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FE D E R A L R E SE R V E BANK O F N EW YORK
f Circular No. 33S01
L April 2 3 . 1948 J

Fiscal Agent of the United States

Public iNotice of Offering of $1,000,000,000, or thereabouts, of 91-Day Treasury Bills
Dated

April 29, 1948

Maturing July

29,

1948

To ail Incorporated Banks and Trust Companies in the
Second Federal Reserve District and Others Concerned:

Following is the text of a notice today made public by the Treasury Department with respect to a new ottering of Treas
ury bills payable at maturity without interest to be sold on a discount basis under competitive and non-competitive bidding.
F O R R E L E A S E , M O R N IN G N E W SP A P E R S ,
Friday, April 23, 1948.

TREASURY D EPARTM EN T
Washington

The Secretary of the Treasury, by this public notice, invites tenders for $1,000,000,000, or thereabouts, of 91-day Treasury
bills, for cash and in exchange for Treasury bills maturing April 29, 1948, to be issued on a discount basis under competi­
tive and non-competitive bidding as hereinafter provided. The bills of this series will be dated April 29, 1948, and will
mature July 29, 1948, when the face amount will be payable without interest. They will be issued in bearer form only, and
in denominations of $1,000, $5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value).
Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, two o’clock p.m., Eastern
Standard time, Monday, April 26, 1948. Tenders will not be received at the Treasury Department, Washington. Each
tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on
the basis of 100, with not more than three decimals, e. g., 99.925. Fractions may not be used. It is urged that tenders be
made on the printed forms and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or
Branches on application therefor.
Tenders will be received without deposit from incorporated banks and trust companies and from responsible and
recognized dealers in investment securities. Tenders from others must be accompanied by payment of 2 percent of the
face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of payment by an
incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, following which
public announcement will be made by the Secretary of the Treasury of the amount and price range of accepted bids. Those
submitting tenders will be advised of the acceptance or rejection thereof. The Secretary of the Treasury expressly reserves
the right to accept or reject any or all tenders, in whole or in part, and his action in any such respect shall be final. Subject
to these reservations, non-competitive tenders for $200,000 or less without stated price from any one bidder will be accepted
in full at the average price (in three decimals) of accepted competitive bids. Settlement for accepted tenders in accordance
with the bids must be made or completed at the Federal Reserve Bank on April 29, 1948, in cash or other immediately
available funds or in a like face amount of Treasury bills maturing April 29, 1948. Cash and exchange tenders will receive
equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange
and the issue price of the new bills.
The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, shall
not have any exemption, as such, and loss from the sale or other disposition of Treasury bills shall not have any special
treatment, as such, under the Internal Revenue Code, or laws amendatory or supplementary' thereto. The bills shall be
subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but shall be exempt from all taxation
now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States,
or by any local taxing authority. For purposes of taxation the amount of discount at which Treasury bills are originally
sold by the United States shall be considered to be interest. Under Sections 42 and 117 (a )(1 ) of the Internal Revenue
Code, as amended by Section 115 of the Revenue Act of 1941, the amount of discount at which bills issued hereunder are
sold shall not be considered to accrue until such bills shall be sold, redeemed or otherwise disposed of, and such bills are
excluded from consideration as capital assets. Accordingly, the owner of Treasury bills (other than life insurance com ­
panies) issued hereunder need include in his income tax return only the difference between the price paid for such bills,
whether on original issue or on subsequent purchase, and the amount actually received either upon sale or redemption at
maturity during the taxable year for which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418, as amended, and this notice, prescribe the terms of the Treasury bills and
govern the conditions of their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch.

In accordance with the above announcement tenders will be received at the Securities Department of this bank (9th
floor, 33 Liberty Street) New York 45, N. Y ., or at the Buffalo Branch of this bank (270 Main Street) Buffalo 5, N. Y .,
up to two o'clock p.m., Eastern Standard time (three o’clock p.m., “ Daylight Saving time” ), on Monday, April 26. 1948.
It is requested that tenders l>e submitted on special form printed on reverse side and returned in special envelope enclosed
herewith. Payment for the Treasury bills cannot be made by credit through the War Loan Deposit Account. Settlement
must be made in cash or other immediately available funds or in maturing Treasury bills.
A

llan

S p k o u l , President.

(Extract from Treasury Department statement released for publication April 20,1948, announcing results
after tenders were opened for Treasury bills dated April 22. 1948 maturing July 22, 1948)
Total applied for...........$1,691,144,000
Total accepted .............$1,001,226,000 (includes $42,816,000
entered on a non-competitive basis
and accepted in full at the aver­
age price shown below)
Average price....... 99.748
Equivalent rate of discount
approx. 0.997% per annum
Range of accepted competitive bids:
High .....................

99.754

Low .......................

99.747

Equivalent rate
approx. 0.973%
Equivalent rate
approx. 1.001%

of discount
per annum
of discount
per annum

(52 percent of the amount bid for at the low
price was accepted)




Federal Reserve
District
.....
New Y o r k ............... .....
Philadelphia ...........
Cleveland ...............
Richmond ...............
Atlanta ....................
Chicago ...................
St. Louis .................
Minneapolis ...........
Kansas City ...........
San Francisco .......
T otal ................. .....

Total
Applied for
$

10.750,000
1,453,633,000
35,725,000
31.750,000
5,475,000
3,215,000
58,290,000
2,004.000
2,295,000
10,853,000
5.810,000
71,344,000

$1,691,144.000

Total
Accepted
$

10,750,000
838,745,000
14.589.000
26.422.000
5.379.000
3.215.000
36.764.000
1.860.000
2.151.000
10.597.000
5.810.000
44.944.000

$1.001,226,000

(o v e r )

19E

IM P O R T A N T — If it is desired to bid on a competitive basis, fill in rate per 100 and
maturity value in paragraph headed "Com petitive Bid” . If it is desired to bid on a non­
competitive basis, fill in only the maturity value in paragraph headed "Non-com petitive
Bid” . D O N O T fill in b o th paragraphs on on e fo r m . A sep a ra te ten d er m u st b e u sed f o r
each bid.

No_______ ___________

TENDER FOR 91 -D A Y TREASURY BILLS
Dated April 29, 1948.

Maturing July 29, 1948.

Dated at __________
To F e d e r a l R e s e r v e B a n k o f N ew Y o r k ,
Fiscal Agent of the United States.

.1948

COMPETITIVE BID

NON-COMPETITIVE BID

Pursuant to the provisions of Treasury
Department Circular No. 418, as amended, and
to the provisions of the public notice on
April 23, 1948, as issued by the Secretary
of
the Treasury,
the undersigned offers

Pursuant to the provisions of Treasury’
Department Circular No. 418, as amended, and to
the provisions of the public notice on April 23,
1948, as issued by the Secretary of the Treasury,
the undersigned offers a non-competitive tender
for a total amount of $___________________________

--- ------------------------------------_* for a total amount of

(Not to exceed $200,000)

(Rate per 100)

$................................................ ...... . (maturity value)
of the Treasury bills therein described, or for
any less amount that may be awarded, settlement
therefor to be made at your bank, on the date
stated in the public notice, as follows:

(maturity value) of the Treasury bills therein
described, at the average price (in three deci­
mals) of accepted competitive bids, settlement
therefor to be made at your bank, on the date
stated in the public notice, as follows:

By surrender of the maturing issue of

By surrender of the maturing issue of

Treasury bills---------------- $_______________________

Treasury bills__________ $_______________________

By cash or other immediately available
funds ....................... ........ $________________________

By cash or other immediately available
funds ................................ $_______________________

The Treasurv bills for which tender is hereby made are to be dated April 29, 1948. and are to mature on
July 29, 1948.
This tender will be inserted in special envelope entitled “ Tender for Treasury bills” .
Name of Bidder..............................................................................................................................
(Please print)

By ................................................................
(Official signature required)

(Title)

Street Address...........................................
(City, Town or Village, P.O. No., and State)

If this tender is submitted for the account of a customer, indicate the customer’s name on line below:
(Name o f Customer)
(City, Town or Village, P.O. No., and State)

Use a separate tender for each customer’s bid.

IMPORTANT INSTRUCTIONS:
1. No tender for less than $1,000 will be considered, and each tender must be for an even multiple of
$1,000 (maturity value). A separate tender must be executed for each bid.
2. If the person making the tender is a corporation, the tender should be signed by an officer of the cor­
poration authorized to make the tender, and the signing of the tender by an officer of the corporation will be construed as
a representation by him that he has been so authorized. If the tender is made by a partnership, it should be signed by a
member of the firm, who should sign in the form “ .......................................................................................... , a copartnership, by
a member of the firm” .
o. Tenders will be received without deposit from incorporated banks and trust companies and from respon­
sible and recognized dealers in investment securities. Tenders from others must be accompanicd by payment of 2 per­
cent of the face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of
payment by an incorporated bank or trust company.
4.
If the language of this tender is changed in any respect, which, in the opinion of the Secretary of the
Treasury, is material, the tender may be disregarded.
P a ym en t b y c r e d it th r o u g h W a r L oan D ep o s it A c c o u n t w ill n o t b e p e rm itte d .


TENTB— 930 a


* Price must be expressed on the basis o f 100, with not more than
three decimal places. Fractions may not be used.
( ovek)




President's
‘
to
Directors

ort

fo r 1947

FEDERAL RESERVE BANK OF NEW YORK

FEDERAL




RESERVE

BANK

OF

NEW

President’s T^eport
to

Directors
fo r 1947

CONFIDENTIAL

YORK

FE D E RA L R E SE R V E BANK
OF NEW YORK

April 20, 1948.

