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OPERATION OF
FEDERAL
RESERVE BANK
OF CHICAGO
1925
SEVENTH FEDERAL RESERVE
DISTRICT

E L E V E N T H ANNUAL
R E P O R T TO
T H E F E D E R A L RESERVE
BOARD




OPERATION OF
FEDERAL
RESERVE BANK
OF CHICAGO
1925
SEVENTH FEDERAL RESERVE
DISTRICT

E L E V E N T H ANNUAL
R E P O R T TO
THE FEDERAL RESERVE
BOARD




F E D E R A L R E S E R V E BANK OF CHICAGO
DIRECTORS AND OFFICERS FOR 1925
OFFICERS—(CONTINUED)

CLASS A—DIRECTORS

Charles H. McNider, Mason City,
Iowa
President, First National Bank

George M. Reynolds, Chicago, Illinois
Chairman of Board, Continental
Commercial National Bank

and

Elbert L. Tohnson, Waterloo, Iowa
President, First National Bank, Waverly
CLASS B—DIRECTORS

Stanford T. Crapo, Detroit. Michigan

Secretary and Treasurer, Huron Portland Cement Company

August H. Vogel, Milwaukee, Wisconsin

Vice-President, Pfister and Vogel Leather
Co.

Robert

Mueller,

Decatur,

Illinois

Secretary, Mueller Company
CLASS C—DIRECTORS

Frank C. Ball, Muncie, Indiana
President, Ball Bros. Company

William A. Heath, Evanston, Illinois
Federal Reserve Agent

James

Simpson,

Chicago,

Illinois

President, Marshall Field & Company
OFFICERS

William A. Heath, Chairman
James Simpson, Deputy Chairman
William H. White, Assistant Federal
Reserve Agent
Frank M. Huston, Manager, Division
of Research and Statistics

James B McDougal, Governor
John H. Blair, Deputy Governor
Charles R. McKay, Deputy Governor
LOANS AND CREDITS

Kent C. Childs, Controller of Loans
and Credits
Allen R. LeRoy, Manager, Loans
Eugene A. Delaney, Manager, Credit
Department
Joseph C. Callahan, Manager, Member
Bank Accounts Department
INVESTMENTS

Alba W. Dazey, Manager, Investment
Department
CASH AND CUSTODIES

Otto J. Netterstrom, Controller of
Cash and Custodies
Jesse G. Roberts, Manager, Cash
Department
Robert E. Coulter, Manager, Cash
Custody Department
Fred Bateman, Manager, Securities
Department
COLLECTIONS

William C. Bachman, Controller of
Collections
Irving Fischer, Manager, Check
Department
Louis G. Pavey, Manager, Collection
Department
ADMINISTRATION

Charles L. Powell, Counsel

James H. Dillard, Controller of
Administration
Robert J. Hargreaves, Manager, Personnel Department
Louis G. Meyer, Manager, Service
Department
Frank A. Lindsten, Manager, Disbursing Department
Richard Huelsman, Manager, Planning Department

Frank O. Wetmore, Chicago, Illinois,
Member Federal Advisory Council

Don A. Jones, Controller of Fiscal
Agency Functions

Francis R. Burgess, Auditor
Walter A. Hopkins, Assistant Auditor

FISCAL AGENCY

DETROIT BRANCH
(128 Congress Street, West)
DIRECTORS AND OFFICERS
George B. Morley, Saginaw, Michigan John W. Staley, Detroit, Michigan
President, Second" National Bank
President, Peoples State Bank
William J. Gray, Detroit. Michigan
William R. Cation, Managing Director
President, First National Bank
John G. Baskin, Assistant Federal
Harry H. Bassett, Flint, Michigan
President, Buick Motor Company
Reserve Agent
N. P. Hull, Lansing, Michigan
George T. Jarvis, Assistant Auditor
President, Grange Life Insurance
John B. Dew, Cashier
Company
Harlan J. Chalfont, Assistant Cashier
James Inglis, Detroit. Michigan
Henry M. Butzel, Assistant Counsel
President, American Blower Company



.

FEDERAL RESERVE BANK
OF CHICAGO

CHICAGO, January 16, 1926.
SIR:

In compliance with your letter of December 7, 1925, I have
the honor to submit herewith the eleventh annual report of the
Federal Reserve Bank of Chicago, covering the year 1925.
Respectfully,
W. A. HEATH,

Federal Reserve Agent.
HON. D. R. CRISSINGER,

Governor, Federal Reserve Board,




Washington, D. C.

