52.295.300
#205.939.200

Deferred
Balances
$13,325,800
2.778.700
&16.104.500

Capital
Stock

Bills
Discounted

$4,719,100
2.023,900
$6.743.000

$

60.000
$60.000

P i t t s b u r g h i s 138 t r a i n m i l e s (5 h r s . - 15 mins.) from Cleveland.

On any

business day t h e r e are a number o f t r a i n s which leave P i t t s b u r g h a t 7 P. M. or
l a t e r and a r r i v e i n Cleveland before 8 A. M. on the succeeding day, i . e . ,
n i g h t m a i l time.

No branch c i t y i s feloser to i t s head o f f i c e than i s

over-

Pittsburg

However, t h e r e are f o u r t e e n other branch c i t i e s which are as w e l l s i t u a t e d as
P i t t s b u r g h from the s t a n d p o i n t of o v e r n i g h t m a i l communication between the
hours o f 7 P. M. and 8 A. M.

Branch c i t i e s comparable to P i t t s b u r g h i n s o f a r

as speed o f r a i l s e r v i c e i s concerned are B a l t i m o r e (157 m i l e s - 4 h r s . and
21 mins.)




and Birmingham (168 m i l e s - 5 h r s . and 50 m i n s . ) .

.86

I t i s apparent t h a t discontinuance o f the Branch would c u r t a i l the s e r v i c e
rendered to bnks l o c a t e d i n and near P i t t s b u r g h .

Such banks under normal con-

d i t i o n s now enjoy an o v e r - t h e - c o u n t e r r e l a t i o n s h i p v / i t h the Branch i n s o f a r as
deposits and withdrawals of currency, w i r e t r a n s f e r s and borrowings c o l l a t e r a l e d
by government bonds are concerned.

If

the Branch were removed i t would be

necessary f o r them t o d e a l w i t h the Head O f f i c e by m a i l .

The s i t u a t i o n

is

d i f f e r e n t i n the case o f banks which a t present deal w i t h the Branch by m a i l ,
since the l a r g e m a j o r i t y o f such banks can be served j u s t as e x p e d i t i o u s l y from
the Head O f f i c e under normal c o n d i t i o n s .

This i s borne out by a study o f the

P i t t s b u r g h Branch zone which was made by Federal Reserve Examiners i n December
1935.

A t t h a t time t h e r e were 155 member bank p o i n t s i n the zone and o f

this

number 112 were w i t h i n o v e r - n i g h t m a i l time o f the Head O f f i c e as compared w i t h
115 w i t h i n o v e r - n i g h t m a i l t i n e o f the Branch.
Other than P i t t s b u r g h there are o n l y three c i t i e s i n the branch zone having
a p o p u l a t i o n i n excess o f 50,000; namely, E r i e , P a . , 115,967, Wheeling, West
Va., 61,659 and McKeesport, P a . , 54,652.

McKeesport i s contiguous t o

P i t t s b u r g h and Wheeling and E r i e are 66 m i l e s (2 h r s . - 20 mins.) and 145 m i l e s
(4 h r s . - 2 m i n s . ) , r e s p e c t i v e l y ,

distant,

(c) Branch B u i l d i n g :
The P i t t s b u r g h Branch has occupied i t s present q u a r t e r s a t Grant S t r e e t
and Ogle Way since December, 1931.

The f o l l o w i n g f i g u r e s show the o r i g i n a l

cost end book v a l u e , as o f September 2, 1937, o f the branch premises:
Cost
Land
Ifuilding
V a u l t & v a u l t equipment
Fixed machinery & equipment
F u r n i t u r e end equipment




$

781,564
867,455)
181,996)
552,411
$2,185,226
248,557
$2,451.585

Book Value
9-5-57
$

781,564

930,512
152.958
$1,864,814
$1,864,814

.87

The banking premises, i n c l u d i n g f i x e d machinery and equipment, occupied
by the Branch p r i o r t o 1951 are c a r r i e d as other r e a l e s t a t e on the books o f
the Head O f f i c e .

The t o t a l book v a l u e o f the o l d p r o p e r t y was $569,115 as o f

September 2, 1937.

This p r o p e r t y was badly damaged by the f l o o d s i n the e a r l y

p a r t o f 1957, and, because of the expense i n v o l v e d , has n o t been placed i n usable
condition.
(d) Earnings - Branch Books:
No r e c o r d of earnings i s maintained a t the P i t t s b u r g h Branch as i t

is

operated on the "memorandum p l a n " .
(e) Branch Personnel:
The r e p o r t of examination o f the F e d e r a l Reserve Bank o f Cleveland, as o f
September 2 , 1957, shows the f o l l o w i n g i n regard to s a l a r i e s and personnel a t
the P i t t s b u r g h Branch:
September 2. 1957
Number
Amount
Officers
Employees

4
210
214

August 29, 1936
Number
Amount

0 27,300
312,400
$559,700

4
184
188

0 50,100
281>200
£511,500

Increase
Number
Amount
26
26

$ 2,800 (Deer.)
51,200
$28,400

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n the above f i g u r e s .

N e i t h e r does the above t a b l e i n c l u d e 16

employees, w i t h annual s a l a r i e s t o t a l i n g

$27,612,

w ho

l e f t the s e r v i c e o f the

Branch p r i o r to August 29, 1956, but who were then r e c e i v i n g d i s m i s s a l wages.
( f ) Branch Expense by Functions:
The expenses o f the P i t t s b u r g h Branch by Functions d u r i n g the past s i x
y e a r s , as shown i n F u n c t i o n a l Expense Reports, were as f o l l o w s :




.88

1952
General Overhead
Controllable
$ 27 ,677
Non-con t r o l l a b l e
28 ,517
•#Pro v i s i o n o f space
129 ,706
P r o v i s i o n o f Personnel
7 ,077
General 8 e r v i c e
71 ,819
Postage
27 ,702
7 ,649
Insurance
6 ,869
L o a n s , r e d i seounts, e t c .
6 ,264
Securities
Currency & Coin
64 ,036
Check C o l l e c t i o n
99 ,235
Non-cash C o l l e c t i o n s
1 1 ,455
Accounting
38 ,960
F i s c a l Agency8 ,052
Legal
Auditing
8 ,605
Bank R e l a t i o n s
26
F.R. Note Issues
Statistical & Analyt'l
340
T o t a l Expense
0543 ,989
Less - Reimbursable
—
F i s c c l Agency Exp.
Net Expense
§543 ,989

1955

1954

0 27, 724
40, 007
114, 391
7, 102
71, 467
31, 926
7, 524
6 , 425
6 , 198
61, 606
102, 457
10, 855
38, 490
7, 912

0 25,754
48,999
117,535
32,231
74,160
31,547
3,828
6,148
6,398
61,152
101,116
10,775
39,101
9,102

9 , 225

10,243

-

1955

1957

1956

$ 23, 938 § 23,580
81
42
110, 180 102,141
45, 947
65,699
68,888
74, 970
31, 220
34,021
3,343
2 , 715
977
2,546
4,
610
14,122
11,
111, 919 122,737
96, 743
95,336
674
12,658
12,
40, 456
37,981
23, 318
23,148
510
106
10,608
316
11,

0 20, 640
63
154, 572
15, 516
64, 025
35, 765
3, 181
1 , 371
14, 188
135, 018
101, 197
12, 808
35, 357
21, 634
421
10, 599
5, 217

-

—

68
310
$543, 607

33
344
0578,466

221
142
234
261
$603, 029 0617,359

247
$631, 819

£543, 687

1,873
£576,593

8,974
2, 964
8600,065 £608,385

7, 914
0623,905

* Represents the n e t expense - income from r e n t a l s having been deducted.
There was no branch i n the System which operated a t a higher aggregate
annual cost than the P i t t s b u r g h Branch i n 1957.

The only comparable branch

from a standpoint o f expense was Los Angeles w i t h annual o p e r a t i n g expenses
aggregating $590,002.
(g) Volume o f Operations a t P i t t s b u r g h Branch;
The f o l l o w i n g i s a comparison o f the volume o f operations i n v a r i o u s departments o f the P i t t s b u r g h Branch and the Head O f f i c e d u r i n g the l a s t

six

months o f 1956:

Safekeeping
Member bank s e c u r i t i e s 12-51-56
Branches w i t h l a r g e r volume:




P i t t s b u r g h Branch

Head O f f i c e

$115,906,000
None

$154,546,000

.89

P i t t s b u r g h Branch

Head O f f i c e

Currency & Coin
1 . Number o f b i l l s r e c e i v e d and counted
26,082,000
27,350,000
Branches w i t h l a r g e r volume: Los Angeles, B a l t i m o r e and D e t r o i t .
Cost per one thousand u n i t s handled
54 cents
61 cents
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , C i n c i n n a t i , Helena, Denver,
Omaha, E l Paso, P o r t l a n d , S a l t Lake C i t y ,
S e a t t l e and Spokane.
2. Number o f coins r e c e i v e d and counted:
26,297,000
22,588,000
Branches w i t h l a r g e r volume: B a l t i m o r e and Los Angeles.
24 cents
Cost per one thousand u n i t s handled
21 cents
Branches w i t h h i g h e r u n i t c o s t : Helena, Omaha, E l Paso, San A n t o n i o ,
P o r t l a n d , S a l t Lake C i t y , S e a t t l e and
Spokane.
Check C o l l e c t i o n
1 . Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
5,551,000
3,345,000
Branches w i t h l a r g e r volume: None
Cost per one thousand u n i t s handled
01.63
$1.82
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , C i n c i n n a t i , L o u i s v i l l e , Helena,
Denver, Oklahoma C i t y , E l Paso, Houston, Los
Angeles, P o r t l a n d , S a l t Lake C i t y , S e a t t l e
and Spokane.
2. Number o f country checks (outgoing) r e c e i v e d 13,193,000
12,547,000
Branches w i t h l a r g e r volume: None
Cost per one thousand u n i t s handled
01.99
$2.50
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , C i n c i n n a t i , C h a r l o t t e , N a s h v i l l e ,
New Orleans, D e t r o i t , Helena, E l Paso, San
A n t o n i o , Los Angeles, P o r t l a n d , S a l t Lake
C i t y , S e a t t l e and Spokane.
Non-cash C o l l e c t i o n s
1 . Number o f c i t y c o l l e c t i o n s handled
8,635
21,159
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , B a l t i m o r e , J a c k s o n v i l l e ,
D e t r o i t , L i t t l e Rock, Memphis, Denver, Oklahoma
C i t y , Omaha, Houston, Los Angeles, S a l t Lake
C i t y and S e a t t l e .
Cost per u n i t handled
66.7 cents
25.9 cents
Branches w i t h h i g h e r u n i t c o s t : None
2. Number o f c o u n t r y c o l l e c t i o n s handled:

None

3. Number o f coupons (except Government) and
c o u n t r y s e c u r i t y c o l l e c t i o n s handled
9,355
Branches w i t h l a r g e r volume: B a l t i m o r e and D e t r o i t .
Cost per u n i t handled
3 . 1 cents
Branches w i t h h i g h e r u n i t c o s t : A l l other branches.




46,887
15.2 cents

.90

A schedule showing the volume o f o p e r a t i o n s o f the P i t t s b u r g h Branch f o r
the years 1831 to 1936, i n c l u s i v e , i s attached to t h i s memorandum.
(h) Survey of P i t t s b u r g h Branch by Board 1 s Examiners - 1955
During the course o f an examination o f the Federal Reserve Bank o f
Cleveland, made as o f December 50, 1955, the Board's F i e l d Examiners reviewed
the o p e r a t i o n s o f the P i t t s b u r g h Branch and expressed the o p i n i o n t h a t i t s continuance was warranted i n view o f the s i z e and importance o f the branch c i t y
and the volume o f o p e r a t i o n s conducted a t the Branch.

At t h a t time t h e r e were

396 banks i n the branch zone and 252 o f them, i n c l u d i n g 14 i n the C i t y o f
P i t t s b u r g h , were members o f the System.

Then, as a t p r e s e n t , the P i t t s b u r g h

Branch was one o f the s i x mo:st a c t i v e branches i n the System; r a n k i n g f i r s t

in

the d o l l a r volume and number o f checks handled.
( i ) Survey of P i t t s b u r g h Branch made by Federal Reserve Bank o f Cleveland
- 1956
As requested i n the Board's l e t t e r o f March 25, 1956 (X-9552) the Federal
Reserve Bank o f Cleveland reviewed the operations o f i t s branches.

The Board

was advised i n a l e t t e r dated October 29, 1956 t h a t on the basis o f t h i s survey
the continuance o f the P i t t s b u r g h Branch appeared t o be f u l l y j u s t i f i e d and
t h a t no serious c o n s i d e r a t i o n should be given t o i t s discontinuance f o r the
present a t l e a s t .

The c h i e f reasons advanced i n support o f t h i s c o n c l u s i o n

were J
1 . That tho Branch had b u t r e c e n t l y occupied a new
b u i l d i n g which was c a r r i e d a t §1,958,000 and which
could n o t be disposed o f , based on t h e i r experience
w i t h the o l d branch banking qtxarters, except a t a
substantial loss.
2. 'That i n t e n s e r i v a l r y e x i s t e d between the bankingi n t e r e s t s o f Cleveland and P i t t s b u r g h a t the time
the System was organized and t h a t although bankers
i n P i t t s b u r g h have since become r e c o n c i l e d t o the




.91

l o c a t i o n o f the F e d e r a l Reserve Bank i n Cleveland,
any i n d i c a t i o n t h a t the P i t t s b u r g h Branch might be
d i s c o n t i n u e d would be met by the most a c t i v e and
severe o p p o s i t i o n .
S. That discontinuance o f the Branch would r e s u l t i n
some saving i n s a l a r y expense, b u t would e n t a i l
much added expense a t the Head O f f i c e ; the n e t
saving being d i f f i c u l t to e s t i m a t e .
4. That the branch c i t y was selected because the n a t u r a l
t r e n d o f business o f the surrounding t e r r i t o r y was
toward P i t t s b u r g h .
5. That check c o l l e c t i o n and c l e a r i n g o p e r a t i o n s are
f a c i l i t a t e d by the Branch because banks i n the
t e r r i t o r y f i n d i t convenient t o s e t t l e i n P i t t s b u r g h
exchange.
6. That a s u b s t a n t i a l number o f c i t i e s i n the branch zone
are two days removed from the Head O f f i c e by m a i l and
t h a t check c o l l e c t i o n s and currency shipments would be
g r e a t l y delayed i f they were handled from Cleveland,
and
7. That P i t t s b u r g h i s the outstanding i n d u s t r i a l center
o f the North C e n t r a l S t a t e s , the l a r g e r i n d u s t r i a l
concerns m a i n t a i n i n g o f f i c e s t h e r e , and t h a t , as a
r e s u l t , the Branch i s c e l l e d upon t o supply currency
through banking connections o f such concerns which i s
d i s t r i b u t e d and used throughout Western Pennsylvania
and Northwestern West V i r g i n i a j some o f such t e r r i t o r y
b e i n g l o c a t e d i n the P h i l a d e l p h i a and Richmond D i s t r i c t s .




.92

PITTSBURGH BRANCH
VOLUME OF-OPERATIONS

Hywkprfrfpieces far^M

Bills

msi

Discounted

Currency

Coin

Received

Received

and

and

fiwinitriL.

tmt&t.

Hon Cash
Collection Items
All
Qov , t

Checks Handled
Gov»t
City

Cpuntrv

Checks

Total

Coupons

Fiscal Agency

Transfer

TCftMKiiMI.,

of
Funds

Other

Direct

Otfter

1931

-

1*7,1*02,000

**t,820,000

8,871*,000 21,036,000

732,000

30,6**2,000

**8»*,710

31,091

29,769

1932

•

39,192,000

39,125,000

8,106,000 18,803,000

786,000

27,695,000

**68,729

31,991

9,**56

18

19,6** 1

1933

-

38,829,000

32,632,000

8,277,000 17,178,000

87**,000

26,329,000

**86,l**l

3!,73l

25,6**2

102

17,18**

193**

m

l* 1,1*52, 000 33,766,000

!0,3M*,000 18,592,000

2,138,000

31,07**,000

521,677

28,565

****,690

**8I

***,557

1935

-

****,687,000

35,8^*9,000

1**,050,000 23,356,000

1,008,000

38,**IN,000

56**, 000

3**, 000

73,8**9 16,007

9,606

>936

-

52,609,000

148,651,000

13,823,000 25,888,000

1,052,000

**0,763,000

**70,000

*»0,000

l**,977

5,930

11,000

25,112

-

Atouint* jHniritaf
( i n thousands of dollars)
1931

21*7,367

3,915

8,66**, 505

1/602,529

10**,757

10,371,79*

15,563

36,756

127,076

2,13**, 203

m

1932

-

173,752

3,211

5,5«*M0&

l,2****,l**l

89,383

6,878,332

l**,625

32,96**

17,108

155

1,018,927

1933

-

203,280

6,695

5,260,589

1, 198,2** 7

9**,989

6,553,825

15,001

**7,038

52,156

152

896, **97

1931*

-

208,160

3,817

6,032,868

l,**57,93l

120,893

7,611,692

17,77**

68,035

86,905

509

657,306

1935

-

217, 02**

2,7^*7

7,06**,852

1,70**, 060

1 m , 138

8,883,050

I9,****7

88,729

102,350 I7,7**9

7**3, 136

1936

•

286,861

3 , ******

8,930,791

2,190,031

»**3,**57

11,26**, 279

5,629

956, l**0




19,693 123,979

II7,09t

BALTIMORE BRANCH - FEDERAL RESERVE BANK OF RICHMOND
(a) C i t y o f B a l t i m o r e
B a l t i m o r e , w i t h a p o p u l a t i o n o f 804,874, i s the e i g h t h l a r g e s t c i t y i n
the U n i t e d States and the l a r g e s t c i t y i n Maryland.

I t i s l o c a t e d i n the

c e n t r a l p a r t o f the S t a t e , on the Petapsco R i v e r which enters Chesapeake Bay,
and serves a trade area extending approximately 20 m i l e s i n a l l
There are s l i g h t l y more than 1,000,000 i n h a b i t a n t s i n t h i s area.

directions.
Five r a i l -

r o a d s , i n c l u d i n g the Baltimore & Ohio, Pennsylvania ana Western Maryland, servp
the c i t y and numerous ocean steamship l i n e s a f f o r d d i r e c t connection w i t h most
o f the i m p o r t a n t American and f o r e i g n p o r t s .

I n addition regular a i r

service

i s a v a i l a b l e a t two a i r p o r t s .
According t o the B i e n n i a l Census o f Manufactures B a l t i m o r e C i t y had
1,867 manufacturing establishments i n 1935 which had an output v a l u e d a t
$558,805,000.
fertilizer,

The most i m p o r t a n t manufactures were i r o n and s t e e l ,

copper,

straw h a t s , drugs, canned goods, a i r c r a f t , and d i s t i l l e r y and

brewery products.

There i s also considerable meat packing, r a i l r o a d r e p a i r

work and ship b u i l d i n g and r e p a i r i n g c a r r i e d on.

The Census o f American B u s i -

ness f o r the year 1935 l i s t s 13,557 r e t a i l and 1,622 wholesale establishments
i n B a l t i m o r e C i t y which enjoyed sales aggregating $301,137,000 and $424,478,000^
respectively, during that year.
Banking f a c i l i t i e s i n B a l t i m o r e are provided by s i x n a t i o n a l banks,
t h i r t e e n S t a t e banks (6 members), ten mutual savings banks and a M o r r i s Plan
bank.

These i n s t i t u t i o n s had d e p o s i t s aggregating $659,687,000, as o f

December 31, 1936, and o f t h i s amount $355,895,000 was c a r r i e d w i t h the twelve
l o c a l member banks, one, a n a t i o n a l bank, being a u t h o r i z e d to c a r r y country
bank reserves.




.94

Debits to i n d i v i d u a l accounts i n banks o f the c i t y aggregated
04,049,015,000 d u r i n g the year 1936, or an average o f approximately $13,500,000
f o r each banking day.
( * ) Branch T e r r i t o r y and F u n c t i o n s :
The B a l t i m o r e Branch was e s t a b l i s h e d March 1 , 1918 and serves the e n t i r e
State o f Maryland and t h i r t y counties i n Northern West V i r g i n i a .

This

t e r r i t o r y represents 15$ o f the l a n d area o f the F i f t h D i s t r i c t and has a p p r o x i mately 21% o f i t s t o t a l p o p u l a t i o n .

Approximately 26% o f a l l banks i n the d i s -

t r i c t are w i t h i n t h i s a r e a .
As o f December 31, 1936 there were 268 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and o f t h i s number 116, i n c l u d i n g 98 n a t i o n a l banks
and 18 S t a t e i n s t i t u t i o n s , were members o f the Federal Reserve System.
the nonmember i n s t i t u t i o n s i n the branch zone were on the par l i s t .

A l l of

The f o l l o w -

i n g f i g u r e s taken from r e p o r t s o f c o n d i t i o n as o f the same date show the s i z e
o f member bank f o o t i n g s i n the branch zone as compared t o those o f the F i f t h
D i s t r i c t as a whole:

No. Member
Banks

Fifth District
Branch Zone

404
116

Loans
and
Investments

$1,227,580
383,677

Capital
and
Surplus
(000 omitted)
$158,222
43,533

Total
Deposits

$1,702,403
511,126

There are o n l y f i v e branch zones i n the e n t i r e System having l a r g e r
member bank f o o t i n g s than the B a l t i m o r e zonej namely, P i t t s b u r g h , Los Angeles,
D e t r o i t , C i n c i n n a t i and B u f f a l o .
The B a l t i m o r e Branch renders s u b s t a n t i a l l y the same s e r v i c e t o member
banks i n i t s t e r r i t o r y as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s
and disbursements o f currency and c o i n , w i r e




t r a n s f e r s , check c l e a r i n g s ,

.95

non-cash c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and loans t o member banks are
concerned.
Branch.

Reserve accounts o f member banks i n the zone are maintained a t the

Member bank borrowings are passed upon a t the Branch, s u b j e c t to r e -

view by the Head O f f i c e and notes and c o l l a t e r a l , i f any, are h e l d by the
Branch.

The Branch does n o t exercise f i s c a l agency f u n c t i o n s , but a c t s as a

r e c e i v i n g and d i s t r i b u t i n g s t a t i o n f o r the Head O f f i c e .

I t has no Bank Exam-

i n a t i o n , L e g a l or F a i l e d Bank departments.
As o f June 17, 1957, member banks i n the branch zone had balances w i t h
the Reserve bank as f o l l o w s :
No.of
Banks
C i t y of Baltimore
Remainder o f Zone
Total

12
104
116

Reserve
Balances
$51,766,221
16.126.667
$67,892.888

Deferred
Balances

Capital
Stock

Bills
Discounted

$11,050,075 $ 727,300
945.952
586.700
$11.976.005 $1,314.000

$90,000
$90,000

B a l t i m o r e i s 15S t r a i n miles (4 h r s . and 21 mins.) from Richmond.

On a#y

business day there are s e v e r a l t r a i n s which leave B a l t i m o r e a t 7 ; P . M. or l a t e r
and a r r i v e i n Richmond b e f o r e 8 A. M. on the succeeding day, i . e . ,
m a i l time.
head o f f i c e .

overnight

P i t t s b u r g h i s the o n l y branch c i t y c l o s e r than B a l t i m o r e t o i t s
However, t h e r e are f o u r t e e n other branch c i t i e s which are w i t h i n

o v e r n i g h t m a i l time o f t h e i r r e s p e c t i v e head o f f i c e s .

The branches most

comparable t o Baltimore are P i t t s b u r g h (138 miles - 3 h r s . and 20 m i n s . ) and
D e t r o i t (284 m i l e s - 6 h r s . and 35 m i n s . ) .
I t i s apparent t h a t discontinuance o f the B a l t i m o r e Branch would c u r t a i l
the s e r v i c e rendered t o banks l o c a t e d i n t h a t c i t y which now enjoy an o v e r - t h e counter r e l a t i o n s h i p i n s o f a r as d e p o s i t s and withdrawals o f currency, w i r e
t r a n s f e r s , borrowings and safekeeping accommodations are concerned.

The Federal

reserve balances o f banks i n Baltimore are two and o n e - h a l f times as l a r g e as




.101

those o f banks i n Richmond.

Any i n d i c a t i o n t h a t discontinuance o f the Branch

was even contemplated would reawaken the i n t e n s e b i t t e r n e s s which the o r i g i n a l
s e l e c t i o n o f Richmond, r a t h e r than B a l t i m o r e , as a Reserve Bank c i t y aroused
and would undoubtedly be harmful t o the System as a whole.

I n addition

it

appears from a v a i l a b l e i n f o r m a t i o n t h a t a number o f the 79 o u t l y i n g banking
p o i n t s i n the B a l t i m o r e zone, p a r t i c u l a r l y p o i n t s i n West V i r g i n i a , cannot be
served as e x p e d i t i o u s l y from Richmond as they are now being served f r o m
Baltimore.
Other than B a l t i m o r e , there i s no c i t y i n the branch zone having a populat i o n o f over 50,000.
follows:

The p o p u l a t i o n s o f the more i m p o r t a n t c i t i e s are as

Cumberland, Maryland, 37,747j Hagerstown, Maryland, 30,861 and

Fairmont, West V i r g i n i a ,

23,159.

(c) Branch B u i l d i n g :
Thc3 B a l t i m o r e Branch has occupied i t s present q u a r t e r s a t Lexington and
C a l v o r t S t r e e t s since September 1928.

The f o l l o w i n g f i g u r e s show the o r i g i n a l

cost and book v a l u e , as o f June 17, 1957, o f the branch premises:

Cost
Land
Building
V a u l t & v a u l t equipment
F i x e d machinery & equipment
F u r n i t u r e & equipment

$

250,487
992,474)
254,788)
550,459
$1,828,188
245,765
£g«071,955

Book Value
6-17-57
$

187,145

1,012,675
22,589
$1,222,409
Si.222,409

(d) Earnings - Branch Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r the years 1931 to
l i i o 7 , i n c l u s i v e , were as f o l l o w s :




9?

Year

Earnings

1951
1952
1955
1934
1935
1956

£ 52,600
25,300
19,200
20,500
21,600

1957

22,000

These f i g u r e s are incomplete s i n c e , under the p r e s e n t accounting p r o cedure, the Branch does n o t r e c e i v e any c r e d i t f o r income r e c e i v e d by the Head
O f f i c e on investments, a l a r g e p o r t i o n o f which i s made p o s s i b l e by the c a p i t a l
stock investment and r e s e r v e balances o f member banks i n the branch zone.

In-

come on borrowings by banks i n the branch zone i s a l s o c a r r i e d o n l y on the
books o f the Head O f f i c e , which i s c o n t r a r y t o the u s u a l p r a c t i c e i n

full-

f l e d g e d branches.
(e) Branch Personnel;
The r e p o r t o f examination o f the Federal Reserve Bank o f Richmond, as o f
June 17, 1937, shows the f o l l o w i n g i n regard to s a l a r i e s and personnel a t the
B a l t i m o r e Branch:
_June 17, 1957
Number
Amount
Officers
Employees

4
164
168

$ 26,500
215,500
$240,000

June 27, 1956
Number
Amount
4
160
164

$ 25,800
209,600
8255,400

Increase
Number
Amount
4
4

$

700
5,900
$4,600

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n the above f i g u r e s .

Compensation p a i d t o temporary employees and

f o r overtime and supper money i s a l s o n o t i n c l u d e d ($8,200 f o r 1956).
( f ) Branch Expense by Functions:
The uxpenses o f the B a l t i m o r e Branch by f u n c t i o n s f o r t h e years 1932 t o
1937, i n c l u s i v e , were as f o l l o w s :




.98

1952
General Overhead
Controllable
$ 11,323
Non-Controllable
16,112
* P r o v i i j i o n o f Space
55,612
P r o v i s i o n o f Personnel
6,580
General Service
54,881
Postage
24,060
Insurance
7,148
F a i l e d Banks
L o o n s , r e d i s c o u n t s , e t c . 14,346
5,587
Securities
Currency & Coin
50,084
Check C o l l e c t i o n
62,551
Non-cash C o l l e c t i o n
12,582
Accounting
29,430
F i s c a l Agency4,057
Legal
Auditing
2,656
Bank R e l a t i o n s
1,642
—
Bank Examinations
901
F.R. Note Issues
Statistical & Analyt'l
402
T o t a l Expense
$359,962
Less - Reimbursable
—
F i s c s l Agency Exp.
Net Expense
£359.962
-

1933

0 19,309
20,993
54,246
6,278
54,014
27,849
6,784
—

17,151
5,653
45,498
64,726
14,610
27,072
4,641
-

2,624
296
«

892
369
$373,805
—

0373.805

1934

0 18,419
22,207
53,146
26,659
59,167
27,984
5,236
—

$ 17,982
249
48,881
37,815
59,874
28,747
4,265
—

9,251
6,481
48,164
58,654
14,557
28,102
13,836
-

1935

'

3,429
240
—

4,741
6,351
73,209
57,418
16,985
28,892
41,931
-

5,094
86
—

1936

$ 14,346
83
52,091
53,921
56,474
28,336
4,050

1937

0 15,617
111
107,031
9,397
57,811
28,668
3,828

—

—

4,995
8,124
74,475
59,169
15,832
28,043
44,245

5,315
7,828
75,737
65,462
17,514
28,506
45,562

-

-

6,100
606

5,059
316

—

—

717
455
$396,704

517
263
0455,500

307
171
$450,037

348
162
$475,683

7.393
§389.311

13,572
0419.728

29.118
$>420,919

31.260
5444.415

* Represents the n e t expense - income from r e n t a l s having been deducted.
There are two branches i n the System which operated a t a h i g h e r annual
c o s t than the B a l t i m o r e Branch i n 1937; namely, P i t t s b u r g h and Los Angeles,
(g) Volume o f Operations a t B a l t i m o r e Branch:
The f o l l o w i n g i s a comparison o f the volume o f operations i n v a r i o u s
departments o f the B a l t i m o r e Branch and the Head O f f i c e d u r i n g the l a s t

six

months o f 1956:
B a l t i m o r e Branch
Discount Department:
Notes r e d i s c o u n t e d
C o l l a t e r a l notes discounted
I n d u s t r i a l advances
Branches w i t h l a r g e r volume:




Head O f f i c e

17
42
3
Denver, Omaha, E l Paso, San Antonio and
Buffalo.

.99

Baltimore Branch
Safekeeping:
Member bank s e c u r i t i e s 12-51-36
$56,150,000
Branches w i t h l a r g e r volume: P i t t s b u r g h and D e t r o i t .

Head O f f i c e
$64,406,000

Currency & Coin:
1 . Number o f b i l l s r e c e i v e d and counted
27,396,000
26,575,000
Branches w i t h l a r g e r volume: Los Angeles.
Cost per one thousand u n i t s handled
49 cents
40 cents
Branches w i t h higher u n i t c o s t : B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , D e t r o i t ,
Helena, Denver, Oklahoma C i t y , Omaha, E l
Paso, San Antonio, P o r t l a n d , S a l t Lake C i t y ,
S e a t t l e and Spokane.
2. Number o f coins received and counted
61,774,000
28,607,000
Blanches w i t h l a r g e r volume: None
Cost per one thousand u n i t s handled
8 cents
7 cents
Branches w i t h higher u n i t c o s t : A l l except New Orleans and Oklahoma C i t y .
Check C o l l e c t i o n :
1 . Number o f c i t y checks ( c l e a r i n g s ) received
2,574,000
1,054,000
Branches w i t h l a r g e r volume: P i t t s b u r g h , D e t r o i t and Los Angeles.
Cost per one thousand u n i t s handled
$1.44
$2.29
Branches w i t h higher u n i t c o s t : A l l except C h a r l o t t e , Birmingham,
J a c k s o n v i l l e , N a s h v i l l e and New Orleans.
2. Number of country checks (outgoing) received
9,570,000
14,507,000
Branches w i t h l a r g e r volume:
Pittsburgh.
Cost per one thousand u n i t s handled
$1.87
$2.45
Branches w i t h higher u n i t c o s t : B u f f a l o , C i n c i n n a t i , P i t t s b u r g h ,
C h a r l o t t e , N a s h v i l l e , New Orleans, D e t r o i t ,
Memphis, Helena, E l Paso, San Antonio, Los
Angeles, P o r t l a n d , S a l t Lake C i t y , S e a t t l e
and Spokane.
Non-cash C o l l e c t i o n s
! • Number of c i t y c o l l e c t i o n s handled
10,149
10,579
Branches w i t h l a r g e r volume: D e t r o i t , L i t t l e Hock, Memphis, Omaha and
Los Angeles*
Cost per u n i t handled
17.2 cents
18.4 cents
Branches w i t h higher u n i t c o s t : B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , C h a r l o t t e ,
D e t r o i t , Los Angelas, P o r t l a n d and S e a t t l e .
2. Number o f country c o l l e c t i o n s handled
18,212
44,456
Branches w i t h l a r g e r volume: B u f f a l o , C h a r l o t t e , Omaha, S a l t Lake C i t y
and Spokane.
Cost per u n i t handled
12.5 cents
11.8 cents
Branches w i t h higher u n i t c o s t : B u f f a l o , Birmingham, N a s h v i l l e , Helena,
Los Angeles, P o r t l a n d and S e a t t l e .




too

Baltimore Branch

Head O f f i c e

3. Number o f coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
22,733
9,048
Branches w i t h l a r g e r volumes None
Cost per u n i t handled
10. cents
20.5 cents
Branches w i t h higher u n i t cost: A l l except C i n c i n n a t i , P i t t s b u r g h ,
Birmingham, New Orleans, Denver, Omaha and
Seattle.
A schedule showing the volume of operations of the Baltimore Branch f o r
the years 1931 to 1936, i n c l u s i v e , i s attached t o t h i s memorandum,
(h) Survey of B a l t i m o r e Branch by Board's Examiners - 1933
During the course o f examination o f .the Federal Reserve Bank o f Richmond,
made as of J u l y 29, 1933, the Board's Examiners reviewed the operations of the
Baltimore Branch and expressed the o p i n i o n t h a t i t s continued o p e r a t i o n was
justified.

A t t e n t i o n was c a l l e d t o the f a c t t h a t i t i s one of the f i v e l a r g e s t

branches i n the System and t h a t i n a number of departments the volume o f work
handled by the Branch exceeded t h a t handled a t the Head O f f i c e .
( i ) Survey of Baltimore Branch made by Federal Reserve Bank o f
Richmond - 1936
As requested i n the Board's l e t t e r o f March 25, 1936 (X-9532) the Federal
Reserve Bank of Richmond surveyed the operations o f i t s Baltimore Branch and
advised as f o l l o w s :
we are very p o s i t i v e t h a t the Baltimore Branch — one of the
l a r g e s t and most important branches i n the Federal Reserve System
— should be continued on the present basis
I n reaching t h i s conclusion consideration was given to the character o f
the t e r r i t o r y served by the Branch, the volume o f i t s operations as compared
to those a t the Head O f f i c e , the s i z e and prominence of the C i t y o f Baltimore
and the s u b s t a n t i a l investment i n quarters occupied by the Branch. The f a c t o r s
which prompted the establishment o f the Branch o r i g i n a l l y , such as improved
t r a n s i t , currency and discount f a c i l i t i e s and the b e l i e f t h a t the System should
be made as f l e x i b l e as p o s s i b l e and n o t become too c l o s e l y i d e n t i f i e d w i t h a
given s e c t i o n or c i t y , were a l s o c i t e d .




10.1

BALTIMORE BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled
Currency
Received
Bills
fills.

and

Di scounted

Non Cash

Coin
Received
and

Checks

StoMfltrr

M a i

All

F i s c a l Agency
Trutfltifitiftat...

Other

PLrsfci

O^r

Transfer
of
FunsN

,„

1931

11,801

50,769,000

13*4,337,000

* l , 363, 000

1*4,561,000

8*41,000 19,765,000

296,09*4

128,523

6,977

172

30,195

1932

26,918

45,339,000

120,103,000

*4, 1*49,000

12,921,000

787,000 17,857,000

313,666

f46,5H

6,333

260

25,685

1933

15,8*16

>48,208,000

108,5*43,000

3,972,000

11,92*4,000

898,000 16,79*4,000

3*42,895

173,321

12,826

176

17,206

193*1

679

49,905,000

113,676,000

*4, 376,000

13,6*40,000

1,8*49,000 19,865,000

*417, 263

159,691

35,0*45

5,253

15,36*4

1935

95

51,316,000

116,752,000

**, 731,000

15,588,000

1,059,000 21,378,000

41 M o o

122,000

71,776

37,998

12,630

1936

29

55,3t2,000

125,18*1,000

5,128,000

17,7*47,000

1,252,000 2*4,127,000

352,000

11*4,000

10,81*4

19,226

12,000

AfqmU
0 "

N*
O

Gov«t

Gov't
Citv

Counted

Collection Items

Checks Handled

tteiibri

thousands of d o l l a r s )

f93l

6*11,632

2*48,848

10,455

2,008**405

1,076,800

125,79*4

3,210,999

5,676

96,90*4

53,712

8,600

I,*46*4,I05

1932

766,019

218,530

9,070

1,5*4*4,836

921,018

97,279

2,563,133

7,025

96,135

62,323

11,500

938,166

1933

207,106

24 0,492

11,317

1,509,197

89*4,067

111,319

2,51*4,583

8,069

103,682

79,1*42

1,291

822,780

193*4

11,531

211,736

8,098

1,771,81*4

1,10*4,18*4

1*4*4,515

3,020,513

10,712

1*40,11*4

230,180

8,3*46

878,119

1935

2,*402

217,5*17

8,172

l,832,*43l

1,289,*!!*!

1*4*4,869

3,266,71*4

11,138

161,8*40

29*4,02*4

*49,068

855,170

1936

998

233,6*18

8,8*4 8

2,020,1*31

1,579,786

180,3*48

3,780,565

11,525

163,463

221,923

26,666

875,885




.108

CHARLOTTE BRANCH - FEDERAL RESERVE BANK OF RICHMOND
(a) C i t y o f C h a r l o t t e
C h a r l o t t e , w i t h a p o p u l a t i o n o f 82,675, i s l o c a t e d i n the southwestern

p a r t o f N o r t h C a r o l i n a i n what i s known as the Piedmont s e c t i o n .

I t is

the

l a r g e s t c i t y i n the S t a t e and serves a t r a d e area w i t h a r a d i u s o f from 50 t o
70 m i l e s , which i s noted f o r t e x t i l e manufacturing.

The surrounding

territory

i s devoted also t o d a i r y i n g and the r a i s i n g o f sweet p o t a t o e s , peanuts,
s t r a w b e r r i e s , peaches and apples.

cotton,

The community i s served by the Southern,

N o r f o l k & Southern, and Seaboard A i r L i n e r a i l r o a d s , and by the Piedmont and
Northern E l e c t r i c Railway.

I t i s a l s o on the r e g u l a r Washington-Atlanta a i r

mail l i n e .
According to the B i e n n i a l Census o f Manufactures t h e r e were 164 inanufac-~
t u r i n g establishments which had an output valued a t $42,900,000 o p e r a t i n g i n
Mecklenburg County, i n which C h a r l o t t e i s s i t u a t e d , d u r i n g the year 1935.

The

c h i e f manufactures were c o t t o n y a r n , cottonseed o i l , wobdpulp, lumber, asbestos
p r o d u c t s , h o s i e r y , c l o t h i n g and d y e s t u f f s .

The Census o f American Business f o r

1935 l i s t s 1,228 r e t a i l and 268 wholesale establishments i n the same area which
had sales aggregating £33,917,000 and $125,025,000, r e s p e c t i v e l y , d u r i n g t h a t
year.
Banking f a c i l i t i e s i n C h a r l o t t e are provided by three n a t i o n a l banks, one
S t a t e member bank and f o u r r e l a t i v e l y small i n d u s t r i a l banks.

These i n s t i t u -

t i o n s had deposits aggregating $83,764,000, as o f December 31, 1936, and of
t h i s amount $82,494,000 was c a r r i e d w i t h member banks.
D e b i t s to i n d i v i d u a l accounts i n banks o f the c i t y aggregated $655,224,000
d u r i n g the year 1936, or an average o f approximately $2,184,000 f o r each banki n g day#




(h) Branch T e r r i t o r y and F u n c t i o n s :
The C h a r l o t t e Branch was e s t a b l i s h e d December 1 , 1927, and serves

thirty-

f o u r counties i n N o r t h C a r o l i n a and twenty-one c o u n t i e s i n South C a r o l i n a .
This t e r r i t o r y r e p r e s e n t s 18% o f the l a n d area o f the F i f t h D i s t r i c t and has
19% of i t s t o t a l p o p u l a t i o n .

Approximately 14% o f a l l banks i n the d i s t r i c t

are w i t h i n t h i s area.
As o f December 31, 1936, there were 145 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and o f t h i s number 36, i n c l u d i n g 31 n a t i o n a l and 6
S t a t e i n s t i t u t i o n s , were members o f the Federal Reserve System.
109 non-member banks i n the zone were on the par l i s t .

Only 6 out o f

There were t e n communi-

t i e s i n the zone served by o u t - o f - t o w n branches o f member banks a t t a c h e d t o the
Head O f f i c e .

The f o l l o w i n g f i g u r e s taken from r e p o r t s o f c o n d i t i o n as o f the

same date show the s i z e o f member bank f o o t i n g s i n the branch zone as compared
to those o f tiie F i f t h D i s t r i c t as a whole:
No. Member
Banks
Fifth District
Branch Zone

404
36

Loans
and
Investments
$1,227,380
98,815

Capital
and
Surplus
(000 omitted)

Total
Deposits

$158,222
11,293

$1,702,403
143,411

There are only f o u r branch zones i n the e n t i r e System having smaller
member bank f o o t i n g s than the C h a r l o t t e zone; namely, Spokane, E l Paso, L i t t l e
Rock and Helena.
The C h a r l o t t e Branch renders s u b s t a n t i a l l y the same s e r v i c e t o member banks
i n i t s t e r r i t o r y as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s and
disbursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g and c o l l e c t i o n , non-cash c o l l e c t i o n s and safekeeping o f s e c u r i t i e s a r e concerned.

It

also

acts as c u s t o d i a n f o r the R e c o n s t r u c t i o n Finance C o r p o r a t i o n . Reserve accounts




.104

o f member banks i n the zone are maintained a t the Branch.
have d i s c o u n t or f i s c a l agency departments.

The Branch does n o t

However, d i s c o u n t s of member banks

i n the C i t y o f C h a r l o t t e may be presented a t the branch t o be forwarded t o the
Head O f f i c e a f t e r being examined f o r t e c h n i c a l i t i e s .

Immediate c r e d i t i s g i v e n

f o r such o f f e r i n g s s u b j e c t t o f i n a l approval by the Head O f f i c e .
As o f June 17, 1937, member banks i n t h e branch zone had balances w i t h the
Reserve bank as f o l l o w s :
No. o f
Banks
City of Charlotte
(*)Remainder o f Zone
Total

4
42.
46

Reserve
Balances
011,619,907
9.565.595
£20.985.502

Deferred
Balances

Capital
Stock

03,895,987
1.152.580
05.028.567

0125,700
215.450
£541.150

Bills
Discounted
£45.000
£45.000

(~*)lncludes 10 branches o f member banks i n Head O f f i c e zone.
C h a r l o t t e i s 282 t r a i n m i l e s from Richmond.

M a i l l e a v i n g Richmond a t

6:10 P.M. a r r i v e s i n C h a r l o t t e a t 5:50 A.M. the next day (9 h r s . and 40 mins.)
and m a i l l e a v i n g C h a r l o t t e a t 7:15 P.M. a r r i v e s i n Richmond a t 8:10 A.M. the
next day (12 h r s . and 55 m i n u t e s ) .
o v e r n i g h t m a i l time o f Richmond.

The branch c i t y may be said t o be w i t h i n
Many o f the banking p o i n t s i n the branch zone,

which deal w i t h the Branch by m a i l , are also w i t h i n o v e r n i g h t m a i l time o f
Richmond.

Discontinuance o f the Branch would o f course c u r t a i l the s e r v i c e

rendered to banks l o c a t e d i n the c i t y o f C h a r l o t t e , which now enjoy an o v e r t h e - c o u n t e r r e l a t i o n s h i p w i t h the Branch.

I t would a l s o slow up the c l e a r i n g

and c o l l e c t i o n o f checks on and f o r shipments of currency and c o i n to a small
number o f o u t l y i n g p o i n t s which are n o t w i t h i n o v e r n i g h t m a i l time o f Richmond.
Other than C h a r l o t t e , the most populous c i t i e s i n the branch zone are as
follows:

Columbia, South C a r o l i n a , 51,581; A s h v i l l e , N o r t h C a r o l i n a ,

50,193;

G r e e n v i l l e , South C a r o l i n a , 29,154; and Spartanburg, South C a r o l i n a , 28,723.




.105

A l l o f these c i t i e s have one or more member banks and are over 550 m i l e s from
Richmond by r a i l .

A l l o f these c i t i e s are w i t h i n o v e r n i g h t m a i l time o f

Charlotte.
(c) Branch B u i l d i n g :
The C h a r l o t t e Branch occupies r e n t e d q u a r t e r s a t 110 South Tryon S t r e e t
under a l e a s e e x p i r i n g June 1, 1941, a t an annual r e n t a l o f $12,207.

Additional

space, occupied by the R e c o n s t r u c t i o n Finance C o r p o r a t i o n , Custodian D i v i s i o n ,
i s r e n t e d on a month t o month b a s i s .

The Branch i s reimbursed by the c o r p o r a -

t i o n f o r t h i s a d d i t i o n a l space, c e r t a i n maintenance costs and a basement v a u l t
which i t uses.

The n e t r e n t a l and maintenance cost p a i d by the Branch f o r

the

year 1936 was $14,612.57.
(d) Earnings - Branch Books:
The Branch 1 s n e t earnings as r e f l e c t e d by i t s books f o r the years 1351 to
1937, i n c l u s i v e , were as f o l l o w s :
Year

Earnings

1951
1952
1253
1934
1955
1956
1937

$2,500
7,700
1,300
100
200
100
100

These f i g u r e s are incomplete s i n c e , under the present accounting procedure,
the Branch does n o t r e c e i v e any c r e d i t f o r income r e c e i v e d by the Head O f f i c e
on investments, a l a r g e p o r t i o n o f which i s made p o s s i b l e by the c a p i t a l stock
investment and r e s e r v e balances o f member banks i n the branch zone.

Income on

borrowings o f banks i n the branch zone i s a l s o c a r r i e d on the books o f the Head
Office.




1CH

(e) Branch Personnel;
The r e p o r t o f examination of the Federal Reserve Bank o f Richmond, as o f
June 17, 19S7, shows the f o l l o v d n g i n regard t o s a l a r i e s and personnel a t the
C h a r l o t t e Branch;
June 17, 1957
Number
Amount
Officers
Employees

June 27, 1956
Number Amount

Increase
Number Amount

3
55

$14,500
70,400

§
54

$13,900
70,100

1

$600
500

58

$84,900

57

&84,000

I

|900

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n the above f i g u r e s .
( f ) Drench Expenses by F u n c t i o n s :
The expenses o f the C h a r l o t t e Branch by f u n c t i o n s f o r the y e a r s 1932 t o
1937, i n c l u s i v e , were as f o l l o w s :
1952
General Overhead
Controllable
$ 10,026
Non-controllable
10,565
P r o v i s i o n o f Space
15,727
P r o v i s i o n o f Personnel
1,226
General Service
17,492
Postage
8,372
Insurance
2,240
F a i l e d Banks
641
Loan s , r e d i scouri t s , e t c
3,751
544
Securities
Currency & Coin
13,328
Check C o l l e c t i o n
18,842
Non-Cash C o l l e c t i o n
6,148
Accounting
21,146
F i s c a l Agency32,704
Auditing
1,611
—
Bank R e l a t i o n s
F. Ft. Note Issues
511
S t a t i s t i c a l & Anc.lyt'l
86
T o t a l Expense
0164,960
Less - Reimbursable
F i s c a l Agency Exp.
31,083
Net Expense
$133,877




1955

1954
9, 973
12, 805
16, 886
8, 796
21, 389
11, 108
1 , 741

1955

$ 10, 120
16, 070
16, 569
1 , 302
18, 009
10, 525
2, 123
448
1 , 732
528
13, 177
19, 167
6, 979
19, 312
44, 130
1 , 590

0

$ 10,383
36
13,872
15,925
24,096
10,857
1,450

558
73
0182, 412

486
72
0202, 532

533
65
0241,036

049
$140, 363

51, 042
$151, 490

67.445
$173,591

1936

1957

$ 10, 604
21
13, 143
18, 726
22, 513
11, 732
1 , 592

0 10, 879
35
14, 042
1 , 810
23, 645
13, 094
1 , 527

903
166
30, 744
20, 714
6, 071
21, 421
71, 912
2 , 286
541
91
$233, 180

809
31
32, 500
21, 969
5, 765
20, 480
55, 628
2, 487
190
299
89
0205, 279

62, 143
$171, 037

49, 683
$155, 596

—

755
970
13, 734
22, 236
6 , 544
21, 193
52, 422
1 , 422

873
141
29,912
19,658
5,955
21,236
83,922
2,122
—

.107

There were t e n branches i n the System which operated a t a lower annual
cost than the C h a r l o t t e Branch i n 1937.
(g) Volume o f Operations a t C h a r l o t t e Branch:
The f o l l o w i n g i s a comparison o f the volume o f operations i n v a r i o u s departments o f the C h a r l o t t e Branch and the Head O f f i c e d u r i n g the l a s t

six

months o f 1936:
C h a r l o t t e Branch

Head O f f i c e

Safekeeping
Member bank s e c u r i t i e s 12-31-36
£304,000
$64,486,000
Branches w i t h l a r g e r volume: A l l branches, except S e a t t l e , Helena, Los
Angeles and Spokane.
Currency & Coin
1 . Number o f b i l l s r e c e i v e d and counted
7,915,000
26,375,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
J a c k s o n v i l l e , New Orleans, D e t r o i t , L o u i s v i l l e ,
Memphis and Los Angeles.
Cost per one thousand u n i t s handled
44 cents
48 cents
Branches w i t h higher u n i t c o s t : A l l branches except Birmingham, N a s h v i l l e ,
New Orleans, L i t t l e Rock, L o u i s v i l l e and
Memphis.
2. Number o f coins r e c e i v e d and counted
3,164,000
28,687,000
Branches w i t h l a r g e r volume: A l l branches except L i t t l e Rock, Helena, E l
Paso, S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
16 cents
7 cents
Branches w i t h higher u n i t c o s t : A l l branches except B a l t i m o r e ,
J a c k s o n v i l l e , New Orleans, L o u i s v i l l e ,
Memphis, Oklahoma C i t y and Houston.
Check C o l l e c t i o n
1 . Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
505,000
1,054,000
Branches w i t h l a r g e r volume: A l l branches except J a c k s o n v i l l e , L i t t l e Rock,
Helena, Oklahoma C i t y , E l Paso, S a l t Lake C i t y
and Spokane.
Cost per one thousand u n i t s handled
$1. 32
$2.29
Branches w i t h h i g h e r u n i t c o s t : A l l branches except Birmingham, N a s h v i l l e
and New Orleans.
2. Number of country checks (outgoing) r e c e i v e d 3,587,000
14,387,000
Brunches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
D e t r o i t , L o u i s v i l l e , Denver, Oklahoma C i t y ,
Omaha and Los Angeles.
Cost per one thousand u n i t s handled
$2.04
$2.45




.108

C h a r l o t t e Branch
Check C o l l e c t i o n (Continued)
Branches w i t h h i g h e r u n i t c o s t :

Head O f f i c e

B u f f a l o , C i n c i n n a t i , N a s h v i l l e , New
Orleans, D e t r o i t , Helena, E l Paso, San A n t o n i o
Los Angeles, P o r t l a n d , S a l t Lake C i t y ,
S e a t t l e and Spokane.

Non-cash C o l l e c t i o n s
1 . Number o f c i t y c o l l e c t i o n s handled
3,568
10,579
Branches w i t h l a r g e r volume: A l l branches.
Cost per u n i t handled
17.4 cents
18.4 cents
Branches w i t h higher u n i t c o s t : B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , D e t r o i t ,
Los Angeles, P o r t l a n d and S e a t t l e .
2. Nuaber of c o u n t r y c o l l e c t i o n s handled
18,961
44,456
Branches w i t h l a r g e r volume: B u f f a l o , Omaha, S a l t Lake C i t y and Spokane.
Cost per u n i t handled
0 . 6 cents
11.8 cents
Branches w i t h higher u n i t c o s t : A l l branches except L i t t l e Rock, Memphis,
Omaha, E l Paso, S a l t Lake C i t y and Spokane.
3. Nuriber o f coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
1,696
9,048
Drenches w i t h l a r g e r volume: / i l l branches except Birmingheim, J a c k s o n v i l l e ,
Helena, Oklahoma C i t y , E l Paso, P o r t l a n d , S a l t
Lake C i t y , S e a t t l e and Spokane.
21.2 cents
20.5 cents
Cost per u n i t handled
Branches w i t h h i g h e r u n i t c o s t : J a c k s o n v i l l e , E l Paso, Los Angeles,
P o r t l a n d , S a l t Lake C i t y and Spokane.
A schedule showing the volume o f o p e r a t i o n s o f the C h a r l o t t e Branch f o r
the yoars 1951 to 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey of C h a r l o t t e Branch by Board's Examiners - 1955
During an examination o f the Federal Reserve Bank of Richmond, made as o f
June 17, 1337, the Board's F i e l d Examiner reviewed the o p e r a t i o n s o f the
C h a r l o t t e Branch and made the f o l l o w i n g comment:
" I n view o f the r e l a t i v e unimportance o f the Branch c i t y
and t e r r i t o r y and the comparatively small volume o f o p e r a t i o n s
handled by the Branch, your examiner questions whether i t s continuance i s j u s t i f i e d i n the i n t e r e s t s o f economy and e f f i c i e n c y . "
( i ) Survey o f C h a r l o t t e Branch made by Federal Reserve Bank o f
Richmond - 1956
A survey o f o p e r a t i o n s o f the C h a r l o t t e Branch was made by the Federal
Reserve B a n k o f Richmond, as requested i n the Board's l e t t e r o f March 25, 1936



.109

9532), and the Board was advised as f o l l o w s :
"The C h a r l o t t e Branch i s an e f f e c t i v e arm o f the Federal
Reserve Bank o f Richmond i n s e r v i n g member banks, commerce,
i n d u s t r y and a g r i c u l t u r e , and i t i s b e l i e v e d t h r t i t would be
unwise to d i s c o n t i n u e i t s o p e r a t i o n s . "
The f o l l o w i n g p o i n t s were considered i n r e a c h i n g t h i s c o n c l u s i o n :
1 . The f a c t t h a t the Branch was e s t a b l i s h e d o n l y a f t e r c a r e f u l
a t t e n t i o n had been given t o the c o m p i l a t i o n o f p e r t i n e n t
data r e l a t i v e to t r a n s i t schedules, currency needs and the
normal t r e n d o f business i n the F i f t h D i s t r i c t - such i n v e s t i g a t i o n extending over a p e r i o d o f y e a r s .
£. The f a c t t h a t C h a r l o t t e i s the l a r g e s t and most i m p o r t a n t
c i t y i n the two C a r o l i n a s and i s i n the center o f the
Piedmont s e c t i o n which i s noted f o r t e x t i l e manufacturing.
3. The f a c t t h a t the Branch has adapted i t s e l f t o the needs o f
t h i s t e r r i t o r y and has become an i m p o r t a n t f a c t o r i n i t s
f i n a n c i a l l i f e - having rendered p a r t i c u l a r l y u s e f u l s e r v i c e
t o banks i n i t s zone d u r i n g the banking c r i s i s o f 1931-1934.
4. The volume o f operations conducted a t the Branch, and,
5. The f a c t t h a t i t i s much more s a t i s f a c t o r y , and p o s s i b l y no
more expensive, t o have accounts o f member banks i n the branch
zone c a r r i e d at C h a r l o t t e r a t h e r than a t Richmond.




CHARLOTTE BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled
Currency

Non Cash

XJoin

Collection

Checks Handled
Bills
Discounted

Gov't

Al 1

Total

Coupons

Other

Gov't

and

and

Counted

Counted

cy*

Y

Checks

Transfer
Traimptipn*.
D i r e c t Other

of

1931

12,765,000

6,527,000

765,000

4,851,000

365,000

-£,981,000

23,499

23,896

•

20,447

1932

12,275,000

6,959,000

748,000

4,082,000

421,000

5,251,000

34,827

27,579

-

17,639

1933

12,025,000

6,578,000

868,000

4,150,000

679,000

5,697,000

41,555

43,938

-

13,265

1934

12,767,000

7,238,000

845,000

4,795,000 1,503,000

7,143,000

49,655

42,722

-

12,222

1935

13,788,000

10,554,000

881,000

5,823,000

950,000

7,654,000

55,000

46,000

-

\\,m

1936

15,255,000

7,626,000

973,000

6> 882,000

797,000

8,652,000

45,000

49,000

mm

mm

12,000

Handled
( i n thousands of do 11ars)

^SBS

1931

50,931

961

476,847

612,907

39,531

1,129,285

252

25,433

•

1,020,265

1932

48,747

932

343,967

445,408

37,949

827,324

413

22,125

-

659,806

1933

53,049

3,780

441,904

541,100

52,284

1,035,288

507

31,980

-

615,109

1934

kefm

1,15**

624,283

750,040

91,612

1,465,935

513

m,707

•

35*4, 757

1935

4&, 673

1,280

669,589

832,229

72,314

1,574,132

479

38,590

-

1,01*6,376

1936

52,560

1,027

739,906

982,802

80,663

1,803,37t

440

46,173

•

1, 182,316




BIRMINGHAM BRANCH - FEDERAL RESERVE BANK Off ATLANTA.
(a) C i t y o f Birmingham
Birmingham, w i t h a p o p u l a t i o n o f 259,678, i s the t h i r t y - f o u r t h l a r g e s t
i n the U n i t e d States and the l a r g e s t c i t y i n Alabama•

city

I t i s l o c a t e d i n the

c e n t r a l p a r t o f the S t a t e and i s s a i d t o serve a t r a d e area extending about 100
miles i n a l l d i r e c t i o n s .

There are approximately 740,000 people i n t h i s a r e a .

Nine r a i l r o a d s , i n c l u d i n g the Southern, C e n t r a l o f Georgia, L o u i s v i l l e and Nashv i l l e , Seaboard A i r l i n e and F r i s c o , serve the c i t y .

Transportation i s also

a f f o r d e d by t h e D e t t e r A i r L i n e s .
According t o t h e B i e n n i a l Census o f Manufactures J e f f e r s o n County, i n which
Birmingham i s l o c a t e d , had 546 manufacturing establishments i n 1935, which had an
o u t p u t v a l u e d a t $137,003,000. The p r i n c i p a l manufactures are s t e e l and i r o n p r o d u c t s , machinery, chemicals, cottonseed p r o d u c t s , t e x t i l e s , coke and coke b y - p r o d u c t s , cement and r a i l w a y equipment. Goal, i r o n o r e , l i m e s t o n e , marble, g r a p h i t e
and commercial c l a y s are mined i n the surrounding t e r r i t o r y .

There i s a l s o con-

s i d e r a b l e lumbering, t r u c k f a r m i n g , d a i r y i n g , c o t t o n r a i s i n g and hog and p o u l t r y
r a i s i r g c a r r i e d on.
The Census o f American Business f o r 1935 l i s t s 418 wholesale and 3,729 r e t a i l
establishments o p e r a t i n g i n J e f f e r s o n County, which enjoyed sales aggregating
$125,688,000 and $88,584,000, r e s p e c t i v e l y , d u r i n g t h a t y e a r .
Banking f a c i l i t i e s i n Birmingham are p r o v i d e d by t h r e e S t a t e banks ( l member),
one n a t i o n a l bank and one p r i v a t e banking c o r p o r a t i o n . These i n s t i t u t i o n s had
d e p o s i t s aggregating $88,007,000 as o f December 51, 1956, and o f t h i s amount
$85,557,000 was c a r r i e d by the two l o c a l member banks.

The n a t i o n a l bank operates

s i x branch o f f i c e s i n the c i t y .
Debits t o i n d i v i d u a l accounts i n banks o f the c i t y aggregated $888,125,000




d u r i n g the year 1936, o r an average o f approximately 03,000,000 f o r each banking
day.
(b) Branch T e r x d t o r y and F u n c t i o n s :
The Birmingham Branch was e s t a b l i s h e d on August 1 , 1918, and serves a l l o f the
State o f Alabama except eleven counties l o c a t e d i n the southern p a r t o f the S t a t e
and c e r t a i n designated c i t i e s , which are served by the Head O f f i c e . The branch
zone c o n s t i t u t e s 17% o f the l a n d area o f the S i x t h D i s t r i c t and has 19% o f
t o t a l population.

its

Approximately 16$ o f a l l banks i n the d i s t r i c t are w i t h i n

t h i s area.
As o f December 31, 1936, t h e r e were 177 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and o f t h i s number 70, i n c l u d i n g 54 n a t i o n a l and 16
State i n s t i t u t i o n s , were members o f the Sjjrstem.
banks i n the zone were on t h e par l i s t .

Only 6 o f the 107 nonmember

The f o l l o w i n g f i g u r e s taken from r e p o r t s

o f c o n d i t i o n as o f the same date show the s i z e o f member bank f o o t i n g s i n the branch
zone as compared t o those o f t h e S i x t h D i s t r i c t as a whole:
No. Member
Banks
Sixth D i s t r i c t
Branch Zone

330
70

Loans and
Investnents
01,026,849
129,397

Capital
and
Surplus
(000 o m i t t e d )
0143,409
24,488

Total
Deposits
$1,458,473
180,379

There are o n l y seven branch zones i n t h e System having smaller member bank f o o t i n g s
than the Birmingham zonej namely, Spokane, E l Paso, L i t t l e Rock, Helena, C h a r l o t t e ,
San Antonio and N a s h v i l l e .
The Birmingham Branch i s operated on the "memorandum plan. 1 1

A l l general

ledger accounts, as w e l l as accounts o f member banks, nonnenber clearir^g banks
and ether Federal Reserve banks, are maintained a t the Head O f f i c e , which also
maintains a l l expense r e c o r d s .




A t r a n s c r i p t o f a l l e n t r i e s a f f e c t i n g these

. 1 1 3

v a r i o u s accounts i s sent t o the Head O f f i c e d a i l y by w i r e . Banks i n the t e r r i t o r y served by the Branch nay f o r w a r d t h e i r d i s c o u n t s e i t h e r t o the Branch o r
the Head O f f i c e .

Notes r e c e i v e d by the Branch are examined f o r

technicalities

and the amount i s w i r e d t o the Head O f f i c e which i n t u r n w i r e s i t s

tentative

approval o r d i s a p p r o v a l , c r e d i t being g i v e n as o f the date the a p p l i c a t i o n i s r e ceived a t the Branch* Notes are then forwarded t o the Head O f f i c e f o r

final

a p p r o v a l , b u t the supporting c o l l a t e r a l , i f any, remains i n custody o f the
Branch.

The Branch g i v e s t h e sane s e r v i c e t o member banks i n i t s zone as i s

a v a i l a b l e a t the Head O f f i c e i n s o f a r as r e c e i p t s and disburseaents o f currency
and c o i n , check c o l l e c t i o n , noncash c o l l e c t i o n s , w i r e t r a n s f e r s and safekeeping
o f s e c u r i t i e s ore concerned.

The Branch has no Bank Examination, Bank R e l a t i o n s ,

L e g a l , F a i l e d Banks, Research o r F i s c a l Agency departments.
As o f J u l y 10, 19S7, ueriber banks i n the branch zone had balances w i t h the
Reserve bank as f o l l o w s :
No.of
Banks
C i t y o f Birmingham
Remainder o f Zone

2
65
67

Reserve
Balances

Deferred
Balances

Capital
Stock

011,340,501 02,480,632
0.247.919
489,707
Sl9.588.500 $2.970.339

0405,200
$35 1 850
0741 f 050

Bills
Discounted

Birmingham i s 168 t r a i n m i l e s (5 h r s . and 50 n i n s . ) from A t l a n t a .

There

are o n l y two branch c i t i e s c l o s e r to t h e i r r e s p e c t i v e head o f f i c e s t h a n Birmingham
namely, P i t t s b u r g h and B a l t i m o r e .

However, t h e r e are f o u r t e e n branch c i t i e s

which are as w e l l s i t u a t e d as Birmingham from the s t a n d p o i n t o f o v e r n i g h t m a i l .
Other than Birmingham t h e r e are 50 member bank p o i n t s i n the branch zone and a l l
b u t 7 o f such p o i n t s , having 7 member banks, can be reached o v e r n i g h t by o r d i n a r y
m a i l from Birmingham, whereas 10, having 13 member banks, cannot be reached




o v e r n i g h t by o r d i n a r y n a i l from A t l a n t a . I n s o f a r as r e g i s t e r e d n a i l i s concerned,
t h e r e are 19 c i t i e s , w i t h 22 member banks, which are n o t w i t h i n o v e r n i g h t n a i l
t i n e o f c i t h e r c i t y ; t h e r e being o n l y one p o i n t i n t h e zone which can be served
more promptly f r o n Birmingham than from A t l a n t a .

I n t h e circumstances,

it

appears t h a t discontinuance o f the Birmingham Branch would inconvenience a v e r y
U n i t e d number o f o u t l y i n g member banks and t h a t o n l y where o r d i n a r y m a i l i s
used*

I t would, o f courso, a f f e c t the s e r v i c e rendered t o the two member banks

I n the City o f Birmingham which now have an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h
the Branch*
Other than Birmingham, t h e r e are f i v e Alabama c i t i e s i n the branch zone having
a p o p u l a t i o n i n exccss o f 20,000; namely, Montgomery, 66,079; Gadsden, 24,042;
A n n i s t o n , 22,545; Bessemer, 20,721, and Tuscaloosa, 20,659.
(c) Branch B u i l d i n g :
The Birmingham Branch has occupied i t s present q u a r t e r s a t 1 8 t h S t r e e t and
5 t h Avenue since January 1927.

