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Operations of the Federal Reserve
Bank of St Louis 1975
JEAN M. LOVATI

HE operations of the Federal Reserve System are
conducted through the Board of Governors and a network of 12 Federal Reserve Banks located in districts
across the country. The Federal Reserve System provides a variety of services for member commercial
banks, the United States Government, and the public.
Federal Reserve Banks clear and collect checks, transfer funds, distribute coin and currency, and extend
credit to member banks, They supervise and regulate
member banks and bank holding companies. As
bankers for the Federal Government, Federal Reserve Banks carry the principal checking accounts of
the United States Treasury and market Treasury
securities.
The Federal Reserve Bank of St. Louis serves the
Eighth Federal Reserve District, which includes all
of Arkansas and parts of Illinois, Indiana, Kentucky,
Mississippi, Missouri, and Tennessee, Branch offices
of the St. Louis Federal Reserve Bank are located in
Little Rock, Louisville, and Memphis. This article reviews the functions and operations of the St. Louis
Federal Reserve Bank and its branches during 1975.

Bank Superois ion and Regulation
The Federal Reserve Bank of St. Louis, along with
the state banking authorities, has responsibility for
the supervision of the 84 state chartered banks in the
Eighth Federal Reserve District which have elected
to become members of the Federal Reserve System.
Bank supervision is concerned essentially with the
safety and soundness of individual banks. To ensure
solvent and effective banking institutions and adherence to bank laws and regulations, each Federal
Reserve Bank conducts field examinations of member
banks within its district. These examinations involve
an evaluation of the banks’ assets and liabilities as
well as their capital and liquidity positions and an
appraisal of the capabilities of their managements.
Page 2



Although they have authority to examine all member banks, Federal Reserve Banks generally do not
examine national banks, which are required to be
members of the Federal Reserve System. Primary responsibility for examination and supervision of national banks, which number 344 in the Eighth District,
lies with the office of the Comptroller of the Currency. The Federal Deposit Insurance Corporation
(FDIC), along with respective state banking authorities, examines state nonmember banks that are insured by the FDIC. Noninsured banks are examined
only by state authorities.
Federal Reserve Banks also supervise bank holding
companies. At the end of 1975, the Federal Reserve
Bank of St. Louis had jurisdiction over 19 multibank
and 71 one-bank holding companies. Prior approval
must be obtained from the Federal Reserve System
for bank holding company formations and for acquisitions of additional banks and permissible nonbank
subsidiaries. Applications for holding company formations and for acquisitions of additional subsidiaries are
analyzed by the Bank Supervision and Regulation
Department along with the Legal and Research Departments. In the analyses, these departments consider the history, financial condition, and prospects of
the institutions, and evaluate the quality of management. They also assess the legal aspects of the proposal and its likely effects on banking and nonbanking competition. During 1975, the Federal Reserve
Bank of St. Louis processed 19 applications to form
one-bank or multibank holding companies and 20
applications by holding companies to acquire additional subsidiaries, engage de novo in nonbank activities, or establish new locations.
Upon formation, bank holding companies are required to register and thereafter to file annual reports
with Federal Reserve Banks. These annual reports are
analyzed by the staff of the Bank Supervision and

FEDERAL RESERVE SANK OF ST. LOUIS

Table I

FEBRUARY 1976

VOL ME OF OPERAT ONS’
Number
(thousands~

1975
Checks hondted’
Transfers of funds
.
Coin receved and counted
.
Currency counted or weighed
ii S So ings Bands and Savings Notes’
Other Governmen Secu sties
US Government coupon paid
.
Food S amps r c ived and counted

.

.

.

974

28,079
8 6
160,485
09 6 0
1 659
576
68
16 733

975

Change

614 10
614
.292,669
9 841
1 I 22
6 4
64
180, 65

Rock Lo
ill andMmbi offi
2Totalfr beS Lou,LtI
E ci
tJ.S Governm t be
an ix,stal money rd
tm
Regasnin m1914 o ecren
bee v ifidI, ~e ho cikot
I ned, rvsced. or r em

DCI or Amount
(n~iions)

Percent

2

225,06
7 839 6
1225
2,6 8
67 2
40,337 7
2677
5674

329
0
2
.