FEDERAL RESERVE BANK OF CHICAGO
Comparative Statement of Condition

IN THOUSANDS OF DOLLARS

Dec. 31.
1925
114,683
5,612

Dec. 31.
1924
165,909
2,498

Dec. 31.
1923

120,295
128,969
69,067

168,407
110,989
87,980

389,113
106,900
49.091

318,331
17,494

367,376
15,576

545,104
8,286

335,825

382,952

553,390

9,568

9,266

7,500

55,505
32,455

19,379
18,445

48,866
46,468

Total bills discounted
Bills bought in open market
United States Government securities:
Bonds
Treasury notes
Certificates of indebtedness

87,960
27,711

37,824
33,882

95.334
42,437

20.190
18.955
13,657

19,494
46.556
14,320

4,425
4.868
1,464

Total United States Government securities
Foreign Loans on gold

52.802
1.077

3.370
894

10,757

169,550

152,970

148.528

97,279
7,933
1,928

81,588
8,099
1,556

66,451
8,264
240

622.083

636.431

784.373

RESOURCES

Gold with Federal reserve agent
Gold redemption fund with United States Treasury
Gold held exclusively against Federal Reserve notes..
Gold settlement fund with Federal Reserve Board
Gold and gold certificates held by bank
Total gold reserves
Reserves other than gold
Total reserves
Non-reserve cash
Bills discounted:
Secured by United States Government obligations...
Other bills discounted

Total bills and securities.
Uncollected items
Bank premises
All other resourcesTotal resources.

334,917
4.196

LIABILITIES

Federal Reserve notes in actual circulationDeposits :
Member bank—reserve account
Government
Foreign bank
Other deposits

180,118

196,529

406,901

306,521
434
1,139

312,395
6,173
275
1,340

268,212
2.745
226
826

Total deposits
Deferred availability items.
Capital paid in
Surplus
All other liabilities

308,982
85,020
15,731
30,613
1,619

320.183
72,786
15.172
30,426
1,335

272.009
58,611
15,179
30,426
1,247

622.083

636.431

784,373

68.7%

74.1%

81.5%

9,706

6,360

2.640

Total liabilities.
Ratio of total reserves to deposit and Federal Reserve
note liabilities combined
Contingent liability on bills purchased for foreign corre
spondents




OPERATION OF THE FEDERAL
RESERVE BANK OF CHICAGO
IN 1925

T

HE generally prosperous industrial and agricultural conditions prevailing throughout the country have been shared by the Seventh
Federal Reserve district and reflected in the operations of the Federal
Reserve Bank of Chicago in 1925.

Business has been carried on in large volume; although the first six
months of the year were marked by considerable unevenness, by midyear
the majority of activities in the district exceeded 1924 levels, broadening
moderately after the usual summer curtailments which were less extensive than in former years, so that in many instances new yearly records were set. Important among these were the year's automobile
output, steel ingot production, building operations, and the manufacture
of farm equipment. As a consequence, industrial workers were well
employed and at higher wages than during the preceding year, with
resultant expansion of demand for consumption goods.
Agricultural sections in general have contributed to increased purchasing power, good crops, as a rule with fair prices, effecting pronounced
improvement in the majority of farming communities. Unfortunately
there are some areas which have not shared in the increased income, and
others, while benefiting, have not shared sufficiently to enable them to
recuperate fully from the depression of recent years. The corn crop constituted the one exception to prevailing fair prices: the bulk of this has
not been marketed, but if fed promises a good return at current livestock
prices.
Financial features have been the plentiful funds available at relatively
low rates, unprecedented activity in the investment market, and the new
records reached in number and amount of savings deposits.
The personnel of the bank has been reduced during 1925 without impairment of efficiency, notwithstanding the handling of a considerably heightened volume of work as compared with 1924.
Financial Results of Operations—The volume of Federal Reserve
credit extended to member banks has been on an expanding scale, reflected
in the figures showing amounts of bills discounted at the close of 1925
and 1924. On December 31, 1925, total bills discounted aggregated
$87,960,000. as against $37,824,000 at the close of 1924, while total cash
reserves dropped from $382,952,000 on December 31, 1924, to $335,825,000




5

ELEVENTH ANNUAL REPORT
Earnings and Expenses
EARNINGS

1925

Total

1924

1923

$2,121,979 $2,044,407 $3,872,139
1,055,291
705,723
1.420,395
1,834,450 2,121,708
1,049,666
43,069
39.910
37,573
369,874
290,421
131,586

Discounted bills
Purchased bills
U. S. securities
Deficient reserve penalties.
Miscellaneous

$5.424,663 $5.202,169 $6.511.359

earnings..
CURRENT EXPENSES

Salaries:
Bank officers
Clerical staff
Special officers and watchmen
All other
Governors' conferences
Federal reserve agents' conferences
Federal Advisory Council
Directors' meetings
# Traveling expenses
Assessments for Federal Reserve Board expenses
Legal fees
Insurance (other than on currency and security ship
ments)
Taxes on banking house
Repairs and alterations, banking house
Light, heat, and power
Rent
Telephone
Telegraph
Postage
Expressage
Insurance on currency and security shipments
Federal Reserve Currency:
Original cost, including shipping charges
Cost of redemption, including shipping charges
Taxes on Federal Reserve bank-note circulation
Office and other supplies
Printing and stationery
All other expenses
Total current expenses..

