Full text of Annual Report of the Federal Reserve Bank of Chicago : President's Annual Report to Member Banks : Activities for the Year 1948

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CHICAGO

FEDERAL RESERVE BANK
OF CHICAGO

PRESIDENT'S
ANNUAL

REPORT

TO
MEMBER

ACTIVITIES
FOR THE YEAR

1 9 4 8

DETROIT

BANKS

FEDERAL

RESERVE

BANK

CHICAGO

PRESIDENT'S ANNUAL REPORT
TO MEMBER BANKS
OF THE SEVENTH
FEDERAL RESERVE DISTRICT

ACTIVITIES

FOR

THE YEAR

1948

FEDERAL RESERVE BANK OF CHICAGO

OFFICE OF THE P R E S I D E N T

January 27, 1949

To the Member Banks of the Seventh
Federal Reserve District:
You will find in the following pages a brief
summary of the activities of the Federal Reserve
Bank of Chicago during 1948. In addition to the
regular departmental reports, the work of our
currency and coin divisions is described in some
detail, illustrated by photographs of representative
cash operations.
As in past years, the basic factor in our
ability to handle these volumes of work has been the
continuing support and cooperation of our Member
Banks. We are most grateful indeed for that support
and cooperation, and extend the thanks of our entire
organization.
Very truly yours,

President

The illustrations on the following page
set forth the salient points of the currency
and coin routines of the Federal Reserve
Bank of Chicago.
A detailed explanation of this operation
appears on page 13.

1. UNISSUED F. R. NOTES BEING CHECKED INTO VAULT STOCK

3. CURRENCY SHIPMENTS TO MEMBER BANKS

OLD AND NEW CURRENCY BEING ROUTED INTO VAULTS

5. CURRENCY BEING VERIFIED AND SORTED ON MACHINE

INCOMING SHIPMENTS OF CURRENCY FROM MEMBER BANKS

6. INCOMING CURRENCY AWAITING VERIFICATION AND SORTING

7. PROVING AND SORTING BY HAND

INCOMING COIN SHIPMENTS

8. UNFIT CURRENCY IN PROCESS OF CANCELLATION

11. WRAPPING COIN

10. INSPECTING AND COUNTING COIN

12. STORING WRAPPED COIN

TABLE OF CONTENTS
Economic Summary
Federal Open Market Committee

6
11

Supplying of Currency and Coin to the Seventh Federal Reserve District... 13
Departmental Activities
Services to Member Banks
Discounts and Other Credits

Safekeeping of Securities

Collection of Checks and Other Items

Investments

Economic Research

Examination of Banks

Bank and Public Relations

Services to Treasury Department
Issuance of Government Securities

Servicing of Government Securities

Redemption of Government Securities

Collection of Withheld Taxes

Reconstruction Finance Corporation

Board of Governors Activities—Consumer Credit

General Bank Activities
Accounting

Wires, Telephone, Mail, Files

Personnel
Procurement
Maintenance of Building
Legal

33
34
35
36

Earnings History

Board of Governors Organization Chart

Statement of Earnings and Expenses

Statement of Condition

Directors and Officers

SEVENTH DISTRICT ECONOMIC SUMMARY
Upward Pace in Business Slows in 1948
During the year just closed, the Seventh Federal Reserve District as well as the
nation once again achieved new all-time records in most measures of business and
employment. The year 1948, however, was marked by growing evidence of a return
to more normal supply-demand relationships in most markets.
Reflecting the predominantly inflationary character of the year, most priceaffected business indicators, such as sales, income, and profits made larger gains than
physical unit measures, such as employment, industrial production, and carloadings.
Agriculture, however, was marked by a downward drift in prices, particularly in
grains, during 1948, but record crops nevertheless enabled gross farm income to exceed
the 1947 level by a small margin. Although new highs were established in all forms
of credit, the 1947-48 increases in mortgages and business loans outstanding in the
District were below the national gains. By the final quarter of the year, numerous
leveling-to-declining trends in business were evident, but no sharp general readjustment appeared imminent.
In 1948 the Seventh District repeated its longstanding tendency to mirror many
of the economic trends of the country, no doubt because the District closely parallels
the economic structure of the nation and accounts for about one-fifth of most major
national economic totals. For business as a whole, it cannot be said that the District
was markedly stronger than the nation. Likewise, with the exception of residential
construction, in which the District's lag was noticeable, no unusual weaknesses became
apparent. Moreover, the Midwest was not confronted with year-end layoffs and shortened workweeks to any appreciable degree and less than in several other sections of
the country.
Principal Products in Heavy Demand
Continued high demand for the District's principal industrial products was
responsible for record employment and business earnings last year. Steel and automobile shortages persisted throughout the year despite expanded full capacity
operations in both industries. Farm machinery, especially tractors, remained in strong
demand, as did petroleum products, mining and construction machinery, and heavy
electrical equipment. Some resurgence in electronic products, particularly because of
rapidly growing television output, likewise contributed to the high-level stability in
manufactures which the District achieved during 1948. As war-inspired backlogs of
demand disappeared in a growing number of cases, seasonal fluctuations in demand
and output, common in prewar years, again became evident.