54
92

Percen

1974
21041 3
69 .2027
12 8
2 43
668 2
28, 26.2
2 79
4277

h nge
7 ¶
8
4 I
88
9
38
32

e

Regulation Depirt cut to v rfy accuracy and completeness to asceitain the financal condition of the
holding company and it subsidia tes and to dete
m ne compliance with apphcThle Ptws and iegulahons. Examination meports submitted to th primary
Federal supervisory agency of the respective ha k
subsidiaries are also analyzed by the Federal Reserv
Bank to deteimine th oveiall condition o s c s b
sidiaries. In addition, the Bank conducts scre ionary
on-site inspections of bank holding comp ni s an
their rio ibank subsidiari s. The purpos of these nspections is similal to that of xami ations of m mhe
banks.
-

Check Collection
Checks drawn on commercial banks can be cleared
through facilities maintained by the Federal Reserve
System. Settlement for the checks collected is made
by entries to member banks’ reserve accounts at Federal Reserve Banks. To increase the speed of the payments process, the Federal Reserve System has instituted a network of Regional Check Processhmg
Centers (RCPCs). Through this network checks are
processed overnight, thereby achieving prompt
credit and payment for the items. Each of the four
Eighth District Federal Reserve offices serves an
RCPC area.
Banks deposit checks at RCPCs according to specific time schedules. Persomiel at the RCPCs process
the checks overnight, deliver them to the paying
banks, and obtain payment by an automatic charge
to the reserve accounts of Federal Reserve member
banks. Checks drawn on member banks are paid on
the day of presentment by charges to their reserve
accounts or to the reserve accounts of correspondent




no

member banks, Similarly, payment for checks drawn
on nonmember banks is effected on the same day the
checks are presented for payment by an authorized
reduction in the reserve accounts of correspondent
member banks, Most of the dollar volume of checks
cleared in the Eighth District is accomplished through
this overnight system
The number and dollar amount of checks handled
by the Eighth District Federal Reserve offices increased slightly in 1975 (Table I). During the year,
628 million checks with a value of $225 billion were
cleared through the four offices, an increase of 2.3
and 7 percent, respectively, over the volumes handled in 1974. The dollar amount of checks cleared has
increased steadily since 1970 at an annual rate of 10.2
percent. The quantity of checks, on the other hand,
—______

5

Number of Checks Handkd

tells Side
Mills is
650

550
450

350

250

963

1965

1967

1969

1971

1973

150
1975

E,,Iud,sU.S. Go,,,,,,—~,t,h,,k.,,d p.,,,]

Page 3

FEDERAL RESERVE SANK or sr. L.ou

increased at a 6.9 percent annual rate between 1971
and 1975. This represents a deceleration in the growth
of the quantity of checks cleared from an 11.2 percent rate in the previous eight years.

Electronic Transfer of Funds
The Federal Reserve Banks make available to
member banks a computer-based communication system which can be used to transfer funds from one
part of the country to another. Through the Federal
Reserve Communications System, member banks may
transfer funds to other member banks for their owni
accounts or for their customers. These electronic transfers of funds are made through debits or credits to
member banks’ reserve accounts, No charge is made
for transfers of $1,000 or more. The System’s communication facilities are often used by member haoks
to transfer marketable Government securities or to
lend their excess reserves to other banks for temporary
reserve adjustments.’ Nonniember banks have access to funds transfer services through correspondent
banks which are members of the Federal Reserve
System.
The size of the communication network in the

Eighth District has continued to increase. At the beginning of 1975, three commercial banks in St. Louis
and tsvo in Memphis, plus the Louisville, Memphis
and St. Louis Federal Reserve offices were already
equipped with on-line tenninals. During the year, online terminals were installed at the Little Rock branch
plus an additional 14 commercial banks in the Eighth
District. Of these commercial banks, five are located
in the Little Rock zone, four in the Louisville zone,
four in the St. Louis zone, and one in the Memphis
zone. Thus, all four Federal Reserve offices and a
total of 19 commercial banks in the Eighth District
are currently on-line.