321,901
1,663,194
95,633
282,265
360
346
992
8,147
25,879
97.955
2.000

347,478
1,818,716
102,906
271,471
383
302
914
8.441
26,222
91,183
4,711

; 332,875
1,947,951
108,696

46,069
242,374
34.353
33,906
33,364
21,878
49,570
237,061
51.588
64,870

39,714
230,166
17,941
41,240
48,142
26,675
59,305
213,546
50,584
58,859

38,601
230,455
88,308
49,602
42,176
30,164
62,125
207.994
55.244
56,083

189,089
20,675
66,379
71,329
77,862

225.985
36,556

210,993
57,752
2,006
144,239
112,922
110,094

$3,744,039

PROFIT AND LOSS ACCOUNT

76,924
81,128
66,944

1923

55,424,663 $5,202,169
3,744.039 3,946,436

Current net earnings

711
363
1,007
9,094
31.780
97.426

$3,946,436 $4,373,024

1925

Earnings
Current expenses.

344,363

56,511,359
4,373,024

$1.680,624 $1.255.733 $2.138.335

Additions to current net earnings:
Withdrawn from reserve for—
Depreciation on United States bonds.
All other
Total additions.

12,646
$

Deductions from current net earnings:
Depreciation allowances on bank premises
Reserve for probable losses
Furniture and equipment
All other
Total deductions

21,370
6,487

29.946
11.957

12,646 $

27.857

41.903

$ 165,197
323,097
32,718
50,985

165,197 $ 451,044
181,674
363,586
166,662
11,818
20,591
15,778

$ 571,997 $ 374.467 $1.001,883
$ 559,351 $ 346,610 $ 959,980

Net deductions from current net earnings
Net earnings available for dividends, surplus and fran
chise tax
Dividends paid
Transferred to surplus account
Franchise tax paid United States Government.

1,121.273 $ 909.123 $1.178.355
$ 934,016 $ 909,123
187,257

904,371
27,398
246,586

# Other than those connected with governors' and agents' conferences and meetings
of directors and of the advisory council.




6

FEDERAL RESERVE BANK OF CHICAGO
on December 31, 1925. Member bank deposits at the end of 1925 were
$306,521,000 compared with $312,395,000 on the corresponding date in 1924.
The charts on page 8 present the movement of the principal resources
and liabilities from 1920 to 1925, inclusivjj.
Net earnings from January 1, 1925, to December 31, 1923, totaled
$1,121,272.70 compared with $909,123.00 in the preceding year. Dividends of $934,015.92 were paid out of 1925 net earnings, and $187,256.78
transferred to surplus account. No franchise tax was paid the United
States Government, as was the case also in 1924; in the latter year no
transfer to surplus was made.
At the beginning of the year 1924, the budget system which had been
in use in the agent's division was extended to all departments of the bank,
and vigorous efforts were made to effect economy wherever possible.
As a result, the total expenses for the year 1924 were $426,587.85 less than
for the year 1923. This reduction was accomplished notwithstanding the
fact that the volume of operations handled in all of the departments,
excepting the Discount and Government Bond departments, showed
increases over the year 1923. This policy was continued during the year
1925, with the result that the total expenses for the year 1925 show a reduction of $202,397.26 when compared with the year 1924, and the volume
of operations, generally, show an increase over the previous year, exceptions in both years being the Discount and Government Bond
departments.
Discount Operations in 1925—The loan and discount operations of the
Federal Reserve Bank of Chicago during the year 1925 were marked by
seasonal fluctuations and showed evidence of heavy demand in certain
lines of industry. During the first six weeks of the year loans declined
from $46,830,000 on January 2 to $23,635,000 on February 18, the latter
being the low point of the year. Subsequent to February 18 the general
trend of loans was upward with a marked increase at the end of the year,
the high point, $124,560,000, being reached on December 29.
Activity in the automotive industry was evidenced in the trend of the
volume of credit in automobile manufacturing centers. Measured by our
loans to member banks in the state of Iowa, agricultural demand was
found to have followed the usual seasonal fluctuations. These loans
decreased from $11,637,00© on January 2 to $8,531,000 on April 1, largely
because of the marketing of crops and live stock carried over from 1924.
The summer demand increased these loans to a level between $10,000,000
and $11,000,000, until the harvesting demand in the fall carried them to
the high point of $13,739,00© on December 7.
The number of applications, 16,509, and the number of notes discounted,
79,204, during the year showed a reduction from the volume of 19,391 and
#2,140, respectively, in 1924. The volume in dollars, $2,075,378,000, however, showed a very substantial increase over the $1,035,261,000 in 1924.