The f o l l o w i n g f i g u r e s show the o r i g i n a l c o s t

and c a r r y i n g value as o f J u l y 10, 1957, o f t h e branch premises:

Cost
Umd
Building
V a u l t and v a u l t equipment
F i x e d machinery and equipment

0124,156
245,426)
65.910)
0455,472
47.448
Q4Q?f920

Book Value
7-10-57
0124,156
186.596
0310,732
495
$511,227

This account i s c a r r i e d on the books o f the Head O f f i c e .
(d) Earnings - Branch Books:
No r e c o r d o f earnings i s maintained a t the Birmingham Branch as i t i s operated
on the "nenorondun




plan. 1 1

.115

(e) Branch Personnel:
The r e p o r t o f examination o f t h e Federal Reserve Bank o f A t l a n t a , nade as
o f J u l y 10, 1937, shows the f o l l o w i n g i n regard t o s a l a r i e s and personnel a t
the Birmingham Branch:
J u l y 10. 1937
Number Amount
Officers
Employees

2
30
H

0 9,000
39.400
£48.400

May 30. 1936
Number Amount
3
27
J£

$11,700
33,400
§45.100

Decrease
Number Amount
1#
§2,700
3 I n c . 6.000 I n c
2 Inc.S3.500 I n c

#Due t o discontinuance o f o f f i c e o f A s s i s t a n t Cashier.
O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n the above f i g u r e s .
( f ) Branch Expense by F u n c t i o n s :
The expenses o f t h e Birmingham Branch by f u n c t i o n s f o r the y e a r s 1932 t o
1937, i n c l u s i v e , were as f o l l o w s :
1935
1952
1955
1934
1936
1957
General Overhead
Controllable
$ 8,867 0 0,546 0 9,021 0 9 , 5 6 1 0 9,109 0 7,105
—
10,300
Noncontrollable
5,904
10,600
^ P r o v i s i o n o f Space
5,695
11,606
9,013
9,952
9,571
7,446
P r o v i s i o n of Personnel
196
6,218
386
5,523
09
3,204
General Service
0,629
0,557
9,058
7,824
7,453
0,090
6,758
12,323
11,719
Postage
0,420
10,037
9,221
1,226
1,795
1,078
Insurance
1,044
992
1,179
Loans, r e d i s c o u n t s , e t c .
795
235
1
982
604
724
636
736
Securities
639
709
727
054
22,672
9,384
Currency & Coin
19,608
7,394
0,142
17,375
15,090
15,120
13,080
Check C o l l e c t i o n
14,159
14,231
13,994
2,906
3,271
2,915
3,449
Noncash c o l l e c t i o n
3,397
4,407
13,146
14,460
11,407
14,533
13,513
13,024
Accounting
90,297
03,207
72,299
30,061
22,104
12,057
F i s c a l Agency
—
25
60
Legal
494
424
390
330
459
314
Auditing
—
—
—
—
224
F . R. Note Issues
095,255 $100,433 0131,777 0160,320 0170,003 0134,173
T o t a l Expense
Less - Reimbursable F i s c a l
' Agency Expense
11.579
21.518
30.285
65.092
79.949
37.515
Net Expense
&3S.674 & 06.915 8 95 r 492 &105.728 ft 98.954 $ 96,660
* Represents the n e t expense - income from r e n t a l s having been deducted.
There were twenty branches i n the System which operated a t a h i g h e r annual
c o s t than the Birmingham Branch i n 1957.



(g) Volume o f Operations a t Birmingham Branchs
The f o l l o w i n g i s a comparison o f t h e volume o f o p e r a t i o n s i n v a r i o u s d e p a r t ments o f the Birmingham Branch and the Head O f f i c e d u r i n g t h e l a s t s i x months o f
1956 s
Birmingham Branch Head O f f i c e
Safekeeping
Member banks s e c u r i t i e s 12-31-56
§2,455,000
$40,256,000
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , N a s h v i l l e , Memphis,
E l Paso, P o r t l a n d and S e a t t l e ,
Currency & Coin
1. Number o f b i l l s r e c e i v e d and counted
5,695,000
22,024,000
Branches w i t h l a r g e r volumes A l l branches except L i t t l e Rock, Helena, Denver,
Oklahoma C i t y , Omaha, E l Paso, San A n t o n i o ,
P o r t l a n d , S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
36 cents
41 cents
Branches w i t h h i g h e r u n i t costs A l l branches except New Orleans and L i t t l e Rock,
2. Number o f coins r e c e i v e d and counted
4,550,000
7,225,000
Branches w i t h l a r g e r volumes A l l branches except C h a r l o t t e , J a c k s o n v i l l e ,
N a s h v i l l e , L i t t l e Rock, Helena, Denver, E l Paso,
P o r t l a n d , S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
17 cents
18 cents
Branches w i t h h i g h e r u n i t c o s t ; A l l branches except B u f f a l o , B a l t i m o r e ,
C h a r l o t t e , J a c k s o n v i l l e , New Orleans, D e t r o i t ,
L o u i s v i l l e , Memphis, Oklahoma C i t y , Houston
and Los Angeles.
Check C o l l e c t i o n
1. Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
627,000
1,567,000
Branches w i t h l a r g e r volumes A l l branches except C h a r l o t t e , J a c k s o n v i l l e ,
L i t t l e Rock, Helena, Oklahoma C i t y , E l Paso,
San A n t o n i o , S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
$1.19
$1.23
Branches ^ i t h h i g h e r u n i t costs A l l branches.
2,111,000
3,704,000
2. Number o f country checks (outgoing) received
Branches w i t h l a r g e r volume: A l l branches except N a s h v i l l e , New Orleans, L i t t l e
Rock, Memphis, Helena, E l Paso, S e a t t l e and Spokane.
Cost per one thousand u n i t s handled
$1.63
$1.83
Branches w i t h h i g h e r u n i t costs A l l branches.
Non-cash C o l l e c t i o n s
1. Number of c i t y c o l l e c t i o n s handled
4,206
15,278
Branches w i t h l a r g e r volumes A l l branches except C h a r l o t t e and Helena.
Cost per u n i t handled
13.7 cents
8 . 4 cents
Branches w i t h h i g h e r u n i t costs A l l branches except J a c k s o n v i l l e , N a s h v i l l e ,
L i t t l e Rock, L o u i s v i l l e , Memphis, Helena,
Oklahoma C i t y , Omaha, E l Paso, Houston and
S a l t Lake C i t y .



.117

Birmingham Branch

Head O f f i c e

Non-cash C o l l e c t i o n s (Continued)
2. Hu^bcr of country c o l l e c t i o n s handled
4,093
21,273
Branches w i t h l a r g e r volumes A l l branches
Cost per u n i t handled
15,4 cents
7 cents
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , N a s h v i l l e , Los Angeles and P o r t l a n d .
3. Number o f coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
1,027
2,630
Branches w i t h l a r g e r volume: A l l branches except Helena, E l Paso, S a l t Lake
C i t y , S e a t t l e and Spokane.
Cost per u n i t handled
9 . 1 cents
10.3 cents
Branches w i t h h i g h e r u n i t costs A l l branches except C i n c i n n a t i , P i t t s b u r g h ,
New Orleans, Denver, Omaha and S e a t t l e .
(h) Survey of Birmingham Branch by Board 1 s Examiners - 1933:
During t h e course of an examination of t h e Federal Reserve Bank of A t l a n t a ,
made as o f November 13, 1933, the Board 1 s examiners reviewed the operations of
the Birmingham Branch and, based on i n f o r m a t i o n developed, expressed doubt as t o
the n e c e s s i t y f o r i t s continuance.

I t was p o i n t e d out t h a t Birmingham i s o n l y

160 miles from A t l a n t a , being e a s i l y reached o v e r n i g h t by r a i l and w i t h i n one
hour and t h i r t y minutes by a i r ? t h a t a l l b u t f o u r t e e n p o i n t s i n the branch zone
could be reached o v e r n i g h t from A t l a n t a or New Orleans, only one of such p o i n t s
having a p o p u l a t i o n of over 5,00uj and t h a t the Branch was one o f the s m a l l e s t
i n the System, based on the number and d o l l a r volume o f items handled.
( i ) Survey of Birmingham Branch made by Federal Reserve Bank o f Atlanta—1936:
I n accordance w i t h the request i n the Board's l e t t e r o f March 25, 1936
(X-9532), a survey of the o p e r a t i o n s of the Birmingham Branch was made by the
Federal Reserve Bank o f A t l a n t a .

As a r e s u l t o f t h i s survey, P r e s i d e n t Newton

advised the Board t h a t the c l o s i n g of the Birmingham Branch would cause very




little

.118

inconvenience, except t o banks l o c a t e d i n t h e immediate v i c i n i t y , and t h a t

it

would r e s u l t i n an estimated annual saving o f $45,574> c h i e f l y through a r e d u c t i o n
i n over-head.

Mr. Newton's r e p o r t contained data r e l a t i v e t o o r d i n a r y and

r e g i s t e r e d m a i l f a c i l i t i e s fro,a both A t l a n t a and Birmingham t o p o i n t s i n the
branch zone, which has been p r e v i o u s l y given i n t h i s memorandum, as w e l l as d a t a
r e g a r d i n g the volume o f o p e r a t i o n s a t the Branch.

He p o i n t e d out t h a t banks

l o c a t e d i n and near Birmingham would be inconvenienced i f the Branch were closed,
but uiade no comment as t o t h e i r p o s s i b l e r e a c t i o n t o the c l o s i n g .

N e i t h e r was

any comment made as t o p o s s i b l e l o s s r e s u l t i n g from abandonment o f the banking
premises owned and occupied by the Branch.




.119

BIRMINGHAM BRANCH
VOLUME OF OPERATIONS
flwplw* 9f Pigs?? H a r r t M
Currency
Received
Bills

Oaie

20

and
Counted

1931

10,30**,000

1932

8,336,000

1933

11,221,000

mk

9,27*4,000

1935

9,323,000

1936.

10,328,000

Non Cash

Coin
Received
and

Checks Handled

sentry

fronted
6,182,000
5,883,000
7,**36,000
6,283,000
6,870,000
7,770,000

Collection Items
Gov't
All

Gov't
Checks

Tptal

Coupons

Ofoer

Fiscal Agency
Direct

Other

Transfer
of

Ftfndfi

1,317,000

2,879,000

332,000

**,528,000

17,335

12,333

6,975

99!,000

2,077,000

353,000

3,**2I,000

18,322

12,**67

5,901

926,000

2,**39,Q00

532,000

3,897,000

22,392

l**,370

5,338

1,08*1,000

3,177,000

818,000

5,079,000

36,939

19,060

6,396

1,151,000

3,6**6,000

863,000

5,660,000

52,000

17,000

5,2****

1,2*10,000

3,958,000
713,000
5,911,000
Amounts Handled
( i n thousands of dollars)

**2,000

18,000

5,000

1931

1*0,275

708

681,818

299,762

39,080

1,020,660

162

11,511

105,301

1932

31,798

670

**6I,129

209,227

28,613

698,969

219

6,898

66,106

1933

*4l,**05

1,615

517,215

21*2,283

35,190

79**,696

276

10,656

67,**39

193**

31, 66*1

786

7**9,90**

32**,956

58,597

I,I33,**57

¥*5

l**,8**7

129,3**9

1935

29,599

960

8I7,U38

3**M32

58,888

1,221,158

*f20

15,239

135,953

1936

3U,3l*9

960

927,kBk

**38,500

62,5**3

l,**28,527

390

16,237

137,216


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O
Federal Reserve Bank of St. Louis

HAVANA AGENCY - FEDERAL RESERVE BAM OF ATLANTA
(a) I s l a n d o f Cuba
Cuba, the l a r g e s t I s l a n d o f the West I n d i e s , l i e s between the Gulf o f
Mexico, the S t r a i g h t o f F l o r i d a and the A t l a n t i c Ocean on the n o r t h and
the Caribbean Sea on the south.
tant.

Key West, F l o r i d a , i s about 100 m i l e s d i s -

I t s area, i n c l u d i n g the adjacent I s l e o f Pines and surrounding keys,

i s about 44,164 square m i l e s , or n e a r l y equal to t h a t o f the S t a t e o f
Pennsylvania,

I t i s 750 m i l e s i n l e n g t h and has an average b r e a d t h o f 50

m i l e s , w i t h a maximum o f 160 m i l e s .

The coast l i n e , i n c l u d i n g the l a r g e r

k e y s , i s about 2,500 m i l e s i n l e n g t h and provides many f i n e h a r b o r s , n o t a b l y
t h a t o f Havana which i s one o f the l a r g e s t and f i n e s t i n the w o r l d .

Accord-

i n g t o the census o f 1930, the I s l a n d had a p o p u l a t i o n o f 3,763,375,

consist-

i n g o f 2,570,102 n a t i v e w h i t e s , 923,346 colored and 269,927 u n c l a s s i f i e d ;

the

l a t t e r f i g u r e i n c l u d i n g Americans, Europeans, Chinese and a l l f o r e i g n e r s
permanently r e s i d e n t i n Cuba.

The estimated p o p u l a t i o n as o f December 31, 1936,

was 4,046,706.
Sugar i s the predominant crop and approximately 1,000,000 acres are given
over to growing cane.

The y i e l d f o r 1936 was 2,557,000 l o n g tons and d u r i n g

the year 2,562,289 l o n g tons valued a t $112,591,307 were exported.

Tobacco

r a i s i n g and the manufacture o f c i g a r s and c i g a r e t t e s i s the second l a r g e s t
i n d u s t r y i n Cuba.

The r a i s i n g o f l i v e s t o c k , c o f f e e , f r u i t and vegetables

and the mining o f i r o n , copper and manganese are a l s o f a c t o r s i n the economic
l i f e o f the I s l a n d .
The Department o f Commerce estimated t h a t American investments i n Cuba
i n 1930 aggregated $1,066,551,000 o f which $935,706,000 was d i r e c t and
$130,845,000 p o r t f o l i o .




An estimate made i n W a l l S t r e e t i n J u l y , 1933, p u t

.121

American investments i n sugar p r o p e r t i e s on the I s l a n d a t 0570,000,000;

in

power i n t e r e s t a t more than 0125,000,000; i n o i l a t 09,000,000; i n r a i l r o a d s
a t 0116,000,000; i n t e l e g r a p h and telephones a t 015,000,000 and i n o t h e r
sources a t 0100,000,000.

Cuba has been hard h i t through u n f a v o r a b l e economic

c o n d i t i o n s which undoubtedly explains the d i f f e r e n c e s between the estimates
f o r 1950 end 1955.
The major p o r t i o n o f Cuban trade i s w i t h the United S t a t e s , as i s
r e f l e c t e d by the f o l l o w i n g f i g u r e s :
Exports
U n i t e d States

Year

Total

1931
1952
1935
1934
1935
1936

#118,865,553
80,672,000
84,591,000
107,746,409
128,022,542
154,805,158

$ 90,059,512
58,550,270
58,497,548
78,928,916
101,534,180
121,898,787

Imports
U n i t e d States

Total
$ 78,678,777
51,024,000
42,362,000
73,388,154
95,464,502
105,215,001

$ 46,965,702
28,754,509
25,092,862
45,525,574
55,686,078
66,494,245

A r e c i p r o c a l t a r i f f agreement between the U n i t e d States and Cuba was
signed i n 1956 under which Cuba made concessions on 426 items o f American
o r i g i n , g r a n t i n g duty r e d u c t i o n s and p r e f e r e n t i a l s o f from 20% t o 60%.

In

t u r n the U n i t e d States granted Cuba l a r g e t a r i f f r e d u c t i o n s on sugar, rum
and tobacco, and also seasonal decreases on f r e s h f r u i t s and v e g e t a b l e s .
The t r e a t y covered over 90% o f Cuba's exports t o the U n i t e d S t a t e s ,
(b) C i t y o f Havana
Havana, w i t h a p o p u l a t i o n o f 584,893, i s the c a p i t a l and l a r g e s t
o f Cuba.

city

I t i s s i t u a t e d on the northwestern s h o r t o f the I s l a n d about 100

m i l e s to the south and somewhat ?#est o f Key West, F l o r i d a .

I t has one o f

the f i n e s t and s a f e s t harbors i n the w o r l d and numerous steamship l i n e s p l y
between Havana and American p o r t s .

There i s d a i l y passenger s e r v i c e by a i r -

plane between Miami, F l o r i d a and Havana.




The number o f t o u r i s t s e n t e r i n g

.22

Cuba, c h i e f l y a t Havana, was 157,908 i n 1936.
As o f December 31, 1937, banking f a c i l i t i e s i n Havana were p r o v i d e d
by the f o l l o w i n g i n s t i t u t i o n s :

American Banks
N a t i o n a l C i t y Bank, New York
Chase N a t i o n a l Bank, New York
F i r s t N a t i o n a l Bank, Boston

Number of O f f i c e s
C i t y o f Havana
Elsewhere i n Cuba
5
1
3

8

8
1
4

15

3

Canadian Banks
Royal Bank o f Canada
Canadian Bank o f Commerce
Bank o f Nova S c o t i a

4

Domestic Banks
Mendoza y Cia ( P r i v a t e )
N« Gelatz y c i a ( p r i v a t e )
Banco T e r r i t o r i a l de Cuba ( J t . Stock)
Banco d e l Commercio

1
1
1
1

Published statements o f f o r e i g n banks o p e r a t i n g branches i n Cuba show
c n l y combined f i g u r e s f o r the head o f f i c e and a l l branches.

However,

estimates place bank deposits i n Cuba i n the neighborhood o f $140,000,000.
Havana, as above i n d i c a t e d , i s the banking center o f the I s l a n d .
(c) Establishment o f Havana Agency:
On September 1 , 1923, agencies o f the Federal Reserve Banks o f A t l a n t a
and Boston were e s t a b l i s h e d i n Havana; the l a t t e r being d i s c o n t i n u e d and
i t s f u n c t i o n s assumed by the A t l a n t a Agency on January 1 , 1927.

From 1927

to the present time the Agency has been operated by the A t l a n t a Reserve
bank.

However, since June 1 , 1935, such o p e r a t i o n has been by agreement w i t h

the o t h e r eleven Reserve banks " f o r the account of the F e d e r a l Reserve System
as a whole and o f each o f the Federal Reserve banks".

The agreement p r o -

vides t h a t the A t l a n t a bank d e f r a y a l l expenses of o p e r a t i o n , b u t t h a t




it

share any p r o f i t s w i t h the other Reserve banks - the l a t t e r undertaking to
bear a pro r a t a share o f c e r t a i n s p e c i f i e d unusual losses ( n o t covered by
c o l l e c t i b l e insurance) such as those a r i s i n g from c i v i l commotion, war
riots,

etc,

(d) Functions of the Agency:
Functions o f the Agency i n c l u d e the r e c e i p t of currency f o r cable t r a n s f e r to the U n i t e d States; the payment o f currency on cable t r a n s f e r s from
the United S t a t e s ; and the exchange of new or f i t f o r m u t i l i a t e d currency.
These t r a n s a c t i o n s are a l l i n United States currency and are handled f o r any
banking i n s t i t u t i o n i n Cuba or f o r the Cuban government a t a r a t e of $1.00
per $1,000.

On shipments o f m u t i l a t e d currency the Agency i s , by s p e c i a l

decreee, exempt from the u s u a l tax o f one f o u r t h of one per cent l e v i e d by
the Cuban government on exports o f funds from the country.
Assets o f the Agency c o n s i s t of cash and such cash items as are held
pending weekly charge to the Head O f f i c e .
currency i s c a r r i e d by the Agency.

Approximately $5,000,000 i n

A l l Agency accounts, i n c l u d i n g earnings

and expenses, are c a r r i e d on the books o f the Head O f f i c e , although the
Agency maintains c e r t a i n records r e q u i r e d by Cuban law.
When the Agency was e s t a b l i s h e d United States currency, which was and
s t i l l i s legal, tender on the I s l a n d , was the c h i e f medium o f exchange.

In

f a c t one of the main reasons f o r e s t a b l i s h i n g the Agency was t o clean up
the currency then c i r c u l a t i n g on the I s l a n d .

I n recent years, however, the

Cuban government has placed i t s own currency i n c i r c u l a t i o n and such notes
have l a r g e l y supplanted United States currency f o r a l l o r d i n a r y purposes.
The United States currency on the I s l a n d , estimated t o aggregate approximatel y $50,000,000, i s a t present l a r g e l y used as bank reserves f o r deposits




.124

payable i n U n i t e d S t a t e s currency and f o r i n t e r b a n k payments, or has found
i t s way i n t o hoarding.

As a r e s u l t there has been a gradual " d r y i n g up" of

a c t i v i t y a t the Havana Agency.
A schedule showing the volume o f operations a t the Havana Agency f o r
the years 1928 to 1937 i n c l u s i v e i s attached to t h i s memorandum.
(e) Agency Q u a r t e r s :
The Havana Agency occupies 2,240 square f e e t o f space on the ground
f l o o r of the M e t r o p o l i t a n O f f i c e B u i l d i n g , Progresso and Aguacate S t r e e t s ,
under a lease which expires on A p r i l 1 , 1942.

The average annual r e n t a l

over the p e r i o d of the lease i s $4>5Q0 por annum.

There i s no p r o v i s i o n i n

the l e a s e f o r i t s extension and i t i s s u b j e c t t o c a n c e l l a t i o n i n the event
the Agency i s d i s c o n t i n u e d .

The v a u l t , v a u l t equipment and f i x t u r e s i n the

o f f i c e are owned by the Reserve bank.
( f ) Agency Personnel:
As o f January 28, 1938, the personnel of the Agency consisted o f a
manager, an a c t i n g a s s i s t a n t manager, one s t e n o g r a p h e r - c l e r k , seven guards,
end one p o r t e r w i t h t o t a l annual s a l a r i e s of 020,980.

I n addition,

salaries

aggregating 0300 a n n u a l l y are paid to three p a r t time employees and payment
a t the r a t e o f 012 per annum i s made t o each o f f o u r o f f i c e r s o f the Havana
Branch o f the N a t i o n a l C i t y Bank o f New York who are a u t h o r i z e d t o a c t as
emergency custodians i n the absence of the Agency manager or a c t i n g a s s i s t a n t
manager.
(g) Earnings and Expenses:
The earnings and expenses o f the Havana Agencies o f the Federal Reserve
Banks o f Boston (1923 to 1926) and A t l a n t a (1923 t o 1937) were as f o l l o w s :




Earnings

Expenses

F.R.B* o f Boston
1923
1924
1925
1926

$ 24,469.00
47,590.18
43,731.00
113,969.60

$ 8,796.40
13,648.23
13,366.43
16,210.52

Havana Agency
F.R.B. o f A t l a n t a
1925
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937

—

—
—

67,434.68
43,382.40
54,571.84
79,212.28
33,891.00
21,614.90
45,248.83
26,693.64
16,560.39
9,483.88
5,316.64

24,958.58
57,614.83
32,191.07
89,011.72
59,856.05
55,246.03
78,794.80
74,100.67
50,877.13
41,521.96
61,387.70
52,020.09
46,893.97
37,429.36
35,157.10

Earnings o f the Agency are d e r i v e d from t h r e e classes of currency
transactions:

(1) the payment o f currency to l o c a l banks i n exchange f o r

c r e d i t a t a Federal Reserve bank, (2) the r e c e i p t o f currency from l o c a l
banks i n exchange f o r which c r e d i t i s given f o r the account o f the l o c a l
bank a t a Federal Reserve bank and (3) the denominational exchange o f new
or f i t currency f o r u n f i t currency.

A commission o f one d o l l a r per thousand

i s charged on a l l t h r e e classes o f t r a n s a c t i o n s .

Expenses i n c l u d e the cost

o f p r i n t i n g and s h i p p i n g Federal Reserve n o t e s ,
(h) Status o f the Agency:
As p r e v i o u s l y s t a t e d i n t h i s memorandum, the Havana Agency since June
1 , 1935 has by agreement been operated by the Federal Reserve Bank o f




12*

A t l a n t a " f o r the account o f the Federal Reserve System as a ishole and o f
each o f the Federal Reserve hanks"*

T h i s arrangement grew out o f the f a c t

t h a t the A t l a n t a Reserve bank had requested a u t h o r i t y t o d i s c o n t i n u e the
Agency or as an a l t e r n a t i v e t o have some p l a n f o r m u l a t e d under which the
Agency might be operated w i t h o u t i n c u r r i n g a s u b s t a n t i a l o p e r a t i n g l o s s ,
as was the case i n every year o f i t s o p e r a t i o n except 1927 and 1930•

A t the

time the agreement became e f f e c t i v e , i t was f e l t t h a t f u t u r e o p e r a t i n g
l o s s e s might be s u b s t a n t i a l l y reduced, i f n o t v i r t u a l l y e l i m i n a t e d ,
an increase i n the charge made f o r e f f e c t i n g t r a n s f e r s o f funds.

through

As a

consequence the A t l a n t a Reserve bank continued t o absorb the expense o f
o p e r a t i n g the Agency.

The Board f e l t , however, t h a t the charge should n o t

be increased, a t l e a s t a t t h a t p a r t i c u l a r time.
showed t h a t , even i f

Subsequent developments

the charge had been doubled, the o p e r a t i n g l o s s would

n o t have been s u b s t a n t i a l l y reduced, due l a r g e l y t o a d e c l i n e i n the volume
of t r a n s f e r s .

Because o f t h i s f a c t , as w e l l as because o f changes i n the

r e l a t i o n s h i p p r e v i o u s l y r e f e r r e d to h e r e i n between the governments o f the
U n i t e d States and Cuba and the s u p p l a n t i n g o f United States currency by
Cuban currency, the board o f d i r e c t o r s o f the A t l a n t a Reserve bank adopted
r e s o l u t i o n s on February 14, 1956 and September 11, 1936, r e q u e s t i n g a u t h o r i t y
t o d i s c o n t i n u e the Agency.

The matter was before the Board on numerous

occasions, but a c t i o n thereon was delayed a t the r e q u e s t o f the S t a t e Department which f e l t t h a t the operations o f the Agency were v i t a l t o t r a d e between
the U n i t e d States and Cuba.

However, on August 3, 1938, the Board o f

Governors a f t e r again r e v i e w i n g the operations o f the Agency, and a c q u a i n t i n g
the S t a t e Department w i t h a l l o f the f a c t s of the case and i t s




intentions,

.127

passed a r e s o l u t i o n a u t h o r i s i n g and d i r e c t i n g the F e d e r a l Reserve Bank o f
A t l a n t a to d i s c o n t i n u e the Agency as soon as p r a c t i c a b l e and i n no event
l a t e r than a t the c l o s e o f business December 51, 1958,

The Federal Reserve

Bank o f A t l a n t a and the other Federal Reserve banks were advised o f the
B o a r d ' s a c t i o n and, as o f August 13, 1938, P r e s i d e n t Newton informed the
Board t h a t h i s bank was p l a n n i n g to close the Agency n o t l a t e r than
November 50, 1958, i f i t was f e a s i b l e t o do so.




HAVANA AGENCY
VOLUME OF OPERATIONS
n thousands of do liars)
Deposits of currency
Currency received from
head o f f i c e and

H*
10

and gold coin by banks in
Havana and by Cuban

U n f i t and mutilated

U n f i t and

Currency payments

American Currency

Mut i I a t e d

to Havana banks for

branches and from

government for transfer

received in exchange

currency

cable transfers

Currency

Date

Treasury Department

to United States

for new and f i t

redeemed

payable in Cuba

exchange s

1928

10,900

26,kk9

2,592

22,862

13,738

3,195

1929

25,*422

28,215

3,*4*4l

31,112

21,595

U,I87

1930

38,820

1*7,63!

2,022

l49,2l4l

27,139

*4,282

1931

7,770

22,8*43

2,*483

20,836

8,010

3,238

1932

1,1*40

17,869

322

15,392

3,550

596

1933

28,806

2*4,27*4

1,226

27,526

26,0*47

193*4

l*4,*420

11,932

201

10,628

1*4,530

606

1935

2,8*40

11,532

UO

9,880

*4,500

699

1936

820

7,9Hi

36

7,*489

1,500

281

1937

-

14,923

39

U,H9

350

115




JACKSONVILLE BRANCH - FEDERAL, RESERVE, BANK OF ATLANTA
(a) C i t y o f J a c k s o n v i l l e :
J a c k s o n v i l l e , w i t h a p o p u l a t i o n o f 129,549, i s the the s i x t y - t h i r d l a r g e s t
c i t y i n the U n i t e d States and the l a r g e s t c i t y i n F l o r i d a .

I t i s located i n

the extreme n o r t h e a s t e r n p a r t o f the State on the S t . Johns R i v e r , which p r o vides ready access to the A t l a n t i c Ocean, and i s s a i d t o serve a trade area
extending 125 m i l e s n o r t h , 115 m i l e s south, 110 m i l e s west and 20 m i l e s to the
east.

This t r a d e area has an estimated p o p u l a t i o n o f 4 i 0 , 0 0 0 .

Rail f a c i l i t i e s

are a f f o r d e d by the A t l a n t i c Coast L i n e , Seaboard A i r L i n e , F l o r i d a East Coast,
Southern and Georgia, Southern & F l o r i d a r a i l r o a d s .
by the Eastern A i r Transport Company.

The c i t y i s a l s o served

A considerable volume o f f o r e i g n and

coastwise s h i p p i n g a l s o emanates from J a c k s o n v i l l e .
According t o the B i e n n i a l Census o f Manufactures f o r the year 1935, there
were 256 manufacturing establishments l o c a t e d i n Duval County, i n which
J a c k s o n v i l l e i s s i t u a t e d , which had an output valued a t $36,240,000 d u r i n g t h a t
year.

The c h i e f i n d u s t r i e s o f the community are the p r o d u c t i o n o f n a v a l s t o r e s ,

lumber, c i g a r s , canned goods and f e r t i l i z e r .

I n a d d i t i o n there i s some ship

b u i l d i n g and automobile assembling.
The Census o f American Business f o r 1935 l i s t s 2,292 r e t a i l and 555 wholesale establishments o p e r a t i n g i n Duval County, which enjoyed sales aggregating
$52,506,000 and $136,341,000, r e s p e c t i v e l y , d u r i n g t h a t y e a r .
Banking f a c i l i t i e s i n J a c k s o n v i l l e are p r o v i d e d by two S t a t e banks (nonmembers), three n a t i o n a l banks and one M o r r i s Plan bank.

'These i n s t i t u t i o n s

had deposits aggregating $105,056,000 as o f December 51, 1956, and o f t h i s
amount $103,521,000 was c a r r i e d by the three l o c a l member banks.
Debits t o i n d i v i d u a l accounts i n banks o f the c i t y aggregated




.80

$792,111,000 d u r i n g t h e year 1936, o r an average o f approximately $2,640,000
f o r each banking day.
(b) Branch T e r r i t o r y and Functions:
The J a c k s o n v i l l e Branch was e s t a b l i s h e d on August 5 , 1918, and serves
the e n t i r e S t a t e o f F l o r i d a .

The branch zone c o n s t i t u t e s 2256 o f t h e l a n d

area o f the S i x t h D i s t r i c t and has 13$ o f i t s t o t a l p o p u l a t i o n .

Approxi-

mately 14$ o f a l l banks i n the d i s t r i c t are w i t h i n t h i s area.
As o f December 31, 1936, t h e r e were 155 banks, e x c l u s i v e o f mutual
savings banks, i n the branch zone and o f t h i s number 57, i n c l u d i n g 53
n a t i o n a l and 4 S t a t e i n s t i t u t i o n s , were members o f t h e System.
o f the 98 nonmember banks i n t h e zone were on t h e par l i s t .

Only 19

The f o l l o w i n g

f i g u r e s taken from r e p o r t s o f c o n d i t i o n as o f the same date show the s i z e
o f t h e member bank f o o t i n g s i n t h e branch zone as compared t o those o f
the S i x t h D i s t r i c t as a whole:

No. Member
Banks
Sixth District
Branch Zone

330
57

Capital
Loons and
and
Total
Investments
Surplus
Deposits
(000 o m i t t e d )
$1,026,849
$143,409 $1,458,473
177,123

23,075

272,270

There are only tv/elve branch zones i n the System having l a r g e r bank f o o t i n g s than the J a c k s o n v i l l e Zone; namely, P i t t s b u r g h , Los Angeles,

Detroit,

C i n c i n n a t i , B u f f a l o , B a l t i m o r e , New O r l e a n s , S e a t t l e , Oklahoma C i t y ,
Houston, Denver and Omaha.
The J a c k s o n v i l l e Branch i s operated on the "memorandum p l a n " , b u t
o f f e r s t o member banks i n i t s zone the same s e r v i c e as i s a v a i l a b l e a t
the Head O f f i c e i n s o f a r as r e c e i p t s and disbursements o f currency and
c o i n , w i r e t r a n s f e r s , check c o l l e c t i o n , noncash c o l l e c t i o n s and safekeeping




.131

o f s e c u r i t i e s are concerned.

However, a l l general l e d g e r accounts, as w e l l

as accounts o f member banks, nonmember c l e a r i n g banks and o t h e r Federal
Reserve banks, are maintained a t the Head O f f i c e , which also maintains
expense accounts.

all

A t r a n s c r i p t o f a l l e n t r i e s a f f e c t i n g the v a r i o u s a c -

counts i s sent t o the Head O f f i c e d a i l y by w i r e .

Banks i n the t e r r i t o r y

served by t h e Branch may f o r w a r d t h e i r discounts e i t h e r t o the Branch o r
the Head O f f i c e .

Notes r e c e i v e d by the Branch are examined f o r

technical-

i t i e s and the amount i s w i r e d t o the Head O f f i c e which i n t u r n w i r e s i t s
t e n t a t i v e approval o r d i s a p p r o v a l , c r e d i t being given as o f the date the
a p p l i c a t i o n i s r e c e i v e d a t t h e Branch.

Notes are then forwarded t o the

Head O f f i c e f o r f i n a l a p p r o v a l , b u t the s u p p o r t i n g c o l l a t e r a l , i f
remains i n custody o f the Branch.

any,

The Branch has no Bank Examination, Bank

R e l a t i o n s , L e g a l , F a i l e d Banks, Research o r F i s c a l Agency departments.
As o f J u l y 10, 1957, member banks i n the branch zone had balances
w i t h the Reserve bank as f o l l o w s :
No. o f
Banks
City of Jacksonville
Remainder o f Zone
Total

5
55
H

Reserve
Balances
$14,669,235
20,121,551
154,790,786

Deferred
Balances
$2,293,021
940.570
$5,255,591

Capital
Stock

Bills
Discounted

$242,850
465,150
$706,000

-

J a c k s o n v i l l e i s 349 t r a i n m i l e s (9 h r s . and 15 mins.) from A t l a n t a .
On any business day t h e r e are s e v e r a l t r a i n s o p e r a t i n g between t h e two
c i t i e s which p r o v i d e o v e r n i g h t m a i l s e r v i c e (7 P.M. t o 8 A.M.)*

There are

twelve branch c i t i e s c l o s e r t o t h e i r r e s p e c t i v e head o f f i c e s than Jacksonv i l l e - a l l o f which also enjoy o v e r n i g h t communication by m a i l w i t h t h e i r
head o f f i c e s .

Outstanding examples are P i t t s b u r g h , 138 m i l e s (3 h r s . and

20 m i n s . ) } B a l t i m o r e , 156 m i l e s (4 h r s . and 21 mins.) and Birmingham, 168




.182

m i l e s (5 h r s . and 50 m i n s . ) *
Other than J a c k s o n v i l l e , t h e r e are 45 member bank p o i n t s i n the branch
zone.

A l l b u t 4 o f these c i t i e s , having 4 member banks, can be reached by-

o r d i n a r y m a i l b e f o r e 10 A.M. on the day f o l l o w i n g m a i l i n g i n J a c k s o n v i l l e ,
whereas 25 p o i n t s , having 54 member banks, cannot be so reached from
Atlanta.

The r e g i s t e r e d m a i l schedules i n d i c a t e t h a t t h e r e are 16 p o i n t s ,

having 19 member b*mks, i n the branch zone which cannot be reached from
J a c k s o n v i l l e by 10 A.M. on the day f o l l o w i n g m a i l i n g and t h a t t h e r e are 54
p o i n t s , w i t h 42 member banks, which cannot be reached from A t l a n t a .
I t i s apparent from the above t h a t discontinuance o f the J a c k s o n v i l l e
Branch would n o t o n l y c u r t a i l the c h a r a c t e r o f Reserve bank s e r v i c e rendered
t o banks i n J a c k s o n v i l l e , which now have an o v e r - t h e - c o u n t e r

relationship

w i t h the Branch, but t h a t i t would also cause a s u b s t a n t i a l number o f o u t l y i n g member banks t o adapt themselves t o a slower t r a n s i t and currency
shipment schedule than they are a t present a f f o r d e d .
Other than J a c k s o n v i l l e , the more populous c i t i e s i n F l o r i d a > a r e Miami,
110,657j Tampa, 101,161; S t . Petersburg, 40,425; Pensacola, 51,579; Orlando,
27,530 and West Palm Beach, 26,610.

A l l o f these c i t i e s have one o r more

member banks and are w i t h i n o v e r n i g h t m a i l o f J a c k s o n v i l l e .

Attention i s

c a l l e d t o the f a c t t h a t t h e p o p u l a t i o n o f F l o r i d a increased 51.6$ i n the
decade 1920 t o 1930, o r upwards o f 500,000 since the J a c k s o n v i l l e Branch
was e s t a b l i s h e d i n 1918.
(c) Branch B u i l d i n g :
The J a c k s o n v i l l e Branch has occupied i t s present q u a r t e r s a t Church
and Hogan S t r e e t s since June 1924.




The f o l l o w i n g f i g u r e s show the o r i g i n a l

.33

coat and c a r r y i n g value as o f J u l y 10, 1937, o f the branch premises:
$
Book Value
7-10-37

Cost
Land
Building
Vault and v a u l t equipment
Fixed machinery & equipment

$ 45,842
179,101 )
38,229 )
263,172
25,956
$289,128

$ 45,015
125,758
170,773
$170.773

This account i s c a r r i e d on the books o f the Head O f f i c e .
(d) E a r n i n g s - - Branch Books:
No r e c o r d o f earnings i s maintained a t the J a c k s o n v i l l e Branch, as
i t i s operated on the "memorandum p l a n " .
(e) Branch Personnel:
The r e p o r t o f examination o f the Federal Reserve Bank o f A t l a n t a ,
made as o f J u l y 10, 1937, shows the f o l i o v d n g i n regard t o s a l a r i e s and
personnel a t the J a c k s o n v i l l e Branch:
J u l y 10. 1937
Number
Amount
Officers
Employees

2
40
M

$10,100
52,600
$62,700

May SO. 1936
Number
Amount
3
34
|Z

$12,500
42,800
$55,300

Increase
Number
Amount
#1 tec. $ 2,400 Itec.
6
9,800
5
$ 7,400

# Due t o discontinuance o f o f f i c e o f a s s i s t a n t c a s h i e r .
O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are
n o t included i n t h e above f i g u r e s .
( f ) Branch Expense by Functions:
The expense o f the J a c k s o n v i l l e Branch by f u n c t i o n s f o r t h e y e a r s 1932




.134

t o 1937, i n c l u s i v e , were as f o l l o w s :
1932
General Overhead
Controllable
$ 8,843
18,987
Noncontreliable
* P r o v i s i o n o f Space
6,674
708
P r o v i s i o n o f Personnel
General Service
9,489
10,404
Postage
Insurance
2,136
40
Loans, r e d i s c o u n t s , e t c .
1,411
Securities
14,104
Currency and Coin
Check C o l l e c t i o n
12,561
5,624
Noncash C o l l e c t i o n
Accounting
16,979
F i s c a l Agoncy
3,989
—
Legal
Auditing
947
—
F.R. Note Issues
—
Works Progress
T o t a l Expense
1112,896
Less-Reimbursable Fiscal
3.462
Agency Expense
Net Expense
&L09.434

1935

7,828
29,207
6,943
669
9,619
11,084
2,263
22
1,301
14,536
13,050
6,326
16,514
6,670
75
554
261

1935 ;

1934

$

7,817
26,068
6,728
4,543
9,390
15,733
1,417
—

1,397
15,214
14,246
6,673
15,869
12,178
—

$

8,343
—

5,169
6,829
11,573
14,027
1,414
2
1,344
47,401
13,994
5,524
15,391
23,636
—

835
—

$

7,717

#

7,812

- -

—

4,812
7,768
10,974
12,063
1,508

19,166
1,271
12,216
12,795
1,659
20
1,120
57,345
16,945
4,068
13,351
20,468

—

1,244
51,083
13,599
4,638
13,821
22,197
—

—

618

1,209
—

1937

1936.

1,191

—

—

&L26,922

$138,108

$155,856

240
$152,282

$169,427

6,040
5120.882

11.289
1126.819

17.529
Si38.327

17.925
&L34.357

^6,^59
$153,268

—

——

* Represents the net expense - income from r e n t a l s having been deducted.
There were s i x t e e n branches i n the System which operated a t a h i g h e r
annual cost than the J a c k s o n v i l l e Branch i n 1937.
(g) Volume o f Operation?at J a c k s o n v i l l e Branch:
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s i n v a r i o u s departments o f the J a c k s o n v i l l e Branch and the Head O f f i c e d u r i n g the l a s t

six

months o f 1936.
J a c k s o n v i l l e Branch

Head O f f i c e

Safekeeping:
Member bank s e c u r i t i e s 12-31-36
$16,689,000
$77,439,000
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , D e t r o i t and
Omaha.




J a c k s o n v i l l e Branch Head O f f i c e
Currency & Coin:
1 . Number o f b i l l s r e c e i v e d and counted
9,875,000
22,024,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
New.Orleans, D e t r o i t , Memphis and Los
Angeles.
Cost per one thousand u n i t s handled
48 cents
41 cents
Branches w i t h h i g h e r u n i t costs B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
D e t r o i t , Helena, Denver, Oklahoma C i t y ,
Omaha, E l Paso, San Antonio, P o r t l a n d , S a l t
Lake C i t y , S e a t t l e and Spokane/
2. Number o f coins r e c e i v e d and counted
3,268,000
7,223,000
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , L i t t l e Rock,
Helena, E l Paso, S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
13 cents
18 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except B u f f a l o , B a l t i m o r e ,
New Orleans, L o u i s v i l l e , Memphis and
Oklahoma C i t y .
Check C o l l e c t i o n :
1. Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
485,000
1,567,000
Branches w i t h l a r g e r volume: A l l branches except L i t t l e Rock, Helena,
E l Paso, S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
01.38
01.23
Branches w i t h h i g h e r u n i t c o s t : A l l branches except C h a r l o t t e , Birmingham,
N a s h v i l l e and New Orleans.
2. Number o f country checks (outgoing) r e c e i v e d 2,539,000
3,704,000
Branches w i t h l a r g e r volume: A l l branches except Birmingham, N a s h v i l l e ,
New Orleans, L i t t l e Rock, Memphis, Helena,
E l Paso, S e a t t l e and Spokane•
Cost per one thousand u n i t s handled
01.71
01.83
Branches w i t h h i g h e r u n i t c o s t : A l l branches except Birmingham and
L i t t l e Rock.
Non-cash C o l l e c t i o n s :
1. Number o f c i t y c o l l e c t i o n s handled
11,907
15,278
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , B a l t i m o r e , D e t r o i t ,
L i t t l e Rock, Memphis, Denver, Oklahoma C i t y ,
Omaha, Houston, Los Angeles and S a l t Lake
City.
Cost per u n i t handled
6 . 2 cents
8 . 4 cents
Branches w i t h higher u n i t c o s t : A l l branches except L i t t l e Rock and Omaha.
2. Number o f country c o l l e c t i o n s handled
10,639
21,273
Branches w i t h l a r g e r volume: A l l branches except Birmingham, N a s h v i l l e ,
New Orleans, L i t t l e Rock, L o u i s v i l l e , Helena,
E l Paso, San Antonio, S e a t t l e and Houston.
Cost per u n i t handled
11.7 cents
7 cents
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , B a l t i m o r e , Birmingham, N a s h v i l l e ,
Helena, Los Angeles, P o r t l a n d and S e a t t l e .



.36

Non-cash C o l l e c t i o n s : (Cont'd)
J a c k s o n v i l l e Branch Head O f f i c e
5. Number o f coupons (except Government)
and country s e c u r i t y c o l l e c t i o n s handled
1,052
2,650
Branches w i t h l a r g e r volume: A l l branches except Birmingham, Helena,
E l Paso, S a l t Lake C i t y , S e a t t l e and Spokane.
Cost per u n i t handled
55.5 cents
10.8 cents
Branches w i t h h i g h e r u n i t c o s t : E l Paso.
A schedule showing the volume o f o p e r a t i o n s o f t h e J a c k s o n v i l l e Branch
f o r the y e a r s 1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f J a c k s o n v i l l e Branch by Board's Examiners - 1955
The Board's Examiners reviewed the o p e r a t i o n s o f the J a c k s o n v i l l e
Branch, as o f November 18, 1933, and i n c o r p o r a t e d the f o l l o w i n g comment conc e r n i n g the n e c e s s i t y f o r i t s continuance i n the r e p o r t o f examination o f
the A t l a n t a Reserve bank made as o f the same date:
"There appears t o be a r e a l need f o r the branch a t Jacksonv i l l e i n view o f i t s d i s t a n c e from the Head O f f i c e and i t s
l o c a t i o n a t t h e gateway t o F l o r i d a . "
( i ) Survey o f J a c k s o n v i l l e Branch made by Federal Reserve Bank o f
A t l a n t a - 1956
As requested i n the Board's l e t t e r o f March 25, 1936 (X-9552), a survey
o f the o p e r a t i o n s o f t h e J a c k s o n v i l l e Branch was made by the Federal Reserve
Bank o f A t l a n t a .

As a r e s u l t o f t h i s survey, P r e s i d e n t Newton advised the

Board as f o l l o v / s :




"A discontinuance o f the J a c k s o n v i l l e Branch would,
i n my o p i n i o n , s u b s t a n t i a l l y delay the c o l l e c t i o n o f items
and the f u r n i s h i n g o f currency. The volume o f business
t r a n s a c t e d i n t h a t Branch, p a r t i c u l a r l y i n t h e t o u r i s t
season, i s c o n s i d e r a b l e . From the s t a n d p o i n t o f t r a i n
s e r v i c e , p o i n t s i n Southern F l o r i d a are as f a r d i s t a n t
from A t l a n t a as New York. Furthermore, and speaking i n
general terms, the only saving which would f o l l o w the d i s continuance o f any Branch would be the e l i m i n a t i o n o f o v e r head expense, and i n the case o f the J a c k s o n v i l l e Branch
the aggregate o f saving from t h i s source would have t o be
reduced by s u b s t a n t i a l l y increased postage charges and i n creased telephone and t e l e g r a p h t o l l s . "

.137

Based on o p e r a t i n g expenses f o r the y e a r 1935, Mr. Newton s t a t e d an
estimated saving o f $25,749 would r e s u l t from discontinuance o f the Branch.
A statement showing the estimated saving by f u n c t i o n s was i n c l u d e d i n h i s
r e p o r t , which a l s o contained data r e l a t i v e t o m a i l schedules, h e r e t o f o r e
mentioned, and the volume o f operations a t the Branch.

No comment was made

as to t h e l o s s which might be sustained i f the q u a r t e r s occupied by the
Branch were abandoned o r as t o t h e p o s s i b l e unfavorable r e a c t i o n s which
might develop i f the Branch were d i s c o n t i n u e d .




.138

JACKSONVILLE BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled

Bills
Pftte

Discounted

Non Cash

Currency
Received
and

Coin
Received
ahd

Counted

Counted

City

Cpwrtor

Checks Handled
6ov«t
Checks

Collection Items
A! I
Gov't
Total

Sftraoi

iihsr

Fiscal Agency
Transactions
Direct O^her

Transfer
of
Funds

1931

-

10,036,000

9,076,000

061,000

*4, 258,000

*45*f, 000 5,573,000

51,037

*46,*4*48

-

8,*426

1932

-

15,09*4,000

9,721,000

001,000

3,623,000

512,000 *4,936,000

69,808

*49,595

-

8,329

1933

-

15,^27,000

8,6*40,000

788,000

3,607,000

538,000 *4,933,000

83,089

*49,665

-

10,213

193*1

-

18,096,000

7,57**,000

938,000

*4, 181,000

698,000 5,817,000

9*4,892

50,87*4

-

7,577

1935

-

18,808,000

9,033,000

97*4,000

*4,882, 000

693,000 6,5*49,000

85,000

5*4,000

-

5,852

1936

-

21,232,000

9,928,000

9*48,000

5,*409,000

66,000

50,000

1931

-

79,*493

1,287

1,118,356

*4l 1,2*45

51,553 1,581,15*4

953

20,321

-

197,507

1932

-

6*4,518

1,355

65*4,065

315,775

*43,099 1,012,939

1,258

16,508

-

1*49,66*4

1933

-

66,715

2,076

292,335

306,667

52,0f6

651,018

l,*437

19,8*42

-

152,612

193*4

-

67,273

1,378

396,370

*45*4,279

63,107

913,756

l,*435

22,103

•

181,981

J935

.

78,183

f,270

600,*498

557,690

65,*495 1,223,683

1,128

31,395

-

181,500

1936

-

87,7 18

l,*422

1,030,875

676,909

89,*42*4 1,797,208

878

29,22*4

•

H*

<0


725,000 7,082,000
Amounts Handled
( i n thousands of dollars)

6,000

-

192,561

NASHVILLE BRANCH - FEDERAL RESERVE BANK OF ATLANTA
(a) C i t y o f N a s h v i l l e :
N a s h v i l l e , w i t h a p o p u l a t i o n o f 153,866, i s the second l a r g e s t c i t y
Tennessee and the f i f t y - f i r s t l a r g e s t c i t y i n the U n i t e d S t a t e s .

in

I t i s located

i n the c e n t r a l p o r t i o n o f the S t a t e , on the Cumberland R i v e r , and i s s a i d t o
serve a trade area extending 33 m i l e s n o r t h , 85 m i l e s south, 115 m i l e s east and
75 m i l e s west i n ?;hich approximately 677,000 people r e s i d e .

Transportation

f a c i l i t i e s i n t h i s area are provided by the L o u i s v i l l e & N a s h v i l l e ,

the

N a s h v i l l e , Chattanooga & S t . L o u i s , the Tennessee C e n t r a l and the N a s h v i l l e F r a n k l i n R a i l r o a d s ; a l s o by v a r i o u s bus l i n e s and s e v e r a l n a t i o n a l a i r l i n e s .
According t o the B i e n n i a l Census o f Manufactures, Davidson County,

in

which N a s h v i l l e i s l o c a t e d , had 295 manufacturing concerns i n 1935, which had
an o u t p u t valued a t 0105,171,000 t h a t y e a r .

The p r i n c i p a l products were rayon,

cellophane, shoes, t e x t i l e s , f u r n i t u r e , stoves and bakery goods.

The Census o f

American Business f o r 1935 shows 4,039 r e t a i l and 452 wholesale f i r m s i n the
same a r e a , which enjoyed sales aggregating 083,177,000 and 0123,688,000,
r e s p e c t i v e l y , d u r i n g the y e a r .
Banking f a c i l i t i e s i n N a s h v i l l e are provided by t h r e e n a t i o n a l banks,
three S t a t e nonmember banks and one i n d u s t r i a l bank.

These i n s t i t u t i o n s had

d e p o s i t s aggregating 0112,503,000, as o f December 31, 1936, and o f t h i s amount
084,460,000 was c a r r i e d by the three l o c a l member banks, two o f which were
o p e r a t i n g an aggregate o f eleven branches.
D e b i t s to i n d i v i d u a l accounts i n banks o f the c i t y aggregated 0910,933,000
d u r i n g the year 1936, or an average o f approximately 03,000,000 f o r each bank T
i n g day.




MO

(b) Branch T e r r i t o r y and F u n c t i o n s ;
The N a s h v i l l e Branch was e s t a b l i s h e d October 21, 1919, and serves t h a t
p o r t i o n of Tennessee i n c l u d e d i n the S i x t h D i s t r i c t , w i t h the e x c e p t i o n of the
C i t y o f Chattanooga.

This t e r r i t o r y represents 12$ o f the l a n d area o f the

d i s t r i c t and has 15$ o f i t s t o t a l p o p u l a t i o n .

Approximately

o f a l l banks

i n the S i x t h D i s t r i c t are w i t h i n t h i s a r e a .
As o f December 31, 1956, t h e r e were 205 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and o f t h i s number 61, i n c l u d i n g 57 n a t i o n a l and 4
State i n s t i t u t i o n s , were members o f the System.
banks i n the zone were on the par l i s t .

Only 47 o f the 142 nonmember

The f o l l o v / i n g f i g u r e s taken from r e -

p o r t s o f c o n d i t i o n as o f the same date show the s i z e o f member bank f o o t i n g s i n
the branch zone as compared t o the S i x t h D i s t r i c t as a whole:

Sixth D i s t r i c t

No. Member
Banks

Loans
and
Investments

330

$1,026,849

0145,409

$1,458,473

61

126,821

18,931

177,115

Branch Zone

Capital
and
Total
Surplus
Deposits
(000 o m i t t e d )

There are o n l y s i x branch zones i n the System having smaller member bank
f o o t i n g s than the N a s h v i l l e zone, namely, Spokane, E l Paso, L i t t l e Rock,
Helena, C h a r l o t t e find San A n t o n i o .
The N a s h v i l l e Branch i s operated on the "memorandum p l a n " and o f f e r s the
same s e r v i c e t o member banks i n i t s zone as i s a v a i l a b l e a t the Head O f f i c e ,
i n s o f a r as r e c e i p t s and disbursements o f currency and c o i n , w i r e
check c l e a r i n g s and noncash c o l l e c t i o n s are concerned.

transfers,

However, a l l general

ledger accounts as w e l l as accounts o f member banks, nonmember c l e a r i n g banks
and other Federal Reserve banks are maintained a t the Head O f f i c e , which also
maintains a l l expense r e c o r d s .



A t r a n s c r i p t o f a l l e n t i i e s a f f e c t i n g these

.141

accounts i s sent t o the Head O f f i c e d a i l y by w i r e .

Member banks i n the branch

zone may f o r w a r d t h e i r d i s c o u n t o f f e r i n g s e i t h e r to the Branch or t o the Head
Office.

O f f e r i n g s r e c e i v e d by the Branch are examined to see t h a t the paper

i s t e c h n i c a l l y i n order and the amount o f each o f f e r i n g found t o be acceptable
i s w i r e d t o the Head O f f i c e , which c r e d i t s the account o f the o f f e r i n g bank on
the same day, s u b j e c t t o f i n a l approval upon r e c e i p t o f the notes and a p p l i c a t i o n a t the Head O f f i c e .
i n i t 3 zone.

The branch holds s e c u r i t i e s i n safekeeping f o r banks

I t does n o t have Bank Examination, Bank R e l a t i o n s , L e g a l , Research

or Fiscal. Agency departments.
As o f J u l y 10, 1937, member banks i n the branch zone had balances w i t h the
Reserve bank as f o l l o w s :

C i t y of Nashville
Remainder o f Zone

No. o f
Banks

Reserve
Balances

Deferred
Balances

Capital
Stock

3
58

0 9,714,513
8.300.100
018.014.615

$1,508,200
174,702
^1,682,902

0289,500
291,100
$580.600

Bills
Discounted

N a s h v i l l e i s £89 t r a i n m i l e s (7 h r s . and 15 m i n s . ) from A t l a n t a .

There

are s e v e r a l t r a i n s d a i l y from both c i t i e s which p r o v i d e o v e r n i g h t m a i l s e r v i c e
between them.
branch zone.

Other than N a s h v i l l e ,

there are 51 member bank p o i n t s i n the

A l l b u t 8 of these p o i n t s , having 8 member banks, can be reached

by o r d i n a r y n a i l from N a s h v i l l e before 10 A. M. on the day f o l l o w i n g m a i l i n g ,
whereas 15 p o i n t s , having 15 member banks, cannot be so reached from A t l a n t a .
There i s one member bank p o i n t i n the branch zone which can be reached from
A t l a n t a by o r d i n a r y n a i l before 10 A. M. on the day f o l l o w i n g m a i l i n g which
cannot be reached w i t h i n t h a t time from N a s h v i l l e .

The r e g i s t e r e d m a i l

schedules i n d i c a t e t h a t there are 18 member bank p o i n t s , w i t h 18 member banks,
which cannot be reached before 10 A. M. on the day f o l l o w i n g m a i l i n g from
N a s h v i l l e , as compared ? / i t h 26 member bank p o i n t s , having 28 member banks, which




cannot be so reached from A t l a n t a .

I t appears from t h e f o r e g o i n g t h a t d i s -

continuance o f the N a s h v i l l e Branch, i n a d d i t i o n t o a f f e c t i n g the s e r v i c e
rendered to banks i n t h a t c i t y , would a l s o slow up the s e r v i c e rendered to a
small number o f o u t l y i n g banks; t h a t i s , banks i n N a s h v i l l e would no l o n g e r
have immediate access t o Reserve bank f a c i l i t i e s and a small number o f

outlying

banks would have to adapt t h e i r business to a two day r a t h e r than a one day
m a i l schedule.
Other than N a s h v i l l e , the more populous c i t i e s i n the branch zone, both
o f which have une or more member banks, are K n o x v i l l e , 105,802, and Johnson
City,

25,080.
( c ) Branch B u i l d i n g :
The N a s h v i l l e Branch has occupied i t s present q u a r t e r s a t 228 T h i r d Avenue,

N o r t h , s i n c e December 1922.

The f o l l o w i n g f i g u r e s show the o r i g i n a l c o s t and

c a r r y i n g v a l u e , as of J u l y 10, 1937, o f the branch premises:

Cost
Land
Building
V a u l t and v a u l t equipment
Fixed machinery & equipment

0 83,704
135,870)
40,042)
259,616
25,101
0284,717

Book Value
7-10-37
0 46,704
105,912
152,616
$152,616

(d) Earning s - Branch Books:
No r e c o r d o f earnings i s maintained a t the N a s h v i l l e Branch, as i t

is

operated on the "memorandum plan 11 .
(e) Branch Personnel:
The r e p o r t of examination of the F e d e r a l Reserve Bank o f

A t l a n t a , made

as o f J u l y 10, 1957, shows, the f o l l o w i n g i n regard t o s a l a r i e s end personnel
a t tho N a s h v i l l e Branch:




J u l y 10, 1957
Number Amount
Officers
Employees

2
34
H

May 50, 1956
Number Amount

£10,550
42,054
052,404

2
51
H

Increase
Number
Amount

011,400
57,600
549,000

5
|

01,050 Deer.
4,454
£5,404

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n the above f i g u r e s •
( f ) Branch Expense by F u n c t i o n s :
The expenses o f the N a s h v i l l e Branch by f u n c t i o n s f o r t h e years 1952 t o
1957, i n c l u s i v e , were as f o l l o w s :
1933

1932
General Overhead
Controllable
0 9,112
Non-ccn t r o l l a b l o
3,563
P r o v i s i o n o f Space
8,492
P r o v i s i o n o f Personnel
214
General S e r v i c e
7,530
Postage
9,693
Insurance
2,143
F a i l e d Banks
Loans,r e d i s counts,e t c . 1,090
228
Securities
Currency & Coin
11,461
Check C o l l e c t i o n
16,163
Noncash C o l l e c t i o n
4,376
13,647
Accounting
F i s c a l Agency
14,290
Legal
1,600
Auditing
520
—
Bank R e l a t i o n s
—
Bank Examinations
—
F, R. Note Issues
—
Statistical & Analyt'l
T o t a l Expense
$104,122
Less - Reimbursable
F i s c a l Agency Exp.
12,811
Net Expense
£ 91.311

0

9,156
3,463
7,799
131
7,750
12,993
2,a3

1934
0

9,615
4,010
7,644
4,014
9,330
9,374
1,016
—

—

665
533
9,055
16,295
3,853
11,946
32,142
-

477

525
490
10,048
16,996
3,881
12,050
29,411
6
375

1935
$

9,044
—

1936
$

8,805
—

10,626
6,196
9,307
11,474
1,254
—

7,222
6,974
9,494
11,387
1,211
-

498
1,196
13,657
16,472
4,085
12,469
35,988
-

991

160
1,374
13,535
13,640
4,141
14,203
24,572
57
721

1937
£

8,704
—

10,884
321
9,340
10,245
1,205
—

4
1,391
13,638
13,748
3,995
12,781
23,870
-

582

—

—

-

—

—

—

—

—

—

-

—

—

—

—

—

—

—

194
—

—

$118,665

0118,785

0133,257

$117,496

$110,708

30,363
g 88.302

27,475
0 91,310

24.733
£108.524

20.523
« 96.973

20.337
8 90.371

There were t w e n t y - t h r e e branches i n the System which operated a t a h i g h e r
annual cost than the N a s h v i l l e Branch i n 1937.
(g) Volume of Operations a t N a s h v i l l e Branch:
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s i n the v a r i o u s
departments o f the N a s h v i l l e Branch and the Head O f f i c e d u r i n g the l a s t



six

.144

months of 1956:
N a s h v i l l e Branch

Head O f f i c e

Safekeeping
Member bank s e c u r i t i e s 12-51-56
02,927,000
£77,459,000
Branches w i t h l a r g e r volume: A l l branches except B u f f a l o , C h a r l o t t e ,
Memphis, Birmingham, E l Paso, P o r t l a n d , S e a t t l e
v
Helena, Los Angeles, S a l t Lake C i t y and Spokane
Currency and Coin
1 . Number o f b i l l s r e c e i v e d and counted
6,554,000
22,024,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
C h a r l o t t e , J a c k s o n v i l l e , New Orleans, D e t r o i t ,
L o u i s v i l l e , Memphis, Los Angeles and S e a t t l e .
Cost per one thousand u n i t s handled
57 cents
41 cents
Branches w i t h higher u n i t c o s t : A l l branches except Birmingham, New
Orleans, and L i t t l e Rock.
2. Number o f coins r e c e i v e d and counted
5,510,000
7,225,000
Branches w i t h l a r g e r voluffie: A l l branches except C h a r l o t t e , J a c k s o n v i l l e ,
L i t t l e Rock, Helena, E l Paso, P o r t l a n d , S a l t
Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
20 cents
18 cents
Branches w i t h h i g h e r u n i t c o s t : P i t t s b u r g h , Helena, Omaha, E l Paso, San
A n t o n i o , P o r t l a n d , S a l t Lake C i t y , S e a t t l e
and Spokane.
Chock C o l l e c t i o n
1 . Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
708,000
1,567,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
New Orleans, D e t r o i t , L o u i s v i l l e , Denver,
Omaha, Houston and Los Angeles.
Cost per one thousand u n i t s handled
01*21
§1.23
Branches w i t h higher u n i t c o s t : A l l branches except Birmingham.
2. Number o f country checks (outgoing) r e c e i v e d 1,703,000
5,704,000
Branches w i t h l a r g e r volume: A l l branches except L i t t l e Rock, Memphis,
Helena, E l Paso and S e a t t l e .
Cost per one thousand u n i t s handled
C2.08
$1.85
Branches w i t h h i g h e r u n i t c o s t : A l l branches except P i t t s b u r g h , B a l t i m o r e ,
C h a r l o t t e , Birmingham, J a c k s o n v i l l e , L i t t l e
Rock, L o u i s v i l l e , Memphis, Denver, Oklahoma
C i t y , Omaha and Houston.
Noncash C o l l e c t i o n s
1 . Number o f c i t y c o l l e c t i o n s handled
8,254
15,278
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , Birmingham,
New Orleans, L o u i s v i l l e , Helena, E l Paso, San
Antonio, P o r t l a n d and Spokane.
Cost per u n i t hcndled
9.4 cents
8 . 4 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except J a c k s o n v i l l e , L i t t l e
Rock, Omaha, E l Paso and Houston.




N a s h v i l l e Branch

Head O f f i c e

2. Number of c o u n t r y c o l l e c t i o n s handled
4,640
21,273
Branches w i t h l a r g e r volume: A l l branches except Birmingham and E l Paso.
Cost per u n i t handled
16.5 cents
7 cents
Branches w i t h h i g h e r u n i t c o s t : Los Angeles and P o r t l a n d .
3. Number o f coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
1,765
2,630
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , Birmingham,
J a c k s o n v i l l e , Helena, Oklahoma C i t y , E l Paso
P o r t l a n d , S a l t Lake C i t y , S e a t t l e and Spokane.
Cost per u n i t handled
11.7 cents
10.8 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except C i n c i n n a t i , P i t t s b u r g h ,
B a l t i m o r e , Birmingham, New Orleans, L i t t l e
Rock, Denver, Omaha, Houston, San Antonio
and S e a t t l e .
A schedule showing the volume o f operations o f the N a s h v i l l e Branch f o r
the years 1931 to 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f N a s h v i l l e Branch by Board 1 s Examiner - 1933
During the course of an examination of the F e d e r a l Reserve Bank ^ f
A t l a n t a , made as of November 18, 1933, the Board's examiners reviewed the
o p e r a t i o n s o f the N a s h v i l l e Branch ana, based on i n f o r m a t i o n developed,
expressed doubt as to the n e c e s s i t y f o r i t s continuance.

I t was p o i n t e d out

t h a t N a s h v i l l e i s 288 m i l e s from A t l a n t a , w i t h a ten hour m a i l schedule and a
two hour a i r m a i l s e r v i c e ; t h a t 21 member bank p o i n t s i n the N a s h v i l l e zone were
n o t w i t h i n o v e r n i g h t m a i l time o f A t l a n t a , b u t t h a t a m a j o r i t y of such c i t i e s
and nember banks were small and unimportant i n s i z e and o p e r a t i o n s ; t h a t many
o f such c i t i e s a l s o were n o t w i t h i n o v e r n i g h t m a i l time of the Branch due t o
poor r a i l f a c i l i t i e s ; and t h a t the Branch ?/as one o f the smaller branches i n
the System, based on the number and d o l l a r volume o f items handled.
( i ) Survey o f N a s h v i l l e Branch made by Federal Reserve Bank o f
A t l a n t a - 1936
I n accordance v/ith the request contained i n the Board's l e t t e r o f March
25, 1356 (X-9552), o survey o f the operations o f the N a s h v i l l e Branch was made




by the Federal Reserve Bank o f A t l a n t a .

T h e r e a f t e r P r e s i d e n t Newton advised

the Ik-ard as f o l l o w s :
"The c l o s i n g o f the N a s h v i l l e Branch would cause
comparatively l i t t l e inconvenience except t o banks
l o c a t e d i n N a s h v i l l e and i n the immediate v i c i n i t y o f
that c i t y . "
Mr. Newton s t a t e d t h a t i n r e a c h i n g t h i s conclusion c o n s i d e r a t i o n had been
given tc the a b i l i t y o f the Head O f f i c e to serve the branch zone, w i t h p a r t i c u l a r r e f e r e n c e to m a i l schedules.

He f u r t h e r s t a t e d t h a t a f t e r a c a r e f u l

i n v e s t i g a t i o n , which took i n t o account the probable increases i n p o s t a l ,
portation,

trans-

telephone and t e l e g r a p h costs which would be e n t a i l e d by s e r v i n g

member banks i n the branch zone from A t l a n t a i n s t e a d of N a s h v i l l e , he was o f
the o p i n i o n t h a t an aggregate annual saving of $49,785 would r e s u l t i f
Branch were d i s c o n t i n u e d .

(Based on operations f o r the year 1935.)

the

He s t a t e d

t h a t t h i s saving would a r i s e c h i e f l y from a r e d u c t i o n i n overhead.
No Cv>mment was made as to u n f a v o r a b l e r e a c t i o n s which might p o s s i b l y
a r i s e upon c l o s i n g o f the Branch or to l o s s e s which might be sustained through
abandonment o f the b u i l d i n g end equipment now used by the Branch.