FESRUARY 1575

receiving commercial banks with no direct involvement by Federal Reserve personnel. If the receiving
hank is also on-line, the transfer is again automatically
switched by computer to that bank through its Federal Reserve office without being handled by the
personnel at that office.
In processing a transfer of funds, the computer records the accounting data and other information
needed to complete the transaction. This information
is then used to update member banks’ reserve accounts. Banks with on-line terminals receive an immediate record of each transaction,

Since the installation of on-line terminals at the 19
district commercial banks, an average of 2,857 transactions per day sent and received are no longer handled by Eighth District Federal Reserve personnel,
reducing the number of transfers handled by District
personnel by 78 percent. Automated switching
through these terminals has reduced the time for
completion of a typical funds transaction from nearly
an hour to only a few minutes.
The number and value of transfers facilitated by
the four Eighth District offices continues to increase
swiftly. This year, 816,000 transfers of funds, with a
value of ~748 billion, were made by the St. Louis
Federal Reserve Bank and its branches. This is a 33
percent increase in the number and an 8 percent
increase in the value of 1974 transfers. Since 1973,
the number of transfers has increased at an annual
rate of 28.5 percent and the dollar value has risen
at a 23.4 percent rate. While the quantity of transfers
handled by the four Eighth District offices is still far
below the quantity of cheeks cleared, the dollar value
Number of Transfers of Funds
tetis Scele
itesseed,
850

teSs Scale
Thsssinds
850

The terminals are linked directly to the computer
at the St. Louis Federal Reserve Bank which serves
as the communication and switching center for the
entire Eighth District. Through the terminals, the
on-line commercial banks are able to initiate funds
transfers directly from their offices instead of telephoning or teletyping the information to the St. Louis
Reserve Bank for transmission. The transfers are then
switched automatically by computer from the Federal Reserve Bank of St. Louis through a central
switching unit to the Federal Reserve office of the

150

75°

650

650

550

550

450

450

350

35°

250

250

1The

150
1963

market which brings banks together for the borrowing
and lending of excess reserves is called the Federal funds
market.

Page 4



1965

1967

1969

1971

1973

ISO
1975

FEDERAL RESERVE BANK OF ST. LOUIS

FEBRUARY 1976

of funds transferred has surpassed the value of checks
handled, Since 1968, the dollar volume of funds transferred has grown at a 23.7 percent annual rate.

Number of Coins Received and Counted
tills ScsI,
Millions

tails Scsls
M illisss
1,400
1,300
1,200
1,100
1,000
900
800

In August 1975, the Federal Reserve Bank of St.
Louis implemented the payment of Air Force payroll

by electronic means, Payment data on magnetic tape
are received twice a month and sorted at the Reserve
Bank, which then forwards the data to receiving
banks by magnetic tape or paper listings. Settlement
is made through credits to the reserve accounts of
member banks. Payments made in December, 1975,
for example, totalled 21,458 and were transferred to
987 banks. Three of these banks, whose 9,098 items
represented 42.4 percent of total payments in December, receive their Air Force payment data on magnetic tape.

700
600
500
400

300

200
1963

200
1965

l967

969

1971

1973

1975

Coin and Currency
Virtually all coin and paper currency move into
and out of circulation through Federal Reserve Banks.
Coin and paper currency play an important role in
settling relatively small financial transactions, and currently account for approximately 25 percent of the
nation’s money stock.
There are seasonal fluctuations in circulating currency which reflect, in part, changes in retail trade,
travel, and variations in agricultural production. Currency demand rises, for example, during the intensified shopping period before Christmas and just before
certain holidays such as Easter and the Fourth of
July. To meet the public’s demand for cash, member
banks hold stocks of coin and currency which are
Pieces of Currency Counted or Weighed0
Rolls Scale
Millions
320
310

tells Scsle
Millions
320
310
Ad
300
290

I

~r
/~

300
290
280
—

270

280

p

270

/-

260

160

/

250

250

r

~,

2:c

240

—J

,qn

230

—

220

/

II

210
200

190
1

sn
963
‘l,si’,”~i,

190
1965
‘974 ~




1967

1969

1971

973

180
1975

bp,y ,oi]i,d by ,,,ighi,,p ,,i’h,,nc,,,,ti,,
4

maintained through orders from Federal Reserve
Banks. These orders are charged by the Federal Reserve Banks to the member banks’ reserve accounts.
When the stocks of currency on hand exceed desired
levels, member banks forward the excess to their
Federal Reserve Banks for credit to their reserve
accounts. Member banks generally service the demand for currency of nonmemher banks.
During 1975, about 310 million pieces of currency
with a value of $2.6 billion were received and counted

or weighed by the four Eighth District offices. This
represents increases of 6.1 percent in number and
8,8 percent in dollar volume from 1974. Both the
number and value of coins received and counted are
down from the 1974 levels. Pieces of coin received
and counted totalled 1.2 billion in 1975, amounting to
$122.5 million, decreases of 10.2 and 4,1 percent, respectively, from 1974. Despite these declines, combined sorting, counting, and wrapping of coin and
currency at all four offices averaged over 6.7 million
pieces per working day in 1975.
Paper currency is sorted at the Reserve Banks and
that which is no longer usable is removed from circulation and destroyed. During 1975, the Federal Reserve Bank of St. Louis and its branches verified and
destroyed currency totalling $865 million.

