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OPERATION
OF

FEDERAL RESERVE BANK
OF CHICAGO

1930
SEVENTH FEDERAL RESERVE
DISTRICT

SIXTEENTH ANNUAL REPORT
TO
THE FEDERAL RESERVE BOARD



OPERATION
OF

FEDERAL RESERVE BANK
OF CHICAGO

1930
SEVENTH FEDERAL RESERVE
DISTRICT

SIXTEENTH ANNUAL REPORT
TO
THE FEDERAL RESERVE BOARD




FEDERAL RESERVE BANK OF CHICAGO
Directors and Officers for
CLASS A—DIRECTORS
EDWARD R. ESTBERG, Waukesha, Wiscon-

sin (1931)
President, Waukesha National Hank

GEORGE J. SCHALLER, Storm Lake, Iowa
(1932)
President, Citizens First National Bank

GEORGE M. REYNOLDS, Chicago, Illinois

(1933)

Chairman Executive Committee, Continental
Illinois Bank and Trust Company

CLASS B—DIRECTORS
STANFORD T. CRAPO, Detroit, Michigan

(1931)

JAMES B. MCDOUGAL, Governor

JOHN H. BLAIR, Deputy Governor
CHARLES R. MCKAY, Deputy Governor
JAMES H. DILLARD, Deputy Governor
WILLIAM C. BACHMAN, Assistant Deputy

Governor
EUGENE A. DELANEY, Assistant

Deputy

Governor
DON A. JONES, Assistant Deputy Governor
OTTO J. NETTERSTROM, Assistant Deputy

Governor

Secretary and Treasurer, Huron Portland Cement Company

ROBERT M. FEUSTEL, Fort Wayne, Indiana
(1932)
President, Indiana Service Corporation

MAX W. BABB, Milwaukee, Wisconsin
(1933)

Vice-President, Allis-Chalmers Manufacturing
Company

CLASS C—DIRECTORS
FRANK C. BALL, Muncie, Indiana (1931)
President, Ball Bros. Company

JAMES SIMPSON, Chicago, Illinois (1932)

FRED BATEMAN, Manager, Securities De-

partment
JOSEPH C. CALLAHAN, Manager, Member

Bank Accounts Department
ROBERT E. COULTER, Manager, Cash Cus-

tody Department
ALBA W. DAZEY, Manager, Investment

Department
IRVING FISCHER, Manager, Check Department

Chairman of Board, Marshall Field and Company

ROBERT J. HARGREAVES, Manager, Person-

EUGENE M. STEVENS, Evanston, Illinois

FRANK A. LINDSTEN, Manager, Disburs-

( 1 9 3 3 ) Federal Reserve Agent

MELVIN A. TRAYLOR, Chicago, Illinois,

Member Federal Advisory Council
OFFICERS
EUGENE M. STEVENS, Chairman

JAMES SIMPSON, Deputy Chairman
•WILLIAM H. WHITE, Assistant Federal

Reserve Agent
CLIFFORD S. YOUNG, Assistant

Federal

Reserve Agent
HARRIS G. PETT, Manager, Division of

Research and Statistics
FRANCIS R. BURGESS, Auditor

nel Department

•

ing Department
Louis G. MEYER, Manager, Service Department
ARTHUR L. OLSON, Manager, Loan Division
Louis G. PAVEY, Manager, Collection Department
GEORGE A. PRUGH, Manager, Loan Division
FRANKLIN L. PURRINGTON, Manager, Dis-

count Department
JESSE G. ROBERTS, Manager, Cash Department

WALTER A. HOPKINS, Assistant Auditor

*Died March 7, 1931

CARL MEYER, Counsel

DETROIT BRANCH
Directors and Officers
GEORGE B. MORLEY, Saginaw, Michigan
Chairman of Board, Second National Bank

DAVID MCMORRAN, Port Huron, Michigan
Treasurer and Manager, McMorran Milling
Company

WILLTAM J. GRAY, Detroit, Michigan
Vice-Chairman of Board, First National Bank

JAMES INGLIS, Detroit, Michigan
President, American Blower Corporation

N. P. HULL, Lansing, Michigan.
President, Grange Life Insurance Company




JULIUS H. HAASS, Detroit, Michigan
President, Detroit Bankers Company

WILLIAM R. CATION, Managing Directot
HARLAN J. CHALFONT, Cashier

GEORGE T. JARVIS, Assistant Cashier
JOHN G. BASKIN, Assistant Cashier
FLOYD L. BOWEN, Assistant Auditor
ISADORE LEVIN, Assistant Counsel

FEDERAL RESERVE BANK
OF CHICAGO
Chicago, January 17, 1931.
Sir:
I have the honor to submit herewith, in accordance
with the usual custom, the sixteenth annual report of
the Federal Reserve Bank of Chicago, covering the
year 1930.
Respectfully,
EUGENE M. STEVENS,

Federal Reserve Agent.
HON. EUGENE MEYER,

Governor, Federal Reserve Board,
Washington, D. C.