ELEVENTH ANNUAL REPORT
COMPARATIVE VOLUME OF OPERATIONS I N PRINCIPAL
1925, 1924, and 1923
1924

1925

Number of Pieces Handled
Bills discounted :
Applications
Notes discounted
Bills purchased in open market
for own account
Currency received and counted....
Coin received and counted
Checks handled
Collection items handled :
United States Government coupons paid
All other
United States securities—issues,
redemptions, and exchanges by
Fiscal Agency department
Transfers of funds
Envelopes received and dispatched

DEPARTMENTS

1923

16.509
79,204

19,391
92,140

21,196
94,971

17,316
303,159,000
207,945,000
104,023,000

10,135
282,779,000
208,091,000
97,084,000

20,241
268,485,000
206,613,000
88,649,000

7,158,000
507,000

8,063,000
489,000

10,459,000
442,000

1,178,000
271,000
4,810,000

2,634,000
263,000
5,279,000

#22,041,000
246,000
7,460,000

$ 2,075,378,000

$ 1,035,261,000

$2,508,082,000

247,786,000
1,669,703,000
31,540,000
25,356,469,000

164,045,000
1,564,021,000
29,234,000
23,280,863,000

265,360,000
1,501,901,000
28,843,000
23,074,243,000

80,233,000
832,836,000

82,348,000
618,147,000

89,818,000
763,273,000

699,530,000
20,537,448,000

831,013,000
18,833,433,000

1,116,402,000
15,588,668,000

Amounts Handled
Bills discounted
Bills purchased in open market for
own account
Currency received and counted
Coin received and counted.
Checks handled
Collection items handled :
United States Government coupons paid
All other
United States securities—issues,
redemptions, and exchanges by
Fiscal Agency department
Transfers of funds

# Large total due to redemption of war savings securities which matured January 1, 1923.

MOVEMENT OF RESOURCES AND LIABILITIES
FEDERAL RESERVE BANK OF CHICAGO—1920 TO 1925, INCLUSIVE

1920

12
91

1922




1923

1924

1925

1920

192!

1922

1925

FEDERAL RESERVE BANK OF CHICAGO
This is accounted for by the fact that a large percentage of the loans handled was extended to banks in larger centers and based on rediscounts
of larger denominations. The decrease in the number of items was
affected by £2,633,600 of rediscounted paper being taken from rediscounts
and placed in Failed Banks Account during the year; this volume was
almost entirely represented by notes of small denomination.
During the year 1925 this bank accommodated 825 banks as compared
with 922 in the year 1924.
The aggregate reserve balances maintained by all member banks of
the Seventh district exceeded the total legal requirements throughout the
year, the excess ranging from 3.11 per cent at the maximum, to 2.30 per
cent, the low point. In 1924 aggregate excess reserve balances ranged
from a high of 5.20 per cent to a low of 2.57 per cent.
Collateral
as collateral
reported on
constituting
point of the

and Safekeeping Operations—The volume of securities held
in 1925 was in excess of the preceding year, $90,561,000 being
January 2 and $126,632,000 on December 31, 1925, the latter
the high point, and the $60,664,000 held on March 16 the low
year.