Lending
The Federal Reserve Bank provides three types of
credit to member banks: short-term adjustment, seasonal, and emergency credit, Short-term adjustment
credit is extended as banks seek funds to make temporam’y adjustments in their reserve positions due to
Page 5

FEDERAL RESERVE BANK OF ST. LOUIS

FEBRUARY 1976

unexpected or unusual increases in loan demand,
deposit losses, or other portfolio changes encountered
by the individual banks, Seasonal credit is extended

to those eligible member banks, usually small in size,
which have highly seasonal loan demands. Such demands

arise from a recurring pattern of movement

in deposits and loans. Banks must arrange for this
type of credit in advance, During 1975, five banks in
the Eighth District made use of this seasonal borrowing privilege. Federal Reserve credit is also available
for longer periods to aid member banks in meeting
emergency situations which may result from unusual

local, regionaj, or national financial developments, or
from adverse circumstances involving particular member banks. No emergency loans were made in 1975.

On the other hand, when the discount rate is low
relative to market rates, Federal Reserve lending is
likely to increase as member banks take advantage of
the cheaper rates. Member banks which borrow from
the Federal Reserve under emergency situations are
charged a special interest rate which is higher than
the discount rate just described.

The discount rate at the start of 1975 was 7.75
percent; it was lowered four times and stood at 6 percent at year-end. The discount rate remained above
short-term market interest rates throughout most of

the year. Accordingly, member bank borrowings were
low, with the daily average of loans outstanding
at $5.3 million. This is a substantial decrease from

1974, when the discount rate remained below other

The interest rate at which member banks borrow
from the Federal Reserve Banks is called the discount
rate. The volume of credit extended by the Federal
Reserve Banks is influenced by the level of the discount rate in relation to other short-term market interest rates. When the discount rate is higher than
alternative market interest rates, member banks are

market rates and outstanding loans averaged about

reluctant to borrow from the Federal Reserve to make
temporary reserve adjustments. They may choose, instead, to obtain funds from the Federal funds market

Fiscal Agency

or through markets for other short-term instruments.
Influence of Relative Interest Rates
on Member Bank Borrowings
Pa to e C C

Roles

Percent
1

5

tone Soul.
-

Million.

*4 DelIurs

loans OuIsIandmIg lo

Membeo SInks

,

—

,

teem

Scala

Millions of Delmars

$55 million. During 1975, the St. Louis Federal Reserve Bank made 280 advances, amounting to $1.1
billion, to 44 Eighth District member banks. This
compares with the 2,164 advances totalling $11.1 billion to 111 member banks in 1974.

The Federal Reserve Banks perform a variety of
services for the Federal Government in acting as its
fiscal agent. As bankers for the Government, Federal
Reserve Banks carry the principal checking accounts
of the U.S. Treasury, through which the Treasury
makes payments for all major types of Government
spending. The Treasury receives funds directly into
its accounts at Federal Reserve Banks or through deposit accounts, called tax and loan accounts, at approved commercial banks. Such funds are received
mainly from the payment of taxes and the sale of
Government securities to the public. Funds initially
deposited in tax and loan accounts are transferred
periodically to the Treasury’s accounts at Federal
Reserve Banks in order to maintain a balance large

enough to meet all
1.0
6.0
5.0
4.0
3.0
2.0

1.8
.8
.1
.6
.1
.4
.3

of the Treasury’s

near-term

payments.
The Federal Reserve Banks also act on behalf of the

ciHA/’~
2.0

‘8

-~

.1
.6
.5
.4

±~VsTH~

JAN PER
MAt APR
~IOL.,,,,,,J,,t,.,dV,,d,,,fo,
El MM, ‘hEp,,.,,p,,thdth Ep

.3

MAY JUNE JULY AUG
F,J,,oI P.,,,,,

SEP

OCT

NOV

DEC

Government in marketing Government securities.
‘When the Treasury offers new securities, the Reserve
Banks receive subscriptions from those who wish to
buy. Reserve Banks then allot the securities among