.147

NASHVILLE BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled
Currency
Received
2&ie

Bills
Di scountsd

and

Coin
Received
and
Counted

Checks Handled

Ciil

Country

Govt.
Checks

Total

Won Cash
Collection lte»s
Gov't
AH
Coupons
Other

Fiscal Agency
Tr.WMMtiftDfL.
Oirect Other

Transfer
of

1931

-

13,601,000

*,880,000

1,015,000

*,120,000

27*,000

5,*09,000

*3,*89

29,*39

-

6,258

1932

•

11,689,000

*,712,000

1,002,000

3,362,000

296,000

*,660,000

36,386

28,69*

-

5,16*

1933

-

10,771,000

*,29*,000

1,63*4,000

3,1*9,000

38*,000

5,167,000

36,055

3*,056

-

* , 109

193*

-

12,886,000

6,555,000

1,291,000

3,553,000

669,000

5,513,000

*8,097

32,259

-

3,766

1935

-

12,570,000

*,672,000

1,325,000

3,12*,000

637,000

5,086,000

52,000

31,000

-

2,9*6

1936

-

12,718,000

6,263,000

1,32*1,000

3,3*9,000

5*0,000

5,213,000

*6,000

30,000

-

2,000

1931

*8,767

651

715,9*8

Amounts Handled
in
thousands
of dollars]1
(
29,108 1,036,998
291,9*2

366

29,*52

123,102

1932

-

*2,351

52**

51*0, »*70

217,28*

23,365

781,119

339

33,535

-

6*,91*

1933

-

39,*75

970

568,8*0

227,96*

28,392

825,196

399

36,395

-

61,208

193*

-

38,275

658

771,760

300,9*2

* 1,763

1,11*,*65

*97

50,780

mm

1935

-

37,3*5

585

858,159

259,98*

* 1,555

1,159,698

528

50,659

-

88,9*6

1936

•

37,896

701

936,* i *

296,107

52,181

!,28*,*02

516

*7,580

-

9*,367

Digitized
30 for FRASER


«r

76,613

MEW ORLEANS BRANCH;

FEDERAL RESERVE BANK OF ATLANTA

(a) C i t y o f New Orleans
New Orleans, w i t h a populationc£ 458,762, i s the s i x t e e n t h l a r g e s t
i n the U n i t e d States and the l a r g e s t c i t y i n L o u i s i a n a .

city

I t i s l o c a t e d i n the

southeastern p a r t o f the S t a t e , on the M i s s i s s i p p i r i v e r , and serves a trade
area extending approximately 60 m i l e s i n a l l d i r e c t i o n s .
840,000 i n h a b i t a n t s i n the m e t r o p o l i t a n area.

There are about

Ten r a i l r o a d s , i n c l u d i n g a l l

of t h e major southern l i n e s , enter the c i t y , which i s a l s o served by numerous
steamship l i n e s t o a l l w o r l d p o r t s and a number of a i r l i n e s .
According t o the B i e n n i a l Census o f Manufactures Orleans P a r i s h , i n which
New Orleans i s l o c a t e d , had 607 manufacturing concerns i n 1955, which had an
o u t p u t valued a t $92,578,000 t h a t y e a r .

The c h i e f manufactures were wash

s u i t s , c o t t o n goods, candy, r o p e , c i g a r e t t e s and c i g a r s , i r o n and s t e e l , syrup
canning, seafood packing and m i n e r a l o i l r e f i n i n g .
shipping.

The p r i n c i p a l i n d u s t r y i s

According t o the Census o f American Business t h e r e were i n the same

area 6,835 r e t a i l and 934 wholesale establishments which enjoyed sales aggregati n g $123,524,000 and 1414,188,000, r e s p e c t i v e l y , d u r i n g % e year 1935.
Banking f a c i l i t i e s i n New Orleans are provided by two S t a t e banks ( l member) and t h r e e n a t i o n a l banks.

These i n s t i t u t i o n s had d e p o s i t s aggregating

#254,838,000, as o f December 31, 1936, and o f t h i s amount $252,959,000 was
c a r r i e d w i t h the f o u r l o c a l member banks, t h r e e o f which were o p e r a t i n g an
aggregate o f eighteen branches.
D e b i t s t o i n d i v i d u a l accounts i n banks o f the c i t y aggregated
$2,463,348,000 d u r i n g t h e year 1936, or an average o f approximately $8,000,000
f o r each banking day.




.149

(b) Branch T e r r i t o r y and F u n c t i o n s ;
The New Orleans Branch was e s t a b l i s h e d September 10, 1915, and serves
those p o r t i o n s o f t h e States o f Louisiana and M i s s i s s i p p i i n c l u d e d i n the
S i x t h D i s t r i c t and two counties i n Alabama.

T h i s t e r r i t o r y represents 22$

o f the l a n d area o f t h e d i s t r i c t and has 2Z% o f i t s t o t a l p o p u l a t i o n .
Approximately 17% o f a l l banks i n the S i x t h D i s t r i c t are w i t h i n t h i s area.
As o f December 51, 1956, t h e r e were 185 banks, e x c l u s i v e o f mutual
savings banks, i n the branch zone and o f t h i s number 45, i n c l u d i n g 40 n a t i o n a l
and 5 State i n s t i t u t i o n s , were members o f the System.
member banks i n t h e zone were on the par l i s t .

Only 8 o f t h e 140 non-

The f o l l o w i n g f i g u r e s taken

from r e p o r t s o f c o n d i t i o n as o f t h e same date show t h e s i z e o f member bank
f o o t i n g s i n the branch zone as compared t o those o f t h e S i x t h D i s t r i c t as
a wholes

Sixth D i s t r i c t
Branch Zone

No. Member
Banks

Loans
and
Investments

Capital
and
Surplus
(000 o m i t t e d }

Total
Deposits

330
45

$1,026,849
287,865

$143,409
31,219

$1,458,473
403,414

There are o n l y s i x branch zones i n the System having l a r g e r member bank
f o o t i n g s than t h e New Orleans zone$ namely, P i t t s b u r g h , Los Angeles, D e t r o i t ,
C i n c i n n a t i , B u f f a l o and B a l t i m o r e .
The New Orleans Branch i s a " f u l l f l e d g e d " branch and renders the same
s e r v i c e t o member banks i n i t s t e r r i t o r y as i s a v a i l a b l e a t t h e Head O f f i c e ,
i n s o f a r as r e c e i p t s and disbursements o f currency and c o i n , w i r e t r a n s f e r s ,
check c l e a r i n g s , noncash c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and loans t o




.150

member banks are concerned.

The Branch has i t s own general books and a l s o keeps

the accounts o f i t s zone members and o t h e r Federal Reserve banks and branches.
Transactions a r e , however, cleared d a i l y through an account maintained w i t h the
Head O f f i c e .

The Hew Orleans Branch i s t h e only branch i n t h e System h a n d l i n g

the i s s u e and exchange o f Government s e c u r i t i e s and which has been a u t h o r i z e d
t o purchase acceptances i n t h e open market w i t h o u t s p e c i f i c i n s t r u c t i o n s from
the Head O f f i c e .

I t does n o t have Bank Examination, Bank R e l a t i o n s o r Research

departments.
As o f J u l y 10, 19S7, member banks i n t h e branch zone had reserve balances
as f o l l o w s :

C i t y o f New Orleans
Remainder o f Zone

No. o f
Banks

Reserve
Balances

Deferred
Balances

Capital
Stock

4

$35,964,108
^16^460.956

$4,491,042
^660.669

$487,500
^462^400

Bills
Discounted

-

New Orleans i s 495 t r a i n m i l e s (15 h r s . and 45 mins.) from A t l a n t a .
There are 29 member bank p o i n t s , having 36 member banks, i n the New Orleans zone,
which cannot be reached by o r d i n a r y m a i l from A t l a n t a before 10 A.M. on t h e day
following mailing.

A l l o f these places can be reached by o r d i n a r y m a i l from

New Orleans b e f o r e 10 A.M.

There are 31 c i t i e s , having 38 member banks, i n the

branch zone, which cannot be reached by r e g i s t e r e d m a i l from A t l a n t a b e f o r e
10 A.M. on tiie day f o l l o w i n g m a i l i n g , whereas 12 o f these c i t i e s , w i t h 17 member banks, can be reached from New Orleans.

I t i s clear, therefore,

that

discontinuance o f t h e New Orleans Branch would s e r i o u s l y a f f e c t t h e character
o f the s e r v i c e rendered t o a s u b s t a n t i a l number o f member banks i n o u t l y i n g
s e c t i o n s o f t h e zone, as w e l l as banks i n t h e C i t y o f New O r l e a n s , which now
enjoy an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h t h e Branch.




There are s i x t e e n

.151

branch c i t i e s c l o s e r than New Orleans t o t h e i r r e s p e c t i v e head o f f i c e s ,

practically

a l l o f which appear t o enjoy more e x p e d i t i o u s m a i l connections w i t h t h e i r head
offices.

I n c l u d e d i n t h i s number are J a c k s o n v i l l e , Birmingham, N a s h v i l l e ,

Little

Rock, Memphis, Oklahoma C i t y and San A n t o n i o , which handle a smaller volume o f
operations and serve l e s s important c e n t e r s .
Other than New Orleans, t h e more populous c i t i e s i n t h e branch zone,

all

o f which have one or more member banks, are Mobile C i t y , Alabama, 68,202;
Baton Rouge, L o u i s i a n a , 50,729} Jackson, M i s s i s s i p p i , 48,282; M e r i d i a n , M i s s i s s i p p i
21,954} and V i c k s b u r g , M i s s i s s i p p i ,

22,945.

(c) Branch B u i l d i n g s
The New Orleans Branch has occupied i t s present q u a r t e r s a t Carondelet
S t . and Common since October, 1925.

The f o l l o w i n g f i g u r e s show the o r i g i n a l cost

and c a r r y i n g v a l u e , as o f J u l y 10, 1957, o f t h e branch premisess

Cost
Land
Building
V a u l t and V a u l t Equipment
Fixed machinery and equipment

$

201,500
635,647)
102.757)
|
939,704
159.500
$1.099.204

Book Value
7-10-57
$ 146,600
420.700
$ .567,300
$ 567,500

(d) Earnings - Branch Bookst
The Branch 1 s earnings as r e f l e c t e d by i t s books f o r the years 1931 t o
1957, i n c l u s i v e , were as f o l l o w s :




Year

Earnings

1951
1952
1935
1934
1955
1956
1957

$508,200
451,900
151,500
11,500
700
400
1,700

.152

These f i g u r e s are incomplete s i n c e , under present accounting procedure,
the Branch does n o t r e c e i v e any c r e d i t f o r income received by t h e Head
O f f i c e on investments, a p o r t i o n o f which i s made p o s s i b l e by the c a p i t a l
stock investment and reserve balances o f banks i n the branch zone.
The amount o f income shown on the books o f the Branch depends almost
e n t i r e l y on the e x t e n t o f borrowing by member banks i n t h e zone.

Income

from t h i s source amounted t o $419,000 i n 1932 and t o only about $700 i n
1957.

(e) Branch Personnels
The r e p o r t o f examination o f the Federal Reserve Bank o f A t l a n t a ,
made as o f J u l y 10, 1937, shows the f o l l o w i n g i n regard t o s a l a r i e s and
personnel a t t h e New Orleans Branchs

J u l y 10. 1957
Number
Amount
Officers
Employees

3
59
62

$17,400
71.100
S,500

May 50. 1956
Number Amount
5
57
62

$29,600
62.400
$92,000

Decrease
Number
Amount
2#
2(lnc.)
0

$12,200
8.700(Inc.)
$ 5,500

# Due t o discontinuance o f o f f i c e s o f A s s i s t a n t Manager and
Assistant Auditor.

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are
n o t i n c l u d e d i n the above f i g u r e s .




.153

( f ) Branch Expense by F u n c t i o n s :
The expenses o f t h e New Orleans Branch by f u n c t i o n s f o r the years 1932 t o
1937, i n c l u s i v e , were as f o l l o w s
1932

«
.

1935

1934

1935

1936

1937

General Overheads
$33,952 $32,309 #28,078 113,999 $19,833 $13,398
Controllable
9,794
Noncontrollable
15,219
14;542
34,971
20,052
35,149
31,586
23,231
35,733
-^Provision o f Space
11,596
21,090
511
P r o v i s i o n o f Personnel
506
5
8,853
17,104
20,900
20,859
21,799
17,949
General Service
20,725
12,685
12,619
10,464
9,829
Postage
8,246
12,344
2,321
2,253
4,299
2,772
2,404
4,743
Insurance
100
329
2
F a i l e d Banks
6,410
2,232
2,059
10,117
9,842
7,562
Loans, Redi scoun t s , E t c .
720
856
717
725
868
764
Securities
39,378
19,614
41,462
18,994
18,732
35,996
Currency & Coin
16,718
17,078
18,781
14,543
Check C o l l e c t i o n
18,244
21,001
4,771
5,135
4,668
4,896
5,172
Noncash C o l l e c t i o n
4,822
19,900
18,046
17,805
16,857
Accounting
21,900
20,502
65,911 112,354 177,706 196,012 176,407
F i s c a l Agency
36,963
70
2,170
1,550
500
600
1,656
Legal
2,706
4,422
2,421
1,583
Auditing
1,870
2,453
355
Federal Reserve Note Issue
277
S t a t i s t i c a l & Analytical
286
292
74
322
T o t a l Expense
$228,577 $258,206 $313,466 $351,254 $371,818 $342,679
Less - Reimbursable
F i s c a l Agency Expense
32.806
61.997 108.265 153>921 185.235 166.254
Net Expense
$195.771 $186.209 $205.201 $217.333 $186.583 $176.425
* Represents t h e net expense - income from r e n t a l s having been deducted.
There were t h i r t e e n branches i n the System which operated a t a h i g h e r annual
cost than t h e New Orleans Branch i n 1937.

A number o f these branches appear t o

have handled a smaller volume o f i t e m s .




.154

(g) Volume o f Operations a t New Orleans Branch s
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s i n v a r i o u s d e partments o f the New Orleans Branch and t h e Head O f f i c e d u r i n g the l a s t

six

months o f 1936:
New Orleans Branch
Head O f f i c e
Discount Department?
Notes rediscounted
52
C o l l a t e r a l notes discounted
7
15
I n d u s t r i a l Advances
3
Branches w i t h l a r g e r volumes B u f f a l o , B a l t i m o r e , Memphis, Denver, Omaha, E l
Paso, San A n t o n i o , and S a l t Lake C i t y .
Safekeeping:
Member bank s e c u r i t i e s 12-31-36
$8,603,000
$77,439,000
Branches w i t h l a r g e r volumes A l l branches except B u f f a l o , C h a r l o t t e , Birmingham,
N a s h v i l l e , L o u i s v i l l e , Memphis, E l Paso, P o r t l a n d ,
S a l t Lake C i t y , S e a t t l e , Helena, Los Angeles,
San A n t o n i o , and Spokane.
Currency & Coins
1 . Number o f B i l l s received and counted
13,420,000
22,024,000
Branches w i t h l a r g e r volumes B u f f a l o > C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
D e t r o i t and Los Angeles.
Cost per one thousand u n i t s handled
26 cents
41 cents
Branches w i t h h i g h e r u n i t costs A l l branches.
2. Number o f coins r e c e i v e d and counted:
12,006,000
7,223,000
Branches w i t h l a r g e r volumes B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e and
Los Angeles.
Cost per one thousand u n i t s handled
6 cents
18 cents
Branches w i t h h i g h e r u n i t costs A l l branches.
Check C o l l e c t i o n s
1 . Number o f c i t y checks ( c l e a r i n g s ) received
751,000
1,567,000
Branches w i t h l a r g e r volumes B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
D e t r o i t , L o u i s v i l l e , Denver, Omaha, Houston and
Los Angeles.
Cost per one thousand u n i t s handled
$1.22
$1.23
Branches w i t h h i g h e r u n i t costs A l l branches except Birmingham and N a s h v i l l e .
2. Number o f country checks (outgoing) received 1,837,000
3,704,000
Branches w i t h l a r g e r volumes A l l branches except N a s h v i l l e , L i t t l e Rock, Memphis,
Helena, E l Paso and S e a t t l e .
Cost per one thousand u n i t s handled
$2.12
$1.83
Branches w i t h h i g h e r u n i t costs B u f f a l o , C i n c i n n a t i , D e t r o i t , Helena, E l Paso,
Los Angeles, P o r t l a n d , S a l t Lake C i t y , S e a t t l e
and Spokane.




.155

New Orleans Branch

Head O f f i c e

Noncash C o l l e c t i o n s :
1 . Number o f c i t y c o l l e c t i o n s handled
6,161
15,278
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , Birmingham, Helena,
E l Paso and San Antonio.
Cost per u n i t handled
14.4 cents
8 . 4 cents
Branches w i t h h i g h e r u n i t costs A l l branches except Birminghajn, J a c k s o n v i l l e ,
N a s h v i l l e , L i t t l e Rock, L o u i s v i l l e , Memphis,
Helena, Denver, Oklahoma C i t y , Omaha, E l Paso,
Houston aiid S a l t Lake C i t y .
2. Number o f country c o l l e c t i o n s handled
9,440
21,273
Branches w i t h l a r g e r volume: A l l branches except Birmingham, N a s h v i l l e , L i t t l e
Rock, L o u i s v i l l e , Helena, E l Paso, Houston and
San A n t o n i o .
Cost per u n i t handled
11.3 cents
7 cents
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , B a l t i m o r e , Birmingham, J a c k s o n v i l l e ,
N a s h v i l l e , Helena, Los Angeles, P o r t l a n d and
Seattle.
3. Number o f coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
3,990
2,630
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
D e t r o i t , Omaha and Los Angeles.
8.8 cents
10.8 cents
Cost per u n i t handled
Branches w i t h h i g h e r u n i t costs A l l branches except C i n c i n n a t i , P i t t s b u r g h ,
Denver, Omaha and S e a t t l e .
A schedule showing t h e volume o f operations o f the New Orleans Branch f o r
t h e years 1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f New Orleans Branch by Board 1 s Examiners - 1933
During the course o f an examination o f t h e Federal Reserve Bank o f A t l a n t a ,
made as o f November 18, 1933, the Board's Examiners reviewed t h e o p e r a t i o n s o f
the New Orleans Branch and expressed t h e o p i n i o n t h a t i t s continuance was j u s t i f i e d " i n view o f the importance o f the c i t y and i t s d i s t a n c e from the Head
Office."
( i ) Survey o f New Orleans Branch made by Federal Reserve Bank o f
A t l a n t a - 1936:
I n accordance w i t h t h e request i n the Board's l e t t e r o f March 25, 1936
(X-9532), a survey o f t h e operations o f the New Orleans Branch was made by the




.156

Federal Reserve Bank o f A t l a n t a .

As a r e s u l t o f t h i s survey, P r e s i d e n t Newton

submitted a r e p o r t t o t h e Board c o n t a i n i n g the f o l l o w i n g recommendations
"The New Orleans Branch renders a v a l u a b l e s e r v i c e , and i n
my o p i n i o n , should be r e t a i n e d . The l o c a t i o n o f t h e Branch,
the importance o f New Orleans as a business center o f t h e
New Orleans Branch zone, as w e l l as the volume o f business
t r a n s a c t e d a t the Branch, form the basis f o r my o p i n i o n . "
Mr. Newton s t a t e d t h a t a f t e r i n v e s t i g a t i n g the matter c a r e f u l l y he had reached
the conclusion t h a t an aggregate annual saving o f approximately $113,900 would
r e s u l t i f the New Orleans Branch were closed, c h i e f l y through t h e e l i m i n a t i o n o f
overhead.

He c a l l e d a t t e n t i o n t o t h e f a c t t h a t discontinuance o f any branch

would be regarded as an inconvenience by banks l o c a t e d i n t h e immediate v i c i n i t y .
The d i f f e r e n c e s between m a i l f a c i l i t i e s a v a i l a b l e t o member bank p o i n t s i n t h e
branch zone from New Orleans and A t l a n t a and t h e volume o f operations a t t h e
Branch, which have already been mentioned i n t h i s memorandum, were c i t e d t o
amplify t h i s point.

No comment was made r e g a r d i n g t h e p o s s i b i l i t y o f losses

a r i s i n g from abandonment o f the q u a r t e r s occupied by the Branch or as t o any
u n f a v o r a b l e r e a c t i o n on the p a r t o f bankers and c i v i c l e a d e r s which might
develop i f the Branch were d i s c o n t i n u e d .




NEW ORLEANS BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled
Currency

Coin

Received

Received

and

Non Cash
Fi seal Agency

Checks Handled
Gov't

All

Mai

OftHfififlS

Other

Direct

Gov't

and

Transfer
of

Pate

B i lis
Pi,S£9upied

1931

11,952

28,372,000

27,186,000

1,015,000

2,270,000

782,000

4,067,000

120,471

29,509

9,181

2

15,474

1932

8,802

24,676,000

29,975,000

1,044,000

1,866,000

881,000

3,791,000

129,724

28,919

8,716

10

14,670

1933

3,^33

23,025,000

29,801,000

1,231,000

2,025,000

1,281,000

4,537,000

142,102

41,699

14,418

9

8,04!

193*

474

20,967,000

19,1*81,000

1,410,000

2,632,000

2,727,000. 6,769,000

185,489

42,710

53,987

229

7,221

1935

21

21,961,000

21,405,000

1,1406,000

2,940,000

2,545,000

6,891,000

208,000

37,000

37,736

11,002

7,803

1936

17

25,292,000

2*1,331,000

1,444,000

3,538,000

1,571,000

6,553,000

148,000

39,000

10,017

1,976

8,000

Counted

Counted

SUta.

C&uf^ry

CHe^s

Other

Amounts Handled
( i n thousands of dollars)
1931

204,678

103,859

3,30*4

1,384,294

247,613

99,891

1,731,798

1,547

36,614

49,030

too

631,474

1932

276,839

94,814

3,340

809,922

173,142

82,934

1,065,998

2,234

30,347

30,748

125

490,259

HJ33

55,654

97,530

4,677

830,911

220,138

111,830

1,162,879

2,406

43,708

27,698

9

336,612

1934

5,m

71,672

2,223

740,681

313,926

163,922

1,218,529

3,326

50,166

78,982

575

3H,630

t935

m

71,0*7

2,205

739,987

364,2H

154,008

1,258,206

3,018

62,973

60,110

9,42!

359,722

m

82,999

2,280

876,590

457,451

176*258

1,510,299

3,166

62,129

43,092

3,173

377,326

1936




SAVANNAH AGENCY - FEDERAL RESERVE BANK OF ATLANTA
(a) C i t y o f Savannah:
Savannah, w i t h a p o p u l a t i o n o f 85,024, i s the second l a r g e s t c i t y i n
Georgia,

I t i s l o c a t e d i n the southeastern p a r t o f t h e S t a t e on t h e south

bank o f the Savannah R i v e r about 20 M i e s from t h e A t l a n t i c Ocean.

Situated

on a splendid l a n d l o c k e d h a r b o r , t h e c i t y has steamship connections w i t h
f o r e i g n and P a c i f i c coast p o r t s , as w e l l as coast-wise s e r v i c e t o o t h e r
Atlantic ports.

I t i s one o f t h e more i m p o r t a n t c o t t o n e x p o r t and naval

s t o r e s p o r t s o f t h e South.

R a i l f a c i l i t i e s a r e provided by t h e C e n t r a l o f

Georgia, Savannah and A t l a n t a , Seaboard A i r l i n e , A t l a n t i c Coast L i n e and
Southern r a i l r o a d s .

The c i t y i s a l s o served by numerous bus l i n e s and several

air lines.
The p r i n c i p a l i n d u s t r i e s o f t h e c i t y are c o t t o n warehousing and marketi n g , s h i p b u i l d i n g , lumbering, f i s h i n g , sugar r e f i n i n g , petroleum r e f i n i n g
and t h e manufacture o f c o t t o n seed o i l p r o d u c t s , f e r t i l i z e r s , and r o s i n o i l .
According t o t h e B i e n n i a l Census o f Manufactures f o r 19S5, t h e r e were 122
manufacturing establishments o p e r a t i n g i n Chatham County, i n which Savannah
i s s i t u a t e d , which had an output valued a t #45,260,362 and p a y r o l l s amounti n g t o $5,126,909 d u r i n g t h a t y e a r .

The Census o f American Business l i s t s

1,559 r e t a i l and 183 wholesale concerns o p e r a t i n g i n t h e same area.

These

f i r m s had sales aggregating $26,454,000 and #62,508,000, r e s p e c t i v e l y , d u r i n g 1955.
Banking f a c i l i t i e s i n Savannah are provided by f o u r S t a t e banks (two
members), two n a t i o n a l banks and f o u r savings and l o a n companies.

These

i n s t i t u t i o n s had d e p o s i t s aggregating $106,853,000 as o f December 31, 1936,




.159

and o f t h i s amount $99,446,000 was c a r r i e d by the f o u r l o c a l member banks.
One o f t h e l o c a l n a t i o n a l banks was o p e r a t i n g two branches i n Savannah and
seven branches i n f i v e o t h e r c i t i e s o f Georgia.
Debits t o i n d i v i d u a l accounts i n banks o f t h e c i t y amounted t o $363,276,000
d u r i n g the y e a r 1936, o r an average o f approximately $1,211,000 f o r each banki n g day.
(h) Establishment and Operation o f Agency;
The Savannah Agency was e s t a b l i s h e d on
o n l y t h e f o u r member banks i n t h a t

February 4 , 1919, and serves

city.

I t s operations are l i m i t e d t o t h e r e c e i p t and disbursement o f cash and
the h o l d i n g o f s e c u r i t i e s pledged by t h e Savannah banks as c o l l a t e r a l t o

bills

d i s c o u n t e d f o r them by t h e Head O f f i c e .
Savannah i s 293 t r a i n m i l e s (8 h r s . and 50 mins.) from A t l a n t a and 171
t r a i n m i l e 3 (3 h r s . and 25 mins.) from J a c k s o n v i l l e .

I t i s apparent,

therefore,

t h a t f o r a l l but the most extreme emergencies the currency requirements o f
member banks i n Savannah c o u l d be met by t h e Head O f f i c e or the J a c k s o n v i l l e
Branch.
A schedule showing t h e volume o f operations a t t h e Agency f o r the years
1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(c) Agency Quarters;
The Agency i s l o c a t e d i n t h e main o f f i c e b u i l d i n g o f t h e C i t i z e n s and
Southern N a t i o n a l Bank, occupying two a d j o i n i n g rooms i n t h e basement near
the safe d e p o s i t v a u l t which have been remodeled and made a v a i l a b l e as an
o f f i c e and counting room.

Several compartments i n t h e safe d e p o s i t v a u l t are

a l s o assigned t o t h e Agency.
which i t

No r e n t i s p a i d by t h e Agency f o r the space

occupies.




.180

(d) Agency Personnel:
As o f December 51, 1937, the s t a f f o f t h e Agency c o n s i s t e d o f a manager
and a s s i s t a n t manager w i t h annual s a l a r i e s t o t a l l i n g $6,400.

A guard and two

emergency custodians are each p a i d #12 per year by t h e Agency t o b r i n g them
tinder t h e Federal Reserve banks 1 b l a n k e t bond.

The guard devotes h i s

full

time t o t h e Agency and, i n a d d i t i o n t o t h e $12 p a i d by t h e Agency, i s p a i d a
s a l a r y o f $900 per year by t h e f o u r member banks i n Savannah.
(e) Agency Expenses
O p e r a t i n g expenses o f t h e Savannah Agency f o r t h e years 1931 t o 1937,
i n c l u s i v e , were as f o l l o w s :
Year

Amount

1931
1932
1933
1934
1935
1936
1937

$ 9,800

10,100
9,700

10,100
9,700
8,300
8,400

( f ) A t t i t u d e o f Federal Reserve Bank o f A t l a n t a Toward t h e Agency:
As e a r l y as 1932, t h e Board r s Examiners i n r e p o r t s o f examination o f
t h e Federal Reserve Bank o f A t l a n t a had questioned t h e n e c e s s i t y o f c o n t i n u i n g t h e Savannah Agency.

Because o f t h i s f a c t , i n June, 1933, a committee

appointed by t h e D i r e c t o r s o f t h e A t l a n t a Reserve Bank v i s i t e d t h e Savannah
Agency and a f t e r meeting w i t h t h e Savannah C l e a r i n g House, which was made up
o f f o u r member banks, a l l o f which favored continuance o f t h e Agency, subm i t t e d a r e p o r t c o n t a i n i n g t h e f o l l o w i n g observations and recommendation:
" I t i s t h e o p i n i o n o f your Committee t h a t t h i s Agency
i s p e r f o r m i n g a v a l u a b l e s e r v i c e t o the f o u r member banks
l o c a t e d i n Savannah and t h a t , i n view o f i t s importance as
a p o r t and t h e need f o r l a r g e sums o f money from time t o




.161

t i m e beyond the normal amount o f money t h a t a bank would
c a r r y , t h e c o n t i n u a t i o n o f t h e Agency i s j u s t i f i e d .
n

The Savannah banks make l a r g e shipments o f currency
t o banks i n t h e i r t e r r i t o r y and some o f these banks are
members o f t h e F e d e r a l Reserve System. To t h i s e x t e n t the
Federal Reserve Bank i s r e l i e v e d o f t r a n s p o r t a t i o n cost on
money shipped by Savannah banks t o our member banks.
" I n view o f t h e l o n g and s a t i s f a c t o r y o p e r a t i o n o f
t h e Agency as i t r e l a t e s t o our Savannah member banks,
and a f t e r c o n s i d e r i n g t h e s e r v i c e t o our Savannah member
banks t h a t t h i s Agency renders, i t i s t h e o p i n i o n o f your
Committee t h a t i t should be continued, and we so recommend."
The D i r e c t o r s o f t h e A t l a n t a Bank a f t e r r e v i e w i n g t h i s r e p o r t voted t o
continue t h e Agency and so advised t h e Board.
I n connection w i t h t h e general survey requested by t h e Board i n i t s
l e t t e r o f March 25, 1936 (X-9532), the o p e r a t i o n s o f t h e Savannah Agency were
again reviewed.

I n t h e r e p o r t o f survey, P r e s i d e n t Newton s t a t e d t h a t i n

h i s o p i n i o n t h e Agency should be closed and t h a t he would recommend t o h i s
D i r e c t o r s t h a t such a c t i o n be taken e f f e c t i v e December 31, 1956, s u b j e c t o f
course t o the approval o f t h e Board o f Governors.

While t h e D i r e c t o r s o f

t h e A t l a n t a Bank were acquainted w i t h Mr. Newton's recommendation,
a c t i o n t o d i s c o n t i n u e t h e Agency was n o t taken d u r i n g 1936.

definite

However, i n

January, 1937, a committee o f d i r e c t o r s , appointed t o i n v e s t i g a t e t h e q u e s t i o n
f u r t h e r , r e p o r t e d t h a t i t was a matter o f considerable doubt whether the Agency
was o f any b e n e f i t t o t h e general community as d i s t i n g u i s h e d from t h e f o u r
l o c a l member banks, b u t recommended t h a t u n t i l t h e Havana Agency, which operates a t an annual l o s s o f approximately $30,000, was closed, or the cost t h e r e o f assumed p r o p o r t i o n a t e l y by other Reserve banks, no f u r t h e r

consideration

should be given t o discontinuance o f t h e Savannah Agency.




.162

SAVANNAH AGENCY
VOLUME OF OPERATIONS
Currency and Coin

Number o f u n i t s handled
Currency
Coin

ft
Gi

Digitized
C* for FRASER


Amount o f u n i t s handled
Currency
Coin

1931

3,24.8,000

715,000

1*8,754,000

t106,000

1932

2,528,000

496,000

7,646,000

87,000

1933

3,529,000

660,000

10,399,000

171,000

1934

3,080,000

557,000

7,238,000

35,000

1935

3,222,000

437,000

7,947,003

36,000

1936

3,189,000

937,000

8,135,000

71,000

DETROIT BRANCH - FEDERAL RESERVE BANK OF CHICAGO
(a) C i t y o f D e t r o i t :
D e t r o i t , w i t h a p o p u l a t i o n o f 1,568,662, i s t h e f o u r t h l a r g e s t c i t y
t h e U n i t e d States and t h e l a r g e s t c i t y i n Michigan.

in

I t i s l o c a t e d i n the

n o r t h e a s t e r n p a r t o f the S t a t e , on t h e D e t r o i t R i v e r , one o f the connecting
l i n k s i n t h e Great Lakes c h a i n , and i s s a i d t o serve a t r a d e area h a v i n g
a r a d i u s o f approximately 50 m i l e s . W i t h i n t h i s area over 2,500,000 people
reside.

T r a n s p o r t a t i o n f a c i l i t i e s are provided t y n i n e r a i l r o a d s ,

including

t h e Canadian P a c i f i c , Grand Trunk, Michigan Central', New York C e n t r a l , Pere
Marquette, Pennsylvania and Wabash; also by v a r i o u s steamship l i n e s arid several
air lines.
According t o t h e B i e n n i a l Census o f Manufactures, Wayne County, i n which
D e t r o i t i s l o c a t e d , had 2,465 manufacturing establishments i n 1935, which had an
o u t p u t valued a t

$976,295,000.

The p r i n c i p a l i n d u s t r y i s t h e manufacturing

of automobiles and accessories; over 85% o f a l l motor cars made i n the U n i t e d
States being manufactured i n the D e t r o i t area.

Other major i n d u s t r i e s were

the p r o d u c t i o n o f machinery, machine s u p p l i e d , d r u g s , d r y goods, wearing
a p p a r e l , j e w e l r y , tobacco p r o d u c t s , meat and meat products and paper.

The

area i s a l s o noted f o r d a i r y i n g and the r a i s i n g o f f r u i t and v e g e t a b l e s .
The Census o f American Business f or T935~~33rstB 22,646 r e t a i l and 2,465
wholesale establishments o p e r a t i n g i n Wayne

C o u n t y ,

which enjoyed sales aggregat-

i n g $625,637,000 and #976,295,000, r e s p e c t i v e l y , d u r i n g t h a t y e a r .
Banking f a c i l i t i e s i n D e t r o i t are provided by t h r e e S t a t e banks (2 members),
two n a t i o n a l banis,

t h r e e i n d u s t r i a l banks and f o u r t r u s t companies.

These

i n s t i t u t i o n s had d e p o s i t s aggregating $768,185,000 as o f December 31, 1936,
and o f t h i s amount $695,775,000 was c a r r i e d by the f o u r l o c a l member banksj the




.164

t h r e e l a r g e r o f which were o p e r a t i n g an aggregate o f 58 branches i n t h e c i t y .
D e b i t s t o i n d i v i d u a l accounts i n banks o f t h e c i t y aggregated $10,616,325,000
d u r i n g t h e year 1936, or an average o f approximately $35,380,000 f o r each banki n g day.

I n t h i s r e s p e c t D e t r o i t leads a l l o t h e r branch c i t i e s and a l l b u t f o u r

Reserve bank c i t i e s .
(b) Branch T e r r i t o r y and F u n c t i o n s ;
The D e t r o i t Branch was e s t a b l i s h e d March 18, 1918, and serves n i n e t e e n
c o u n t i e s l o c a t e d i n t h e southeastern p a r t o f t h e S t a t e o f Michigan.

The branch

zone c o n s t i t u t e s 6% o f t h e l a n d area o f t h e Seventh D i s t r i c t and has 17% of
t o t a l population.

its

Approximately 8.2$ o f a l l banks i n the d i s t r i c t are w i t h i n

t h i s area.
As o f December 31, 1936, t h e r e were 214 banks, e x c l u s i v e o f mutual savings
banks, i n t h e branch zone and o f t h i s number 81, i n c l u d i n g 23 n a t i o n a l and 58
S t a t e i n s t i t u t i o n s , were membeisof t h e System.
banks i n t h e zone were on the par l i s t .

A l l b u t two o f t h e 133 nonmember

The f o l l o w i n g f i g u r e s taken from r e -

p o r t s o f c o n d i t i o n as o f the same date show the s i z e o f member bank f o o t i n g s i n
t h e branch zone as compared t o those o f t h e Seventh D i s t r i c t as a whole;

No. Member
Banks
Seventh D i s t r i c t
Branch Zone

741
81

Capital
Loans and
and
Investments
Surplus
(000 o m i t t e d )
$4,277,515
$416,241
629,868
55,680

T o t a l Deposits
$5,886,160
917,215

There were only two branch zones i n the System having l a r g e r member bank
f o o t i n g s than t h e D e t r o i t zonej namely, P i t t s b u r g h and Los Angeles.
The D e t r o i t Branch renders the same s e r v i c e t o banks i n i t s zone as i s
a v a i l a b l e a t t h e Head O f f i c e i n s o f a r as r e c e i p t s and disbursements o f currency
and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , noncash c o l l e c t i o n s , safekeeping o f




.165

s e c u r i t i e s and loans t o member banks are concerned.

The reserve accounts of

member banks i n t h e branch zone, as w e l l as accounts o f nonmember c l e a r i n g banks
and o t h e r Federal Reserve banks, are maintained a t the Branch, which a l s o maint a i n s a memorandum general l e d g e r and record o f earnings and expenses.

Trans-

a c t i o n s are cleared d a i l y through c o n t r o l accounts maintained a t the Head O f f i c e .
Member bank borrowings are passed upon a t the Branch and immediate c r e d i t
g i v e n , s u b j e c t t o f i n a l approval o f the Head O f f i c e .

is

Schedules covering such

t r a n s a c t i o n s are forwarded t o the Head O f f i c e , but the notes and c o l l a t e r a l ,
i f any, are r e t a i n e d by the Branch.

The Branch has no Bank Examination, Bank

R e l a t i o n s , F a i l e d Banks, Research, Legal or F i s c a l Agency departments.
As o f September 25, 1937, member banks i n t h e branch zone had the f o l l o w i n g Reserve Bank balances?
No. o f
Banks
City of D e t r o i t
Remainder o f Zone

4
8£
88

Reserve
Balances
$102,808,123
27.136 t 238
$129.944.361

Deferred
Balances
$6,931,996
1.091.111
$8.023.107

Capital
Stock
$1,180,500
597.700
$1.778.200

Bills
Discounted

$20.000
$20.000

D e t r o i t i s 284 t r a i n m i l e s (6 h r s . and 26 mins.) from Chicago. On any b u s i ness day t h e r e are a number of t r a i n s l e a v i n g both p o i n t s a f t e r 7 P.M. and
a r r i v i n g a t the o t h e r b e f o r e 8 A.M. on the f o l l o w i n g day, i . e . , o v e r n i g h t m a i l .
The Federal Reserve Bank of Chicago advises t h a t more than 90$ o f t h e member
banks i n Michigan can be reached o v e r n i g h t from Chicago as w e l l as from D e t r o i t
and t h a t more t r a i n s c a r r y i n g r e g i s t e r e d m a i l are a v a i l a b l e a t Chicago than a t
Detroit.

I t i s p o i n t e d o u t , however, t h a t approximately 66 2/3% o f a l l Michigan

banks, i r r e s p e c t i v e o f branch zone l i n e s , r e m i t f o r Chicago and D e t r o i t cash
l e t t e r s t o D e t r o i t and t h a t t h i s t r e n d i s g r a d u a l l y i n c r e a s i n g , a l s o t h a t 75%




' 166

o f a l l country checks, t h a t i s checks drawn on banks l o c a t e d i n Michigan o u t side o f D e t r o i t , are r e c e i v e d through D e t r o i t banks. F u r t h e r , i t i s s t a t e d t h a t
the D e t r o i t Branch handles as many noncash c o l l e c t i o n s as t h e Head O f f i c e .
Because of these f a c t o r s , i t i s i n d i c a t e d t h a t discontinuance o f t h e D e t r o i t
Branch would n o t o n l y s e r i o u s l y a f f e c t the character o f s e r v i c e rendered t o
banks i n D e t r o i t , b u t t h a t i t would a l s o slow up t h e s e r v i c e rendered t o o u t l y i n g banks and t o t h e System as a whole, p a r t i c u l a r l y i n s o f a r as t h e c o l l e c t i o n
f u n c t i o n s are concerned.
Other than D e t r o i t , the more populous c i t i e s i n t h e branch zone are F l i n t ,
156,492; Saginaw, 80,715; Lansing, 78,397, P o n t i a c , 64,928; Hamtramck, 56,268;
Jackson,

55,187; Highland Park, 52,959; Dearborn, 50,358; Bay C i t y , 47,555

and P o r t Huron, 31,361.

A l l o f these c i t i e s except Hamtramck, which has t h r e e

nonmember banks, i s served by one o r more member banks o r a branch o f a member
bank.
(c) Branch B u i l d i n g s
The D e t r o i t Branch has occupied i t s present q u a r t e r s a t 160 West F o r t
S t r e e t , sinee December, 1927.

The f o l l o w i n g f i g u r e s show t h e o r i g i n a l cost

and book v a l u e , as of September 25, 1957, o f the branch premises;

Cost
Land
Building
V a u l t and v a u l t equipment
Fixed machinery and equipment

$

650,000
836,144)
170,725)
$1,656,869
115.840
$1.772.709

Book Value
9 - 25- 37
$ 412,500
550,065
$ 762,565
9.496
I 772.061

I n commenting on t h e p o t e n t i a l sale v a l u e o f the branch b u i l d i n g i n the
event t h e Branch were d i s c o n t i n u e d , t h e Reserve bank s t a t e s t h a t the b u i l d i n g
o f t h e Bank of D e t r o i t ( c l o s e d ) , l o c a t e d w i t h i n o n e - h a l f block o f t h e Branch,




.167

which was constructed a t about t h e same t i m e , i s t o be t o r n down and t h e
ground used as a p a r k i n g space i n order t o pay taxes.
(d) Earnings - Branch Books?
The Branch's earnings as r e f l e c t e d by i t s books f o r t h e year 1931 t o
1937, i n c l u s i v e , were as f o l l o w s :
Year

Earnings

1931
1932
1933
1934
1935
1936

1411,000
531,700
133,100
14,700
39,300
5,200

1937

5,000

The above f i g u r e s a r e , o f course, incomplete s i n c e t h e Branch r e c e i v e s
no c r e d i t f o r income r e c e i v e d by the Head O f f i c e on investments, a p o r t i o n o f
which i s made p o s s i b l e by the reserve balances and Reserve bank stock i n v e s t ment o f banks i n the branch zone.

Branch earnings depend almost e n t i r e l y on

the e x t e n t t o which member banks i n the branch zone use the c r e d i t
o f t h e System.

facilities

Income d e r i v e d by the Branch from t h i s source amounted t o

$500,400 i n 1932 and t o only $600 i n 1937.
(e) Branch Personnel:
The r e p o r t of examination o f the Federal Reserve Bank o f Chicago, as
o f September 25, 1937, shows t h e f o l l o w i n g i n regard t o s a l a r i e s and personnel
a t the D e t r o i t Branch:

Officers
Employees

Seat. 25. 1937
Number Amount

Nov. 21. 1936
Number Amount

3
13£
136

4
122
126

$ 23,600
208.200
$231.800

| 29,400
194.100
$225.500

Increase
Number Amount
1*
11
10

$ 5,$00*
14.100
$ 8.500

* Decrease
O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n the above f i g u r e s .



.168

( f ) Branch Expense by Functionss
The expenses o f t h e D e t r o i t Branch by f u n c t i o n s f o r the years 1932 t o
1957, i n c l u s i v e , ?/ere as followss
1932

1933

1934

1935

1936

1937

General Overheads
Controllable
$ 28,540 $ 30,608 $ 24,565 $ 17,400 $ 22,637 $ 21,075
Noncontrollable
18,815
109
240
136
24,215
18,483
-^Provision o f Space
65,791
47,235
75,177
76,169
51,887
46,719
P r o v i s i o n o f Personnel
63,040
3,603
4,324
33,829
54,532
4,164
General Service
74,277
80,826
76,268
53,068
61,709
54,562
Postage
19,629
20,298
21,376
23,719
21,350
21,677
Insurance
6,692
7,175
4,146
2,926
2,544
3,399
Loans,rediscounts,etc.
9,557
712
25,644
21,589
7,761
2,724
13,579
Securities
14,094
12,054
10,849
10,479
10,063
Currency & Coin
72,328
56,714
63,055
79,729
74,503
70,524
Check C o l l e c t i o n
74,691
68,187
53,600
54,625
61,956
57,411
Non-cash C o l l e c t i o n
21,896
20,315
21,709
24,703
24,388
20,675
Accounting
32,436
37,256
28,842
27,470
32,208
31,552
F i s c a l Agency69,398 194,002 205,078 214,125 163,526 135,900
Legal
3,032
3,131
4,047
300
400
503
Auditing
13,304
10,457
16,132
4,366
5,337
13,363
Bank R e l a t i o n s
5,551
1,178
3,804
1,141
1,596
1,590
Bank Examinations
3,675
19,038
15,737
13,587
4,153
796
2,568
632
F.R.Note Issues
752
813
383
25
Miscellaneous
53
91
2,074
T o t a l Expense
#570,320 $696,289 $673,673 $651,346 $586,903 $496,019
Less - Reimbursable
F i s c a l Agency Expense 66.321 189.538 197.551 183.441 147.782 120.489
Net Expense
$505,999 $506,751 $476,122 $467,905 $439,121 $375,530
* Represents the n e t expense - income from r e n t a l s h a v i n g been deducted.
There were twenty branches i n the System which operated a t l e s s expense
than t h e D e t r o i t Branch i n 1937.

D e t r o i t i s one o f t h e l a r g e s t branches i n

t h e System based on t h e volume o f o p e r a t i o n s .
(g) Volume o f Operations a t D e t r o i t Branch s
The f o l l o w i n g i s a comparison o f t h e volume o f o p e r a t i o n s i n v a r i o u s
departments o f the D e t r o i t Branch and the Head O f f i c e d u r i n g t h e l a s t




six

.169

months o f 1936s
D e t r o i t Branch

Head O f f i c e

Discount Department;
Notes rediscounted
C o l l a t e r a l notes discounted
2
2
I n d u s t r i a l advances
2
Branches w i t h l a r g e r volume: B u f f a l o , B a l t i m o r e , New Orleans, Memphis, Denver,
Omaha, E l Paso, Houston, San Antonio, S a l t Lake
C i t y , and Spokane.
Safekeeping:
Member bank s e c u r i t i e s 12-31-36
Branches w i t h l a r g e r volume: P i t t s b u r g h

$58,783,000

$1,079,753,000

Currency & Coin:
1. Number of b i l l s received and counted
26,106,000
118,745,000
Branches w i t h l a r g e r volume: B a l t i m o r e and Los Angeles.
Cost per one thousand u n i t s handled
52 cents
38 cents
Branches w i t h higher u n i t c o s t : B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , Helena,
Denver, Omaha, E l Paso, San Antonio, P o r t l a n d ,
S a l t Lake C i t y , S e a t t l e and Spokane.
2. Number of coins received and counted
7,048,000
47,130,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , New
Orleans, Houston and Los Angeles.
Cost per one thousand u n i t s handled
16 cents
19 cents
Branches w i t h higher u n i t c o s t : A l l branches except B u f f a l o , B a l t i m o r e , C h a r l o t t e ,
J a c k s o n v i l l e , New Orleans, L o u i s v i l l e , Memphis,
Oklahoma C i t y , Houston and Los Angeles.
Check C o l l e c t i o n :
1. Number of c i t y checks ( c l e a r i n g s ) received
3,088,000
10,243,000
Branches w i t h l a r g e r volumes P i t t s b u r g h and Los Angeles.
Cost per one thousand u n i t s handled
$1.45
$2.22
Branches w i t h higher u n i t costs A l l branches except B a l t i m o r e , C h a r l o t t e ,
Birmingham, Jacksonville., N a s h v i l l e , San
Antonio and New Orleans.
2. Number of country checks (outgoing) received; 5,546,000
43,162,000
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h , Baltimore and Oklahoma C i t y .
Cost per one thousand u n i t s handled
$2.62
$3.01
Branches w i t h higher u n i t costs B u f f a l o , Los Angeles, P o r t l a n d , S a l t Lake C i t y ,
Spokane and S e a t t l e .




170

D e t r o i t Branch
Head O f f i c e
Non-cash C o l l e c t i o n s :
1 . Number o f c i t y c o l l e c t i o n s handled
27,239
43,338
Branches w i t h l a r g e r volume: L i t t l e Rock and Omaha.
Cost per u n i t handled
19.8
21.8
Branches w i t h h i g h e r u n i t c o s t : C i n c i n n a t i , P i t t s b u r g h , Los Angeles, P o r t l a n d
and S e a t t l e .
2. Number of country c o l l e c t i o n s handled
13,572
190,808
Branches w i t h l a r g e r volume: B u f f a l o , B a l t i m o r e , C h a r l o t t e , Denver, Oklahoma
C i t y , Omaha, Los Angeles, S a l t Lake C i t y and
Spokane.
Cost per u n i t handled
10.3 cents
6.4 cents
Branches w i t h higher u n i t c o s t : B u f f a l o , B a l t i m o r e , Birmingham, J a c k s o n v i l l e ,
N a s h v i l l e , New Orleans, Helena, San Antonio,
Los Angeles, P o r t l a n d and S e a t t l e .
3. Number o f coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
15,259
118,441
Branches w i t h l a r g e r volume: Baltimore
Cost per u n i t handled
15.7 cents
13.3 cents
Branches w i t h higher u n i t c o s t : C h a r l o t t e , J a c k s o n v i l l e , Helena, E l Paso,
Los Angeles, P o r t l a n d , S a l t Lake C i t y and
Spokane.
A schedule showing the volume of operations of the D e t r o i t Branch f o r the
years 1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f D e t r o i t Branch by Board's Examiners - 1934:
During the course o f an examination o f the Federal Reserve Bank of Chicago,
made as o f February 10, 1934, the Board's Examiners reviewed t h e operations of
the D e t r o i t Branch and expressed the f o l l o w i n g o p i n i o n as t o the n e c e s s i t y f o r
i t s continuance:
"The D e t r o i t Branch i s one o f the l a r g e s t branches i n the
System, but i n the o p i n i o n of your examiner, i t s continuance, l i k e
t h a t o f the C i n c i n n a t i and P i t t s b u r g h branches, i s j u s t i f i e d only
because of the importance of the branch c i t y . "
I t was pointed out t h a t there were f o u r l i c e n s e d member banks w i t h t o t a l
resources o f approximately $350,000,000 (now |746,000,000) i n the c i t y o f
D e t r o i t , and t h a t a l l b u t f o u r o f seventy-four member bank p o i n t s i n the
D e t r o i t zone were w i t h i n overnight m a i l time from Chicago.




171

An apparent change i n o p i n i o n i s r e f l e c t e d i n t h e f o l l o w i n g comment appeari n g i n the c o n f i d e n t i a l s e c t i o n o f the r e p o r t o f an examination o f t h e Chicago
Reserve bank as o f November 21, 1936:
" D u r i n g the past few years the management has given considerable thought
and study w i t h the view t o determining whether the f u n c t i o n s o f t h e D e t r o i t
branch could be t r a n s f e r r e d t o t h e head o f f i c e a t a s u b s t a n t i a l savings i n
o p e r a t i n g costs w i t h o u t i m p a i r i n g the s e r v i c e s which the System i s now r e n d e r i n g member banks i n t h a t zone. A few minor f u n c t i o n s which d i d not d i r e c t l y
a f f e c t s e r v i c e t o member banks have been t r a n s f e r r e d t o the head o f f i c e .
However, i n vie?; o f the s i z e and importance o f t h e C i t y o f D e t r o i t and i n
the i n t e r e s t of s e r v i c e t o member banks i n the branch t e r r i t o r y , i t was n o t
considered f e a s i b l e t o t r a n s f e r any o f the more i m p o r t a n t o p e r a t i n g f u n c t i o n s
t o the head o f f i c e , and i n t h i s your examiner agrees."
( i ) Survey o f D e t r o i t Branch made by Federal Reserve Bank o f Chicago—1956s
The Federal Reserve Bank o f Chicago made a thorough survey o f the o p e r a t i o n
of t h e D e t r o i t Branch, as requested i n t h e Board's l e t t e r o f March 25, 1956
(X-9532), t o determine whether any o f the o p e r a t i o n s being performed a t the
Branch could be t r a n s f e r r e d t o the Head O f f i c e a t a s u b s t a n t i a l saving i n
o p e r a t i n g cost and w i t h o u t i m p a i r i n g the s e r v i c e rendered t o member banks and
through them t o commerce, i n d u s t r y and a g r i c u l t u r e .
A t t e n t i o n was c a l l e d t o the f a c t t h a t a comprehensive survey o f t h e Branch
was undertaken i n 1954 and t h a t as a r e s u l t c e r t a i n nonbanking f u n c t i o n s had
been t r a n s f e r r e d t o the Head O f f i c e and t h a t a r e d u c t i o n i n s a l a r y expense
aggregating approximately f10,000 per month had been e f f e c t e d w i t h o u t i m p a i r i n g t h e e f f i c i e n c y o f s e r v i c e t o member banks.

I n view o f the previous s t u d i e s

the 1956 survey was c o n f i n e d l a r g e l y toUie cash c o l l e c t i o n , noncash c o l l e c t i o n ,
currency and safe-keeping f u n c t i o n s ) p r i n c i p a l l y t h e c o l l e c t i o n f u n c t i o n s .




As a r e s u l t o f t h i s survey, i t was concluded t h a t a saving o f a t l e a s t
$100,000 could be made by t r a n s f e r r i n g a l l Branch f u n c t i o n s t o the Head O f f i c e ,
b u t t h a t such a move would s e r i o u s l y i m p a i r t h e s e r v i c e rendered t o member
banks i n Michigan, and would arouse s t r o n g o p p o s i t i o n p a r t i c u l a r l y on the p a r t
o f member banks i n D e t r o i t and i n i t s immediate v i c i n i t y . I t was p o i n t e d out
t h a t , d e s p i t e e x c e l l e n t m a i l communication between Chicago and member bank p o i n t s
i n Michigan, the n a t u r a l t r e n d o f banking i n the S t a t e was toward D e t r o i t and
t h a t member banks i n the S t a t e would d e a l w i t h D e t r o i t correspondents
preference t o sending t h e i r items t o Chicago.

in

I t was f u r t h e r s t a t e d t h a t

o p e r a t i o n o f the D e t r o i t Branch q u a r t e r s merely as a currency depot would
be uneconomical, the overhead expense being a l l out o f p r o p o r t i o n t o t h e
s e r v i c e rendered; t h a t a move t o smaller q u a r t e r s would c a l l f o r d i s p o s i t i o n
of t h e present q u a r t e r s , which could n o t be accomplished w i t h o u t a s u b s t a n t i a l
l o s s ; and t h a t t r a n s f e r o f t h e currency f u n c t i o n t o Chicago would work a
hardship on D e t r o i t banks, which would have t o m a i n t a i n h i g h e r cash r e s e r v e s ,
and a t t h e same time would save very l i t t l e as i t would increase s h i p p i n g
charges from Washington and t o p o i n t s i n Michigan and r e q u i r e an augmented
personnel a t Chicago.

I n g e n e r a l , i t was i n d i c a t e d t h a t general o p e r a t i n g

economies r a t h e r than c u r t a i l m e n t o f f u n c t i o n s was t h e more d e s i r a b l e means
o f r e d u c i n g expenses a t t h e D e t r o i t Branch.




DETROIT BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled
Currency
Received
and

Coin
Received
and
Counted
_________

Checks Handled
Gov't
Checks

Non Cash
Collect i on i terns
AI I
Gov't

Fiscal Agency
Transactions

Coupons

Other

Direct

Transfer

Date

Bills
Dt scounted

1931

14,525

77,517,000

125,374,000

6,996,000 15,116,000

671,000

22,783,000

251,036

131,883

2,346

1932

17,396

69,731,000

121,043,000

6,630,000 10,475,000

672,000

17,777,000

248,732

131,762

2,320

10

36,550

1933

4,617

68,149,000

107,347,000

5,329,000

6,314,000

919,000

12,562,000

259,304

172,505

7,375

66

20,472

193**

168

69,475,000

120,170,000

5,588,000

8,678,000

2,417,000

16,633,000

402,762

157,658

12,022

18

21,578

1935

6

77,530,000

45,802,000

5,979,000 10,602,000

1,084,000

17,665,000

463,000

149,000

23,616 14,274

23,299

1936

2

60,395,000

25,895,000

6,073,000 10,811,000

1,061,000

17,945,000

370,000

115,000

6,292

6,605

128,298

5,508

6,982

78,214

11,361

205

6,942,347

6,147

105,727

12,155

135

2,191,959

7,660

138,779

8,408

125

2,154,164

7,482

186,411

11,688

3,030

2,726,719

6,597

193,423

10,327

1,527

2,207,086

Counted

Country

Total

Other

of
Funds
46,291

5,076

23,000

Amounts Handled
(in thousands of dollars)
1931

Iff*
1933
1934
1935
1936

512,650
592,395
104,670
5,359
277
85


§
It*®


459,331

tyO 1, 112
544,691
418,353
475,622
303,309

7,342
3.885.294

1,075,278

106,324

5,066,896

2,554,522

723,688

81,561

3,359,771

2,305,206

592,107

97,955

2,995,268

4,025,318

821,224

140,733

4,995,275

5,540,391

1,050,441

153,683

6,744,515

6.008.295

1,027,542

192,998

7,228,835

7,357
17,064
7,908
3,142
1,869

4,662,218

LITTLE ROCK BRANCH - FEDERAL RESERVE BANK OF ST. LOUIS.
(a) C i t y o f L i t t l e Rock
L i t t l e Rock, w i t h a p o p u l a t i o n o f 81,679, i s the l a r g e s t c i t y i n Arkansas.
I t i s l o c a t e d i n t h e c e n t r a l p a r t o f the S t a t e , on the Arkansas R i v e r , and i s
said t o serve a t r a d e area extending approximately 64 m i l e s i n a l l d i r e c t i o n s
i n which about 660,000 people r e s i d e .

T r a n s p o r t a t i o n f a c i l i t i e s are provided

by t h e M i s s o u r i P a c i f i c , S t . Louis Southwestern, and the Chicago, Rock I s l a n d
& P a c i f i c r a i l r o a d s j a l s o by a number o f bus l i n e s and two a i r l i n e s .
According t o the B i e n n i a l Census o f Manufactures t h e r e were 155 manuf a c t u r i n g establishments i n P u l a s k i County, i n which L i t t l e Rock i s l o c a t e d ,
1955.

in

These concerns had an o u t p u t valued a t $24,275,000 d u r i n g t h a t y e a r .

The p r i n c i p a l manufactures were cottonseed o i l , f e r t i l i z e r , f u r n i t u r e ,
canned goods, d a i r y products and meat products.

textiles,

The c i t y i s noted as a c o t t o n

warehousing and marketing c e n t e r .
The Census o f American Business f o r 1955 l i s t s 1,994 r e t a i l and 219 wholes a l e f i r m s o p e r a t i n g i n P u l a s k i County which enjoyed sales aggregating
#58,925,000 and #52,467,000, r e s p e c t i v e l y , d u r i n g t h a t y e a r .
Banking f a c i l i t i e s i n L i t t l e Rock are provided by t h r e e n a t i o n a l banks and
one S t a t e member bank.
as o f December 51, 1956.

These i n s t i t u t i o n s had d e p o s i t s aggregating $40,887,000
D e b i t s t o i n d i v i d u a l accounts i n banks o f t h e c i t y

amounted t o #418,295,000 d u r i n g 1936, or an average o f approximately $1,594,000
f o r each banking day.
(b) Branch T e r r i t o r y and Functions*
The L i t t l e Rock Branch was e s t a b l i s h e d January 6 , 1919 and serves f i f t y - s i x
c i t i e s i n the State o f Arkansas.

While t h e branch t e r r i t o r y i s n o t determined

by State o r County l i n e s i t i s estimated t h a t i t represents approximately 20%




.175

o f the l a n d area o f the E i g h t h D i s t r i c t and has about 14$ o f i t s t o t a l population.

Approximately 10$ o f a l l banks i n the d i s t r i c t operate i n c i t i e s served

by the branch.
As o f December 51, 1936, t h e r e were 169 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and o f t h i s number o n l y 56, i n c l u d i n g 30 n a t i o n a l and
6 S t a t e i n s t i t u t i o n s , were members o f t h e System.
member banks i n the zone were on t h e par l i s t .

T h i r t y - n i n e o f t h e 133 non-

The f o l l o w i n g f i g u r e s taken

f r o m r e p o r t s of c o n d i t i o n as o f the same date show the s i z e o f member bank
f o o t i n g s i n t h e branch zone as compared t o those o f t h e E i g h t h D i s t r i c t as
a whole:

Eighth D i s t r i c t
Branch Zone

No. Member
Banks

Loans
and
Investments

Capital
and
Surplus
(000 omitted)

Total
Deposits

388
36

$1,092,425
56,134

$125,722
7,006

$1,480,335
89,283

There are o n l y two branch zones i n the System h a v i n g smaller bank f o o t i n g s than
t h e L i t t l e Rock zone; namely, E l Paso and Spokane.
The L i t t l e Rock Branch-rcnders s u b s t a n t i a l l y t h e same s e r v i c e t o member
banks i n i t s t e r r i t o r y as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s
and disbursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , noncash c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and borrowings are concerned.
Reserve accounts o f member banks i n the zone, as w e l l as o f nonmember c l e a r i n g
banks and o t h e r Federal Reserve banks, are maintained a t the Branch, which a l s o
maintains a memorandum general l e d g e r and a r e c o r d o f c e r t a i n earnings and expenses.

C o n t r o l accounts a r e , o f course, maintained a t the Head O f f i c e which

i s sent a d a i l y t r a n s c r i p t o f e n t r i e s a f f e c t i n g such accounts.




Immediate c r e d i t

.181

i s given t o member banks f o r d i s c o u n t o f f e r i n g s received by the Branch, s u b j e c t
t o f i n a l approval o f t h e Head O f f i c e .

Schedules covering t r a n s a c t i o n s are

forwarded t o the Head O f f i c e , but the notes and c o l l a t e r a l , i f any, are r e t a i n e d a t the Branch.

The Branch does n o t have Bank Examination, Bank Rela-

t i o n s , L e g a l , Research or F i s c a l Agency departments.
As of November 27, 19S7, member banks i n the branch zone had balances
w i t h the Reserve bank as f o l l o w s s
No. o f
Banks
L i t t l e Rock
Remainder o f Zone

4
51
55

Reserve
Balances

Deferred
Balances

Capital
Stock

Bills
Discounted

$ 5,785,927 $1,027,525 $ 68,250
5.401.878
259.808 142.150
fcLl.lB7.805
11.287.551 $210.400

L i t t l e Rock i s 549 t r a i n m i l e s (9 h r s . and 5 mins.) from S t . L o u i s .

On

any business day t r a i n s leave b o t h p o i n t s a t 7 P.M. o r l a t e r and a r r i v e a t the
o t h e r before 8 A.M. on the day f o l l o w i n g , i . e . , o v e r n i g h t m a i l .

There are 28

p o i n t s i n the branch zone i n which one or more member banks are l o c a t e d .

A

study o f m a i l schedules made i n 1954 by t h e Board's examiners i n d i c a t e d t h a t 21
o f these member bank p o i n t s were w i t h i n o v e r n i g h t m a i l time o f the Memphis
Branch and t h a t 16 o f t h e p o i n t s were w i t h i n o v e r n i g h t m a i l time o f S t . L o u i s .
I t appears, t h e r e f o r e , t h a t o n l y a small number o f o u t l y i n g banks i n t h e zone
would be inconvenienced by discontinuance o f the Branch. I t would o f course
c u r t a i l t h e s e r v i c e rendered t o the f o u r member banks i n the c i t y o f L i t t l e
Rock, which now enjoy an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h the Branch.

In

t h i s connection, i t may be s t a t e d t h a t t h e r e are a s u b s t a n t i a l number o f l a r g e r
and more important c i t i e s than L i t t l e Rock i n the U n i t e d States which do n o t
have immediate access t o Reserve bank f a c i l i t i e s .




.77

Other than L i t t l e Rock, the more populous c i t i e s i n the branch zone are
Pine B l u f f , 20,760; Hot Springs, 20,238$ and E l Dorado, 16,421.
(c) Branch B u i l d i n g s
The L i t t l e Rock Branch has occupied i t s present q u a r t e r s a t T h i r d and
L o u i s i a n a S t r e e t s since March, 1925.

The f o l l o w i n g f i g u r e s show the o r i g i n a l

cost and book v a l u e , as o f November 27, 1937, o f t h e branch premises:
Cost
Land
Building
V a u l t and v a u l t equipment
Fixed machinery and equipment

$ 85,007
186,800)
46.279)
$318,086
103*608
$421.694

Book Value
11-27-37
$ 80,000
143.404
$223,404
$223.404

(d) Earnings - Branch Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r the years 1931 t o
1937, i n c l u s i v e , were as f o l l o w s :
Year

Earnings

1931
1932
1933
1934
1935
1936

$ 61,500
38,600
14,200
8,700
5,200
100

1937

400

These f i g u r e s are incomplete since, under t h e present accounting p r o cedure, the Branch does n o t r e c e i v e any c r e d i t f o r income r e c e i v e d by the
Head O f f i c e on investments, a p o r t i o n o f which i s made p o s s i b l e by the Reserve
bank stock investment and reserve balances o f member banks i n t h e branch zone.
Income c a r r i e d on the books o f t h e Branch i s d e r i v e d c h i e f l y from borrowings by
member banks i n i t s zone.

Income from t h i s source amounted t o $60,200 i n 1931

and t o l e s s than $100 i n 1937.



.178

(e) Branch Personnel.
The r e p o r t o f examination o f the Federal Reserve Bank o f S t . L o u i s , as o f
November 27, 1957, shows the f o l l o w i n g regarding s a l a r i e s and personnel a t the
L i t t l e Rock Branch:
November 27. 1957
Number
Amount
Officers
Employees

5
4£)
H

$17,100
54.800
$71.900

October 51. 1956
Number
Amount
5
41
H

$15,500
54.800
$70.100

Increase
Number
Amount
$ 1,800
l(Dec.)
i ( D e c . ) $ 1.800

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n the above f i g u r e s .
( f ) Branch Expense by F u n c t i o n s :
The expenses of t h e L i t t l e Rock Branch by f u n c t i o n s f o r t h e years 1952
t o 1937, i n c l u s i v e , were as f o l l o w s :
1952
1955
1954
1955
1956
1957
General Overhead:
Controllable
$ 11, 650 iI 12,474 i} 11,827 ii! 11,990 $ 10,,770 <P 11, 215
Noncontrollable
5,459
4,953
3, 383
12, 911
10,858
9,618
7.,993
13, 560
* P r o v i s i o n o f Space
9,372
447
12,381
P r o v i s i o n o f Personnel
505
7,414
14a,161
1 , 168
16, 185
15,
General Service
16,596
19,881
423
18,327
,376
16,
317
,429
697
5,415
4,187
Postage
6,062
6
,
4,
5,
077
2,295
1,942
,854
Insurance
3,885
2,
1 , 544
1;
1,416
3
692
697
F a i l e d Banks
4,
990
3,818
8,888
2,264
903
Loans, r e d i s c o u n t s , e t c ,. 8 , 548
617
2,425
2,486
,942
863
4,042
Securities
2,
5,
17,,271
17, 748
16,126
9,635
Currency & Coin
9,723
8 , 672
10,525
10,,346
10, 739
11, 284
11,476
Check C o l l e c t i o n
12,768
6,195
6,668
,744
Non-cash C o l l e c t i o n
7,341
4 , 366
6,
7 , 478
10,
12,880
815
15, 634
13,855
14,615
11,,813
Accounting
35,637
49,
,618
42, 870
F i s c a l Agency
11, 289
21,874
50,953
Legal
25
3,276
3,998
Auditing
3,093
5> 881
5;,545
s , 222
86
463
92
Bank R e l a t i o n s
11
301
301
F . ft. Note Issues
768
700
364
72
85
159
144
S t a t i s t i c a l & A n a l y t i c a l 132
167
88
Works Progress
T o t a l Expense
$123,065 $135,656 $150,150 $168,728 $160,705 $146,824
Less - Reimbursable
F i s c a l Agency
Expense
10.569
20.695
54.414
42.690
42.575
55.561
Net Expense
&112.694 &L14.961 1115.756 $126.058 $118.150 $111.465
* Represents the n e t expense - income from r e n t a l s having been deducted.