The safekeeping services of the Reserve bank on December 31 were
being utilized by 635 banks, representing an increase of 5.0 per cent over
the number so doing at the end of 1924. The amount held for safekeeping on December 31, 1925, was $149,091,448, or 4.5 per cent in excess
of the $142,604,851 on the corresponding date in 1924. During 1925, pieces
numbering 96,429 were entrusted to this bank for safekeeping compared
with 99,918 the year before, and 83,002 pieces were released as against
96,235 in 1924. Receipts to the number of 11,170, or 25.2 per cent more
than in 1924, were issued in 1925, and 7,982 receipts were released, representing an increase of 30.2 per cent over the preceding year.
Investments—During 1925, holdings of bankers' acceptances by the
Federal Reserve Bank of Chicago fluctuated from a peak of $43,282,000
on March 25 to a low point of $24,077,000 on August 25, the investment
account showing $27,711,000 (inclusive of bills bought under sales contract) held at the close of the year. Purchases of acceptances during the
year amounted to $247,786,000 as against $164,045,000 the previous year,
those bought under repurchase agreement totaling $48,010,000 in 1925 as
compared with $27,039,000 in 1924. Purchases of bills for account of
member banks were only $650,000 in 1925 compared with $1,800,000 the
preceding year.
Holdings of United States securities, consisting for the most part of
short maturities, were at a high point the first weekly reporting date of
the year, January 7, when $74,558,000 was reported. These were allowed
to mature without reinvestment, or were sold gradually as market conditions seemed to warrant, until a low point of $38,650,000 was reached on
June 17. At the close of the year holdings aggregated $52,802,000. Open-




ELEVENTH ANNUAL REPORT
market operations in United States securities throughout the year have
been co-ordinated with the other Federal Reserve banks, and purchases
and sales have been made primarily to suit the needs of commerce and
business.
During the year the Federal Reserve bank purchased $41,000,000 in
United States securities for member banks, compared with $24,000,000' in
1924. Sales for member banks amounted to $50,000,000 as against
$42,000,000 in the preceding year. Purchases of securities for account of
the Treasury aggregated approximately $40',000,000, whereas in 1924 these
amounted to $16,000.
COMPARATIVE TABLE OF GOVERNMENT S E C U R I T Y TRANSACTIONS ]925,
1924, AND 1923—AMOUNTS I N T H O U S A N D S O F DOLLARS
1925
Number
of Transactions
Certificates of Indebtedness and Treasury Notes:
Market PurchasesMarket Sales
Bought with Agreement . .
Sold under Agreement
U. S. Bonds:
Bought
Sold .
Totals

109
222

1923

1924

Amount

Number
of Transactions

167,607
182,543

264
462

Amount

Number
of Transactions

173,615
92,309

1,006
813

Amount

76,505
73,083

581

92,574

410

52,293

2,142

198,472

519

90,771

401

56,292

2,250

211,317

4,314
9,611

63,141
32,752

2,989
11,698

61,015
37,845

3,356
9,710

43,015
23,840

15,356

629,388

16,224

473,369

19,277

626,232

NOTE.—Includes transactions for the account of member and other banks, but excludes
temporary Treasury Certificates purchased from the Treasury Department.

Deposit and Federal Reserve Note Liabilities; Reserve Position—The
volume of Federal Reserve notes in circulation showed a steadily declining trend during the first eight months of 1925, but after September seasonal requirements for currency were reflected in greater volume of Federal Reserve notes. On January 7, the first weekly reporting date of the
year, they stood at $192,163,000 and on December 30, the last reporting
date, at $179,712,000. The lowest point of the year in Federal Reserve
note circulation was $144,708,000 on September 2. A factor in this reduction in the net circulation of Federal Reserve notes between the beginning and the end of the year was the paying out of a greater volume of
gold notes than in 1924. Weekly changes in Federal Reserve note circulation are shown in the Annual Report of the Federal Reserve Board.
Throughout the year member bank deposits have averaged higher than
in 1924 and, while showing considerable week-to-week fluctuation, the
$324,211,000 given on December 30 differs but little from the $321,704,000
on the first weekly reporting date of the year.
Total cash reserves in the early months of 1925 showed no established
trend, but after April the movement was downward with little interrup-




10

FEDERAL RESERVE BANK OF CHICAGO
tion. On January 7 total cash reserves were .'! 385,289,000 as compared
with $321,491,000 on December 30.
The reserve ratio of this bank has been lower during 1925 than in the
preceding year, on January 7 amounting to 74.3 per cent, and on December 30 to 63.4 per cent, touching a high point of 81.7 per cent on August 12.
The December 30 figure constituted the year's low point.
Membership'—Five state banks in the Seventh district were admitted to
the System in 1925, as follows: Columbia State Savings Bank, Chicago,
Illinois; LaGrange Trust and Savings Bank, LaGrange, Illinois; Sumner
State Bank, Stockland, Illinois; First Trust and Savings Bank of Hammond, Indiana; and the Utica State Savings Bank, Utica, Michigan. A
total of sixteen withdrew, of which number eleven were closed, two were
absorbed by state member banks, and three left on six months' notice.
These changes resulted in a net reduction of eleven state member banks
during 19'25. The names of eighteen national bank members have been
added during 1925, thirteen of which were new institutions, four succeeded other national banks, and one represented a conversion of a state
bank. Twelve, however, closed their accounts with the Federal Reserve
bank, thus reducing to six the gain in the total number of national banks
of the district. Of those which closed their accounts, eight had previously suspended operations, seven in 1925 and one late in 1924; five
national banks, including two of those no longer operating, were absorbed
by other banks; and one bank consolidated with another national bank.
A total of sixteen national banks suspended operations during the year,
but nine of these have not closed their accounts and therefore are included
in the number of member national banks. Total membership showed a
reduction of five from the figures of December 31, 1924.
MEMBER BANKS—SEVENTH FEDERAL RESERVE DISTRICT
December 31, 1925