the subscribers according to instructions from the
Treasury, collect payment, and deliver them to the

purchasers. With funds from the Treasury’s accounts,
the Federal Reserve Banks pay interest on securities
and redeem them at maturity. Reserve Banks also pay
interest on and redeem the securities of most Govern-

ment sponsored corporations.
Page 8



FEBRUARY

FEDERAL RESERVE BANK OF ST. LOUIS

As fiscal agent, Federal Reserve Banks hold in safekeeping the securities pledged by commercial banks
to secure Government deposits in tax and loan ac-

counts, In addition, Reserve Banks will also hold

1976

m nt’s analy is is the xpected eff cts of the piopo ed
acquisitio s md me g rs oi compet’tion and on
meeting the convenience and needs of the area to be
ser ed.

other securities in safekeeping as a service to member

banks. U.S. Treasury and most Government Agency
securities are held in the form of book-entries in the
records of the Reserve Banks. Other securities, such
as municipal bonds, are held in physical form in the
vaults of the Federal Reserve Banks,
Federal Reserve Banks issue, service, and redeem

U.S. savings bonds. During 1975, 11.7 million savings
bonds with a dollar value of $674 million were issued,
serviced, or redeemed by the St. Louis Federal Reserve Bank and its branches. Also, 578,000 other Government securities totalling $40 billion were issued,
serviced, or redeemed, and 881,000 Government bond
coupons totalling $288 million were paid by these
offices.

Table II
COMPARATWE STAT M NT OF ONDtT ON
(DoIIa Amounts on Thousands)
ASSETS
Decembe
3 , 975

Dec rebor
3?, 974

$1 4 7,460

$1,437,167

US. Government Secur.ties.

As fiscal agents, Federal Reserve Banks also redeem
U.S. Government food stamps. A total of 184 million
food stamps totalling $567 million were received and
counted by the four Eighth District Federal Reserve
offices in 1975.
Research
Through its collection of business, monetary, and

financial data, the Research Department of the Federal Reserve Bank of St. Louis analyzes economic
conditions on a regional, national, and international

level. These analyses are used by the President of the
Bank in making monetary policy recommendations at
meetings of the Federal Open Market Committee
2
and in providing information to the public.
Economic

The ederal Reserve Bmnk of St. Louis strives to
maintain er onml co tact w t me b ba ks through
‘ts visitation p ogram
hrou h this psogr m the St.
Lo is Bank keeps membes banks informed of cha ges
in Fed nI Reserve regulmtions and p ocedures and

data and analyses on recent develop-

ments are available to the public through the Research Department’s 10 weekly, monthly, and quarterly publications. The Review, with a monthly
circulation of 42,000, incorporates much of the analytical research undertaken by the Research staff.

In addition to these functions, the Research Department engages in studies of bank market structure.
These studies include review and analysis of proposed
bank holding company acquisitions and bank mergers.

The particular emphasis of the Research Depart2

The Federal Open Market Committee consists of the seven
members of the Board of Governors of the Federal Reserve

System and five of the twelve Reserve Bank Presidents, four
of which serve on a rotating basis. It directs th~purchase and
sale of Treasury aacl Government agency securities on the
open market by the Federal Reserve System.




BdIs
Certatlcates

—

Note

1,675 830

210,358

.564,002
28351

$3,303 648
$
650

$3,129,520
5
2 100

.

Bonds
.
.
TOTAL U.S. GOVERNMENT

SECURITIES
Discounts aS Advances
Acceptances
.
.
Federal Agency Oblegotions.
TOTAL LOANS AND SECURITIES
Gold Certetlcate Account
.
Special 0 awong Rights Certificate
A count . .
.
F deral Reserve Notes of Other Banks
Othe Cash
.
.
Cash Items in Process of Collection
Bank Premises (Net)
.
.
lnterdistrect Selll mont Account .
Other Assets
.
.
TOTAL ASSETS
IABIL TIES AND