.179

There were only f i v e branches i n the System which operated a t a lower
net cost than t h e L i t t l e Rock Branch i n 1937; namely, Spokane, N a s h v i l l e ,
E l Paso, Birmingham and Helena.
(g) Volume o f Operations a t L i t t l e Rock Branch:
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s i n v a r i o u s d e partments o f the L i t t l e Rock Branch and t h e Head O f f i c e d u r i n g t h e l a s t

six

months o f 1936:
L i t t l e Rock Branch
Discount Department:
Notes discounted
C o l l a t e r a l notes discounted
I n d u s t r i a l advances
Branches w i t h l a r g e r volume:

Head O f f i c e

2
31
2
B u f f a l o , B a l t i m o r e , New O r l e a n s , Memphis, Denver,
Omaha, E l Paso, Houston, San A n t o n i o , S a l t Lake
C i t y and Spokane.

Safekeeping:
Member bank s e c u r i t i e s 12-31-36
12,065,000
160,823,000
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , J a c k s o n v i l l e ,
D e t r o i t , Denver, Oklahoma C i t y , Omaha and Houston.
Currency & Coin:
1. Number o f b i l l s r e c e i v e d and counted
5,020,000
36,272,000
Branches w i t h l a r g e r volume: A l l branches except Helena, Denver, Omaha,
Oklahoma C i t y , E l Paso, S a l t Lake C i t y and Spokane
Cost per one thousand u n i t s handled
31 cents
37 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except New Orleans.
2. Number o f coins r e c e i v e d and counted
2,757,000
39,431,000
Branches w i t h l a r g e r volume: A l l branches except Helena, E l Paso, S a l t Lake
C i t y and Spokane.
Cost per one thousand u n i t s handled
19 cents
11 cents
Branches w i t h h i g h e r u n i t c o s t : C i n c i n n a t i , P i t t s b u r g h , N a s h v i l l e , Helena,
Omaha, E l Paso, San A n t o n i o , P o r t l a n d , S a l t
Lake C i t y , S e a t t l e and Spokane.
Check C o l l e c t i o n :
1 . Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
357,000
3,284,000
Branches w i t h l a r g e r volume: A l l branches except Helena and E l Paso.
Cost per one thousand u n i t s handled
$1.57
$1.91
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , L o u i s v i l l e ,
Helena, Denver, Oklahoma C i t y , E l Paso, Houston
Los Angeles, P o r t l a n d , S a l t Lake C i t y , S e a t t l e
and Spokane.




L i t t l e Rock Branch
Head O f f i c e
Check C o l l e c t i o n ( C o n t ' d . ) :
2. Number o f country checks (outgoing) received
1,585,000
11,820,000
Branches w i t h l a r g e r volume: A l l branches except Memphis and E l Paso.
Cost per one thousand u n i t s handled
$1.66
fl.85
Branches w i t h h i g h e r u n i t c o s t : A l l branches except Birmingham.
Non-cash C o l l e c t i o n s :
41,811
1 . Number o f c i t y c o l l e c t i o n s handled
Branches w i t h l a r g e r volumes Omaha
Cost per u n i t handled
5 . 1 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except Omaha.

17,556
14.7 cents

2. Number o f country c o l l e c t i o n s handled
8,290
77,714
Branches w i t h l a r g e r volume: A l l branches except Birmingham, N a s h v i l l e , Helena,
E l Paso and Houston,
Cost per u n i t handled
6.3 cents
5 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except Memphis, S a l t Lake C i t y
and Spokane.
3. Number o f coupons (except Government) and
2,667
14,700
country s e c u r i t y c o l l e c t i o n s handled
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , New
Orleans, D e t r o i t , Omaha, San Antonio and Los
Angeles.
Cost per u n i t handled
10.7 cents
13.8 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except C i n c i n n a t i , P i t t s b u r g h ,
B a l t i m o r e , Birmingham, New Orleans, Denver,
Omaha and S e a t t l e .
A schedule showing the volume o f o p e r a t i o n s of t h e L i t t l e Rock Branch f o r
t h e years 1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum,
(h) Survey o f L i t t l e Rock Branch by Board's Examiners - 1934
During the course o f an examination o f the F e d e r a l Reserve Bank o f S t .
L o u i s , as o f September 8 , 1934, the Board's Examiners reviewed t h e o p e r a t i o n s o f
the L i t t l e Rock Branch and, based on i n f o r m a t i o n developed, questioned the
n e c e s s i t y f o r i t s continuance.

Reference was made i n t h a t r e p o r t t o t h e l i m i t e d

number o f banks i n t h e C i t y o f L i t t l e Rock and the branch zone, and t o the f a c t
t h a t the major p o r t i o n o f member bank p o i n t s i n the zone were w i t h i n ' o v e r n i g h t
m a i l time o f both S t . L o u i s and Memphis.




.181

( i ) Survey o f Branches by Federal Reserve Bank o f S t . L o u i s - 1956
I n accordance w i t h the request contained i n t h e Board's l e t t e r o f March
25, 1936 (X-9532), t h e Federal Reserve Bank o f S t . L o u i s appears t o have
reviewed the o p e r a t i o n s o f i t s branches w i t h a vie?/ t o a s c e r t a i n i n g whether
any o f them should be d i s c o n t i n u e d o r t h e i r f u n c t i o n s c u r t a i l e d .

A detailed

r e p o r t , i n d i c a t i n g t h e thoroughness o f t h i s survey, was n o t submitted t o the
Board.

However, on August 5 , 1936, Deputy Chairman D i l l a r d wrote a l e t t e r

t o t h e Board r e l a t i v e t o t h e general survey o f the S t . Louis Reserve Bank
which contained the f o l l o w i n g comment concerning i t s t h r e e branches:
" I n our o p i n i o n , a l l o f our branches are necessary, i f t h e
s e r v i c e s o f the System t o member banks and through them t o commerce, i n d u s t r y and a g r i c u l t u r e , are n o t t o be i m p a i r e d . L i k e w i s e ,
we do n o t f i n d t h a t any o f t h e operations now b e i n g handled by
t h e branches could be t r a n s f e r r e d t o the head o f f i c e w i t h o u t i m p a i r i n g the s e r v i c e s which the System i s r e n d e r i n g t o member banks."




\

LITTLE ROCK BRANCH
VOLUME OF OPERATIONS
Nyifi^r 9f Pieces H a i t f M

Bills
Date

DiflfMYOW

Currency

Coin

Received

Received

and

and

Cowttftf

S&MfiteS .

Hon Cash
Fiscal Agency

Checks Handied
Gov't
m

i

Gov't

Jfruptry

Checks

Total

Coupons

All

Tranaac]Hons

O^herr

Transfer
of

Other

1931

2,5*47

7,*465,000

5,*48l,000

658,000

2,628,000

3*47,000

3,633,000

27,353

38,902

333

-

10,162

1932

96*4

6,389,000

5,OHO,000

555,000

1,9*43,000

3*41,000

2,839,000

3I,*4*»8

27,**03

172

-

9,398

1933

273

6,560,000

5,92*4,000

651,000

1,730,000

556,000

2,937,000

30,151

85,231

622

-

8,762

193*4

28

7, *»70, 000

if, 332,000

729,000

2,105,000

1,122,000

3,956,000

31,881

70,389

l,*405

-

8,207

1935

10

7,6**2,000

*4,608,000

811,000

2,51*1,000

790,000

*4, 115,000

58,000

6*1,000

2,295

735

6,961

1936

2

9,220,000

5,563,000

73k,000

3,062,000

671,000

*4,**67,000

*45,000

86,000

528

2*4*1

6,000

( i n thousands of dolllars)
1931

5k

,577

29,786

531

*425, m

162,367

37,017

62*4,532

282

2*4,182

267

m

25*4,901

1932

32,066

2*4,572

m

257,126

I I I , 6*48

2*4,972

393, 7*46

396

20,98*4

253

-

179,030

1933

7,809

29,527

626

23*4,508

II9,*»72

38,92*1

392,90*4

386

31,903

**I5

-

130,737

193*1

655

28,981

*49l

327,587

961,982

*48,0*43

537,612

**7*4

33,367

836

-

1*4*4,163

1935

89

27,688

k90

517,938

190, 17*4

*43,I76

751,288

523

*t2,556

856

357

172,315

1936

100

3*4,*473

655

5914,022

235,162

52,905

882,089

**37

61,191

(*4l

93

212,296

CD for FRASER
Digitized


LOUISVILLE BRANCH - FEDERAL RESERVE BANK OF ST. LOUIS
(a) C i t y o f L o u i s v i l l e :
L o u i s v i l l e , w i t h a p o p u l a t i o n o f 307,745, i s t h e t w e n t y - f o u r t h l a r g e s t
c i t y i n the United S t a t e s and t h e

l a r g e s t c i t y i n Kentucky.

I t i s located i n

the extreme n o r t h c e n t r a l p a r t o f the S t a t e , on the Ohio R i v e r , and i s s a i d t o
serve a t r a d e area extending approximately 50 m i l e s i n a l l d i r e c t i o n s i n which
upwards o f 755,000 people r e s i d e .

T r a n s p o r t a t i o n f a c i l i t i e s are p r o v i d e d by

ten r a i l r o a d s , i n c l u d i n g t h e B a l t i m o r e & Ohio, Chesapeake & Ohio, Pennsylvania,
Southern, L o u i s v i l l e & N a s h v i l l e and t h e I l l i n o i s C e n t r a l .

I t i s a l s o served

by two n a t i o n a l a i r l i n e s and i s t h e t e r m i n a l f o r a number o f Ohio R i v e r barge
lines.
According t o t h e B i e n n i a l Census o f Manufactures t h e r e were 593 manufacturi n g establishments o p e r a t i n g i n J e f f e r s o n County, i n which L o u i s v i l l e i s
i n 1955 which had an output valued a t |302,844,000 d u r i n g t h a t y e a r .

situated,

The p r i n -

c i p a l manufactures were tobacco products, a l c o h o l i c beverages, plumbing equipment,
foundry and machine shop p r o d u c t s , motor v e h i c l e p a r t s and b o d i e s ,
implements, stoves and f u r n a c e s , t e x t i l e s and lumber p r o d u c t s .

agricultural

The Census o f

American Business f o r 1935 l i s t s 4,915 r e t a i l and 529 wholesale establishments
o p e r a t i n g i n the same area which had sales aggregating $104,852,000 and
$165,896,000, r e s p e c t i v e l y , d u r i n g t h a t y e a r .
Banking f a c i l i t i e s i n L o u i s v i l l e are provided by t h r e e n a t i o n a l banks, t e n
S t a t e banks ( t h r e e members), two i n d u s t r i a l banks and two t r u s t companies; the
l a t t e r d o i n g no commercial banking business.

These i n s t i t u t i o n s

had d e p o s i t s

aggregating $173,466,000, as o f December 31, 1936, and o f t h i s amount
$153,539,000 was c a r r i e d w i t h t h e s i x l o c a l member banks.




184,

D e b i t s t o i n d i v i d u a l accounts i n banks o f the c i t y aggregated $1,885,257,000
d u r i n g t h e year 1936, o r an average o f approximately $6,284,000 f o r each banking
day.
(b) Branch T e r r i t o r y and Functions?
The L o u i s v i l l e Branch was e s t a b l i s h e d December 3, 1917, and serves f o r t y one c i t i e s i n southern I n d i a n a and 168 c i t i e s i n the c e n t r a l and western p a r t o f
Kentucky.

While t h e branch t e r r i t o r y i s n o t determined by S t a t e o r county l i n e s

i t i s estimated t h a t t h e area served by t h e branch r e p r e s e n t s approximately 14$
o f t h e t o t a l l a n d area o f t h e E i g h t h D i s t r i c t and has about 17% o f i t s
population.

total

Approximately 19$ o f a l l banks i n t h e d i s t r i c t are i n c i t i e s served

by t i i e Branch.
As o f December 31, 1936, t h e r e were 303 banks, e x c l u s i v e o f mutual savings
banks, i n t h e branch zone and o f t h i s number 67, i n c l u d i n g 61 n a t i o n a l and 6
S t a t e i n s t i t u t i o n s , were members o f t h e System.
banks i n t h e zone were on t h e par l i s t .

A l l b u t 11 o f the 236 nonmember

The f o l l o w i n g f i g u r e s taken from r e p o r t s

of c o n d i t i o n as o f t h e same date show t h e s i z e o f member bank f o o t i n g s i n the
branch zone as compared w i t h the E i g h t h D i s t r i c t as a whole:

Eighth D i s t r i c t
Branch Zone

No.Member
Banks

Loans and
Investments

Capital
and
Surplus
(000 omitted)

Total
Deposits

388
67

$1,092,425
148,897

$125,722
20,848

$1,480,335
198,055

There are t e n branch zones i n the System having s m a l l e r member bank f o o t i n g s than t h e L o u i s v i l l e zone, namely, Spokane, E l Paso, L i t t l e Rock, Helena,
C h a r l o t t e , San A n t o n i o , N a s h v i l l e , Birmingham, Memphis and S a l t Lake C i t y .
The L o u i s v i l l e Branch renders s u b s t a n t i a l l y t h e same s e r v i c e t o member banks
i n i t s zone as i s a v a i l a b l e a t t h e Head O f f i c e , i n s o f a r as r e c e i p t s and d i s -




185,

burscaaents o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , noncash c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and borrowings o f member banks are concerned.
Reserve accounts o f member banks i n t h e zone, as w e l l as o f nonmember c l e a r i n g
banks and other Federal Reserve banks, are maintained a t the Branch, which a l s o
maintains a memorandum general l e d g e r and a r e c o r d o f earnings and expenses.
C o n t r o l accounts a r e , o f course, maintained a t t h e Head O f f i c e which i s sent a
d a i l y t r a n s c r i p t o f e n t r i e s a f f e c t i n g such accounts.

Immediate c r e d i t i s given

t o member banks f o r d i s c o u n t o f f e r i n g s r e c e i v e d by the Branch, s u b j e c t t o f i n a l
approval o f the Head O f f i c e .

Schedules c o v e r i n g t r a n s a c t i o n s are forwarded t o

the Head O f f i c e , b u t t h e notes and c o l l a t e r a l , i f any, arc r e t a i n e d a t the Branch.
The branch does n o t have Bank Examination, Bank R e l a t i o n s , L e g a l , Research o r
F i s c a l Agency departments.
As o f November 27, 1957, member banks i n t h e branch zone had balances w i t h
t h e Reserve bank as f o l l o w s :
No. o f
Banks
Indiana
Kentucky:
Louisville
Remainder of S t a t e

Reserve
Balances

Deferred
Balances

Capital
Stocks

Bills
Discounted

16

$ 1,572,011

$

3,065

$ 66,950

$

~

6
45
67

18,451,227
5.125.812
$25.147.050

4,560,144
—
$4.565.209

419,700
221.400
$708.050

—
22.000
$ 22.000

L o u i s v i l l e i s 274 t r a i n m i l e s (8 h r s . and 10 mins.) from S t . L o u i s . On any
business day t h e r e are s e v e r a l t r a i n s l e a v i n g b o t h p o i n t s a t 7 P.M. or l a t e r and
a r r i v i n g a t t h e other p r i o r t o 8 A. M. on t h e f o l l o w i n g day, i . e . ,
nail.

overnight

The branch zone i n c l u d e s 46 p o i n t s i n which one or more member banks are

l o c a t e d and m a i l schedules i n d i c a t e t h a t 22 o f these p o i n t s cannot be reached
by i u a i l from S t . L o u i s b e f o r e 10 A.M. on t h e day f o l l o w i n g m a i l i n g .

It

appears,

t h e r e f o r e , t h a t a s u b s t a n t i a l number o f o u t l y i n g banks i n t h e branch zone would




191,

be inconvenienced by discontinuance o f the Branch.

Banks i n the C i t y o f

L o u i s v i l l e which now have an o v e r - t h e - c o u n t e r c o n t a c t w i t h the Branch would
o f course s u f f e r the g r e a t e s t inconvenience.
Other than L o u i s v i l l e , t h e most populous c i t i e s served by t h e Branch are
New Albany, I n d i a n a , 25,819; Paducah, Kentucky, 53,541 and Owensboro, Kentucky,
22,765.
(c) Branch B u i l d i n g ;
The L o u i s v i l l e Branch has occupied i t s present q u a r t e r s a t 5th and Market
S t r e e t s since June, 1929.

The f o l l o w i n g f i g u r e s show t h e o r i g i n a l cost and

book v a l u e , as o f November 27, 1937, o f the branch premises:

Cost
Land
Building
V a u l t and V a u l t Equipment
Fixed Machinery and Equipment

$131,177
183,373)
42,886)
$357,436
55,250
$392.666

Book Value
11-27-37
$ 90,000
110,543
$200,543

1200.543

(d) Earnings - Branch Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r t h e

years 1931 t o

1937, i n c l u s i v e , were as f o l l o w s :
Xear

Earnings

1931
1952
1935
1934
1935
1936
1937

$ 80,200
99,200
33,000
6,100
4,300
1,000
400

The above f i g u r e s are incomplete since, under the present accounting procedure,
the Branch receives no c r e d i t f o r income r e c e i v e d by the Head O f f i c e on investments,
a p o r t i o n o f which i s made p o s s i b l e by the Reserve bank stock investment and




187,

reserve balances of member banks i n the branch zone.

They are i n t e r e s t i n g o n l y

i n s o f a r as they show the shrinkage i n Branch earnings, which are d e r i v e d
c h i e f l y from b i l l s discounted f o r member banks i n the zone.

Income from t h i s

source amounted t o o n l y $200 i n 1937, as compared t o $83,500 i n 1932.
(e) Branch Personnels
The r e p o r t of examination o f the Federal Reserve Bank o f S t . L o u i s , as
o f November 27, 1937, shows the f o l l o w i n g i n regard t o s a l a r i e s and personnel
a t the L o u i s v i l l e branchs
Nov. 27. 1937
Number
Amount
Officers
Employees

3
77
80

$ 15,900
94,700
$110*600

Oct. .51. 1956
Nu&ber Amount
3
74
77

$ 17,900
91.100
$109.000

Increase
Number Amount
5
5

$ 2,000 *
5.600
$ 1.600

* Decrease

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are
n o t i n c l u d e d i n the above f i g u r e s .

A r e l i e f guard, employed a t $5.55 1/5

per day, i s a l s o not i n c l u d e d .




188,

( f ) Branch Expense b:y Functions;
The expenses o f the L o u i s v i l l e Branch by functions f o r the years 1932 to
1957, i n c l u s i / e , were as f o l l o w s :
1952

1955

}934

1955

1926

1957

General Overhead
Controllable
$ 12,551 $ 12,512 0 12,455 $ 12,752 $ 11,884 # 15,145
N onc^ntroilable
1
25
5,554
5,784
29
6,521
* P r o v i s i o n o f Space
15,965
50,122
15,790
12,554
14,590
12,555
5,495
P r o v i s i o n o f Personnel
1,515
11,818
16,978
19,264
2,252
General Service
25,281
27,121
21,714
26,472
29,069
27,542
Postage
10,740
12,648
12,217
15,781
11,655
14,654
Insurance
5,074
5,650
2,628
2,176
2,115
2,215
—
F a i l e d Banks
988
2,885
1,675
5,570
Loans, r e d i s c o u n t s , e t c .
14,792
10,626
7,529
4,446
2,921
5,252
5,121
Securities
5,544
4,075
5,621
5,651
Currency and Coin
18,064
18,299
26,015
27,241
16,995
26,641
Chock C o l l e c t i o n
28,562
51,012
25,979
50,512
52,046
28,715
4,279
Nun-Cash C o l l e c t i o n
5,819
6,427
4,440
4,862
4,845
Accounting
16,459
15,765
15,552
15,961
16,055
16,142
F i s c a l Agency
21,157
26,544
21,215
85,514
14,525
—
—
Legal
16
Auditing
5,627
5,162
4,624
4,641
5,652
5,215
175
Bank R e l a t i o n s
9
554
599
2
25
—
—
—
—
—
Bank Examinations
1
—
228
F. R. Note Issues
948
790
515
1,004
80
98
Statistical & Analytical
25
45
69
69
—
—
—
—
—
.
170
Works Progress
T o t a l Expense
0 172,111 $109,294 $197,157 $207,125 $205,104 $216,371
Less - Reimbursable
F i s c a l Agency Exp.
12.565
18.$56
17.074
15.862
16.955
24.209
Net Expense
ft
159.546 $170.956 $180.083 $191.263 $188.169 $192.162
—

'

—

—

—

—

* Represents t h e n e t expense - income from r e n t a l s having been deducted.

There were eleven branches i n t h e System which operated a t a h i g h e r cost
than t h e L o u i s v i l l e Branch i n 1937.
(g) Volume o f Operations a t L o u i s v i l l e Branch:
The f o l l o w i n g i s a comparison of t h e volume o f operations i n v a r i o u s
departments of t h e L o u i s v i l l e Branch and t h e Head O f f i c e d u r i n g t h e l a s t

six

months o f 1936:




189,

L o u i s v i l l e Branch Head O f f i c e
Safekeeping*
Menher bank s e c u r i t i e s 12-51-36
$7,152,000
$137,655,000
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , J a c k s o n v i l l e ,
New Orleans, D e t r o i t , L i t t l e Rock, Denver,
Oklahoma C i t y , Omaha and Houston.
Currency & Coin:
1. Number o f b i l l s received and counted
9,002,000
36,272,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i * P i t t s b u r g h , B a l t i m o r e ,
J a c k s o n v i l l e , New Orleans, D e t r o i t , Memphis,
and Los Angeles.
Cost per one thousand u n i t s handled
37 cents
37 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except Birmingham, New Orleans
N a s h v i l l e and L i t t l e Rock.
2. Number of coins received and counted
6,600,000
39,451,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g , B a l t i m o r e , New
Orleans, D e t r o i t , Houston, and Los Angeles.
C j s t j>er one thousand u n i t s handled
15 cents
11 cents
Branches w i t h l a r g e r volume: A l l branches except B u f f a l o , B a l t i m o r e , New
Orleans, J a c k s o n v i l l e , Memphis and Oklahoma C i t y .
Check C o l l e c t i o n :
1. Number of c i t y checks ( c l e a r i n g s ) received
966,000
3,284,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
D e t r o i t , Omaha and Los Angeles.
C^st per one thousand u n i t s handled
$2.11
$1.91
Branches w i t h higher u n i t c o s t : Helena, Oklahoma C i t y , Los Angeles, P o r t l a n d ,
S a l t Lake C i t y , S e a t t l e and Spokane.
2. Nuiiber of country checks (outgoing) received
4,224,000
11,820,000
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , D e t r o i t
Oklahoma C i t y , Omaha and Los Angeles.
Cost per one thousand u n i t s handled
$1.75
$1.85
Branches w i t h h i g h e r u n i t c o s t : A l l Branches except Birmingham, J a c k s o n v i l l e ,
L i t t l e Rock, Denver, Oklahoma C i t y and Omaha.
Non-cash Co31ections:
1 . Number of c i t y c o l l e c t i o n s handled
7,026
17,556
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , Birmingham, New
Orleans, Helena, E l Paso, San Antonio and
Portland.
Cost per u n i t handled
12.5 cents
14.7 cents
Branches w i t h higher u n i t c o s t : A l l branches except J a c k s > m v i l l e , N a s h v i l l e ,
L i t t l e Rock, Memphis, Helena, Oklahoma C i t y ,
Omaha, E l Paso, Houston and S a l t Lake C i t y .
2. Uuiaber of country c o l l e c t i o n s handled
8,550
77,714
Branches w i t h l a r g e r volume: B u f f a l o , B a l t i m o r e , C h a r l o t t e , J a c k s o n v i l l e , New
Orleans, D e t r o i t , Memphis, Denver, Oklahoma C i t y ,
Omaha, San Antonio, Los Angeles, P o r t l a n d , S a l t
Lake C i t y , S e a t t l e and Spokane.




190

2. C / u n t r y C o l l e c t i o n s (Continued)

L o u i s v i l l e Branch

Head O f f i c e

Cost per u n i t handled
0 . 7 cents
5 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except C h a r l o t t e , L i t t l e Rock,
Memphis, Omaha, E l Paso, S a l t Lake C i t y and
Spokane.
3. Nuuber of coupons (except Government)
and country s e c u r i t y c o l l e c t i o n s handled
2,466
14,700
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , New
Orleans, D e t r o i t , L i t t l e Rock, Omaha, San Antonio
and Los Angeles.
Cost per u n i t handled
15.5 cents
13.8 cents
Branches w i t h h i g h e r u n i t c o s t : C h a r l o t t e , J a c k s o n v i l l e , D e t r o i t , Helena,
E l Paso, Los Angeles, P o r t l a n d , S a l t Lake
C i t y and Spokane.
A schedule showing t h e volume o f operations o f the L o u i s v i l l e Branch f o r
the years 1951 t o 1956, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f L o u i s v i l l e Branch by B o a r d s Examiners: 1954
During an examination o f t h e Federal Reserve Bank o f S t . L o u i s , made as of
September 8 , 1954, t h e 3 o a r d f s Examiners reviewed t h e operations of t h e
L o u i s v i l l e Branch and expressed t h e o p i n i o n t h a t i t s continuance was warranted
only i n view of t h e s i z e and importance o f t h e branch c i t y .

I n reaching t h i s

conclusion c o n s i d e r a t i o n was given t o the volume o f operations a t t h e Branch,
t h e & a i l schedules between S t . L o u i s and member bank p o i n t s i n t h e branch
zone and the number and s i z e o f banks i n the c i t y o f L o u i s v i l l e .
( i ) Survey o f L o u i s v i l l e Branch aade by Federal Reserve Bank of
S t . Louis—1956
As requested i n the Board's l e t t e r o f March 25, 1936, (X-9552) a survey
o f t h e L o u i s v i l l e Branch was made by the Federal Reserve Bank o f S t . L o u i s .
The f o l l o w i n g e x c e r p t taken fror* a l e t t e r addressed t o the Board by Deputy
Chairman Paul. D i l l a r d on August 5, 1956, summarizes t h e c o n c l u s i o n reached
by the Reserve bank:
" I n our o p i n i o n , a l l of our branches are necessary, i f t h e s e r v i c e s o f
the System t o member banks and through then t o commerce, i n d u s t r y , and
a g r i c u l t u r e , are n o t t o be impaired. L i k e w i s e , we do n o t f i n d t h a t any o f
the o p e r a t i o n s now b e i n g handled by t h e branches could be t r a n s f e r r e d t o
the head o f f i c e w i t h o u t i m p a i r i n g t h e s e r v i c e s which the System i s now
r e n d e r i n g t o member banks. 11




191,

LOUISVILLE BRANCH
VOLUME OF OPERATIONS
Number

Bil Is
Date

Ptainted

1931

9f

pjece? Hapdted
Non Cash

Currency

Coin

Received

Received

and

and

P<mt<l<*

Counted

Oil*

18,908,000

19,998,000

1,757,000

7,378,000

595,000

9,730,000

I82,*»85

**2,58*»

1,057

5

13,56*4

C o l l e c t i o n Items

Checks Handled

Gov't

Gov't

Other

l2iaL

Pantry

All

F i s c a l Agency
TrftniKitaitD i r e c t Other

Transfer
of
Funds

1932

2,951

17,032,000

16,739,000

1,619,000

6,378,000

632,000

8,629,000

212,763

*40,090

821

25

12,631

1933

902

17,080,000

I3,*»29,000

1,758,000

5,879,000

718,000

8,355,000

2*47,858

*47,03*4

1,785

*49

10,510

»93U

79

17,139,000

I2,*42*4,000

1,9*42,000

6,196,000

l,*4*4*»,000

9,582,000

28*1,96*4

*47,550

11,707

1*43

9,393

1935

8

16,937,000

12,533,000

2,0*47,000

7,*4I2,000

87*4,000

10,333,000

327,000

39,000

17,736

3,656

8,*47*4

1936

2

18,9*42,000

12,952,000

1,9&8,000

8,1*40,000

93*4,000

11,022,000

299,000

36,000

2,289

1,587

9,000

1931

335,8*10

82,976

l,*»26

l,**6**,253

298,020

5*4,*405

1,816,678

2,51*1

*4*4,3I3

1,5*41

250

656,217

1932

286,893

68,*m

1,37*1

1,161,756

2*4*4,555

*4**,970

1,1451,281

3,012

Ml ,*4l*4

2,112

1,030

*467,773

1933

63,695

86,282

5,312

1,191,3*45

261,332

55,579

1,508,256

3,** 76

*48,639

606

66

382,557

193*4

*4,209

68,115

1,373

1,507,786

31*4,231

10*4,916

1,926,933

3,503

68,575

*4,7*47

266

*4l5,181

1935

125

66,580

1,159

1,727,112

388,662

7I,*4*48

2,487,222

3,86*4

66,5*«6

6,182

1,553

396,231

1936

26

77,39M

1,251

1,907,352

*430 ,110

86,03*1

2,*423,*»96

3,897

58,156

755

761

5*17,378

(»n thousands of d o l l a r s )\




MEMPHIS BRANCH - FEDERAL RESERVE BANK OF ST. LOUIS,
(a) C i t y o f Memphis:
Memphis, w i t h a p o p u l a t i o n o f 253,143, i s the t h i r t y - s i x t h l a r g e s t c i t y i n the
United S t a t e s and t h e l a r g e s t c i t y i n Tennessee.

I t i s l o c a t e d i n the extreme south-

western p a r t o f the S t a t e , on t h e M i s s i s s i p p i R i v e r , and i s s a i d t o serve a t r a d e
area w i t h a r a d i u s o f approximately 75 m i l e s .

T r a n s p o r t a t i o n f a c i l i t i e s are p r o -

vided by t e n r a i l r o a d s , i n c l u d i n g the Chicago-Rock I s l a n d & P a c i f i c , F r i s c o L i n e ,
I l l i n o i s C e n t r a l , L o u i s v i l l e & N a s h v i l l e , Southern, M i s s o u r i P a c i f i c , S t . L o u i s
Southwestern and the Nashville-Chattanooga & S t . L o u i s .
v a r i o u s bus l i n e s and a i r l i n e s .

The c i t y i s a l s o served by

I n a d d i t i o n t h e r e i s a l a r g e amount o f r i v e r

traffic

between Memphis and o t h e r M i s s i s s i p p i and Ohio River p o r t s .
According to the B i e n n i a l Census o f Manufactures, Shelby County, i n which
Memphis i s l o c a t e d , had 351 manufacturing establishments i n 1935 which had an o u t put valued a t $130,199,000.

The p r i n c i p a l a c t i v i t i e s were the warehousing and

marketing o f c o t t o n and the p r o d u c t i o n o f mixed feed, c o t t o n seed d e r i v a t i v e s and
lumber; Memphis being the center o f one o f the l a r g e s t hardwood areas i n the U n i t e d
States.
The Census o f American Business f o r 1935 l i s t s 3,727 r e t a i l and 627 wholesale
establishments o p e r a t i n g i n Shelby County.

These f i r m s enjoyed sales aggregating

$105,617,000 and #387,054,000, r e s p e c t i v e l y , d u r i n g

that year.

Banking f a c i l i t i e s i n Memphis are provided by two S t a t e banks (nonmember) and
t h r e e n a t i o n a l banks.

These i n s t i t u t i o n s had deposits aggregating ^151,287,000, as

o f December 31, 1936 and o f t h i s amount £149,497,000 was c a r r i e d by t h e t h r e e l o c a l
member banks.




193,

Debits t o i n d i v i d u a l accounts i n banks o f the c i t y aggregated $1,594,020,000
d u r i n g the year 1936, o r an average o f approximately <£5,313,000 f o r each banking
day.
(b) Branch T e r r i t o r y and Functions:
The Memphis Branch was e s t a b l i s h e d September 3* 1918, and serves t e n c i t i e s
i n n o r t h e r n M i s s i s s i p p i , f i f t e e n c i t i e s i n southwestern Tennessee and twelve c i t i e s
i n e a s t e r n Arkansas.

While the branch zone i s not determined by S t a t e or County

l i n e s , the area served by t h e branch represents approximately l&fo o f the l a n d area
o f the E i g h t h D i s t r i c t and has about 21% o f i t s t o t a l p o p u l a t i o n .

Approximately

14 1/2$ o f a l l banks i n the d i s t r i c t are w i t h i n t h i s area.
As o f December 31, 1936, t h e r e were 234 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and o f t h i s number 28, i n c l u d i n g 26 n a t i o n a l and 2 S t a t e
i n s t i t u t i o n s , were members o f t h e System.
the zone were on t h e par l i s t .

Only 25 o f the 206 nonmember banks i n

The f o l l o w i n g f i g u r e s taken f r o m r e p o r t s o f condi-

t i o n as o f the same date show the s i z e o f member bank f o o t i n g s i n the branch zone
as compared w i t h those

Eighth D i s t r i c t
Branch Zone

o f the E i g h t h D i s t r i c t as a whole:

No. Member
Banks

Loans
and
Investments

388
28

$1,092,425
115,610

Capital
and
Total
Surplus
Deposits
(000 omitted)
§125,722
12,852

$1,480,335
184,978

There are e i g h t branch c i t i e s i n the System having smaller bank f o o t i n g s t h a n
the Memphis Branch, namely, Spokane, E l Paso, L i t t l e Rock, Helena, C h a r l o t t e ,
San A n t o n i o , N a s h v i l l e and Birmingham.
The Memphis Branch renders s u b s t a n t i a l l y the same s e r v i c e t o banks i n i t s
zone as i s a v a i l a b l e a t the Head O f f i c e i n s o f a r as r e c e i p t s and disbursements
o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , noncash c o l l e c t i o n s ,




194,

safekeeping o f s e c u r i t i e s , and loans

t o member banks are concerned.

The reserve

accounts o f member banks i n t h e branch zone, as w e l l as accounts o f nonmember
c l e a r i n g banks and o t h e r Federal Reserve banks, are

maintained at the Branch,

which also maintains a memorandum general l e d g e r and a r e c o r d o f some* earnings and
expenses.

Transactions are cleared d a i l y through c o n t r o l accounts maintained a t

the Head O f f i c e .

Member bank borrowings are passed upon at the Branch and im-

mediate c r e d i t i s g i v e n , s u b j e c t t o f i n a l approval

o f the Head O f f i c e .

Schedules

covering such t r a n s a c t i o n s are forwarded t o the Head O f f i c e , but the notes and
c o l l a t e r a l , i f any, are r e t a i n e d at the Branch.
t i o n , Bank R e l a t i o n s , F a i l e d Banks,

The Branch has no Bank Examina-

Research, Legal or F i s c a l Agency departments.

As o f November 27, 1937, member banks i n the branch zone had the f o l l o w i n g
Reserve bank balances:

C i t y o f Memphis
Remainder o f Zone

Kb. o f
Banks

Reserve
Balances

Deferred
Balances

Capital
Stock

3
26
22

$17,565,231
3,21^,456
$20,778i687

$1,309,719
26.491
fcL.336.210

#307,500
102,400
$409I900

Memphis i s 305 t r a i n m i l e s (8 hours) from S t . L o u i s .
t r a i n s leave b o t h p o i n t s a f t e r 7
on the f o l l o w i n g day.
by the Branch.

Bills
Discounted
#

—
10,000
&10-000

On any business day

which a r r i v e at the o t h e r p r i o r t o 8 A.M.

There are 21 o u t l y i n g member bank p o i n t s now being served

M a i l schedules r e v e a l t h a t a l l but 8 o f these p o i n t s can be

reached o v e r n i g h t from S t . L o u i s .

I t appears, t h e r e f o r e , t h a t discontinuance o f

the Branch would inconvenience o n l y a l i m i t e d number o f member banks.

Banks i n

Memphis, which now have an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h t h e Branch, would
o f course, have t o r e v i s e t h e i r operations considerably i n d e a l i n g w i t h the
Head O f f i c e .
Other t h a n Memphis, the more populous c i t i e s served by the Branch are Jackson
Tennessee, 22,172; G r e e n v i l l e , M i s s i s s i p p i , 14,807; Columbus, M i s s i s s i p p i ,




10,743;

195,

and B l y t h e v i l l e , Arkansas, 10,098.
(c) Branch B u i l d i n g :
The Memphis Branch has occupied i t s present q u a r t e r s a t T h i r d & J e f f e r s o n
S t r e e t s since June, 1929*

The f o l l o w i n g f i g u r e s show the o r i g i n a l cost and book

v a l u e , as o f November 27, 1937, o f the branch premises:
Book Value
11-27-37

Cost
Land
Building
V a u l t & v a u l t equipment
Fixed machinery & equipment

$100,906
192,153)
41,492)
*334,551
44»062
fr?76.6l3

$ 60,000
177.519
$>237,519
9.54?
$247,066

(d) Earnings - Branch Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r the years 1931 t o
1937, i n c l u s i v e , were as f o l l o w s :
Year

Earnings

1931
1932
1933
1934
1935
1936
1937

$32,600
32,500
34,600
8,700
19,700
2,400
4,200

The above f i g u r e s are incomplete s i n c e , under t h e present accounting procedure, t h e Branch r e c e i v e s no c r e d i t f o r income r e c e i v e d by t h e Head O f f i c e on
investments, a p o r t i o n o f which i s made p o s s i b l e by the Reserve bank stock i n v e s t ment and reserve balances o f banks i n the branch zone.

They are i n t e r e s t i n g o n l y

i n so f a r as they show the shrinkage i n Branch e a r n i n g s , which f o r m e r l y were
d e r i v e d c h i e f l y from b i l l s discounted f o r member banks i n the zone.

Income from

t h i s source amounted t o approximately $1,800 i n 1937 as compared w i t h $31,200 i n
1931.




201,

(e) Branch Personnel:
The r e p o r t o f e x a m i n a t i o n o f the F e d e r a l Reserve Bank o f S t . L o u i s , as o f
November 27, 1937, shows t h e f o l l o w i n g i n r e g a r d t o s a l a r i e s and personnel a t
t h e Memphis Branch:
Nov. 27, 1937
Number
Amount
Officers
Employees
Total

3
12

$17,500
76,4.00

O c t . 31. 1936
Number
Amount
2
46

&

Increase
Number
Amount

$13,800
66,200
&80.000

1
8

# 3,700
10,200
¥13.900

O f f i c e r s and employees whose s a l a r i e s and wages are r e i m b u r s a b l e are not
cluded i n t h e above f i g u r e s .

There has been an a c t u a l i n c r e a s e o f f o u r employees

a t the Branch - t h e r e m a i n i n g i n c r e a s e o f one o f f i c e r and
due t o a r e d u c t i o n i n t h e

in-

t h r e e employees b e i n g

amount o f r e i m b u r s a b l e work performed,

( f ) Branch Expense by F u n c t i o n s :
The expenses o f the Memphis Branch by f u n c t i o n s f o r t h e years 1932 t o 1937,
i n c l u s i v e , were as f o l l o w s :
1922

M

1924

m i

1936

1937

G e n ' l Overhead
Controllable
$' 14,185
15,945 ; 1 1 5 , 0 0 2 $ 1 4 , 9 0 9 1t <11,902!. 12,950
Noncontrollable
5,085
84
23
3,793
6,033
13,024
12,686
^ P r o v i s i o n o f Space
9,118
7,350
9,494 1 5 , 6 7 8
P r o v i s i o n o f Personnel
1,030
17,122
1,023
20,051
9,364
1,835
General S e r v i c e
24,510
17,005 18,380
23,345
23,649
22,445
Postage
4,892
2,930
4,492
6,345
6,594
5,307
Insurance
2,890
4,211
2,401
2,229
2,034
1,851
(420)
2
F a i l e d Banks
9,663
1,165
1,353
Loans, r e d i s c o u n t s , e t c .
10,296
2,442
7,004
9,274
2,533
2,547
Securities
3,032
1,672
1,856
2,301
1,695
1,371
Currency and Coin
2
2
,
2
4
2
17,962
25,476
18,244
24,469
18,495
11,966
Check C o l l e c t i o n
10,024 10,301
7,925
10,159
9,997
8,082
7,486
Non-Cash C o l l e c t i o n
6,665
7,494
5,459
7,249
10,180
Accounting
12,790
14,503
16,584
14,559
16,569
4,260
F i s c a l Agency
57,393
1 1 1 , 0 7 7 101,042 74,945
24,114
8
150
Legal
(19)
4,556
Auditing
3,948
4,643
3,284
3,987
5,057
101
6
29
Bank R e l a t i o n s
443
77
24
Bank Examinations
20
4
F.R. Note I s s u e s
452
623
1,041
557
748
178
190
S t a t i s t i c a l and A n a l y t i c a l
169
169
147
121
$143,324 $166,693 #196,630 $237,872 $230,801$194,096
Less - Reimbursable F i s c a l
Agency Expense
3,041
23,048
$6,463
?2,478
92,820 69,165
Net expense
$140.283 $14^,64^ $j>140,l67 $145>394 1136,981&L24,931
* Represents t h e net expense - income from r e n t a l s h a v i n g been deducted.



197,

There were s i x branches i n t h e System which operated a t a lower net cost
than t h e Memphis Branch i n 1937; namely, Spokane, N a s h v i l l e , E l Paso, Helena,
Birmingham and L i t t l e Rock.
(g) Volume o f Operations a t Memphis Branch:
The f o l l o w i n g i s a comparison o f t h e volume o f o p e r a t i o n s i n v a r i o u s departments o f the Memphis Branch and the Head O f f i c e d u r i n g the l a s t s i x months
o f 1936:
Memphis Branch
Discount Department:
Notes rediscounted
C o l l a t e r a l notes discounted
I n d u s t r i a l advances
Branches w i t h l a r g e r volume:

Head O f f i c e

8
31
2
B u f f a l o , B a l t i m o r e , Denver, Omaha, E l Paso, San
Antonio and S a l t Lake C i t y .

Safekeeping:
Member bank s e c u r i t i e s 12-31-36
£ 1,443,000
#160,828,000
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , P o r t l a n d , S e a t t l e ,
Helena, Los Angeles and Spokane.
Currency & Coin:
1. Number o f b i l l s r e c e i v e d and counted
11,695,000
36,272,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , New
Orleans, D e t r o i t and Los Angeles.
Cost per one thousand u n i t s handled
38 cents
37 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except Birmingham, N a s h v i l l e ,
New Orleans, L i t t l e Rock, and L o u i s v i l l e .
2. Number o f coins r e c e i v e d and counted
5,631,000
39,431,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
New Orleans, D e t r o i t , L o u i s v i l l e , Houston,
Los Angeles and S e a t t l e .
Cost per one thousand u n i t s handled
11 cents
11 cents
Branches w i t h higher u n i t c o s t : A l l branches except B u f f a l o , B a l t i m o r e , New
Orleans and Oklahoma C i t y .
Check C o l l e c t i o n :
1. Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
756,OOOfr
Cost per 1,000 u n i t s handled
#1.85
jf I n c l u d e s a l l c i t y items r e c e i v e d .
2. Number o f country checks (outgoing) r e c e i v e d
998,000
Branches w i t h l a r g e r volume: A l l branches have a l a r g e r volume.

3,284,000
#1.91
11,820,000

Cost per one thousand u n i t s handled
#1.99
$1.85
Branches w i t h h i g h e r u n i t c o s t : A l l branches except B a l t i m o r e , P i t t s b u r g h ,
Birmingham, J a c k s o n v i l l e , L i t t l e Rock, L o u i s v i l l e , Denver, Oklahoma C i t y , Omaha and Houston.



198,

Memphis Branch
Non-cash C o l l e c t i o n s
1. Number o f c i t y c o l l e c t i o n s handled
19,682
Branches w i t h l a r g e r volume: D e t r o i t , L i t t l e Rock and Omaha.
Cost per u n i t handled
Branches w i t h higher u n i t cost:

Head O f f i c e
17,556

11.7 cents
14.7 cents
A l l branches except J a c k s o n v i l l e , N a s h v i l l e ,
L i t t l e Rock, Oklahoma C i t y , Omaha, E l Paso and
Houston.

2. Number o f country c o l l e c t i o n s handled
12,143
77,714
Branches w i t h l a r g e r volume: B u f f a l o , B a l t i m o r e , C h a r l o t t e , D e t r o i t , Denver,
Oklahoma C i t y , Omaha, Los Angeles, S a l t Lake C i t y
and Spokane.
Cost per u n i t handled
6.2 cents
5 cents
Branches w i t h higher u n i t cost: A l l branches except S a l t Lake C i t y and Spokane.
3. Number o f coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
1,856
14,700
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
New Orleans, D e t r o i t , L i t t l e Rock, L o u i s v i l l e ,
Denver, Omaha, Houston, San Antonio and Los Angelea
Cost per u n i t handled
14.8 cents
13.8 cents
Branches w i t h higher u n i t cost: C h a r l o t t e , J a c k s o n v i l l e , D e t r o i t , L o u i s v i l l e ,
Helena, E l Paso, Los Angeles, P o r t l a n d , S a l t
Lake C i t y and Spokane.
A schedule showing the volume o f operations of the Memphis Branch f o r the
years 1931 t o 1936, i n c l u s i v e , i s attached

t o t h i s memorandum.

(h) Survey o f Memphis Branch by Board's Examiners - 1934
During an examination o f the f e d e r a l Reserve Bank o f S t . L o u i s , made as
o f September 8, 1934, the Board's Examiners reviewed the operations o f the
Memphis Branch and expressed the o p i n i o n t h a t i t s continuance was warranted
o n l y i n view of the size and importance o f the branch c i t y .
conclusion c o n s i d e r a t i o n was g i v e n t o the

I n reaching t h i s

volume o f operations at the Branch,

the m a i l schedules between S t . Louis and member bank p o i n t s served by the Branch
and the number and s i z e o f banks i n the branch zone.

I t was i n d i c a t e d ,

in

the event t h a t the L i t t l e Rock Branch were discontinued, a s u b s t a n t i a l number o f
p o i n t s i n t h a t zone could be served j u s t as e x p e d i t i o u s l y from Memphis.




199

( i ) Survey o f Memphis Branch made by Federal Reserve Bank o f S t . Louis-1936
A survey o f the Memphis Branch was made by the Federal Reserve Bank o f S t ,
L o u i s , as requested by the Board i n i t s l e t t e r o f March 25, 1936, (X-9532), and
on August 5, 1936, Deputy Chairman Paul D i l l a r d advised the Board as f o l l o w s :
" I n our o p i n i o n , a l l of our branches are necessary, i f the s e r v i c e s
o f the System t o member banks and through them t o commerce, i n d u s t r y
and a g r i c u l t u r e , are not t o be impaired. L i k e w i s e , we do not f i n d t h a t
any o f t h e operations now being handled by the branches could be t r a n s f e r r e d t o the head o f f i c e w i t h o u t i m p a i r i n g the s e r v i c e s which the System
i s now r e n d e r i n g t o member banks."




MEMPHIS BRANCH
VOLUME OF OPERATIONS
NM»frpr 9f Pfeces

Bills
Date

Pi scounted

Currency

Coin

Received

Received

and

and

Counted

Counted

Non Cash
Checks Handled
Gov't

1932
1933

1,86*4
2,650
320

193*4

72

1935

12

1936

10

16,630,000
l*f,8*47,000
15,607,000
18,162,000
18,602,000
21,505,000

9,826,000
9,500,000
8,371,000
8,299,000
9,593,000
10,367,000

Collection items

Fiscal Agency

Gov't

Transact ions

Coupons

City
Po u nt r Y

1931

fondled

Bssks

AlI
Other

Direct

Transfer
of

Other

Funds

M i l

1,211,000
1,509,000

368,000

3,088,000

1,217,000

*432,000

2,7*42,000

1,191,000

690,000

3,021,000

1,387,000

1,309,000

3,987,000

1,7*40,000

883,000

**, 160,000

1,817,000

728,000

*4,022,000

1,093,000
1,1*40,000
1,291,000
1,529,000
l,*477,000

****,293

*4*4,9*45

50*4

*f9,075

*45,0I I

360

7

11,261

56,806

59,795

*406

175

10,737

57,859

55,051

2,633

2*4

10,110

00,000

**6,000

5,1*43

871

8,776

65,000

58,000

962

798

9,000

11,979

Amounts Handled
( i n thousands of dollars)
1931

39,115

55,51*1

1,588

631,09*4

77,763

****,680

75**, 337

500

35,928

*453

1932

35,417

*48,335

1,390

519,679

62,283

39,73*4

621,696

726

32,152

1,520

190

358,667

1933

30,661

58,888

2,921

563,5*10

79,619

70,OIH

713,173

8*43

*48,97l

*49l

175

352,222

193**

1,277

50,508

2,058

686,*456

106,128

95,780

008,36*4

871

5*4,509

1,092

600

392,800

1935

**25

51,707

1,81*4

7*40,337

109,885

07,010

937,732

85**

52,09**

1,958

879

*465,035

1936

19*4

58,626

2,75*4

930,0*40

125,081

87,**0*4

l,l**2,525

786

59,09*4

*465

572

560,609




**6**,330

HELENA BRANCH - FEDERAL RESERVE BANK OF MINNEAPOLIS.
(a) C i t y o f Helena
Helena, w i t h a p o p u l a t i o n o f 11,803, i s t h e c a p i t a l o f Montana and t h e
sixth largest c i t y i n that State.

I t i s l o c a t e d i n t h e west c e n t r a l p a r t o f

t h e S t a t e and serves a r a t h e r s p a r s e l y s e t t l e d t r a d e area i n which general
a g r i c u l t u r e , stock r a i s i n g and mining are the c h i e f a c t i v i t i e s .

Transporta-

t i o n f a c i l i t i e s are p r o v i d e d by t h e Northern P a c i f i c and Great Northern
R a i l r o a d s and by s e v e r a l bus and a i r l i n e s .
According t o t h e B i e n n i a l Census o f Manufactures f o r 1935, t h e r e were
25 manufacturing f i r m s i n Lewis & Clark County, i n which Helena i s
which had an o u t p u t valued a t $10,131,000.

situated,

The Census o f American Business

l i s t s 31 wholesale and 291 r e t a i l establishments o p e r a t i n g i n the same area
and i n d i c a t e s t h a t such concern enjoyed sales aggregating $4,043,000 and
$10,283,000, r e s p e c t i v e l y , d u r i n g 1935.
Banking f a c i l i t i e s i n Helena are p r o v i d e d by one n a t i o n a l bank and one
S t a t e member bank.

As o f December 31, 1936, these i n s t i t u t i o n s had t o t a l

d e p o s i t s o f $16,446,000.
D e b i t s t o i n d i v i d u a l accounts i n banks o f t h e c i t y amounted t o $123,991,000
d u r i n g t h e year 1936; or an average o f approximately $413,000 f o r each banking,
day.
(b) Branch T e r r i t o r y and Functions
The Helena Branch was e s t a b l i s h e d on February 1 , 1921, and serves t h e
e n t i r e S t a t e o f Montana.

The branch zone represents Z5% o f the l a n d area o f

t h e N i n t h Federal Reserve D i s t r i c t and has about 10% o f i t s t o t a l p o p u l a t i o n .
Approximately 9% o f a l l banks i n t h e d i s t r i c t are




l o c a t e d i n t h i s area.

202,

As o f December 31, 1956, t h e r e were 120 bonks, e x c l u s i v e o f mutual savings
banks, i n t h e branch zone and o f t h i s number 66, i n c l u d i n g 45 n a t i o n a l and 21
S t a t e i n s t i t u t i o n s were members o f t h e System.
i n the zone were on t h e par l i s t .

33 o f t h e 54 nonmember banks

The f o l l o w i n g f i g u r e s taken from r e p o r t s

o f c o n d i t i o n as o f t h e same date show t h e s i z e o f member bank f o o t i n g s i n t h e
branch zone as compared t o t h e N i n t h D i s t r i c t as a whole:
No.Member
Banks

Ninth D i s t r i c t
Helena Zone

481
66

Loans
and
Investments

$782,049
76,774

Capital
and
Surplus
( 000 o m i t t e d )
#96,485
10,177

Total
Deposits

$1,051,848
117,607

There are o n l y t h r e e branch zones i n t h e System having smaller member
bank f o o t i n g s than t h e Helena Branch, namely, Spokane, E l Paso and L i t t l e
Rock.
The Helena Branch renders s u b s t a n t i a l l y t h e same s e r v i c e t o member banks
i n i t s zone as I s a v a i l a b l e a t t h e Head O f f i c e , i n s o f a r as r e c e i p t s and d i s bursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , non-cash
c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and borrowings are concerned.

Reserve

accounts o f banks i n t h e zone, as w e l l as o f nonmember c l e a r i n g banks and
o t h e r F e d e r a l Reserve banks, are maintained a t t h e Branch, which a l s o maintains
a memorandum general l e d g e r and a r e c o r d o f c e r t a i n earnings and expenses.
C o n t r o l accounts a r e , o f course, maintained a t t h e Head O f f i c e which i s sent
a d a i l y t r a n s c r i p t o f e n t r i e s a f f e c t i n g such accounts.

Immediate c r e d i t i s

given t o member banks f o r d i s c o u n t o f f e r i n g s r e c e i v e d by t h e Branch,' s u b j e c t
t o f i n a l approval o f t h e Head O f f i c e .

Schedules c o v e r i n g t r a n s a c t i o n s are

forwarded t o the Head O f f i c e , b u t t h e notes and c o l l a t e r a l , i f any, are




r e t a i n e d a t t h e Branch.

The Branch has no Bank Examination, Bank R e l a t i o n s ,

L e g a l , Research o r F i s c a l Agency departments.
As o f November 2, 1937, member banks i n t h e branch zone had balances
w i t h t h e Reserve bank as f o l l o w s :
No.of
Banks
Helena
Remainder o f Zone

Reserve
Balances

Deferred
Balances

Capital
Stock

Bills
Discounted

2
63

$ 2,984,900 $
11.366.200

546,500
520.100

$ 39,000
265.800

$31.800

65

£14.551.100 $1.066.600

$304.800

$31.800

Helena i s 1,120 t r a i n m i l e s (27 h r s . and 30 mins.) from M i n n e a p o l i s ,
and i t i s 270 t r a i n m i l e s (10 h r s . ) from Helena t o t h e western border o f
Montana.

The p r e v a i l i n g i n t e r - d i s t r i c t time schedule i s two days from Helena

t o Minneapolis and t h r e e days from Minneapolis t o Helena.

Other than by a i r

m a i l no p o i n t i n t h e Helena zone i s w i t h i n o v e r - n i g h t m a i l t i m e o f M i n n e a p o l i s .
I n f a c t , p o i n t s o u t s i d e o f Helena, o t h e r than t h e l a r g e r c i t i e s , are i n many
cases t h r e e o r f o u r days m a i l t i m e from M i n n e a p o l i s .

I t i s clear,

therefore,

t h a t discontinuance o f t h e Helena Branch would n o t o n l y inconvenience t h e two
member banks i n Helena, which now enjoy an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h
t h e Branch, b u t t h a t i t would a l s o slow up t h e s e r v i c e rendered t o banks i n
o u t l y i n g s e c t i o n s o f Montana.
Other than Helena, the more populous c i t i e s i n t h e branch zone are B u t t e ,
39,532; Great F a l l s , 28,822; B i l l i n g s , 16,380; M i s s o u l a , 14,657 and Anaconda,
12,494.

A l l o f these c i t i e s have one or more member banks.

( c ) Branch B u i l d i n g :
On August 7 , 1937, a s i t e f o r a new branch b u i l d i n g was purchased f o r
$15,000 and on November .10, 1937, a c o n t r a c t was l e t f o r the c o n s t r u c t i o n o f a
new one s t o r y r e i n f o r c e d concrete b u i l d i n g w i t h basement.




The Branch moved

204,

i n t o i t s new q u a r t e r s on June 13, 1958.

The t o t a l cost o f c o n s t r u c t i n g ,

f u r n i s h i n g and occupying t h e new b u i l d i n g was i n t h e neighborhood o f $100,OCX).
(d) Earnings - Branch Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r t h e years 1951 t o
1937, i n c l u s i v e , were as f o l l o w s :
Year

Earnings

1931
1932
1933
1934
1935
1936

$26,000
68,400
22,500
900
100
100

1937

500

These f i g u r e s are incomplete s i n c e , under t h e present accounting procedure,
t h e Branch does n o t r e c e i v e any c r e d i t f o r income r e c e i v e d by the Head O f f i c e
on investments, a p o r t i o n o f which i s made p o s s i b l e by t h e Reserve bank stock
investment and reserve balances o f member banks i n t h e Helena zone.
Branch income depends almost e n t i r e l y on t h e e x t e n t t o which member
banks i n t h e branch zone use ttie

c r e d i t f a c i l i t i e s o f t h e System.

Income from

t h i s source amounted t o $64,900 i n 1952 as compared t o l e s s than $200 i n 1937.
(e) Branch Personnel:
The r e p o r t o f examination o f t h e Federal Reserve Bank o f M i n n e a p o l i s ,
made as o f November 2, 1937, shows t h e f o l l o w i n g i n r e g a r d t o s a l a r i e s and
personnel a t t h e Helena Branch:
November 2. 1957
Number
Amount
Officers
Employees




3
26

29

$14,700
40.100
$54.800

October 10. 1956
Number
Amount
3
28
51

$14,700
41.500
$56.000

Decrease
Number
Amount

2
2

fl.200
&L.200

205,

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n t h e above f i g u r e s .
( f ) Branch Expense by F u n c t i o n s :
The expenses o f t h e Helena Branch by f u n c t i o n s f o r t h e years 1932 t o 1937,
i n c l u s i v e , were as f o l l o w s :
1935
1934
1932
1935
General Overhead:
Controllable
$ 6,529 $ 7,774 $ 9,494 $ 9,375
Non-controllable
5,423
8,096
8,161
6,297
5,793
9,129
6,245
* P r o v i s l o n o f Space
P r o v i s i o n o f Personnel
673
864
5,857
6,827
General Service
13,460
14,878
16,924
17,706
4,944
Postage
4,623
6,144
5,416
Insurance
3,516
3,573
2,201
2,309
—
F a i l e d Banks
2,405
Loans, Rediscounts,etc,. 3,434
3,123
3,657
2,713
Securities
2,560
3,444
5,480
Currency and Coin
5,849
4,700
5,953
15,316
Check C o l l e c t i o n
9,791
12,902
13,632
9,898
Non-cash C o l l e c t i o n
3,016
3,158
3,103
3,198
11,555
10,815
Accounting
9,635
8,576
F i s c a l Agency
5,105
8,352
10,619
14,077
Legal
625
624
628
804
Auditing
4,150
5,214
2,717
3,328
Bank R e l a t i o n s
19
294
388
350
Bank Examinations
509
473
216
271
195
S t a t i s t i c a l and A n a l y t i c a l 140
215
249
T o t a l Expanse
$85,206 $94,097 $112,526 $117,877
Less - Reimbursable
F i s c a l Agency Expense 5,105
8.352
10.609
10.085
N e t Expense
880.101 $85,745 $101,917 5107.792

1936
$ 11,214

1937
$ 10,543
—

-

5,019
12,068
18,401
6,366
2,003

5,343
2,992
18,003
6,182
1,848

970
1,051
17,306
13,676
3,731
9,754
13,210
73
4,728
215
216
39
$120,040

563
143
15,706
10,194
3,169
9,258
12,721
35
4,596
472
240
39
$102,047

8.791
Sill.249

7.184
$ 94.863

^Represents t h e n e t expense - income from r e n t a l s having been deducted.
There were o n l y t h r e e branches i n the System which operated a t a lower
n e t cost than t h e Helena Branch i n 1937; namely, Spokane, N a s h v i l l e , and
E l Paso.
(g) Volume o f Operations a t Helena Branch:
The f o l l o w i n g i s a comparison o f t h e volume o f o p e r a t i o n s i n v a r i o u s




departments o f t h e Helena Branch and t h e Head O f f i c e d u r i n g t h e l a s t s i x
months o f 1936:
Helena Branch
Discount Department;
Notes r e d i s c o u n t e d
C o l l a t e r a l notes discounted
I n d u s t r i a l advances
Branches w i t h smaller volume:

Head O f f i c e

3
17
Ten o t h e r branches handled no d i s c o u n t s
during period.

Safekeeping:
Member bank s e c u r i t i e s - 12-31-36
45,000
0358,465,000
Branches w i t h smaller volume: C h a r l o t t e , S e a t t l e , P o r t l a n d , Los Angeles
and Spokane.
Currency and Coin:
1 , Number o f b i l l s r e c e i v e d and counted
Branches w i t h s m a l l e r volume: None.
Cost per one thousand u n i t s handled
Branches w i t h h i g h e r u n i t c o s t : Spokane.
2. Number o f coins r e c e i v e d and counted
Branches w i t h smaller volume: None.

1,335,000

26,227,000

0.96

$.41

573,000

Cost per one thousand u n i t s handled
$.89
Branches w i t h h i g h e r u n i t c o s t : E l Paso and Spokane.
Check C o l l e c t i o n :
1 . Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
Branches w i t h smaller volume: None.
Cost per one thousand u n i t s handled
Branches w i t h h i g h e r u n i t c o s t : None.

114,000

$3.61

2 . Number o f country checks (outgoing) r e c e i v e d 1,671,000
Branches w i t h s m a l l e r volume: Memphis, S e a t t l e and E l Paso.

8,006,000

$.41

2,114,000

01.82

9,403,000

Cost per one thousand u n i t s handled
§2.15
$1.94
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , C i n c i n n a t i , D e t r o i t , E l Paso,
Los Angeles, P o r t l a n d , S a l t Lake C i t y ,
S e a t t l e , and Spokane.




207,

Memphis Branch
Non-cash C o l l e c t i o n s :
1 . Number o f c i t y c o l l e c t i o n s handled
Branches w i t h smaller volume:
Charlotte.

3,917

Head O f f i c e
354,756*

* Non-cash c i t y c o l l e c t i o n s handled a t Head O f f i c e are
l a r g e l y g r a i n d r a f t s c o l l e c t e d a t small c o s t .
Cost per u n i t handled
Branches w i t h higher u n i t c o s t :

12.3 cents
2.6 cents
A H branches except J a c k s o n v i l l e , N a s h v i l l e ,
L i t t l e Rode, L o u i s v i l l e , Memphis, Oklahoma
C i t y , Omaha, E l Paso, Houston and S a l t Lake
City.

2. Number o f country c o l l e c t i o n s handled
7,653
42,451
Branches w i t h smaller volume: Birmingham, N a s h v i l l e and E l Paso.
U n i t cost per item handled
Branches w i t h higher u n i t c o s t :

13.8 cents
6.5 cents
B u f f a l o , Birmingham, N a s h v i l l e , Los
Angeles, P o r t l a n d and S e a t t l e .

3. Number o f coupons (except Government) and country
s e c u r i t y c o l l e c t i o n s handled
652
22,858
Branches w i t h smaller volume: E l Paso, S a l t Lake C i t y and Spokane.
U n i t cost per u n i t handled
Branches w i t h higher u n i t c o s t :

19 cents
8 . 2 cents
C h a r l o t t e , J a c k s o n v i l l e , E l Paso, Los
Angeles, P o r t l a n d , S a l t Lake C i t y and
Spokane.

A schedule showing the volume o f operations of the Helena Branch f o r
the years 1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum,
(h) Proposed Conversion o f Helena Branch - 1926
I n the e a r l y p a r t o f 1926 t h e Federal Reserve Bank o f Minneapolis
advised the Board t h a t c o n s i d e r a t i o n was being given t o c o n v e r t i n g t h e Helena
Branch i n t o an agency, and t h a t p r e l i m i n a r y estimates i n d i c a t e d a saving o f
$50,000 per annum would r e s u l t from the change.

Governor Young o f Minneapolis

subsequently wrote Dr. M i l l e r (Board Member) t h a t a f t e r v i s i t i n g Helena and
c a r e f u l l y considering the matter he was convinced approximately $35,000 could
be saved annually i f the rediscount f u n c t i o n s and member bank reserves were
t r a n s f e r r e d from the Branch t o t h e Head O f f i c e , thus l i m i t i n g Branch




208

a c t i v i t i e s t o h a n d l i n g currency and c o i n , safekeeping, t r a n s i t items and
non-cash c o l l e c t i o n s .

Mr. Young s a i d t h e proposed change was f a v o r e d by

bankers i n o u t l y i n g towns o f Montana, who found i t more convenient t o s e t t l e
i n Minneapolis exchange, b u t t h a t i t was s t r o n g l y opposed by bankers i n
Helena.
The Board discussed t h e m a t t e r and Dr. M i l l e r was i n f o r m a l l y advised
t h a t he might s t a t e t h a t i f t h e banks i n Helena agreed t o t h e conversion o f
the Branch i n t o an agency, t h e Board would be disposed t o approve a r e d u c t i o n
i n t h e i r reserve requirements t o the country bank f i g u r e .

The p l a n t o convert

the Branch appears t o have been abandoned, presumably because o f o p p o s i t i o n
on the p a r t o f member banks i n Montana.

I n any event, t h e m a t t e r was n o t

f u r t h e r pursued by t h e Board a t the t i m e .
( i ) Survey o f Helena Branch by Federal Reserve Bank o f Minneapolis - 1955
On June 6, 19S5, t h e Board addressed a l e t t e r t o Mr. J . N. Peyton, then
Federal Reserve Agent a t M i n n e a p o l i s , which read i n p a r t as f o l l o w s :
"The s i t u a t i o n . . . ariphasizes t h e q u e s t i o n which has
e x i s t e d f o r some time as t o t h e n e c e s s i t y o r j u s t i f i c a t i o n
f o r t h e continuance o f a branch a t Helena. I t i s suggested
t h a t a f t e r you have had an o p p o r t u n i t y t o f a m i l i a r i z e y o u r s e l f w i t h t h e a f f a i r s o f t h e Minneapolis bank, you arrange t o
v i s i t t h e Helena Branch f o r t h e purpose o f o b t a i n i n g f i r s t hand i n f o r m a t i o n as t o i t s operations and t h e requirements o f
t h e t e r r i t o r y served by i t
and submit t o t h e Board a
d e t a i l e d r e p o r t on the q u e s t i o n o f t h e a d v i s a b i l i t y o f t h e d i s continuance o f the Branch."
P r i o r t o t h e r e c e i p t o f Mr. Peyton 1 s r e p o r t t h e Board was advised by
A. R. McDermott, P r e s i d e n t o f t h e Montana Bankers 1 A s s o c i a t i o n , i n a l e t t e r
dated J u l y 29, 1955, t h a t such a s s o c i a t i o n had unanimously voted t o request
the Board and t h e Minneapolis bank t o continue t h e Helena Branch as a complete
o p e r a t i n g u n i t f o r the s e r v i c c and p r o t e c t i o n o f the people, business and banks




209,

o f Montana.