Over-all industrial production nationally advanced about three percent during
the past year, and the Seventh District record at least paralleled this gain. Since total
employment advanced about two per cent, some slight improvement in output per
worker appears to have occurred in 1948.
District employment gains were confined to nonagricultural occupations, and
moreover, largely to the trade and service fields. In contrast, however, the principal
increases in employment nationally were in manufacturing and construction. District
manufactures adding to their work forces during the year included iron and steel,
non-ferrous metals, and automobiles, but gains in these fields were more than offset by
losses in electrical machinery, printing, paper and leather manufacturing establishments. In view of the greater concentration of employment in manufacturing
activities during the war years, the slight relative shift away from manufacturing
during 1948 may well be viewed as a further step in the gradual return to a more
normal labor market structure. The District, however, continues to have a distinctly
larger proportion of persons employed in factories than the nation as a whole.
Personal income increased steadily during the past year because of fairly general
advances in wages, farm marketing receipts, and other forms of earnings. The 194748 rise is estimated to have been about 10 per cent, lifting aggregate personal income
in the District to more than 35 billion dollars. To an important degree, widespread
third round wage increases were responsible for raising average weekly earnings of
factory workers to $59.00, or eight per cent above 1947, and noticeably ahead of the
national figure of $54.00, which represented a seven per cent gain from the
previous year.
Inflationary Impact Somewhat Greater
Seventh District consumers continued to experience a somewhat greater impact
of inflation in meeting their living expenses than residents of most other regions.
During the past twelve months, consumer prices averaged nine per cent above the
1947 level, compared with an eight per cent rise generally in the nation. Comparable
consumer price advances in Chicago and Indianapolis were roughly 10 per cent. The
year-to-year increase narrowed appreciably, however, during the final quarter.
Detailed price movements actually were quite mixed, with the principal rises
occurring in the clothing, fuel, and miscellaneous—including local transportation—
groups. Declines, confined almost entirely to foods and textiles, became sufficiently
important during the final months of the year, however, to more than offset rises
elsewhere and turn the official price indexes down slightly.

Emphasis upon nonresidential building continued to dominate District construction during 1948 as in every year since the end of the war. While urban nonresidential
building permit values increased 58 per cent over 1947, well ahead of the nation, the
rise in residential permits was 21 per cent, considerably under the country-wide
figure. Toward the end of the year, tightening availability of mortgage and construction funds clearly limited new residential starts. A few thousand finished homes
remained unsold.
Rising price-quality consciousness sharply influenced what and where consumers
bought in 1948, but retail sales nevertheless surged to a new high, despite some
lagging during the early Christmas buying period. Seventh District department store
sales approached two billion dollars, marking the tenth consecutive annual rise, nine
of which have established successive new all-time records. The seven per cent sales
rise during 1947-48 in the District matched the national increase. Retail expenditures were characterized by shifts: to durables, and particularly from foods; to second
or lower-priced lines, reappearing after an extended period of absence during the war
and initial postwar years; to stores appealing for sales largely upon a price basis; and
to seasonal consumer buying habits well known before the war, and particularly late
Christmas buying. While sellers experienced difficulty moving particular types of
goods, especially some luxury items and others no longer in short supply, consumer
response to "good buys" was reported excellent throughout the district.
Net Cash Farm Income Declines Slightly
The year 1948 marked a new all-time high in the gross cash income of Seventh
District farmers, but rising expenses of production left farmers slightly to somewhat
smaller net incomes than in 1947. Furthermore, the rising price level has affected
farmers' living expenses in such a way that 1946 was probably the best year for farmers
in terms of real incomes.
The Year 1948 saw new records in crop production for the District. The five
states of the District produced a total corn crop of 1,677,000,000 bushels, 46 per cent
of the national total, and more than 30 per cent above the average of the 10-year
period, 1937-46. The oats crop for the states was 691 million bushels, also 46 per cent
of the national total, and exceeded the 10-year average by about nine per cent. The
soybean crop of 146 million bushels was two-thirds of the nation's crop and exceeded
all previous records. The hay crop of 19,000,000 tons for the five states, while below
last year's and the 10-year average, was still large enough to be considered an excellent output except in the nation's leading state, Wisconsin, where this year's crop fell
nearly one-fifth below last year.

