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1971 ANNUAL REPORT

The Federal Reserve
Bank of Richmond

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Contents
THE DISTRICT ECONOMY IN 1971

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3

H IG H L IG H T S ....................................

8

Summary o f Operations..................... 13

COMPARATIVE STATEM EN T................ 14
C onditions ...................................... 14
Earnings and E x p en ses ..................... 15

D IR E C T O R S...................................... 16
O F F IC E R S ......................................
BRANCH DIRECTORS

17

........................1«

1971

ANNUAL REPORT
The Federal Reserve
Bank of Richmond
To Our Hlembrr Hunks:
W e are pleased to present the 1971
Annual Report of the Federal Reserve
Bank of Richmond. This report features
a review of the Kifth District economy
in 1971.

It also includes highlights of

the year’s operations, comparative
financial statements, and current lists
of officers and directors of our
Richmond, Charlotte, and
Baltimore offices.
On behalf of our directors and staff,
we wish to thank you for your continued
cooperation and support.
Sincerely yours,

C h a i r m a n oj the Hoa r d
Library of C o n gre ss C a ta lo g C a rd N um ber: 1 6 -7 2 6 4

i d.d :': 0 " a l ,COpieS °f ,his
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"e p o rt m a y be

Prcsidcn t

THE DISTRICT ECONOMY
IN 1971
For Fifth District business, as for the national economy, 1971 was a year of
recovery from the slowdown that began in late 1969. Recovery in both
the District and the nation was of moderate dimensions and had still not
reached full throttle late in the year. The course of the improvement in
the District, however, was somewhat more even than in the national economy,
at least over the first three quarters. During this period the pace of growth
nationwide was heavily influenced by developments in the automobile
and steel industries, both of which are of greater significance for the
national than for the District economy. In the first quarter, the automobile
industry rebounded sharply from the work-stoppage of the preceding quarter;
and this advance, coupled with the beginnings of a buildup of steel
inventories, in anticipation of a possible strike in that industry, led to a large
quarterly gain in Gross National Product (G N P ). In the first quarter, the
nation’s real GNP advanced at an annual rate of 8.0 per cent. In the
second quarter, real growth fell off to a 4.8 per cent annual rate, as
automobile production lost to the 1970 work-stoppage had been made up by
that time. W ith the signing of a new steel labor contract in midsummer,
liquidation of strike-hedge steel inventories began, and real growth fell off
further to 3.9 per cent in the third quarter. On the basis of statistics compiled
at this Bank, swings in these key national industries appear to have had
relatively little effect on the course of District output.
More important for
District business were the work stoppages among East Coast dock workers
and in the coal industry, both of which dampened activity in the District in
the third quarter.
The New Economic Program announced by President Nixon on August 15
affected the District economy in much the same way that it affected the
national economy. The initial stimulus to business confidence, which had been
weak all year, was dramatic, although this effect soon gave way to growing
doubts and uncertainties over the details of the second phase of the
President’s program to contain wage and price inflation at home. Moreover,
the international features of the program soon became a source of concern
in some quarters of the business community. The unsettled state of the foreign
exchanges following the suspension of gold convertibility, the manifest
difficulties of negotiating a new system of exchange parities, and the sometimes
bitter reactions of foreign governments to the 10 per cent surtax on United
States imports aroused fears of a trade war that might lead to sharp
cutbacks in the volume of world trade.
Nevertheless, the President’s dramatic announcement of August 15 reduced
public concern over domestic inflation, causing consumer spending to pick up
in both the District and the nation. Consumer outlays for durables, and
especially for new domestic passenger cars, rose significantly during the
ninety days of the wage-price freeze. A fter November 13, new car sales fell,
but general retail sales continued strong. Surveys made by this Bank in
December indicated that District consumer spending remained




robust and that the District’s retailers were expecting a record or
near-record Christmas season.
As the year drew to a close, sentiments in the District’s business community
began to take a distinctly optimistic turn. This Bank’s index of optimism
among District businessmen and bankers, based on a sample survey, showed a
sharp rise in December after a substantial decline in the two preceding
months. The strong performance of retail sales in the fourth quarter
no doubt contributed to this improvement in business confidence.
But there were also other contributing factors. Business statistics generally
moved favorably in October and November, and forecasts for 1972 were for the
most part quite bullish. Moreover, the rate of inflation slowed significantly
in the September-November period, reflecting the effects of the wage-price
freeze and raising hopes of continued relief. By December much
of the uncertainty regarding the details of the second phase of the
President’s domestic program had been dissipated. Finally, prospects for a
settlement of the international monetary crisis had brightened considerably by
early December. In fact, in international discussions held in Washington on
December 17-18, general agreement was reached among the major trading
nations on a new system of exchange parities, widely interpreted as
favorable to the United States. Shortly afterwards, the United States
terminated the 10 per cent import surcharge. These mid-December
developments did much to allay fears of a worldwide business slowdown.
M ODERATE OVERALL RECOVERY Although the statistical record of the
District economy’s performance throughout 1971 was not complete at the
time this report was prepared, fairly complete statistics through October,
coupled with sample survey data for November and early December, bear out
the judgment that the pace of business improvement was moderate at best.
The principal sources of strength were the construction, government, and
trade and services sectors. Within the construction industry, residential
building was notably robust, as virtually every section of the District shared
in the nationwide housing boom of 1971. In contrast, the performance of
the District’s manufacturing sector was spotty and lackluster over most of
the year, although new orders, shipments, and order backlogs registered
sizable increases toward the end of the year. The farm sector, adversely
affected in some areas by heavy and untimely rains, showed little improvement
over its 1970 performance. For the most part, this general pattern
applied in all Fifth District states.
Residential construction remained strong all year throughout the District,
although toward the end of the year survey data began to suggest some
tapering in the rapid pace of new building in the first three quarters.
Over the first ten months of the year, the building permit index for the
District rose 57 per cent, while residential construction contract awards
were up 54 per cent. Increases in these indicators were sizable in all