—

231,329
$3 535,627

$ 449,37?
20,000
59 242
25419
473 744
,151

15,000
47,993
1,197
420 998
13,560

403,896
51,301
$5 031 751

$ 740 663

$ 828 804

52 ,866

154,696

$1,280,877
$3,321 414
328,733
38,25
$4,949,277

$1,012,097
$2 969,610
305,965
41,384
$4 329,056

8,928
9420

CAPITAL ACCOUNTS
Copstal Rood In
$ 3 .237
Surpius
.
31,237
0th r Capital Accounts
TOTAL CAPITAL ACCOUNTS
$ 62,474
TOTAL LIABILITIES AND
CAPTA ACCOUNTS
$50317 1
MENtOR NI)
con nEen IsabUt’ o
to elms on~ ponden dec
from
to co

nflec

be

6 961
$4,389 120

API AL ACCOUNT

LIABILITI S
Depos ts
Member Bank — Re erve Accounts
US Treasurer
General Accoun
Foresgn
.
,
Other Deposit .
.
TOTAL DEPOSITS
.
Federal Reserve Notes (Net) .
Deferred Availabslsty Cash Items
Other Lmabslstses and Accrued Dividends
TOTAL LIABILITIES .

wr

183 812

$3 315,432
$ 5 7 979

8

9 860
8,737

$

30,0 2
30032

$

60,064

$ ,389 120

n
p cli e
o
5 00 a Decembe S

,197

Page

9

FEDERAL RESERVE BANK OF ST. LOUIS

FEBRUARY 1976

‘ob’e III

COMPARATIVE PROFIT AND LOSS STATEMENT
I Doilor Amounts

fl

Thos.scnds 1
Percent

1975
.
Total commas
Net expenses
C.,’rer.t nc’earnsngs . ,
Net additions I
) or
deductions I
I
...
Ne’ ta’r’ir.cs before pay
roscrits to U.S. Troassiry .
D.stributson of Net Earnings
Dividends
.
.
.
.
Interest an Federat Reserve
Notes
.
.
.
.
Transferred to 5cr pus

TOTAL

.

.796

1974
5229.690

34,083

32.732

197,713

.

19/,158

~hangt
0.8

4.1
0.3

5,352 visitors toured the four Federal Reserve offices
in the Eighth District.

Financial Statements
At the end of 1975, assets of the St. Louis Federal
Reserve Bank and its branches totalled $5 billion, an
increase of 14.6 percent from the previous year (Table

II). Increases in Federal agency obligations and in
U.S. Government notes and bonds were largely re-

6,714
SI 90,999

.

S194,744

I 9

$
.

2,412

S

1,764

46

sponsible for the increase in total assets. Approxisnately 66 percent, or $3.3 billion, of the Bank’s total
assets were held in U.S. Government securities. The

591,433
1.547

.8
22 0

remaining assets, which include the gold certificate
account, the special drawing rights certificate account,

1 845
187,948
.206
!90,999

5194,744

1.9

Federal Reserve notes of other banks, and interdistrict settlement account, amounted to $1.7 billion.

provides assistance if questions arise. The Bank Rela-

Total liabilities of the four offices of the St. Louis

tions and Public Information Department makes
available to all member banks in the Eighth District
the Federal Reserve Functional Cost Analysis Program. This program enables a participating bank to
measure its profitability by comparing its cost and
revenue figures with System-wide average figures of
participating banks. The Functional Cost Analysis
program makes possible comparisons by size of banks
and partidular functions. Last year, 50 banks in the
Eighth District participated in this program.

Federal Reserve Bank increased to $5 billion in 1975,
14.8 percent higher than the year-earlier figure. A

It is also through this department that the Bank
maintains contact with the public. During 1975, the
officers and staff members of the St. Louis Federal
Reserve Bank and its branches delivered 302 addresses before groups of bankers, businessmen, and
educators. The Bank was represented at 469 banker,

500 professional, and 308 miscellaneous meetings.
Under the bank visitation program, 1,121 banks were
visited, During 1975, 228 groups requested films, and

Page 10



major source of this change was the increase of $367
million in U.S. Treasury deposits held at the Bank.
Total deposits rose 26,6 percent in 1975, to $1.3 billion.
Federal Reserve notes, the principal type of circulat-

ing currency, amounted to 83.3 billion, 66.8 percent of
the Bank’s total liabilities.
Federal Reserve Banks’ earnings result mainly from
interest on Government securities, loans to mem-

ber banks, and other investments. The portion of the
Federal Reserve System’s earnings allocated to the
St. Louis Bank and its branches increased 0.8 percent
in 1975, to $232 million (Table III). After statutory
dividends of $1.8 million were paid to member banks
and operating expenses of $34 million were covered,
$1.2 million was transferred to surplus and $188 million, or 81.1 percent of total earnings, was paid to the
Treasury as interest on Federal Reserve notes.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102