Mr. McBermott s t a t e d t h a t t h i s a c t i o n was taken a f t e r

careful

c o n s i d e r a t i o n and d i s c u s s i o n o f the past and present e x c e l l e n t s e r v i c e
rendered by t h e Branch i n c o l l e c t i n g checks, meeting currency requirements,
safekeeping s e c u r i t i e s and h a n d l i n g d i s c o u n t s f o r bankers i n Montana, who
were otherwise f a r removed from any f i n a n c i a l c e n t e r .
The Board considered Mr. McDermott's l e t t e r on September 12, 1933, and
forwarded a copy t o M r . Peyton, w i t h the request t h a t he submit

h i s r e p o r t on

t h e Helena Branch, which he was w i t h h o l d i n g pending a d i s c u s s i o n o f

certain

phases o f the q u e s t i o n w i t h o f f i c i a l s o f t h e Federal Reserve Bank o f San
Francisco.
1933.

Mr. P e y t o n ' s memorandum was forwarded t o t h e Board on October 9 ,

I n i t he s t a t e d there were t h r e e p o i n t s o f view from whi'ch t h e q u e s t i o n

o f c o n t i n u i n g t h e Helena Branch must be considered; namely, s e r v i c e , expense
and p o l i t i c a l .

He submitted d a t a bearing on these t h r e e aspects o f the ques-

t i o n and drew t h e f o l l o w i n g conclusions:
(1) The Branch s u p p l i e s s e r v i c e t o member banks which cannot
be as e x p e d i t i o u s l y or conveniently s u p p l i e d from M i n n e a p o l i s .
(2) The discontinuance o f the Helena Branch would e f f e c t a
saving of approximately $59,000 t h i s year and p o s s i b l y an a d d i t i o n a l
amount i n f u t u r e y e a r s , b u t a t the time o f discontinuance t h e book
value o f t h e Helena b u i l d i n g , i n the amount o f $53,281.26, should
be completely charged o f f as an asset on t h e books o f t h e F e d e r a l
Reserve Bank o f Minneapolis.
(5) Outside o f the d i s t u r b a n c e t o l o c a l p r i d e , i t would be
b e t t o r from a p o l i t i c a l p o i n t o f view t o d i s c o n t i n u e the Helena
Branch.
(Mr. Peyton r e f e r s c h i e f l y t o the p o l i t i c a l cleavage i n
t h e S t a t e between c e r t a i n mining i n t e r e s t s and an
o p p o s i t i o n f a c t i o n , which he says i s very e v i d e n t i n
Helena, t h e c a p i t a l c i t y o f Montana.)
Mr. Peyton c a l l e d a t t e n t i o n t o the f a c t t h a t the Spokane Branch was
o n l y 100 miles from t h e Western Montana border and t h a t the discontinuance




210,

o f t h e Helena Branch might cause t h e western p o r t i o n o f t h e S t a t e ,

despite

i t s n a t u r a l r e l a t i o n s h i p w i t h t h e e a s t , t o apply f o r t r a n s f e r t o t h e T w e l f t h
District.

He s a i d t h a t Minneapolis d i d n o t wish t o l o s e such t e r r i t o r y and

suggested San Francisco be approached w i t h regard t o discontinuance o f t h e
Spokane Branch i f i t was deemed a d v i s a b l e t o close t h e Helena Branch.
Mr. Peyton's memorandum, and a proposed l e t t e r t o t h e San Francisco
Reserve Bank on t h e q u e s t i o n r a i s e d by Mr. Peyton, was discussed by t h e Board
on October 26, 1933, and November 15, 1933, b u t t h e m a t t e r was d e f e r r e d on both
occasions.

The o p i n i o n was expressed t h a t t h e Board should adopt a general

p o l i c y r e g a r d i n g t h e continuance o f branches before making i t s

decision

r e g a r d i n g Helena o r Spokane.
( j ) A c t i o n r e g a r d i n g Helena Branch i n 1934:
A t a meeting o f t h e Board on December 12, 1934, Governor Eccles r e f e r r e d
t o t h e Helena Branch q u e s t i o n which had been h e l d on t h e docket w i t h o u t a c t i o n
since t h e f a l l o f 1933, and s t a t e d he f e l t i t would be inopportune a t t h e time
t o g i v e c o n s i d e r a t i o n t o t h e discontinuance o f a branch o f a F e d e r a l Reserve
bank.

I t was v o t e d t h a t t h e m a t t e r be l a i d on t h e t a b l e .
( k ) Survey o f Helena Branch made by Federal Reserve Bank o f
Minneapolis - 1936
The Board 1 s l e t t e r o f March 25, 1936 (X-9532) addressed t o t h e Chairman

o f a l l F e d e r a l Reserve banks, r e q u e s t i n g a thorough survey o f t h e i r o r g a n i z a t i o n s i n t h e i n t e r e s t o f economy and e f f i c i e n c y , contained t h e f o l l o w i n g i n
r e g a r d t o branches:
I n making these s t u d i e s i t i s i m p o r t a n t t h a t c a r e f u l
thought be given t o t h e operations now handled by branches o f
F e d e r a l Reserve banks w i t h p a r t i c u l a r r e f e r e n c e t o t h e n e c e s s i t y
f o r t h e branches. I f t h e branches are considered necessary a
review o f t h e i r operations should be made t o determine whether




211,

any o f t h e o p e r a t i o n s now being handled by than should be t r a n s f e r r e d t o t h e head o f f i c e a t a s u b s t a n t i a l saving i n o p e r a t i n g
cost and w i t h o u t i m p a i r i n g t h e s e r v i c e s which t h e System i s now
r e n d e r i n g t o member banks and through them t o commerce, i n d u s t r y
and a g r i c u l t u r e . M
I n s o f a r as the Helena Branch was concerned t h e q u e s t i o n r a i s e d by t h e
Board was o f prime importance.

The Helena Branch b u i l d i n g , which had l o n g

been considered inadequate, was badly damaged by earthquakes d u r i n g t h e F a l l
o f 1955 and was a t t h e t i m e considered u n s a f e .
On A p r i l 18, 1956, P r e s i d e n t Peyton o f t h e Minneapolis bank, addressed
a l e t t e r t o t h e Board i n which he o u t l i n e d t h e conclusions reached i n h i s
1955 survey o f t h e Branch and s t a t e d t h a t t h e present s i t u a t i o n contained t h e
following actuating factors:
"1.

The Helena t e r r i t o r y can n o t reach Minneapolis by o v e r n i g h t
railway mail.

2.

Discontinuance o f t h e Helena Branch undoubtedly would cause
s t r o n g sentiment on t h e p a r t o f Western Montana t o annex i t s e l f t o t h e San Francisco d i s t r i c t , which i s a l r e a d y unwieldy
i n s i z e , and t h a t p a r t o f Montana i s i n t h e n a t u r a l t r a d e
t e r r i t o r y o f t h e Minneapolis d i s t r i c t .

5.

I have no reason t o b e l i e v e the San Francisco bank w i l l ever
be allowed t o d i s c o n t i n u e t h e Spokane Branch, and t h e Spokane
Branch presupposes t h e continuance o f our Helena Branch. Even
should San Francisco d i s c o n t i n u e t h e Spokane Branch, t h e
S e a t t l e Branch would o f f e r much the same problem.

4.

Helena has been s u b j e c t t o a continuous s e r i e s o f earthquakes,
w i t h damage t o t h e Branch b u i l d i n g r e s u l t i n g , though the framework and u n d e r - p i n n i n g o f t h e b u i l d i n g are i n t a c t .

5.

The Helena b u i l d i n g i s e n t i r e l y inadequate i n i t s cubic c o n t e n t ,
i t s l o c a t i o n and i t s appearance. The i n s i d e measurements o f
t h e b u i l d i n g are 25 x 68 f e e t , e x c l u s i v e o f t h e v a u l t , and t h e r e
are 4,700 square f e e t o f space on the two f l o o r s . The b u i l d i n g
i s on a corner so surrounded by o t h e r b u i l d i n g s t h a t i t i s imposs i b l e t o add t o i t i n any d i r e c t i o n . The t y p e o f b u i l d i n g makes
i t u n d e s i r a b l e and i n e f f i c i e n t t o add s t o r i e s . I recommend
immediate p l a n s f o r t h e e r e c t i o n o f a s u i t a b l e b u i l d i n g t o




212,

adequately house Branch f u n c t i o n s and t o present a proper
appearance o f d i g n i t y and i n t e g r i t y t o t h e Federal Reserve
System. The m a t t e r should r e c e i v e immediate c o n s i d e r a t i o n
as i t appears w a s t e f u l t h a t necessary r e p a i r s be made t o
t h e present Branch b u i l d i n g , should the Board g i v e f a v o r a b l e
c o n s i d e r a t i o n t o a new Branch b u i l d i n g a t Helena. When plans
have been consummated, t h e t i m e o f i n i t i a t i o n o f a c t u a l cons t r u c t i o n should be l e f t t o the d i s c r e t i o n o f the Executive
Committee o f t h e Federal Reserve Bank o f M i n n e a p o l i s , t o
i n s u r e a g a i n s t premature a c t i o n , i n view o f t h e present e a r t h quake s i t u a t i o n . "
I n J u l y 1936 r e p r e s e n t a t i v e s o f the Minneapolis Reserve Bank, i n c l u d i n g
P r e s i d e n t Peyton, v i s i t e d Helena a t the request o f the Re-Organization Comm i t t e e o f t h e Minneapolis Reserve Bank.

The outgrowth o f t h i s v i s i t was a

complete a u d i t and i n v e s t i g a t i o n o f a l l a c t i v i t i e s o f t h e Helena Branch.

A

program o f r e o r g a n i s a t i o n was f o r m u l a t e d which i n v o l v e d a few changes i n
personnel and methods o f procedure, t h e establishment o f d e f i n i t e departmental
r e s p o n s i b i l i t y , a program f o r t r a i n i n g o f f i c e r s o f t h e Branch by p e r i o d i c a l
assignment t o t h e Head O f f i c e , c l o s e r a u d i t s u p e r v i s i o n by the Head O f f i c e
and modernization o f equipment.

A copy o f the r e o r g a n i z a t i o n program f o r the

Branch was submitted as a supplement t o the Minneapolis Bank Survey.
At the same time p a r t i c u l a r a t t e n t i o n was given t o the b u i l d i n g s i t u a t i o n
and on J u l y 28, 1936, Mr. Peyton advised t h e Board t h e i r survey showed f o u r
p o s s i b l e s o l u t i o n s t o the problem, (a) Repair the b u i l d i n g as i t stood, (b)
Repair the b u i l d i n g and add another s t o r y o r r e a r a d d i t i o n , (c) Rent o t h e r
q u a r t e r s , (d) E r e c t a new b u i l d i n g .

Mr. Peyton s t a t e d t h a t a t a meeting o f

Branch and Head O f f i c e d i r e c t o r s the Branch Manager had been requested t o
o b t a i n o p t i o n s on two b u i l d i n g s i t e s and t o o b t a i n b i d s from t h r e e f i r m s o f
a r c h i t e c t s on the cost o f r e p a i r i n g the o l d b u i l d i n g w i t h and w i t h o u t an
a d d i t i o n and o f c o n s t r u c t i n g a s u i t a b l e new b u i l d i n g on the o p t i o n e d s i t e s
( n o t t o exceed $100,000).




213,

On October 17, 1956, the Board o f D i r e c t o r s o f t h e Minneapolis Reserve
Bank passed a r e s o l u t i o n f a v o r i n g t h e e r e c t i o n o f a new branch b u i l d i n g ,
j e c t t o approval o f t h e Board

sub-

o f Governors, a t a cost n o t t o exceed $100,00tf

e x c l u s i v e o f the cost o f one o r t h e o t h e r o f two p r o s p e c t i v e s i t e s .
Mr. Peyton appeared before t h e Board on November 25, 1936, t o discuss
the q u e s t i o n o f c o n t i n u i n g t h e Branch and t h e need f o r a new b u i l d i n g .

He

o u t l i n e d the general h i s t o r y o f t h e Helena Branch and compared t h e s e r v i c e
which i t rendered t o Montana banks t o t h a t which could be rendered from
Minneapolis.

He expressed t h e o p i n i o n t h a t l i t t l e would be saved by con-

v e r t i n g t h e Branch i n t o an agenqy and s a i d he f e l t t h e r e would be considerable
o p p o s i t i o n on t h e p a r t o f i n d i v i d u a l s i n Helena and i n Montana g e n e r a l l y

if

t h e Branch were d i s c o n t i n u e d e n t i r e l y , and t h a t such o p p o s i t i o n would be
g r e a t e r i f t h e Spokane Branch o f t h e San Francisco Reserve Bank were r e t a i n e d .
Mr. Poyton s t r e s s e d t h e need f o r an immediate d e c i s i o n i n view o f t h e u n s a t i s f a c t o r y c o n d i t i o n o f the Helena Branch b u i l d i n g .
Mr. Peyton was advised t h a t t h e Board was s t u d y i n g t h e general q u e s t i o n
o f the continuance and scope o f branch f u n c t i o n s .

I t was suggested t h a t

necessary r e p a i r s , estimated a t $4,000, be made t o t h e present branch b u i l d i n g
t o i n s u r e s a f e t y and t h a t any d e c i s i o n r e s p e c t i n g t h e Helena Branch be d e f e r r e d
u n t i l t h e Board had completed i t s study.

I t was a l s o suggested t h a t considera-

t i o n be given t o t h e q u e s t i o n whether, i n view o f present business and banking
a c t i v i t i e s , Helena was t h e l o g i c a l l o c a t i o n f o r a branch i n Montana.
I n keeping w i t h a motion unanimously passed a t t h e above meeting, a
l e t t e r was d r a f t e d , approved and sent t o Mr. Peyton, which read as f o l l o w s :




214,

"Pursuant t o t h e a c t i o n taken a t t h e meeting o f the Board
o f Governors o f t h e F e d e r a l Reserve System on November 25, 1956,
a t which you were p r e s e n t , t h i s l e t t e r i s addressed t o you f o r
t h e purpose o f a d v i s i n g t h a t , i n t h e l i g h t o f t h e d i s c u s s i o n s a t
the meeting o f the Board w i t h respect t o t h e Helena Branch, t h e
Board f e e l s t h a t a d e c i s i o n on the a c t i o n taken a t t h e j o i n t
meeting o f t h e Boards o f d i r e c t o r s o f t h e Federal Reserve Bank
o f Minneapolis and i t s Helena Branch on October 17, 1936, i n
connection w i t h t h e e r e c t i o n o f a new branch b u i l d i n g a t Helena,
should be d e f e r r e d f o r a p e r i o d o f n o t t o exceed s i x months t o
a l l o w s u f f i c i e n t t i m e f o r t h e completion o f t h e study now b e i n g
made by t h e Board o f the general q u e s t i o n o f t h e continuance o f
branches o f F e d e r a l reserve banks and t h e i r f u n c t i o n s . As soon
as t h e r e p o r t i s a v a i l a b l e and t h e Board has had an o p p o r t u n i t y t o
consider i t , t h e q u e s t i o n o f t h e e r e c t i o n o f a new b u i l d i n g t o
house t h e a c t i v i t i e s o f t h e Helena Branch w i l l be given f u r t h e r
consideration.
"However, as you were advised a t the meeting, t h e Board
suggests t h a t steps be taken by t h e Federal Reserve Bank o f
Minneapolis as promptly as p o s s i b l e t o make such r e p a i r s t o the
present b u i l d i n g as are necessary f o r t h e s a f e t y o f t h e employees
o f t h e Branch."
On February 6 , 1937, Mr. Peyton submitted a survey r e l a t i v e t o t h e best
place f o r t h e l o c a t i o n o f a branch o f t h e Minneapolis Reserve Bank i n Montana,
as suggested a t t h e November h e a r i n g .

T h i s survey i n d i c a t e d t h a t on the basis

o f (1) t o t a l deposits served, (2) t o t a l p o p u l a t i o n served, (3) t o t a l number o f
banks served, and (4) m a i l s e r v i c e , Helena was the most d e s i r a b l e l o c a t i o n f o r
a branch i n Montana.

I n t h e survey Mr. Peyton s t a t e d t h a t t h e f i n a l d e c i s i o n

i n regard t o the Helena Branch now r e s t e d w i t h the Board o f Governors and t h a t
the Minneapolis bank would await t h e i r d e c i s i o n .
Subsequently, the Federal Reserve Bank o f Minneapolis sought t o purchase
adequate q u a r t e r s i n Helena w i t h o u t success, and on J u l y 9 , 1937, t h e Board
sanctioned t h e purchase o f t h e most d e s i r a b l e o f t h e two b u i l d i n g s i t e s h e l d
under o p t i o n f o r $15,000 and steps were t a k e n , w i t h t h e Board's a p p r o v a l , t o
e r e c t a s u i t a b l e branch b u i l d i n g a t a cost o f n o t more than $100,000.

As

p r e v i o u s l y s t a t e d i n t h i s memorandum, the new branch premises were completed,
f u r n i s h e d and occupied by t h e Branch on June 13, 1938.




215,

HELENA BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled

Date

Currency

Coin

Received

Received

Bi l i s

and

and

Pi scounted

Counted

Counted

Ci tv

Non Cash
Checks Handled
Govtt

1931

2,054

1,715,000

1,8*t7,COG

210,000

1932

3,096

1,323,000

1,797*000

186,000

1933

990

1,334,000

1,101,000

199,000

1934

25

»,557,000

959,000

258,000

1935

I

2,135,000

I ,474,000

292,000

1936

I

2,105,000

1,209,000

2*40,000

Countfv

Checks

Total

1,525,000

218,000

1,953,000

1,139,000

228,000

1,553,000

1,387,000

312,000

1,898,000

2,106,000

802,000

3,166,000

2,418,000

587,000

3,297,000

3,147,000

600,000

4,067,000

Co I lection items

Fiscal Agency

Gov11

Transactions

All

Direct

Other

Transfer
of

Coupons

Other

41,526

13,084

8,211

42,437

16,541

8,160

40,944

22,686

7,450

52,797

20,860

8,121

48,000

25,000

10,582

40,000

23,000

11,000

Funds

Amounts Handled
( i n thousands of d o l l a r s )

£

1931

5,535

15,344

621

179,655

144,675

29,107

353,437

403

5,350

1932

10,039

13,029

401

117,807

100,598

26,011

245,216

435

5,988

1933

6,527

13,103

621

88,265

124,703

41,502

254,470

524

9,301

34,236

1934

205

I i ,354

353

101,6*42

224,071

73,491

400,004

549

14,705

102,578

1935

9

12,626

I,mo

119,161

294,404

68,640

482,285

415

20,895

1936

14

15,354

334

119,334

323,754

81,254

524,342

452

20,012

Digitized
Qi for FRASER


-

—
10

-

—

133,908
96,284

145,414
167,570

DENVER BRANCH - FEDERAL RESERVE BANK OF KANSAS CITY
(a) C i t y o f Denver.*
Denver, w i t h a p o p u l a t i o n o f 287,861, i s the t w e n t y - n i n t h l a r g e s t c i t y
the U n i t e d S t a t e s and the l a r g e s t c i t y i n Colorado.

in

I t i s l o c a t e d near the

center o f t h e S t a t e and i s s a i d t o serve a t r a d e area extending approximately
30 m i l e s i n a l l d i r e c t i o n s i n which about 575,000 people r e s i d e .

Transportation

f a c i l i t i e s are provided by e i g h t r a i l r o a d s , i n c l u d i n g t h e Atchison-Topeka &
Santa Fe, Union P a c i f i c , B u r l i n g t o n Route, Denver & Rio Grande-Western and the
Chicago-Rock I s l a n d & P a c i f i c .

The c i t y i s a l s o served by the Tfyoming A i r L i n e

which connects w i t h t h e U n i t e d A i r Lines a t Cheyenne.
The p r i n c i p a l l o c a l i n d u s t r i e s are l i v e s t o c k , meat packing, s m e l t i n g
and r e f i n i n g , petroleum r e f i n i n g , beet sugar p r o d u c t i o n , canning, c l a y products
and automobiles and accessories.

According t o the B i e n n i a l Census o f Manu-

f a c t u r e s t h e r e were 600 manufacturing establishments o p e r a t i n g i n Denver County
i n 1935, which had an o u t p u t valued a t $90,117,000 d u r i n g t h a t y e a r .

The

Census o f American Business f o r the same year l i s t s 4,184 r e t a i l and 835 wholes a l e establishments o p e r a t i n g i n t h e same area; such f i r m s e n j o y i n g sales
aggregating $127,497,000 and $261,593,000, r e s p e c t i v e l y , d u r i n g t h e y e a r .
Banking f a c i l i t i e s i n Denver are provided by seven n a t i o n a l banks, t h r e e
S t a t e banks (two members) and one i n d u s t r i a l bank.

These i n s t i t u t i o n s had

d e p o s i t s aggregating $200,232,000, as o f December 31, 1936, and o f t h i s amount
$197,484,000 was c a r r i e d by t h e n i n e l o c a l member banks.

Two s m a l l n a t i o n a l

banks w i t h d e p o s i t s aggregating $1,629,000, l o c a t e d i n o u t l y i n g s e c t i o n s o f t h e
c i t y were a u t h o r i z e d t o c a r r y c o u n t r y bank r e s e r v e s .




217,

Debits t o i n d i v i d u a l accounts i n banks o f t h e c i t y aggregated $1,945,488,OCX)
i n 1936; o r an average o f approximately $6,480,000 f o r each banking day.
( b ) Branch T e r r i t o r y and Functions:
The Denver Branch was e s t a b l i s h e d on January 14, 1918, and serves the
e n t i r e S t a t e o f Colorado and the n o r t h e r n p o r t i o n o f the S t a t e o f New Mexico
i n c l u d e d i n the Tenth D i s t r i c t .

This t e r r i t o r y represents approximately 31%

o f the l a n d area o f the Tenth D i s t r i c t and has about 16% o f i t s t o t a l population.

Approximately 8.7% o f a l l banks i n the d i s t r i c t are l o c a t e d i n t h i s

area.
As o f December 31, 1936, there were 168 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and o f t h i s number 90, i n c l u d i n g 84 n a t i o n a l and 6
State i n s t i t u t i o n s , were members o f the System.
member banks i n the zone were on the par l i s t .

A l l b u t 1 o f t h e 78 nonThe f o l l o w i n g f i g u r e s taken

from r e p o r t s o f c o n d i t i o n as o f the same date show the s i z e o f member bank
f o o t i n g s i n t h e branch zone as compared w i t h t h e Tenth D i s t r i c t as a whole:

Tenth D i s t r i c t
Branch Zone

No. Member
Banks

Loans
and
Investments

726
90

$1,119,013
203,648

Capital
and
Surplus
(000 omitted}
$133,006
23,955

Total
Deposits
$1,762,865
334,086

There are f o u r t e e n branch zones i n the System having s m a l l e r member bank
f o o t i n g s than the Denver zone, namely, Spokane, E l Paso, L i t t l e Rock, Helena,
C h a r l o t t e , San Antonio, N a s h v i l l e , Birmingham, Memphis, S a l t Lake C i t y ,
L o u i s v i l l e , P o r t l a n d , J a c k s o n v i l l e and Omaha.
The Denver Branch renders s u b s t a n t i a l l y the same s e r v i c e t o member banks
i n i t s zone as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s and d i s bursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , non-cash




218,

c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and borrowings o f member banks are
concerned.

Reserve accounts o f member banks i n the zone, as w e l l as o f non-

member c l e a r i n g banks and o t h e r Federal Reserve banks, are maintained a t the
Branch, which a l s o m a i n t a i n s a memorandum general l e d g e r and a r e c o r d o f
c e r t a i n earnings and expenses.

C o n t r o l accounts a r e , o f course, maintained

a t the Head O f f i c e which i s sent a d a i l y t r a n s c r i p t o f e n t r i e s a f f e c t i n g such
accounts.

Immediate c r e d i t i s given t o member banks f o r d i s c o u n t o f f e r i n g s

r e c e i v e d by the Branch, s u b j e c t t o f i n a l approval o f t h e Head O f f i c e .
Schedules covering t r a n s a c t i o n s are forwarded t o the Head O f f i c e , b u t the
notes and c o l l a t e r a l , i f any, are r e t a i n e d a t the Branch.

The Branqh does

n o t have Bank Examination, Bank R e l a t i o n s , L e g a l , Research o r F i s c a l Agency
departments.
As o f February 27, 1957, member banks i n the branch zone had the f o l l o w i n g Reserve bank balances:

Colorado:
Denver
Remainder o f S t a t e
New Mexico

No. o f
Banks

Reserve
Balances

Deferred
Balances

9
74
J7
90

$31,675,657
10,724,927
2.406.085
$44,806.647

$3,924,900
169,890
108,001
$4,202,791

Capital
Stock

Bills
Discounted

$581,900
266,300
54.150
$702,550

Denver i s 666 t r a i n m i l e s (16 h r s . and 45 m i n s . ) from Kansas C i t y .

It

i s impossible t o send m a i l by t r a i n from e i t h e r p o i n t a f t e r 7 P. M. on any
business day and have i t a r r i v e a t the o t h e r before 8 A. M. on the f o l l o w i n g
day.

Consequently, Denver i s n o t considered t o be w i t h i n o v e r n i g h t m a i l

time o f Kansas C i t y .

There are 73 member bank p o i n t s i n the branch zone.

Only 11 o f these p o i n t s are w i t h i n o v e r n i g h t m a i l o f Kansas C i t y , whereas
42 are w i t h i n o v e r n i g h t m a i l o f Denver.

I t i s clear, therefore, that d i s -

continuance o f t h e Denver Branch would n o t o n l y inconvenience banks i n t h a t




219,

c i t y , which now e n j o y an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h the Branch, b u t
t h a t i t would a l s o i m p a i r the s e r v i c e rendered t o a s u b s t a n t i a l number o f
member banks s i t u a t e d i n o u t l y i n g c i t i e s o f t h e branch zone.
Other than Denver, the most populous c i t i e s i n the branch zone are
Pueblo, Colorado, 50,096} Colorado Springs, Colorado, 55,257; and Greeley,
Colorado, 12,205.
( c ) Branch B u i l d i n g :
The Denver Branch has occupied i t s present q u a r t e r s a t 17th and Araphoe
S t r e e t s since November 1925.

The f o l l o w i n g f i g u r e s show the o r i g i n a l cost

and book v a l u e , as o f February 27, 1937, o f the branch premises:
Cost
Land
Building
V a u l t and v a u l t equipment
Fixed machinery and equipment

$101,512
59S,5?4)
113^502)
$551,388
60,593
$611,981

Book Value
2-27-57
$ 80,000
282,784
$362,784
5,087
$365,871

(d) Earnings - Branch Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r t h e years 1951 t o
1937, i n c l u s i v e , were as f o l l o w s :
Year

Earnings

1931
1932
1935
1954
1935
1936
1937

$ 65,900
139,600
61,100
9,700
4,900
1,300
2,700

The above f i g u r e s are incomplete s i n c e , under the p r e s e n t accounting
procedure, t h e Branch i s g i v e n no c r e d i t f o r income r e c e i v e d by the Head




220,

O f f i c e on investments, a p o r t i o n o f which i s made p o s s i b l e by t h e Reserve
bank stock investment and r e s e r v e balances o f member banks i n the branch
zone.

They are i n t e r e s t i n g o n l y i n s o f a r as they show the shrinkage i n

Branch earnings which are d e r i v e d c h i e f l y from b i l l s discounted f o r member
banks i n the zone.

Earnings from t h i s source aggregated $155,800 I n 1932

and t o o n l y $2,300 i n 1937.
(e) Branch Personnel:
The r e p o r t o f examination o f the Federal Reserve Bank o f Kansas C i t y ,
made as o f February 27, 1937, shows the f o l l o w i n g i n r e g a r d t o s a l a r i e s and
personnel a t the Denver Branch:
February 27, 1937
Number
Amount
Officers
Employees

3
68
71

$ 18,100
94.800
&L12.900

May 8, 1956
Numbed
Amount
3
69
72

$ 18,000
99,100
$117,100

Decrease
Number
Amount
1
|

$

100(Inc.)
4,500
14,200

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n t h e above f i g u r e s .
( f ) Branch Expense by F u n c t i o n s :
The expenses o f the Denver Branch fcy f u n c t i o n s f o r the years 1932 t o
1937, i n c l u s i v e , were as f o l l o w s :




221,

1952

1955

1954

1955

1956

1957

G e n ' l . Overhead
Controllable
$ 17,770 $ 18,166 $ 15,749 § 15,982 # 15,500 0 16,558
8,879
67
Noncontrollable
15,084
12,152
31
2
^Provision o f Space
21,181
21,174
16,807
18,630
19,162
33, 150
P r o v i s i o n o f Personnel
858
15,746
19,846
701
10,815
1 , 598
General S e r v i c e
27,929
28,428
32,360
31,453
30,255
30, 013
Postage
11,230
15,106
14,309
14,645
14,322
14, 065
Insurance
4,973
4,824
3,461
2,461
2,538
2, 240
F a i l e d Banks
256
35
1
462
323
Loans, r e d i s c o u n t s , e t c .
9,014
11,606
2,882
6,146
3,192
1 , 238
4,003
3,491
4,101
5,090
4,113
Securities
3, 735
Currency & Coin
28,489
13,665
13,824
14,675
31,352
32, 552
Check C o l l e c t i o n
33,336
29,254
27,228
27, 046
31,964
29,961
Non-Cash C o l l e c t i o n
7,063
6,936
7,178
7,942
7,061
7, 925
Accounting
20,487
18, 577
22,122
21,210
21,904
23,374
F i s c a l Agency
6,010
9,528
12,365
22,900
15, 954
18,993
Auditing
5,238
5,477
4,771
4,374
4,625
4, 705
Bank R e l a t i o n s
1
14
10
6
942
61
—
—
Bank Examinations
168
65
62
—
—
47
F . R. Note I s s u e s
149
34
283
S t a t i s t i c a l and A n a l y t i c a l
128
176
1,043
325
752
1 , 087
$192,551 $202,656 #215,498 $226,625 $218,084 $211,752
Less - Reimbursable F i s c a l
Agency Expense
2,845
6,557
11,958
14,414
10,654
8,874
Net Expense
£189,706 &L96.299 S201.560 &212.211 $207,450 £202,858
* Represents the n e t expense - income from r e n t a l s having been deducted.
There were nine branches i n the System which operated a t a h i g h e r n e t
cost than the Denver Branch i n 1957, namely, P i t t s b u r g h , Los Angeles, B a l t i m o r e ,
C i n c i n n a t i , D e t r o i t , B u f f a l o , S a l t Lake C i t y , Omaha and S e a t t l e ,
(g) Volume o f Operations a t Denver Branch:
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s i n v a r i o u s
departments o f the Denver Branch and the Head O f f i c e d u r i n g the l a s t
months o f 1956s

i
Denver Branch

Discount Department:
Notes r e d i s c o u n t e d
C o l l a t e r a l notes discounted
I n d u s t r i a l advances
Branches w i t h l a r g e r volume:




six

26
29
-

Head O f f i c e
55
2
15

E I Paso

227,

Memphis Branch

Head O f f i c e

Safekeeping:
Member bank s e c u r i t i e s 12-31-36
$15,030,000
$284,078,000
Branches w i t h l a r g e r volume:
C i n c i n n a t i , P i t t s b u r g h , Baltimore,
J a c k s o n v i l l e , D e t r o i t and Omaha.
Currency and Coin:
1. Number o f b i l l s received and counted
4,987,000
20,168,000
Branches w i t h l a r g e r volume:
A l l branches except Helena, E l Paso, S a l t
Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
67 cents
54 cents
Branches w i t h higher u n i t c o s t :
C i n c i n n a t i , Helena, E l Paso, S a l t Lake
C i t y and Spokane.
2. Number o f coins received and counted
3,946,000
17,754,000
Branches w i t h l a r g e r volume:
A l l branches except C h a r l o t t e , J a c k s o n v i l l e ,
N a s h v i l l e , L i t t l e Rock, Helena, E l Paso,
P o r t l a n d , S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
19 cents
11 cents
Branches w i t h higher u n i t c o s t :
C i n c i n n a t i , P i t t s b u r g h , N a s h v i l l e , Helena,
Omaha, E l Paso, San Antonio, P o r t l a n d ,
S a l t Lake C i t y , S e a t t l e and Spokane.
Check C o l l e c t i o n :
1 . Number o f c i t y checks ( c l e a r i n g s ) received
935,000
2,186,000
Branches w i t h l a r g e r volume:
Buffalo, Cincinnati, Pittsburgh, Baltimore,
D e t r o i t , L o u i s v i l l e , Omaha and Los Angeles.
Cost per one thousand u n i t s handled
$2.08
. $1.86
Branches w i t h higher u n i t c o s t :
L o u i s v i l l e , Helena, Oklahoma C i t y , Los
Angeles, P o r t l a n d , S a l t Lake C i t y , S e a t t l e
and Spokane.
2. Number o f countiy checks (outgoing) received 3,783,000
10,423,000
Branches w i t h l a r g e r volume:
Buffalo, Cincinnati, Pittsburgh, Baltimore,
D e t r o i t , L o u i s v i l l e , Oklahoma C i t y , Omaha and
Los Angeles.
Cost per one thousand u n i t s handled
$1.74
$2.24
Branches w i t h higher u n i t c o s t :
A l l branches except Birmingham, Jacksonv i l l e , L i t t l e Rock, Oklahoma C i t y and
Omaha.
Non-cash C o l l e c t i o n s :
1 . Number o f c i t y c o l l e c t i o n s handled
14,606
9,177
Branches w i t h l a r g e r volume:
B u f f a l o , B a l t i m o r e , D e t r o i t , L i t t l e Rock,
Memphis, Omaha, Houston and Los Angeles.
Cost per u n i t handled
14.3 cents
16.7 cents
Branches w i t h higher u n i t c o s t :
A l l branches except Birmingham, Jacksonv i l l e , N a s h v i l l e , L i t t l e Rock, L o u i s v i l l e ,
Memphis, Helena, Oklahoma C i t y , Omaha, E l
Paso, Houston and S a l t Lake C i t y .




223

Denver Brnnch

Head O f f i c e

Non-cash C o l l e c t i o n s ( C o n f t . )
2. Number o f country c o l l e c t i o n s handled
17,098
64,955
Branches w i t h l a r g e r volume:
B u f f a l o , Baltimore, C h a r l o t t e , Oklahoma C i t y ,
Omaha, S a l t Lake C i t y and Spokane.
Cost per u n i t handled
9.6 cents
7 . 4 cents
Branches w i t h higher u n i t cost:
B u f f a l o , B a l t i m o r e , Birmingham, Jacksonv i l l e , N a s h v i l l e , New Orleans, D e t r o i t ,
Helena, San Antonio, Los Angeles, P o r t l a n d and S e a t t l e .
5. Number o f coupons (except Government)
and country s e c u r i t y c o l l e c t i o n s handled
2,356
5,063
Branches w i t h l a r g e r volume:
A l l branches except C h a r l o t t e , Birmingham,
J a c k s o n v i l l e , N a s h v i l l e , Memphis, Helena,
Oklahoma C i t y , E l Paso, Houston, P o r t l a n d ,
S a l t Lake C i t y , S e a t t l e and Spokane.
Cost per u n i t handled
4 . 1 cents
20 cents
Branches w i t h higher u n i t c o s t :
A l l branches except C i n c i n n a t i , P i t t s b u r g h
and S e a t t l e .
A schedule showing the volume o f operations o f the Denver Branch f o r
the years 1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f Denver Branch by Board's Examiners - 1934:
During an examination o f the Federal Reserve Bank o f Kansas C i t y , made
as o f September 29, 1934, the Board's Examiners reviewed the operations of the
Denver Branch.

P a r t i c u l a r a t t e n t i o n was given t o the s i z e and importance o f

the branch c i t y and i t s distance from the Head O f f i c e , the m a i l f a c i l i t i e s
a v a i l a b l e between Kansas C i t y and member bank p o i n t s i n the branch zone, and
t o the volume o f operations conducted a t the Branch.

I t was concluded t h a t

the continued o p e r a t i o n o f the Branch was warranted.
( i ) Survey o f Denver Branch made by Federal Reserve Bank o f Kansas
C i t y - 1956:
I n accordance w i t h the request made i n the Board's l e t t e r o f March 25,
i
1936 (X-9532), the Federal Reserve Bank of Kansas C i t y surveyed the operations
o f i t s branches.




I t was estimated t h a t a saving o f $350,830, based on

224

o p e r a t i n g costs o f $679,090 f o r the y e a r 1955, would be r e a l i z e d i f
t h r e e branches were d i s c o n t i n u e d .

all

However, t h e i r discontinuance was not

recommended, c h i e f l y because o f the v a l u a b l e services which they were p e r forming f o r member banks and t h e f a c t t h a t over a p e r i o d o f years thqy had
become i m p o r t a n t f a c t o r s i n the economic l i f e o f the c i t i e s and t e r r i t o r i e s
which they served.

I t was s t a t e d t h a t any suggestion t h a t such branches

were t o be d i s c o n t i n u e d would be s t r o n g l y opposed by the p u b l i c as w e l l as
by the member banks they serve.
As an a l t e r n a t i v e , the o p i n i o n was expressed t h a t the Omaha and Denver
Branches should be converted i n t o l i m i t e d power branches and t h a t t h i s could
be done w i t h o u t reducing the value o f the s e r v i c e s which were being rendered
t o member banks i n such branch zones.

I t was estimated t h a t , based on con-

d i t i o n s then e x i s t i n g , a saving o f approximately $21,000 would be r e a l i z e d
through such conversion and t h a t such a c t i o n would also strengthen Head O f f i c e
c o n t r o l over these branches.
I n accordance w i t h the above o p i n i o n , P r e s i d e n t Hamilton o f the Kansas
C i t y Reserve Bank addressed a l e t t e r t o the Board on January 12, 1937, r e q u e s t i n g i t s approval o f the conversion o f the Omaha and Denver Branches i n t o
l i m i t e d power branches t o be operated on the same b a s i s as the Oklahoma C i t y
Branch.

On January 21, 1937, the Board wrote P r e s i d e n t Hamilton approving

the proposed conversion and r e q u e s t i n g to be advised o f the date on which
the change would be made e f f e c t i v e .

President Hamilton r e p l i e d on February 4,

1937, t h a t h i s d i r e c t o r s had voted to approve i n p r i n c i p l e the proposed conv e r s i o n , b u t had postponed s e t t i n g an e f f e c t i v e date f o r the conversion u n t i l
r e p r e s e n t a t i v e s o f b o t h branches had had an o p p o r t u n i t y t o stucty" necessary
changes.




225,

Opposition t o the proposed conversion developed and on A p r i l 10, 1937,
t h e Board o f Governors was advised t h a t t h e d i r e c t o r s o f t h e Federal Reserve
Bank o f Kansas C i t y a t a r e g u l a r meeting on A p r i l 8 , 1937, had acted as
follows:
"President Hamilton r e p o r t e d on meetings h e l d a t Denver,
Colorado, and Omaha, Nebraska, f o r t h e purpose o f d i s c u s s i n g
w i t h banker groups t h e proposed conversion o f t h e Denver and
Omaha Branches o f t h i s bank i n t o memorandum branches. He
s t a t e d t h a t a f t e r a thorough d i s c u s s i o n o f the e f f e c t o f the
proposed change upon the s e r v i c e rendered t o member banks i n
t h e branch zones, the meetings had ended w i t h r e a f f i r m a t i o n
o f t h e bankers present o f t h e i r o p p o s i t i o n t o t h e change. A
general d i s c u s s i o n f o l l o w e d , a f t e r which the d i r e c t o r s voted
unanimously, i n view o f the general p r o t e s t , t o d i s c o n t i n u e
c o n s i d e r a t i o n o f conversion o f t h e Denver and Omaha Branches
o f t h i s bank i n t o memorandum branches, and t o p e r m i t them t o
remain i n t h e i r present s t a t u s . "
The l e t t e r c o n t a i n i n g t h i s advice was acknowledged by the Board on
A p r i l 88, 1937, and no f u r t h e r a c t i o n has been taken i n t h e m a t t e r .




226,

DENVER'BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled
Currency
Received
and
Counted

Non Cash
Collection items
Gov't
Al I

Coin

Total

Coupons

Other

Fiscal Agency
Transactions
Direct Other

565,000

8,555,000

191,549

55,968

3,543

5

18,222

4,986,000

563,000

6,798,000

196,156

57,724

1,236

3

15,821

1,453,000

4,999,000

701,000

7,153,000

206,037

68,332

1,511

92

12,570

11,197,000

1,733,000

5,649,000

1,354,000

8,736,000

239,214

73,196

7,416

140

10,131

I0,769,000

7,586,000

1,846,000

6,202,000

910,000

8,958,000

265,000

64,000

12,306

2,369

8,719

10,117,000

7,994,000

1,832,000

7,083,000

873,000

9,788,000

204,000

65,000

2,161

1,060

8,000

3,636

41,680

20,612

250

896,440

Received
and
Counted

Checks Handled
Gov't
Country
Checks

Date

Bills
Pi scounted

1931

3,972

8,1*69,000

9,099,000

1,478,000

6,512,000

1932

7,075

7,369,000

8,256,000

I,249,000

1933

2,860

9,097,000

8,300,000

1934

79

8,662,000

1935

129

1936

83

City

Transfer
of
Funds

193!

37,333

47,703

2,547

794,223

Amounts Handled
( i n thousands of do 11 are)
775,561
89,965 1,659,749

1932

99,192

Ml, 066

2,667

572,784

516,023

74,132

1,162,939

3,815

32,256

9,124

150

553,933

1933

35,778

56,**92

6,530

509,833

562,377

91,946

1,164,156

3,778

39,336

5,447

132

471,359

1931*

953

52,417

2,377

654,980

758,310

135,403

1,548,693

3,966

55,524

7,158

131

437,445

1935

1,231

62,878

1,529

798,907

926,667

136,777

1,862,351

3,625

61,201

6,403

751

560,126

1936

3,834

70,U82

1,711

932,812

1,049,927

176,473

2,159,212

2,939

68,677

7,501

338

598,993




OKLAHOMA CITY BRANCH - FEDERAL RESERVE BANK OF KANSAS CITY.
(a) C i t y o f Oklahoma C i t y
Oklahoma C i t y , w i t h a p o p u l a t i o n o f 185,389, i s t h e f o r t y - t h i r d l a r g e s t
c i t y i n the U n i t e d States and the l a r g e s t c i t y i n Oklahoma.

It

i s located i n

the c e n t r a l p a r t o f the S t a t e and i s said t o serve a t r a d e area extending 58
m i l e s n o r t h , 72 m i l e s south, 61 m i l e s east and 94- m i l e s west.
926,000 people r e s i d e i n t h i s area.
six railroads, including

T r a n s p o r t a t i o n f a c i l i t i e s are provided by

the Santa Fe, Chicago-Rock I s l a n d & P a c i f i c ,

L i n e s , F o r t Smith & Western and the Missouri-Kansas & Texas.
a i r service i s

Approximately

Frisco

I n addition regular

available.

O i l p r o d u c t i o n and r e f i n i n g , meat packing, f l o u r and feed m i l l i n g ,

printing

and p u b l i s h i n g , and the manufacture o f i r o n and s t e e l products are the p r i n c i p a l
local industries.

The B i e n n i a l Census o f Manufactures f o r 1935 l i s t s 269 p l a n t s

o p e r a t i n g i n Oklahoma County, i n which Oklahoma C i t y i s s i t u a t e d , and shows t h a t
such f i r m s had an output valued at $67,910,000 d u r i n g t h a t y e a r .

According t o

the Census o f American Business t h e r e were 2814- r e t a i l and 462 wholesale establishments i n the same area, which enjoyed sales aggregating $>76,200,000 and
$161,853,000, r e s p e c t i v e l y , i n 1935 •
Banking f a c i l i t i e s i n Oklahoma C i t y are provided by s i x n a t i o n a l banks, one
small S t a t e nonmember bank and a branch M o r r i s P l a n bank.

These i n s t i t u t i o n s had

d e p o s i t s aggregating %>107,94.7,000 as o f December 31, 1936, and o f t h i s amount
#107,088,000 was c a r r i e d by t h e s i x l o c a l member banks, t h e s m a l l e s t o f which i s
a u t h o r i z e d t o c a r r y country bank reserves.
Debits t o i n d i v i d u a l accounts i n banks o f the c i t y aggregated #1,135,973,000
d u r i n g the year 1936,

o r an average o f approximately

$3,790,000 f o r . e a c h bank-

i n g day.




228,

(b) Branch T e r r i t o r y and F u n c t i o n s :
The Oklahoma C i t y Branch was e s t a b l i s h e d August 2 , 1920 and serves a l l
t h a t p a r t o f t h e S t a t e o f Oklahoma l o c a t e d i n t h e Tenth D i s t r i c t .

This

terri-

t o r y r e p r e s e n t s 1% o f t h e l a n d area o f t h e d i s t r i c t and has a p p r o x i m a t e l y 28$
of i t s t o t a l population.

About 20$ o f a l l banks i n t h e T e n t h D i s t r i c t are w i t h i n

t h i s area.
As o f December 31>

1936, t h e r e were 384 banks, e x c l u s i v e o f mutual savings

banks, i n t h e branch zone and o f t h i s number 207, i n c l u d i n g 20U n a t i o n a l and 3
S t a t e i n s t i t u t i o n s , were members o f t h e F e d e r a l Reserve System.
177 nonmember banks i n t h e zone were

on the par l i s t .

A l l but 9 o f

the

The f o l l o w i n g f i g u r e s

t a k e n from r e p o r t s o f c o n d i t i o n a s o f t h e same date show t h e s i z e o f member bank
f o o t i n g s i n t h e branch zone as compared t o those o f t h e T e n t h D i s t r i c t as a

Tenth D i s t r i c t
Branch Zone

No. Member
Banks

Loans and
Investments

Capital
and
Surplus
(000 o m i t t e d )

726
207

£>1,119,013
247,626

&133,006
36,113

whole:

Total
Deposits
^1,726,865
371,331

There are o n l y e i g h t branch zones i n t h e System h a v i n g l a r g e r member bank
f o o t i n g s t h a n t h e Oklahoma C i t y Zone; namely, P i t t s b u r g h , Los Angeles,

Detroit,

C i n c i n n a t i , B u f f a l o , B a l t i m o r e , New Orleans and S e a t t l e .
The Oklahoma C i t y Branch i s operated on t h e "memorandum p l a n " .

A l l general

l e d g e r accounts, as w e l l as accounts o f member banks, nonmember c l e a r i n g banks
and o t h e r F e d e r a l Reserve banks, are m a i n t a i n e d a t t h e Head O f f i c e .

A transcript

o f a l l e n t r i e s a f f e c t i n g t h e accounts o f banks i n t h e branch zone i s sent t o t h e
Head O f f i c e d a i l y by w i r e .

Member banks i n t h e branch zone may f o r w a r d t h e i r

count o f f e r i n g s e i t h e r t o t h e Branch o r t h e Head O f f i c e .

dis-

O f f e r i n g s r e c e i v e d by

t h e Branch are examined t o see t h a t t h e paper i s t e c h n i c a l l y i n o r d e r and t h e




229,

amount o f each o f f e r i n g i s w i r e d t o the Head O f f i c e , which i n t u r n w i r e s
t e n t a t i v e approval o r d i s a p p r o v a l , c r e d i t being
c a t i o n i s r e c e i v e d a t the Branch.

g i v e n as o f the date the a p p l i -

Notes are t h e n forwarded t o the Head O f f i c e

f o r f i n a l approval, but t h e s u p p o r t i n g c o l l a t e r a l , i f any,
o f the Branch.

its

remains i n custody

The Branch gives t h e same s e r v i c e t o member banks i n i t s zone

as i s a v a i l a b l e a t the Head O f f i c e i n s o f a r as r e c e i p t s and disbursements o f
currency and c o i n , check c o l l e c t i o n s , non-cash c o l l e c t i o n s , w i r e t r a n s f e r s and
safekeeping o f s e c u r i t i e s are concerned.

The Branch has no Bank Examination,

Bank R e l a t i o n s , L e g a l , F a i l e d Banks, Research or F i s c a l Agency departments.
As o f February 27, 1937, member banks i n the branch zone had balances w i t h
the Reserve bank as f o l l o w s :
No. o f
Banks
Oklahoma C i t y
Remainder o f S t a t e
i n Zone

6

Reserve
Balances
^>15,557,855

Deferred
Balances
&2,970,225

Capital
Stock
$

276,300

Bills
Discounted
v

3?8|89?

784 1 9QQ

3,771

3291120

&1,06l.200

$3>771

Oklahoma C i t y i s 343 m i l e s (9 h r s . and 20 mins.) from Kansas C i t y .
any business day t r a i n s leave

both c i t i e s a f t e r 9 P»M. which a r r i v e a t t h e

o t h e r p r i o r t o 8 A.M. on the f o l l o w i n g day.
the branch zone.

On

There a r e 149 member bank towns i n

An examination o f m a i l schedules i n d i c a t e s t h a t a l l but 20 o f

such p o i n t s are w i t h i n o v e r n i g h t m a i l time o f Oklahoma C i t y , whereas 50 o f such
p o i n t s are not w i t h i n o v e r n i g h t m a i l time o f

Kansas C i t y .

Therefore, i t

ap-

pears t h a t discontinuance o f the Oklahoma C i t y Branch would c u r t a i l the s e r v i c e
rendered t o a s u b s t a n t i a l number

o f member

banks l o c a t e d

i n o u t l y i n g sections

o f the branch zone, as w e l l as banks i n Oklahoma C i t y which now have an o v e r - t h e counter r e l a t i o n s h i p w i t h t h e Branch.




230,

Other t h a n Oklahoma C i t y , the more populous c i t i e s i n the branch zone
are T u l s a , Oklahoma, 141,258; Muskogee, Oklahoma, 32,026; E n i d , Oklahoma,
26,399; Shawnee, Oklahoma, 23,283, and Okmulgee, Oklahoma, 17,097.
(c) Branch B u i l d i n g :
The Oklahoma C i t y Branch has occupied i t s present q u a r t e r s a t 226 West
T h i r d S t r e e t since A p r i l , 1923.

The f o l l o w i n g f i g u r e s show the o r i g i n a l cost

and c a r r y i n g value as o f February 27, 1937, o f the branch premises:

Cost
Land
Building
V a u l t & v a u l t equipment
Fixed machinery & equipment

$ 65,021
333,490)
76,400)
#474,911
'
77,480

Book Value
2-27-37
& 63,721
238 f 244
#301,965
1,553

(d) Earnings - Branch Books:
No r e c o r d o f earnings i s maintained a t the Oklahoma C i t y Branch as i t

is

operated on the "memorandum p l a n " .
(e) Branch Personnel:
The r e p o r t o f examination o f the Federal Reserve Bank o f Kansas C i t y , made
as o f February 27, 1937, shows the f o l l o w i n g i n r e g a r d t o s a l a r i e s and personnel
a t t h e Oklahoma C i t y Branch:
February 27, 1937
Number
Amount
Officers
Employees

3
64
62

$ 18,90091,500
$110 ? 400

May 8 , 1936
Number
Amount
3
68
2k

& 16,900
97,300
$116,200

Decrease
Number Amount

J±
J^

f5,800
&5.800

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are not
i n c l u d e d i n the above f i g u r e s .




231,

( f ) Branch Expense by Functions:
The expenses o f t h e Oklahoma

C i t y Branch by f u n c t i o n s f o r the years 1932

t o 1937 > i n c l u s i v e , were as f o l l o w s :
1222
General Overhead
Controllable
$ 17,258
Non-Controllable
7,205
* P r o v i s i o n o f Space
13,044
P r o v i s i o n o f Personnel
1,016
General Service
27,291
Postage
18,066
Insurance
4,949
Loans, Rediscounts, etc. 3,706
Securities
2,995
Currency & Coin
11,905
Check C o l l e c t i o n
50,606
Non-Cash C o l l e c t i o n
7,641
Accounting
15,082
F i s c a l Agency
6,356
Legal
Auditing
3,533
Bank R e l a t i o n s
62
F. R. Note Issue
Statistical & Analytical
134
T o t a l Expense
f 190,849
Less - Reimbursable
F i s c a l Agency Exp. 5,639
Net Expense
$185,210

1933
$ 17,909
11,860

12,199
900
27,764
19,388
4,692
3,463
3,131
12,398
51,120
7,567
14,237
9,261
-

4,444
45

1934

$ 14,561 $ 1 5 , 0 2 6
9,968
9,063
8,914
16,820
11,085
28,815
26,985
18,124
21,357
3,409
2,649
2,327
493
5,492
4,017
24,596
13,244
49,362
53,171
8,196
7,414
14,532
12,897
18,120
31,381
139
3,688
3,837
19
79
246
70
166
99

1937

1936

W 5
$

14,686

$ 14,223

-

-

10,148
20,152

18,358
1,738

28,091
22,437
2,825
393
5,509
26,925
44,200
7,935

28,082

22,042
2,362
467
4,056
27,387
42,873
7,733
13,590
22,815

14,124
23,848

15
4,145

-

$200,484

$210,151

$230,210

112
$225,793

4,759
781
256
.
109
1211,631

8,460
$192,024

17,656

$192,49?

20,651
$209,559

16,969
$208,824

17,627
$194,004

-

106

-

248

* Represents the net expense - income from r e n t a l s having been deducted.
There were t e n branches i n the System which operated a t a h i g h e r annual
cost t h a n the Oklahoma C i t y Branch i n 1937; namely, P i t t s b u r g h , Los Angeles,
B a l t i m o r e , C i n c i n n a t i , D e t r o i t , B u f f a l o , S a l t Lake C i t y , Omaha, S e a t t l e and
Denver.
(g) Volume o f Operations a t Oklahoma C i t y Branch
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s i n v a r i o u s departments o f t h e Oklahoma C i t y Branch and the Head O f f i c e d u r i n g the l a s t

six

months o f 1936:




282,

Oklahoma C i t y Branch
Head O f f i c e
Safekeeping:
Member bank s e c u r i t i e s 12-31-36
412,426,000
$284,078,000
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , J a c k s o n v i l l e ,
D e t r o i t , Denver and Omaha.
Currency & Coin:
1. Number of b i l l s received and counted
5,020,000
20,168,000
Branches w i t h l a r g e r volume: A l l branches except Helena, Denver, E l Paso,
S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
52 cents
54 cents
Branches w i t h higher u n i t cost: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , Helena,
Denver, Omaha, E l Paso, San A n t o n i o , P o r t l a n d ,
S a l t Lake C i t y , S e a t t l e , Spokane and L i t t l e
Rock.
2. Number o f coins received and counted
4,842,000
17,754,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , New
Orleans, D e t r o i t , L o u i s v i l l e , Memphis, Houston,
San Antonio, Los Angeles and S e a t t l e .
Cost per one thousand u n i t s handled
7 cents
11 cents
Branches w i t h higher u n i t cost: A l l branches except New Orleans.
Check C o l l e c t i o n :
1. Number o f c i t y checks ( c l e a r i n g s ) received
504,000
2,186,000
Branches w i t h l a r g e r volume: A l l branches except J a c k s o n v i l l e , L i t t l e Rock,
Helena, E l Paso, S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
$2.18
$1.86
Branches w i t h higher u n i t cost: Helena, Los Angeles, P o r t l a n d , S a l t Lake C i t y ,
S e a t t l e and Spokane.
2. Number o f country checks (outgoing) received
7,132,000
10,423,000
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h and B a l t i m o r e .
$1«72
&2.24
Cost per ono thousand u n i t s handled
Branches w i t h higher u n i t cost: A l l branches except Birmingham, J a c k s o n v i l l e ,
and L i t t l e Rock.
Non-Cash C o l l e c t i o n s
1. Number o f c i t y c o l l e c t i o n s handled
13,602
9,177
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , B a l t i m o r e , D e t r o i t , L i t t l e
Rock, Memphis, Denver, Omaha, Houston and Los
Angeles.
Cost per u n i t handled
10.8 cents
16.7 cents
Branches w i t h higher u n i t cost: A l l branches except J a c k s o n v i l l e , N a s h v i l l e ,
L i t t l e Rock, Omaha, E l Paso and Houston.
2. Number o f country c o l l e c t i o n s handled
17,407
64,935
Branches w i t h l a r g e r volume: B u f f a l o , B a l t i m o r e , C h a r l o t t e , Omaha, S a l t Lake
C i t y , and Spokane.
Cost per u n i t handled
9 cents
7-4 cents
Branches w i t h higher u n i t cost: B u f f a l o , B a l t i m o r e , Birmingham, J a c k s o n v i l l e ,
N a s h v i l l e , New Orleans, D e t r o i t , Helena, Denver,
San Antonio, Los Angeles, P o r t l a n d and S e a t t l e .



283

Oklahoma C i t y Branch
Head O f f i c e
Non-Cash C o l l e c t i o n s (Cont'd)
3# Number o f coupons (except Government)
and country s e c u r i t y c o l l e c t i o n s handled
1,494
5,063
Branches w i t h l a r g e r volume: A l l branches except Birmingham, J a c k s o n v i l l e ,
Helena, E l Paso, S a l t Lake C i t y , S e a t t l e and
Spokane.
Cost per u n i t handled
12.8 cents
20 cents
Branches w i t h higher u n i t cost: B u f f a l o , C h a r l o t t e , J a c k s o n v i l l e , D e t r o i t ,
L o u i s v i l l e , Memphis, Helena, E l Paso, Los
Angeles, P o r t l a n d , S a l t Lake C i t y and Spokane.
A schedule showing the volume o f operations o f the Oklahoma C i t y Branch
f o r the years 1931 to 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey of Oklahoma C i t y Branch by Board*s Examiners - 1934
During an examination o f the Federal Reserve Bank o f Kansas C i t y , made as
o f September 29, 1934, the Board's examiners reviewed the operations of the
Oklahoma C i t y Branch.

Special c o n s i d e r a t i o n was given t o the number and size

o f banks i n the branch c i t y , m a i l f a c i l i t i e s a v a i l a b l e t o member bank p o i n t s

in

the zone from both Kansas C i t y and Oklahoma C i t y , the volume o f operations conducted at the Branch and the net cost o f o p e r a t i n g the Branch.

As a r e s u l t o f

t h i s i n v e s t i g a t i o n , the Board's examiners questioned the necessity f o r

continu-

i n g the Branch.
( i ) Survey o f Oklahoma C i t y Branch made by Federal Reserve Bank o f
Kansas C i t y - 19?6
A survey o f operations o f a l l o f i t s branches was made by the Federal
Reserve Bank o f Kansas C i t y , as requested i n the Board's l e t t e r o f March 25,
1936, (X-9532).

I t was estimated t h a t an aggregate saving of $350,830, based

on t o t a l o p e r a t i n g costs o f $679>090 f o r the year 1935, could be r e a l i z e d i f ,
such branches were e l i m i n a t e d .




I t was s t a t e d , however, t h a t :

ii* * * Because o f the very valuable services
performed f o r member banks at these branches,
t h e i r discontinuance a t t h i s time i s not
recommended."

234

" C o n s i d e r a t i o n must also be g i v e n t o the f a c t
t h a t our branches were e s t a b l i s h e d many years
ago, have become important f a c t o r s i n the c i t i e s
i n which they are l o c a t e d and i n the t e r r i t o r i e s
served, and t h a t any suggestion o f t h e i r d i s continuance would be s t r o n g l y opposed by the
p u b l i c as w e l l as by the member banks they
serve."
I t was recommended t h a t the Denver and Omaha Branches be converted i n t o
"memorandum p l a n " branches s i m i l a r t o Oklahoma C i t y , and subsequently the
Board o f Governors 1 approval o f such conversion was requested and obtained.
As i n d i c a t e d i n the comments r e l a t i n g t o such branches t h i s p l a n was l a t e r
abandoned - t h e c h i e f reason f o r i t s abandonment b e i n g the development o f
s t r o n g o p p o s i t i o n by bankers i n t h e t e r r i t o r y served, i . e . , l o c a l p r i d e .




OKLAHOMA CITY BRANCH
VOLUME OF OPERATIONS
Number of Pieces fondled
Currency
Bills
Siis

Discounted

1931

Non Cash

Coin
Recei ved
and
Counted

Checks Handled
Citv

Country

Gov't
Checks

Collection Items
All
Gov«t
Total

Fiscal Apencv

Transfer

Transact i ons
Other

of
Funds

Coupons

Other

Oirect

7,732,000

8,056,000

1,157,000

I3,5**5,000

297,000

1**,999,000

37, 2**3

67,861

920

-

8,639

1932

-

7,565,000

7,0^*0,000

1,027,000

10,800,000

308,000

12,135,000

37,071

60*133

**25

-

8,031

1933

-

8,1*83,000

6,1*72,000

1,1*0**, 000

10,630,000

612,000

12,61*6,000

**7,**22

63,715

1,773

-

7,893

193*4

-

8,796,000

6,5^9,000

1,202,000

I I , 5*13,000

2,**68,000

15,213,000

82,717

55,398

l,2**5

2**

6,896

1935

-

8,712,000

7,209,000

1,1*22,000

13,01**,000

l,**5**,000

15,890,000

87,000

53,000

5,172

59

5,860

1936

-

<0,11*1,000

9,056,000

1,105,000

1*4, 1 »+9,000 1,0****,000

.16,298,000

59,000

59,000

****9

kkS

2,000

**86

26,586

1,316

193!

30,681*

1,057

655,177

Amounts Handled
( i n thousands of dollars)
752,1 7*4
1*0,202
l,****7,553

2I9,**96

1932

-

29,283

909

572,5**6

630,6****

29,701

1,232,891

**82

22,181

326

-

155,799

1933

-

35,****8

1,3**0

633,690

7**2,3I**

**6,1 **7

t,*422, 151

53**

26,525

729

-

130,1*8**

193**

-

32,860

9****

776,863

9**2,856

89,837

1,809,556

931

23,8*16

537

33

!50,**I6

1935

-

31,81*3

932

878,131

1,0*47,931

78,210

2,00**,272

812

27,766

I,**I8

51

222,569

1936

•

35,91**

1,052

802,**92

1,091,819

89,351

1,983,662

77**

26,8**2

**l**

202

67,388

<0

S?

Received
and
Cpunted


Qi


OMAHA BRANCH - FEDERAL RESERVE BANK OF KANSAS CITY
(a) C i t y o f Omaha:
Omaha, w i t h a p o p u l a t i o n o f 214,006, i s the t h i r t y - n i n t h l a r g e s t
i n the U n i t e d States and t h e l a r g e s t c i t y i n Nebraska.

city

I t i s located i n the

extreme east c e n t r a l p a r t o f t h e S t a t e and i s s a i d t o serve a t r a d e area
extending from 25 t o 40 m i l e s i n a l l d i r e c t i o n s .

Transportation

facilities

are p r o v i d e d by t e n r a i l r o a d s , i n c l u d i n g t h e Chicago-Rock I s l a n d & P a c i f i c ,
B u r l i n g t o n , M i s s o u r i P a c i f i c , Chicago & N o r t h Western, and Union P a c i f i c .
The c i t y i s a l s o served by s e v e r a l a i r l i n e s and numerous bus l i n e s .
The p r i n c i p a l i n d u s t r i e s are meat packing, f l o u r m i l l i n g and s m e l t i n g .
The c i t y i s noted f o r t h e h a n d l i n g o f l i v e stock and o t h e r a g r i c u l t u r a l and
dairying products.

The B i e n n i a l Census o f Manufactures f o r t h e year 1955

l i s t s 397 manufacturing establishments o p e r a t i n g i n Douglas County, i n which
Omaha i s s i t u a t e d , which had an o u t p u t valued a t $185,078,000 d u r i n g t h a t y e a r .
The Census o f American Business f o r the same year shows 5,269 r e t a i l and 613
wholesale establishments i n t h e area.

These f i r m s enjoyed sales aggregating

$93,441,000 and $356,374,000, r e s p e c t i v e l y , i n 1935.
Banking f a c i l i t i e s i n Omaha are p r o v i d e d by s i x n a t i o n a l banks and t h r e e
S t a t e nonmember banks.

As o f December 31, 1936, these i n s t i t u t i o n s had

d e p o s i t s aggregating $128,921,000, and o f t h i s amount $126,807,000 was c a r r i e d
w i t h the s i x l o c a l member banks.
D e b i t s t o i n d i v i d u a l accounts i n banks o f t h e c i t y amounted t o $1,840,600,000
d u r i n g 1936, o r an average o f approximately $6,155,000 f o r each banking day.




237,

(b) Branch T e r r i t o r y and Functions;
The Omaha Branch was e s t a b l i s h e d on September 4 , 1917, and serves the
e n t i r e States o f Nebraska and Wyoming.

This area represents approximately

56% of the l a n d area o f the Tenth D i s t r i c t and has about 20% o f i t s
population.

total

Approximately 25% o f a l l banks i n t h e d i s t r i c t are l o c a t e d i n

t h i s area.
As o f December 51, 1956, t h e r e were 494 banks, e x c l u s i v e o f mutual savings
banks, i n t h e branch zone and o f t h i s number 182, i n c l u d i n g 161 n a t i o n a l and
21 S t a t e i n s t i t u t i o n s , were members o f the System.
banks i n the branch zone were on the par l i s t .

152 o f the 512 nonmember

The f o l l o w i n g f i g u r e s taken

from r e p o r t s o f c o n d i t i o n as o f the same date show the s i z e o f member bank
f o o t i n g s i n t h e branch zone as compared w i t h t h e Tenth D i s t r i c t as a whole:
No. Member
Banks

Loans and
Investments

C a p i t a l and
Sdrplus
(000 omitted)

Total
Deposits

Tenth D i s t r i c t

726

$1,119,015

$155,006

$1,762,865

Branch Zone

182

216,968

25,665

518,042

There are t h i r t e e n branch zones i n the System h a v i n g smaller member bank
f o o t i n g s than the Omaha zone, namely, Spokane, E l Paso, L i t t l e Rock, Helena,
C h a r l o t t e , San A n t o n i o , N a s h v i l l e , Birmingham, Memphis, S a l t Lake C i t y , L o u i s v i l l e , P o r t l a n d and J a c k s o n v i l l e .
The Omaha Branch renders s u b s t a n t i a l l y the same s e r v i c e t o member banks
i n i t s zone as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s and d i s bursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , non-cash
c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and borrowings are concerned.

Reserve

accounts o f member banks i n t h e zone, as w e l l as o f nonmember c l e a r i n g banks




238,

and o t h e r Federal Reserve banks, are maintained a t t h e Branch, which also
maintains a memorandum general ledger and a r e c o r d o f c e r t a i n earnings and
expenses.

C o n t r o l accounts a r e , o f course, maintained a t t h e Head O f f i c e

which i s sent a d a i l y t r a n s c r i p t o f e n t r i e s a f f e c t i n g such accounts.