To the Directors of the
Federal Reserve Bank o f New York:

Herewith is a confidential report on the operations of the bank during the year
1947. It gives a more detailed and intimate view of internal operations than is possible
or appropriate in a public document such as our annual report to the stockholders of
the bank.
The form of the report follows the proposal I made to the directors last year look­
ing toward the continuance of those features which had proved useful, and the elimi­
nation of those which had not. In an effort to make the report more compact and
readable, it has been printed instead of mimeographed, the cost being about the same.
During 1947 the transition from war to peace-time operations continued, the
effects of the transition being especially evident in our fiscal agency operations, where
the volume of work declined markedly. In terms of total volume of work and staff
requirements, this decline was partially offset by increases in other functions of the
bank. Increases were particularly noteworthy in those operations having to do with
check collection, the annual volume of checks processed by the bank reaching a new
peak during the year. All of our operating and personnel needs were affected to some
extent, of course, by the adoption of year-round Saturday closing commencing April
5, 1947. The net result of these various factors influencing size of staff was a reduc­
tion, during the year, of 434 employees at the head office and the Buffalo Branch com­
bined (from 4,353 to 3,919).
Of major significance to our employees was the adoption of a new personnel classi­
fication plan, effective October 16,1947, resulting from the job evaluation study which
was started in 1946. Designed to assure to each employee compensation appropriate
to the importance of his job, in proper relation to the compensation of his fellow
employees, the plan was well received by the staff. With continued fair and alert
administration, it should be an important factor in the maintenance of high standards
of employee performance.
This we shall have to count on, if we are to meet, efficiently and economically,
the demands which will be made upon us by the expanded program of military and
economic preparedness which lies ahead.




Yours sincerely,

President,

CONTENTS
PAGE
O

M

pen

arket

O

p e r a t io n s

...................................................................................................................................... .......1

F isc a l A g e n c y O p e r a t i o n s ......................................................................................................... ..... 2
G overn m en t F in a n c in g O p e r a t io n s .................................................................................. ......2
R ed em p tion o f A r m e d F orces L eave B o n d s ........................................................................2
C on solid ation o f S avings B o n d O p e r a t io n s ........................................................................3
Issue, E x ch a n g e and R ed em p tion o f G overn m en t S e c u ritie s .......................................3
R econ stru ction F in a n ce C o r p o r a t io n ..................................................................................... 3
F o r e ig n F u n d s C o n t r o l ......................................................................................................... ..... 4
In tern a tion a l B a n k f o r R econ stru ction an d D e v e lo p m e n t ..................................... ..... 4
P e r s o n n e l ............................................................................................................................................ ..... 4
S a la ry A d m in is t r a t io n ................................................................................................................. 5
The F e d e ra l R eserve C l u b .......................................................................................................... 5
G rou p L ife In s u ra n c e ................................................................................................................... 6
B lu e Cross P la n an d D o c t o r s ’ P la n .................................................................................... ..... 6
P a y r o ll D ed u ction s fo r Series E S avin gs B o n d s ................................................................ 6
F iv e -d a y W eek ............................................................................................................................... 6
F oreign O pe ra tio n s ....................................................................................................................... ..... 6
A ssets H e ld fo r F o r e ig n and In tern a tion a l A c c o u n t ................................................. ..... 6
C hanges in Status o f F o r e ig n A c c o u n t s .............................................................................. 8
L oan s on G o l d ............................................................................................................................ ..... 8
G old M o v e m e n t s ....................................................................................................................... .....8
U n ited States S tab ilization F u n d ............................................................................................9
In tern a tion a l B a n k fo r R econ stru ction an d D e v e lo p m e n t ...........................................9
V isits to F o r e ig n C en tral B a n k s ......................................................................................... .....9
F o r e ig n C entral B a n k V i s i t o r s ........................................................................................... .....9
S taff G rou p on F o r e ig n I n t e r e s t s ............................................................................................9
C h e c k C o l l e c t i o n s ...............................................................................................................................9
C hange in O p era tin g P r o c e d u r e ......................................................................................... .....9
L im its on P rotest and W ir e N on p a y m en t I n s t r u c t io n s ..................................................10
A i r F r e ig h t S h ipm en t o f C h e c k s ............................................................................................10
C heck R o u tin g S y m b ol P l a n ................................................................................................ .....10
G overn m en t Checks ......................................................................................................................11
C a s h O p e r a t i o n s ....................................................................................................................................11
C u rre n cy an d C oin Shipm ents b y A rm o re d T r u c k .........................................................11
L oan s

and

C r e d i t s ............................................................................................................................ .....11

B a n k S u per v isio n

and

B a n k R e l a t i o n s ............................................................................... .....12

M em bersh ip in S y s t e m ............................................................................................................ .... 12
N ew B a n k C harters and N ew B ra n ch O ff ic e s .................................................................... 12
M eetin gs o f B a n k e r s ..................................................................................................................... 12
T o u rs T h rou g h the B a n k ....................................................................................................... .... 12
R ese a r c h S tu dies

and

P u b l i c a t i o n s ....................................................................................... .... 12

F o r e ig n M is s io n s ............................................................................................................................ 13
B u d g e t .................................................................................................................................................... .... 13
O pe r a tin g C ir cu la rs

and

B u l l e t i n s ....................................................................................... .... 14

B u f f a l o B r a n c h O p e r a t i o n s ..................................................................................................... .... 14
F is ca l A g e n c y O p e ra tio n s..................................................................................................... .... 14
P e r s o n n e l .......................................................................................................................................... 14
A ir F r e ig h t S h ipm ents o f C h e c k s ....................................................................................... .... 15
In te r -d istrict Settlem ents ..................................................................................................... .... 15
L oan s to M em ber B a n k s .......................................................................................................... ....15
B a n k M em bersh ip an d B a n k R e la tio n s .................................................................................. 15




PRESIDENT’S REPORT TO DIRECTORS FOR 1947
OPEN M ARKET OPERATIONS
The Federal Reserve Bank of New York, as agent
for and under the direction of the Federal Open Market
Committee, operates the System Open Market Account
in which the twelve Federal Reserve Banks participate
for the purpose of conducting open market operations
in United States Government securities.
The role of open market operations, in furthering
Federal Reserve System policy and in facilitating Treas­
ury management of the public debt, was varied and
active owing to the diverse and changing influences in
the money and Government security markets. Fairly
continuous operations by the System were required, on
both sides of the market at times, to offset gains or losses
in member bank reserve balances and to maintain rela­
tive stability in prices of Government securities. In order
to help counteract inflationary forces, which grew signifi­
cantly during 1947, the Treasury and the Federal Reserve
System acted in concert, to combine and coordinate man­
agement of the public debt with a firmer credit policy.
This Bank was the chief executive agent of policy in the
adjustment of the volume of Federal Reserve credit, the
movement of rates, and the support of Government
security prices. Its activities in this capacity were car­
ried forward primarily through open market operations
in United States Government securities, which were con­
ducted with a view to restraining inflationary pressures
arising out of an expansion in credit, within the limits
imposed by the need to maintain stability in the market
for Government securities.
The principal factor of expansion in the credit supply
during 1947 was a large and fairly continuous inflow of
gold amounting to $2.9 billion. Treasury operations,
including an active program of debt retirement with
emphasis on debt held by the Federal Reserve System,
were a counterinfluence exercising a major contractive
force to the extent that a cash operating surplus of
nearly $7 billion, together with net sales of non-market
debt, caused, at times, substantial drains on the reserve
positions of commercial banks. Funds from this source
were applied in part to the redemption of System-held
debt which this bank presented for redemption, in accord­
ance with agreements reached between the Treasury and
the System, with a view to curtailing the return flow of
funds to the market on Treasury operations. System
redemption operations and open market sales, as a means
of reducing Federal Reserve Bank credit outstanding,
were narrowly circumscribed, however, and the reduction
in total holdings from this source was offset in part by
purchases dictated by a need to regulate the supply of
credit, to control the movement of rates, and to support
Treasury bond prices.
One of the problems at which open market operations
were directed was the tendency of banks to sell short­
term Treasury obligations to the Federal Reserve Sys­
tem in order to obtain funds with which to buy long­
term Government securities or to expand loans, thus
increasing the credit supply. In an effort to escape, in
part, the limiting influence of this tendency, modest in­




creases were permitted in short-term rates on Govern­
ment securities. The Federal Open Market Committee
rescinded the % of 1 percent fixed buying rate (subject
to repurchase option) on Treasury bills and, beginning
with the issue dated July 10, 1947, this bank, as agent
for the System, administered its bill holdings so as to
permit controlled increases in the rate on a basis deter­
mined both by bids placed for the System as well as by
the market. This step paved the way for changes in
other short-term rates, particularly the one-year rate for
Treasury certificates. Effective with the issue dated
August 1, 1947, the Treasury began a program of refund­
ing maturing certificate and note issues on more favor­
able terms by shortening maturities or increasing the
coupon rate. These operations created a certain amount
of pressure on the longest maturities of certificates of
indebtedness and Treasury notes during the period of
rate increase, and necessitated active support operations
conducted by this bank to maintain conditions in the
market in order to assure the success of Treasury refund­
ing operations and the continuance of appropriate rela­
tionships for other short-term rates. The rate for ninetyone day Treasury bills, which had been rigidly held at
% of 1 percent for some five years, was permitted to
rise to about 0.95 percent, while the one-year coupon
rate for Treasury certificates was increased from % to
lYs percent by the end of the year. System open market
operations facilitated the increase in rates. Downward
pressure on long-term rates, which was a particular prob­
lem in the second and third quarters of the year, was
also eased through the influence of this program supple­
mented by sales, for Treasury Trust Accounts, of $1.8
billion long-term Treasury bonds (such sales being exe­
cuted by this bank, as fiscal agent of the United States),
and by the offering by the Treasury Department of a
new issue of nonmarketable long-term 2 * /2 percent bonds.
Yields on Treasury and Corporate Securities