The bumper corn crop presented something of a problem. With the District
livestock population reduced as a result of the short feed crops of 1947, the question
of economic utilization of the new crop presented a challenge to farmers. The price
of corn fell off drastically, and in spite of a Government support level of around
$1.45, new crop corn has been sold generally at $1.15 to $1.25. Lack of storage space,
partly as a result of limitations on Commodity Credit Corporation, partly due to lack
of materials to build new facilities, resulted in the deficit in price below support levels.
The plethora of feeds and the concomitant price readjustments have put feed
prices in a position relative to livestock that is one of the most favorable in years. In
spite of this price position the District's farmers as a whole appear to be reluctant to
gamble on feeding up to the level suggested by the price ratio, and instead are taking
the Government loan on corn and engaging in only a very conservative hog and cattle
feeding program.
Land prices in the District as a whole leveled off, with only very slight rises in
some areas. Farm transfers have been less frequent than in recent years, and many
potential sellers are reported to have reduced their asking prices in order to move their
land while the market is still good. Farmers still maintain a low level of real estate
debt, although the trend of the total is slightly upward.
Farmers and bankers have maintained fairly conservative credit conditions, and
while farm loans for operating use and for capital equipment have shown marked
increases in some situations, the general trend has been one of modest increases in
borrowing to meet higher costs of operation.
In farm machinery and equipment the year 1948 saw the fulfillment of many
farmers' backlogs, although small tractors and some harvesting machinery still continue short in some areas, the latter due largely to the extra load of the bumper crop.
But price premiums above list have diminished or disappeared for many items, and
equipment dealers moved into a period when they have to "sell" some items in
their lines.
Continued high levels of non-farm employment have kept the labor supply for
the District's farmers relatively tight, sufficiently so to maintain pressure on farmers to
proceed with mechanization. Perhaps the most important consequence of this situation
credit-wise is that the equipment required means a higher relative total of investment in such items for the operator. As a result of these requirements and the higher
price levels, it takes three to four times as much capital to start farming today as it
did 10 to 15 years ago.