FEDERAL RESERVE BANK OF CHICAGO
Comparative Statement of Condition
(In Thousands of Dollars)
Dec. 31
1930

RESOURCES

Dec. 31
1929

Dec. 31
1928

Gold redemption fund with United States Treasury

173,000
1,097

269,564
11,420

213,217
9,843

Gold held exclusively against Federal reserve notes
Gold settlement fund with Federal Reserve Board
Gold and gold certificates held by bank

174,097
49,659
130,114

280,984
86,463
73,601

223,060
180,100
60,751

Reserves other than gold

353,870
21,592

441,048
12,652

463,911
11,764

Total reserves
Non-reserve cash

375,462
11,382

453,700
12,405

475,675
10,781

Bills discounted:
Secured by United States Government obligations
Other bills discounted

10,891
11,913

75,121
37,547

80,872
65,647

Bills bought in open market

22,804
52,370

112,668
37,561

146,519
39,078

30,905
22,538
32,547
3,613

25,439
12,208
22,953
8,247

19,937
6,184
9,729

89,603

68,847
1,500

35,850

165,777

220,576

221,447

70,954
8,061
1,221

84,034
8,295
657

89,931
8,527
849

United States Government securities:
Bonds
Treasury notes

"

Treasury bills
Total United States Government securities. .
Federal Land Bank bonds
Federal Intermediate Credit Bank debentures
Total bills and securities
Uncollected items
All other resources
Total resources

1,000

632,857

779,667

807,210

LIABILITIES
Federal reserve notes in actual circulation

139,163

304,538

323,590

Deposits:
Member bank—reserve account
Government
Foreign bank
Other deposits

360,832
2,590

331,302
2,930

343,099
1 068

770
960

768

1,484

2,101

365,152

336,484

347,172

66,523
20,145
39,936
1,938

76,345
20,013
40,094
2,193

79,336
18,478
36,442
2,192

632,857

779,667

807,210

Total deposits
Deferred availability items
Capital paid in..
Surplus
All other liabilities
Total liabilities
Ratio of total reserves to deposit and Federal reserve note
liabilities combined
per cent
Contingent liability on bills purchased for foreign correspondents




904

74.4

70.7

70.9

58,223

74,895

44,901

OPERATION OF THE FEDERAL
RESERVE BANK OF CHICAGO
IN 1930

T

HE world-wide recession in trade and production, ushered in
with the closing months of 1929, and which found its full
counterpart in the Seventh district, was intensified during 1930,
in so far as this district was concerned, by the effect upon agriculture—one of the most important elements of the economic life of
this area—of the drought and the continuous decline in prices of
farm products. While most phases of industry and trade showed
declines in activity of from 5 to 40 per cent in yearly totals from
those of 1929, the year 1930 nevertheless has been one of some
measure of accomplishment in the correction of the conditions which
gave rise to and underlie this period of business and industrial recession.
Automobile production for 1930 aggregated almost 40 per cent under a year previous and was the lowest since 1922. In the earlier
months of the year, steel mills of the Chicago district operated at a
high rate, but production gradually declined until the end of the year
when operations reached a low level; shipments from steel casting
foundries totaled about 35 per cent less and from malleable foundries
approximately 40 per cent smaller than in 1929. The agricultural
machinery industry is indicated as having operated at a much lower
level than in 1929, with a corresponding decline in sales. Building
construction, as reflected in contracts awarded in the Seventh district, declined almost 40 per cent in the aggregate from a year ago,
while residential building fell off 60 per cent; total construction was
the lowest since 1924. Building materials, as might be expected,
moved at a slow rate during the period. Furniture manufacturers
shipped less than two-thirds the dollar volume of 1929, and shoe and
leather production was small. Meat production declined about 5 per
cent from the preceding year, while sales receded 14 per cent, reflecting not only lessened income on the part of the consuming public and
lower prices, but also a smaller supply of products and a low level
of export trade. Butter production in the district declined somewhat
from the 1929 aggregate, with sales slightly less, while cheese production and distribution from Wisconsin factories showed little
change. Industrial employment during 1930 in the Seventh district
averaged almost 15 per cent under that of 1929, and payrolls totaled
nearly 25 per cent less; in non-manufacturing lines, considerable reduction also took place, though to a lesser degree than in factory
employment.
Merchandising statistics indicate that the dollar volume of department store trade in the district totaled about 13 per cent less in
1930 than in 1929, with Detroit and Chicago stores showing the