4




District states and especially large in Virginia, Maryland, and the District of
Columbia. Gains in nonresidential construction were less spectacular. The
index of nonresidential contract awards increased 17 per cent between
January and October, with most of the rise concentrated in North Carolina,
Maryland, and the District of Columbia.
Strength in the government sector of the District’s economy is reflected by
employment data for the first ten months of the year. In October, federal,
state, and local governments were providing 1,475,000 jobs in the
Fifth District, about 50,000 more than in October 1970. Employment
in the government sector currently accounts for about 22 per cent of
total nonagricultural employment in the Fifth District and, numerically, is
exceeded only by employment in manufacturing. For the District as a whole,
government employment was up 3 per cent in the first ten months of the year.
The increases were 4 per cent for Virginia; 3 per cent for North Carolina,
South Carolina, and the District of Columbia; and 2 per cent for
W est Virginia and Maryland.
The employment data also reflect moderate strength in the trade and
services sector. Employment in wholesale and retail trade, the third most
important source of nonagricultural jobs in the District, rose 2 per cent over
the first ten months of the year. Gains in this area were especially strong in
Maryland and South Carolina, where they amounted to 5 per cent and 4 per cent,
respectively. For the District as a whole, employment in finance, insurance,
and real estate rose 2 per cent over the ten-month period, with relative
gains largest in South Carolina, Maryland, and Virginia. The number of
jobs in the services and miscellaneous category increased 3 per cent for the
District as a whole, with the largest relative gains in Maryland and the
District of Columbia. Collectively, the trade and services sector
provided over 2,570,000 jobs in the Fifth District in October, some 70,000
more than in October 1970.

SOME SOFT SPOTS

There were some persisting soft spots in the District
economy in 1971, which partially offset the gains recorded in the strong sectors.
Total nonagricultural employment increased at a lower rate than employment
in the government and trade and services sectors. For the first ten months,
the entire Fifth District showed an increase of only 1 per cent. This
figure clearly understates real employment growth, because the October
data were affected adversely by work stoppages in the coal industry and
among East Coast dock workers. The effects of these work stoppages were
felt chiefly in W est Virginia, Virginia, and Maryland. This Bank’s November
and December surveys of businessmen and bankers suggested moderate to
sizable increases in nonagricultural employment in those months.
Until the October work stoppage, the District’s coal mining industry had been
faring well, with employment rising fairly steadily all year. But the
situation was different for the District’s manufacturing industry. Generally







speaking, 1971 was a year of inventory adjustment and relatively low
production for most manufacturers. There were some exceptions, notably the
furniture industry, which benefited from the strong surge in housing.
But overall, manufacturing employment was lower in October than at the
beginning of the year in every District state. The data show a decline
over this period of 3 per cent for the Fifth District. By states,
the reduction came to 7 per cent in Maryland, 3 per cent each in W est
Virginia and the District of Columbia, 2 per cent in each of the
Carolinas, and 1 per cent in Virginia.
Manufacturing man-hours were also down. The District index shows an
overall decline of 2 per cent for the ten-month period, with a 3 per cent
decline in durables and a 1 per cent fall in nondurables.
By states, this index showed no change for North Carolina but declined
elsewhere. The reduction was greatest in Maryland, where it amounted
to 8 per cent. Man-hours in that state’s durables sector were off 11 per cent.
Total manufacturing man-hours for the ten-month period fell 1 per
cent in both Virginia and South Carolina, 2 per cent in the District
of Columbia, and 4 per cent in W est Virginia.
Both employment and man-hours data for October were temporarily
depressed by the coal and dock strikes, which accounted, in part, for the
poor showing of these indicators over the ten-month period. This Bank’s
surveys of manufacturers in November and December suggest an improving
employment situation, with some prospect that the indicators will show
an even better performance for the year than for the first ten months.
SOME SETBACKS IN FARM ING It now appears that cash income of Fifth
District farmers may have been slightly below the improved level of 1970.
Total cash receipts from farm marketings for the January-September period
were running 1 per cent below the comparable 1970 pace, as a 5 per cent
reduction in receipts from livestock marketings more than offset a 3 per cent
gain in crop receipts. Reductions in livestock marketings occurred in all
states, ranging from 1 per cent in Virginia to 8 per cent in North Carolina.
Judging from price and production data for the final quarter of the year,
the annual figure on livestock receipts will apparently show about the
same percentage decline as the figure for the first nine months.
Heavy rains at the height of the harvesting season resulted in serious
damage to some Fifth District crops, although on the whole the growing
season was good and harvest prospects were excellent. The peanut crop in
North Carolina and Virginia suffered heavily from rains accompanying
Hurricane Ginger. Yields dropped 25 per cent below the 1970 level, and
total production was down 31 per cent. Damage to the cotton, corn, and
soybean crops was also heavy, although production of all these crops
exceeded 1970 levels.
Cotton production was higher by 8 per cent,
corn by 23 per cent, and soybeans by 15 per cent. Good increases were