Member Bank Earning Assets Decrease
Member banks in the Seventh Federal Reserve District experienced a decline in
earning assets in 1948, paralleling a trend which appears to have held in the nation
as a whole. The drop in principal resources of Seventh District member banks, which
is estimated to have been about 300 million dollars, contrasts with a gain of almost 800
million for the year 1947. This development resulted primarily from a sharp reduction
in Government security holdings only partially offset by a moderate continuation of
loan expansion.
Total Government security holdings of these banks declined by some 700 million
dollars. Weekly reporting bank figures indicate that most of this decline occurred in
Chicago and, to some lesser extent, in Detroit. The reduction in bank Government
portfolios reflected principally a shift from bonds, which was compensated for to only
a minor degree by acquisition of short term issues. Many banks sold bonds to meet
increases in reserve requirements which were imposed on central reserve city banks in
February, June, and September, and also on all other member banks in September.
In contrast with the contraction in Government security holdings, loans made by
District member banks continued to expand in 1948. For the first 11 months of the
year, total loans rose about 320 million, but this gain was less than half of that for the
comparable period of 1947. Weekly reporting mertiber banks, which consist chiefly of
the larger banks in the larger centers, accounted for only one-third of the gain made in
loans by all District member banks in 1948—a much smaller proportion than in the
previous year. Thus, it appears that in 1948 an increasing proportion of commercial
bank loans was made by smaller banks. In these weekly reporting banks, the slackening in loan growth was relatively greatest in the business and agricultural category.
Real estate loans and particularly "other loans," which are largely consumer loans,
showed a growth more nearly comparable with 1947. In fact, Chicago reporting banks
indicated a gain in "other loans" in 1948 as compared with an actual contraction
in 1947.
Deposits at Seventh District member banks for the year 1948 as a whole were
relatively stable. Total demand deposits, other than interbank deposits, declined 30
million dollars through November as compared with an increase of 740 million for
the year 1947. Part of the decline in demand deposits adjusted was offset by a gain
in United States Government deposits. Time deposits in the District, as well as in the
nation, increased during the year but at a more moderate rate than in 1947.
For the first half of 1948 member bank earnings compared favorably with the
comparable period of the previous year. Net current operating earnings for the first
six months of 1948 were 67 million compared with 62 million in 1947. Preliminary
reports suggest a continuation of this trend through the rest of 1948. Despite the
contraction in total earning assets of District member banks, higher returns on loans
and investments and a larger loan volume presumably enabled many banks to maintain or slightly better their earnings position.
10

FEDERAL OPEN MARKET COMMITTEE

The activities of the System Open Market Account are directed by the Federal Open
Market Committee, consisting of seven members of the Board of Governors of the Federal
Reserve System and the presidents of five of the Federal Reserve banks, including the Federal
Reserve Bank of Chicago. The Federal Open Market Committee assumes the responsibility of
deciding when and what securities to buy or sell in the open market, with a view to preventing
violent fluctuations in money rates and to maintaining an orderly market for government securities. The Federal Reserve banks are required by law to carry out the program of the Open
Market Committee. The United States Government securities shown on the December 31,
1948, statement of the Federal Reserve Bank of Chicago represented this bank's share in the
portfolio of the System Open Market Account in which all the Federal Reserve banks participate.

This bank's participation in the System Open Market Account amounted on December 31,
1948, to $3,332,925,000 par value of securities, representing 14.28% of the total portfolio of
$23,332,746,000. This figure is comparable with an amount of $3,085,404,000 par value of
securities held on December 31, 1947, an increase of $247,521,000. In addition to the increase
in amount, the composition of our participation changed very materially during the year, as
will be noted from the following analysis:
Dec. 31, 1948

Dec. 31, 1947

Bills
C of I's
Notes
Bonds

$ 797,316,000
863,550,000
112,328,000
1,559,731,000

$1,535,867,000
946,565,000
205,644,000
397,328,000

Total

$3,332,925,000

$3,085,404,000

Increase or
Decrease
— 48.1%
—

8.8%

— 45.4%

+ 292.6%
+

8.0%

It will be evident that the activity of the Open Market Committee in support of the rate
structure of the government securities market resulted in the net accumulation of a large
amount of bonds, mostly long-term, and the disposal of substantial amounts of Treasury bills,
certificates of indebtedness, and notes.

FEDERAL RESERVE BANK OF CHICAGO

P a r t i c i p a t i o n in

SYSTEM OPEN MARKET ACCOUNT

Bills

C of l's

Notes Bonds

DECEMBER 31 1 9 4 7

Bills

C of l's Notes Bonds
DECEMBER 31 1 9 4 8

SUPPLYING CURRENCY AND COIN TO THE
SEVENTH FEDERAL RESERVE DISTRICT
(See Pictorial Insert, Opposite Table of Contents)

One of the important functions of the Federal Reserve
Bank of Chicago is that of supplying the Seventh
Federal Reserve District with the currency and coin necessary for its economic life, and removing that currency
and coin when it becomes unfit for further circulation.
Such an operation involves the obtaining of new currency and coin; its storage, protection, and shipment as
required, and the inspection, sorting, and counting of
incoming deposits.
Sources of Currency and Coin