SIXTEENTH

ANNUAL

REPORT

heaviest aggregate declines of the larger cities. Reporting wholesale
lines, including groceries, hardware, drugs, dry goods, shoes, and
electrical supplies, experienced recessions ranging from only 4 per
cent in groceries to 33 per cent in shoes. Lower prices for most commodities were to some extent responsible for the declines shown in
both retail and wholesale lines.
Farm income in the Seventh Federal Reserve district is estimated
as 17.4 per cent less for the crop year July 1, 1930 to June 10, 1931,
than for the corresponding period of 1929-30, according to the most
recent information available. The figures indicate a decline of 28}4
per cent in the amount of money received from the 1930 crops as
compared with the preceding year, and also a reduction of 13.6 per
cent in the income derived from live-stock operations. Dry weather
during the early months of the year resulted in a small crop of hay,
and fruit suffered severe injury from spring frosts; conditions, however, were favorable for small grain so that larger crops of wheat,
oats, barley, and rye were produced than in 1929. Farm work had
progressed unusually well during the spring months, and May 1
prospects appeared excellent for the late crops. From early July
until late autumn, however, the greater portion of the Seventh district experienced the most severe drought in recent history; prospects
for corn declined from 956,156,000 bushels on July 1 to only 730,306,000 bushels by the beginning of December, and corresponding
reductions were shown in the production estimates for other autumn
crops. Approximately the same number of pigs was raised during
the spring of 1930 as in the corresponding period of 1929, while an
increase of 2]/2 per cent was recorded in the lamb crop; the autumn
crop of pigs aggregated 4 per cent less than in the preceding year.
December 1 reports from county agents in the Seventh district show
a reduction of Ay2 per cent in the number of hogs available for winter
and spring marketing, of 1 1 ^ per cent in the number of beef cattle,
and of 7^4 per cent in size of lamb flocks from last December; dairy
herds totaled \l/2 per cent less. These declines reflect the hesitancy
on the part of farmers to maintain feeding operations at the usual
level, owing to the scarcity of feed and to unsettled price outlook.
The tabulation following shows the changes in the factors affecting
member bank borrowing at the Reserve bank between the end of
1929 and the close of 1930:
FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL RESERVE BANK
OF CHICAGO
Changes between December 31, 1929 and December 31, 1930
(In millions of dollars)
Changes making for decrease in member bank borrowing:
1. Excess of local Treasury expenditures over receipts
117.16
2. Funds gained through inter-district settlements for commercial and financial
transactions
23.46
3. Increase in holdings of acceptances (local transactions)
9.07
4. Increase in holdings of U. S. securities (local transactions)
6.56
5. Decrease in unexpended capital funds
0.61
6. Decrease in non-member clearing balances
0.52
Total




157.38

6

FEDERAL RESERVE BANK OF CHICAGO
Changes making for increase in member bank borrowing:
1. Increase in demand for currency
2. Increase in member bank reserve balances
3. Decrease in reserve bank
float
4. Sales of gold to industry
5. Decrease in holdings of other securities
Total

34.04
29.53
2.17
1.28
0.50
67.52

Excess of changes making for decrease in member bank borrowing
89.86
Absorption of this excess: Decrease in member bank borrowings (discountsfor member banks) 89.86

It will be noted that the borrowings of member banks on December 31, 1930, were approximately 90 million dollars less than a
year before. Principal changes in factors making for lessened borrowing were: local Treasury expenditures exceeded receipts by
almost 120.million dollars, some 23 million dollars of funds were
gained through inter-district settlements for commercial and financial
transactions, and holdings of acceptances and of United States
securities (local transactions) by the Reserve bank increased moderately ; minor decreases were shown in unexpended capital funds—
an approximate measure of the extent to which the paying in of
capital to the Reserve bank and its subsequent earnings have taken
funds out of the money market—and in non-member clearing balances. The outstanding changes in factors which tend to increase
member bank borrowings were a gain of nearly 30 millions in member
bank reserve balances—reflecting increased deposit liabilities of member banks in the district—and an increase in demand for currency
of about 35 millions, the latter altogether in consequence of a substantial growth in the late months of the year, which reflected bank
failures in the district. In connection with currency demand, it
should be stated that while the volume of Federal Reserve notes of
this bank in actual circulation decreased materially as between December 31, 1929 and the corresponding date in 1930, this decrease
was more than counter-balanced by the paying out of gold notes and
by changes in other items attributable to demand for currency, notably
transactions through the Treasurer's account affecting cash holdings
of this bank and an increase of more than &y2 million dollars in new
national bank notes issued, resulting in a net gain in currency demand
as shown.
The year 1930 was one of marked ease in money, reflected in a
downward trend in rates; the prevailing rate on customers' prime
commercial loans charged by banks in Chicago declined from a range
of 5j/2 to 6 per cent in January to one of 4 to 4}4 per cent in December. The rediscount rate of the Federal Reserve Bank of Chicago
underwent two changes during the year, a reduction to 4 per cent
on February 8 from the 4^2 per cent rate obtaining since November
23, 1929, and a further reduction to 2>l/2 per cent on June 21.
During 1930 there were 264 bank suspensions in this district, the
largest number on our records (since 1921), and comparing with
93 suspensions in 1929. Of the banks closed during the past year,
28 were national, 4 state member, and 232 non-member, of which last




7

SIXTEENTH

ANNUAL REPORT

Earnings and Expenses
1930

1929

1928

$1,222,081
629,854
2,503,592
1,215
9,805
35,290
432,316

{6,777,014
1,285,493
1,269,968
5,903
16,638
76,425
458,010

$5,427,825
1,301,910
1,722,821

$4,834,153

89,889,451

$8,936,418

% 320,490
1,634,841
132,699
273,346
89
115
1,228
11,637

$ 311,591
1,677,987
128,016
283,826
232
128
1,360
11,540
20,033
106,654
9,697

EARNINGS

Discounted bills
Purchased bills
U. S. securities
Federal Intermediate Credit Bank debentures.
Federal Land Bank bonds
Deficient reserve penalties
Miscellaneous
Total earnings.