1

2

PRESIDENT’S REPORT TO DIRECTORS FOR 1947

System open market account operations, which, during
the greater part of the year, were governed by considera­
tions of regulating the volume of credit and the move­
ment of short-term rates, entered a new phase late in the
third quarter of the year, when the character of the
Treasury bond market changed from one of strong de­
mand and limited supply to one of uncertainty as to the
adequacy of available investment funds to meet all
requirements. Doubts developing at this time as to the
future course of the interest rate curve were strength­
ened by increases in the certificate and bill rates in the
final quarter of the year. Prices of long-term Treasury
bonds began to decline, while the bank demand for short­
term Treasury obligations increased. By the middle of
November, bond prices had declined to such an extent as
to require intervention, through System open market
account operations, to maintain orderly market condi­
tions under what was at first a reluctant, and later, at
lower levels, an aggressive, policy of price support.
Heavy and continuous purchases of Treasury bonds
made in this connection were the first transactions of
^heir kind undertaken in any magnitude since December
1942. These purchases, totaling $1,925 million, were,
however, almost entirely offset in the last quarter of the
year by sales and redemptions of $1,600 million short­
term Treasury obligations which some sellers of bonds
were buying on a replacement basis.
The uncertainties created by the lowering of our sup­
port levels on December 24, led to extremely heavy sales
of Treasury bonds by the banks and other investors dur­
ing the last week of the year, these being only partly off­
set by redemptions and by sales of short-term securities
by the Federal Reserve Banks. This had the effect of
creating a temporary bulge in the excess reserves of
member banks of about $500 million at the year end, but
the situation was quickly corrected early in 1948 by
redemptions and by net sales of Government securities
by the System.
During the year, under the direction of the Federal
Open Market Committee, we purchased in the open mar­
ket for the twelve Federal Reserve Banks, securities hav­
ing a total face value of over $21.6 billion, and sold or
presented for payment securities having a face value of
$27.1 billion. Treasury bills purchased by us for our own
account at the % percent buying rate and repurchase
option established in 1942 and terminated with the issue
of Treasury bills which matured October 2, amounted to
$19.2 billion, while bills amounting to $22.4 billion were
sold, presented at maturity for payment, or transferred
to the System Open Market Account.
Total holdings of Government securities at all Federal
Reserve Banks amounted to $22,559,334,200 at the end of
1947, as compared with $23,349,685,000 at the end of
1946 and $20,763,563,000 on June 19, 1947, the low point
for the year. The net decline for the whole year of
$790,350,800 was the result of a decline of $3,311,573,000
in Treasury bills, an increase of $421,743,000 in certifi­
cates of indebtedness and Treasury notes combined, and
an increase of $2,099,479,200 in Treasury bonds.
The total holdings of such securities at this bank at
the year end amounted to $5,697,741,200, as compared
with $5,799,794,000 at the end of 1946 (including Treas­
ury bills held in the option account).




FISCAL AGENCY OPERATIONS
Government Financing Operations

Government financing during 1947 was characterized
by (1) redemption of $11 billion of marketable Govern­
ment securities, for the most part short-term issues held
largely by banks, (2) refunding all or part of certain
matured issues and (3) continued sales of non-marketable savings issues to non-bank investors.
The reduction in the public debt resulting from the
redemption of $11 billion of marketable obligations out­
standing was partially offset by a net increase of $3
billion in the amount of non-marketable savings issues,
an increase of $4.4 billion in special issues held by Gov­
ernment trust funds and an increase of $1.3 billion in
non-interest-bearing notes issued to the International
Bank and Monetary Fund. The net decrease during the
year in the public debt was $2.5 billion. The increase
in non-marketable savings issues outstanding was
accounted for by net sales of Savings Bonds amount­
ing to $1.8 billion, $500 million increment in value of
outstanding Savings Bonds, and a $900 million new
issue of 2!/2 percent Treasury Bonds, Investment Series
A-1965. This issue was noteworthy by reason of the
fact that, except for Savings Bonds and Savings Notes
which are on continuous sale and the regular weekly
offering of Treasury Bills, it was the first cash offering
made by the Treasury since the Victory Loan Drive in
December, 1945. The bonds were offered for subscrip­
tion only by insurance companies, savings banks, savings
and loan associations, pension and retirement funds,
fraternal benefit associations, endowment funds, credit
unions and commercial banks holding time or savings
deposits. Subscriptions (except those for account of
commercial banks) were limited to 25% of the increase
in net assets of the subscriber in the six months ending
June 30, 1947, or $250,000, whichever was greater. Com­
mercial banks were permitted to subscribe in an amount
up to 25% of the increase in savings and certain time
deposits in the same period, or $25,000, whichever was
greater. This bank received 1,086 subscriptions for the
new investment bond, amounting in the aggregate to $400
million.
Redemption of Armed Forces Leave Bonds

Armed Forces Leave Bonds were issued to certain
veterans of World W ar II as compensation in lieu of
terminal leave, in acordance with the provisions of the
Armed Forces Leave Act of 1946. The act provided
that each eligible veteran discharged from the armed
forces after January 1, 1943, was entitled to receive a
bond, dated as of the first day of the calendar quarter
next following the date of his discharge and maturing
5 years from such date. On this basis, the first maturity
would have occurred on April 1, 1948, and subsequent
maturities would have occurred at three-month intervals
thereafter, with the largest amounts falling due in the
last part of 1950 and the early part of 1951.
The Armed Forces Leave Act of 1946 was amended
by Public Act No. 254, 80th Congress, effective July 26,
1947, which provided, in effect, that all Armed Forces

FEDERAL RESERVE BANK OF NEW YORK

Leave Bonds would become payable on demand at the
option of the owners beginning September 2, 1947. The
amendment further provided that all financial institu­
tions qualified as agents for the payment of United
States Savings Bonds would be authorized to pay Armed
Forces Leave Bonds in substantially the same manner.
Armed Forces Leave Bonds were redeemed in large
volume commencing on September 2. In the month of
September alone, our Savings Bond Redemption De­
partment received 475,000 bonds, having an aggregate
redemption value of more than $101 million. By the
end of the year, 738,586 bonds with an aggregate re­
demption value of $155,472,000 had been redeemed by
this bank. It was estimated that this amount represented
67% of all the Armed Forces Leave Bonds held in this
District.
The handling of this volume of work with very little
advance notice and with no increase in mechanical equip­
ment or personnel posed some difficult questions of opera­
tion. The peak in volume experienced in September was
handled largely in overtime work covering a period of
about 6 weeks, and bonds received subsequently were
absorbed in the normal Savings Bond redemption
operation.
Consolidation of Savings Bond Operations

Early in 1947, consideration was given to consolidating
the work conducted at the Buffalo Branch, in connection
with the redemption of United States Savings Bonds paid
by paying agents, with the same type of work conducted
at the head office.
When provision was first made for the redemption of
Savings Bonds through paying agents in October 1944,
it was determined that the Buffalo Branch would handle
the bonds paid by about 150 agents situated in the branch
territory. This was an economical operation as long as
the volume of redemptions remained high. When the vol­
ume commenced to decline, however, it became apparent
that, because of the items of fixed cost which were dupli­
cated to a certain extent when the operation was con­
ducted at two points and which could not be readily
adjusted to reduction in volume, it would be more eco­
nomical for the head office to handle the redemption
of paid Savings Bonds received from all paying agents in
the District. Accordingly, this operation at the branch
was concluded on June 30,1947, and thereafter all paying
agents in the branch territory forwarded paid bonds to
the head office. Since the head office was able to absorb
the additional volume of work without any substantial
increase in expense, the consolidation resulted in sub­
stantial economies.
Further economies were realized as the result of a
second consolidation of operations at the head office. For
the past several years, the principal phases of the bank’s
operations, as fiscal agent of the United States, in connec­
tion with the issue, reissue and redemption of United
States Savings Bonds have been divided between two
departments at the head office. The Government Bond
Department conducted all operations relating to original
issues and reissues of bonds and the consignment of unis­
sued bond stock to issuing agents. This work was sub­




3

stantial and involved 224 employees at the beginning of
1947. The Savings Bond Redemption Department han­
dled all redemption of Savings Bonds, including those
paid by paying agents, and also maintained files relating
to all Savings Bond operations. The number of employees
in the department at the beginning of the year was 342.
During the year, it was proposed that substantial
economies in space and personnel could be realized by
combining all Savings Bond issue, reissue, consignment
and redemption operations in a single department, to
be known as the Savings Bond Department. The Plan­
ning Department reviewed and approved this proposal
and assisted in putting it into effect on October 6, 1947.
The consolidation resulted in a saving of nearly 3,000
square feet of floor space, a reduction in personnel, and
reduced rental of machinery and equipment. A t the
end of the year, there were 437 people in the Savings
Bond Department, and a further contraction is antici­
pated. These economies were effected in spite of the
absorption of the work previously performed at Buffalo,
and temporary increase in redemption operations result­
ing from the redemption of Armed Forces Leave Bonds.
Issue, Exchange and Redemption of Government Securities

Transactions in connection with the issue, exchange
and redemption of marketable Government securities
handled during 1947 by the bank, as fiscal agent of the
United States, were at slightly lower levels than during
1946. The volume of such transactions, although sub­
stantially below the volume handled during the years
between 1941 and 1945, remained considerably in excess
of that experienced in any year before the beginning
of defense and war financing.
The number of United States Savings Bonds delivered
by the bank in connection with original issues was
8,632,000 in 1947. This compares with 12,255,000 bonds
handled in 1946, a decline of nearly 3 0% , reflecting
decreased sales of these bonds. The decline in aggregate
issue price of bonds delivered (from $1,171,375,000 to
$985,299,000) was about 1 5 % , indicating that the
decrease in sales was principally in bonds of the smaller
denominations. The number (13,873,000) of Savings
Bonds redeemed in the Second Federal Reserve District
in 1947 was about 25% less than the number redeemed
in 1946, and the aggregate redemption value of such
bonds ($856,828,000) was 22% less.
Reconstruction Finance Corporation

The Corporation has been terminating its wartime
activities while at the same time undertaking a reorgani­
zation of its accounting records and procedure. The
accounting records of the Corporation, relating to lend­
ing programs for which its district Loan Agencies have
administrative responsibility, have been maintained in
Washington, and duplicate records have been kept at the
Federal Reserve banks. These records are being decen­
tralized and each district Loan Agency will ultimately
maintain complete accounting records in connection with
the lending programs it administers. The duplicate ac­
counting records which we have maintained have been or