C

also registered in the small grains, pecan, and apple crops. The tobacco,
peach, and sweet potato crops, however, were smaller than in 1970.
W ith the notable exception of the price of corn, crop prices held up well.
Compared with 1970, prices averaged moderately higher in every
Fifth District state but W est Virginia, where they were lower. Flue-cured
tobacco prices were the highest in history, some 8 per cent above those a
year earlier. Prices of peanuts, soybeans, and cotton were also higher.
On the basis of a special sample survey of Fifth District bank agricultural
specialists, it appears that District farmers’ demand for credit was strong
in 1971 and that bank loan funds were more amply available than in 1970.
Farmers’ outlays for capital items increased, as did spending for family living
items. Farm and family living costs also rose further. Prices of farmland
continued to increase, rising at a faster pace in 1971 than in 1970.
THE BAN K IN G D A T A
Statistics on Fifth District member banks, available
through the last Wednesday in November, reflect a general easing of credit
conditions in 1971 as well as stepped-up business activity. The bank debits
index for the District as a whole increased 19 per cent between November
1970 and November 1971. Increases were sizable in all states, ranging
between 13 per cent in W est Virginia and 22 per cent in Virginia. Total
assets of District member banks on the last Wednesday in November were
$25,008,000,000, up 12 per cent from the comparable date in 1970. Holdings of
United States Government obligations were $2,230,000,000, down 1 per cent
from 1 97 0; but investments in other securities (mainly municipals) were up
28 per cent, at $4,525,000,000. Loans and discounts, at $13,764,000,000, were
11 per cent higher than on the year earlier date. Loan demand was
sluggish throughout the year. Much of the large increase in total loans
was accounted for by consumer and real estate lending.
District member banks experienced large deposit increases in 1971.
Total
deposits for all District member banks on the last W ednesday of November
were 11 per cent higher than on the comparable date in 1970. Most
of the increase was in time deposits, which jumped 17 per cent to
$ 10,631,000,000. Demand deposits rose 6 per cent over the same
period, reaching $10,430,000,000.
By states, total assets of member banks on the last W ednesday of November
h a d r e c o r d e d the following increases: North Carolina, 16 per cent; W est
Virginia and South Carolina, 14 per cent each; Virginia, 13 per cent;
Maryland, 11 per cent; and the District of Columbia, 3 per cent. Comparable
figures for total deposit gains w ere: 13 per cent each for Virginia, W est
Virginia, and South Carolina; 9 per cent each for North Carolina and
M aryland; and 2 per cent for the District of Columbia.
Demand deposit
expansion accounted for all the deposit growth in the District
of Columbia. In the remainder of the Fifth District, by far the
largest part of the growth was in time accounts.




7




HIGHLIGHTS
EARNINGS AN D CAPITAL ACCOUNTS Net earnings before payments to the
United States Treasury decreased $11,515,166.46 to $247,971,989.18 in 1971.
Six per cent statutory dividends totaling $2,261,033.34 were paid to
Fifth District member banks, and $243,122,855.84 was paid to the
Treasury as interest on Federal Reserve notes.
Capital stock rose $2,588,100.00 to $38,288,650.00 as member banks
increased their stockholdings in this Bank, as required by law, to reflect
the rise in their capital and surplus. The Bank’s surplus account increased
$2,588,100.00 to a total of $38,288,650.00.
NEW BAN K BUILDINGS Plans for the construction of a new building to
house the Richmond Reserve Bank continued to move forward. A New
Building Program staff, appointed in January, focused on the study of space
needs and future projections. The architectural firm of Minoru Yamasaki and
Associates, Troy, Michigan, was selected in April. In June the firm of
Ford & Earl Design Associates, Warren, Michigan, was engaged for space
programming and interior design. The building will be located
on a 7-acre site adjacent to the new Ninth Street Bridge on the north
bank of the James River. Preliminary estimates indicate occupancy
in late 1975 or early 1976.
In November the architectural firm of Hellmuth, Obata and Kassabaum of
St. Louis, Missouri, was selected to plan and design a new building to house
the Baltimore Branch. Present plans call for construction of the building
within Baltimore’s Inner Harbor Redevelopment Area on the city’s waterfront.
DISCOUNT RATE On January 8, the Richmond Reserve Bank lowered its
discount rate from 51/2 per cent to 51/4 per cent in recognition of declines
in short-term market interest rates.
Because of further declines in short-term rates, the discount rate was reduced
on January 29 from 51/4 per cent to 5 per cent. The rate was reduced again on
February 13, by one-quarter of one per cent to 4 % per cent, to keep it
in closer alignment with short-term market rates.
On July 23, in recognition of short-term interest rate increases, the
discount rate was raised from 4 % per cent to 5 per cent. The increase
brought the discount rate into closer alignment with short-term rates and
reflected concern over the continuation of substantial cost-push
inflation in the economy.
The discount rate was lowered on November 12 from 5 per cent to 4 % per cent,
following reductions in short-term interest rates. The rate was
reduced again on December 24 by one-quarter of one per cent to 41/2 per cent.
This change was made in recognition of the prevailing levels of market
interest rates and to assist the progress of economic expansion.