44,287
439,575

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 shipments)
Taxes on banking house
Light, heat, and power
Repairs and alterations, banking house
Rent
Telephone
Telegraph
Postage
Expressage
Insurance on currency and security shipments
Printing and stationery
Office and other supplies
Miscellaneous expenses
Federal reserve currency (including shipping charges):
Original cost
Cost of redemption
Total current expenses

166,941
31,944
12,059

291,366
32,037
21,947

20,013
41,049
231,868
58,546
64,654
67,093
45,228
83,541

19,879
43,281
265,294
62,745
73,332
74,581
55,890
81,381

$ 307,420
1,712,899
129,351
275,378
344
269
1,054
9,797
23,687
95,764
3,444
31,603
281,601
35,136
21,373
5,134
20,638
41,758
243,679
55,671
67,496
76,749
61,235
82,894

404,177
16,038

450,979
23,973

90,615
21,690

$3,805,117

$4,092,369

$3,696,679

$4,834,153
3,805,117

$9,889,451
4,092,369

$8,936,418
3,696,679

$1,029,036

$5,797,082

$5,239,739

$ 298,510

$

$

$ 233,681

$ 233,682
31,500
59,750
55,535

$ 192,809

38,980
557
$ 273,218

$ 380,467

488,143

$ 372,417

476,310

$5,424,665

$4,763,429

18,666

108,972
15,220
44,663

1930

PROFIT AND LOSS ACCOUNT

Earnings
Current expenses.
Current net earnings
Additions to current net earnings.
Deductions from current net earnings:
Depreciation allowances on bank premises. .
Reserve for probable losses
Furniture and equipment
All other
Total deductions.
Net deductions from current net earnings.
Net additions to current net earnings.. . .

44,620

$

8,050

25,292

Net earnings available for dividends, surplus, and franchise
tax
$1,054,328

11,833

23,659

68,872
202,803

Dividends paid
1,211,418 $1,170,363 $1,099,761
3,651,464
3,663,668
Transferred to surplus account. . .
Withdrawn from surplus account
' 157,090
Franchise tax paid United States Government
602,838
tOther than those connected with governors' and agents' conferences and meetings of directors
and of the advisory council.




FEDERAL RESERVE BANK OF CHICAGO
39 were private institutions. Aggregate capital involved amounted
to $15,038,000 and deposits to $111,018,000, as against $4,993,000
and $35,450,000, respectively, in 1929. Member bank suspensions in
1930 accounted for $3,270,000 of the total capital involved and $26,666,000 of the deposits.
Banks in the Seventh district involved in consolidations during
1930 numbered 275, with capital and loans and investments aggregating $90,205,000 and $1,086,447,000, respectively; 108 of these
were member banks with capital of $59,976,000 and loans and investments of $836,943,000. This represented an increase in number
of mergers of more than 50 per cent over 1929. The continuing"
institutions numbered 133, with capital and loans and investments
of $69,557,000 and $1,076,737,000, respectively. The aggregate capitalization of the continuing institutions in 1930 was 25 per cent less
than that of the banks involved in the mergers, whereas in 1929 the
resulting institutions were capitalized in the aggregate at a figure
almost 25 per cent greater than that of the consolidating banks. This
reversal in trend was an outgrowth in large measure of the fact that
fully 60 per cent of the 1930 mergers involved absorptions, one bank
often purchasing the assets of another for liquidation. Mergers in
1930 involved for the most part banks of moderate size, only two
cases in Detroit offering exceptions, that of the Bank of Michigan,
Peninsular State Bank, and Peoples Wayne County Bank into the
Peoples Wayne County Bank, and of the Bank of Detroit and
Guardian Detroit Bank into the Guardian Detroit Bank.
In group and chain banking there was little development during
the year, the formal organization in January of the National Republic Bancorporation with 10 banks and 3 investment companies,
and that of the Wisconsin Bancorporation, also in January, being
alone outstanding. The Wisconsin Bancorporation, however, continued to expand until it now controls 46 banks and 7 investment
companies, most of which are in the Seventh district. Nor did branch
banking develop to any extent during the year, the only notable
changes being effected through consolidations. The Peoples Wayne
County Bank increased its branch holdings considerably when it took
over the Peninsular State Bank and the Bank of Michigan, so that
it now has 137 branches, and the Guardian Detroit Bank entered
the branch banking field when it acquired all but one of the branches
of the National Bank of Commerce and the Bank of Detroit at the
time of its merger with the latter institution.
FINANCIAL RESULTS OF OPERATION
Net earnings of the Federal Reserve Bank of Chicago for the calendar year 1930 were $1,054,328, as compared with $5,424,665 the
preceding year and $4,763,429 in 1928. The sum of $157,090 was
withdrawn from surplus account, and dividends of $1,211,418 were
paid. No franchise tax was paid to the United States Government




9

SIXTEENTH

ANNUAL

REPORT

Comparative Volume of Operations in Principal Departments
1930, 1929, and 1928
Number of Pieces Handled
Bills discounted:
Applications
Notes discounted
Bills purchased in open market for own

1930

1928

1929

8,796
38,847
17,728
409,291,000
323,631,000
128,039,000

13,554
54,860

13,056
48,885

14,029
410,223,000
231,019,000
129,661,000

22,062
376,595,000
279,743,000
123,365,000

3,299,000
753,000

3,548,000
743,000

4,743,000
702,000

318,000
328,000
4,826,000

374,000
355,000
4,901,000

1,377,000
337,000
5,085,000

Bills discounted
$ 1,171,330,000
Bills purchased in open market for own
359,330,000
2,262,720,000
Currency received and counted
35,497,000
Coin received and counted
30,271,276,000
Checks handled
Collection items handled:
Unitea States Government coupons paid
60,367,000
All other
1,183,646,000
United States securities—issues, redemptions, and exchanges by Fiscal
1,025,083,000
Agency department
Transfers of funds
35,038,613,000