Nat'l

Total

Nat'l

68
19
107
153
24

404
210
455
235
131

371

1.435

State

Total

State

333
189
341
90
112

70
17
90
152
20

403
206
431
242
132

331
189
346
83
110

67
18
100
154
21

398
207
446
237
131

336
191
348
182
107

1.065

Totals

Thirty
Reserve
indicated
mentary,

December 31, 1923

Nat'l

Illinois

December 31, 1924

349

1.414

1,059

360

1,419

1,064

State

Total

national banks were authorized and approved by the Federal
Board to exercise fiduciary powers. Of this number, two, as
bv an asterisk in the list appended below, were granted suppleor limited, powers, all others receiving full powers.

ILLINOIS:

Aurora, American National Bank.
Aurora, Aurora National Bank.
Chicago, Guardian National Bank.
Chicago, Irving Park National Bank.




11

ELEVENTH ANNUAL REPORT
ILLINOIS :

Chicago, Washington Park National Bank.
Riverside, First National Bank.
Rockford, Security National Bank.
Waukegan, First National Bank.
Springfield, Illinois National Bank.
INDIANA:
Auburn, City National Bank.
Cloverdale, First National Bank.
Connersville, First National Bank.
Franklin, Citizens National Bank.
LaFayette, National Fowler Bank.
(*)
Marion, First National Bank.
Mulberry, Citizens National Bank
Richmond, Union National Bank.
West Port, First National Bank.
IOWA:
Cedar Falls, Cedar Falls National Bank.
Dubuque, Consolidated National Bank.
Eldon, First National Bank.
Eldora, First National Bank.
Harlan, Harlan National Bank.
Jewell Junction, First National Bank.
Sioux City, Toy National Bank.
MICHIGAN: Ionia, National Bank of Ionia.
Kalamazoo, Kalamazoo National Bank.
Monroe, First National Bank.
(*)
Quincy, First National Bank.
WISCONSIN: Stevens Point, Citizens National Bank.
Since the opening of the Federal Reserve Bank of Chicago, through
1925, thirty national banks and twenty-six state member banks, or a total
of fifty-six member banks, have closed their doors. Ten of the number
have since re-opened, while thirty-four have liquidated fully, since closing, their indebtedness to the Federal Reserve bank. Included in the above
totals are sixteen national banks and eight state member banks which suspended business during the year 1925.
Realizing the necessity for the maintenance of relations of mutual friendship and understanding between the Reserve bank and its member banks,
representatives of the Bank Relations Department made 1,723 calls on
members during 1925. Such visits not only establish personal contacts, but
also bring about, on the one hand, an understanding of the services afforded
them by the Reserve bank and, on the other hand, an appreciation by the
Reserve bank of the local problems of the members. Misunderstandings
are in large measure prevented and, when occurring, these visits are invaluable in clearing them up. Non-member banks are also visited whenever
practicable, 1,432 such calls being made in 1925, but these calls are not
made for the purpose of soliciting membership.
During the year there were seventy-five addresses delivered by offi-