Immediate

c r e d i t i s given t o member banks f o r discount o f f e r i n g s r e c e i v e d by t h e Branch,
s u b j e c t t o f i n a l approval o f t h e Head O f f i c e .

Schedules c o v e r i n g t r a n s a c t i o n s

are forwarded t o t h e Head O f f i c e , but t h e notes and c o l l a t e r a l , i f any, are
r e t a i n e d a t t h e Branch.

The Branch does n o t have Bank Examination, Bank

R e l a t i o n s , L e g a l , Research or F i s c a l Agency departments.
As o f February 27, 1937, member banks i n the branch zone had balances
w i t h the Reserve bank as f o l l o w s :

Nebraska:
Omaha
Remainder o f S t a t e
Wyoming

No. o f
Banks

Reserve
Balances

6
142
55
185

$19,010,076
22,585,454
5,165,626
$46.761.156

Deferred
Balances

Capital
Stock

$5,221,505
777,195
96^585

$245,850
592,050
158.650
$776,550

Bills
Discounted

$17,500

Omaha i s 196 t r a i n miles (7 h r s . and 2 mins.) from Kansas C i t y .

On any

business day t r a i n s leave both p o i n t s a f t e r 8 P.M. which a r r i v e a t the o t h e r
before 8 A.M. on t h e f o l l o w i n g day, i . e . , o v e r n i g h t m a i l .

The branch zone

i n c l u d e s 140 p o i n t s i n which one or more member banks are l o c a t e d .

Mail

schedules i n d i c a t e t h a t 62 o f these p o i n t s have o v e r n i g h t m a i l s e r v i c e t o
Omaha, whereas o n l y 47 are w i t h i n o v e r n i g h t m a i l o f Kansas C i t y .
therefore, that at least

It

appears,

15 p o i n t s i n t h e branch zone can be served more

e x p e d i t i o u s l y by t h e Branch than by t h e Head O f f i c e .

Banks l o c a t e d a t these

p o i n t s and banks i n t h e c i t y o f Omaha would o f course s u f f e r the g r e a t e s t
inconvenience i f t h e Branch were d i s c o n t i n u e d .




244,

Other than Omaha, the more populous c i t i e s i n t h e branch zone are L i n c o l n ,
Nebraska, 75,935j Grand I s l a n d , Nebraska, 18,041; Cheyenne, Wyoming, 17,361
and Casper, Wyoming, 16,619.
(c) Branch B u i l d i n g :
The Omaha Branch has occupied i t s present q u a r t e r s a t 1701-5 Dodge S t r e e t
since December

1925.

The f o l l o w i n g f i g u r e s show the o r i g i n a l c o s t and book

v a l u e , as o f February 27, 1957, o f the branch premises:

Cost
Land
Building
V a u l t & v a u l t equipment
F i x e d machinery & equipment

$176,427
286,955)
110,985)
$574,565
75,479
$647*844

Book Value
2-27-57
$176,427
249,221
$425,648
1,795
$427,445

(d) Earnings - Branch Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r the years 1951 t o
1957, i n c l u s i v e , were as f o l l o w s :
Year

Earnings

1951
1932
1955
1954
1955
1956
1957

$202,000
506,700
81,700
20,600
6,000
3,700
5,400

The above f i g u r e s are incomplete s i n c e , under the present accounting
procedure, t h e Branch i s given no c r e d i t f o r income r e c e i v e d by t h e Head O f f i c e
on investments, a p o r t i o n o f which i s made p o s s i b l e by t h e Reserve Bank stock
investment and reserve balances o f member banks i n the branch zone.

They are

i n t e r e s t i n g o n l y i n s o f a r as t h e y show the shrinkage i n branch e a r n i n g s , which




210,

are d e r i v e d c h i e f l y from b i l l s discounted f o r member banks i n the zone.

Income

from t h i s source amounted t o $301,500 i n 1952 and t o o n l y $3,200 i n 1937.
(e) Branch Personnel:
The r e p o r t o f examination o f the Federal Reserve Bank o f Kansas C i t y ,
made as o f February 27, 1937, shows the f o l l o w i n g i n regard t o s a l a r i e s and
personnel a t the Omaha Branch:
Feb. 27, 1937
Number
Amount
Officers
Employees

3
72
TO

$ 21,600
108,900
$150,500

May 8. 1936
Number
Amount
3
77
80

$ 21,500
.117,700
$159,200

Decrease
Number
Amount
5
5

$

100(Inc..)
8,800
$8,700

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n the above f i g u r e s .
( f ) Branch Expense by Functions:
The expenses o f the Omaha Branch by f u n c t i o n s f o r t h e years 1932 t o 1937,
i n c l u s i v e , were as f o l l o w s :
1932
General Overhead
Controllable
$ 18,027
Noncontrollable
9,881
* P r o v i s i o n o f Space
23,180
P r o v i s i o n o f Personnel
1,017
General Service
30,255
Postage
16,041
Insurance
5,091
F a i l e d Banks
1,927
Loans, Rediscounts, e t c . 16,554
Securities
5,771
Currency and Coin
14,194
Check C o l l e c t i o n
36,630
Non-Cash C o l l e c t i o n
6,938
Accounting
21,445
F i s c a l Agency8,916
Legal
Auditing
5,774
Bank R e l a t i o n s
242
—
F.R. Note Issues
Statistical & Analytical
547
T o t a l Expense
|222,430
Less - Reimbursable F i s c a l
6.116
Agency Expense
Net Expense
$216,314

1933

1934

1935

1936

19557

$ 15,628
57
23,077
22,091
34,269
17,143
3,068
36
3,822
11,154
35,411
30,461
7,423
29,636
41,669
47
7,546
397
337
142
$283,414

$ 14,698
40
20,270
27,625
30,643
17,813
2,891
5
2,358
8,493
35,280
29,814
7,812
28,415
36,495
40
6,555
1,518
324
64
$271,153

$ 15,611
33
26,327
3,079
30,932
16,975
2,450

561
$239,840

$ 14,967
16,347
22,645
15,441
33,637
16,505
2,500
296
7,367
9,717
17,279
34,335
7,885
2*,252
103,329
3
7,181
341
106
500
$334,633

15.606
$224,234

100.761
$233,872

26.092
$257,322

26.072
$245,081

19.691
$218,276

17,807
16,754
23,493
1,271
30,988
17,732
4,956
1,311
16,726
5,544
16,323
32,212
7,448
22,944
17,666
-

5,944
160
—

—

2,592
6,034
32,985
30,023
8,854
25,956
29,825
6
5,029
892
306
58
$237,967

^Represents t h e n e t expense - income from r e n t a l s having been deducted.




4

241.

There were seven branches i n t h e System which operated a t a h i g h e r n e t
qost than the Omaha Branch i n 1937 j namely, P i t t s b u r g h , Los Angeles, B a l t i m o r e ,
C i n c i n n a t i , D e t r o i t , B u f f a l o and S a l t Lake C i t y ,
(g) Volume o f Operations a t Omaha Branch;
The f o l l o w i n g i s a comparison o f t h e volume o f o p e r a t i o n s i n v a r i o u s
departments o f the Omaha Branch and t h e Head O f f i c e d u r i n g t h e l a s t s i x months
o f 1936s
Omaha Branch
Discount Department:
Notes rediscounted
C o l l a t e r a l notes discounted
I n d u s t r i a l advances
Branches w i t h l a r g e r volume: Denver and E l Paso.

33
10

Head O f f i c e
35
2
13

Safekeeping:
Member bank s e c u r i t i e s 12-31-36
$33,227,000
$284,078,000
Branches w i t h l a r g e r volume: P i t t s b u r g h , B a l t i m o r e and D e t r o i t .
Currency and Coin:
1 . Number o f b i l l s r e c e i v e d and counted
5,127,000
20,168,000
Branches w i t h l a r g e r volume: A l l branches except L i t t l e Rock, Helena, Denver
Oklahoma C i t y , E l Paso, S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
55 cents
54 cents
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , C i n c i n n a t i , Helena, Denver, E l Paso,
P o r t l a n d , S a l t Lake C i t y , S e a t t l e and Spokane.
2. Number o f coins r e c e i v e d and counted
4,623,000
17,754,000
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , Birmingham,
J a c k s o n v i l l e , N a s h v i l l e , L i t t l e Rock, Helena, Denver,
E l Paso, P o r t l a n d , S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
25 cents
11 cents
Branches w i t h h i g h e r u n i t c o s t : Helena, E l Paso, San A n t o n i o , P o r t l a n d , S a l t
Lake C i t y , S e a t t l e and Spokane.
Check C o l l e c t i o n :
1 . Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
1,275,000
2,186,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , D e t r o i t
and Los Angeles.
Cost per one thousand u n i t s handled
$1.55
$1.86
Branches w i t h h i g h e r u n i t c o s t : A l l branches except B a l t i m o r e , C h a r l o t t e ,
Birmingham, J a c k s o n v i l l e , N a s h v i l l e , New Orleans,
D e t r o i t , and San A n t o n i o .




Memphis Branch
Head O f f i c e
Check C o l l e c t i o n :
2. Number o f country checks (outgoing) received
4,503,000
10,425,000
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h , Baltimore, D e t r o i t ,
Oklahoma C i t y and Los Angeles.
Cost per one thousand u n i t s handled
$1.73
$2.24
Branches w i t h higher u n i t cost: A l l branches except Birmingham, J a c k s o n v i l l e ,
L i t t l e Rock and Oklahoma C i t y .
Non-cash C o l l e c t i o n s
1. Number o f c i t y c o l l e c t i o n s handled
Branches w i t h l a r g e r volume:
None.
Cost per u n i t handled
Branches w i t h higher u n i t cost:

43,555
4 cents

9,177
16.7 cents

A l l branches.v

2. Number o f country c o l l e c t i o n s handled
21,255
Branches w i t h l a r g e r volume: B u f f a l o , S a l t Lake C i t y and Spokane.

64,935

Cost per u n i t handled
7 cents
7 . 4 cents
Branches w i t h higher u n i t cost: A l l branches except L i t t l e Rock, Memphis,
S a l t Lake C i t y and Spokane.
5. Number o f coupons (except Government)
and country s e c u r i t y c o l l e c t i o n s handled
6,103
5,065
Branches w i t h l a r g e r volume: P i t t s b u r g h , B a l t i m o r e , D e t r o i t and Los Angeles.
7.7 cents
20 cents
Cost per u n i t handled
Branches w i t h higher u n i t c o s t : A l l branches except C i n c i n n a t i , P i t t s b u r g h ,
Denver and S e a t t l e .
A schedule showing the volume o f operations o f the Omaha Branch f o r the
years 1951 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f Omaha Branch by Board's Examiners - 1954
During an examination o f t h e Federal Reserve Bank o f Kansas C i t y , made
as o f September 29, 1954, the Board's Examiners reviewed the operations o f the
Omaha Branch and expressed the o p i n i o n t h a t i t s continuance was warranted.
I n a r r i v i n g a t t h i s conclusion consideration was given t o the number and s i z e
of member banks i n the C i t y o f Omaha, the number o f member banks i n o u t l y i n g
sections o f the branch zone, and the m a i l f a c i l i t i e s a v a i l a b l e between banking
p o i n t s i n the branch zone and the c i t i e s o f Omaha and Kansas C i t y .




243

( i ) Survey o f Omaha Branch by Federal Reserve Bank o f Kansas C i t y ~ 1856
I n accordance w i t h the r e q u e s t made i n the Board's l e t t e r o f March 25,
1956 (X-9552), the Federal Reserve Bank o f Kansas C i t y surveyed the operations
o f i t s branches*

I t was estimated t h a t a saving o f 0550,050, based an o p e r a t i n g

costs o f $679,090 f o r the year 1955, would be r e a l i z e d i f a l l t h r e e branches
were d i s c o n t i n u e d .

However, t h e i r discontinuance was n o t recommended,

chiefly

because o f the v a l u a b l e s e r v i c e s which they were performing f o r member banks
and the f a c t t h a t over a p e r i o d o f years they had become i m p o r t a n t f a c t o r s i n
the economic l i f e of the c i t i e s and t e r r i t o r i e s which they served.

I t was s t a t e d

t h a t any suggestion t h a t such branches were to be d i s c o n t i n u e d would be s t r o n g l y
opposed by the p u b l i c as w e l l as by the member banks they serve.
As an a l t e r n a t i v e , the o p i n i o n was expressed t h a t the Omaha and Denver
branches should be converted i n t o l i u i t e d power branches and t h a t t h i s could be
done w i t h o u t r e d u c i n g the value o f the services which were b e i n g rendered t o
member banks i n such branch zones.

I t was estimated, based on c o n d i t i o n s then

e x i s t i n g , a saving o f approximately $21,000 would be r e a l i z e d through such conv e r s i o n and t h a t such a c t i o n would a l s o strengthen Head O f f i c e c o n t r o l over the
branches.
I n accordance w i t h the above o p i n i o n , P r e s i d e n t Hamilton o f the Kansas
C i t y Reserve bank addressed a l e t t e r t o the Board on January 12, 1937, r e questing i t s approval o f the conversion o f the Omaha nnd Denver Branches i n t o
l i m i t e d power branches t o be operated on the same basis as the Oklahoma C i t y
Branch,

On January 21, 1957, the Board wrote P r e s i d e n t Hamilton approving the

proposed conversion and r e q u e s t i n g t o be advised as t o the date on which the
change would be made e f f e c t i v e .

P r e s i d e n t Hamilton r e p l i e d on February 4, 1957

t h a t h i s d i r e c t o r s had voted t o approve i n p r i n c i p l e the proposed converaion,




244,

b u t had postponed s e t t i n g an e f f e c t i v e date f o r the conversion u n t i l r e p r e s e n t a t i v e s o f the branches had had an o p p o r t u n i t y t o study necessary changes.
O p p o s i t i o n to the proposed conversion developed and on A p r i l 10, 1937,
the Board o f Governors was advised t h a t the d i r e c t o r s o f the Federal Reserve
Bank o f Kansas C i t y a t a r e g u l a r meeting on A p r i l 8 , 1937, had acted as
follows:
"President Hamilton r e p o r t e d on meetings h e l d a t Denver,
Colorado, and Omaha, Nebraska, f o r the purpose o f d i s c u s s i n g
w i t h banker groups the proposed conversion o f the Denver and
Omaha Branches o f t h i s bank i n t o memorandum branches. He s t a t e d
t h a t a f t e r a thorough d i s c u s s i o n o f the e f f e c t o f the proposed
change upon the s e r v i c e rendered t o member banks i n the branch
zones, the meetings had ended w i t h r e a f f i r m a t i o n o f the bankers
present o f t h e i r o p p o s i t i o n t o the change. A g e n e r a l d i s c u s s i o n
f o l l o w e d , a f t e r which the d i r e c t o r s voted unanimously, i n view o f
the general p r o t e s t , t o d i s c o n t i n u e c o n s i d e r a t i o n o f conversion
o f the Denver and Omaha Branches o f t h i s bank i n t o memorandum
branches, and t o p e r m i t them t o remain i n t h e i r present s t a t u s . "
The l e t t e r c o n t a i n i n g t h i s advice was acknowledged by the Board on
A p r i l 20, 1957, and no f u r t h e r a c t i o n has been taken i n the m a t t e r .




245,

OMAHA BRANCH
VOLUME OF OPERATIONS
M v l u r of

Date

Bi I Is
Discounted

Currency

Coin

Received

Received

and

and

Counted

Counted

P j . H a i l e d
Non Cash

Country

Checks

Coupons

Other

Gov't

Gov't
City

Fiscal Agency
Transactions
Direct O^her

Co 11ect i on i terns

Checks Handled
Total

AH

Transfer
of
Funds

193!

11,573

7,386,000

9,6*40,000

1,768,000

9,*45*4,000

*47*4,000

11,696,000

189,*455

55,52*4

1,59*4

8*4

23,77*4

1932

17,221

7,209,000

11,178,000

1,668,000

6,771,000

1481,000

8,920,000

16*4,995

69,739

l,*4 55

38

21,302

1933

if, 737

7,859,000

9,679,000

1,7*15,000

6,367,000

635,000

8,7*47,000

181,968

72,095

!,*439

385

22,913

193*4

161

9,211,000

8,501,000

2,077,000

7,3C9,000

1,663,000

11,05*4,000

267,2*40

83,560

5,2*41

1,036

f9,822

1935

330

9,505,000

9,500,000

2,2*43,000

8,075,000

1,295,000

H,613,GOO

279,000

86,000

9,255

2,*4R7

16,207

1936

92

9,780,000

9,375,000

2,729,000

8,692,000

1,009,000

I2,*430 , 000

2*40,000

131,000

1,9*49

1,081

1*4,000

Amounts Handled
( i n thousands of dollars)
1931

63,202

38,789

2,280

900,682

*»75,088

57,578

l,*433,3*48

2,203

62,990

*4,9*4l

1,7*40

' ,02^,76*4

1932

60,516

36,013

2,095

620,677

329,7*49

55,897

1,006,323

2,223

5*4,218

6,116

1,085

679,958

1933

26,1*20

*43,623

3,30*4

653,868

3*41,579

98,969

J,09*4,*4l6

2,ty23

59,871

*4,785

1,002

635,190

193*4

3,368

*4o,372

2,118

975,319

507,201

178,735

1,661,255

3,197

96,*46*i

*4,97*4

1,059

708,262

1935

1,752

*43,3S7

1,71*4

1,037,016

56*4,6*45

165,357

1,767,018

3,320

96,13*4

6,2*10

1,350

653,395

!936

766

*40,*43l

1,629

1,135,060

655,657

1*46,788

1,937,505

2,9o I

111,25**

2,387

1,019

771,975




EL PASO BRANCH - FEDERAL RESERVE BANK OF DALLAS
(a) C i t y o f E l Paso:
E l Paso, w i t h a p o p u l a t i o n o f 102,421, i s the f i f t h l a r g e s t c i t y i n the
S t a t e o f Texas and the e i g h t y - s i x t h l a r g e s t c i t y i n the U n i t e d S t a t e s .

It

i s l o c a t e d i n the extreme Western p a r t o f the S t a t e on the Rio Grande R i v e r ,
and serves a trade area extending from 350 t o 400 m i l e s i n a l l
Approximately 439,400 i n h a b i t a n t s r e s i d e i n t h i s a r e a .

directions.

I t i s adjacent to

J u a r e z , Mexico, w i t h which i t i s connected by two i n t e r n a t i o n a l 'bridges}
two c i t i e s being the l a r g e s t on the b o r d e r .

the

T r a n s p o r t a t i o n f a c i l i t i e s i n the

community and i t s t r a d e area are p r o v i d e d by f i v e r a i l r o a d s , i n c l u d i n g the
Texas & P a c i f i c , Southern P a c i f i c , A t c h i s o n , Topeka & Santa Fe and two
Mexican roads.

S e r v i c e i s a l s o p r o v i d e d by v a r i o u s coach and a i r p l a n e l i n e s .

The E l Paso area i s l a r g e l y given over t o m i n i n g and c a t t l e

raising,

a l t h o u g h i n r e c e n t years i r r i g a t i o n p r o j e c t s have s t i m u l a t e d the development
of a g r i c u l t u r e .

The p r i n c i p a l i n d u s t r i e s o f the c i t y proper are copper

r e f i n i n g , f l o u r m i l l i n g , meat packing, o i l r e f i n i n g , s m e l t i n g and the manuf a c t u r e o f b r i c k s , brooms, cement, petroleum products and wood p r o d u c t s .

The

B i e n n i a l Census o f Manufactures f o r the year 1935 l i s t s 126 manufacturing
establishments o p e r a t i n g i n E l Paso County.
a t $46,044,000 t h a t year.

These f i r m s had an o u t p u t valued

The Census o f American Business f o r the year 1935

i n d i c a t e s t h a t t h e r e were 1,516 r e t a i l and 193 wholesale establishments which
had sales aggregating $33,905,000 and $41,943,000, r e s p e c t i v e l y , o p e r a t i n g i n
the same area.
Banking f a c i l i t i e s i n E l Paso are f u r n i s h e d by two n a t i o n a l banks.

These

i n s t i t u t i o n s had d e p o s i t s aggregating $31,002,000 as o f December 31, 1936.
D e b i t s to i n d i v i d u a l accounts i n banks o f the c i t y amounted t o $294,228,000




d u r i n g the year 1936, or an average o f approximately $980,000 f o r each banking
day.
(b) Branch T e r r i t o r y and F u n c t i o n s :
The E l Paso Branch was e s t a b l i s h e d on June 17, 1918, and serves f o u r t e e n
counties i n the western p a r t o f Texas and a l l t h a t p a r t o f the S t a t e s o f
i \ r i s o n a and New Mexico i n c l u d e d i n Federal Reserve D i s t r i c t Eleven.

The

branch zone represents approximately 52$ o f the l a n d area o f the E l e v e n t h
D i s t r i c t and has about 756 o f i t s t o t a l p o p u l a t i o n .

Only 4.2$ o f e l l banks i n

the d i s t r i c t are l o c a t e d i n the branch zone*
As o f December 31, 1936, t h e r e were 43 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and o f t h i s number 30, i n c l u d i n g 26 n a t i o n a l and 4
S t a t e i n s t i t u t i o n s , wore members o f the System.
i n the zone were on the par l i s t .

12 o f t h e 13 nonmember banks

The f o l l o w i n g f i g u r e s taken from r e p o r t s o f

c o n d i t i o n as o f the same date show the s i z e o f member bank f o o t i n g s i n the
branch zone as compared to those o f the Eleventh D i s t r i c t as a whole:

Eleventh D i s t r i c t
Branch Zone

No. Member
Banks _

Loans
and
Investment
~

550
30

$826,850
41,379

Capital
and
Surplus
(000 omitted)
$127,747
4,496

Total
Deposits

$1,314,452
64,574

There i s o n l y one branch i n the System having smaller member bank f o o t i n g s
than the E l Paso Branch, namely, Spokane.
The E l Paso Branch renders s u b s t a n t i a l l y the same s e r v i c e t o member banks
i n i t s zone as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s and d i s bursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , non-cash
c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and borrovdLngs are concerned.

Reserve

accounts o f member banks i n the zone, as w e l l as o f nonmember c l e a r i n g banks




248,

and other Federal Reserve banks, are maintained a t the Branch, which a l s o
maintains a memorandum general l e d g e r and a r e c o r d o f c e r t a i n earnings and
expenses.

C o n t r o l accounts a r e , o f course, maintained a t the Head O f f i c e which

i s sent a d a i l y t r a n s c r i p t o f e n t r i e s a f f e c t i n g such accounts.

Immediate c r e d i t

i s given be member banks f o r d i s c o u n t o f f e r i n g s r e c e i v e d by the Branch, s u b j e c t
t o f i n a l approval o f the Head O f f i c e .

Schedules c o v e r i n g t r a n s a c t i o n s are

forwarded t o the Head O f f i c e , b u t the notes and c o l l a t e r a l , i f any, are r e t a i n e d a t the Branch.

The Branch does n o t have Bank Examination,

Bank Relations^

F a i l e d Bank, L e g a l , Research or F i s c a l Agency departments.
As o f February 6 , 19S7, member banks i n the branch zone had balances w i t h
the Reserve Bank as f o l l o w s :
Number o f
Banks
Arizona
New Mexico
Texas
C i t y o f E l Paso
Remainder o f Zone

Reserve
Balances

Deferred
Balances

Capitol
Stock

Bills
Discounted

3
19

854,700
2,871,500

$

#27,250*
42,600

$5,700

2
JS
30

3,609,300
485.000
$7,820.500

500
15,900

1,064,200
4,400
$1,085,000

48,000
17.150
$135,000

$5,700

* $15,500 c a p i t a l stock s u b s c r i p t i o n o f one Arizona bank which d i s c o n t i n u e d on
February 11, 1935, b u t which has n o t y e t been voted i n t o v o l u n t a r y l i q u i d a t i o n i s n o t i n c l u d e d , although s t i l l o u t s t a n d i n g .
E l Paso i s 647 t r a i n m i l e s (18 h r s . and 10 mins.) from D a l l a s and 620
t r a i n m i l e s (17 h r s . and 10 m i n s . ) from San Antonio.

The c i t y i s n o t w i t h i n

o v e r n i g h t m a i l time of e i t h e r the Head O f f i c e or the San Antonio Branch. There
are 26 member bank p o i n t s i n the E l Paso Branch zone and o f t h i s number o n l y 4 ,
having 5 member banks, are w i t h i n o v e r n i g h t m a i l time o f the Head O f f i c e , whereas 25 p o i n t s , having 29 member banks, are w i t h i n o v e r n i g h t m a i l o f E l Paso. D i s continuance o f the E l Paso Branch would, t h e r e f o r e , inconvenience the two
r e l a t i v e l y l a r g e member banks i n E l Paso, as w e l l as the m a j o r i t y o f member




249,

banks s i t u a t e d i n o u t l y i n g p o i n t s o f the zone.
Other than E l Paso, the more populous c i t i e s i n the branch zone are
Tucson, A r i z o n a , 52,506; Roswell, New Mexico, 11,173j C l o v i s , New Mexico,
8,027 and Midland, Texas, 5,484.
(c) Branch B u i l d i n g :
The E l Paso Branch has occupied i t s present q u a r t e r s a t 351 M y r t l e Avenue
since August, 1920.

The f o l l o w i n g f i g u r e s show the o r i g i n a l cost and book

value as o f February 6 , 1937, o f the branch premises:
Cost
Land
Building
V a u l t & v a u l t equipment

$ 39,004
78,035)
53>533)
$150,372
10,824
$161,196

Fixed machinery & equipment

Book Value
2-6-57
$25,004
51,585
$76,589
250
$76,859

(d) Earnings - Branch Books:
The Branch 1 s earnings as r e f l e c t e d by i t s books f o r the years 1931 t o
1937, i n c l u s i v e , were as f o l l o w s :
Year

Earnings

1931
1932
1933
1934
1935
1936

$30,800
43,100
13,000
1,000
1,000
1,700

1937

1,000

These f i g u r e s are incomplete s i n c e , under the present accounting procedure,
the Branch r e c e i v e s no c r e d i t f o r income r e c e i v e d by the Head O f f i c e on i n v e s t ments, a p o r t i o n o f which i s made p o s s i b l e by the Reserve bank stock investment
and r e s e r v e balances o f member banks i n the Branch zone.

Income shown on the

Branches books i s d e r i v e d c h i e f l y from r e d i s c o u n t s o f member banks, reserve



p e n a l t i e s , r e n t a l o f banking house space and i n d u s t r i a l loans*

Income from

r e d i s c o u n t s has s t e a d i l y d e c l i n e d i n r e c e n t years, amounting t o approximately
$400 i n 1937 as compared t o 042,100 i n 1982.
(e) Branch Personnel:
The r e p o r t of examination o f the F e d e r a l Reserve Bank o f D a l l a s , made
as o f February 6 , 1937, shows the f o l l o w i n g i n regard t o s a l a r i e s end personnel
a t the E l Paso Branch:
February 6 , 1957
Number
Amount
Officers
Employees

2
30
32

#8,900
46,600
§55,500

March 8 , 1956
Number
Amount
2
31
53

$ 8,900
48,900
£57,800

Decrease
Number
Amount

1
1

S2.500
&2,50Q

O f f i c e r s and employees who g i v e the major p o r t i o n o f t h e i r time t o r e imbursable work are n o t i n c l u d e d i n the above comparison.

N e i t h e r does i t

i n c l u d e .amounts p a i d f o r such reimbursable work,
( f ) Branch Expense by F u n c t i o n s :
The expenses o f the E l Paso Branch by f u n c t i o n s f o r the years 1952 t o
1957, i n c l u s i v e , were as f o l l o w s :




251,

1932
General Overhead
Controllable
$ 10,425
Non-Controllable
4,070
* P r o v i s i o n o f Space
6,260
P r o v i s i o n o f Personnel
1,010
General S e r v i c e
16,535
Postage
4,116
Insurance
2,504
F a i l e d Banks
40
Loans,Rediscounts, e t c .
5,507
Securities
924
Currency & Coin
9,292
Check C o l l e c t i o n
13,116
Non-cash C o l l e c t i o n
2,119
Accounting
18,188
F i s c a l Agency
4,114
Legal
Auditing
3,732
Bank R e l a t i o n s
173
F.R. Note Issues
Statistical & Analytical
278
T o t a l Expense
§102,403
Less «• Reicbursable
F i s c a l Agency Exp.
3,317
Net Expense
£ 99.086

1933

1934

$ 9,735
5,016
6,041
1,198
18,377
4,543
2,571
11
4,187
877
8,697
13,035
1,944
12,729
4,403
4
3,784
107
48
145
$97,452

0 8,603
4,972
5,687
6,449
19,737
4,624
1,912

4.082
&93.570

1935

$

6,622

1936

0

7,473

—

—

5,276
10,962
16,384
5,380
1,418

—

1,C94
1,070
8,205
12,482
2,244
11,214
6,715

$

6,760

-

5,150
8,802
19,335
4,722
1,624

1937

8,062
945
16,921
5,798
1,431
—

—

3,760
273
20
168
$99,229

1,251
1,193
12,941
10,565
2,405
11,884
14,608
5
4,336
104
224
167
$105,938

4,122
112
207
156
^107,470

997
595
13,877
13,128
2,472
10,276
15,076
5
4,038
427
188
75
$101,784

6.183
S93.046

7.284
5 98.654

13.418
£ 94.052

11.088
8 90.696

-

947
634
13,506
10,979
2,399
10,346
17,882
-

* Represents the n e t expense - income from r e n t a l s having been deducted.
There were only two branches i n the System which operated a t a lower n e t
cost than the E l Paso Branch i n 1957; namely, Spokane and N a s h v i l l e ,
(g) Volume o f Operations a t E l Paso Branch:
The f o l l o w i n g i s a comparison o f the volume o f operations i n v a r i o u s
departments o f the E l Paso Branch and the Head O f f i c e d u r i n g the l a s t s i x months
o f 1956:
E l Paso Branch
Discount Department
Notes rediscounted
C o l l a t e r a l notes discounted
I n d u s t r i a l advances
Branches w i t h l a r g e r volume:




71
None.

Head O f f i c e
524
35

E l Paso Branch

Head O f f i c e

Safekeeping
Member bank s e c u r i t i e s 12-31-36
$1,636,000
$73,714,000
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , Memphis,
P o r t l a n d , S e a t t l e , Helena, Los Angeles and
Spokane.
Currency and Coin
1 . Number o f b i l l s received
Branches w i t h l a r g e r volume:

2,023,000
19,826,000
A l l branches except Helena and Spokane

Cost per one thousand u n i t s handled
92 cents
45 cents
Branches w i t h higher u n i t c o s t : Helena, S a l t Lake C i t y and Spokane.
789,000
17,795,000
2m Number of coins received and counted
Branches w i t h l a r g e r volume: A l l branches except Helena and Spokane.
Cost per one thousand u n i t s handled
Branches w i t h higher u n i t c o s t : Spokane.

01.28

Check C o l l e c t i o n
1. Number of c i t y checks ( c l e a r i n g s ) received
235,000
Branches w i t h l a r g e r volume: A l l branches except Helena.

.13

1,322,000

Cost per one thousand u n i t s handled
01.98
$1.57
Branches w i t h h i g h e r o m i t c o s t : L o u i s v i l l e , Helena, Denver, Oklahoma C i t y ,
Houston, Los Angeles, P o r t l a n d , S a l t Lake
C i t y , S e a t t l e and Spokane.
2. Number of country checks (outgoing) received
1,342,000
Branches w i t h l a r g e r volume:
A l l branches except Memphis.

10,343,000

Cost per one thounsand u n i t s handled
§2.28
$2.31
Branches w i t h higher u n i t c o s t : B u f f a l o , C i n c i n n a t i , D e t r o i t , Los Angeles,
P o r t l a n d , S a l t Lake C i t y , S e a t t l e and
Spokane.
Non-cash C o l l e c t i o n s
1 . Number o f c i t y c o l l e c t i o n s handled
4,689
14,769
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , Birmingham and
Helena.
Cost per u n i t handled
8 . 1 cents
13.5 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except J a c k s o n v i l l e , L i t t l e
Hock, and Omaha.
2. Number o f country c o l l e c t i o n s handled
4,396
Branches w i t h l a r g e r volume: A l l branches except Birmingham,
Cost per u n i t handled
Branches w i t h higher u n i t c o s t :




39,412

8 cents
8.9 cents
A l l except L i t t l e Rock, Memphis, Omaha,
S a l t Lake C i t y , and Spokane.

Portland Branch
Non-cash C o l l e c t i o n s
3. Number of coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
Branches w i t h l a r g e r volume: A l l branches.
Cost per u n i t handled
Branches w i t h higher u n i t c o s t :

Head O f f i c e

214

55.3 cents

4,440

25 cents

None.

A schedule showing the volume of operations o f the E l Paso Branch f o r the
years 1931 to 1936, i n c l u s i v e , i s attached to t h i s memorandum.
(h) Survey o f E l Paso Branch by Board* s Examiners - 1934:
The Board's Examiners reviewed the operations o f the E l Paso Branch, as
o f June 23, 1934, and concluded t h a t the o n l y j u s t i f i c a t i o n f o r i t s continuance
was i t s distance from the Head O f f i c e .

I n reaching t h i s conclusion considera-

t i o n was given t o the volume and c o s t o f operations a t the Branch, the number
and importance o f member banks i n the branch c i t y and zone, and the m a i l
f a c i l i t i e s a v a i l a b l e between p o i n t s i n the branch zone and the Head O f f i c e a t
Dallas.
( i ) Survey o f E l Paso Branch by Federal Reserve Bank o f D a l l a s - 1936
As requested by the Board i n i t s l e t t e r of March 25, 1956 (X-9552) the
i n t e r n a l operations o f the E l Paso Branch were surveyed by the Federal Reserve
Bank o f D a l l a s .

T h e r e a f t e r , a r e p o r t c o n t a i n i n g t h e f o l l o w i n g conclusions

r e l a t i v e t o discontinuance of the Branch, c u r t a i l m e n t of i t s f u n c t i o n s , or the
p o s s i b i l i t y o f otherwise e f f e c t i n g economies i n i t s operations was submitted
t o the Board:
1 . That, based on o p e r a t i n g expenses o f f98,500 f o r the
year 1955, an estimated saving o f 071,500 would be
r e a l i z e d i f the Branch were discontinued.
2. That o p e r a t i n g expenses were very heavy considering
the l i m i t e d number o f banks served by the Branch, b u t
t h a t i t was questionable whether the mere number o f
banks p r o p e r l y r e f l e c t e d the need, a c t u a l and p o t e n t i a l ,




254

f o r branch f a c i l i t i e s ; i t being necessary t o consider
a l s o the g r e a t d i s t a n c e between the branch t e r r i t o r y
and the Head O f f i c e , the importance o f the C i t y o f E l
Paso from the standpoints o f domestic and i n t e r n a t i o n a l
t r a d e , the apparent prospects f o r development o f the
t e r r i t o r y along such l i n e s i n f u t u r e years and the f a c t
t h a t banking, i n d u s t r y and p r o d u c t i o n i n the branch zone
wore e n t i t l e d t o enjoy the b e n e f i t s o f the System on a
basis comparable w i t h other r e g i o n s of the c o u n t r y , which
would n o t be p o s s i b l e i f the Branch were d i s c o n t i n u e d .
5. That w h i l e some o f the f u n c t i o n s performed by the Branch
could be t r a n s f e r r e d t o the Head O f f i c e the saving would
n o t be l a r g e i n the aggregate and i n t h e i r o p i n i o n would
be i n s u f f i c i e n t to induce them to e f f e c t the t r a n s f e r .
4. That c o n s i d e r a t i o n had from time to time been given t o
reducing the Branch t o a currency depot or agency, but
t h a t such a c t i o n , unless i n pursuance o f a w e l l d e f i n e d
p o l i c y a p p l i c a b l e t o the whole c o u n t r y , would r e s u l t i n
much d i s s a t i s f a c t i o n , accompanied by g r e a t p r e s s u r e , both
c i v i c and o t h e r w i s e , and would a l s o q u i t e p o s s i b l y l e a d
t o a p p l i c a t i o n s f o r the c r e a t i o n o f s i m i l a r depots i n
other towns o f t h e d i s t r i c t l i k e A m a r i l l o and Shreveport,
and
5. That, i n view o f economies a l r e a d y e f f e c t e d over a p e r i o d
o f years, i t appeared improbable t h a t t h e personnel o f the
Branch could be reduced or apenses otherwise lowered w i t h o u t i m p a i r i n g the e f f i c i e n c y o f i t s o p e r a t i o n s *
I n s u b m i t t i n g t h i s r e p o r t the O f f i c e r s and D i r e c t o r s o f the D a l l a s bank
s t a t e d t h a t they d i d n o t wish i t t o be considered as a recommendation i n
r e s p e c t t o the E l Paso Branch, since they were merely endeavoring t o o u t l i n e
the f a c t s to. the Board o f Governors, and t h a t , i f

the Board d e s i r e d t o give

s p e c i a l c o n s i d e r a t i o n to such Branch, they would be pleased t o make a more
thorough i n v e s t i g a t i o n and, i f i t were the Board's w i s h , submit d e f i n i t e sugg e s t i o n s i n respect t h e r e t o .
I t was p o i n t e d o u t t h a t Congress i n the Federal Reserve Act had taken
cognizance o f the f a c t t h a t w i t h o n l y twelve Federal Reserve banks many o u t l y i n g member banks and t h e i r communities would s u f f e r disadvantages and i n convenience as compared to those nearer the Head O f f i c e , and had a u t h o r i z e d the




255,

establishment o f branches i n order t o equalise the b e n e f i t s and f a c i l i t i e s o f
the System.

I t was s t a t e d f u r t h e r t h a t Congress, w h i l e a p p a r e n t l y aware o f

the expense which the establishment o f branches would e n t a i l d i d n o t under the
Federal Reserve Act seem to contemplate d i f f e r e n t types o f branches,
"memorandum p l a n " branches or " f u l l - f l e d g e d " branches.

i.e.,

The o p i n i o n was

expressed t h a t each branch should render t o member banks i n i t s t e r r i t o r y , so
f a r ris p r a c t i c a b l e , a l l the services i n c i d e n t to membership, s u b j e c t o n l y t o
the general c o n t r o l o f and s u p e r v i s i o n by the Head O f f i c e , and t o the o p e r a t i n g
p o l i c i e s e s t a b l i s h e d by i t .

I t was i n d i c a t e d t h a t the t r a n s f e r o f f u n c t i o n s o f

a branch t o the Head O f f i c e would tend t o show a l a c k o f need f o r the branch
and t h a t , as a consequence, the r e a l q u e s t i o n seemed t o be whether any branch
nor i n o p e r a t i o n should be d i s c o n t i n u e d , r a t h e r than whether i t s f u n c t i o n s
should be c u r t a i l e d .

I n c o n c l u s i o n , i t was s t a t e d t h a t the q u e s t i o n o f branches

was one o f general p o l i c y f o r d e t e r m i n a t i o n o f the Board and t h a t the Board
alone, a c t i n g f o r the System as a whole, could provide a " y a r d s t i c k " by which
the need f o r continuance o f any s p e c i f i c branch could be determined.
I n c l u d e d i n the r e p o r t submitted by the D a l l a s Bank was a memorandum
prepared by the Managing D i r e c t o r o f the E l Paso Branch s e t t i n g f o r t h the
reasons which he f e l t warranted i t s maintenance.

Among such reasons, and n o t

p r e v i o u s l y mentioned i n t h i s memorandum, was the v e r y v a l u a b l e s e r v i c e s which
the branch i s performing f o r t h e R e c o n s t r u c t i o n Finance C o r p o r a t i o n and o t h e r
Government agencies.




EL PASO BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled

Bills

Currency

Co i n

Received

Received

and

and

Non Cash
Checks Handled

Collection Items

Gov't

Gov't

Al I

Coupons

Other

pate

Pi scounted

Counted

Counted

City

Country

Checks

Total

1931

1,7*45

4,289,0t0

3,025,000

495,000

1,997,000

206,000

2,698,000

19,365

1932

2,132

3,446,000

2,6*40,000

418,000

1,673,000

21*4,000

2,305,000

1933

096

3,200,000

2,382,000

362,000

1,5*42,000

326,000

193*4

5

3,5*47,000

1,556,000

308,000

1,786,000

1935

8*4

3,213,003

1,512,000

*4I8,OGO

J 936

99

3,801,000

1,760,000

*467,000

Fiscal Agency
Transactions

Transfer
of

Direct

Other

Fupds

13,597

-

-

8,200

21,276

l*4,*473

-

~

6,986

2,230,000

23,917

16,9*46

-

-

5,711

616,000

2,790,000

30,379

1*4,270

-

~

4,874

2,133,000

376,000

2,927,000

33,000

13,000

-

-

*4,259

2,603,000

*42l ,000

3,491,000

24,000

18,000

-

-

4,000

Amounts Handled
( i n thousands of d o l l a r s )
1931

15,757

23,396

983

273,73*4

141,609

25,573

440,916

296

8,630

-

-

282,959

1932

10,59*4

16,685

2,879

15*4,731

95,343

20,622

270,696

319

7,999

-

-

102,238

1933

*4,276

15,352

1,030

IO*4,*4*42

93,419

26,491

224,352

3io

10,425

-

-

130,220

193*4

88

!3,*439

327

1*45,171

120,679

46,686

312,536

366

10,219

-

-

31,362

1935

39

13,476

317

16*4,6*43

152,007

36,371

353,021

317

12,298

-

-

98,323

191,868

53,683

445,553

272

14,134

-

-

110,452

J 936




65

15,582

356

200,002

HOUSTON BRANCH - FEDERAL RESERVE BANK OF DALLAS
( a ) C i t y o f Houston:
Houston, w i t h a p o p u l a t i o n o f 292,352, i s t h e t w e n t y - s i x t h l a r g e s t c i t y
i n t h e U n i t e d States and t h e l a r g e s t c i t y i n Texas.

I t i s l o c a t e d i n the

southeastern p a r t o f the S t a t e and i s s a i d t o serve a t r a d e area which extends
50 m i l e s t o the south and 100 m i l e s i n a l l o t h e r d i r e c t i o n s i n which a p p r o x i mately 1,000,000 people r e s i d e .

The c i t y has an o u t l e t t o t h e G u l f o f Mexico

through t h e Houston Ship Channel and numerous steamship l i n e s connect i t
o t h e r G u l f and ocean p o r t s .

with

T r a i n f a c i l i t i e s are provided by t h e Southern

P a c i f i c , M i s s o u r i P a c i f i c , Santa Fe, Burlington-Rock I s l a n d , M. K. & T. and
t h e Galveston-Houston & Henderson r a i l w a y s .

The c i t y i s a l s o served by v a r i o u s

bus and a i r l i n e s •
The p r i n c i p a l i n d u s t r i e s o f t h e community are petroleum r e f i n i n g ,

milling,

vegetable o i l r e f i n i n g , and t h e manufacture o f cottonseed p r o d u c t s , o i l w e l l
machinery, car wheels and o t h e r i r o n and brass p r o d u c t s .
p o r t a n t j o b b i n g and s h i p p i n g c e n t e r .

I t i s a l s o an im-

The B i e n n i a l Census o f Manufactures f o r

1935 l i s t s 470 p l a n t s o p e r a t i n g i n H a r r i s County, i n which Houston i s l o c a t e d ,
and shows t h a t such f i r m s had an output valued a t $222,774,000 d u r i n g t h a t
year.

According t o t h e Census o f American Business t h e r e were 4,589 r e t a i l

and 600 wholesale establishments i n the same area i n 1935, which enjoyed sales
aggregating $124,662,000 and $333,438,000, r e s p e c t i v e l y , d u r i n g t h e y e a r .
Banking f a c i l i t i e s i n Houston are f u r n i s h e d by t e n n a t i o n a l banks and
f o u r S t a t e nonmember banks.

These i n s t i t u t i o n s had d e p o s i t s aggregating

$248,503,000, as o f December 31, 1936, and o f t h i s amount $231,534,000 was
c a r r i e d by t h e t e n l o c a l member banks; t h e s m a l l e s t o f which i s l o c a t e d i n an
o u t l y i n g d i s t r i c t and p e r m i t t e d t o c a r i y c o u n t i y bank reserves.




258,

Debits t o i n d i v i d u a l accounts i n banks o f the c i t y amounted to a p p r o x i mately $2,222,896,000 d u r i n g 1936; o r an average o f about $7,400,000 f o r each
banking day.
(b) Branch T e r r i t o r y and Functions:
The Houston Branch was e s t a b l i s h e d August 4, 1919 and serves f o r t y one counties i n t h e southeastern p a r t o f Texas.

The branch zone represents

about 9% o f t h e l a n d area o f t h e Eleventh D i s t r i c t and has approximately 20$
of i t s t o t a l population.

Approximately 19% o f a l l banks i n the d i s t r i c t are

w i t h i n the t e r r i t o r y a l l o t t e d t o t h e Branch.
As o f December 31, 1936, t h e r e were 192 banks, e x c l u s i v e o f mutual savi n g s banks, i n the branch zone and o f t h i s number 85, i n c l u d i n g 72 n a t i o n a l
and 13 State i n s t i t u t i o n s , were members o f the System.
nonmember banks i n the zone were on the par l i s t .

Only 66 o f the 107

The f o l l o w i n g f i g u r e s

taken from r e p o r t s o f c o n d i t i o n as o f the same date show t h e s i z e o f member
bank f o o t i n g s i n the branch zone as compared t o those o f the Eleventh D i s t r i c t
as a whole:
No. Member
Banks
Eleventh D i s t r i c t
Branch Zone

550
85

Loans
and
Investments
$826,850
223,538

Capital
and
Surplus
(000 o m i t t e d )
$127,747
35,638

Total
Deposits
$1,314,452
355,356

There are only nine branch zones i n the System having l a r g e r member bank
f o o t i n g s than the Houston Branch, namely, P i t t s b u r g h , Los Angeles,

Detroit,

C i n c i n n a t i , B u f f a l o , B a l t i m o r e , New Orleans, S e a t t l e and Oklahoma C i t y .
The Houston Branch renders s u b s t a n t i a l l y the same s e r v i c e t o member
banks i n i t s zone as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s and
disbursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , noncash




c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and borrowings are concerned.

Reserve

accounts o f member banks i n t h e zone, as w e l l as o f nonmember c l e a r i n g banks
and o t h e r Federal Reserve banks, are maintained a t t h e Branch, which a l s o
maintains a memorandum general l e d g e r and a r e c o r d o f c e r t a i n earnings and
expenses.

C o n t r o l accounts a r e , o f course, maintained a t t h e Head O f f i c e which

i s sent a d a i l y t r a n s c r i p t o f e n t r i e s a f f e c t i n g such accounts.

Immediate

c r e d i t i s g i v e n t o member banks f o r d i s c o u n t o f f e r i n g s r e c e i v e d by the Branch,
s u b j e c t t o f i n a l approval o f t h e Head O f f i c e .

Schedules c o v e r i n g t r a n s -

a c t i o n s are forwarded t o t h e Head O f f i c e , b u t t h e notes and c o l l a t e r a l ,
apy, are r e t a i n e d a t the Branch.

if

The Branch does n o t have Bank Examination,

Bank R e l a t i o n s , F a i l e d Bank, L e g a l , Research o r F i s c a l Agenqy departments.
As o f February 6, 1957, member banks i n t h e branch zone had balance®
w i t h the Reserve bank as f o l l o w s ;
Number o f
Banks
Houston
Remainder o f Zone

10
76
86

Reserve
Balances

Deferred
Balances

$28,596,900
21.605.500
$50.000.200

$2,215,000
645.800
$2.856.800

Capital
Stock

Bills
Discounted

$

679,500
595.800
$1.075,100

Houston i s 264 t r a i n m i l e s (8 h r s . and 50 mins.) from D a l l a s .

On any

business day t h e r e are t r a i n s l e a v i n g b o t h p o i n t s a f t e r 8 P.M. which a r r i v e
a t the o t h e r p r i o r t o 8 A.M. on t h e f o l l o w i n g day, i . e . , o v e r n i g h t m a i l .
There are 56 o u t l y i n g c i t i e s i n the branch zone i n which one o r more member
banks are l o c a t e d .

An examination o f m a i l schedules i n d i c a t e s t h a t 17 o f these

c i t i e s are n o t w i t h i n o v e r n i g h t m a i l time o f t h e Head O f f i c e , whereas a l l b u t
5 are w i t h i n o v e r n i g h t m a i l o f Houston.

I t appears, t h e r e f o r e , t h a t a t l e a s t

12 p o i n t s i n the branch zone can be served more e x p e d i t i o u s l y by the Branch
than by t h e Head O f f i c e .




Banks l o c a t e d a t these p o i n t s and the t e n member

260,

banks i n Houston, which now have an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h the
Branch, would s u f f e r t h e g r e a t e s t inconvenience i f the Branch were d i s c o n tinued.
Other than Houston, the more populous c i t i e s i n t h e branch zone are
Beaumont, 57,752; Galveston, 52,958 and P o r t A r t h u r , 50,902.
(c) Branch B u i l d i n g :
The Houston Branch has occupied i t s present q u a r t e r s a t Texas Avenue
and C a r o l i n e S t r e e t since February, 1922.

The f o l l o w i n g f i g u r e s show t h e

o r i g i n a l c o s t and book v a l u e , as o f February 6 , 1957, o f t h e Branch premises:
Cost
Land
Building
V a u l t and v a u l t equipment
Fixed machineiy and equipment

$ 66,512
255,058)
54.958)
$554,508
60.001
&414.509

Book Value
2-6-57
$ 66,512
145.562
$211,874
$211.874

(d) Earnings - Branph Books:
The Branch 1 s earnings as r e f l e c t e d by i t s books f o r the y e a r s 1951
t o 1937, i n c l u s i v e , were as f o l l o w s :
Year

Earnings

1931
1952
1933
1934
1935
1936

$14,300
20,600
7,000
2,400
7,800
11,500

1937

5,600

These f i g u r e s are incomplete s i n c e , under t h e present accounting procedure,
the Branch receives no c r e d i t f o r income r e c e i v e d by the Head O f f i c e on i n vestments, a p o r t i o n o f which i s made p o s s i b l e by t h e Reserve bank stock




261,

investment and reserve balances o f member banks i n t h e branch zone.

Income

shown on t h e Branch's books i s d e r i v e d c h i e f l y from r e d i s c o u n t s o f member
banks, reserve p e n a l t i e s , r e n t a l o f banking house space and i n d u s t r i a l
advances and commitments.

Income from the f i r s t mentioned source has

s t e a d i l y d e c l i n e d , amounting t o o n l y $500 i n 1937 as compared t o $19,900 i n
1932.
(e) Branch Personnel:
The r e p o r t o f examination o f t h e Federal Reserve Bank o f D a l l a s , made
as o f February 6, 1937, shows t h e f o l l o w i n g i n regard t o s a l a r i e s and p e r sonnel a t t h e Houston Branch:
m

February 6 , 1937
Number
Amount
Officers
Employees

2
46
H

$ 9,500
69,800
$79.300

March 18, 1936
Number
Amount
2
46
H

$10,500
70,900
$81.400

Decrease
Number
Amount
-

$1,000
1,100
$2.100

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are not
i n c l u d e d i n the above f i g u r e s .
( f ) Branch Expense by F u n c t i o n s :
The expenses o f t h e Houston Branch by f u n c t i o n s f o r the y e a r s 1932 t o
1937, i n c l u s i v e , were as f o l l o w s :




262,

1932
General Overhead
Controllable
$ 10,626
Noncontrollable
7,841
15,705
^ P r o v i s i o n o f Space
P r o v i s i o n o f Personnel
2,457
General Service
18,325
Postage
8,249
3,121
Insurance
F a i l e d Banks
Loans, Rediscounts, e t c . 3,956
Securities
1,712
Currency & Coin
11,096
Check C o l l e c t i o n
22,707
Non-Cash C o l l e c t i o n
5,172
17,762
Accounting
5,788
F i s c a l Agency
_
Bank R e l a t i o n s
Legal
3,858
Auditing
S t a t i s t i c a l & A n a l y t i c a l 1,045
—
F. R. Note Issue
T o t a l Expense
0139,420
Less-Reimbursable
F i s c a l Agency Exp.
5.369
Net Expense
&L34.051

1933

1934

1935

0 10,541 & 10,354
10,959
10,918
14,398
13,043
924
7,264
20,108
a , 743
9,323
9,500
2,994
2,277
—

2,786
1,731
10,545
21,867
6,033
16,134
11,988

—

7,781 0

$ 10,339
20
29,058
1,078
21,007
10,912
1,862
1
1,552
1,380
24,863
20,733
5,400
16,574
36,262
231

9,495
11
9,382
14,815
18,946
10,450
1,978

-

9,478
12,270
22,648
10,442
2,147

-

—

2,721
1,870
10,177
21,408
6,510
17,245
29,807
—

$

1937

1936

7,291
1,899
20,501
19,930
6,310
16,619
40,955

3,746
1,341
22,763
19,451
5,588
15,896
37,625

—

—

4,137
1,185

16
3,674
765

3,969
466

0145,612

$169,333

0182,706

§176,065

4,390
304
64
0186,031

11.875
0133.737

29.586
§139.747

3}.tQ57
$151.649

55,§71
5142.394

31.705
£154.326

-

(13)
4,220
371

-

—

—

-

* Represents the n e t expense - income from r e n t a l s having been deducted.
There were f i f t e e n branches i n t h e £3ystem which operated a t a h i g h e r
n e t cost than the Houston Branch i n 193?5 namely, P i t t s b u r g h , Los Angeles,
B a l t i m o r e , C i n c i n n a t i , D e t r o i t , B u f f a l o , S a l t Lake C i t y , Omaha, S e a t t l e , Denver,
Oklahoma C i t y , L o u i s v i l l e , P o r t l a n d , New Orleans and C h a r l o t t e .
(g) Volume o f Operations a t Houston Branch:
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s o f the v a r i o u s
departments o f t h e Houston Branch and the Head O f f i c e d u r i n g t h e l a s t

six

months o f 1936:
Houston Branch
Discount Department:
Notes rediscounted
C o l l a t e r a l notes discounted
I n d u s t r i a l advances
Branches w i t h l a r g e r volume:




Head O f f i c e

4

524
35

B u f f a l o , B a l t i m o r e , New Orleans, Memphis,
Denver, Omaha, E l Paso, San Antonio and
S a l t Lake C i t y .

263,

Seattle Branch

Head O f f i c e

Member bank s e c u r i t i e s 12-31-36
$10,908,000
$73,714,000
Branches w i t h l a r g e r volume:
C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , Jacksonv i l l e , D e t r o i t , L i t t l e Rock, Denver, Oklahoma
C i t y and Omaha.
Currency & Coin:
1 . Number o f b i l l s received and counted
6,020,000
19,826,000
Bx*anches w i t h l a r g e r volume:
Buffalo, Cincinnati, Pittsburgh, Baltimore,
C h a r l o t t e , J a c k s o n v i l l e , N a s h v i l l e , New
Orleans, D e t r o i t , L o u i s v i l l e , Memphis, Los
Angeles and S e a t t l e .
Cost per one thousand u n i t s handled
48 cents
45 cents
Buffalo, Cincinnati, Pittsburgh, Baltimore,
Branches w i t h higher u n i t c o s t :
D e t r o i t , Helena, Denver, Oklahoma C i t y ,
Omaha, EL Paso, San Antonio, P o r t l a n d ,
S a l t Lake C i t y , S e a t t l e and Spokane.
2. Number o f coins received and counted
8,569,000
17,795,000
Branches w i t h l a r g e r volume:
Buffalo, Cincinnati, Pittsburgh, Baltimore,
New Orleans and Los Angeles.
Cost per one thousand u n i t s handled
15 cents
13 cents
Branches w i t h higher u n i t c o s t :
Cincinnati, Pittsburgh, Charlotte,
Birmingham, N a s h v i l l e , D e t r o i t , L i t t l e
Rock, Helena, Denver, Omaha, E l Paso, San
Antonio, Los Angeles, P o r t l a n d , S a l t Lake
C i t y , S e a t t l e -and Spokane.
Check C o l l e c t i o n :
1. Number o f c i t y checks ( c l e a r i n g s ) received
874,000
1,322,000
Branches w i t h l a r g e r volume:
Buffalo, Cincinnati, Pittsburgh, Baltimore,
D e t r o i t , L o u i s v i l l e , Denver, Omaha and Los
Angeles.
Cost per one thousand u n i t s handled
$2.05
$1.57
L o u i s v i l l e , Helena, Denver, Oklahoma C i t y ,
Branches w i t h higher u n i t c o s t :
Los Angeles, P o r t l a n d , S a l t Lake C i t y ,
S e a t t l e and Spokane.
2. Number o f country chocks (outgoing) received
2,821,000
10,343,000
Branches w i t h l a r g e r volume:
Buffalo, Cincinnati, Pittsburgh, Baltimore,
C h a r l o t t e , D e t r o i t , L o u i s v i l l e , Denver,
Oklahoma C i t y , Omaha, Los Angeles and S a l t
Lake C i t y .
Cost per one thousand u n i t s handled
$1.86
$2.31
Branches w i t h higher u n i t c o s t :
A l l branches except Birmingham, Jacksonv i l l e , L i t t l e Rock, L o u i s v i l l e , Denver,
Oklahoma C i t y and Omaha.




264

Seattle Branch
Head O f f i c e
Non-cash Collectionss
1 . Number o f c i t y c o l l e c t i o n s handled
16,967
14,769
Branches w i t h l a r g e r volume:
B u f f a l o , B a l t i m o r e , D e t r o i t , L i t t l e Rock,
Memphis, Omaha and Los Angeles.
Cost per u n i t handled
8.7 cents
13.5 cents
Branches w i t h higher u n i t c o s t :
A l l branches except J a c k s o n v i l l e , L i t t l e
Rock, Omaha and EL Paso.
2. Number o f country c o l l e c t i o n s handled
7,761
39,412
Branches w i t h l a r g e r volume:
A l l branches except Birmingham, N a s h v i l l e ,
Helena and E l Paso.
Cost per u n i t handled
9 cents
8.9 cents
Branches w i t h higher u n i t c o s t :
B u f f a l o , B a l t i m o r e , Birmingham, Jacksonv i l l e , N a s h v i l l e , New Orleans, D e t r o i t ,
Helena, Denver, San Antonio, Los Angeles,
P o r t l a n d and S e a t t l e .
3. Number o f coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
2,311
4,448
Branches w i t h l a r g e r volume:
Buffalo, Cincinnati, Pittsburgh, Baltimore,
New Orleans, D e t r o i t , L i t t l e Rock, L o u i s v i l l e ,
Denvwr, Omaha, San Antonio and Los Angeles.
Cost per u n i t handled
10.8 cents
25 cents
Branches w i t h higher u n i t c o s t :
A l l branches except C i n c i n n a t i , P i t t s burgh, B a l t i m o r e , Birmingham, New Orleans,
L i t t l e Rock, Denver, Omaha and S e a t t l e .
A schedule showing the volume o f operations o f the Houston Branch f o r
the years 1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum,
(h) Survey o f Houston Branch by B o a r d s Examiners - 1934
During an examination o f t h e Federal Reserve 3ank of D a l l a s , made as o f
June 23, 1934, the Board's Examiners reviewed the operations o f the Houston
Branch and expressed the o p i n i o n t h a t i t s continuance appeared t o be warranted
o n l y i n view o f i t s long establishment and the importance o f the C i t y o f
Houston as a business center and p o r t .

I n reaching t h i s conclusion considera-

t i o n was given t o the volume and cost o f operations a t the Branch, the number
o f member banks i n the branch c i t y and zone, and the m a i l f a c i l i t i e s

available

between p o i n t s i n the branch zone and the Head O f f i c e a t D a l l a s .




265

( i ) Survey o f Houston Branch by Federal Reserve Bank o f D a l l a s - 1956
I n accordance w i t h the request made by the Board i n i t s l e t t e r o f March 25,
1956, (X-9532) the Federal Reserve Bank o f D a l l a s reviewed t h e i n t e r n a l operat i o n s o f t h e Houston Branch and advised t h a t t h e f o l l o w i n g conclusions had been
reached i n regard t h e r e t o :
1.

i n view o f economies already e f f e c t e d over a
p e r i o d o f y e a r s , i t appeared improbable t h a t t h e
personnel o f t h e Branch could be reduced o r expenses
otherwise lowered w i t h o u t i m p a i r i n g the e f f i c i e n c y o f
i t s operations.
That,

2. That w h i l e some o f t h e f u n c t i o n s performed by
the Branch c o u l d be t r a n s f e r r e d t o the Head
O f f i c e t h e saving would n o t be l a r g e i n t h e
aggregate and i n t h e i r o p i n i o n would be i n s u f f i c i e n t to induce them t o e f f e c t t h e t r a n s f e r ,
and
5. That, i n the absence o f a general p o l i c y adopted
by the Board which would e l i m i n a t e a l l o r a subs t a n t i a l p o r t i o n o f a l l e x i s t i n g branches, they
b e l i e v e d maintenance o f t h e Houston Branch was
warranted.
I t was p o i n t e d out t h a t Congress i n the Federal Reserve Act had taken
cognizance o f t h e f a c t t h a t w i t h only twelve Reserve banks many o u t l y i n g member
banks and t h e i r communities would s u f f e r disadvantage and inconvenience as
compared t o those nearer the Head O f f i c e , and had a u t h o r i z e d the establishment
o f branches i n o r d e r t o equalize t h e b e n e f i t s and f a c i l i t i e s o f t h e System.

It

was s t a t e d f u r t h e r t h a t Congress, w h i l e a p p a r e n t l y aware o f t h e expense which
t h e establishment o f branches would e n t a i l , d i d n o t under the Federal Reserve
Act seem t o contemplate d i f f e r e n t types o f branches, i . e . , "memorandum plan 11 o r
" f u l l - f l e d g e d " branches.

The o p i n i o n was expressed t h a t each branch should

render t o member banks i n i t s t e r r i t o r y , so f a r as p r a c t i c a b l e * a l l t h e services
i n c i d e n t t o membership, s u b j e c t only t o the general c o n t r o l o f and s u p e r v i s i o n
by t h e Head O f f i c e , and t o t h e o p e r a t i n g p o l i c i e s e s t a b l i s h e d by i t .




I t was

271,

i n d i c a t e d t h a t t h e t r a n s f e r o f f u n c t i o n s o f a branch t o t h e Head O f f i c e would
tend t o show a l a c k o f need f o r the branch and t h a t , as a consequence, the real,
q u e s t i o n seemed t o be whether any branch now i n o p e r a t i o n should be d i s c o n t i n u e d ,
r a t h e r than whether i t s f u n c t i o n s should be l i m i t e d .

I n t h i s connection, i t was

admitted t h a t s t r i c t l y speaking t h e r e e x i s t s no n e c e s s i t y f o r the continuance o f
any branch, since t h e member banks i n v o l v e d , even though they might f e e l g r e a t l y
inconvenienced and i n some cases d i s c r i m i n a t e d a g a i n s t , would nevertheless a d j u s t
themselves t o t h e change.

I n c o n c l u s i o n , i t was s t a t e d t h a t t h e q u e s t i o n o f

branches was one o f general p o l i c y f o r d e t e r m i n a t i o n o f the Board and t h a t t h e
Board alone, a c t i n g f o r t h e System as a whole, could p r o v i d e a " y a r d s t i c k " by
which t h e need f o r continuance o f any s p e c i f i c branch c o u l d be determined.

In

t h e absence o f such a y a r d s t i c k f a c t s r e l a t i n g t o banking, business and m a i l
schedules i n the Houston zone, s i m i l a r t o those i n c l u d e d i n t h i s memorandum,
were submitted t o support t h e i r c o n t e n t i o n t h a t t h e continued o p e r a t i o n o f the
Houston Branch was warranted.




267,

HOUSTON BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled

Bi ( I s
Date

Oi scounted

Currency
Received
and

Coi n
Received
and

Counted

Counted

Non Cash
Collection Items
Al 1
Gov't

Checks Handled
Gov't
Sit*

Checks

Cfun^ry

Other

Total

Fiscal Agency

Transfer

Transact ions

of

Direct

Other

1931

1,667

10,101,000

13,945,000

1,354,000

5,108,000

270,000

6,732,000

58,119

39,820

-

-

24,242

1932

1,521

8 ,"987,000

12,999,000

1,103,000

4,089,000

266,000

5,458,000

59,211

46,180

-

-

23,093

1933

547

9,481,000

10,359,000

1,215,000

3,650,000

476,000

5,341,000

63,272

56,879

-

-

23,669

1934

22

10,624,000

11,365,000

1,383,000

4,123,000

1,068,000

6,574,000

98,497

61,714

-

-

20,315

1935

7

10,483,000

11,607,000

1,505,000

4,890,000

755,000

7,150,000

112,000

52,000

-

-

18,474

1936

II

11,328,000

15,297,000

1,848,000

5,532,000

668,000

8,048,000

88,000

53,000

-

-

17,000

Amounts Handled
( i n thousands of dollars)
1931

10,623

38,528

1,383

878,136

374,021

37,622

1,289,779

796

42,342

•

-

1,401,025

1932

14,690

33,122

1,180

527,183

271,263

26,124

824,570

931

40,046

-

-

1,021,494

1933

5,034

39,539

2,384

561,932

275,613

48,668

886,213

1,073

59,434

-

-

938,540

1934

516

37,444

1,235

734,353

354,095

01,245

1,169,693

1,423

78,529

-

-

886,822

1935

260

35,826

1,177

774,824

416,141

66,034

1,256,999

1,607

79,670

-

-

1,073,606

1936

425

39,318

1,527

985,988

509,962

69,429

1,565,379

1,627

63,130

-

-

1,162,452




00

SAN ANTONIO BRANCH - FEDERAL RESERVE BAM OF DALLAS
(a) C i t y o f San A n t o n i o :
San A n t o n i o , w i t h a p o p u l a t i o n of 231,542, i s the t h i r t y - e i g h t h l a r g e s t
c i t y i n the U n i t e d States and t h e t h i r d l a r g e s t c i t y i n Texas.

I t i s located

i n the south c e n t r a l p a r t o f t h e S t a t e and i s s a i d t o serve a t r a d e area e x tending 125 m i l e s n o r t h , 300 m i l e s south, 130 m i l e s east and 165 m i l e s west.
This area i s devoted t o a g r i c u l t u r e and l i v e s t o c k } the r e g i o n l y i n g west and
southwest o f San Antonio b e i n g noted as one o f t h e most i m p o r t a n t l i v e s t o c k
breeding grounds i n the U n i t e d S t a t e s .

Being s i t u a t e d n o t v e r y f a r d i s t a n t

from the Rio Grande, San Antonio t r a n s a c t s considerable business w i t h t h e Rep u b l i c o f Mexico.

T r a n s p o r t a t i o n f a c i l i t i e s are provided by the M. K. & T . ,

M i s s o u r i P a c i f i c and Southern Railways; a l s o by v a r i o u s bus l i n e s and a i r
The p r i n c i p a l i n d u s t r i e s are the manufacture o f t e x t i l e s ,

vegetable

o i l p r o d u c t s , d a i r y p r o d u c t s , s t e e l and i r o n p r o d u c t s , meat packing, o i l
i n g and f l o u r m i l l i n g .

lines.

refin-

According to the B i e n n i a l Census o f Manufactures f o r

1935, t h e r e were 318 manufacturing f i r m s o p e r a t i n g i n Bexar County, i n which
San Antonio i s s i t u a t e d , which had an output valued a t $37,295,000 d u r i n g t h a t
year.