$ 5,187,455,000

$ 5,928,134,000

262,259,000
2,266,698,000
34,327,000
35,219,944,000

324,613,000
2,103,652,000
38,253,000
29,077,223,000

64,084,000
996,964,000

63,567,000
1,004,814,000

1,189,208,000
31,088,981,000

1,506,837,000
27,047,795,000

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
Amounts Handled

MOVEMENT OF RESOURCES
FEDERAL RESERVE BANK OF CHICAGO 19Z1 TO 1930 INCLUSIVE

1921

1922 1923 1924 1925 1926 1927 1928 1929

DATA AS OF THE LAST REPORTING DATE IN EACH MONTH




10

1930

FEDERAL RESERVE BANK OF CHICAGO
in 1930. Since its organization the bank has paid a total of $24,222,013 as franchise tax, in the years and in the amounts shown
below:
1917
$ 215,799
1920
10,394,480
1921
11,576,009
1922
1,186,301
1923
246,586
1929
602,838
$24,222,013
DISCOUNT OPERATIONS IN 1930
Perhaps the most significant feature in the loan and discount
operations of the Federal Reserve Bank of Chicago during the year
1930 was the material decrease in volume as compared with the year
1929. This decline has been general at all Federal Reserve banks
and has reflected security purchases by the System, as well as a
smaller demand for credit accompanying reduced volume of business.
The high point of loans for the year was reached on January 2,
$129,093,000, which compared with the 1929 high of $237,173,000,
thus showing a decrease of $108,080,000. Loans declined to a low
point of $10,976,000 on September 18, a decrease of $71,571,000 from
1929 when the low was $82,547,000. The greater part of this fluctuation occurred in the borrowings of the larger city banks. The
country bank borrowings, while at a somewhat lower level than in
the preceding year, followed the usual seasonal demancj.
MOVEMENT OF LIABILITIES
FEDERAL RESERVE BANK OF CHICAGO 1921 TO 1930 INCLUSIVE

hAJ

1921

1922 1923 1924 1925 192b 1927 1926 1929

DATA AS OF THE LAST REPORTING DATE IN EACH MONTH




11

1930

SIXTEENTH

ANNUAL REPORT

The high point of member bank borrowings in the city of Chicago
was $37,763,000 on January 2 and the low point $70,000 on June 11.
Member bank borrowings in Detroit also reached their high point
on January 2, when they totaled $45,472,000; during portions of the
year no Detroit banks were borrowing.
In the State of Iowa, which is more nearly an agricultural area
than any other state of this district, the banks were borrowing
$7,681,000 on January 6, the high point for the year. The usual
seasonal fluctuation followed, bringing loans down to $2,429,000 on
February 21, after which the planting season brought them back to
$5,298,000 on June 6. There was a steady decline in this item during
the summer months, a low point of $1,103,000 being reached on
October 2. The fall demand brought the total amount up to a high
of $4,395,000 on November 26, after which they declined to
$2,138,000 on December 31.
This bank extended credit accommodation during the year to 657
banks (inclusive of the rediscounting of adjusted service certificates
for one non-member bank), represented by 8,796 applications and
38,847 notes rediscounted, having a face value of $1,171,330,456. In
dollars, this represents a decrease of $4,016,124,918 from the year
1929.
During the year $1,582,457 of rediscounted paper was taken from
rediscounts and placed in Failed Banks Account because of the
failure of twenty-four member banks indebted to us at the time of
closing. This, compared with $372,296 during the year 1929, represents an increase of $1,210,161.
The aggregate average reserve balances maintained by member
banks in the Seventh district exceeded the total legal requirements
throughout the year, the excess attaining a peak of 2.90 per cent in
September and registering a low of 2.04 per cent in January. In
1929, the excess reached a high point of 2.09 in March and a low of
1.14 in September.
COLLATERAL AND SAFEKEEPING

OPERATIONS

Reflecting a lessened volume of borrowing by member banks during 1930, securities held as collateral reached a high point of only
$196,381,000 on January 24, as compared with one of $236,142,000
in the preceding year. Whereas in 1929 the low point had been
$151,002,000, the minimum recorded in 1930 was $108,301,000 on
September 26.
A greater number of banks took advantage of Reserve bank safekeeping facilities in 1930 than in the preceding year. During the
year, a total of 168,261 pieces with an aggregate value of $293,255,180
was received for safekeeping, an increase of nearly 50 per cent over
1929, the result largely of the number of robberies taking place in
the district. Receipts to the number of 25,786 were issued, as against
17,682 the preceding year. Receipts totaling 21,533 in number, in-