CHANGES IN DISCOUNT PROCEDURES
On February 4, with the approval
of the Board of Governors, several changes were made in the procedures
under which member banks borrow funds from the Federal Reserve Bank.
The changes a re :
1. the use of a “ continuing lending agreement” in lieu of a formal
application and promissory note;
2. the collection of interest on a member bank’s borrowing at the time the
loan is repaid, rather than the deduction of interest in advance; and
3. the immediate application of any discount rate change to all
outstanding borrowings.

CULPEPER FACILITY On June 17, the Board of Governors issued a
policy statement urging reforms in the payments mechanism to offset
anticipated increases in check volume within the next decade and
encouraging greater and more efficient use of the Federal
Reserve Communications System.
In keeping with the intent of this directive, the Communications System at
the Communications and Records Center, Culpeper, Virginia, was expanded to
provide computer-to-computer links between the Culpeper Switching Center
and the Chicago and San Francisco Federal Reserve Banks. Such links
provide for immediate and completely automatic transfer of funds to and
from member banks connected to those Federal Reserve Banks. The
San Francisco and Chicago offices represent about 10 per cent of the
Communications System’s present wire transfer volume.
At year-end two other head offices, New York and Cleveland, were testing
their computer links with Culpeper. Additional Reserve Banks
are planning to initiate such testing soon.

CHECK COLLECTION The Burroughs Model B-3500, a third generation
check processing system that was installed at the Richmond office
during the latter part of 1970, became fully operational by m id-1971.
The unit, using Burroughs Image Processing Systems modified to the Richmond
Reserve Bank’s specifications, will comprise the standard system for
check processing operations within the Fifth District.
The Charlotte Branch, in cooperation with the South Carolina Bankers
Association, continued to work toward a plan that will provide overnight
check collection for all South Carolina banks clearing with other South Carolina
banks. The Branch is currently analyzing a two-week survey, conducted
late in 1971, of all checks presented in the state. It is anticipated that a
finalized plan of operation will be drawn up during the first part of 1972, to
become functional after mid-year.




9

A pioneer in the Regional Clearing Center concept of check processing, the
Baltimore Branch’s Clearing Center operated smoothly through its second
year, with the average daily volume approaching 1,000,000 items.
On December 8, 12 new banks joined the Center, bringing the total number
of participating banks to 104. Planning is underway for further expansion
of this Center and for the possible establishment of additional
Clearing Centers throughout the Fifth District.
M ONEY
Two new coins were placed in circulation during the year.
The cupro-nickel Kennedy half dollar was released on April 19, and the
cupro-nickel Eisenhower dollar was issued on November 1. There was much
interest in both of these coins in the Fifth District.
Effective September 1, this Bank began paying for transportation of currency
and coin to and from member banks located in Baltimore, M aryland;
Charlotte, North Carolina; Richmond, Virginia; and Washington, D. C.,
in order to bring service to banks in these cities into parity
with such service to other member banks.
N EW MEMBER BANKS
Seven Fifth District banks became members of the
Federal Reserve System during the year. The Bank of Arlington,
Arlington, Virginia, opened for business in February. In June The Peoples
Bank of Hartsville, Hartsville, South Carolina, converted into a nationally
chartered bank and joined the Federal Reserve System under the name of
First Peoples National Bank of South Carolina, and First Virginia Bank of
Colonial Heights, Colonial Heights, Virginia, began operations.
First Virginia Bank of the Peninsula, Hampton, Virginia, was established
in August. Atlantic National Bank, Norfolk, Virginia, opened in September;
Commonwealth Bank and Trust Company of Virginia, Sterling, Virginia,
started operations in October; and in November the Greensboro National
Bank, Greensboro, North Carolina, began serving the public.
Also, Kanawha Banking & Trust Company National Association,
Charleston, W est Virginia, was converted from a state member bank
into a nationally chartered bank in July.
CHANGES IN DIRECTORS
The election, by Fifth District member banks,
of one Class A Director to a three-year term on the Richmond Board of
Directors was held in the fall. Edward N. Evans, President, The Farmers and
Merchants National Bank, Cambridge, Maryland, was elected to succeed
Douglas D. Monroe, Jr., Chief Executive Officer and Vice Chairman,
Chesapeake National Bank, Kilmarnock, Virginia, whose term expired
December 31. Henry Clay Hofheimer, II, Director and Member of
Executive Committee, Lone Star Industries, Inc., Norfolk, Virginia, was
elected by Fifth District member banks to a three-year term as a Class B
Director of the Richmond Bank, succeeding Charles D. Lyon, retired President,
10




The Potomac Edison Company, Hagerstown, Maryland.
term expired December 31.