The Census o f American Business f o r t h e same year l i s t s 4,679 r e t a i l and

441 wholesale establishments o p e r a t i n g i n the county.

These concerns had sales

aggregating $83,251,000, and $86,784,000, r e s p e c t i v e l y , d u r i n g the year 1935.
Banking f a c i l i t i e s i n San Antonio are provided by e i g h t n a t i o n a l banks,
two S t a t e nonmember banks, one of which has no banking and d i s c o u n t p r i v i l e g e s ,
and one M o r r i s Plan bank.

These i n s t i t u t i o n s had d e p o s i t s aggregating $92,428,000

as o f December 31, 1936 and o f t h i s amount $86,173,000 was c a r r i e d w i t h t h e e i g h t




289,

l o c a l member banks.
D e b i t s t o i n d i v i d u a l accounts i n banks o f the c i t y amounted t o $757,187,000
d u r i n g 1936, or an average o f approximately $2,523,000 f o r each banking day.
(b) Branch T e r r i t o r y and F u n c t i o n s :
The San Antonio Branch was e s t a b l i s h e d on J u l y 5, 1927, and serves
f i f t y - f o u r counties i n the southwestern and south c e n t r a l p a r t o f Texas.

This

area represents approximately 17$ o f the l a n d area o f the Eleventh D i s t r i c t
and has about 16% o f i t s t o t a l p o p u l a t i o n .

Approximately 15% o f a l l banks i n

the d i s t r i c t are l o c a t e d i n t h i s area.
As o f December 31, 1936, t h e r e were 149 banks, e x c l u s i v e o f mutual savings banks, i n the branch zone and o f t h i s number 73, i n c l u d i n g 65 n a t i o n a l and
8 State i n s t i t u t i o n s , were members of the System.
banks i n the branch zone were on the par l i s t .

Only 54 o f t h e 76 nonmember

The f o l l o w i n g f i g u r e s taken

from r e p o r t s o f c o n d i t i o n as o f the same date show the s i z e o f member bank f o o t i n g s i n the branch zone as compared w i t h the Eleventh D i s t r i c t as a whole:

No. Member
Banks

Eleventh D i s t r i c t
Branch Zone

550
73

Loans
and
Investments

$826,850
107,940

Capital
and
Surplus
(000 omitted)
$127,747
15,682

Total
Deposits

$1,314,452
168,494

There are only f i v e branch zones i n the System which have smaller member
bank f o o t i n g s than the San Antonio Branch, namely, Spokane, E l Paso, L i t t l e
Rock, Helena and C h a r l o t t e .
The San Antonio Branch renders s u b s t a n t i a l l y t h e same s e r v i c e t o member
bonks i n i t s zone as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s and
disbursements of currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , non-cash




270,

c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and borrowings are concerned.

Reserve

accounts o f member banks i n t h e zone, as w e l l as o f nonmember c l e a r i n g banks
and o t h e r Federal Reserve banks, are maintained a t t h e Branch, which a l s o maint a i n s a memorandum g e n e r a l ledger and a r e c o r d o f c e r t a i n earnings and expenses.
C o n t r o l accounts a r e , o f course, maintained a t the Head O f f i c e which i s sent a
d a i l y t r a n s c r i p t o f e n t r i e s a f f e c t i n g such accounts.

Immediate c r e d i t i s given

t o member banks f o r d i s c o u n t o f f e r i n g s r e c e i v e d by t h e Branch, s u b j e c t t o f i n a l
approval o f t h e Head O f f i c e .

Schedules covering t r a n s a c t i o n s are forwarded t o

the Head O f f i c e , b u t the notes and c o l l a t e r a l , i f any, are r e t a i n e d a t t h e
Branch.

The Branch does n o t have Bank Examination, Bank R e l a t i o n s , F a i l e d Bank,

L e g a l , Research or F i s c a l Agency departments.
As o f February 6 , 1937, member banks i n the branch zone had balances w i t h
the Reserve bank as f o l l o w s :
Number o f
Banks

Reserve
Balances

Deferred
Balances

$ 9,551,375
11,342,444
$20,893>819

$1,709,955
378,425
$2,088,380

Capital
Stock

Bills
Discounted

Texas
San Antonio
Remainder o f Zone

8
73

$214,200
257,600
$471,800

San Antonio i s 292 t r a i n m i l e s (8 h r s . ) from D a l l a s and 211 t r a i n m i l e s
(5 h r s . ) from Houston.

There are 58 p o i n t s i n the branch zone i n which one

o r more member banks are l o c a t e d .

F i f t y - t h r e e o f these p o i n t s appear t o be

w i t h i n o v e r - n i g h t m a i l t i m e o f San A n t o n i o , 47 w i t h i n o v e r - n i g h t m a i l time o f
Houston and 2 are w i t h i n o v e r - n i g h t m a i l time of E l Paso.

A small number o f

t h e p o i n t s which are w i t h i n o v e r - n i g h t m a i l time o f Houston and San A n t o n i o ,
are a l s o w i t h i n o v e r - n i g h t m a i l o f D a l l a s .

I f t h e San Antonio Branch were

d i s c o n t i n u e d and i t s t e r r i t o r y d i v i d e d between t h e Houston and E l Paso Branches




271,

o n l y 4 o u t l y i n g member bank p o i n t s would receive l e s s e x p e d i t i o u s s e r v i c e than
i s now f u r n i s h e d from San Antonio. Member banks i n t h e C i t y o f San A n t o n i o , which
now enjoy an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h t h e Branch would, o f course,
have t o a d j u s t t h e i r business t o o v e r - n i g h t m a i l communication.
Other than San A n t o n i o , the more populous c i t i e s i n the branch zone
are A u s t i n , 55,120; Laredo, 32,618; Corpus C h r i s t i , 27,741 and B r o w n s v i l l e ,
22,021.

A l l o f these places have one or more member banks.

(c) Branch B u i l d i n g :
The San Antonio Branch has occupied i t s present q u a r t e r s a t J a r d i n and
V i l l i t a S t r e e t s since October, 1928.

The f o l l o w i n g f i g u r e s show the o r i g i n a l

cost and book v a l u e , as o f February 6, 1937, o f the branch premises:
Cost
Land
Building
V a u l t and v a u l t equipment
Fixed machinery and equipment

$ 75,002
139,189)
18,769)
$232,960
21,258
$254.198

Book Value
2-6-37
$ 30,000
102.816
$152,816
4,247
$157.065

(d) Earnings - Branch Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r the years 1931 t o
1937, i n c l u s i v e , were as f o l l o w s :




Year

Earnings

1951
1932
1933
1934
1935
1936
1937

$65,500
67,100
20,000
2,500
8,000
7,600
5,200

These f i g u r e s are incomplete since under the present accounting procedure
the Branch r e c e i v e s no c r e d i t f o r income r e c e i v e d by the Head O f f i c e on i n v e s t ments, a p o r t i o n o f which i s made p o s s i b l e by the Reserve bank stock i n v e s t ment and reserve balances o f member banks i n the branch zone.

Income shown

on the Branch's books i s d e r i v e d c h i e f l y from rediscounts o f member banks,
reserve p e n a l t i e s , r e n t a l of banking house space and i n d u s t r i a l l o a n s . Income
fr.>m the f i r s t mentioned source has s t e a d i l y d e c l i n e d , amounting t o a p p r o x i mately $600 i n 1957 as compared t o $63,600 i n 1932.

(e) Branch Personnel:
The r e p o r t of examination o f the Federal Reserve Bank o f D a l l a s , made as
o f February 6, 1957, shows the f o l l o w i n g i n regard t o s a l a r i e s and personnel
a t the San Antonio Branch:
February 6, 1957
Number
Amount
Officers
Employees

2
41
4Z

$10,100
58,700
$68,800

March 18, 1956
Niiah>jr.. Amoynt
2
42
U

$10,000
61,000
$71,000

Decrease
Number Amount
1
i

$

100*
2,500
$2,200

^Increase

O f f i c e r s end employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n the above f i g u r e s .




273,

( f ) Branch Expense by Functions:
The expenses o f t h e San Antonio

B

ranch by f u n c t i o n s f o r the years 1952

t o 1937, i n c l u s i v e , were as f o l l o w s :
1932
General Overhead:
Controllable
N on~C ont r o l l a b l e
^ P r o v i s i o n of Space
P r o v i s i o n o f Personnel
General Service
Postage
Insurance
F a i l e d Banks
Loans, r e d i s c o u n t s , e t c .
Securities
Currency & Coin
Check C o l l e c t i o n
Non-Cash C o l l e c t i o n
Accounting
F i s c a l Agency
Legal
Auditing
Bank R e l a t i o n s
F . R. Note Issues
Statistical & Analytical
T o t a l Expense
Less - Reimbursable
F i s c a l Agency Expense
Net Expense

1933

1934

1935

1936

1937

$ 13,562 $ 12,354 $ 9,826 i> 10,167 it 9,936 $ 10,564
9,204
12,158
11,329
5,527
13,691
9,975
6,578
6,144
8,325
1,695
11,090
1,321
1,010
6,924
12,113
18,030
20,051
20,707
17,718
17,102
18,303
10,037
8,245
8,851
8,538
9,163
10,110
2,795
1,764
2,931
2,145
1,594
1,354
3
8,327
1,270
5,986
3,608
1,743
2,431
909
1,715
1,214
1,039
1,672
1,643
25,020
27,562
11,530
10,746
11,314
23,363
18,168
17,988
18,526
20,785
18,797
19,964
3,371
3,607
4,409
4,546
4,271
4,755
14,545
13,705
11,951
12,117
14,000
14,441
5,607
31,515
31,612
9,146
17,671
29,098
1
9
10
9
4,395
4,428
4
,
4
2
1
5,820
3,958
3,495
58
8
12
62
3
—
44
41
39
—
—
—
—
142
13
$129,846 $132,058 $143,595 $156,083 $155,818 $156,389
-

26,617
16,347
26,363
5,142
8.793
20,024
$124,704 $123,265 $127,248 $136,059 $129,455 $129,772

* Represents the n e t expense - income from r e n t a l s having been deducted.
There were seventeen branches i n the System which operated a t a h i g h e r
n e t cost than the San Antonio Branch i n 1937; namely, P i t t s b u r g h , Los Angeles,
B a l t i m o r e , C i n c i n n a t i , D e t r o i t , B u f f a l o , S a l t Lake C i t y , Omaha, S e a t t l e , Denver,
Oklahoma C i t y , L o u i s v i l l e , P o r t l a n d , Hew Orleans, C h a r l o t t e , Houston and
Jacksonville.




274,

(g) Volume o f Operations a t San Antonio B r anch:
The f o l l o w i n g i s a comparison o f the volume o f operations i n v a r i o u s
departments of the San Antonio Branch and t h e Head O f f i c e d u r i n g the l a s t

six

months o f 1956:
San Antonio
Branch
Discount Department
Notes rediscounted
C o l l a t e r a l notes discounted
I n d u s t r i a l advances
Branches w i t h l a r g e r volume:

22
8

Head O f f i c e
324
55

Denver, Omaha and E l Paso.

Safekeeping
Member bank s e c u r i t i e s 12-51- •36
$75,714,000
$6,274,000
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , J a c k s o n v i l l e ,
New Orleans, D e t r o i t , L i t t l e Rock, L o u i s v i l l e ,
Denver, Oklahoma C i t y , Omaha and Houston.
Currency & Coin
1. Number o f b i l l s received and counted
5,338,000
19,826,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
C h a r l o t t e , Birmingham, J a c k s o n v i l l e , N a s h v i l l e ,
New Orleans, D e t r o i t , L o u i s v i l l e , Memphis, Houston,
Los Angeles and S e a t t l e .
Cost per one thousand u n i t s handled
54 cents
45 cents
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , C i n c i n n a t i , Helena, Denver, Omaha,
E l Paso, P o r t l a n d , S a l t Lake C i t y , S e a t t l e
and Spokane.
2. Number o f coins r e c e i v e d and counted
4,919,000
17,795,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
New Orleans, D e t r o i t , L o u i s v i l l e , Memphis, Houston,
Los Angeles and S e a t t l e .
Cost per one thousand u n i t s handled
27 cents
13 cents
Branches w i t h h i g h e r u n i t costs Helena, E l Paso, P o r t l a n d , S a l t Lake C i t y ,
S e a t t l e and Spokane.
Check C o l l e c t i o n
1. Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
627,000
1,322,000
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , Birmingham,
J a c k s o n v i l l e , L i t t l e Rock, Helena, Oklahoma C i t y ,
E l Paso, S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
$1.45
$1.57
Branches w i t h h i g h e r u n i t c o s t : A l l branches except B a l t i m o r e , C h a r l o t t e ,
Birmingham, J a c k s o n v i l l e , N a s h v i l l e , New
Orleans and D e t r o i t .




275,

San Antonio
Branch

Head O f f i c e
Check C o l l e c t i o n (Continued)
2. Number o f country checks (outgoing) received
2,792,000
10,343,000
Branches w i t h l a r g e r volumes A l l branches except Birmingham, J a c k s o n v i l l e ,
N a s h v i l l e , New Orleans, L i t t l e Rock, Memphis,
Helena, E l Paso, P o r t l a n d , S e a t t l e and Spokane.
Cost per one thousand u n i t s handled
f2.ll
$2.51
Branches v / i t h h i g h e r u n i t costs B u f f a l o , C i n c i n n a t i , New Orleans, D e t r o i t ,
Helena, E l Paso, Los Angeles, P o r t l a n d , S a l t
Lake C i t y , S e a t t l e and Spokane.
Non-cash C o l l e c t i o n s
1 . Number o f c i t y c o l l e c t i o n s handled
5,193
14,769
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , Birmingham, Helena
and E l Paso.
Cost per u n i t handled
1 7 . 1 cents
13.5 cents
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
C h a r l o t t e , D e t r o i t , Los Angeles, P o r t l a n d
and S e a t t l e .
2. Number o f country c o l l e c t i o n s handled
0,715
39,412
Branches w i t h l a r g e r volume: B u f f a l o , B a l t i m o r e , C h a r l o t t e , J a c k s o n v i l l e , New
Orleans, D e t r o i t , Memphis, Denver, Oklahoma C i t y ,
Omaha, Los Angeles, P o r t l a n d , S a l t Lake C i t y ,
S e a t t l e and Spokane.
10.7 cents
8 . 9 cents
Cost per u n i t handled
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , B a l t i m o r e , Birmingham, J a c k s o n v i l l e ,
N a s h v i l l e , New O r l e a n s , Helena, Los Angeles,
P o r t l a n d and S e a t t l e .
3. Number of coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
3,077
4,448
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
New Orleans, D e t r o i t , Omaha and Los Angeles.
Cost per u n i t handled
1 1 . 1 cents
25 cents
Branches w i t h h i g h e r u n i t c o s t : B u f f a l o , C h a r l o t t e , J a c k s o n v i l l e , N a s h v i l l e ,
D e t r o i t , L o u i s v i l l e , Memphis, Helena, Oklahoma
C i t y , E l Paso, Los Angeles, P o r t l a n d , S a l t
Lake C i t y and Spokane.
A schedule showing the volume o f operations o f t h e San Antonio Branch
f o r tiie years 1951 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f San Antonio Branch by Board's Examiners - 1934:
During an examination o f t h e Federal Reserve Bank o f D a l l a s , made as o f
June 23, 1954, t h e Board's Ex&raincrs reviewed the operations o f t h e San Antonio
Branch and i n d i c a t e d i n t h e i r r e p o r t t h a t t h e r e was some q u e s t i o n as t o the
n e c e s s i t y f o r i t s continuance.

I t was p o i n t e d out t h a t p r e v a i l i n g m a i l schedules

would permit o v e r n i g h t m a i l s e r v i c e t o a m a j o r i t y o f member bank p o i n t s i n the



281,

branch zone from e i t h e r Houston or D a l l a s and t h a t a v i a t i o n s e r v i c e had become
s u f f i c i e n t l y dependable t o p e r m i t currency shipments from the Head O f f i c e i n
cases of emergency.
( i ) Survey o f San Antonio Branch by Federal Reserve Bank o f D a l l a s - 1956:
I n accordance w i t h the request made by t h e Board i n i t s l e t t e r o f March
2b, 1936, (X-9532) t h e Federal Reserve Bank o f D a l l a s reviewed t h e i n t e r n a l
operations o f t h e San Antonio Branch and advised t h a t the f o l l o w i n g conclusions
had been reached i n regard t h e r e t o :
1. I n view o f economies already e f f e c t e d over a
p e r i o d o f y e a r s , i t appeared improbable t h a t the
personnel o f the Branch could be reduced or expenses
otherwise lowered w i t h o u t i m p a i r i n g the e f f i c i e n c y o f
i t s operations.
2. Although some of the f u n c t i o n s performed by the Branch
could be t r a n s f e r r e d t o the Head O f f i c e the saving would
n o t be l a r g e i n the aggregate and i n t h e i r o p i n i o n would
be i n s u f f i c i e n t t o induce them t o e f f e c t t h e t r a n s f e r .
5. I n t h e absence o f a general p o l i c y adopted by the Board,
which would e l i m i n a t e a l l o r a s u b s t a n t i a l p o r t i o n o f
a l l e x i s t i n g branches, they b e l i e v e d maintenance o f the
San Antonio Branch was warranted.
I t was p o i n t e d out t h a t Congress i n the Federal Reserve Act had taken
cognizance o f the f a c t t h a t w i t h only twelve Reserve banks many o u t l y i n g member
banks and t h e i r communities would s u f f e r disadvantage and inconvenience as
compared t o those nearer the Head O f f i c e , and had a u t h o r i z e d the establishment
o f branches i n order t o equalize t h e b e n e f i t s and f a c i l i t i e s o f t h e System.

It

was s t a t e d f u r t h e r t h a t Congress, w h i l e apparently aware of t h e expense which
the establishment o f branches would e n t a i l , d i d n o t under the Federal Reserve
Act seeu t o comtemplate d i f f e r e n t types of branches, i . e . , "memorandum p l a n "
or " f u l l - f l e d g e d " branches.

The o p i n i o n was expressed t h a t each branch should

render t o member bonks i n i t s t e r r i t o r y , so f a r as p r a c t i c a b l e , a l l the s e r v i c e s




277,

i n c i d e n t t o membership, subject only t o the general c o n t r o l o f and s u p e r v i s i o n
by t h e Head O f f i c e , and t o the o p e r a t i n g p o l i c i e s e s t a b l i s h e d by i t .

I t was

i n d i c a t e d t h a t the t r a n s f e r o f f u n c t i o n s o f a branch t o t h e Head O f f i c e would
tend t o show a l a c k o f need f o r t h e branch and t h a t , as a consequence, the r e a l
q u e s t i o n seemed t o be whether any branch now i n o p e r a t i o n should be d i s c o n t i n u e d ,
r a t h e r than whether i t s f u n c t i o n s should be l i m i t e d .

I n t h i s connection, i t was

admitted t h a t s t r i c t l y speaking t h e r e e x i s t s no n e c e s s i t y f o r t h e continuance o f
any branch, since the member banks i n v o l v e d , even though they might f e e l g r e a t l y
inconvonienced and i n some cases d i s c r i m i n a t e d a g a i n s t , would n e v e r t h e l e s s a d j u s t
themselves t o the change.

I n c o n c l u s i o n , i t was s t a t e d t h a t the q u e s t i o n o f

branches was one o f general p o l i c y f o r d e t e r m i n a t i o n o f t h e Board and t h a t the
Board a l o n e , a c t i n g f o r t h e System as a whole, could p r o v i d e a " y a r d s t i c k " by
which the need f o r continuance o f any s p e c i f i c branch could be determined.

In

the absence o f such a y a r d s t i c k f a c t s r e l a t i n g t o banking, business and m a i l
schedules i n the San Antonio zone, s i m i l a r t o those i n c l u d e d i n t h i s memorandum,
were submitted t o support t h e i r c o n t e n t i o n t h a t the continued o p e r a t i o n of the
San Antonio Branch was warranted.




278,

SAN ANTONIO BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled

Bilis

Currency

Coin

Received

Received

and

and

Counted

Counted

_

_

Non Cash
Collection Items

Checks Handled
Gov't

Gov't
Total

Fiscal Agency

Al 1
Other

Transfer
of
Funds

Country

Checks

1,061,000

4,184,000

220,000

5,465,000

33,903

21,231

-

14,389

6,715,000

913,000

3,481,000

224,000

4,610,000

43,071

24,199

-

13,127

8,219,000

6,235,000

876,000

3,372,000

399,000

4,647,000

46,789

28,829

-

12,614

27

8,707,000

5,276,000

979,000

4,054,000

865,000

5,898,000

78,248

31,896

1935

63

9,233,000

6,797,000

1,104,000

4,627,000

541,000

6,272,000

87,000

36,000

-

IC,4f0

1936

55

10,701,000

8,175,000

1,245,000

5,391,000

564,000

7,200,000

65,000

36,000

-

0,000

Date

Pi scounted

Ci\y

1931

3,486

10,803,000

6,584,000

1932

4,265

8,412,300

1933

1,585

1934

CouDons

Direct

Other

11,094

Amounts Handled
( i n thousands of dollars)
1931

24,206

47,131

1,167

355,783

429,434

38,986

824,203

456

23,184

1932

14,036

34,676

0

263,863

275,029

29,304

568,196

605

23,185

-

334,676

1933

4,952

*fc,224

277,990

260,951

37,744

576,685

703

28,499

-

279,020

347,400

56,552

793,527

1,026

38,734

-

285,700

911,845

973

46,752

-

338,956

1,077,911

807

39,459

-

m k

1935

1936

135

103

53




32,648
32,725
36,594

2,603

706
324
1,049

389,575
461,583
510,757

398,506
490,300

51,756
63,854

470,578

-

316,269

LOS ANGELES BRANCH - FEDERAL RESERVE BANK OF SAN FRANCISCO
(a) C i t y o f Los Angeles
Los Angeles, w i t h a p o p u l a t i o n o f 1,238,000, i s t h e f i f t h l a r g e s t
i n t h e U n i t e d S t a t e s and the l a r g e s t c i t y i n C a l i f o r n i a .

city

I t i s located i n

t h e southwestern p a r t o f t h e S t a t e and i s s a i d t o serve a t r a d e area extending
55 n i l e s n o r t h , 50 m i l e s south and 50 m i l e s e a s t ; approximately 2,300,000
people r e s i d e i n t h e m e t r o p o l i t a n area.

T r a n s p o r t a t i o n f a c i l i t i e s are provided

by the Atchison-Topeka & Santa Fe, Union P a c i f i c , Southern P a c i f i c and P a c i f i c
E l e c t r i c r a i l w a y s and by v a r i o u s a i r l i n e s and bus l i n e s .

Los Angeles a l s o

enjoys dix*ect steamship s e r v i c e t o a l l the p r i n c i p a l p o r t s of the w o r l d , app r o x i m a t e l y $774,800,000 i n cargoes having passed over i t s wharves d u r i n g the
year ending June 50, 1955.
The p r i n c i p a l i n d u s t r i e s o f t h e c i t y are motion p i c t u r e s , petroleum
p r o d u c t s , i r o n and s t e e l , food p r o d u c t s , p l a n i n g m i l l s , f u r n i t u r e , wearing
a p p a r e l , clay p r o d u c t s , automobiles and automobile accessories and a i r

craft.

According t o t h e Biennial Census o f Manufactures f o r 1955, t h e r e were 4,568
manufacturing f i r m s o p e r a t i n g i n Los Angeles County, which had an output valued
a t $844,006,000 d u r i n g t h a t y e a r .

The Census o f American Business f o r 1955

shows 5,042 wholesale and 41,059 r e t a i l establishments i n t h e same area, which
enjoyed sales aggregating $1,119,952,000 and $959,409,000, r e s p e c t i v e l y , d u r i n g
the. y e a r .
Banking f a c i l i t i e s i n Los Angeles are f u r n i s h e d by f o u r S t a t e banks, two
o f which are members o f the System, f o u r n a t i o n a l banks, one i n d u s t r i a l bank,
f o u r t i t l e and t r u s t companies, and t h r e e branches o f f o r e i g n banks.

Branch

banking has been h i g h l y developed i n Los Angt l e s and throughout t h e S t a t e o f
California.




The f o l l o w i n g f i g u r e s r e l a t e t o member banks o p e r a t i n g i n Los

280,

Angeles on December 51, 1936:

Name
C i t i z e n s N.T. & Svgs.Bk.
S e c u r i t y - F i r s t N a t « l Bk.
C a l i f o r n i a Bank
Union Bank & T r . Co.
Farmers & Merchants N.B.
B k . o f America N.T.& S.A.
Totals

Head O f f i c e
Los
Los
Los
Los
Los
San

Angeles
Angeles
Angeles
Angeles
Angeles
Francisco

Number o f Branches
C i t y o f Outside T o t a l
Los
Los
for
Angeles Angeles S t a t e
53
65
42

2
56
11

55
119
53

86
224

579
448

465
672

Total
Deposits
$

114,595,000
580,651,000
100,413,000
39,505,000
127,674,000
1,298.977.000
$2.261.815.000

D e b i t s t o i n d i v i d u a l accounts i n banks o p e r a t i n g i n Los Angeles aggregated
$10,216,206,000 f o r t h e year 1936, o r an average o f approximately $34,COO,000
f o r each banking day.
(b) Branch T e r r i t o r y and Functions:
The Los Angeles Branch was e s t a b l i s h e d on January 2, 1920, and serves t h a t
p a r t o f t h e S t a t e o f Arizona l o c a t e d i n Federal Reserve D i s t r i c t Twelve and
n i n e counties i n t h e southern p a r t o f C a l i f o r n i a .

The brarich zone represents

approximately 21$ o f the l a n d area o f the T w e l f t h D i s t r i c t and has about 34$
of i t s t o t a l population.

Approximately 16$ o f a l l banks i n t h e d i s t r i c t are

l o c a t e d i n t h i s area.
As o f December 31, 1936, t h e r e were 107 banks, e x c l u s i v e o f mutual savings
bonks i n the branch zone and o f t h i s number 63, i n c l u d i n g 55 n a t i o n a l banks and
8 S t a t e i n s t i t u t i o n s , were members o f the System.
t h e zone were on t h e par l i s t .

The 44 nonmember banks i n

The f o l l o w i n g f i g u r e s taken from r e p o r t s o f

c o n d i t i o n as o f t h e same date show the s i z e o f member bank f o o t i n g s i n t h e
branch zone as compared t o t h e T w e l f t h D i s t r i c t as a wholes




281,

No .Member
Banks

Twelfth D i s t r i c t
Los Angeles Zone

322
63

Loans
Capital
and
and
Investments
Surplus
(000 omitted)
$3,650,503
925,855

There i s o n l y one branch zone i n the

$337,201
91,097

Total
Deposits

$4,483,284
1,166,712

System having l a r g e r member bank

f o o t i n g s than t h e Los Angeles Branch, namely P i t t s b u r g h .
The Los Angeles Branch renders s u b s t a n t i a l l y t h e same s e r v i c e t o member
banks i n i t s zone as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s and
disbursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , non-cash
c o l l e c t i o n s and borrowings a r e concerned.

Reserve accounts o f member banks i n

the zone, as w e l l as o f nonmember c l e a r i n g banks and o t h e r Federal Reserve banks,
are maintained a t t h e Branch, which a l s o maintains a memorandum general l e d g e r
and a r e c o r d o f c e r t a i n earnings and expenses.

C o n t r o l accounts a r e , o f course,

maintained a t t h e Head O f f i c e which i s sent a d a i l y t r a n s c r i p t o f e n t r i e s
a f f e c t i n g such accounts.

Immediate c r e d i t i s given t o member banks f o r d i s -

count o f f e r i n g s r e c e i v e d by t h e Branch, s u b j e c t t o f i n a l approval o f t h e Head
Office.

Schedules covering t r a n s a c t i o n s are forwarded t o t h e Head O f f i c e , but

the notes and c o l l a t e r a l , i f any, are r e t a i n e d a t t h e Branch.

The Branch has

no Bank Examination, Bank R e l a t i o n s , L e g a l , Research o r F i s c a l Agency d e p a r t ments.
As o f January 8 , 1957, member banks i n t h e branch zone had balances w i t h
t h e Reserve bank as f o l l o w s :

Los Angeles
Remainder o f Zone

No.of
Banks

Reserve
Balances

Deferred
Balances

Capital
Stock

Bills
Discounted

6
57
63

$108,487,700
17.858.500
$126.526.000

$5,418,500
1.172.000
$6.590.500

$2,258,800
558,100
$2.796,900*

-

^ C a p i t a l stock f i g u r e i n c l u d e s holdings o f f i v e banks which have been absorbed
by o t h e r member bank3, but whose stock investment i n t h e Reserve bank had
n o t been surrendered.



282,

Los Angeles i s 471 t r a i n m i l e s (12 h r s . and 30 mins.) from San F r a n c i s c o .
On any business day t h e r e are s e v e r a l t r a i n s l e a v i n g both p o i n t s a f t e r 8 P.M.
which a r r i v e a t t h e o t h e r b e f o r e 9 A.M. on the f o l l o w i n g day.

Other than Los

Angeles t h e r e are 52 member bank p o i n t s i n t h e branch zone and o f t h i s number
48 are w i t h i n o v e r n i g h t m a i l o f Los Angeles, whereas o n l y 14 are w i t h i n o v e r n i g h t m a i l o f Sen F r a n c i s c o .

I t i s c l e a r , t h e r e f o r e , t h a t discontinuance o f

the Los Angeles Branch would n o t o n l y inconvenience t h e

member banks i n t h e

O i t y o f Los Angeles, which now enjoy an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h
t h e Branch, but t h a t i t would a l s o slow up t h e s e r v i c e rendered t o a subs t a n t i a l number o f member banks s i t u a t e d i n o u t l y i n g c i t i e s .
Other than Los Angeles, t h e more populous c i t i e s o f t h e branch zone are
San Diego, 147,995; Long Beach, 142,052; Pasadena, 76,086; Glendale, 62,736;
San Bernadino, 37,481 and Santa Monica, 37,146.
(c) Branch B u i l d i n g :
The Los Angeles Branch has occupied i t s present q u a r t e r s a t 10th and
O l i v e S t r e e t s since A p r i l , 1930.

The f o l l o w i n g f i g u r e s show t h e o r i g i n a l

cost and book value as o f January 8, 1957, o f the branch premises:

Cost
Land
Building
V a u l t & v a u l t equipment
F i x e d machinery & equipment

$

453,458
839,477)
148.652)
$1,441,567
282.698
Si,724.265

Book Value
1-8-57
$

298,866

815,949
$1,114,815
84.967
Si.199,782

(d) Earnings - Branch Books:
The Branch 1 s earnings as r e f l e c t e d by i t s books f o r t h e years 1951 t o
1937, i n c l u s i v e , were as f o l l o w s :




283,

Year

Earnings

1951
1932
1955
1934
1935
1936

$ 65,100
159,100
59,700
5,100
1,600
3,500

1957

3,800

These f i g u r e s are incomplete since t h e Branch r e c e i v e s no c r e d i t f o r
income r e c e i v e d by t h e Head O f f i c e on investments, a p o r t i o n of which i s made
p o s s i b l e by the Reserve bank stock investment and reserve balances o f banks
i n t h e branch zone.

Income shown on t h e Branch 1 s books i s d e r i v e d c h i e f l y

from r e d i s c o u n t s o f member banks, reserve p e n a l t i e s and the r e n t a l o f banking
house space.

Income from t h e f i r s t mentioned source amounted t o $151,200 i n

1932 as compared t o o n l y $3,200 i n 1937.
(e) Branch Personnel:
The r e p o r t o f examination o f the

Federal Reserve Bank o f San F r a n c i s c o ,

made as o f January 8, 1937, shows the f o l l o w i n g i n r e g a r d t o s a l a r i e s and p e r sonnel a t the Los Angeles Branch:
January 8 , Amount
1957
Number
Officers
Employees

4
221
225

$ 25,200
548.700
$575,900

A p r i l 11, Amount
1956
Number
4
227
251

O f f i c e r s and employees whose s a l a r i e s
i n c l u d e d i n the above f i g u r e s .

$ 24,400
559.000
$585.400

DecreaseAmount
Number
.6
|

$

800 I n c .
10.500
$ 9.500

and wages are reimbursable are n o t

The January 8 , 1957, f i g u r e i n c l u d e s s i x em-

ployees w i t h t o t a l annual s a l a r i e s o f $7,200 who were employed on a temporary
basis t o handle t h e u s u a l p o s t - h o l i d a y increase i n unassorted currency.
A l l o w i n g f o r these i n d i v i d u a l s , t h e r e was a r e d u c t i o n o f 12 nonreimbursable
employeevS since A p r i l 11, 1956.




284,

( f ) Branch Expenses by Functions:
The expenses o f t h e Los Angeles Branch by f u n c t i o n s f o r t h e years 1952 t o
1937, i n c l u s i v e , were as f o l l o w s :
1932

1933

General Overhead
Controllable
$ 16,769 0 18,776
51,834
Noncontrollable
41,996
P r o v i s i o n o f Space
59,601
60,109
P r o v i s i o n o f Personnel 15,893
19,941
General Service
78,615
86,673
Postage
21,999
19,942
Insurance
9,321
8,105
F a i l e d Banks
8,828
22,296
Loans, R e d i s c o u n t s , e t c . 26,141
31,699
Securities
1,419
2,676
Currency & Coin
62,528
63,261
Check C o l l e c t i o n
92,348
83,248
Non-cash C o l l e c t i o n
26,586
29,522
Accounting
44,929
44,647
F i s c a l Agency
35,742
41,072
Legal
Auditing
4,068
4,441
Bank R e l a t i o n s
461
444
Bank Examinations
5
31
S t a t i s t i c a l & A n a l y t i c a l 1,590
2,052
Works Progress
T o t a l Expense
$546,839 $590,769
Less-Reimbursable
F i s c a l Agency Expense 31.054
35.599
Net Expense
0515.785 §555.170

1934

1935

0 14,074
48,955
56,648
44,912
90,467
11,015
4,312
12,590
36,139
2,792
61,347
81,405
25,915
44,185
41,340
160
4,932
402
110
2,949

0 11,219
52
52,993
59,924
95,559
18,543
3,637
6,043
67,733
3,019
122,206
75,804
22,328
47,483
59,237

0584,649
33.186
3551.463

-

5,681
503
54
1,462

1936

0 14,528
—

50,909
68,615
89,765
20,344
3,676
2,789
33,112
1,627
134,992
81,275
20,597
45,668
54,064
50
5,597
495

1937

0 14,968
4
99,830
33,232
88,474
18,723
3,449
1,071
20,275
1,846
142,728
84,546
17,328
36,611
46,010
-

4,346
859

—

—

$653,480

1,627
111
0629,841

1,079
$615,379

24.420
0629.060

26.733
0603.108

25.377
0590.002

There were 23 branches i n t h e System which operated a t a lower cost than
t h e Los Angeles Branch i n 1937.

A l l o f these branches, w i t h t h e p o s s i b l e ex-

c e p t i o n o f B a l t i m o r e , appear t o have handled a smaller volume o f work.

Balti-

more, o f course, serves a much more compact t e r r i t o r y than does Los Angeles•
(g) Volume o f Operations a t Los Angeles Branch:
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s i n v a r i o u s
departments o f t h e Los

Angeles Branch and the Head O f f i c e d u r i n g t h e l a s t

s i x months o f 1936:




285,

Los Angeles Branch
Discount Department
Notes rediscounted
C o l l a t e r a l notes discounted
I n d u s t r i a l advances ( * )
Branches w i t h l a r g e r volumes

Head O f f i c e

38
31
2
Denver, B u f f a l o , B a l t i m o r e , S a l t Lake C i t y ,
Omaha, Memphis, New Orleans, San A n t o n i o ,
Houston, Spokane, D e t r o i t , L i t t l e Rock,
P o r t l a n d and EL Paso.

(*•) A l l i n d u s t r i a l advances are c a r r i e d on t h e books o f t h e Head O f f i c e but
those o r i g i n a t i n g i n t h e branch zone are s e r v i c e d by t h e Branch.
Safekeeping
Member bank s e c u r i t i e s 12-31-36
Branches w i t h l a r g e r volume: A l l branches except Spokane.
Currency & Coin
1 . Number o f b i l l s r e c e i v e d and counted
Branches w i t h l a r g e r volume: None.

41,134,000

0353,000

25,977,000

Cost per one thousand u n i t s handled
44 cents
46 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except, C h a r l o t t e , Birmingham,
N a s h v i l l e , New Orleans, L i t t l e Rock,
L o u i s v i l l e and Memphis.
2. Number o f coins r e c e i v e d and counted
Branches w i t h l a r g e r volume: B a l t i m o r e .

38,650,000

39,378,000

Cost per one thousand u n i t s handled
16 cents
16 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except B u f f a l o , B a l t i m o r e ,
C h a r l o t t e , J a c k s o n v i l l e , New Orleans, D e t r o i t ,
L o u i s v i l l e , Memphis, Oklahoma C i t y and Houston.
Check C o l l e c t i o n
1 . Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
Branches w i t h l a r g e r volume:
Pittsburgh.
Cost p e r one thousand u n i t s handled
Branches w i t h h i g h e r u n i t c o s t :
Helena.

3,178,000

$3.45

3,055,000

$1.78

2. Number o f country checks (outgoing) r e c e i v e d
5,294,000
3,259,000
Branches w i t h l a r g e r volume: C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e , D e t r o i t and
Oklahoma C i t y .
Cost p e r one thousand u n i t s handled
Branches w i t h h i g h e r u n i t c o s t : None.




03.66

$2.31

291,

Log Angeles Branch
Head O f f i c e
Non-cash C o l l e c t i o n s
1 . Number o f c i t y c o l l e c t i o n s handled
10,154
12,352
Branches w i t h l a r g e r volume: D e t r o i t , L i t t l e Rock, Memphis, and Omaha.
Cost per u n i t handled
Branches w i t h h i g h e r u n i t c o s t :

24.9 cents
27.5 cents
C i n c i n n a t i , P i t t s b u r g h and P o r t l a n d .

2. Number o f country c o l l e c t i o n s handled
16,462
43,331
Branches w i t h l a r g e r volume: B u f f a l o , B a l t i m o r e , C h a r l o t t e , Denver, Oklahoma
C i t y , Omaha, S a l t Lake C i t y and Spokane.
Cost per u n i t handled
17 cents
6.3 cents
Branches w i t h h i g h e r u n i t c o s t :
Portland.
3. Number o f coupons (except Government)
and country s e c u r i t y c o l l e c t i o n s handled
6,212
Branches w i t h l a r g e r volume: P i t t s b u r g h , B a l t i m o r e , and D e t r o i t .
Cost per u n i t handled
Branches w i t h h i g h e r u n i t c o s t :

30 cents
J a c k s o n v i l l e and E l Paso.

3,465
19.3 cents

A schedule showing t h e volume o f operations o f t h e Los Angeles Branch f o r
t h e years 1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f Los Angeles Branch by Board 1 s Examiners - 1933
During an examination o f t h e Federal Reserve Bank o f San F r a n c i s c o , made
as o f September 2, 1933, the 3 o a r d f s examiners reviewed t h e o p e r a t i o n s o f t h e
Los Angeles Branch and i n c o r p o r a t e d t h e f o l l o w i n g statement as t o i t s continuance i n t h e i r r e p o r t :
"The branch a t Los Angeles would appear t o be j u s t i f i e d
i n view o f t h e s i z e and importance o f t h e c i t y and i t s d i s t a n c e
from t h e Head O f f i c , * * * . "
( i ) Survey o f Los Angeles Branch by Federal Reserve
Bank o f San Francisco - 1956.
I n accordance w i t h t h e request made by t h e Board i n i t s l e t t e r o f March 25,
1936 (X-9532) the Federal Reserve Bank o f San Francisco made a comprehensive
survey o f i t s f i v e branches.

A r e p o r t o f t h i s survey was submitted t o t h e

Board, w i t h o u t a d e f i n i t e recommendation as t o t h e discontinuance o f any




287,

branch.

I n the l e t t e r o f t r a n s m i t t a l , dated August 26, 19S6, i t was s t a t e d

t h e D i r e c t o r s o f t h e San Francisco Reserve Bank, a f t e r a f u l l d i s c u s s i o n o f
t h e m a t t e r , f e l t t h a t b e f o r e any recommendation could be made i t would be
necessary f o r t h e Board o f Governors t o g i v e c o n s i d e r a t i o n t o t h e q u e s t i o n
from a n a t i o n a l v i e w - p o i n t and e s t a b l i s h some d e f i n i t e p o l i c y i n regard
thereto.
The survey contained a d e s c r i p t i o n o f the t e r r i t o r i e s served and f u n c t i o n s
performed by a l l t h e branches o f t h e San Francisco Reserve Bank, as w e l l as
s t a t i s t i c s and c h a r t s covering t h e i r operations f o r the years 1926 t o 1955,
inclusive.




288,

LOS ANGELES BRANCH
VOLUME OF OPERATIONS
Number

Date
1931

B> I Is
Discounted
4,319

Pieces Handled
Non Cash

Currency
Received
and
Counted

Co i n
Received
and
Ceunted

cik

67,222,000

38,100,000

7,920,000

13,385,000

1,438,000

22,743,000

264,190

73,514

3,363

-

32,148

6,547,000

9,803,000

1,532,000

17,882,000

311,532

98,882

4,480

-

31,620

5,842,000

7,509,000

1,857,000

15,208,000

362,207

138,928

13,458

-

44,098

5,482,000

7,165,000

3,084,000

15,731,000

439,627

107,023

21,521

-

43,890

5,974,000

10,929,000

1,903,000

18,806,000

539,000

08,000

54,510

10,837

40,458

6,479,000

10,497,000

2,498,000

19,474,000

429,000

86,000

6,204

4,894

36,000

I
1932

6,847

67,536,000

54,843,000

1933

2,233

64,077,000

51,518,000

1934

231

64,588,000

50,823,000

1935

81

73,010,000

55,141,000

1936

19

81,992,000

70,321,000

Checks Handled
Gov't
Checks
Country

lalii

Collection Items
A! 1
Gov't
Other
COUBftM

F» seal Agency
Transaction*

Transfer
of

9t h e r

Amounts Handled

Or i thousands of dollars)

<0
0D

193!

35,566

327,786

13,317

2,315,640

703,773

295,247

3,314,660

6,041

68,660

36,323

-

3,566,723

1932

97,933

306,546

17,511

1,776,195

496,198

261,660

2,534,053

7,570

49,020

38,858

-

2,256,933

1933

38,819

314,800

30,008

1,712,021

411,708

260,951

2,384,680

7,824

53,870

34,284

-

1,702,173

1934

8,269

260,428

15,296

1,888,212

434,057

310,965

2,633,234

9,196

54,273

33,953

-

1,562,138

1935

4,436

301,156

16,231

2,331,990

571,175

252,746

3,<55,91i

9,810

68,513

84,159

4,286

2,050,478

1936

1,920

338,811

8,794

2,683,325

687,088

366,212

3,736,625

10,029

87,660

23,987

2,001

1,876,174




PORTLAND BRANCH - FEDERAL RESERVE BANK OF SAN FRANCISCO
(a) C i t y of P o r t l a n d
P o r t l a n d , w i t h a p o p u l a t i o n of 501,815, i s the t w e n t y - f i f t h l a r g e s t
i n the U n i t e d States and t h e l a r g e s t c i t y i n the State o f Oregon.

city

I t i s located

i n the extreme northwestern p a r t o f the S t a t e and l i e s along both sides o f the
W i l l a m e t t e River a t i t s j u n c t u r e w i t h the Columbia, where t h e r e i s a s p l e n d i d
p o r t deep enough f o r the l a r g e s t ships t o dock.

The c i t y serves a t r a d e area

extending approximately 30 m i l e s i n a l l d i r e c t i o n s ; more than 380,000 people
r e s i d i n g w i t h i n the m e t r o p o l i t a n area alone.

T r a n s p o r t a t i o n f a c i l i t i e s are f u r -

nished by t h e Union P a c i f i c , Great N o r t h e r n , Northern P a c i f i c , Southern P a c i f i c
and the Spokane, P o r t l a n d & S e a t t l e r a i l r o a d s and t h e P o r t l a n d e l e c t r i c
way.

rail-

I t i s a l s o served by the American and U n i t e d a i r l i n e s .
According t o t h e B i e n n i a l Census o f Manufactures, Multnomah County, i n

which P o r t l a n d i s s i t u a t e d , had 679 manufacturing establishments i n 1935, which
had an o u t p u t valued a t $120,312,000 t h a t y e a r .

The c h i e f products were lumber,

canned goods, l e a t h e r goods, d a i r y p r o d u c t s , f l o u r , woolen goods, harness, r o o f i n g m a t e r i a l s and a i r cleaners.

There was a l s o a s u b s t a n t i a l amount o f brewing

and meat packing.
The Census o f American Business f o r 1935 l i s t s 5,562 r e t a i l and 885
wholesale concerns o p e r a t i n g i n the same a r e a , which had sales aggregating
$151,985,000 and $278,103,000, r e s p e c t i v e l y , d u r i n g t h a t y e a r .
Banking f a c i l i t i e s i n P o r t l a n d are p r o v i d e d by two n a t i o n a l banks, two
S t a t e nonmember banks, one mutual savings bank and one t i t l e and t r u s t company;
a l s o by a branch o f the Bank o f C a l i f o r n i a , N.A. and a branch o f t h e Canadian
Bank o f Commerce.

As o f December 31, 1936, the banks h a v i n g t h e i r head o f f i c e s

i n P o r t l a n d had t o t a l d e p o s i t s aggregating $207,028,000 and o f t h i s amount




290,

$201,280,000 was c a r r i e d by the two l o c a l member banks; such banks o p e r a t i n g a
t o t a l o f twelve branches w i t h i n the c i t y l i m i t s .
D e b i t s t o i n d i v i d u a l accounts i n banks o f the c i t y amounted t o
$1,953,740,000 f o r t h e year 1936, or an average o f approximately $6,500,000
f o r each banking day,
(b) Branch T e r r i t o r y and Functions
The P o r t l a n d Branch was e s t a b l i s h e d on October 1 , 1917, and serves the
e n t i r e S t a t e o f Oregon, and t h e town of I l w a c o and f i v e c o u n t i e s i n the southwestern p a r t o f the S t a t e o f Washington.

The branch zone represents 14$ o f the

l a n d area o f t h e T w e l f t h D i s t r i c t and has about 11$ of i t s t o t a l p o p u l a t i o n .
Approximately 17$ o f a l l banks i n t h e d i s t r i c t are l o c a t e d i n t h i s area.
As o f December 31, 1936, t h e r e were 109 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and o f t h i s number 49, i n c l u d i n g 42 n a t i o n a l banks
and 7 S t a t e i n s t i t u t i o n s , were members o f t h e System.
member banks i n the zone were on the par l i s t .

A l l b u t 6 o f t h e 60 non-

The f o l l o w i n g f i g u r e s taken from

r e p o r t s o f c o n d i t i o n as o f t h e same date show t h e s i z e o f member bank f o o t i n g s
i n the branch zone as compared t o the T w e l f t h D i s t r i c t as a wholes

No. Member
Banks

Twelfth D i s t r i c t
P o r t l a n d Branch

322
49

Loans
and
Investments

$3,630,503
192,342

Capital
and
Total
Surplus
Deposits
(000 omitted)
$337,201
16,492

$4,483,284
257,117

There are t h i r t e e n branch zones i n the System having l a r g e r member bank
f o o t i n g s than t h e P o r t l a n d Branch; namely, P i t t s b u r g h , Los Angeles, D e t r o i t ,
C i n c i n n a t i , B u f f a l o , B a l t i m o r e , New Orleans, S e a t t l e , Oklahoma C i t y , Houston,
Denver, Omaha and J a c k s o n v i l l e .
The P o r t l a n d Branch renders s u b s t a n t i a l l y t h e same s e r v i c e t o member banks
i n i t s zone as i s a v a i l a b l e a t t h e Head O f f i c e , i n s o f a r as r e c e i p t s and d i s b u r s e 


291,

ments o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , noncash c o l l e c t i o n s ,
safekeeping o f s e c u r i t i e s and borrowings are concerned.

Reserve accounts o f

member banks i n the zone, as w e l l as o f nonmember c l e a r i n g banks and o t h e r
Federal Reserve banks, are maintained a t t h e Branch, which a l s o maintains a
memorandum general l e d g e r and a record o f c e r t a i n earnings and expenses.
t r o l accounts a r e , o f course, maintained a t t h e Head O f f i c e which i s
d a i l y t r a n s c r i p t o f e n t r i e s a f f e c t i n g such accounts.

Con-

sent-a

Immediate c r e d i t i s given

t o member banks f o r d i s c o u n t o f f e r i n g s received by the Branch, s u b j e c t t o f i n a l
approval o f the Head O f f i c e .

Schedules covering t r a n s a c t i o n s are forwarded t o

the Head O f f i c e , b u t t h e notes and c o l l a t e r a l , i f any, are r e t a i n e d a t the
Branch.

The Branch has no Bank Examination, Bank R e l a t i o n s , L e g a l , Research

or F i s c a l Agency departments.
As o f January 8 , 1937, member banks i n t h e branch zone had balances w i t h
the Reserve bank as f o l l o w s :
No. o f
Banks
Oregon:
Portland
Remainder o f S t a t e
Washington

2
42
J7
51

Reserve
Balances

Deferred
Balances

$20,684,700
3,915,500
831,900
$25.432,100

$1,439,600
52,200
16,300
$1.508.100

Capital
Stock

$357,000
128,500
22,100
$507.600

Bills
Discounted

-

The above t a b l e i n c l u d e s two banks which have been acquired by o t h e r member
banks t o be operated as branches but whose c a p i t a l stock h o l d i n g s i n the Reserve
bank had n o t y e t been surrendered.
P o r t l a n d i s 771 t r a i n m i l e s (23 h r s . and 30 mins.) from San F r a n c i s c o .
Consequently, the P o r t l a n d Branch does n o t enjoy o v e r n i g h t m a i l communication
w i t h the Head O f f i c e .

Other than P o r t l a n d , t h e r e are 44 member bank c i t i e s

i n the branch zone and of t h i s number only 5 can be reached by o v e r n i g h t m a i l
from San F r a n c i s c o , whereas approximately 40 are w i t h i n o v e r n i g h t m a i l from




222,

Portland,

I t i s c l e a r , t h e r e f o r e , t h a t discontinuance o f t h e P o r t l a n d Branch

would n o t only a f f e c t t h e c h a r a c t e r o f s o r v i c e rendered t o member banks i n
t h a t c i t y , which now enjoy an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h t h e Branch,
b u t t h a t i t would a l s o slow up t h e services performed f o r t h e m a j o r i t y o f member banks l o c a t e d i n o u t l y i n g sections of t h e zone.
Other than P o r t l a n d , the more populous c i t i e s i n t h e branch zone are
Salem, Oregon, 26,266; Eugene, Oregon, 18,901; Klamath F a l l s , Oregoi^ 16,095
and Vancouver, Washington, 15,766.
(c) Branch B u i l d i n g s
The P o r t l a n d Branch occupies rented q u a r t e r s i n the P o r t e r b u i l d i n g a t
S i x t h and Oak S t r e e t s under a l e a s e which e x p i r e s December 31, 1942.

Under

the terms o f t h e lease the Branch i s provided w i t h approximately 14,111 square
f e e t o f space a t an annual r e n t a l of $21,560.

Usable f l o o r space amounts t o

12,989 square f e e t and i s a l l occupied by the Branch except f o r a small area
f o r which t h e P o r t l a n d C l e a r i n g House A s s o c i a t i o n pays $240 per y e a r .
(d) Earnings - Branch Books
The Branch's earnings as r e f l e c t e d by i t s books f o r the years 1931 t o
1937, i n c l u s i v e , were as f o l l o w s :
Year

Earnings

1931
1932
1935
1934
1935
1936
1937

$44,200
98,800
24,300
1,400
100
2,300
600

These f i g u r e s are incomplete s i n c e , under the present accounting procedure,
the Branch receives no c r e d i t f o r income received by the Head O f f i c e on i n v e s t ments, a p o r t i o n o f which i s made p o s s i b l e by the Reserve bank stock investment



298,

and reserve balances o f banks i n the branch zone.

Income shown on the Branch's

books i s d e r i v e d c h i e f l y from rediscounts o f member banks.

Income from t h i s

source has d e c l i n e d s t e a d i l y i n recent y e a r s amounting t o $95,600 i n 1932 and
t o s l i g h t l y l e s s than $100 i n 1937.
(e) Branch Personnel
The r e p o r t o f examination o f the Federal Reserve Bank o f San F r a n c i s c o ,
made as o f January 8 , 1937, shows the f o l l o w i n g i n regard t o s a l a r i e s and
personnel a t the P o r t l a n d Branch 2
January 8 . 1937
Number
Amount
Officers
Employees

3
£5
68

$ 16,200
„ 1 0 5tgQQ
$121,800

A p r i l 11, 1956
Number Amount
3
M
TO

$ 16,200
q0g,8QQ
$125,000

Decrease
Number
Amount
£
£

ffStl£0Q
I>5,a00

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n the above f i g u r e s .
( f ) Branch Expense by Functions
The expenses o f the P o r t l a n d Branch by f u n c t i o n s f o r t h e years 1932 t o
1937, i n c l u s i v e , were as followss
1956
1955
1957
1952
1955
1954
General Overhead:
$ 14,974 i£ 16,527 $ 11,082 |I 8,245 $ 11,590 $ 11,422
Controllable
ft on e on t r o l l a b l e
7,784
10
4
6,019
8,116
22,059
P r o v i s i o n o f Space
20,116
16,898
22,515
20,589
20,180
P r o v i s i o n of Personnel
14,766
21,897
9,145
4,758
4,795
20,542
General Service
51,487
52,10?,
52,569
51j0o7.
29,152
26,411
10,551
8,747
9,746
Postage
9,515
9,564
8,665
1,474
1,597
1,821
1,622
Insurance
2,997
5,051
284
4
F a i l e d Banks
12,194
6,605
585
25,675
15,515
22,169
15,804
11,257
Loans, Rediscounts, e t c . 16,805
9,942
545
700
800
1,247
952
Securities
506
15,447
20,591
Currency & Coin
11,012
12,924
25,654
24,626
26,801
50,717
Check C o l l e c t i o n
27,005
50,107
25,722
29,572
9,790
9,805
Non-Cash C o l l e c t i o n
7,154
11,526
9,641
8,596
Accounting
27,240
26,520
26,708
25,749
24,809
19,526
F i s c a l Agency
22,988
25,696
58,595
55,544
55,299
12,051
2,788
2,825
Auditing
2,440
2,966
5,257
2,454
Bank R e l a t i o n s
558
490
249
592
605
551
65
Bank Examinations
66
56
75
54
44
551
S t a t i s t i c a l & Analytical
655
701
554
520
819
$204,09? $240,224 $221,185 $254,785 $254,855 $216,114
T o t a l Expense
Less - Reimbursable
21,756
F i s c a l Agency Expense
18,851
25.446
24,206
20,909
9.805
Net Expense
$194,294 $219,515 $202,554 $215,027 $211,587 $191,908



294,

There were twelve branches i n the System which operated a t a lower n e t cost
than the P o r t l a n d Branch i n 1937} namely, Spokane, N a s h v i l l e , E l Paso, Helena,
Birmingham, L i t t l e Rock, Memphis, San Antonio, J a c k s o n v i l l e , Houston, C h a r l o t t e
and New Orleans.
(g) Volume o f Operations a t P o r t l a n d Branch
The f o l l o w i n g i s a comparison of the volume of operations i n v a r i o u s d e p a r t ments o f t h e P o r t l a n d Branch and the Head O f f i c e d u r i n g t h e l a s t s i x months of
1956:
P o r t l a n d Branch

Head O f f i c e

Discount Department
Notes rediscounted
58
C o l l a t e r a l notes discounted
2
51
I n d u s t r i a l advances
2
Branches w i t h l a r g e r volume: B u f f a l o , B a l t i m o r e , New Orleans, Memphis, Denver,
Omaha, E l Paso, Houston, San A n t o n i o , S a l t Lake C i t y
and Spokane.
Safekeeping
Member bank s e c u r i t i e s 12-31-36
§447,000
$355,000
Branches w i t h l a r g e r volume: A l l branches except Los Angeles, S e a t t l e , Spokane
and C h a r l o t t e .
Currency & Coin
1. Number o f b i l l s r e c e i v e d and counted
5,147,000
25,977,000
Branches w i t h l a r g e r volumes A l l branches except L i t t l e Rock, Helena, Denver,
Oklahoma C i t y , Omaha, E l Paso, S a l t Lake C i t y and
Spokane.
Cost per one thousand u n i t s handled
66 cents
46 cents
Branches w i t h h i g h e r u n i t costs C i n c i n n a t i , Helena, Denver, E l Paso, S a l t Lake
C i t y and Spokane.
2. Number o f coins received and counted
3,381,000
39,378,000
Branches w i t h l a r g e r volumes A l l branches except C h a r l o t t e , J a c k s o n v i l l e , L i t t l e
Rock, Helena, E l Paso, S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
36 cents
16 cents
Branches w i t h h i g h e r u n i t costs Helena, E l Paso, S a l t Lake C i t y and Spokane.
Check C o l l e c t i o n
1 . Number o f c i t y checks ( c l e a r i n g s ) received
657,000
3,055,000
Branches w i t h l a r g e r volumes A l l branches except C h a r l o t t e , Birmingham, Jacksonv i l l e , L i t t l e Rock, Memphis, Helena, Oklahoma C i t y ,
E l Paso, San A n t o n i o , S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
$2.61
$1.78
Branches w i t h h i g h e r u n i t costs Helena, Los Angeles, S a l t Lake C i t y and S e a t t l e .




300,

P o r t l a n d Branch

Head O f f i c e

Check C o l l e c t i o n (Continued)
2. Number o f country checks (outgoing) received
2,614,000
3,259,000
Branches w i t h l a r g e r volume: A l l branches except Birmingham, J a c k s o n v i l l e ,
N a s h v i l l e , New Orleans, L i t t l e Rock, Memphis,
Helena, E l Paso, S e a t t l e and Spokane.
Cost per one thousand u n i t s handled
$3.36
$2.31
Branches w i t h higher u n i t c o s t : Los Angeles.
Non-cash C o l l e c t i o n s
1. Number of c i t y c o l l e c t i o n s handled
Branches w i t h l a r g e r volume: A l l branches except
Orleans, Helena, E l
Cost per u n i t handled
Branches w i t h higher u n i t c o s t : P i t t s b u r g h .

6,212
12,352
C h a r l o t t e , Birmingham, New
Paso and San Antonio.
39.8 cents
27.5 cents

2. Number of country c o l l e c t i o n s handled
11,020
43,331
Branches w i t h l a r g e r volume: B u f f a l o , B a l t i m o r e , C h a r l o t t e , D e t r o i t , Memphis,
Denver, Oklahoma C i t y , Omaha, Los Angeles, S a l t
Lake C i t y and Spokane.
Cost per u n i t handled
18 cents
6.3 cents
Branches w i t h a higher u n i t c o s t : None.
3. Number of coupons (except Government) and
country s e c u r i t y c o l l e c t i o n s handled
1,548
3,465
Branches w i t h l a r g e r volume: A l l branches except Birmingham, J a c k s o n v i l l e , Helena,
Oklahoma C i t y , E l Paso, S a l t Lake C i t y , S e a t t l e
and Spokane.
Cost per u n i t handled
24.8 cents
19.3 cents
Branches w i t h higher "unit c o s t : J a c k s o n v i l l e , E l Paso, Los Angeles and S a l t Lake
City.
A schedule showing the volume of operations of the P o r t l a n d Branch f o r
the years 1931 t o 1936, i n c l u s i v e , i s attached to t h i s memorandum,
(h) Survey of P o r t l a n d Branch by Board 1 s Examiners - 1933
During an examination of the Federal Reserve Bank of San Francisco, made
as of September 2, 1933, the Board's Examiners reviewed the operations of the
P o r t l a n d , S e a t t l e and Spokane Branches and reached the conclusion t h a t i t would
be possible t o consolidate the operation of such branches i n P o r t l a n d w i t h o u t
s e r i o u s l y a f f e c t i n g the character of the s e r v i c e rendered to member banks i n
the P a c i f i c Northwest, v / i t h the possible exception of those l o c a t e d i n the
c i t i e s of S e a t t l e and Spokane.

I t was i n d i c a t e d t h a t m a i l f a c i l i t i e s ,

both

f o r ordinary and emergency purposes, had improved s u b s t a n t i a l l y since the



301

branches were e s t a b l i s h e d and t h a t t h e s e r v i c e which could be rendered t o member banks throughout t h e P a c i f i c Northwest from P o r t l a n d was comparable t o t h a t
being rendered by t h e Spokane and S e a t t l e Branches.

I t was a l s o s t a t e d t h a t ,

a f t e r a l l o w i n g f o r some i n c r e a s e i n personnel and p h y s i c a l f a c i l i t i e s

at

P o r t l a n d , t h e work o f a l l t h r e e branches could be handled a t a c o n s i d e r a b l e
saving and t h a t , s i n c e a l l t h e branches occupied leased q u a r t e r s , t h e c o n s o l i d a t i o n could be e f f e c t e d w i t h o u t any l o s s on r e a l e s t a t e and b u i l d i n g s .

I t was

f u r t h e r i n d i c a t e d * however, t h a t t h e management o f t h e San Francisco Reserve
Bank, w h i l e agreeing t h a t t h e r e was no need f o r t h r e e branches i n t h e P a c i f i c
Northwest, b e l i e v e d i t would be inopportune t o d i s c o n t i n u e any branch a t t h a t
t i m e because o f t h e s e r v i c e s which t h e Reserve banks were p e r f o r m i n g f o r o t h e r
Government agencies.
( i ) Survey o f P o r t l a n d Branch made by t h e Federal Reserve Bank o f
San Francisco - 1956
The Federal Reserve Bank o f San F r a n c i s c o , as requested i n a l e t t e r from
t h e Board, dated March 25, 1956 (X-9552), made a comprehensive survey o f
f i v e branches.

its

A r e p o r t o f t h i s survey was submitted t o t h e Board, w i t h o u t a

d e f i n i t e recommendation as t o t h e discontinuance or c u r t a i l m e n t o f any branch.
I n t h e l e t t e r o f t r a n s m i t t a l , dated August 26, 1956, i t was s t a t e d t h e
D i r e c t o r s o f t h e San Francisco Reserve Bank, a f t e r a f u l l d i s c u s s i o n o f t h e
m a t t e r , f e l t t h a t b e f o r e any recommendation could be made i t would be necessaiy
f o r t h e Board o f Governors t o g i v e c o n s i d e r a t i o n t o t h e q u e s t i o n from a n a t i o n a l
v i e w p o i n t and e s t a b l i s h a d e f i n i t e p o l i c y i n regard t h e r e t o .
The survey contained a d e s c r i p t i o n of the t e r r i t o r i e s served and t h e
f u n c t i o n s performed by a l l o f t h e branches o f the San Francisco Reserve Bank,
as w e l l as s t a t i s t i c s and c h a r t s covering t h e i r operations f o r the years 1926
t o 1955, i n c l u s i v e .




297,

A iaemorandum r e l a t i v e t o c u r t a i l m e n t o f the Spokane Branch was attached
t o the above survey, and on January 17, 1957, on t h e recommendation o f t h e
Reserve Bank and w i t h the Board 1 s a p p r o v a l , the e n t i r e t e r r i t o r y

previously

served by the Spokane Branch, except the c i t y o f Spokane, was t r a n s f e r r e d t o
the S e a t t l e Branch.

A t t h e same time t h r e e c i t i e s i n southwestern Oregon,

f o r m e r l y served by t h e Head O f f i c e , were t r a n s f e r r e d t o t h e P o r t l a n d Branch.
These changes, p a r t i c u l a r l y t h a t w i t h r e s p e c t t o t h e Spokane Branch, have r e s u l t e d i n a s u b s t a n t i a l saving i n the cost o f o p e r a t i o n s .
The lease on t h e q u a r t e r s occupied by t h e Spokane Branch w i l l e x p i r e on
December 51, 1938.

I n January 1937, when t h e t e r r i t o r y o f t h a t Branch was r e -

duced i t was contemplated t h a t a new lease c o v e r i n g a reduced amount of space
a t a lower r e n t a l could be n e g o t i a t e d .

However, t h e management was unable t o

o b t a i n a s a t i s f a c t o r y lease and because o f t h i s s i t u a t i o n , t h e d i r e c t o r s o f t h e
San Francisco Reserve bank r e c e n t l y reviewed t h e operations o f t h e Spokane Branch
and recommended i t s e n t i r e discontinuance.

As a r e s u l t P r e s i d e n t Day addressed

a l e t t e r t o t h e Board of Governors on August 9 , 1938, a d v i s i n g o f the a c t i o n
taken by h i s d i r e c t o r s and r e q u e s t i n g approval o f the discontinuance o f the
Spokane Branch.

I t was i n d i c a t e d a p o r t i o n o f the t e r r i t o r y f o r m e r l y served

by the Spokane Branch, which was t r a n s f e r r e d t o t h e S e a t t l e Branch on January
17, 1937, would be r e a l l o c a t e d t o t h e P o r t l a n d Branch i f t h e Spokane Branch was
closed.




298,

PORTLAND BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled
Currency
Received
Bills
Date

Discounted

and
Counted

Non Cash

Co i n
Checks Handled

Received
and
Counted

1932
1933

2,781
It, 325
7*42

193^

k5

1935

-

1936

5,690,000
5,678,000
6,137,000
7,008,000
8,*479,000

2

9,400,000

7,306,000
7,183,000
6,831,000
5,3*49,000
5,7*45,000
6,999,000

Gov't

pi t y
Qountrv

1931

CpU+crtfon Items

Gov't
Checks

All

Fiscal Agency

Transact 19ps
Direct

Other

Transfer
of
Funds

Coupons

Other

1*45,812

3*4,887

2,00*4

11,889

1*48,775

32,1*45

907

10,555

1*45,206

61,801

3,505

7

8,560

1*46,078

55,026

12,8*40

5*4

6,331

166,000

39,000

28,999

3,577

6,791

125,000

36,000

2,63*4

1,730

6,000

Total

1,365,000
5,ty95,000

*419,000

7,279,000

*4, 187,000

1*13,000

5,797*000

3,212,000

537,000

*4,791,000

3,*426,000

1,017,000

5,*47l,000

U,061,000

63**,G00

5,703,000

14,857,000

69*4,000

6,831,000

1,197,000
1,0*42,000
1,028,000
1,080,000
1,280,000

Aaounts Handled
( i n thousands of d o l l a r s )
1931

27,700

3D,853

I,6\k

092,003

203,021

61,855

1,237,679

1,999

30,**85

2,650

-

696,951

1932

97,4*42

36#72*4

1,523

615,762

200,837

50,145 1

0 67,050

1,889

23,2*40

1,446

-

*495»CI0

1933

12,663

37,67*4

3,*467

529,082

177,996

68,212

776,090

1,660

26,867

2,605

7

393,000

1934

1,023

*40,5*45

1,230

600,017

236,392

97,088

933,497

1,792

42,479

*4,673

52

*429,57*4

1935

-

HO,866

1,302

727,360

320,537

94,257

1,1*42,162

1,809

30,278

12,063

1,271

*4*42,9C0

147,471

1,615

86*4,762

367,371

117,063

1,3*49,196

1,583

3*4,35*4

67*4

732

493,278

1936

*40




SALT LAKE CITY BRANCH - FEDERAL RESERVE BANK OF SAN FRANCISCO
(a) C i t y o f S a l t Lake C i t y :
S a l t Lake C i t y , w i t h a p o p u l a t i o n o f 140,267, i s t h e l a r g e s t c i t y i n the
S t a t e o f Utah and t h e f i f t y - n i n t h l a r g e s t c i t y i n the U n i t e d States-

It

is

l o c a t e d i n the n o r t h c e n t r a l p a r t o f the S t a t e and i s said t o serve a t r a d e
area extending 150 m i l e s n o r t h , 37 m i l e s south, 85 m i l e s east and 266 m i l e s t o
the west.