The Federal Reserve Bank obtains all of its new coin
and some of its new currency (Silver Certificates and
United States Notes) from the Treasury Department,
making payment through the Treasurer's General Account. Most new currency (about 85%) is issued by
the Federal Reserve Bank itself in the form of Federal
Reserve Notes. Acceptable collateral is deposited to
the full face value of the new currency wanted, and new
Federal Reserve Notes are released to the Federal Reserve Bank by the Federal Reserve Agent (illustration
1). Such new currency is set up simultaneously on the
Federal Reserve Bank's books as a liability, and the Federal Reserve Bank is required to maintain a reserve in
gold certificates of not less than 25%.
This new currency and coin is augmented by substantial amounts of fit circulated currency and coin received in incoming deposits (described later), and the
new and fit money provide an inventory of cash, which
is maintained in the Federal Reserve Bank's vaults for
service to member banks (illustration 2).

tration 4). Transportation costs on shipments from outof-town banks are borne by the Federal Reserve Bank.
Incoming currency is verified and sorted as to fit
and unfit. Federal Reserve Notes are also sorted as to
bank of issue. Most of this sorting and proving is done
on electrically operated currency counting machines
(illustration 5). This mechanization of the proving routine, which is the basis for the Federal Reserve Bank's
ability to handle large volumes of currency (illustration
6), requires that all counts and proofs be on a piece
basis alone, rather than upon pieces and denomination.
For this reason, member banks are required to ship currency sorted in standard straps and straight as to denomination. Shipments of currency mixed as to denomination
or in a badly worn condition must be proved and sorted
by hand (illustration 7).
Currency segregated as unfit for further use in the
above sort is cancelled by die perforation, cut in half
lengthwise (illustration 8), and the halves forwarded
separately to the Treasury Department for destruction.
Federal Reserve Notes fit for further circulation must
be returned to the bank of issue. Other fit incoming
currency is routed back into the vault inventory to await
shipment.
Incoming coin received from member banks (illustration 9) is processed through automatic counting
machines for verification, and rebagged. During this
work (illustration 10), the machine operator inspects
the coin and removes counterfeits, slugs, foreign coin,
and all other coin unfit for further circulation. The
verified bagged coin is then placed in the vault inventory
for future shipment.

Shipments

Currency and coin are shipped to member banks upon
request (illustration 3). The reserve accounts of such
banks are charged with the value of the cash involved,
shipping charges being absorbed by the Federal Reserve
Bank. Nonmember banks usually obtain their currency
and coin through correspondent member banks. The
Federal Reserve Bank makes every effort tofill orders for
currency in accordance with the wishes of its members.
However, the paying out of new currency and coin is
governed entirely by the volume of fit and circulated on
hand. United States mints supply Federal Reserve Banks
with new coin only when circulated is not available.
Incoming Currency and Coin from Member Banks

The great bulk of incoming currency is received from
member banks for credit to their reserve accounts (illus-

Wrapped Coin

Member banks may obtain wrapped coin if they so
desire. A separate wrapped coin division is maintained,
where all work in connection with the wrapping, storage, and shipping of coin is done.
Coin is transferred into this division in bags which
have previously been proved and inspected, as described
above. Automatic machines count the coin into standard
rolls, and feed each such counted group through a spout
into a paper roll held by the operator. The filled roll
is then sealed in a crimping device attached to the
machine (illustration 11).
In this work, the machine operators handle a batch of
coin at a time and place the finished bags of wrapped
coin on steel skids. These skids are handled mechanically, and are placed in wall compartments of the coin

vaults, where they become part of the inventory of
wrapped coin (illustration 12).

partment's personnel are engaged in proving and sorting;
135 are assigned to the verification of incoming currency.

Because of the high degree of mechanization necessary to keep the cost of wrapped coin within a reasonable figure, only standard bag units are placed in inventory, and member banks are required to order wrapped
coin in terms of such units. A charge is made for
wrapped coin, including only the salaries and supplies
applicable to the wrapping operation. Transportation
costs are absorbed by the Federal Reserve Bank.