4

PRESIDENT’S REPORT TO DIRECTORS FOR 1947

will be eliminated as and when the New York Loan
Agency can assume responsibility for them. To date, ap­
proximately 60% of such records has been discontinued
by us.
The disbursements and collections made by us during
the year for all activities of the Corporation aggregated
$424,000,000 and $662,000,000, respectively, as compared
with disbursements and collections of $649,000,000 and
$997,000,000 the previous year. This represents a de­
crease of approximately 35% and 34% .
The gradual termination of the Corporation’s war­
time activities and the decentralization plan of the Cor­
poration resulted in the abolishment of the Defense Plant,
Defense Supplies and the Washington Proof sections
of the R. F. C. Custody Department. In keeping with
the decreased volume of work, the personnel assigned
to the department declined from 245 employees at the
beginning of the year to 98 at the end of the year, a
decrease of 60% .
Foreign Fnnds Control

As of the beginning of the year 1947 the Foreign Funds
Control activities of all other Federal Reserve banks
were transferred to this bank. Despite this, a substantial
reduction in work volume and personnel was achieved
during the early months of the year. Progress in liquida­
tion of this wartime function was arrested, pending
determination of a number of complex questions of
policy such as the disposition of (a) blocked property
held for account of nationals of countries with which
defrosting agreements have not been made, (b) blocked
property held for account of nationals of countries with
which defrosting agreements are in effect, but whose
owners have failed to apply for unfreezing through a
certification procedure pursuant to such agreements,
and (c) dollar securities which are reported to have
been looted during the German occupation of certain
European countries.
Secretary of the Treasury Snyder has announced that,
effective June 1, 1948, the Treasury Department will
cease to have jurisdiction of blocked foreign funds. On
that date, the jurisdiction over the remaining blocked
assets will be transferred from Foreign Funds Control
in the Treasury Department to the Office of Alien
Property in the Department of Justice. Presumably our
connection with this work will then cease.
International Bank for Reconstruction and Development

In accordance with provisions of the Bretton Woods
Agreements Act we were requested to act as fiscal agent of
the International Bank for Reconstruction and Develop­
ment in connection with its first two issues of bonds.
These were $150,000,000 principal amount of twentyfive-year 3 % bonds and $100,000,000 principal amount
of ten-year 2^4% bonds, both dated July 15, 1947.
After the bonds had been offered by the International
Bank early in July, we prepared and sent confirmations
of the allotments to more than 1,700 dealers through­
out the country and subsequently received their instruc­
tions for delivery of the bonds allotted. On July 28,




1947, we delivered 237,724 bonds in 3,540 deliveries
over the window and received payment therefor for
account of the International Bank; no deliveries were
made by mail.
As fiscal agent of the International Bank, this Bank
conducts a variety of transactions in the outstanding
bond issues. A supply of unissued bonds is maintained
in our vaults for use in making various transfers and
exchanges, such as denominational exchanges. W e issue
and pay checks in payment of interest on registered
bonds, and also pay interest coupons detached from
coupon bonds and presented to us. A ll bonds issued are
authenticated by us as registrar, by manual signature of
one of our officers. Prior to the end of the year, more
than 250,000 pieces had been authenticated and issued.
The bonds now outstanding are in temporary form, and
when permanent bonds have been prepared we will
authenticate them and issue them in place of the tem­
porary bonds which will be presented to us for exchange.
W e also maintain various records showing in detail all
transactions involving the issuance and retirement of
bonds of the International Bank.

PERSONNEL
The number of employees at the head office continued
to decline during 1947, reaching 3,755 at the year end
as against 4,142 a year previously. The year-end figure
was approximately 20.4% below the peak of 4,737 reached
in July 1944.
The net decline in number of employees was the result
of two opposing factors. There was a sharp reduction in
the number of employees devoting their time to the
work of the bank on behalf of the United States Treasury
and the Reconstruction Finance Corporation, while there
was a moderate increase in the number of employees
engaged in other bank work. To the extent possible,
an attempt was made to transfer employees no longer
needed in fiscal agency work, to other departments. Such
transfers were limited, however, by the fact that the prin­
cipal need for help was in departments, such as the Check
Department, requiring relatively unskilled workers. It
seems probable that the number of employees in the bank
as a whole may expand slightly during 1948, as a result
of continuing needs of this character, which are difficult
to meet because of a lack of desirable applicants for work
of this sort.
The following table covering the years 1943-1947, in­
clusive, shows some basic statistics concerning the head
office employment situation:
1943

Employees, close of business Dec. 31... 4,415
Employees, average number, engaged in
work reimbursable by U. S. Gov’t, and
its agencies..........................................
1,844
Employees, average number, all other__
2,422
Applicants .............................................. 12,178
Hired....................................................... 2,729
Separations*............................................ 2,008
Dismissals (included in Separations)...
109

1944

1945

1946

1947

4,367 4,294 4,142 3,755
1,893
2,601
4,736
1,379
1,427
133

1,584 1,218
820
2,662 2,949 3,070
6,002 8,346 7,405
1,043
948
565
1,116 1,100
952
120
246
402

* Includes entered military service, resigned, dismissed, retired, died,
became officers.

FEDERAL RESERVE BANK OF NEW YORK

The chart appearing below illustrates the fluctuations
in yearly average employment in the bank during the
past twenty years, and shows the effect of reimbursable
work performed for the United States Government and
agencies thereof, on total employment.
Fluctuations in Yearly Average Employment, 1928-47
THOUSANDS
OF E M P L O Y E E S

TOTAL EMPLOYEES

5

were then assigned. By December 31, 1947, the number
of employees whose salaries exceeded the maximums for
the jobs to which they were assigned had been reduced
to 223 and the excess to $39,425, or 0.37% of the yearend salary liability.
Adoption of the new personnel classification plan is
in keeping with the current trend in industry and repre­
sents a more systematic approach to the question of
employee relations and compensation. Such plans, how­
ever, are not static. Management must be continually
alert to maintain proper internal alignment and an ap­
propriate relationship with the community market. A
continuous review of the content and description of jobs
and periodic market surveys are contemplated.
The following figures, covering the years 1943-1947,
inclusive, show employee salary liability at the head
office as of the close of business on December 31 of each
year. Supplementary compensation which was paid prior
to January 1, 1946, has been treated as part of salary.
1943

N A L L OTHER WORK

Salary Administration

The major development of the year 1947 affecting em­
ployees’ salaries was the adoption of a new personnel
classification plan. This was the result of a job evalua­
tion program undertaken by the bank, in common with the
other Reserve Banks, in 1946. Pursuant to the program,
each job in the bank was carefully analyzed and
described; and each job was compared with every other
job to determine the relative difficulty and rank of
all the jobs in the bank. On the basis of this analysis
and evaluation, ranges of pay were established for all
jobs. These ranges were fixed after a survey, made
in April 1947, of the salaries paid by progressive in­
dustrial, commercial, financial, and utility enterprises
in New York City. The midpoint of our salary range
was established close to the top of the highest quarter
bracket of this quality community rate structure.
The new personnel classification plan was put in
effect in the fall of 1947. The 681 employees who were
receiving salaries less than the minimums for their
respective salary grades under the plan received in­
creases, effective October 16, 1947, to bring their salaries
to such minimums. These increases totalled $89,446, or
0.84% of the then existing salary liability. As of the
same date, 263 employees were receiving salaries in
excess of the maximum rates for their respective salary
grades by an aggregate amount of $52,787, or 0.49% of
salary liability. Effort has been, and will continue to
be, made to place these employees in more responsible
(and higher paying) jobs than those to which they




Salary liability
(in thousands o f dollars)

1944

1945

1946

1947

$8,503 $8,790 $9,515 $11,242 $10,621

The following graph shows the changes in annual em­
ployee compensation for the past twenty years and the
extent to which such compensation was reimbursable by
the United States Government and its agencies. The term
“ compensation” for purposes of the graph, includes basic
salary, supplemental compensation, separation pay, over­
time and ‘ ‘ breakfast money ’ ’.
Total Yearly Compensation Received by Employees and
Extent Reimbursable, 1928-47
MIL LION S
OF D O L L A R S

12

1928

’ 30

’ 32

’ 34

»36

’ 30

’ 40

’ 42

’44

’ 46

The Federal Reserve Club

During 1947, the Club continued to demonstrate its
usefulness to its members, and indirectly, to the bank.
Membership in the Club averaged approximately 84%
of all employees. The Club sponsored some fifty different

PRESIDENT’S REPORT TO DIRECTORS FOR 1947

6

social, recreational and other activities in 1947. Exit
interviews with employees resigning voluntarily under­
scored the popularity of the Club with the employees.
While the cafeteria, which is not a Club-sponsored proj­
ect, was most frequently named by resigning employees
as the individual feature of the bank which they enjoyed
most, the Club and its various activities collectively,
were mentioned more frequently.

Group Life Insurance

The bank’s plan providing group life insurance cover­
age on an optional basis in amounts ranging from $500
to $3,000, depending on the salary and sex of the insured,
continued unchanged during the year. Participants pay
$7.20 per annum for $1,000 of insurance. As of Decem­
ber 31, 1947, 2,735 persons or 71.6% of the staff partici­
pated in the plan. Death benefits of $58,000 were paid
to the beneficiaries of 19 employees and 1 officer who died
during the year. Because of changes in economic condi­
tions since the present plan was set up in 1935, consid­
eration is being given to the practicability of some plan
providing increased coverage.

Blue Cross Plan and Doctors’ Plan

The bank provides members of its staff with protec­
tion, if desired, under the Blue Cross Plan and Doctors’
Plan. “ Individual” , “ husband and wife” or “ family”
coverage is afforded, the bank paying two-thirds of the
premium. In 1947 the cost to the bank was $80,757 and
to participants $41,364. The plan provides certain pro­
tection against the usual hospitalization and related ex­
penses, together with in-hospital medical and surgical
care. As of December 31, 1947, 3,180 persons or 83.3%
of the staff were members of the plan. During the year
1947, members of the bank’s staff insured under the plan
filed 630 claims for 5,065 days’ hospital care, costing
$55,190, and 466 claims for medical and surgical care
amounting to $31,559. The plan has contributed sub­
stantially to employee security and seems to have had a
beneficial effect on morale.