12

FEDERAL RESERVE BANK OF CHICAGO
cials and other representatives of the Federal Reserve Bank of Chicago.
The audiences included trade bodies of various kinds, schools, community
gatherings, and hearers interested primarily in banking and the place
the Federal Reserve System occupies in our financial structure.
Division of Research and Statistics—The Division of Research and Statistics in 1925 has carried, with decreased personnel, an increasingly heavy
volume of work in the preparation of statistical data for the Federal
Reserve Board, officials of this bank, and various outside sources,
besides completing a detailed preliminary study of member bank earnings and expenses for the year 1924. The reporting service, now comprising approximately 1500 firms engaged in the major industries of the
Seventh district, was extended to include the retail shoe trade, and the
scope of the lumber survey was greatly increased. The Monthly Review
of Business Conditions, based on the reports from individual firms, is
sent to a list of 12,000 names in the United States and foreign countries.
The Reference Library, operated in conjunction with the Division of
Research and Statistics, now comprises about 6,000 volumes, acquired by
gift, purchase, and deposits from the Chicago Public Library, as well as
many thousand pamphlets, clippings, valuable maps, charts, and manuscript compilations.
Fiscal Agency Functions—The work of the Fiscal Agency Department
has now become more or less routine, the outstanding features being the
Treasury financing usual in March, June, September, and December. This
bank, as in previous years, took an active part in Government financing
during 1925, distributing $166,719,700 of Certificates of Indebtedness and
Treasury Bonds. In the performance of other fiscal agency functions,
there were surrendered to this bank for exchange, conversion, redemption,
etc., Government securities amounting to $532,810,704, represented by
1,147,130 pieces. Against these surrenders there were delivered 160,802
pieces aggregating $316,611,300.
The telegraphic transfer of United States Treasury Certificates of
Indebtedness and short-term notes is still used by banks and brokers
dealing in these securities and, during the year of 1925, this bank accepted
for telegraphic transfer to other Federal Reserve banks $226,958,400 and
delivered $132,005,000 of Government securities against receipts by other
Federal Reserve banks.
The work for the War Finance Corporation is entirely finished, the
last of the advances made through this bank having been paid. No new
loans were made during the year but twenty-four renewals were effected
aggregating $399,089, and substitutions of collateral amounted to $838,759.
On July 1, 1925, all of the Wisconsin business being handled bv the Federal Reserve Bank of Chicago was transferred to the Corporation's Minneapolis office.
Gold Settlement Fund—As was the case in 1924, the volume of balances




13

ELEVENTH ANNUAL REPORT
settled through the Gold Settlement Fund in 1925 increased over the preceding year, receipts from other Federal Reserve banks amounting to
$15,400,734,000' compared with $14,189,217,000 in 1924, and payments to
other Federal Reserve banks aggregating $15,444,254,000 as against
$14,365,048,000 in 1924. These transactions between the Seventh and other
Federal Reserve districts, therefore, entailed a net loss of $43,520,000 to
the Chicago bank, whereas in 1924 the corresponding loss had been
$175,831,000. The weekly figures of Gold Settlement Fund transactions
are contained in the Annual Report of the Federal Reserve Board.
As a result of these transactions and a considerable volume of deposits,
the Gold Settlement Fund, which at the end of 1924 amounted to
$110,989,000, on December 31, 1925, was shown as $128,969,000.
Clearings and Collections—The total number of checks handled during
the year 1925 by the Federal Reserve Bank of Chicago, including the
Detroit Branch, was 104,023,000, amounting to $25,356,469,000, an increase
over 1924 of 6,939,000 or 7.1 per cent in the number of items and
$2,075,606,000 in amount. The number of items drawn on Chicago and
Detroit banks was practically unchanged. Government checks decreased
5.9 per cent, but items payable outside of Chicago and Detroit increased
10 per cent. The largest volume of items ever handled in one day by the
head office and its Detroit Branch combined was 565,447, amounting to
$122,088,000 on November 12, 1925.
While the Check Department handled nearly seven million items in
excess of the volume in 1924, its operating expenses in 1925 were less than
in the preceding year.
A total of 507,411 non-cash collection items, with an aggregate value
of $832,836,405, was handled by the Federal Reserve Bank of Chicago and
the Detroit Branch in 1925, as compared with 489,474 items totaling
$618,147,324 in the preceding year. This represents an increase of 3.7
per cent in the number of items. Of this volume 418,877 items with a
total value of $710,123,836 were handled by the Chicago office, and 88,534
by the Detroit office with a total value of $122,712,569.
An aggregate of $20,537,448,000 was transferred by wire during 1925
compared with $18,833,433,000 in 1924. Of the 1925 total, $13,457,299,000
was transferred over leased wires, as against $14,157,666,000 in 1924, and
$2,642,276,000 over commercial wires, all other transfers in 1925 amounting to $4,437,873,000. Transactions numbered 270,868 compared with
262,776 the preceding year.
Cash and Currency Operations—The amount of currency and coin received and paid out at this bank during 1925 was larger than in any previous year. Currency received amounted to $1,672,620,000, as compared with
$1,569,248,000 for the preceding year; while payments amounted to
$1,692,976,000, as compared with $1,532,185,000 in 1924. Shipments of currency and coin to and from country banks numbered 92,644, and in 1924