Mr. Lyon’s

The Board of Governors designated Robert W . Lawson, Jr., Managing Partner,
Charleston Office, Steptoe & Johnson, Charleston, W est Virginia, to serve as
Chairman of the Board of Directors and Federal Reserve Agent for 1972.
Named as Deputy Chairman of the Board of Directors for 1972 was
Stuart Shumate, President, Richmond, Fredericksburg and Potomac Railroad
Company, Richmond, Virginia. The Board of Governors also appointed
E. Craig W a ll, Sr., Chairman of the Board, Canal Industries, Inc., Conway,
South Carolina, to a three-year term as a Class C Director of the
Richmond Reserve Bank. Mr. W a ll, who was a member of the Charlotte Branch
Board of Directors, succeeded Wilson H. Elkins, President, University of
Maryland, College Park, Maryland, whose term expired December 31.
Dr. Elkins served as Chairman of the Board of the Richmond Bank
from 1968 through 1971.
The Board of Governors appointed Robert C. Edwards, President,
Clemson University, Clemson, South Carolina, to serve the remaining year
of Mr. W a ll’s three-year term on the Board of Directors of the Charlotte
Branch. Charles F. Benbow, Vice President, R. J. Reynolds Industries, Inc.,
Winston-Salem, North Carolina, was appointed by the Board of Governors
to a three-year term on the Charlotte Branch Board. Mr. Benbow succeeded
John L. Fraley, President, Carolina Freight Carriers Corporation,
Cherryville, North Carolina, whose term expired December 31. The Board of
Governors also appointed James G. Harlow, President, W est Virginia
University, Morgantown, W est Virginia, to a three-year term on the
Baltimore Branch Board of Directors. He succeeded James M. Jarvis,
retired Chairman of the Board and Director, Jarvis, Downing & Emch, Inc.,
Clarksburg, W est Virginia, whose term expired December 31.
The Richmond Board of Directors reappointed Tilton H. Dobbin,
President and Chairman of Executive Committee, Maryland National Bank,
Baltimore, Maryland, as a Director at the Baltimore Branch. The Richmond
Board also reappointed L. D. Coltrane, III, President and Trust Officer,
The Concord National Bank, Concord, North Carolina, to a three-year
term on the Charlotte Branch Board of Directors.

FEDERAL ADVISORY COUNCIL

The Board of Directors selected

Joseph W . Barr, President, American Security and Trust Company,
W ashington, D. C., to serve during 1972, for a second term, as the Fifth
District representative to the Federal Advisory Council. The Council,
which consists of a representative from each of the 12 Federal Reserve
Districts, meets quarterly with the Board of Governors in Washington, D. C.,
to discuss business conditions and Federal Reserve affairs.




11




CHANGES IN OFFICIAL STAFF

A number of changes in the official staff

occurred during 1971.
In February William C. Fitzgerald was named Assistant Vice President in
the Examining Department. John F. Rand was appointed Senior Vice President
in June and was given responsibility for the Data Processing, Computer
Services, and Planning Departments, as well as the Communications
Division located at the Culpeper facility. Also in June Assistant Vice
President William H. W allace, formerly with the Research Department,
was assigned to the Planning Department, and Robert D. McTeer, Jr.,
was named Assistant Vice President in the Research Department.
W enifred O. Pearce, formerly Assistant Vice President in the Check Collection
Department, resigned in September to accept the position of Staff Vice
President with the Virginia Bankers Association.
At the end of September, after nearly 30 years of distinguished service,
Senior Vice President Upton S. Martin retired. Immediately prior to his
retirement, Mr. Martin supervised the Check Collection and Building and
Equipment Departments.
Clifford B. Beavers was named Vice President in charge of the Check
Collection Department in October, and Raymond E. Sanders, Jr., Senior Vice
President, was given the additional responsibility of the Building and
Equipment Department. Also in October, Andrew L. Tilton, Assistant Vice
President, was transferred from the Computer Services Department
to the Check Collection Department.
Additional promotions and changes, effective January 1, 1972, were announced
in December. Lloyd W . Bostian, Jr., and Chester D. Porter, Jr., were
appointed Vice Presidents in the Examining Department, and W . Thomas
Cunningham, Jr., was named Vice President in the Personnel Department.
Fred L. Bagwell was promoted to Assistant Vice President in the Examining
Department, and W yatt F. Davis was elevated to Chief Examiner.
William D. Martin, III, was named Assistant General Counsel in the Legal
Department, and William E. McLean was elected Assistant Vice President
in the Data Processing and Computer Services Departments.
Joseph C. Ramage was promoted to Assistant Vice President in the Discount
and Credit Department, and Wilbur C. Wilson was elected Assistant Vice
President in the Fiscal Agency and Securities Departments.
Named Examining Officer was Jackson L. Blanton.
At the Culpeper facility, Albert D. Tinkelenberg was promoted to
Vice President, and John G. Stoides was named Assistant Vice President.
Charles P. Kahler was promoted to Assistant Vice President at the
Baltimore Branch.