Payroll Deductions for Series E Savings Bonds

As of December 31, 1947, 2,351 members, or 61.6% of
the bank’s staff were purchasing Series E Savings Bonds
under the payroll deduction plan, the average deduction
being about 3.6% of salary. Although continuing efforts
were made during the year to encourage maximum par­
ticipation, there has been a reduction compared with
December 31, 1946 when 64.6% of the staff participated
with an average deduction of 3.9% of salary.

Five-day Week

Permissive State legislation made Saturday closing pos­
sible, and commencing Saturday, April 5,1947, this bank




and the other banks in New York City elected to remain
closed on Saturdays throughout the year. Since then we
have been on a five-day week.
Saturday closing did not involve the formal lengthen­
ing of the hours worked on the remaining five work days.
The bank continued on a variable workweek under which
all employees with a few exceptions are expected to work
such periods as may be necessary to complete the work of
their respective units each day. Actually, some employees
have occasionally had to work longer on their remaining
work days than would have been necessary prior to Satur­
day closing. The difficulty of operating smoothly some of
the mass production operations of the bank has been
accentuated, especially at times when legal holidays make
a short week still shorter. The five-day week is, however,
exceedingly popular with employees.

FOREIGN OPERATIONS
Assets Held for Foreign and International Account

Continuing the decline which has been apparent since
the latter part of 1945, total assets held at the Federal
Reserve Bank of New York for foreign account decreased
$1,960 million further during 1947 to $3,370 million.
This reduction, which reflected the continued heavy
foreign requirements for dollar exchange, is even more
significant when considered in the light of the ship­
ment of about $2 billion of foreign-owned gold to this
country in 1947 and substantial amounts of dollars made
available under the United States Government foreign
lending program and by the Internationl Bank for
Reconstruction and Development and the International
Monetary Fund.
In contrast to the substantial decline in total assets
held for foreign account, the total assets held for the
International Fund and Bank increased from $412
million to $3,039 million during 1947. This increase
resulted almost exclusively from the contributions made
by the various members (including the United States)
of the International Monetary Fund and from the pro­
ceeds of the sale of bonds issued by the International
Bank.
Of the various types of assets held for foreign account,
by far the greatest reduction during 1947 occurred, as
can be seen from the table on the following page, in gold
held under earmark, which declined from $3,823 million
to $2,766 million. The accounts having the greatest
reduction in total assets were those of the central banks
of Canada, Argentina, Switzerland, China, Belgium, and
the Netherlands. Total assets held for account of Bank
of England had a net increase of $54 million, drawings
of $2,850 million under the $3,750 million British loan,
about $500 million of gold imports from England, and
drawings of $240 million from the International Fund,
offsetting necessary outpayments.

FEDERAL RESERVE BANK OF NEW YORK

7

Total Assets Held at Federal Reserve Bank of New York
for Foreign and Certain International Accounts
(In Millions)
Net Change
Dec. 3 1 ,1946Dec. 31,1947

Sept. 19,1945
(H igh Point)

Dec. 31, 1946

Dec. 31,1947

Earmarked Gold ...........................................................
D eposits............................................................................
United States Government Securities......................
Miscellaneous Securities, Commercial Paper, and
Bankers Acceptances................................................

$4,175 (c)
1,082
1,589

$3,823 (a)
508
969

$2,766 (b)
392
187

22

30

25

T o t a l — Foreign Accou nts.........................................

$6,868

$5,330

$3,370

— $1,960

—
—
—

$

6
11
395

$ 764
330
1,945

+ $ 758
+
319
+ 1,550

T o t a l — International Accounts ......................

—

G r a n d T o t a l .......................................................................

$6,868

$ 412
$5,742

$3,039
$6,409

+$2,627
+ $ 667

Foreign Accounts
— $1,057
—
116
—
782
—

5

International Accounts
(International Fund and Bank)
Earmarked Gold .................................................. ___
Deposits.................................................................... ___
United States Government Securities............. . . . .

(a ) Includes $156,746,000 held as collateral against loans made by Federal Reserve Banks to foreign central banks.
(b ) Includes $132,641,000 held as collateral against loans made by Federal Reserve Banks to foreign central banks; excludes
$8,020,000 held for account o f domestic commercial banks as collateral against their loans to foreign central banks;
excludes $80,814,000 held by Federal Reserve Bank o f New York as fiscal agent to secure repurchase agreement with
Brazil.
(c ) Includes $10,204,000 held as collateral against loan made by Federal Reserve Banks to a foreign central bank; excludes
$102,814,000 held for account o f a domestic bank against loan to a foreign central bank.

Trends during recent years of total assets held for
foreign account and for account of the International
Fund and Bank are shown in the accompanying chart. It
can be seen that the total for foreign account increased
progressively throughout the war years, reaching a
record high of around $7 billion in September 1945. The
trend was reversed immediately after the end of hos­
tilities and the virtual cessation of the Lend Lease pro­
gram, and by the end of 1947 the amount of assets
held for foreign account, at $3,369 million, was less
than half the September 1945 peak.
This bank began to hold assets for the International
Fund and Bank in March 1946. There was a gradual in­
crease in these holdings until February 1947, when they
rose abruptly to $3.4 billion largely as a result, as men­
tioned above, of the payment by member countries of their
contributions to the International Monetary Fund. Sub­
sequent disbursements by both the Fund and Bank
brought the total by the end of the year to $3,039 million.




Total Gold and Dollar Assets Held at the Federal Reserve
Bank of New York for Foreign Accounts and
for International Fund and Bank

1939

1940

1 941

1942

1943

1944

1945

1946

1947

PRESIDENT’S REPORT TO DIRECTORS FOR 1947

8
Changes in Status of Foreign Accounts

During the past year a new account was opened in
the name of Banco Central de la República Dominicana
— the new central bank of the Dominican Republic,
which opened in October 1947. Gold formerly held in
an account for Banco de Reservas de la República
Dominicana was transferred to the account of the new
bank. The account in the name of Banco Central de
Guatemala was closed during the year; it will be re­
called that in 1946 an account was opened for Banco de
Guatemala, which had assumed the central bank functions
of Guatemala. A t the end of the year, negotiations were
under way for the opening of an account for the
Austrian National Bank, the previous account of that
bank having been closed out when Germany absorbed
Austria.
Two new fiscal agency accounts were opened during
the year, one entitled “ Military Governments for Ger­
many (U S /U K ) Joint Export Import Account,” and
the other in the name of “ Tripartite Commission for
the Restitution of Monetary Gold. ’ ’ The former account
is designed to facilitate the foreign trade of the BritishAmerican zone of Germany, under the direction of the
Military Governments for Germany (U S /U K ) Joint
Foreign Exchange Agency. The Tripartite Commission
was established for the purpose of implementing Part III
of the Agreement on Reparations signed in Paris on
January 14, 1946. It operates independently, but in
close cooperation with the Inter-Allied Reparations
Agency, and is responsible for the settlement of claims
and the distribution of looted gold, including gold re­
covered in Germany. The fiscal agency accounts in the
names of Banque Algerie Tresorerie Afrique Nord,
Banque de l ’Afrique Occidentale S. A. (Tresor Central),
and Banque d ’Etat du Maroc S. A . Tresorerie Afrique
Nord, which were established primarily in connection
with this Government’s wartime operations in North
Africa, were closed during 1947.
Owing primarily to political considerations the
accounts in the names of the central banks of Bulgaria,
Hungary, Rumania, and Yugoslavia have remained dor­
mant. The accounts are still blocked under the Treasury
Department’s freezing control, and certifications by the
Secretary of State under Section 25(b) of the Federal
Reserve Act have not been issued.
Loans on Gold

The increased activity in loans on gold to our foreign
correspondents, which first developed in 1946, continued
throughout the past year, although the total of such
loans outstanding declined from $147.3 million to $50.6
^million during the period.
The arrangements in effect with respect to the loans
outstanding at the year-end provide for three-month
advances up to stipulated maximum amounts. Renewals
thereof are subject to further arrangements at maturity.
The loans are fully secured, with a slight margin, by gold
held in our vaults, and interest is at the discount rate
of this bank.
Outstanding at the beginning of the year were advances
to the five foreign central banks of Uruguay, Netherlands,




Greece, Costa Rica and Nicaragua. New loans were made
during the year to the central banks of six countries:
Poland, Bolivia, Ecuador, England, Turkey, and France.
Seven central banks liquidated their indebtedness to
us in full during the year. Uruguay repaid the last of
our advances against gold in February 1947, after we
had advised the central bank that, in view of the fact
that loans to it had been on our books for over a year,
we were,, not disposed to grant indefinite renewals. We
were obliged to deny Nicaragua’s request for a new
loan in view of the absence of official relations between
the United States Government and the regime in power
in Nicaragua. The $130 million loan to De Nederlandsche
Bank was paid on April 15, by the use of the proceeds
of the gold collateral which the Dutch decided to sell,
not having come into the possession of sufficient other
dollar funds. A t the end of 1947 only the central banks
of Greece, Poland, Turkey, and France were indebted to
us as the result of loans against gold.
The following schedule shows the loans against gold
which were outstanding during 1947:

Central bank
of

(In thousands of dollars)
Maximum
Date of
End
outstanding
first advance
of 1946
1947

Uruguay
..
Netherlands . ..
Costa Rica. .. ..
Nicaragua .. ..
Poland ....... ..
.

8-17-45
5-24-46
9-24-46
10-19-46
11-12-46
4- 8-47
4-11-47
5- 9-47
6-19-47
9-29-47
12-22-47

Total..