12

FEDERAL RESERVE BANK OF CHICAGO

volving 132,716 pieces valued at $259,742,751, were released from
safekeeping during the year, a marked gain over the 1929 volume.
Considerable activity occurred the latter part of 1930, owing to the
declining bond market and general banking disturbances in various
parts of the district. An aggregate of 786 banks had $321,339,962
of securities in safekeeping at the Reserve bank on December 31,
1930. In addition, there was $1,139,132 in securities representing
applications for safekeeping which had not been acted upon.
There were detached from bonds in the Safekeeping and Collateral
divisions, a total of 487,024 interest coupons, aggregating $21,214,090
in value.
INVESTMENTS
The activities of the Investment Department during 1930, as compared with 1929, reflect a somewhat smaller number of U. S. securities purchased, and an increased total in both the volume and amount
of U. S. securities sold.
This bank accumulated for its own holdings through purchases
made by the System about $15,000,000 of U. S. Treasury certificates
and notes, part of which were purchased locally, but as in previous
years, most of these purchases for the System Account were made
through the Federal Reserve Bank of New York.
This bank has had an increase in sales of securities other than
Government, the majority of which transactions were made for the
account of receivers of failed banks.
District purchases of bankers' acceptances by this bank wTere in
smaller volume during 1930 than in the preceding year, because of
the fact that the larger member banks were buyers of bills during
most of the year and had very little need for recourse to the Federal
Reserve System in the sale of acceptances. Total purchases, however, exceeded those of 1929.
COMPARATIVE TABLE OF GOVERNMENT SECURITY TRANSACTIONS 1930, 1929,
AND 1928—AMOUNTS IN THOUSANDS OF DOLLARS
1930
Number
of TransAmount
actions
Certificates of Indebtedness, Treasury Notes,
and U. S. Bonds:
•Market Purchases. . . .
•Market Sales
Bought with Agreement
Sold under Agreement.
Totals

5,895
7,361
220
199

13,675

1929
Number
of Trans- Amount
actions

$348,388
413,264
68,532
61,978
892,162

8,818
5,461
371
430

15,080

$274,609
195,443
169,021
171,290
810,363

1928
Number
of TransAmount
actions

6,897
8,967
334
508

16,706

$367,656
365,414
189,530
191,670
1,114,270

•These figures include special Certificates of Indebtedness to cover overdrafts amounting to
$95,000,000 in 1930, $116,500,000 in 1929, and $131,000,000 in 1928.




13

SIXTEENTH

ANNUAL REPORT

FEDERAL RESERVE NOTE AND DEPOSIT LIABILITIES;
RESERVE POSITION

The volume of Federal Reserve notes of this bank in circulation
showed a considerable reduction in 1930 from the preceding year,
in large part the result of the generally lower level of business and
industrial activity. A low point of $139,163,000 was recorded on
December 31, whereas in 1929 a low of $274,126,000 was reported
on February 6. The peak of the 1930 circulation in this district
appeared on March 5, with $305,700,000, as against $349,600,000 on
July 10, 1929, the high point of that year. Member bank reserve
deposits ranged from a low of $323,692,000 on February 19 to a
high of $367,823,000 July 9, the weekly average amounting to $345,000,000 compared with $347,536,000 in 1929; for that year the low
point was shown on May 22 with $330,831,000 and a peak of $372,160,000 October 30. Total cash reserves were at their lowest point
in 1930 on December 24—$370,420,000—and the $551,926,000 on
April 2 represented the peak. On the closing day of 1930, the Reserve
bank's ratio was 74.4, and on the first reporting date, January 8,
stood at 73.7 per cent; this item ranged from a high of 88.4 on
May 14 to the low recorded January 8.
MEMBERSHIP
Changes in Status of Banks, Affecting Membership in 1930
Losses to Membership:
Voluntary withdrawal of state bank
Consolidation of state member bank with national bank
Consolidation of state member bank with state member bank
Consolidation of state member bank with non-member bank
Refund of deposit to state bank closed in 1929
Suspensions and insolvencies of state banks
Consolidation of national bank with national bank
National bank succeeded by national bank
Consolidation of national bank with state non-member bank
Conversion of national bank to state non-member bank
National bank, voluntarily liquidated
Consolidation of national bank with state member bank
Refund of deposit of national bank closed in 1929
Suspensions and insolvencies of national banks
Total losses
Additions to Membership:
National bank succeeded by national bank
Primary organization of national bank
Admission of state bank

97
7
2
1

Total additions

10

Net loss
Withdrawals pending at close of 1930:
Consolidation of national bank with national bank
National bank succeeded by national bank. .
Consolidation of national bank with state non-member bank
Suspensions and insolvencies of national banks
Conversion of national bank to state non-member bank
Consolidation of national bank with state member bank
Voluntary withdrawal of state bank
Consolidation of state member bank with state non-member bank
Total withdrawals pending




18
3
3
3
1
4
18
4
20
4
2
1
1
15

87
10
4
4
13
. 1
1
2
1
36

14

FEDERAL RESERVE BANK OF CHICAGO
M E M B E R BANKS—SEVENTH FEDERAL RESERVE DISTRICT
December 31 , 1930

December 31 1928

Nat'l

State

Total

Nat'l

State

Total

Nat'l

State

Total

312

Illinois

December 31 1929

38

350

321

48

369

323

383

182
301*
228
123

170
272
95
110

60

14
55
147
15

184
327
242
125

1,203*

970

291

1,261

Wisconsin

153
236
87
106

12
31
130
11

Total

894

222

165
267
217
117

168
260*
91
110

14
41
137
13

1,116

950*

253

•Revised.