12

Summary o f Operations
CHECK CLEARING & COLLECTION

1971

1970

Dollar amount
Commercial bank checks1
Government checks2 _____
Return items ___________

218,118,784,000
18,416,145,000
2,167,970,000

189,905,006,000
15,503,843,000
1,746,610,000

Number of items
Commercial bank checks1
Government checks2 _____
Return items ___________

708,860,900
71,728,000
7,753,000

636,923,000
68,261,000
7,359,000

Currency disbursed—-Dollar amount
Coin disbursed— Dollar amount_____
Dollar amount of currency destroyed

3,625,049,840
170,541,920
1,091,826,100

3,318,065,890
147,146,575
1,131,836,112

Daily average of currency destroyed
Dollar amount ____________________
Number ___________________________

4,298,528
793,837

4,438,573
792,338

3,450,100,000
19,924,479
67

5,126,845,000
33,055,397
95

Marketable securities delivered or redeemed
Dollar amount _____________________________
Number ____________________________________

20,518,332,102
202,519

16,857,927,029
355,646

Coupons redeemed
Dollar amount _____________________________
Number ____________________________________

103,284,799
335,884

116,116,823
366,297

Savings bond and savings note issues
Dollar amount ____________________________
Number ___________________________________

413,299,400
9,667,352

361,648,172
9,408,269

Savings bond and savings note redemptions
Dollar amount ___ ________________________
Number ______________ ____________________

478,247,164
11,297,295

531,196,284
11,946,924

Depositary receipts for withheld taxes
Dollar amount ____________________________
Number ___________________________________

9,903,179,888
2,508,511

9,028,901,905
2,134,725

453,010,466,662
491,238

384,495,547,822
425,529

CURRENCY & COIN

DISCOUNT & CREDIT
Dollar amount
Total loans made during year _____________
Daily average loans outstanding___________
Number of banks borrowing during the year

FISCAL AG EN CY ACTIVITIES

TRANSFERS OF FUNDS
Dollar amount
Number ______
1 Excluding checks on this Bank.
2 Including postal money orders.




13

COMPARATIVE STATEMENTS

Condition
D ec. 31, 1971

Dec. 31, 1970

Gold certificate account ________________________________
Special Drawing Rights certificate account
Federal Reserve notes of other Federal Reserve Banks
_________________________________________
Other cash
Discounts and advances ----- -------------------------- ------- -----Federal agency obligations ____________________________
U. S. Government securities:

$ 893,888,219.95
36.000.000.00
99.994.310.00
37.588.915.00
2,950,000.00
36.286.000.00

$1,043,808,340.57
36,000,000.00
82,642,870.00
12,797,592.30

Bills _________________________ ______ ____________ ___ Certificates __________________________________________
N otes--------------------------------------------------------------------------Bonds -------------------------------------------------------------------------

2,256,080,000.00

1,932,823,000.00

2.659.964.000.00
245,866,000.00

2.474.114.000.00
218,878,000.00

TOTAL U. S. GOVERNMENT SECURITIES ____________________

5.161.910.000.00

4.625.815.000.00

TOTAL LOANS AND SECURITIES ....... ........................... ....... ........

Cash items in process of collection ---------------- ------------Bank premises ______________________ ___________________
Other assets ___________________________________________

5.201.146.000.00
1,087,551,283.61
13,065,841.52
54,806,430.19

4.625.815.000.00
996,018,127.33
11,417,938.52
58,185,422.04

TOTAL ASSETS _________ ______ ____________ _ __
_

$7,424,041,000.27

$6,866,685,290.76

Federal Reserve notes _____________

$4,802,937,861.00

$4,604,378,958.00

Deposits:
Member bank reserves ..................
U. S. Treasurer— general account
Foreign --------- ---------------------------Other _______ __________ ____ ____

1,514,666,753.97
98,035,104.43
14,280,000.00
41,252,085.39

1,306,815,256.74
38,828,985.64
6,375,000.00
30,087,116.20

Deferred availability cash items___
Other liabilities ___________________

1,668,233,943.79
833,605,551.88
42,686,343.60

1,382,106,358.58
766,518,464.43
42,280,409.75

TOTAL LIABILITIES _ ..... .....

7,347,463,700.27

6,795,284,190.76

Capital paid in ___________________ ____ ____________________
Surplus ----------------------------------------------------------------------------------

38.288.650.00
38.288.650.00

35.700.550.00
35.700.550.00

TOTAL LIABILITIES AND CAPITAL ACCOUNTS

$7,424,041,000.27

$6,866,685,290.76

$

$

ASSETS:

LIABILITIES:

TOTAL DEPOSITS ____________________

C A P IT A L A CCO U N TS:

Contingent liability on acceptances purchased for
foreign correspondents __________________ ___ ___

14




12,999,900.00

12 , 755 , 100.00

Earnings and Expenses
1971

EARNINGS:
Discounts and advances _______________
Intei'est on U. S. Government securities
Foreign currencies __ ______ ___________
Other earnings______ ___ _____ ___________
TOTAL CURRENT EARNINGS