$ 5,000
130,000
10,800
1,000
500
—
—

—
—
—
—
$147,300

$ 5,000
130,000
10,800
1,000
500
17,000
1,000
1,700
100,000
17,000
10,000

End
of 1947

$

—

—
8,800
—
—

17,000
—
—
—
14,800
10,000

Date of
final
repayment

2- 6-47
4-15-47
4-21-47
2-13-47
6-10-47
11- 5-47
8-21-47

$50,600

In addition, the central banks of Bolivia and Nicaragua
borrowed during the year from domestic commercial
banks against gold held in our vaults.

Gold Movements

There was a marked increase during 1947 in the net
gain of gold to the United States from abroad— a
movement which began soon after the end of hostilities
in 1945. In 1947 the United States’ net acquisition of
gold (other than through new domestic production)
amounted to $2,138 million. If allowance is made for
this country’s gold contribution to the International
Monetary Fund, which amounted to $687.5 million, our
net gain of gold from foreign accounts alone amounted
to $2,826 million. This compared with a net gain of
$711 million in 1946. The bulk of the net gain during
the past year represented the sale of gold released from
earmark for foreign account at this bank. The remainder,
amounting to around $740 million, represented gold
imported for direct sale to the United States Treasury.
Although earmarked gold held at this bank for foreign
and international account showed a net decline of $300
million, the volume of gold transactions handled was at a
record level. There were 223 imports totaling over $2
billion, 229 releases from earmark with an aggregate

9

FEDERAL RESERVE BANK OF NEW YORK

value of $2.2 billion, and 85 transfers within earmark,
most of which entailed physical movement of gold, involv­
ing another $2 billion.
United States Stabilization Fund

This bank, acting as fiscal agent of the United States,
continued during the year to operate the United States
Exchange Stabilization Fund under authorization and
instructions from the Treasury Department. Pursuant to
agreements with Brazil and Mexico, a total of $80 million
was advanced to Banco do Brasil during the year and $20
million to Banco de Mexico. In the former case, the
advances were against the equivalent amount of cruzeiros
and secured by about $80.8 million of gold held at this
bank, while in the latter case the advances were solely
against the equivalent amount of pesos.
International Bank for Reconstruction and Development

The Federal Reserve Bank of New York performed
rather extensive operations during the year as depository
of the International Bank for Reconstruction and Devel­
opment. Our services in this capacity consisted primarily
of handling its investments in United States Government
securities, receiving deposits, and making payments
under loans granted by the Bank. In addition, as pro­
vided in the Bretton Woods Agreements Act, we were
requested to act as fiscal agent of the International Bank
in connection with its first two bond issues dated July 15,
1947. The operations we carried out under the fiscal
agency agreement are referred to elsewhere in this report.
Visits to Foreign Central Banks

In the spring of 1947, L. Werner Knoke, Vice President
in charge of the Foreign function, and Henry C. Wallich,
Chief, Foreign Research Division, visited the central
banks of six South American countries. The purposes of
these visits were to establish or renew personal contacts
with the officials of the central banks, and, at the same
time, to gain a more intimate insight into the problems
of Latin America.
For the same purposes, Horace L. Sanford, Assistant
Vice President in the Foreign Department, and 0 . Ernest
Moore, Manager of the Research Department, visited in
the fall of 1947 three additional South American coun­
tries, four Central American countries, and Mexico.
Foreign Central Bank Visitors

During 1947, there was a marked increase in the num­
ber of representatives of foreign central banks who made
their headquarters at this bank in order to study and
observe our methods and operations, and, on occasion,
those of New York commercial banks.
During the year we received representatives, varying
in number from one to three, of the central banks of
Australia, China, Colombia, England, Finland, France,
India, Iran, New Zealand, Norway, and South Africa,
together with two representatives of the Bureau of Bank­
ing of the Philippine Government, which is making




studies in connection with the organization of a central
bank in that country.
W e also had the opportunity during the year to discuss
common problems with a number of officials of foreign
central banks enroute to or from the International
Monetary Fund and the International Bank for Recon­
struction and Development in Washington, for which
they were acting in official capacities.

Staff Group on Foreign Interests

The Staff Group on Foreign Interests, consisting of
representatives of the Board of Governors of the Federal
Reserve System and the Federal Reserve Bank of New
York, continued during the past year to consider prob­
lems in the foreign field. Special attention was given to
a number of questions concerning gold policies and pro­
cedures, and recommendations in this respect were made
to the Policy Group of the System. International devel­
opments of significance to the System were also reviewed
periodically by the Staff Group.

CHECK COLLECTIONS
The annual volume of commercial checks collected by
this bank reached a new peak in 1947 when we collected
289.5 million checks as compared with 279.5 million col­
lected during 1946. The highest monthly volume occurred
during December 1947 when we handled 28 million
checks or 6 million more than December 1946.
This steadily increasing volume, the processing of
which has been complicated by the five-day workweek,
has required constant attention, at all levels of manage­
ment and staff, to insure that the efficiency of our opera­
tion not only remains at a high level but also to devise
ways and means to improve our operation to speed up
the collection of checks and to offer the best possible
service to member and nonmember clearing banks. Some
of the steps taken to accomplish these objectives are
described below.
Change in Operating Procedure

__

Progress has been made in putting into effect the
change in operating procedure from the use of I.B.M.
punch-card and tabulating equipment in the preparation
of cash letters (which had not worked to the satisfaction
of either this bank or the member banks) to a manually
prepared cash letter. This reconversion included the adop­
tion of a block system of controlling the checks so han­
dled, preparatory procedure and planning, the acquisi­
tion of necessary new equipment and the training of
personnel.
On March 4,1947, the preparation by hand of a portion
of our outgoing cash letters was begun when 34 employees
handled and dispatched 20,000 checks drawn on banks
located in New Jersey and Connecticut. Since that time
we have continued to train additional personnel and have
increased our staff to the point where at the end of the
year 1947 we were manually processing an average of
250,000 checks daily, which is about three-fourths of our

PRESIDENT’S REPORT TO DIRECTORS FOR 1947

10

aggregate New Jersey and Connecticut volume. Our
training program has been retarded and a more rapid
conversion has been hampered by the delayed delivery of
equipment, increased volume of checks handled and be­
cause of difficulties in procuring personnel, the need for
which has been accentuated by the five-day week. It is
impossible at this time to determine when this conversion
will be complete. Meanwhile there has been no letdown
in our service to the banking and business community,
but the efficiency of the operation will be improved when
the change-over is consumated.
Limits on Protest and Wire Nonpayment Instructions

A substantial saving in unnecessary expense and labor
on the part of both the Federal Reserve banks and the
commercial banks and their customers has resulted since
the inception of the Federal Reserve check collection sys­
tem in 1916, through gradually increasing the maximum
amount of dishonored items, which are not protested,
from $10 to $100, and the maximum amount of unpaid
items, on which wire advice of nonpayment is not given,
from $500 to $1,000. In addition, such changes have
resulted in a faster return of an increasing number of
unpaid items as the result of their not being held for
protest.
Early in 1947, the Conference of Presidents and the
Board of Governors agreed that, provided the banks of
the country were in accord, the protesting of all checks
should be placed on a voluntary basis through appropri­
ate State legislation. As this program would take con­
siderable time to become effective, it was further agreed
that, as interim measures, the minimum protest limit be
increased from $100.01 to $500.01, and the wire advice
instructions be changed so that such advice would not be
given on items of $1,000 and over, which are not paid
because of missing, irregular or unsatisfactory endorse­
ments and those bearing on their face instructions not to
wire nonpayment. During the year the American Bank­
ers Association polled the banks of the country and a sub­
stantial majority of such banks favored each proposal.
The uniform instructions regarding protest and wire
advice of nonpayment, therefore, have been changed
accordingly, effective March 1, 1948.
Air Freight Shipment of Checks

During the past year our program of shipping checks
to other Federal Reserve banks and branches as air
freight has been further developed. By June 1947 we
were making one daily shipment to all other Federal
Reserve banks and branches. In November, we began to
make two such daily shipments. The first of these daily
shipments is made in the evening and is designed to
obtain for the participating banks the earliest possible
presentment of, and availability for, cash items processed
on the day of shipment. The second shipment, which
leaves this bank at 4 a. m., is designed to take care of the
sizable volume of checks which cannot be processed by




the larger banks in time for inclusion in the earlier ship­
ment. It provides for the earliest possible presentment
of these items also, although, in most cases, availability
of the proceeds is deferred one day.
Our use of air freight has permitted us to give earlier
credit of approximately $50,000,000 daily to the partici­
pating member banks in the metropolitan area while, at
the same time, enabling us to reduce materially, the debit
float (net balance of uncollected items for which credit
has been given) on inter-district check sendings. The use
of air freight has also been further developed by other
Federal Reserve banks and their branches during the
past year. W e have cooperated fully in establishing this
method of shipment on a system-wide basis and have
devoted a considerable amount of time to the supervision
of incoming shipments from other Federal Reserve banks,
seeking thus to improve the service generally.
In the latter part of 1947, weather conditions and other
operational difficulties led to the voluntary grounding of
the big DC-6 airliners. This, for a period of about two
months, resulted in a serious curtailment of airline serv­
ice. Because of such interferences, the widespread use of
air freight subjects the System check float to wider
fluctuations than in the past, but the average amount
of float has been reduced. Thus, with the relatively tight
situation in the money market, a period of bad flying
weather over a sizable portion of the country will directly
influence the money market for a few days by holding
up the presentment of a considerable volume of checks.
W e have endeavored to meet this situation, in part, by
scheduling more than one shipment each evening to those
Federal Reserve banks and branches where our volume
is heaviest.
Check Routing Symbol Plan

The Federal Reserve System and the American
Bankers Association continue jointly to sponsor and to
promote the use of a uniformly placed symbol on all
checks and drafts which greatly facilitates the sorting,
collection and presentment of checks and drafts. W e
have vigorously pressed the program by visits to banks,
by posters and through correspondence, and the check
routing symbol has now been adopted by 100 percent
of the 930 commercial banks in our district. This com­
pares with a nation-wide ratio of 96 percent according
to a survey made as of the first of December 1947.
The volume of checks bearing the symbol has increased
steadily. During November approximately 58 percent
of the checks passing through our Check Department
bore the symbol, a percentage somewhat above the
nation-wide average of 45 percent for the corresponding
period. In this district the proportion of checks bearing
the routing symbol has increased from 30 percent, shown
in a survey made as of December 1, 1946, to 58 percent
noted above. The increase for the System as a whole
over the same period was from 24 to 45 percent, with
encouraging progress shown in each district. Since the

FEDERAL RESERVE BANK OF NEW YORK

full benefit of the Check Routing Symbol Plan cannot
be obtained until substantially all checks carry the rout­
ing symbol, we shall continue to make every effort to
maintain this rate of progress in order to hasten the time
when the advantages of this needed improvement to the
check collection system can be fully realized.