Calls were made by representatives of the Bank Relations Department on 984 member and 432 non-member banks during 1930, and
nine addresses were made by officers and other representatives of
the Federal Reserve Bank of Chicago and the Detroit Branch. In
addition, more than 2,700 visitors were received at the head office
or the branch during 1930.
Fiduciary powers were granted to twenty-one national banks by
the Federal Reserve Board during the year, fourteen receiving full
powers, one supplemental powers, and six partial powers. Full trust
powers, previously granted, due to consolidations, were confirmed in
the case of eleven banks, and partial powers were confirmed in the
case of one.
MEMBER BANKS AUTHORIZED AND APPROVED IN 1930 TO
EXERCISE FIDUCIARY POWERS

Illinois:

Indiana:

Iowa:

Michigan:
Wisconsin:

Bloomington, First National Bank & Trust Company
Chicago, Terminal National Bank
Morris, Grundy County National Bank
Streator, Union National Bank
Aurora, First National Bank
Greenwood, First National Bank
Indianapolis, Merchants National Bank
Kendallville, Citizens National Bank
*Belle Plaine, Citizens National Bank
*Chariton, National Bank & Trust Company
Grinnell, Poweshiek County National Bank
Kingsley, Farmers National Bank
Spencer, Clay County National Bank
* Adrian, National Bank of Commerce
t Grand Rapids, American National Bank
*Hillsdale, First National Bank
Beloit, Second National Bank
*Menasha, First National Bank
Ripon, First National Bank
Waupun, National Bank of Waupun

* Partial
f Partial then supplemental '
All others full powers




15

S I X T E E N T H ANNUAL

REPORT

CONFIRMATIONS OF TRUST POWERS PREVIOUSLY GRANTED DUE TO
CONSOLIDATIONS HAVING FULL POWERS

Illinois:

Indiana:
Iowa:
Michigan:
Wisconsin:

Aurora, First National Bank
Elmhurst, First National Bank
Peoria, Commercial Merchants National Bank &
Trust Company
Greensburg, Citizens Third National Bank & Trust
Company
Muscatine, First National Bank
Flint, First National Bank
Jackson, Union & Peoples National Bank
Port Huron, First National Trust & Savings Bank
Baraboo, First National Bank & Trust Company
*Gintonville, First National Bank
Milwaukee, Marine National Exchange Bank
Milwaukee, National Bank of Commerce

* Partial
DIVISION OF RESEARCH AND STATISTICS
Marked expansion took place during 1930 in the work of the
Division, largely an outgrowth of a number of special studies undertaken at the request of the Federal Reserve Board. In addition,
the earnings and expenses of all Iowa banks in 1929 were compiled
for the Iowa Bankers Association, with the co-operation of the Iowa
State Banking Department, and those of all national banks in Illinois
for the Illinois Bankers Association. Comparable records were completed showing resource and liability items of all banks in the
Seventh district and in the five states comprising it, in so far as
data were available from June 30, 1919 to date.
The reference library collections, administered as a part of this
division, have undergone a thorough overhauling during the past
year, so that while 535 pieces have been catalogued and added to
the shelves, 875 have been withdrawn, leaving a total book collection
of about 7,500 volumes. The same procedure has been applied to the
files, with the result that all library collections show little increase
in quantity, but are better organized and in more active condition.
A very large amount of both printed and typewritten matter has
been handled by the staff during the year. Most of the material
withdrawn has been distributed to other reference libraries of this
vicinity. Reference and other library work has been carried on as
usual.
FISCAL AGENCY FUNCTIONS
The work in the Fiscal Agency Department showed a marked decrease in 1930; however, during the year this bank received 806
subscriptions for new issues of Government securities totaling $734,16



FEDERAL RESERVE BANK OF CHICAGO
417,000. On these, there was allotted $243,282,000, delivery of which
was made by 689 shipments containing 11,449 pieces amounting to
$244,195,000,- the difference of $913,000 between allotments and
deliveries was represented by a net difference in transfers of certificates of indebtedness on allotment to and from other Federal
Reserve banks.
Payment for certificates and bills allotted was made as follows:
By surrender of other Government securities. .$ 51,011,500
By credit in War Loan Deposit Account
118,088,500
By cash
73,980,578
By discount on Treasury Bills
201,422
$243,282,000
In connection with the figures given above, it is interesting to
note that while this bank received but 806 subscriptions during 1930
for a total of $734,417,000, in 1929 there were received 2,323 subscriptions for a total of only $350,287,000. The Treasury offered
eight series of Treasury bills during 1930 on which the bank received
165 tenders aggregating $137,951,000; twenty-six of these tenders
were accepted for a total of $43,077,000.
There were surrendered to this bank for exchange, transfer, etc.,
Government securities amounting to $467,207,850, represented by
258,183 pieces, against which were delivered 132,118 pieces totaling
$432,272,900. These figures include United States Treasury Certificates of Indebtedness and Treasury Notes totaling $274,208,400
(39,293 pieces) accepted for telegraphic transfer to other Federal
Reserve banks, and like securities totaling $241,692,000 (11,436
pieces) delivered for account of other Federal Reserve banks. Securities redeemed totaled $313,679,902, represented by 47,964 pieces.
In addition, 3,298,541 coupons amounting to $60,367,418 were cashed.
GOLD SETTLEMENT FUND
A net gain of $60,433,000 was shown in Gold Settlement Fund
transactions between the Seventh and other Federal Reserve districts in 1930, as compared with a net loss of $142,637,000 in 1929 and
of $39,772,000 in 1928. Receipts from other Federal Reserve banks
amounted to $21,165,756,000, a gain of $735,093,000 over the preceding year, and total payments in 1930, of $21,105,323,000 as against
$20,573,300,000 in 1929, increased $532,023,000. The Gold Settlement Fund of this bank as of December 31, 1930, amounted to
$49,660,000.
CLEARINGS AND COLLECTIONS
Checks handled during the year 1930 by the head office and the
Detroit branch combined, showed a slightly decreased volume from
1929. Total number decreased 1.3 per cent; those payable in Chicago
17