14

FEDERAL RESERVE BANK OF CHICAGO
were 88,870. During 1925, $889,998,000 in gold certificates were paid out as
compared with $704,320,000 during the previous year, and $763,443,000
were received in 1925 compared with $455,419,000 in 1924. This was a
factor in a further reduction in the net circulation of Federal Reserve
notes outstanding from a high point of $195,964,000 on January 2 to
$180,118,000 on December 31.
Internal Organization, Buildings, and Property—Charles H. McNider,
Class A Director, and Stanford T. Crapo, Class B Director, whose terms
expired at the end of 1925, were re-elected. William A. Heath, Class C
Director, whose term also expired at the end of 1925, was re-appointed by
the Federal Reserve Board.
The Directors for the year 1926 will consist of the following:
CLASS A—Elbert L. Johnson, Waterloo, Iowa; Charles H. McNider,
Mason City, Iowa; George M. Reynolds, Chicago, Illinois.
CLASS B—Stanford T. Crapo, Detroit, Michigan; Robert
Decatur, Illinois; August H. Vogel, Milwaukee, Wisconsin.

Mueller,

CLASS C—Frank C. Ball, Muncie, Indiana; James Simpson, Chicago,
Illinois; William A. Heath, Evanston, Illinois.
The Federal Reserve Board again designated William A. Heath as
Chairman of the Board of Directors and Federal Reserve Agent for 1926,
and James Simpson as Deputy Chairman.
The Executive Committee for 1925 consisted of James B. McDougal,
Governor, William A. Heath, Federal Reserve Agent, Charles H. McNider,
George M. Reynolds, James Simpson, and August H. Vogel.
The Membership Committee was composed of William A. Heath, Federal Reserve Agent, James B. McDougal, Governor, and August H. Vogel.
These Committees will serve the Board of Directors in 1926 as constituted during the past year.
There were five resignations in the official staff at the head office during 1925: Frank R. Hanrahan, Manager of Loans, resigned January 31,
1925; John R. Rumbaugh, Manager, Gov't Bond Dept, June 7, 1925;
Walter F. McLallen, Secretary and Ass't Federal Reserve Agent, June 30,
1925; Clarke Washburne, Controller of Investments, July 10, 1925; Everett
L. Harris, Manager, Bank Relations Department, October 31, 1925. No
appointments were made to fill these vacancies.
Following is a comparison of the total number of employes exclusive
of officers at the head office:
December 31, 1924

1,246

December 31, 1925

1,209

Reduction



37
15

ELEVENTH ANNUAL REPORT
The Detroit Branch Board of Directors for the year 1926 will be: N. P.
Hull, Lansing, Michigan; James Inglis, Detroit, Michigan; William J.
Gray, Detroit, Michigan; John W. Staley, Detroit, Michigan; W. R. Cation,
Detroit, Michigan; Harry H. Bassett, Flint, Michigan; and George B.
Morley, Saginaw, Michigan.
There was one resignation in the official staff at Detroit, H. H. Gardner,
Assistant Cashier, resigning June 30, 1925.
Following is a comparison of the total number of employes exclusive
of officers at the Detroit Branch:
December 31, 1924
156
December 31, 1925
165
Increase

,

9

The bank building at the head office, completed in 1922, was designed
primarily for use of the Federal Reserve bank. At the time it was
planned, the head office had approximately 1,600 employes and, naturally,
considerable space was allowed for further expansion, as bank operations
were increasing rapidly at that time. Since the building has been occupied,
readjustments and curtailments of some of the activities of the bank and
increased efficiency have made it possible to reduce the staff of the organization, including all employes connected with the operation of the building, to approximately 1,200, and to reduce the amount of space originally
assigned to some departments.
In view of these facts, it was decided to rent part of the space in the
building to desirable tenants for terms of from five to ten years. We
have rented at present to outside tenants approximately five floors.
This includes two floors for which leases were executed in 1925. Income
from the building during the year 1925 amounted to $203,724.08 compared
with $142,670.60 during the year 1924.
The total cost of the bank's building complete, including machinery,
vaults, and permanent equipment, and including also the cost of the ground
upon which it is erected, was $10,457,231.83. In reduction of this total,
the following items have been charged to Profit and Loss:
Assessed value of old buildings wrecked
$847,398.92
Estimated excess over normal cost of building
and permanent equipment
1,830,847.20
Depreciation on building (2% per annum)
272,990.16
Depreciation on machinery and permanent equipment (&2/3% per annum)
222,600.00
The property is carried on the books today at a valuation of $7,283,395.55.
The bank also owns a building site in the city of Detroit, the net cost
of which was $650,000, purchased with the intention of erecting a building
thereon for the occupancy of the Detroit Branch. This is vacant property
and produced a revenue during 1925 of $7,200. No definite arrangements
have as vet been made for the construction of a building for the Detroit
Branch.



16

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