11

In line with the declining volume of work, adjust­
ments were made in the clerical and supervisory staffs of
the Government Check Department. On January 1,1947,
there were 139 employees assigned to this department, and
on January 1, 1948, there were 82 employees assigned,
a reduction during the year of 57 employees or 42
percent.

Government Checks

The volume of Government checks handled during
1947 decreased considerably from 1946 as shown on
the accompanying chart. Checks in the conventional form
(paper) received for collection in 1947 totaled 5,809,000
as compared with 10,167,000 in 1946, a decrease of 4,356,000 or 42 percent. The number of checks in punch-card
form received for payment last year was 34,094,000 as
compared with 48,332,000 in the previous year, a decrease
of 14,238,000 or 29 percent.
Volume of Government Checks Handled, 1941-47

CASH OPERATIONS
Currency and Coin Shipments by Armored Truck

In August a program was inaugurated for trans­
porting currency and coin between Queens County
banks (not including branches of New York City banks)
and ourselves by armored car at our expense. Prior
to that time, some of these banks had been making ship­
ments by registered mail and express, and others had
been using armored car facilities at their own expense.
The service we have provided has been welcomed and
has proved mutually advantageous. It has relieved banks
of the risk of exposing their personnel and of the expense
of delivering and picking up money shipments at post
offices and express offices. It has also assured the par­
ticipating banks of receiving credit for their deposits
on the day dispatched. From our standpoint, it has
afforded a substantial saving over transportation costs
by registered mail and express, which we paid. It has
also permitted concentrating the flow of currency and
coin between these banks and ourselves on two specified
days of each week. The results of the initial operation
have been so satisfactory that the service was extended
to a group of banks in Nassau County in January 1948.
Consideration will also be given to further extension into
other areas within profitable range.
LOANS AND CREDITS

1941

1942

1943

1944

1945

1946

1947

The decrease in the volume of Government checks is
attributable in part to a curtailment of wartime
activities. A contributing factor with respect to card
checks was a change in the place of payment of checks
issued for allowances and allotments to dependents of
members of the armed forces. Heretofore, such checks
were payable through this bank, but since February 1,
1947, when the Office of Dependency Benefits, which
issues these checks, was moved from Newark, New Jersey,
to St. Louis, Missouri, the checks have been issued pay­
able through the Federal Reserve Bank of St. Louis.
The loss in volume due to this change was temporarily
offset, to some extent, by a new issue of checks early in
the year in connection with veterans’ terminal leave pay­
ments, covering cash payments in addition to Armed
Forces Leave Bonds.
The discontinuance of sugar rationing on June 30,
1947, marked the end of our handling of ration checks.




There was an increase in the number of advances made
to member banks during 1947, although the daily average
of amounts outstanding declined considerably compared
with the previous year. During 1947, 2,951 advances
were made to 336 member banks, as against 2,305
advances to 299 banks in 1946, all secured by direct
obligations of the United States or obligations guaranteed
by the United States. The daily average amount of
advances outstanding was approximately $47 million
compared with $85 million in 1946 when central reserve
city banks in New York City were more active users of
our credit facilities, particularly during the early months
of the year. During 1947 advances outstanding ranged
between $4.5 million and $341 million, and the number
of banks borrowing between 20 and 114. The amount of
advances outstanding to member banks other than the
New York City banks did not exceed $52 million at any
time.
During 1947 there were no applications received for
industrial loans or commitments pursuant to section 13b
of the Federal Reserve Act.

12

PRESIDENT’S REPORT TO DIRECTORS FOR 1947

BA N K SUPERVISION AND BANK RELATIONS
Membership in System

Six banks in this district were admitted to member­
ship in the Federal Reserve System during the year.
At the end of the year there were 259 State member
banks and trust companies, as compared with 116 non­
member State banks and trust companies in this district.
More than 87% of all the commercial banks (national
banks and State banks and trust companies) in the
district were members of the System, and 69% of all
State banks and trust companies in the district were
members. Of the remaining number of nonmember State
banks and trust companies, about 50, or 4 4% , were un­
acceptable for membership because of their capital
positions or for other reasons.
New Bank Charters and New Branch Offices

In 1947 two investigations of applications for new
national bank charters in this district were made by
members of the staff of the Bank Relations Department
and in each case disapproval was recommended. The
Comptroller of the Currency concurred in these recom­
mendations. Three investigations were also made of
applications filed with us by State member banks and
trust companies desiring to open new branch offices;
one was approved, one disapproved and the third was
still being processed. The New York State Banking
Department concurred in our action.
Meetings of Bankers

The New York State Bankers Association again
held their annual midwinter meeting in our Audi­
torium on January 20.
There were 788 bankers
in attendance. W e were host to the National Asso­
ciation of Supervisors of State Banks which held meet­
ings here on April 7 and 8. The members of the New
Jersey Bankers Association Committee on Federal
Reserve Relations for Northern New Jersey and the
Council of Administration of the New York State
Bankers Association also held meetings here during the
year.
In the latter part of the year the Bank Relations
Department inaugurated a plan of inviting groups of six
to ten representative bankers from each county to meet
at the bank for round-table discussions of common prob­
lems. The meetings were successful in terms of better
acquaintance and better understanding and will be
continued.
Tours Through the Bank

Our experience indicates that well-conducted tours
through the bank are an important part of our bank and
public relations program and we encourage bank officers
and employees, college and high school students, as well
as adult groups to view our operations in person. Interest
in these tours has increased considerably and 2,694 people
toured the bank in 1947 as compared with 1,452 in 1946.
O f this number, 957 were bank people, 412 college
students and 616 high school students. It required 327
separately conducted tours to accommodate these visitors.




RESEARCH STUDIES AND PUBLICATIONS
In the domestic field, the main objects of our research
work during 1947 were the postwar performance of the
American economy, changes in credit conditions, and the
composition of bank assets. Current developments and
trends in employment, industrial and agricultural output,
and prices were closely followed, and considerable time
was devoted to exploring some of the basic long-term
problems of the American economy, such as the relation­
ship between income and consumption, the composition
of savings, and price trends. A major study of the experi­
ence of the Federal Reserve Banks with section 13b loans,
undertaken in cooperation with the National Bureau of
Economic Research, is nearing completion and will be
published in book form. In addition to the routine weekly
memoranda on the prospective reserve position of member
banks, special studies were prepared for the officers in
charge of open market operations. Over 100 articles on
domestic financial and economic developments were pre­
pared for our internal periodical, the Business and Finan­
cial Summary, and 31 special articles (in addition to the
usual articles) were published in the Monthly Review of
Credit and Business Conditions. Of the nearly 100 papers
written during the year for internal circulation (and
occasionally for public distribution), some of the more
important ones are listed below:
The Wholesale Price Level in the Medium Run
W age Developments in Recent Months
Use o f the Consumption Function in Short Run Forecasting
The Role o f Dissaving in Economic Analysis
A Note on Small Business in Depression
The Impact o f the W ar on the Member Banks— 1939 to 1946
Federal Reserve Regulation o f Margin Requirements on
Security Loans
A Study o f the Effects o f the Primary and Secondary Re­
serve Proposals
Some Small Business Problems Indicated by the Industrial
Loan Experience o f the Federal Reserve Bank o f New
Y ork
The Reconstruction Finance Corporation, 1945-46
The Federal Home Loan Bank System
Relation between Debits to Interbank Accounts and Debits
to A ll Other Accounts
Operating Characteristics o f Second District Member Banks
outside New York City with High Net Operating Earn­
ings relative to Capital Funds

As part of a System project, the Research Department
began the monthly compilation of a combined statement of
the assets and liabilities of all member banks in the Second
District, based on the statements of 49 weekly reporting
banks and on monthly reports which we began to receive
in January from 750 other member banks covering their
loans, discounts, and security holdings. This is the first
time that reliable figures have been compiled on a monthly
basis covering all assets and liabilities of all member
banks in the District. In August the Department inaugu­
rated publication of a combined monthly report of the
assets and liabilities of 68 Second District banks (includ­
ing the 49 weekly reporting banks) , with separate figures
for banks in New York City, outside New York City, in
New Jersey, and in the western, central, and Albany-