1970

$
968,532.33
270,720,509.91
135,076.52
34,681.04

$ 2,086,332.79
281,255,061.17
2,488,230.63
37,585.36

271,858,799.80

285,867,209.95

27,284,368.86
1,674,400.00
2,203,948.20

23,289,429.24
1,084,700.00
2,815,300.03

E XP E N SE S:
Operating expenses (including depreciation on bank premises) after
deducting reimbursements received for certain Fiscal Agency and
other expenses __________ ______ _______________________________________
Assessments for expenses of Board of Governors ___ ________________
Cost of Federal Reserve currency ____________________________________
NET EXPENSES ____ ___ _______________________________________

31,162,717.06

27,189,429.27

CURRENT NET EARNINGS ____________ _______ ______________

240,696,082.74

258,677,780.68

7,629,141.53
117,201.74

616,332.07
251,152.58
867,484.65

ADDITIONS TO CURRENT NET EARNINGS:

Profit on sales of U. S. Government securities (net)
All other __________________________________________
TOTAL ADDITIONS ___________________ ___ ______________________________________

7,746,343.27

DEDUCTIONS FROM CURRENT NET EARNINGS _______________ _____________ ____ ___

470,436.83

58,109.69

NET ADDITION TO CURRENT NET EARNINGS _________

7,275,906.44

809,374.96

NET EARNINGS BEFORE PAYMENTS TO U.S. TREASURY

$247,971,989.18

$259,487,155.64

$ 2,261,033.34
243,122,855.84
2,588,100.00

$ 2,100,487.09
255,889,468.55
1,497,200.00

$247,971,989.18

$259,487,155.64

$ 35,700,550.00
2,588,100.00

$ 34,203,350.00
1,497,200.00

$ 38,288,650.00

$ 35,700,550.00

$ 35,700,550.00
2,737,100.00

$ 34,203,350.00
1,674,150.00

38,437,650.00
149,000.00

35,877,500.00
176,950.00

$ 38,288,650.00

$ 35,700,550.00

Dividends paid ___________________________________________________
Payments to U. S. Treasury (interest on Federal Reserve notes)
Transferred to surplus ___________________________________________
TOTAL

SURPLUS ACCOUNT
Balance at close of previous year
Addition account of profits for year
BALANCE AT CLOSE OF CURRENT YEAR

C A P IT A L STOCK ACCOUNT
(Representing amount paid in, which is 50% of amount subscribed)
Balance at close of previous year ------------------------------Issued during the year ................. ----------------------------Cancelled during the year

______________________

BALANCE AT CLOSE OF CURRENT YEAR




15

DIRECTORS
Wilson H. Elkins
Robert W. Lawson, Jr.

(December 31, 1971)

Chairman of the Board and Federal Reserve Agent
Deputy Chairman of the Board

CLASS A
Hugh A. Curry

Thomas P. McLachlen

Douglas D. Monroe, Jr.

President, The Kanawha Valley Bank
Charleston, West Virginia
(Term expires December 31, 1972)
President, McLachlen National Bank

Washington, D. C.
(Term expires December 31, 1973)
Chief Executive Officer and Vice Chairman, Chesapeake National Bank

Kilmarnock, Virginia
(Term expired December 31, 1971)
Succeeded by: Edward N. Evans
President, The Farmers and Merchants National Bank
Cambridge, Maryland
(Term expires December 31, 1974)

CLASS B
H. Dail Holderness

President, Carolina Telephone and Telegraph Company

Tarboro, North Carolina
(Term expires December 31, 1973)

Charles D. Lyon

Retired President, The Potomac Edison Company

Robert S. Small

President and Chief Executive Officer, Dan River, Inc.

Hagerstown, Maryland
(Term expired December 31, 1971)
Succeeded by: Henry Clay Hofheimer, II
Director and Member of Executive Committee, Lone Star
Industries, Inc.
Norfolk, Virginia
(Term expires December 31, 1974)
Greenville, South Carolina
(Term expires December 31, 1972)

CLASS C
Wilson H. Elkins

President, University of Maryland

College Park, Maryland
(Term expired December 31, 1971)
Succeeded by: E. Craig Wall, Sr.
Chairman of the Board, Canal Industries, Inc.
Conway, South Carolina
(Term expires December 31, 1974)

Robert W. Lawson, Jr.

Stuart Shumate

Managing Partner, Charleston Office, Steptoe & Johnson

Charleston, West Virginia
(Term expires December 31, 1972)
President, Richmond, Fredericksburg and Potomac Railroad Company

Richmond, Virginia
(Term expires December 31, 1973)

MEMBER FEDERAL A D VISO R Y COUNCIL
Joseph W. Barr

16




President, American Security and Trust Company

Washington, D. C.
(Term expires December 31, 1972)

OFFICERS
Richmond
Aubrey N. Heflin

W elford S. Farmer
James Parthemos

President

Senior Vice President and
Special Legal Adviser
Senior Vice President and
Director of Research

Robert P. Black

First Vice President

J. Gordon Dickerson, Jr.

Vice President

H. Ernest Ford

Vice President

William C. Glover

Vice President

John F. Rand

Senior Vice President

Arthur V. Myers, Jr.