Approximately 200,000 people r e s i d e w i t h i n t h i s area.

Transportation

f a c i l i t i e s are provided by the Denver & Rio Grande Western, Union P a c i f i c and
Western P a c i f i c r a i l r o a d s , and by t h r e e i n t r a n s t a t e e l e c t r i c r a i l w a y s .

The

c i t y i s a l s o served by a number o f bus l i n e s and several a i r - l i n e s .
According t o t h e B i e n n i a l Census o f Manufactures S a l t Lake County i n 1935
had 273 manufacturing f i r m s which had an output valued a t $67,368,000 d u r i n g
that year.

The p r i n c i p a l i n d u s t r i e s were m i l l i n g , canning, o i l

refining,

mining and s m e l t i n g , l i v e s t o c k , general a g r i c u l t u r e and the manufacture o f
c l o t h i n g , m i l l i n e r y , clay products and powdered m i l k . The Census o f American
Business f o r 1935 l i s t s 437 wholesale and 2,129 r e t a i l establishments o p e r a t i n g
i n the same area which had sales aggregating $101,709,000 and $67,035,000,
r e s p e c t i v e l y , d u r i n g the y e a r .
Banking f a c i l i t i e s i n S a l t Lake C i t y are provided by t h r e e n a t i o n a l banks
and s i x S t a t e banks (3 members).

These i n s t i t u t i o n s had d e p o s i t s aggregating

$89,970,000, as o f December 31, 1936, and o f t h i s amount $73,528,000

was c a r r i e d

w i t h the s i x l o c a l member banks.
Debits t o i n d i v i d u a l accounts i n banks o f t h e c i t y aggregated $770,152,000
i n 1936; o r an average o f approximately $2,567,000 f o r each banking day.




300,

(b) Branch T e r r i t o r y and Functions:
The S a l t Lake C i t y Branch was e s t a b l i s h e d A p r i l 1 , 1918, and serves the
e n t i r e State o f Utah, t h i r t y - f o u r counties i n southern Idaho and f o u r counties
i n eastern Nevada.

This t e r r i t o r y represents 27 percent o f t h e l a n d area o f

the T w e l f t h D i s t r i c t and has approximately 9 percent o f i t s t o t a l p o p u l a t i o n .
Approximately 15 percent o f a l l banks i n the d i s t r i c t are l o c a t e d w i t h i n t h i s
area.
As o f December 31, 1936, t h e r e were 98 banks, e x c l u s i v e o f mutual savings
banks, i n the branch zone and o f t h i s number 56, i n c l u d i n g 29 n a t i o n a l and
27 S t a t e i n s t i t u t i o n s , were members of the F e d e r a l Reserve System.

A l l of

the 42 nonmember i n s t i t u t i o n s i n t h e branch zone were on the par l i s t .

The

f o l l o w i n g f i g u r e s taken from r e p o r t s o f c o n d i t i o n as o f the same date show
the s i z e o f member bank f o o t i n g s i n the branch zone as compared t o t h e T w e l f t h
D i s t r i c t as a wholes

No. Member
Banks

Twelfth D i s t r i c t
Branch Zone

322
56

Loans
and
Investments

Capital
and
Surplus
(000 omitted)

$3,630,503
128,803

$337,201
15,228

Total
Deposits

$4,483,284
188^,229

There are f i f t e e n branch zones i n the System having l a r g e r member bank
f o o t i n g s than the S a l t Lake C i t y zone; namely, P i t t s b u r g h , Los Angeles, D e t r o i t ,
C i n c i n n a t i , B u f f a l o , B a l t i m o r e , New Orleans, S e a t t l e , Oklahoma C i t y , .Houston,
Denver, Omaha, J a c k s o n v i l l e , P o r t l a n d and L o u i s v i l l e .
The S a l t Lake C i t y Branch renders s u b s t a n t i a l l y the same s e r v i c e t o member
banks i n i t s zone as i s a v a i l a b l e a t t h e Head O f f i c e , i n s o f a r as r e c e i p t s and
disbursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g s , non-cash
c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and borrowings are concerned.




Reserve

accounts o f member banks i n t h e zone, as w e l l as o f nonmember c l e a r i n g banks
and o t h e r Federal Reserve banks, are maintained a t the Branch, which a l s o maint a i n s a memorandum general ledger and a record o f c e r t a i n earnings and expenses.
C o n t r o l accounts a r e , o f course, maintained a t t h e Head O f f i c e which i s sent
a d a i l y t r a n s c r i p t o f e n t r i e s a f f e c t i n g such accounts.

Immediate c r e d i t

is

given t o member banks f o r d i s c o u n t o f f e r i n g s r e c e i v e d by the Branch, s u b j e c t
t o f i n a l approval o f the Head O f f i c e .

Schedules covering t r a n s a c t i o n s are

forwarded t o t h e Head O f f i c e , b u t t h e notes and c o l l a t e r a l , i f any, are r e t a i n e d
a t t h e Branch.

The Branch has no Bank Examination, Bank R e l a t i o n s , L e g a l ,

Research or F i s c a l Agency departments.
As o f January 8 , 1957, member banks i n t h e branch zone had balances w i t h
t h e Reserve bank as f o l l o w s :
No. o f
Banks

State
Idaho
Nevada
U t a h - S a l t Lake C i t y
Remainder o f State

22
2
6
26
56

Reserve
Balances
$ 6,755,500
202,500
12,155,500
5.528.900
$24.642.200

Deferred
Balances

Capital
Stock

Bills
Discounted

579,400
5,162,000
420.500
$4.161,900

#117,550
5,950
196,950
150.600
$450,850

-

$

S a l t Lake C i t y i s 785 t r a i n m i l e s (22 h r s . and 47 mins.) from San F r a n c i s c o .
There are 42 member bank p o i n t s i n the branch zone and an examination o f

train

schedules i n d i c a t e s t h a t none o f these p o i n t s i s w i t h i n o v e r n i g h t m a i l time of
San F r a n c i s c o , whereas a l l but t h r e e o f such p o i n t s appear t o be w i t h i n o v e r n i g h t m a i l o f S a l t Lake C i t y .

I t i s apparent, t h e r e f o r e , t h a t discontinuance

o f t h e S a l t Lake O i t y Branch would m a t e r i a l l y c u r t a i l t h e e f f i c i e n c y o f the
s e r v i c e rendered t o member banks i n S a l t Lake C i t y and throughout the branch zone.




t j 8 x«ur

Other than S a l t Lake C i t y , the more populous c i t i e s i n the branch zone are
Ogden, Utah* 40,272; B o i s e , Idaho, 21,544} P o c a t e l l o , Idaho, 16,471; and Provo,
Utah, 14,766.

One o r more member banks are l o c a t e d i n each o f these c i t i e s .

(c) Branch B u i l d i n g :
The S a l t Lake C i t y Branch has occupied i t s present q u a r t e r s a t South Temple
and East S t a t e S t r e e t since February, 1927.

The f o l l o w i n g f i g u r e s show the

o r i g i n a l cost and book v a l u e as o f January 8 , 1957, o f t h e branch premises:
Book Value
1-8-57

Cost
Land
Building
V a u l t and v a u l t equipment
Fixed machinery and equipment

$114,075
289,772)
51,677)
455,524
84,814
$540.558

$100,000
256,149
356,149
$556.149

(d) Earnings - Branch Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r the y e a r s 1951 t o
1937, i n c l u s i v e , were as f o l l o w s :

Year

Earnings

1931
1932
1935
1954
1955
1936

$ 50,000
155,600
28,400
1,200
400
2,700

1937

1,400

These f i g u r e s are incomplete s i n c e , under the present accounting procedure,
the Branch receives no c r e d i t f o r income received by t h e Head O f f i c e on i n v e s t ments, a p o r t i o n o f which i s made p o s s i b l e by t h e Reserve bank s t o c k investment
and reserve balances o f banks i n t h e branch zone.
c

Income shown on the Branch

books i s d e r i v e d c h i e f l y from r e d i s c o u n t s o f member banks, reserve p e n a l t i e s
and r e n t a l of banking house space.

Income from the f i r s t mentioned source amounted

t o $151,000 i n 1932 and t o o n l y $1,100 i n 1937.



303,

(e) Branch Personnels
The r e p o r t of examination o f the Federal Reserve Bank o f San F r a n c i s c o ,
made as of January 8 , 1937, shows t h e f o l l o w i n g i n regard t o s a l a r i e s and p e r sonnel a t the S a l t Lake C i t y Branch t
January 8 , 1957
Number
Amount
Officers
Employees

5
76
79

I 15,000
127,600
$142,600

A p r i l 11. 1956
Number
Amount
5
78
81

Decrease
Number
Amount

$ 200

$ 15,200
151.800
$147.000

2
2

4.200
$4.400
mi.. a. >n i •

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are n o t
i n c l u d e d i n t h e above f i g u r e s .
( f ) Branch Expense by F u n c t i o n s :
The expenses o f the S a l t Lake C i t y Branch by f u n c t i o n s f o r the years 1952
t o 1937, i n c l u s i v e , were as f o l l o w s s
1952
General Overhead;
Controllable
$ 12,520
5,716
Noncontrollable
40,574
P r o v i s i o n o f Space
P r o v i s i o n o f Personnel
4,051
General Service
59,544
9,489
Postage
Insurance
4,572
F a i l e d Banks
28,914
25,957
Loans,rediscounts,etc.
1,114
Securities
15,546
Currency & Coin
Check C o l l e c t i o n
26,609
Non-Cash C o l l e c t i o n
9,855
Accounting
24,259
11,607
F i s c a l AgencyAuditing
1,759
Bank R e l a t i o n s
184
Bank Examinations
15
Statistical & Analytical
570
T o t a l Expense
$257,795
Less - Reimbursable
F i s c a l Agency Expense
10,219
Net Expense
$247,576

1955

1954

1955

1956

1957

ifc 15,278 $& 10,214 i* 10,197 i\ 10,290 it 11,125
8
7,002
6,515
47,821
59,896
57,618
58,914
56,164
24,181
4,121
4,220
15,792
22,675
46,279
42,468
41,165
45,818
45,469
11,719
15,218
9,805
10,064
9,751
2,178
1,697
2,245
1,625
5,962
29
1,441
22,954
6,841
959
12,500
6,291
8,525
1,614
1,716
984
1,196
1,152
1,011
12,427
21,840
22,616
12,696
24,250
52,859
57,845
29,515
24,841
52,140
8,881
15,556
12,457
15,519
11,675
50,069
23,424
25,298
27,009
28,145
28,579
25,621
15,505
29,591
22,972
2,898
2,598
2,771
1,947
2,197
525
681
407
569
551
10
64
15
61
35
586
966
1,040
746
851
$257,265 $247,235 $267,261 $258,217 $244,207
21,177
11,187
12,657
21,423
17,406
$236,088 $256.048 $254,624 $256,794 $226,801

There were s i x branches i n the System which operated a t . a h i g h e r n e t cost
than the S a l t Lake C i t y Branch i n 1957j namely, P i t t s b u r g h , Los Angeles, B a l t i m o r e ,
C i n c i n n a t i , D e t r o i t and B u f f a l o .

A l l of such branches, however, handled a l a r g e r

volume o f work,



304,

(g) Volume o f Operations a t S a l t Lake C i t y Branchs
The f o l l o w i n g i s a comparison o f the volume o f operations i n v a r i o u s departments o f t h e S a l t Lake C i t y Branch and the Head O f f i c e d u r i n g t h e l a s t

six

months o f 1956:
S a l t Lake C i t y Branch

Head O f f i c e

Discount Departments
Notes rediscounted
38
C o l l a t e r a l notes discounted
15
31
I n d u s t r i a l advances
2
Branches w i t h l a r g e r volumes B u f f a l o , B a l t i m o r e , Denver, Omaha, E l Paso and
San Antonio.
Safekeeping:
Member bank s e c u r i t i e s 12-31-56
$2,591,000
$555,000
Branches w i t h l a r g e r volumes B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
J a c k s o n v i l l e , New Orleans, D e t r o i t , L i t t l e Rock,
L o u i s v i l l e , Denver, Oklahoma C i t y , Omaha, Houston
and San Antonio.
Currency & Coins
1 . Number o f b i l l s r e c e i v e d and counted
2,760,000
25,977,000
Branches w i t h l a r g e r volumes A l l branches except Helena, E l Paso and Spokane.
Cost per one thousand u n i t s handled
94 cents
46 cents
Branches w i t h h i g h e r u n i t c o s t : Helena and Spokane.
1,182,000
59,578,000
2. Number o f c o i n s r e c e i v e d and counted
Branches w i t h l a r g e r volumes A l l branches except Helena, E l Paso and
Spokane.
Cost per one thousand u n i t s handled
85 cents
16 cents
Branches w i t h h i g h e r u n i t costs Helena, E l Paso and Spokane•
Check C o l l e c t i o n s
1 . Number o f c i t y checks ( c l e a r i n g s ) r e c e i v e d
470,000
5,055,000
Branches w i t h l a r g e r volumes A l l branches except L i t t l e Rock, Helena, E l
Paso and Spokane.
Cost per one thousand u n i t s handled
$5.15
$1.78
Branches w i t h h i g h e r u n i t costs Helena, Los Angeles and S e a t t l e .
2. Number o f country checks (outgoing) received
5,416,000
5,259,000
Branches w i t h l a r g e r volumes B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
C h a r l o t t e , D e t r o i t , L o u i s v i l l e , Denver, Oklahoma
C i t y , Omaha and Los Angeles.
Cost per one thousand u n i t s handled
$2.88
$2.51
Branches w i t h h i g h e r u n i t costs B u f f a l o , Los Angeles, P o r t l a n d and S e a t t l e .




305,

S a l t Lake C i t y Branch
Head O f f i c e
Non-cash C o l l e c t i o n s s
1. Number o f c i t y c o l l e c t i o n s handled
12,425
12,352
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , B a l t i m o r e , D e t r o i t , L i t t l e
Rock, Memphis, Denver, Oklahoma C i t y , Omaha,
Houston and Los Angeles.
Cost per u n i t handled
1 2 . 1 cents
27.5 cents
Branches w i t h h i g h e r u n i t c o s t : A l l branches except J a c k s o n v i l l e , N a s h v i l l e ,
L i t t l e Rock, Memphis, Oklahoma C i t y , Omaha,
E l Paso and Houston.
2. Number o f country c o l l e c t i o n s handled
Branches w i t h l a r g e r volumes None.
Cost per u n i t handled
Branches w i t h h i g h e r u n i t c o s t : A l l branches.

79,630

43,331

4.7 cents

6 . 3 cents

3. Number o f coupons (except Government)
and c o u n t r y s e c u r i t y c o l l e c t i o n s handled
608
3,465
Branches w i t h l a r g e r volume: A l l branches except E l Paso and Spokane.
Cost per u n i t handled
25.6 cents
19.3 cents
Branches w i t h h i g h e r u n i t c o s t : J a c k s o n v i l l e , E l Paso and Los Angeles.
A schedule showing t h e volume o f operations of t h e S a l t Lake C i t y Branch
f o r the years 1931 t o 1936, i n c l u s i v e , i s attached t o t h i s memorandum.
(h) Survey o f S a l t Lake C i t y Branch by Board 1 s Examiners - 1933
During an examination of the Federal Reserve Bank of San F r a n c i s c o ,
made as o f September 2, 1933, the Board's examiners reviewed the o p e r a t i o n s
o f t h e S a l t Lake C i t y Branch and reached the conclusion t h a t i t s

continuance

was j u s t i f i e d i n view o f S a l t Lake C i t y ' s importance i n the i n t e r - m o u n t a i n
country and i t s d i s t a n c e from the Head O f f i c e a t San F r a n c i s c o .
( i ) Survey o f S a l t Lake C i t y Branch by Federal Reserve Bank o f
San Francisco - 1936.
I n accordance w i t h t h e request made by the Board i n i t s l e t t e r of March 25,
1936 (X-9532) the Federal Reserve Bank o f San Francisco made a comprehensive
survey o f i t s f i v e branches.

A r e p o r t o f t h i s survey was submitted t o the

Board, w i t h o u t a d e f i n i t e recommendation as t o the discontinuance o f any
branch.

I n the l e t t e r o f t r a n s m i t t a l , dated August 26, 1936, i t was s t a t e d




s o a

t h e D i r e c t o r s o f t h e San F r a n c i s c o Reserve Bank, a f t e r a f u l l d i s c u s s i o n o f
t h o m a t t e r , f e l t t h a t before any recommendation could be made i t would be
necessary f o r the Board o f Governors t o give c o n s i d e r a t i o n t o the q u e s t i o n
from a n a t i o n a l viewpoint and e s t a b l i s h some d e f i n i t e p o l i c y i n r e g a r d t h e r e t o ,
Tho survey contained a d e s c r i p t i o n o f the t e r r i t o r i e s served and f u n c t i o n s
performed by a l l t h e branches o f t h e San Francisco Reserve Bank, as w e l l as
s t a t i s t i c s and c h a r t s covering t h e i r operations f o r the years 1926 t o 1935,
inclusive.




soy

SALT LAKE CITY BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled

Bi Ms
Qa1;e

Oi scounted

Currency
Received
and

Co i n
Received
and

Counted

Canted

Non Cash
Checks Handled

Collection I tegs
Ai 1
Gov't

Gov't
Ci tv

SmttY

Checks

Other

FJ seaI Agency

Transfer

Transactions

of
Funds

I&iat

Coupons

6,555,000

61,325

90,261*

626

-

16,717

-

13,982

•

12,897

Direct

Qther

1931

5,176

3,813,000

3,337,000

677,000

5,588,000

1932

7,205

3,819,000

2,997,000

571,000

3,865,000

296,000

k,732,000

69,1*89

11*0,827

1*78

1933

1,318

3,003,000

2,1*01,000

65**, 000

3,552,000

1*77,000

**,683,000

65,661

21*3,212

2,171*

\93k

52

3,91*6,000

3,0^,000

769,000

1*,I31*,000

1,038,000

5,9** 1,000

91*,619

21*6,732

3,625

2

f 1,198

1935

17

k,586,000

3,07U,000

818,000

I*, 796,000

609,000

6,223,000

137,000

198,000

7,389

*,251*

9,71*8

1936

13

5,062,000

3,1*1*9,000

938,000

6,256,000

553,000

7,7^*7,000

112,000

173,000

1,010

651

9,000

290,000

Amounts Handled
( i n thousands of dollars)
193!

W,9I8

31,21*8

1,231

1*00,912

303,662

1*1,290

71*5,861*

758

32,623

731*

-

1*95,515

1932

260,1*03

3k,Q€M

1,030

300,199

2I6,7M*

39,1*89

556,1*32

853

21*, 279

1*1*7

-

31*2,557

1933

20,**I5

30,161*

1,568

295,918

235,663

81*,1*18

615,999

875

38,81*1*

1,899

-

359,51*1*

193**

7**2

26,907

1,789

362,890

297,232

115,687

775,809

1,290

1*7,875

2,000

1

336,1*93

1935

288

29,250

1,99*4

1*20,072

351,667

106,73^*

878,U73

1,326

1*5,021

3,01*2

335

360,357

1936

230

30,015

930

507,15!

1*96,1*36

95,678

1,099,265

1,3*0

1*3,709

215

11*8

31*8,638




SEATTLE BRANCH - FEDERAL RESERVE BANK OF SAN MtANCISCO
( a ) C i t y of Seattle;
S e a t t l e , w i t h a p o p u l a t i o n o f 565,583, i s the t w e n t i e t h l a r g e s t c i t y i n
the United States and the l a r g e s t c i t y i n the State o f Washington*

It

is

l o c a t e d i n the west c e n t r a l p a r t o f the State on Puget Sound and i s s a i d t o
serve a trade area having a r a d i u s o f from 25 to 30 m i l e s i n which c.bout
513,000 people r e s i d e .

T r a n s p o r t a t i o n f a c i l i t i e s are f u r n i s h e d by the Chicago-

Milwaukee & S t . Paul, Great Northern, Union P a c i f i c , Northern P a c i f i c , and
P a c i f i c Coast r a i l r o a d s and fcy various bus l i n e s and a i r l i n e s .

A l a r g e number

of steamship l i n e s also p l y between S e a t t l e and the p r i n c i p a l P a c i f i c coast
and world p o r t s .
The major i n d u s t r i e s o f the c i t y are canning, lumbering, t e x t i l e s ,

paper,

ship b u i l d i n g and the manufacture of a i r p l a n e and automobile bodies, ammonia
and chemicals, f u r n i t u r e , i r o n and s t e e l a r t i c l e s , r e f r i g e r a t o r s , rope and
cordage, t o o l s and n a u t i c a l supplies.

According t o the B i e n n i a l Census o f

Manufactures f o r 1955, t h e r e were 1,064 manufacturing f i r m s operating i n
King County, i n which S e a t t l e i s s i t u a t e d , which had an output valued a t
$131,200,000 d u r i n g t h a t y e a r .

The Census o f American Business f o r 1935 l i s t s

1,346 wholesale and 7,855 r e t a i l establishments o p e r a t i n g i n the same area,
which enjoyed sales aggregating $355,559,000 and $184,408,000, r e s p e c t i v e l y ,
d u r i n g the year.
Banking f a c i l i t i e s i n S e a t t l e are f u r n i s h e d by f o u r S t a t e banks (two
members), two mutual saving banks, f o u r n a t i o n a l banks, two branches o f
f o r e i g n banks and one branch o f a n a t i o n a l bank having i t s head o f f i c e i n San
Francisco, which also operates branches i n P o r t l a n d , Oregon, and Tacoma,
Washington.




The i n s t i t u t i o n s having t h e i r head o f f i c e s i n S e a t t l e had deposits

309,

aggregating $526,581,000, as o f December 51, 1936, and o f t h i s amount
$262,252,000 was c a r r i e d by the s i x l o c a l member banks.

Three o f the l a r g e r

member banks were o p e r a t i n g an aggregate o f 31 branches; 15 w i t h i n the c i t y
and 18 elsewhere i n the S t a t e o f Washington.

One o f the s m a l l e r l o c a l member

banks was a u t h o r i z e d t o c a r r y country bank r e s e r v e s .
Debits t o i n d i v i d u a l accounts i n banks o f the c i t y aggregated
$2,515,849,000 f o r the year 1956, or an average o f approximately $7,719,000
f o r each banking day.
(b) Branch T e r r i t o r y and Functions:
The S e a t t l e Branch was e s t a b l i s h e d on September 19, 1917.

The branch

t e r r i t o r y , which was r e v i s e d as o f January 18, 1957, i n c l u d e s ten counties i n
Northern Idaho and the e n t i r e State o f Washington, except f i v e counties i n the
extreme southern p a r t , the town o f Ilwaco and the c i t y o f Spokane.

This

t e r r i t o r y represents approximately 1556 o f the l a n d area o f the T w e l f t h D i s t r i c t
and has approximately 18$ o f i t s t o t a l p o p u l a t i o n .

Approximately 28% o f

all

banks i n the d i s t r i c t are w i t h i n t h i s area.
As o f December 51, 1936, there were 182 banks, e x c l u s i v e o f mutual savings
banks, i n the t e r r i t o r y now assigned t o the Branch and o f t h i s number 81,
i n c l u d i n g 55 n a t i o n a l and 26 S t a t e i n s t i t u t i o n s , were members o f the System.
74 o f the 101 nonmember banks i n the zone were on the par l i s t .

The f o l l o w i n g

f i g u r e s taken from r e p o r t s o f c o n d i t i o n as o f the same date show t h e s i z e o f
member bank f o o t i n g s o f banks i n the t e r r i t o r y now assigned t o the Branch as
compared to those o f the T w e l f t h D i s t r i c t as a wholes




310,

No* Member
Banks
Twelfth D i s t r i c t
Branch Zone

322
81

Loans
and
Investments
$3,630,503
282,138

Capital
and
Surplus
(000 omitted)
$337,201
31,148

Total
Deposits
$4,483,284
376,225

There were only seven branch zones i n the e n t i r e System having l a r g e r
member bank f o o t i n g s than the S e a t t l e Zone; namely, P i t t s b u r g h , Los Angeles,
D e t r o i t , C i n c i n n a t i , B u f f a l o , Baltimore and New Orleans.
The S e a t t l e Branch r e n d e r s s u b s t a n t i a l l y the same s e r v i c e t o member banks
i n i t s t e r r i t o r y as i s a v a i l a b l e a t the Head O f f i c e , i n s o f a r as r e c e i p t s and
disbursements o f currency and c o i n , w i r e t r a n s f e r s , check c l e a r i n g and
c o l l e c t i o n , non-cash c o l l e c t i o n s , safekeeping o f s e c u r i t i e s and loans t o member
banks are concerned.

Reserve accounts o f member banks i n the branch zone, as

w e l l as accounts o f nonmember c l e a r i n g banks and o t h e r F e d e r a l Reserve banks,
are maintained a t the Branch, which a l s o m a i n t a i n s a memorandum general l e d g e r
and a r e c o r d o f c e r t a i n earnings and expenses.

Transactions are c l e a r e d d a i l y

through c o n t r o l accounts maintained a t the Head O f f i c e .

Member bank borrowings

are passed upon a t the Branch and immediate c r e d i t i s g i v e n , s u b j e c t t o f i n a l
approval o f the Head O f f i c e .

Schedules c o v e r i n g such t r a n s a c t i o n s are

forwarded to the Head O f f i c e , but the notes and c o l l a t e r a l , i f any, are
r e t a i n e d by the Branch.

The Branch has no Bank Examination, F a i l e d Banks,

Research, L e g a l or F i s c a l Agency departments.
As o f Januaiy 8 , 1937, member banks i n the t e r r i t o r y now assigned t o the
Branch had t h e f o l l o w i n g Reserve Bank balances:
No. o f
Banks
C i t y of Seattle
Remainder o f Zone




6
75
81

Reserve
Balances

Deferred
Balances

$24,973,870
11.995.752
S56.969*622

$2,234,137
574.111
&2.808.248

Capital
- Stock

Bills
Discounted

$573,650
566.600
$940,250

311,

S e a t t l e i s 771 m i l e s (26 h r s . and 52 mins.) from San Francisco and as a
consequence the S e a t t l e Branch does n o t enjoy o v e r - n i g h t communication by m a i l
w i t h t h e Head O f f i c e .
the branch zone.

Other than S e a t t l e t h e r e are 61 member bank p o i n t s i n

An examination o f m a i l schedules i n d i c a t e s t h a t none o f these

p o i n t s are w i t h i n o v e r - n i g h t m a i l time o f San F r a n c i s c o , whereas a l l b u t 10 o f
such p o i n t s are w i t h i n o v e r n i g h t m a i l time o f the Branch.

I t i s clear,

there-

f o r e , t h a t discontinuance o f the S e a t t l e Branch would n o t o n l y c u r t a i l the
c h a r a c t e r o f s e r v i c e rendered to banks i n the c i t y o f S e a t t l e , which now enjoy
an o v e r - t h e - c o u n t e r r e l a t i o n s h i p w i t h the Branch, but t h a t i t would a l s o slow
up the s e r v i c e given t o banks i n o u t l y i n g sections o f t h e zone.

There a r e , o f

course, a number o f member bank p o i n t s i n the S e a t t l e zone t h a t are a l s o w i t h i n o v e r - n i g h t m a i l time o f the P o r t l a n d Branch.
Other than S e a t t l e , the more populous c i t i e s i n the branch zone are
Tacoma, 106,817, Bellingham, 50,823, E v e r e t t , 30,567 and Yakima 22,101.

All

o f these c i t i e s have one or more member banks.
(c) Branch B u i l d i n g s
The S e a t t l e Branch occupies q u a r t e r s a t Second Avenue and Spring S t r e e t
a t on annual r e n t a l o f $17,400 under a l e a s e which e x p i r e s on February 28,
1941.

D u r i n g the year 1956, the Branch r e c e i v e d approximately §800 from

government agencies f o r s u b l e t space.
(d) Earnings - Branch Books:
The Branch's earnings as r e f l e c t e d by i t s books f o r the years 1931 t o
1937, i n c l u s i v e , were as f o l l o w s :




Years
1931
1932
1933
1934
1935
1936
1937

Earnings
#30,500
87,000
27,200
700
200

1,100
500

These f i g u r e s are incomplete s i n c e , under present accounting p r o c e d u r e ,
the Branch r e c e i v e s no c r e d i t f o r income on Head O f f i c e investments, a p o r t i o n
o f which i s made p o s s i b l e by the Federal Reserve bank stock investment and
r e s e r v e balances o f banks i n the branch zone.

Income shown on the Branch 1 s

books i s d e r i v e d c h i e f l y from r e d i s c o u n t s o f member banks, r e s e r v e p e n a l t i e s
and r e n t a l o f banking room space to o t h e r government agencies.

The above

f i g u r e s are i n t e r e s t i n g i n t h a t t h e y r e f l e c t the d e c l i n e i n income from the
f i r s t mentioned source, which amounted t o $85,500 i n 1932 as compared t o o n l y
§500 i n 1937.
(e) Branch Personnel:
The r e p o r t o f examination o f the Federal Reserve Bank o f San F r a n c i s c o ,
as o f January 8 , 1937, shows the f o l l o w i n g i n regard t o s a l a r i e s and personnel
a t the S e a t t l e Branch.
January 8 . 1957
Number
Amount
Officers
Employees

3
56
59

$15,400
90,100
8105,500

A p r i l 11, 1956
Number Amount
5
57
60

$15,400
91,600
$107,000

Decrease
Number
Amount

1
1

$1.500
£1,500

O f f i c e r s and employees whose s a l a r i e s and wages are reimbursable are
n o t i n c l u d e d i n the above f i g u r e s .
During the examination one o f f i c e r and eleven employees, w i t h annual
s a l a r i e s o f $24,400 a f t e r one r e d u c t i o n o f $480, were t r a n s f e r r e d from the
Spokane Branch to the S e a t t l e Branch, and one o f f i c e r w i t h an annual s a l a r y
o f §3,900 was t r a n s f e r r e d from the S e a t t l e t o the Los Angeles Branch, b r i n g i n g
the t o t a l p a y r o l l to

$126,000

per annum.

( f ) Branch Expense by F u n c t i o n s :
The expenses o f the S e a t t l e Branch by f u n c t i o n s f o r the years 1952 t o
1957 i n c l u s i v e , were as f o l l o w s :




SIS

1932

1933

1954

General Overhead:
Controllable
0 9,047 0 11,381
0 8,492
Non C o n t r o l l a b l e
6,985
8,804
9,421
P r o v i s i o n o f Space
25,576
23,151
23,108
P r o v i s i o n o f Personnel
4,047
3,686
11,506
General Service
25,200
26,899
27,186
5,700
7,130
Postage
7,037
1,269
Insurance
2,276
2,6a
F a i l e d Banks
1,111
2,546
2,447
5,457
L o a n s , r e d i s c o u n t s , e t c . 5,715
6,257
905
800
Securities
925
Currency & Coin
17,859
18,474
17,432
Check C o l l e c t i o n
23,526
25,392
23,095
Non-cash C o l l e c t i o n
6,485
7,539
8,072
Accounting
22,686
21,058
21,728
F i s c a l Agency
12,212
16,616
.13,163
Auditing
2,979
2,779
2,042
Bank R e l a t i o n s
100
529
405
—
Bank Examinations
73
51
S t a t i s t i c a l & Analytical
754
779
760
T o t a l Expense
$171,201 0183,595 0104,673
Less - Reimbursable
F i s c a l Agency Exp.
9.016
15,650
10,080
Net Expense
&L62.105 $169,945 §175,793

1956

1955

$

§

9,562

1937

$ 10,402

7,688
7
21,211
14,882
29,546
7,302
1,167
771
11,199
887
24,979
22,147
8,203
21,035
19,927
3,027
157
24
980
§195,139

19,365
17,147
28,551
7,605
1,095
164
5,514
895
28,359
25,527
8,231
21,576
17,670
2,805
254
20
1,126
0193,244

4,135
929
35,221
31,141
8,627
25,180
10,805
3,247
529
22
1,291
$288,750

9.658
£105.401

10,398
$182,846

11,065
§207,687

—

—

27,669
10,419
29,610
12,042
1,483
—

There were s i x t e e n branches i n the System which operated a t l e s s expense
than the S e a t t l e Branch i n 1957.
(g) Volume o f Operations a t S e a t t l e Branch;
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s i n v a r i o u s
departments o f the S e a t t l e Branch and the Head O f f i c e d u r i n g the l a s t

six

months o f 1936:
S e a t t l e Branch
Safekeeping:
Member bank s e c u r i t i e s 12-31-36
$295,000
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e .

Head O f f i c e

$553,000

Currency & Coin:
1 . Number o f b i l l s r e c e i v e d and counted
7,594,000
25,977,000
Branches w i t h l a r g e r volume: B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
C h a r l o t t e , J a c k s o n v i l l e , New O r l e a n s , D e t r o i t ,
L o u i s v i l l e , Memphis and Los Angeles.
Cost per one thousand u n i t s handled
56 cents
46 cents
Branches w i t h h i g h e r u n i t c o s t : Helena and Spokane.




s t

S e a t t l e Branch

Head O f f i c e

Currency & Coin
2. Number o f coins received and counted
6,550,000
59,578,000
Branches w i t h l a r g e r volumes B u f f a l o , C i n c i n n a t i , P i t t s b u r g h , B a l t i m o r e ,
New Orleans, D e t r o i t , L o u i s v i l l e , Houston and
Los Angeles.
Cost per one thousand u n i t s handled
29 cents
16 cents
branches w i t h higher u n i t c o s t : Helena, E l Paso, P o r t l a n d , S a l t Lake C i t y
and Spokane.
Check Collections
1. Number o f c i t y checks ( c l e a r i n g s ) received
669,000
3,055,000
Branches w i t h l a r g e r volume: A l l branches except C h a r l o t t e , Birmingham,
P o r t l a n d , J a c k s o n v i l l e , L i t t l e Rock, Helena, Oklahoma C i t y ,
M e m p h i s * E l Paso, San Antonio, S a l t Lake C i t y and Spokane.
Cost per one thousand u n i t s handled
$5.41
$1.78
Branches w i t h higher u n i t costs Helena and Los Angeles.
2. Number o f country checks (outgoing) received
1,661,000
3,259,000
Branches w i t h l a r g e r volumes A l l branches except L i t t l e Rock, Memphis and
E l Paso.
Cost per one thousand u n i t s handled
05*55
$2.51
Branches w i t h higher u n i t costs Los Angeles and P o r t l a n d .
Non-cash C o l l e c t i o n s
1 . Number o f c i t y c o l l e c t i o n s handled
9,991
12,552
Branches w i t h l a r g e r volumes B u f f a l o , C i n c i n n a t i , B a l t i m o r e , J a c k s o n v i l l e ,
D e t r o i t , L i t t l e Rock, Memphis, Denver, Oklahoma
C i t y , Omaha, Houston, Los Angeles and S a l t Lake
City.
Cost per u n i t handled
2 2 . 1 cents
27.5 cents
Branches w i t h higher u n i t c o s t : C i n c i n n a t i , P i t t s b u r g h , Los Angeles and
Portland.
2. Number o f country c o l l e c t i o n s handled
10,246
45,531
Branches w i t h l a r g e r volumes B u f f a l o , Baltimore, C h a r l o t t e , J a c k s o n v i l l e ,
D e t r o i t , Memphis, Denver, Oklahoma C i t y , Omaha,
Los Angeles, P o r t l a n d , S a l t Lake C i t y and Spokane.
Cost per u n i t handled
14.5 cents
6.5 cents
Branches w i t h higher u n i t c o s t : B u f f a l o , Birmingham, N a s h v i l l e , Los Angeles
and P o r t l a n d .
5. Number of coupons (except Government) and'
country s e c u r i t y c o l l e c t i o n s handled
773
5,465
Branches w i t h l a r g e r volume: A l l branches except Helena, E l Paso, S a l t Lake
C i t y and Spokane.
Cost per u n i t handled
4 cents
19.3 cents
Branches w i t h higher u n i t costs A l l Branches except C i n c i n n a t i and
Pittsburgh.




315

A schedule showing the volume o f o p e r a t i o n s o f the S e a t t l e Branch f o r
t h e years 1951 t o 1956, i n c l u s i v e , i s attached t o t h i s memorandum.
( h ) Survey o f S e a t t l e Branch by Board's Examiners - 1955
D u r i n g the course o f an examination o f the F e d e r a l Reserve Bank o f San
F r a n c i s c o , made as o f September 2, 1953, t h e Board 1 s examiners reviewed the
o p e r a t i o n s o f the S e a t t l e , P o r t l a n d and Spokane Branches and reached the
conclusion t h a t i t would be p o s s i b l e t o c o n s o l i d a t e t h e o p e r a t i o n o f such
branches a t P o r t l a n d w i t h o u t s e r i o u s l y a f f e c t i n g the c h a r a c t e r o f the s e r v i c e
rendered t o member banks i n the P a c i f i c Northwest, w i t h the p o s s i b l e exception
o f those l o c a t e d i n t h e c i t i e s o f Spokane and S e a t t l e .

I t was i n d i c a t e d t h a t

m a i l f a c i l i t i e s , b o t h f o r o r d i n a r y and emergency purposes, had improved subs t a n t i a l l y since the branches were e s t a b l i s h e d ; t h a t as a r e s u l t o f

this

improvement the o p e r a t i o n o f a l l t h r e e branches c o u l d be handled a t P o r t l a n d
a t a considerable saving a f t e r some increase i n personnel and p h y s i c a l
f a c i l i t i e s ; and t h a t , since none o f t h e Northwest branches owned t h e i r banking
q u a r t e r s , i t would be p o s s i b l e t o e f f e c t the c o n s o l i d a t i o n w i t h o u t any l o s s
through t h e sale o f r e a l e s t a t e o r b u i l d i n g s •

I t was f u r t h e r i n d i c a t e d t h a t

the q u e s t i o n o f c o n s o l i d a t i o n had been discussed w i t h the management o f the
San Francisco Reserve Bank, which, w h i l e agreeing t h a t t h e r e was no reason f o r
more than one branch i n t h e P a c i f i c Northwest, b e l i e v e d i t inopportune t o d i s c o n t i n u e any branch because o f the s e r v i c e which the Reserve banks were r e n d e r i n g t o other Government agencies.
( i ) Survey o f S e a t t l e Branch made by Federal Reserve Bank o f
San Francisco - 1956
I n accordance w i t h the request made by the Board i n i t s l e t t e r

of

March 25, 1956 (X-9552), the Federal Reserve Bank o f San Francisco made a
comprehensive survey o f i t s f i v e branches•

A r e p o r t o f t h i s survey was sub-

m i t t e d t o the Board, w i t h o u t a d e f i n i t e recommendation as t o the discontinuance




316,

o r c u r t a i l m e n t o f any branch.

I n t h e l e t t e r o f t r a n s m i t t a l , dated August 26,

1936, i t was s t a t e d t h e D i r e c t o r s o f the San Francisco Reserve Bank, a f t e r a
f u l l d i s c u s s i o n o f t h e m a t t e r , f e l t t h a t b e f o r e any recommendation could be
made i t would be necessaiy f o r the Board o f Governors t o consider t h e q u e s t i o n
from a n a t i o n a l v i e w p o i n t and e s t a b l i s h a d e f i n i t e p o l i c y i n regard t h e r e t o .
The survey contained a d e s c r i p t i o n o f t h e t e r r i t o r i e s served and f u n c t i o n s
performed by a l l o f the branches o f t h e San Francisco Reserve Bank, as w e l l as
s t a t i s t i c s and c h a r t s covering t h e i r o p e r a t i o n s f o r the y e a r s 1926 t o 1935,
inclusive.

A memorandum r e l a t i v e t o c u r t a i l m e n t o f t h e f u n c t i o n s performed by

t h e Spokane Branch was a l s o a t t a c h e d .
On January 17, 1937, w i t h the Board 1 s a p p r o v a l , t h e e n t i r e

territory

p r e v i o u s l y served by t h e Spokane Branch, except t h e C i t y o f Spokane, i n c l u d i n g
eighteen counties i n western Washington and t e n counties i n Northern Idaho,
was t r a n s f e r r e d t o t h e S e a t t l e Branch.

As a r e s u l t o f t h i s change t h e net

expense o f t h e S e a t t l e Branch has increased from $184,200 i n 1936 t o $207,000
f o r the y e a r 1937, o r approximately $22,800j whereas t h e r e has been a r e d u c t i o n
i n n e t expense a t the Spokane Branch from $165,800 i n 1936 t o $70,700 i n 1937,
o r approximately $95,100 - t h e net saving r e s u l t i n g from the change being
about $72,000.

I n t h e c o n f i d e n t i a l s e c t i o n o f t h e r e p o r t o f examination o f

t h e Federal Reserve Bank o f San F r a n c i s c o , made as o f

J u l y 15, 1938, i t

is

s t a t e d t h a t t h e change i n t e r r i t o r y has proved e n t i r e l y p r a c t i c a b l e , b u t t h a t
under present c o n d i t i o n s t h e cost o f o p e r a t i n g t h e Spokane Branch w i l l cont i n u e t o be approximately $70,000 per y e a r , and t h a t t h i s expenditure i s n o t
j u s t i f i e d by the s e r v i c e s rendered by t h e Branch.

I n t h i s connection, the

Board's examiner again expressed the o p i n i o n t h a t the P a c i f i c Northwest could
be s a t i s f a c t o r i l y served by one branch.




317,

At t h e time t h e Spokane Branch was c u r t a i l e d i t was a n t i c i p a t e d t h a t t h p
lease on i t s banking q u a r t e r s , which expires December 31, 1938, could be r e newed f o r l e s s space and a t a reduced r e n t a l .

However, the management has

been unable t o n e g o t i a t e a s a t i s f a c t o r y lease and, because o f t h i s

situation,

t h e d i r e c t o r s o f the Reserve bank r e c e n t l y again reviewed t h e o p e r a t i o n s
o f the Branch and recommended i t s complete discontinuance.

A letter

request-

i n g approval o f the discontinuance was addressed t o t h e Board o f Governors on
August 9 , 1938.

I t was i n d i c a t e d t h a t i n t h e event t h e Spokane Branch were

d i s c o n t i n u e d e n t i r e l y a p o r t i o n o f i t s former t e r r i t o r y , which was t r a n s f e r r e d
t o the S e a t t l e Branch on January 17, 1937, would be r e a l l o c a t e d t o t h e P o r t l a n d
Branch.
On August 30, 1938, t h e Board approved t h e discontinuance o f the Spokane
Branch.




i

318,

SEATTLE BRANCH
VOLUME OF OPERATIONS
WVfftor of P f e ^ s Ha^dletj
Currency
Rece i ved
and

Bills
Date

Discounted

Non Cash

Coin
Recei ved

Counted

and
Counted

Checks Handled
£ii*

Svmirx

GovU
Checks

Collection Items
M a i

Gov't

All

faWMft

Other

Fiscal Agency

Transfer

Transit UM,
Direct Other

of
iMfM!? ..

1931

1,131

10,123,000

II,161,000

2,460,000

3,116,000

533,000

6,109,000

116,398

30,184

1,393

*

14,030

1932

3f4l6

9,560,000

11,080,000

1,863,000

2,328,000

532,000

4,723,000

120,034

33,598

904

-

12,939

1933

1,502

10,520,000

0,977,000

1,595,000

1,924,000

648,000

4,167,000

128,769

49,976

4,431

-

11,606

1934

44

11,563,000

8,790,000

1,688,000

2,273,000

1,192,000

5,153,000

150,560

46,679

6,921

-

8,426

1935

t9

11,911,000

9,649,000

1,916,000

2,692,000

767,000

5,375,000

168,000

44,000

12,367

2,074

7,237

13,990,000

13,546,000

2,130,000

3,116,000

896,000

6,142,000

125,000

40,000

1,917

676

7,000

1936

-

Amounts Handled
( i n thousands of dollars)
1931

198,632

76,218

2,281

840,055

221,743

116,727

1,178,525

1,578

29,101

5,686

-

1,262,416

1932

445,730

71,410

2,111

516,493

157,645

111,254

785,392

1,714

16,992

5,579

-

1,020,859

1933

63,103

71,490

3,541

486,781

142,771

95,332

724,884

1,821

23,389

4,982

-

759,342

1934

846

67,553

1,939

639,522

197,909

155,407

992,838

2,050

29,628

3,649

-

537,831

1935

1,702

65,943

2,034

711,979

240,531

166,394

1,118,904

1,924 34,669

5,309

610

465,714

76,603

2,693

801,639

312,485

192,185

1,306,309

1,412

415

482,338

1936

-




1,933

39,709

SPOKANE BRANCH - FEDERAL RESERVE BANK OF SaN JfltAMCISCO
(a) C i t y o f Spokane
Spokane, w i t h a p o p u l a t i o n o f 115,514 i s t h e second l a r g e s t

city

i n t h e S t a t e o f Washington and the s e v e n t i e t h l a r g e s t c i t y i n t h e U n i t e d
States.

I t i s l o c a t e d i n t h e extreme west c e n t r a l p a r t o f t h e S t a t e , on

t h e Spokane R i v e r , a t t h e o n l y p o i n t n o r t h o r south a t w h i c h r a i l r o a d s
cross t h e Rocky Mountains on a reasonable grade and, because o f t h i s

can

fact,

i s considered t h e n a t u r a l gateway between the P a c i f i c t i d e w a t e r and t h e
interior.

It

i s about 92 m i l e s d i s t a n t from the s i t e o f Grand Coulee Dam.

The c i t y i s r e p o r t e d t o serve a t r a d e area e x t e n d i n g f r o m 100 t o 150 m i l e s
i n a l l d i r e c t i o n s i n w h i c h a p p r o x i m a t e l y 564,000 people r e s i d e .

Transpor-

t a t i o n f a c i l i t i e s are f u r n i s h e d by s i x r a i l r o a d s , i n c l u d i n g t h e Great N o r t h e r n ,
t h e Chicago-Milwaukee, S t . P a u l and P a c i f i c , t h e N o r t h e r n P a c i f i c and the
Union P a c i f i c ; a l s o by v a r i o u s motor coach l i n e s and s e v e r a l a i r

lines.

The p r i n c i p a l i n d u s t r i e s o f Spokane are t h e h a n d l i n g o f g e n e r a l
farm c r o p s , l i v e s t o c k , w o o l , f r u i t and lumber, and b r e w i n g .

According to

t h e B i e n n i a l Census o f Manufactures f o r 1935, t h e r e were 256 m a n u f a c t u r i n g
f i r m s i n Spokane County w h i c h had an o u t p u t v a l u e d a t $43,877,000 d u r i n g t h a t
year.

The Census o f American Business l i s t s 2,332 r e t a i l and 1,585 wholesale

e s t a b l i s h m e n t s o p e r a t i n g i n t h e same a r e a .

These concerns had s a l e s aggre-

g a t i n g 062,951,000 and $72,173,000, r e s p e c t i v e l y , d u r i n g t h e year 1935.
Banking f a c i l i t i e s i n Spokane are f u r n i s h e d by two S t a t e banks (one
member), two n a t i o n a l banks, one nonmember t r u s t company and by two branches
o f t h e S e a t t l e - F i r s t N a t i o n a l Bank, S e a t t l e , Washington.

Banks h a v i n g t h e i r

head o f f i c e s i n Spokane had d e p o s i t s a g g r e g a t i n g ^ 3 4 , 1 8 3 , 0 0 0 , as o f December
31, 1937, and o f t h i s amount 033,500,000 was c a r r i e d by member i n s t i t u t i o n s .




320,

The S e a t t l e - F i r s t N a t i o n a l Bank had deposits o f

v 138,742,000

as o f the same

date o f which approximately ^31#000,000 was h e l d by i t s two branches i n
Spokane.
Debits to i n d i v i d u a l accounts i n banks o f t h e c i t y amounted t o
$537,754,000 d u r i n g the year 1936, or an average o f approximately $1,792,000
f o r each banking day,
(b) Branch T e r r i t o r y and Functions:
The Spokane Branch was e s t a b l i s h e d on J u l y 26, 1917 and u n t i l January
17, 1937 served a t e r r i t o r y c o n s i s t i n g o f t e n counties i n Northern Idaho and
e i g h t e e n counties i n e a s t e r n Washington.

On January 17, 1937 a l l o f t h i s

terri-

t o r y , except the c i t y o f Spokane, was t r a n s f e r r e d t o t h e S e a t t l e Branch.
The Spokane Branch now maintains the reserve accounts o f banks l o c a t e d
w i t h i n the c i t y , handles cash and non-cash items payable i n the c i t y o f Spokane,
handles m a i l and t e l e g r a p h i c t r a n s f e r s t o and from Spokane banks,

furnishes

currency and c o i n t o such banks, r e c e i v e s and a c t s upon a p p l i c a t i o n s f o r r e d i s counts o f banks i n the c i t y and performs c e r t a i n f i s c a l agency f u n c t i o n s f o r
them.

The Branch also acts as custodian f o r the R e c o n s t r u c t i o n Finance Cor-

poration.

The l a s t mentioned a c t i v i t y was t r a n s f e r r e d t o the P o r t l a n d Branch

i n November, 1937, but was r e s t o r e d on J u l y 5, 1938.
As o f J u l y 15, 1938, the t h r e e member banks i n the c i t y o f Spokane had
balances w i t h t h e Branch as f o l l o w s :
Mb. o f
Banks

Reserve
Balances

Deferred
Balances

Capital
Stock

3

^7,330,600

^543,900

#76,500

Bills
Discounted

Spokane i s 330 t r a i n m i l e s (9 t o 10 h r s . ) from S e a t t l e and 379 t r a i n
m i l e s (10 to 11 h r s . ) from P o r t l a n d .

On any business day t r a i n s leave Spokane

a f t e r 6 P.M. and a r r i v e i n P o r t l a n d or S e a t t l e p r i o r t o 8 A.M. on the f o l l o w i n g




321,

day i . e . , overnight mail time.

There i s also overnight mail from both Portland

and Seattle to Spokane between the same hours.

Daily a i r mail service is also

available to and from the three c i t i e s .
Discontinuance of the Spokane Branch would, of course, r e s u l t i n some
inconvenience to the three member banks located i n Spokane, which now enjoy
an over-the-counter relationship with the Branch, since they would have to
adapt themselves to over-night mail schedules.

I n t h i s connection, however,

a t t e n t i o n i s called to the fact that there are a number of c i t i e s throughtout
the United States that are as important as Spokane as centers of population,
finance and industry which do not enjoy immediate access to Reserve bank f a c i l i ties.

This group includes Indianapolis, Indiana, Columbus and Toledo, Ohio,

Grand Rapids, Michigan, Hartford, Connecticut and Milwaukee, Wisconsin; to
name but a few.
(c) Branch B u i l d i n g ;
The Spokane Branch occupies quarters i n the Old National Bank building
under a lease which expires December 31, 1933.

Under the terms of the lease

the Branch i s provided with approximately 16,715 square f e e t o f space a t an
annual r e n t a l of §12,000.

Usable floor space amounts to 11,222 square feet, of

which 6,854 square feet are occupied by the Branch and 4,368 square feet are
vacant.

The vacant space arises from curtailment of the functions of the

Branch.

An e f f o r t has been made to renew the lease for a reduced amount of

space at a lower r e n t a l without success.
(d) Branch Personnel:
The report of examination of the Federal Reserve Bank of San Francisco,
made as of July 15, 1938, shows the following i n regard to salaries and personnel at the Spokane Branch:




322,

J u l y 15, 1933
Amount
Number
Officers
Less - Reimbursable

Employees
Less - Reimbursable
Total
Less - Reimbursable

1.00

$ 5,500
1,650

•2°
.70

January 8 , 1937
Number
Amount
3.00
.20

117,200
900

2.80

16.300

31.00
8.11
22.89

12,67?

66.00
9-78

99,720
l?,959

125.207

56.22

#82,761

32.00
8.A1
23.. 59

¥53,380
14,22,3
$29,057

69.00

^116,920

47,880

9.98
16.859
59.02 $100,061

Decrease
Number
Amount

2.10

$12,45c

35.A3

&61.00Z

As w i l l be noted from t h e above t a b l e , the personnel c o n s i s t s o f one
o f f i c e r and 31 employees w i t h annual s a l a r i e s o f &53>380 o f which $>14,323 i s
reimbursable.

A f t e r allowance f o r reimbursable s a l a r i e s , t h i s r e f l e c t s a r e -

d u c t i o n between examinations o f two o f f i c e r s and 33 employees, w i t h annual s a l a r i e s o f $61,004.

The decrease i s due t o c u r t a i l e d o p e r a t i o n s r e s u l t i n g from

the t r a n s f e r o f branch t e r r i t o r y , other t h a n the c i t y o f Spokane, t o the S e a t t l e
Branch on January 17, 1937*
(e) Branch Expense by Functions:
The expenses o f t h e Spokane Branch by f u n c t i o n s f o r the years 1932 t o
1937> i n c l u s i v e , were as f o l l o w s ;




323,

1222

1224

±m

General Overhead:
Controllable
§ 10,814 0-12,945
Non-controllable
4,520
2,788
P r o v i s i o n o f Space
15,625
18,733
6,092
P r o v i s i o n o f Personnel
3,623
General Service
24,386
29,967
Postage
8,322
6,310
Insurance
3,486
2,953
F a i l e d Banks
18,406
33,660
Loans, r e d i s c o u n t s , e t c . 24,948
23,088
Securities
2,127
1,323
Currency & Coin
9,202
8,506
Check C o l l e c t i o n
18,626
15,719
Non-Cash C o l l e c t i o n
9,898
5,423
Accounting
20,076
23,439
F i s c a l Agency
13,861
30,357
Auditing
2,111
3,837
Bank R e l a t i o n s
564
645
Bank Examinations
5
S t a t i s t i c a l & A n a l y t i c a l . . 514
.. 792
T o t a l Expense
^178,754 $238,938
Less - Reimbursable
F i s c a l Agency Expense
12 v 8?2
28,666
Sl65^922 $210,272
Net Expense

$ 10,323
5,440
19,718
14,243
33,556
7,150
2,040
20,792
4,118
1,416
11,663

1935
$ 10,104

1226

31,812
4,296
961
11
m
1200,160

$ 10,365
15
15,505
19,387
32,134
7,615
1,274
230
3,015
1,490
17,729
17,159
6,697
23,137
27,984
3,222
921
5
924
#188,808

19.220
, 20.750
£185.46^ 1^80,940

. 22,091
#165,717

16,568
8,267

22,678
23,103
3,427
651
6
1,055
$206,214

-

15,167
20,512
34,076
7,188
1,439
4,649
6,374
1,151
16,292
15,695
7,149
22,291

1222
$

6,404
-

457
11,005
19,269
801
1,146
-

634
406

7,514
3,583
2,204
13,131
18,769
1,404
217
-

556
$87,500
15,97*
£71.522

The r e d u c t i o n i n expenses f o r the year 1937, as compared t o p r i o r y e a r s ,
was due t o the c u r t a i l m e n t o f Branch t e r r i t o r y and f u n c t i o n s on January 17, 1937•
( f ) Volume o f Operations at Spokane Branch:
The f o l l o w i n g i s a comparison o f the volume o f o p e r a t i o n s i n v a r i o u s
departments o f t h e Spokane Branch d u r i n g the l a s t s i x months o f t h e years 1936
and 1937, i . e . , b e f o r e and a f t e r t h e change i n b r a n c h t e r r i t o r y :
Last s i x
monts 1^36
Discount Department
Notes Rediscounted
C o l l a t e r a l notes r e d i s c o u n t e d
I n d u s t r i a l advances




3

Last s i x
months 1937

Currency & Coin
Number o f b i l l s
Cost per one
Number o f coins
Cost per one

received
thousand
received
thousand

and counted
u n i t s handled
and counted
u n i t s handled

Check C o l l e c t i o n
Number o f c i t y checks ( c l e a r i n g s ) handled
Cost per one thousand u n i t s handled
Number o f country checks (outgoing) r e c e i v e d
Cost per one thousand u n i t s handled

Last s i x
months 1936

Last s i x
months 1937

1,485,000

1,134,000

#1.26

$1.12

698,000

603,000

#1-95

78 cents

389,000

294,000

$2.30

$2.63

$2.76

$11.56

1,948,000

11,000

Non-cash C o l l e c t i o n s
Number o f c i t y c o l l e c t i o n s handled
Cost per u n i t handled
Number o f country c o l l e c t i o n s handled
Cost per u n i t handled

7,949
15.6 cents
24,720
6 . 1 cents

2,524
25.7 cents

Number o f coupons (except kovernments)
and country s e c u r i t y c o l l e c t i o n s handled
Cost per u n i t handled

U5
24*5 cents

79
28.9 cents

1,928

2 , 2 cents

(g) Survey o f Spokane Branch by Board*s Examiners - 1933
During t h e course o f an examination o f t h e Federal Reserve Bank o f
San F r a n c i s c o , made as o f September 2 , 1933, the B o a r d ' s examiners reviewed
the o p e r a t i o n s o f t h e Spokane, S e a t t l e , and P o r t l a n u Branches and reached t h e
c o n c l u s i o n t h a t i t would bo p o s s i b l e t o c o n s o l i d a t e the o p e r a t i o n o f such
branches a t P o r t l a n d w i t h o u t s e r i o u s l y a f f e c t i n g the c h a r a c t e r o f the s e r v i c e
rendered t o member banks i n t h e P a c i f i c Northwest, w i t h t h e p o s s i b l e e x c e p t i o n
o f those l o c a t e d i n tho c i t i e s o f Spokano and S e a t t l e .

I t was i n d i c a t e d t h a t

m a i l f a c i l i t i e s , b o t h f o r o r d i n a r y and emergency purposes, had improved subs t a n t i a l l y since t h e branches were e s t a b l i s h e d ; t h a t as a r e s u l t o f

N

this

improvement the o p e r a t i o n o f a l l t h r e e branches could be handled a t P o r t l a n d ,
a f t e r some increase i n personnel and p h y s i c a l f a c i l i t i e s , a t a considerable
saving; and t h a t , s i n c e none o f the Northwest branches owned t h e i r banking




325,

q u a r t e r s , i t would b© p o s s i b l e t o e f f e c t the c o n s o l i d a t i o n w i t h o u t any l o s s
through the sale o f r e a l e s t a t e o r b u i l d i n g s .

I t was f u r t h e r i n d i c a t e d t h a t

the q u e s t i o n o f c o n s o l i d a t i o n had been discussed w i t h the management o f the
Reserve Bank, which, w h i l e agreeing t h a t t h e r e was no reason f o r more t h a n
one branch i n the P a c i f i c Northwest, b e l i e v e d i t inopportune t o d i s c o n t i n u e
any branch because o f the s e r v i c e which the Reserve banks were r e n d e r i n g t o
o t h e r Government agencies.
(h) Survey o f Spokane Branch made by Federal Reserve Bank o f
San Francisco - 1 9 3 6
I n accordance w i t h the request made by t h e Board i n i t s l e t t e r o f
March 25, 1936 (X-9532), the Federal Reserve Bank o f San F r a n c i s c o made a
comprehensive survey o f i t s f i v e branches.

A r e p o r t o f t h i s survey was sub-

m i t t e d t o the Board, w i t h o u t a d e f i n i t e recommendation as t o the d i s c o n t i n uance o f any branch.

However, a memorandum r e l a t i v e t o c u r t a i l m e n t o f the

f u n c t i o n s performed by the Spokane Branch, which had been prepared f o r the
d i r e c t o r s o f the Reserve bank, was attached.

On December 10, 1936 President

Day advised t h e Board t h a t h i s d i r e c t o r s , i n the i n t e r e s t o f economy and subj e c t t o the approval o f t h e Board, had voted t o t r a n s f e r a l l o u t - o f - t o w n r e serve accounts c a r r i e d by member banks w i t h the Spokane Branch t o the S e a t t l e
Branch and t o d i s c o n t i n u e at t h e Spokane Branch a l l s e r v i c e s , o t h e r t h a n the
c o l l e c t i o n o f checks payable i n t h e c i t y o f Spokane and currency s e r v i c e f o r
Spokane banks.
On December 17, 1936, the Board w i r e d i t s approval o f the contemplated
change and i t was made e f f e c t i v e as o f January 17, 1937-

As a r e s u l t o f the

change the net expense o f t h e S e a t t l e Branch increased from $184,200 i n 1936
t o $207,000 i n 1937, o r approximately $23j000; whereas there has been a r e d u c t i o n i n net expense at the Spokane Branch from $.165,800 i n 1936 to#70,500




i n 1937, or approximately $95,000 - the i n d i c a t e d net s a v i n g t o the Federal
Reserve Bank o f San Francisco being i n the neighborhood o f $72,000.

I n the

c o n f i d e n t i a l s e c t i o n o f the r e p o r t o f examination o f the Federal Reserve Bank
o f San Francisco, made as o f J u l y 15, 1938, i t i s s t a t e d t h a t the change i n
t e r r i t o r y has proved e n t i r e l y p r a c t i c a b l e , but t h a t under present

conditions

the cost o f o p e r a t i n g the Spokane Branch w i l l continue t o be approximately
£•70,000 a y e a r , and t h a t t h i s expenditure i s not j u s t i f i e d by the s e r v i c e s
rendered by the Branch.

I n t h i s connection, the Board* s Examiner r e f e r s t o

comments made i n previous r e p o r t s o f examination r e g a r d i n g t h e Spokane, P o r t l a n d and S e a t t l e Branches and s t a t e s :
« * * * y 0 U r examiner continues o f the o p i n i o n t h a t , not
o n l y could the Spokane branch be d i s c o n t i n u e d w i t h o u t
m a t e r i a l l y a f f e c t i n g the s e r v i c e s rendered by the
Reserve Bank, but a l s o t h a t the Northwest t e r r i t o r y
served by the t h r e e branches could be s a t i s f a c t o r i l y
served by one b r a n c h , "

As p r e v i o u s l y mentioned i n t h i s memorandum the lease on the q u a r t e r s
occupied by the Spokane Branch w i l l e x p i r e on December 31, 1938*

When the

t e r r i t o r y served by the Branch was reduced t o the c i t y o f Spokane i n January,
1937 > i t was a n t i c i p a t e d t h a t a new lease f o r l e s s space and a t a reduced
r e n t a l , i n keeping w i t h the c u r t a i l e d needs o f the Branch, could be n e g o t i a t e d .
However, t h e management has been unable t o o b t a i n a s a t i s f a c t o r y lease and,
because o f t h i s s i t u a t i o n , t h e d i r e c t o r s o f the Reserve bank have r e c e n t l y
again reviewed the o p e r a t i o n s o f the Branch and recommended i t s complete d i s continuance.

As a r e s u l t P r e s i d e n t Day addressed a l e t t e r t o the Board o f

Governors on August 9> 1938, a d v i s i n g o f the a c t i o n t a k e n by h i s d i r e c t o r s and
r e q u e s t i n g approval o f the discontinuance o f the Spokane Branch.

I t was i n d i -

cated t h a t i n t h e event the Branch were d i s c o n t i n u e d a p o r t i o n o f i t s




territory,

327,

p r e v i o u s l y t r a n s f e r r e d t o the S e a t t l e Branch, would be r e a l l o c a t e d t o the
P o r t l a n d Branch and t h a t c o n s i d e r a t i o n should be g i v e n t o changing the reserve
c i t y d e s i g n a t i o n o f Spokane.
On August 30, 193S, the Board approved the p l a n t o d i s c o n t i n u e the
Spokane Branch, under which the reserve accounts o f the t h r e e member banks
l o c a t e d i n Spokane would be t r a n s f e r r e d t o the S e a t t l e Branch.

I n approving

the p l a n the Board s t a t e d t h a t i t would be glad t o c o n s i d e r any recommendation
the Reserve Bank might w i s h t o make r e g a r d i n g the r e a l l o c a t i o n o f
i n the S e a t t l e and P o r t l a n d zones.




territory

SPOKANE BRANCH
VOLUME OF OPERATIONS
Number of Pieces Handled
Currency
Received
and
Counted

Co in
Received

Non Cash
Checks Handled
Gov»t
Country
Checks

Fiscal Agency

Lii
Total

21*4,000

3,99*4,000

5*4,376

15,872

736

2,256,000

210,000

3,011,000

5*4,195

29,*422

23*4

25

8,53*4

7*41,000

2,027,000

317,000

3,085,000

5*4,382

I0I,*463

1,562

37

9,313

1,687,000

898,000

2,53*4,000

697,000

*4,129,000

56,*49*4

83,569

3,208*

1*48

7,117

2,589,000

I,820,000

878,000

3,121,000

*437,000 *4,*436,000

63,000

53,000

6,620

I,139

6,S20

2,719,000

2,188,000

798,000

3,611,000

*433,000

*45,000

58,000

525

1,007

12,000

Pate

8i lis
Discounted

1931

3,U09

1,9*42,000

1,530,000

627,000

3,153,000

1932

10,895

1,702,000

1,795,000

5*45,000

<933

2,219

t ,95*4,000

I,if 16,000

193**

8t

2,143*4,000

>935

5

1936

*4

CgMfftfd

Cifry

*4,8*42,000

AI I
Other

Tr ansfer
of

Gov't
Coupons

and

Direct

Other
9,1*48

Amounts Handled
(in thousands of dollars)
1931

13,881

t*4,*432

*458

251,582

188,776

23,996

*46*4,35*4

5*42

13,358

t , 159

1932

61,178

1*4,135

580

181,91*4

133,053

22,3*42

337,309

613

9,575

500

1,130

157,7*47

1933

17,185

16,552

908

2!3,l*43

f*45,79*4

70,798

*429,735

555

22,721

830

*45

13*4,36*4

193*4

699

16,901

733

305,6*42

252,565

95,115

653,322

655

22,079

1,662

17*4

160,719

1935

26

16,916

5*46

361,251

323,287

68,703

753,2*41

578

21,268

3,053

670

1*41,111

1936

120

17,215

6*47

370,11*4

350,357

50,*486

770,957

5*48

20,563

132

*438

19$,961




283,695