FEDERAL RESERVE BANK OF NEW YORK

Troy-Schenectady areas of New York State. In general,
only the larger banks in the principal cities of the District
are included in this new series, which permits month-tomonth studies of the changes in particular asset and
liability items of the banks in different geographical
areas of the District.
In addition to the annual retail credit survey, for which
better coverage was obtained through personal canvassing,
the Department participated in a System survey of com­
mercial and industrial loans made by member banks (be­
gun in 1946) and in another covering loans to farmers;
the results of these surveys in the Second District were
later published in pamphlet form. The Department as­
sisted the National Bureau of Economic Research in ob­
taining replies to a mortgage loan survey from banks that
had not responded to the Bureau’s previous solicitation.
The Department’s monthly series on consumer loans was
broadened by the addition of 29 banks, following per­
sonal visits to those institutions. The compilation of sales
and stock indexes for department store departmental
classifications since 1925 was completed and work was
begun on an index of sales of apparel stores.
The most important problems studied during the
year in the foreign and international fields were those
relating to foreign exchange rates and markets, the
causes and implications of the world dollar shortage, the
British crisis, the Marshall Plan and its probable impact
on the United States balance of payments, the policies and
activities of the World Fund and Bank, the present and
prospective status of the Bank for International Settle­
ments, the progress in setting up an International Trade
Organization, and general problems of central banking.
Current foreign and international developments were re­
ported in the Business and Financial Summary and ten
articles on international topics were written for the
Monthly Review. Among the more important studies
completed during the year on foreign and international
problems were the following:
Recommendations of the Preparatory Committee Appointed
to Draft a Charter for an International Trade Organiza­
tion
Argentina’s Shift to a Creditor Status
The Bank for International Settlements— Wartime Activi­
ties and Present Position
Monetary and Fiscal Policy in Postliberation Austria
Present Statistical Position of Gold
A Suggested Economic Recovery Program for Greece
National Income and Product of the USSR in 1940
Central Banks and the State Today— A Comparative Study
of Postwar Central Bank Laws
The Nationalization of Central Banks
Recent Developments in German Banking
Italian Economy and Finances in Mid-1947
Nationalization of Australian Banks
The Unofficial Market in Canadian Dollars
The Problem of World Dollar Shortage
The New York Market in Sterling
The Relationship between Foreign Aid and Internal
Stabilization
The Impact of the European Recovery Program on the
United States Balance of Payments




13

The plan of export credit information on Latin Ameri­
can countries which had been worked out in 1946 was put
into operation in the spring of 1947. From the twelve
New York City banks which do an important volume of
export financing, we now receive monthly reports showing
the promptness with which dollar export collections are
paid in the various Latin American countries and the
total amounts of collections and confirmed letters of credit
outstanding at the month-end. The composite data and a
brief analysis are published in a monthly press release,
supplemented by occasional more extended analysis in
the Monthly Review. The purpose of the Latin American
export credit survey is to provide for American bankers
and exporters a means of judging the volume, liquidity
and trend of Latin American export collections in the
light of the volume and trend of United States exports to
Latin America. The usefulness of the new monthly re­
ports is indicated by the fact that we are now distributing
4,000 copies to some 550 firms and individuals who have
asked to be put on the mailing list.
As in previous years, members of our research staff
participated actively in, and prepared studies and data
for, the various System research committees and the Staff
Group on Foreign Interests. They also took part in a
number of technical conferences and committee activities
outside the System, and spoke on banking subjects at
meetings of county bankers’ associations.
Foreign Missions

As set forth elsewhere in this report, the manager of the
Research Department and the chief of the Foreign Re­
search Division accompanied two senior officers of the
Foreign function on two trips which together covered
practically the whole of Latin America, for the pur­
pose of discussing problems connected with this bank’s
handling of foreign central banks’ accounts and re­
porting on financial and economic conditions. In the
course of three additional trips to the Dominican
Republic, the chief of the Foreign Research Division
completed the assistance he had been giving the
Dominican authorities in creating a central bank and a
national currency. The member of our research staff to
whom a leave had been granted in October 1946 so that
he could serve as chief of the Taxation Section of the
United States Military Government in Austria, returned
in May 1947, and in September 1947 a leave was granted
to another economist so that he could serve as a financial
adviser on the American Mission to Greece.

BUDGET
In February 1947, the Board of Governors of the Fed­
eral Reserve System requested the Federal Reserve banks
to resume the submission of annual budgets (actually
estimates of expenses) which were temporarily discon­
tinued in 1942.
The Board of Governors stated that responsibility for
supervision and control of the costs of operating the
Reserve banks, including expenses incurred by them as
fiscal agents of the United States, is shared by the boards

PRESIDENT’S REPORT TO DIRECTORS FOR 1947

14

of directors and officers of the banks and the Board of
Governors, and also that, as the agency of the Government
charged with tbe responsibility for general supervision
of the Reserve banks, the Board should be able to demon­
strate whenever necessary that it is in a position to, and
does, adequately supervise expenditures of the Reserve
banks for salaries and for other purposes.

subject matters of these operating bulletins were super­
seded. The designation “ Operating Bulletin” was used
to indicate that these bulletins relate to the operations of
the bank which are of continuing interest and effect, and
to distinguish them from bulletins which relate to transi­
tory matters, such as changes in personnel, telephone
numbers, etc.

Conforming with the Board’s instructions, a budget for
the six months ending December 31, 1947 was submitted
during June 1947, and the budget for the year 1948 was
submitted in November 1947.

BUFFALO BRANCH OPERATIONS

The following is a summary statement of our 1948
budget and a comparison with the budget for 1947:
1947
Budget
Current Expenses.........
Reimbursable Expenses
T ota l...................

1948
Budget

Increase ( + )
or
Decrease (— )

$14,748,524
4,190,766

$14,901,390
3,724,698

$152,866 ( + )
466,068 (— )

$18,939,290

$18,626,088

$313,202 (— )

While no formal budget was required by the Board
during the war period, this bank continued to operate on
an Estimate of Expenses basis, in an attempt to control
expenditures as far as practicable under the circum­
stances.

OPERATING CIRCULARS
For a long time we had felt that we should issue to
the banks in some easily accessible form our operating
circulars covering matters of continuing interest, as
distinguished from other circulars containing material of
a transitory nature.
Shortly before our entry in World W ar II we started
a review of our circulars but were interrupted by unusual
activities during the war, particularly by the publication
of documents pertaining to foreign funds control for the
Treasury. After the war, we resumed the review of our
circulars and on December 8, 1947, our work, which
involved a review of a total of 3,291 circulars, was com­
pleted when we issued our new set of operating circulars.
The new circulars in a new format (in size 6 " by 9 ") have
been issued in a 3-ring binder entitled “ Operating Cir­
culars.” The binder contains nineteen operating cir­
culars setting forth, in consolidated and revised form,
previously published material of general and continuing
interest and effect, relating both to the operations of this
bank and to certain of the operations which this bank per­
forms as fiscal agent of the United States. In addition
the binder contains the Regulations of the Board of
Governors.

OPERATING BULLETINS
W e also made an exhaustive study of over 9,000 intra­
bank bulletins, and on October 1, 1947, issued to officers
and chiefs a loose-leaf binder containing a set of revised
bulletins. All previous bulletins regarding the respective




The Buffalo Branch, which directly serves the ten
westerly counties of New York State, including the cities
of Buffalo and Rochester, provides, for the banks located
within its territory, such services as are needed by those
banks and which cannot be equally well provided by the
Head Office.
With the exception of fiscal agency and other reim­
bursable work, the operations of the Branch showed an
increase in volume during 1947. Current expense and
cost of Federal Reserve currency totaled $661,909 in 1947
as compared with $569,924 in 1946. Fiscal agency and
other reimbursable expenditures aggregated $89,961 as
contrasted with $199,745 in 1946.
Significant developments in the operations of the
Branch during 1947 are indicated below.
Fiscal Agency Operations

The year 1947 witnessed a further decline of Fiscal
Agency operations at the Buffalo Branch which had pro­
gressively lessened since the end of the war. The Savings
Bond Redemption Division, which was started on
January 21, 1943, and reached a maximum in operations
during the latter half of 1945, was discontinued in 1947
and its work transferred to the Head Office.
A survey of withheld tax operations at the Branch has
recently been completed by the Treasury Department
and it has been decided to transfer this operation to the
Head Office, effective February 2, 1948.
Personnel

The number of employees of the Branch decreased from
211 to 164 during the year. There were 63 separations
from service and 16 new employees were engaged. The
reduction in staff resulted primarily from the elimination
of the Savings Bond Redemption and the R.F.C. Custody
divisions and the expiration of Regulation W . The
Job Evaluation and Personnel Classification Plan was
adopted, effective October 16, 1947, with salary adjust­
ments totaling $5,545.50 per annum to bring the salaries
of the employees receiving less than the minimum salaries
up to the new minimums established for the jobs to which
they have been assigned.
All of the 164 employees of the Branch have signed
authorizations for deductions from payroll for the pur­
chase of Series E bonds, the total deductions amounting
to 6.37 percent of the payroll at the end of the year. All
employees are enrolled in the Blue Cross and Blue Shield
plans for hospitalization and surgical benefits, and 132
employees, or 80.5 percent, are participating in the group
life insurance deduction plan.

FEDERAL RESERVE BANK OF NEW YORK
Air Freight Shipments of Checks

Loans to Member Banks

In March 1947 the Buffalo Branch inaugurated air
freight shipments of checks to the New York Office,
in which shipments the Buffalo commercial banks
participated. Subsequently air express shipments of
checks were initiated to other Federal Reserve banks
and branches including Boston, Chicago, Philadelphia,
Cleveland and Pittsburgh; and air mail shipments are
made to other points when the volume does not warrant
the use of air freight or air express. Further develop­
ment of air transportation of checks, with member banks
participating, is contemplated.
Inter-district Settlements

Beginning February 2, 1948, direct settlement of bal­
ances with other Federal Reserve banks and branches was
begun. This service (previously such balances were set­
tled through Head Office) should result in substantial
operating advantages both at the Branch and at our
member banks.




(

15
^

A total of 303 loans aggregating $297,073,000 was
granted to 31 member banks in 1947 as compared with
194 loans amounting to $259,735,000 made to 30 member
banks in 1946. The highest amount of loans outstanding
at any one time was $19,025,000 on January 29, 1947.
Bank Membership and Bank Relations

One Rochester trust company with assets of approxi­
mately $65,000,000 was admitted to the Federal Reserve
System during the year. There were at the end of the
year 37 State member banks and trust companies in the
branch territory and 30 nonmember State banks and
trust companies, of which 5 were deemed to be ineligible
or unacceptable for membership.
Bank relations work is carried on in the Branch terri­
tory by members of the official staff of the Branch under
the general direction of the Head Office. Plans are being
made to integrate more closely the work of the Branch
and the Head Office in this field.

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