Vice President

Raymond E. Sanders, Jr.

Senior Vice President

John L. Nosker

Vice President

Chester D. Porter, Jr.

Vice President
Vice President

Clifford B. Beavers

Vice President

Lloyd W . Bostian, Jr.

Vice President

Aubrey N. Snellings

W. Thomas Cunningham, Jr.

Vice President

Albert D. Tinkelenberg

Vice President

William F. Upshaw

John G. Deitrick

Vice President
Vice President and
General Counsel

J. Lander Allin, Jr.

Assistant Vice President

Robert D. McTeer, Jr.

Assistant Vice President

Elizabeth W. Angle

Assistant Vice President

Victor E. Pregeant, III

Assistant Vice
President and Secretary

Fred L. Bagwell

Assistant Vice President

W yatt F. Davis

Chief Examiner

Joseph C. Ramage

Assistant Vice President

Frank D. Stinnett, Jr.

Assistant Vice President

John G. Stoides

Assistant Vice President
Assistant Vice President

George B. Evans

Assistant Vice President

W illiam C. Fitzgerald

Assistant Vice President

Andrew L. Tilton

John E. Friend

Assistant Vice President

William H. Wallace

Assistant Vice President

Wilbur C. Wilson

Assistant Vice President

Jack H. Wyatt

Assistant Vice President

William D. Martin, III
W illiam E. McLean
Jackson L. Blanton
Charles H. Imel
Joseph F. Viverette

Assistant General Cotinsel
Assistant Vice President
Examining Officer
Assistant Cashier
General Auditor

A. A. Stewart, Jr.
B.

Assistant Cashier
Assistant Cashier

John C. Horigan

Assistant General Auditor

Charlotte Branch

Baltimore Branch
H. Lee Boatwright, III

Hobert D. Pierce
Barthonhue W. Reese

Senior Vice President
Vice President

F. Arm strong Assistant Vice President

Jimmie R. Monhollon
Stuart P. Fishburne

Senior Vice President
Vice President

Boyd Z. Eubanks

Assistant Vice President

E. Riggs Jones, Jr.

Assistant Vice President

Winfred W . Keller

Assistant Vice President

Charles P. Kahler

Assistant Vice President

Fred C. Krueger, Jr.

Assistant Vice President

Gerald L. Wilson

Assistant Vice President

O. Louis Martin, Jr.

Assistant Vice President




BRANCH DIRECTORS

(December 31, 1971)

Baltimore
James R. Chaffinch, Jr.
Tilton H. Dobbin
John H. Fetting, Jr.
James M. Jarvis

* Arnold J. K leff, Jr.
J. Stevenson Peck
James J. Robinson

Executive Vice President, The Denton National Bank
Denton, Maryland
(Term expires December 31, 1972)
President and Chairman of Executive Committee, Maryland National Bank
Baltimore, Maryland
(Term expires December 31, 1974)
President, A. H. Fetting Company
Baltimore, Maryland
(Term expires December 31, 1973)
Retired Chairman of the Board and Director, Jarvis, Downing & Emch, Inc.
Clarksburg, West Virginia
(Term expired December 31, 1971)
Succeeded by: James G. Harlow
President, West Virginia University
Morgantown, W est Virginia
(Term expires December 31, 1974)
Retired Manager, Baltimore Refinery, American Smelting and Refining Company
Baltimore, Maryland
(Term expires December 31, 1972)
President, Union Trust Company o f Maryland
Baltimore, Maryland
(Term expires December 31, 1973)
Executive Vice President and Cashier, Bank o f Ripley
Ripley, West Virginia
(Term expires December 31, 1973)

Charlotte
H. Phelps Brooks, Jr.
C. C. Cameron
J. Willis Cantey
L. D. Coltrane, III
Charles W. DeBell
*John L. Fraley

E. Craig Wall, Sr.

* Branch Board Chairman.

18



President and Trust Officer, The Peoples National Bank
Chester, South Carolina
(Term expires December 31, 1973)
Chairman of the Board and President, First Union National Bank o f North Carolina
Charlotte, North Carolina
(Term expires December 31, 1973)
Chairman of the Board, The Citizens & Southern National Bank o f South Carolina
Columbia, South Carolina
(Term expires December 31, 1972)
President and Trust Officer, The Concord National Bank
Concord, North Carolina
(Term expires December 31, 1974)
General Manager, North Carolina W orks, Western Electric Company, Inc.
Winston-Salem, North Carolina
(Term expires December 31, 1973)
President, Carolina Freight Carriers Corporation
Cherryville, North Carolina
(Term expired December 31, 1971)
Succeeded by: Charles F. Benbow
Vice President, R. J. Reynolds Industries, Inc.
Winston-Salem, North Carolina
(Term expires December 31, 1974)
Chairman of the Board, Canal Industries, Inc.
Conway, South Carolina
(Appointed Class C Director o f Federal Reserve Bank o f Richmond)
Succeeded by: Robert C. Edwards
President, Clemson University
Clemson, South Carolina
(Term expires December 31, 1972)







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