SIXTEENTH

ANNUAL

REPORT

and Detroit were less by 1.1 per cent than in the preceding year
and those payable outside of these cities by 1.3 per cent, while
Government checks fell 1.6 per cent short of the 1929 aggregate.
The total number of items handled during the year by both offices
was $128,038,838 (including duplications), representing $30,271,276,000. Of these, 91.2 per cent were drawn on banks in this district,
5.1 per cent on banks in other districts, and 3.7 per cent on the
United States Treasurer. During the year under consideration the
personnel of the Check Department at the head office reached its
highest state of efficiency, and the items were handled at the lowest
average cost per unit of any year since the department was established. Each year, without exception, the average handling cost per
unit has been reduced from that of the year preceding.
Non-cash collection letters to the number of 753,268 with an
aggregate value of $1,183,646,111 were handled by the bank and the
Detroit branch in 1930, as compared with 742,574 letters with a
value of $996,963,989 in 1929, or a gain of 1.4 per cent in number.
Of this aggregate number, 620,510, totaling in value $1,045,624,567,
were handled by the head office, and 132,758 with an aggregate value
of $138,021,544 by the Detroit branch.
Funds to the amount of $35,038,612,775 were transferred for
member banks during 1930, compared with $31,088,980,668 in the
preceding year. Of the foregoing total, $24,987,044,860 was transferred over leased wires and $3,405,800,265 over commercial wires.
In 1929, transfers over leased wires amounted to $20,892,261,121
and over commercial wires to $3,631,323,551. All other transfers
totaled $6,645,767,650 in 1930 and $6,565,395,996 in the prior year.
The total number of transactions was 327,688 in 1930, as against
355,462 in 1929.
CASH AND CURRENCY OPERATIONS
Currency operations of the Federal Reserve Bank of Chicago
during 1930 changed little in volume from 1929. Currency received
and counted totaled $2,262,720,000, as against $2,266,698,000 in the
preceding year. Payments in 1930 aggregated $2,210,678,000, compared with $2,214,910,000 in 1929. Gold certificates to the amount
of $1,041,849,000 were paid out; in 1929 this item had aggregated
$473,881,500. The number of currency shipments to country banks
in 1930 decreased to 40,561 from 46,429 in 1929.
INTERNAL ORGANIZATION
Max W. Babb, Vice-President of the Allis-Chalmers Manufacturing Company, Milwaukee, Wisconsin, was elected a Class B director, at a special election April 15, 1930, to fill the unexpired term
of August H. Vogel, who died February 18, 1930. Mr. Vogel had
been a director of the Federal Reserve Bank since its beginning.
18



FEDERAL RESERVE BANK OF CHICAGO
George M. Reynolds was re-elected a Class A director for the
term expiring 1933, and Max W. Babb was re-elected a Class B
director for the term expiring 1933. Eugene M. Stevens was appointed a Class C director for the term expiring 1933, and was
designated as Chairman of the Board and Federal Reserve Agent,
and James Simpson was designated as Deputy Chairman of the
Board.
The directors for the year 1931 will consist of the following:
CLASS A—Edward R. Estberg, Waukesha, Wisconsin; George
J. Schaller, Storm Lake, Iowa; George M. Reynolds, Chicago,
Illinois.
CLASS B—Stanford T. Crapo, Detroit, Michigan; Robert M.
Feustel, Fort Wayne, Indiana; Max W. Babb, Milwaukee, Wisconsin.
CLASS C—Frank C. Ball. Muncie, Indiana; James Simpson,
Chicago, Illinois; Eugene M. Stevens, Evanston, Illinois.
The Executive Committee for the year 1931 will consist of the
following: Chairman, Governor McDougal; Eugene M. Stevens,
Chairman of the Board and Federal Reserve Agent; Messrs. George
M. Reynolds, James Simpson, Edward R. Estberg, George J. Schaller, Directors.
The Committee on Admission for the year 1931 will consist of
the following: Chairman of the Board and Federal Reserve Agent,
Eugene M. Stevens; Governor McDougal, and Director Estberg.
Effective October 1, 1930, the title Controller was superseded by
Assistant Deputy Governor, and that of Assistant Controller by
Manager, Loan Division.
There were two resignations in the official staff at the Chicago
office during the year 1930:
William A. Heath, Chairman of the Board, resigned as of December 31, 1930. Mr. Heath had been a Class C director, Chairman
of the Board of Directors, and Federal Reserve Agent since January 1, 1917.
Kent C. Childs, Controller of Loans and Credits, resigned October 1, 1930.
There was one appointment in the official staff at the Chicago
office during the year 1930. George A. Prugh was appointed Manager, Loan Divison, effective October 1, 1930.
19



S I X T E E N T H ANNUAL

REPORT

The following is a comparison of the total number of employes,
exclusive of officials, at the Chicago office:
December 31, 1929
1,186
December 31, 1930
1,084
Decrease
102
The Detroit Branch Board of Directors for the year 1931 will be
composed of James Inglis, Detroit, Michigan; N. P. Hull, Lansing,
Michigan; David McMorran, Port Huron, Michigan; William J.
Gray, Detroit, Michigan ; Julius H. Haass, Detroit, Michigan ; George
B. Morley, Saginaw, Michigan; William R. Cation, Detroit, Michigan.
The following is a comparison of the total number of employes,
exclusive of officials, at the Detroit Branch :
December 31, 1929
231
December 31, 1930
218
Decrease




13

20

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