The Federal Reserve Bank's cash operations occupy
approximately 30,000 square feet of floor space, which is
located on thefirst floor and on the three basement levels
of the Bank building. A considerable outlay of equipment
is required for this work, especially vault facilities and
the mechanical equipment used to count and transport
currency and coin. The maintenance of accuracy and
efficiency requires well-lighted areas, and, for the comfort of the employees, air conditioning is provided.
Sound reduction materials are used on walls and ceilings,
and music is wired in at different intervals throughout
the day.

Operational Setup

The work described above is carried out by a Cash
Department of approximately 270 employees. Two officials, an assistant vice president and an assistant cashier,
are in direct charge of operations, working under the
over-all direction of a vice president. Most of the De-

The volume of work involved in the foregoing transactions is indicated in the figures below.

STATEMENT OF OPERATIONS
CHICAGO
1948
PIECES
Currency
Outgoing
Incoming
Forwarded for Redemption

DETROIT BRANCH
1947

1948

1947

536,339,523
554,539,859
214,308,066

505,142,656
523,534,850
207,974,832

143,610,922
133,988,000
23,954,149

119,530,095
113,721,732
37,034,139

698,834,817
554,211,410
1,253,046,227
1,100,820,759
162,450,000
11,450,000

568,634,136
316,034,000
884,668,136
738,481,403
146,400,000
4,100,000

97,388,734
5,700,550*
103,089,284

100,925,458

$3,127,707,000
3,288,919,875
811,033,375

$3,003,754,800
3,118,258,887
772,378,087

Coin
Outgoing—Loose
Wrapped
Total
Incoming—From Banks
From Mints
From Other F. R. Banks...
DOLLAR VALUE OF PIECES
Currency
Outgoing
Incoming
Forwarded for Redemption

—

100,925,458
67,931,653
37,340,000
5,025,000

98,639,931
22,375,000
2,560,000

901,077,058
932,118,965
108,854,545

779,261,517
772,650,408
161,067,133

7,676,707

$
$

7,676,707
5,232,730
2,350,000
915,000

Coin
Outgoing—Loose
Wrapped
Total
Incoming—From Banks
From Mints
From Other F. R. Banks. . .
FEDERAL RESERVE NOTE ISSUES—FEDERAL
RESERVE AGENT
Pieces
Received from Washington
Issued to Bank
Dollar Value of Pieces
Received from Washington
Issued to Bank

$
$

49,431,921
56,863,182
106,295,103
98,175,709
7,750,000
1,650,000

$
$

42,515,060
31,394,450
73,909,510
66,919,297
6,950,000
1,300,000

$
$

8,179,653
584,300*
8,763,953
8,674,806
1,600,000
610,000

64,748,000
68,765,550

61,764,000
72,259,000

8,840,000
9,344,340

$ 705,040,000
785,900,000

$ 752,640,000
867,060,000

$ 111,000,000

—

126,080,000

12,700,000
13,356,000
$

180,000,000
180,420,000

* Wrapped Coin Service
Inaugurated October 15, 1948.

MOVEMENT OF CURRENCY AND COIN

Federal Reserve Notes are obtained from the Federal Reserve Agent (See page 13).

New silver certificates and
United States Notes are obtained from the Treasury and
payment is made through the
Treasurer's General Account.

New coin is obtained from
the mints, and payment therefor is made through the
Treasurer's General Account.

Fit currency and coin are returned to stock for reshipment to Member Banks.
Unfit currency and coin are
returned to the Treasury for
destruction.

A stock of currency and coin
is kept on hand in the Federal
Reserve Bank.

Currency and coin are shipped
to Member Banks as requested
(and their Reserve Accounts
are charged in payment).

At the Federal Reserve Bank
the money is counted and inspected as to fitness for further circulation.

Member Banks having excess
currency and coin send it to
their Federal Reserve Bank
for credit to their Reserve
Account.
15

SERVICES TO MEMBER BANKS

DISCOUNTS AND OTHER CREDITS
The Federal Reserve Banks are empowered to make loans to member banks and, under certain circumstances, to commercial firms.

GENERAL SUMMARY
Member bank borrowings from the Head Office increased during 1948 to an aggregate of $3,046,865,000,
while similar borrowings from the Detroit Branch declined somewhat during the period.
The increase of 152% at the Head Office may be
attributed to some extent to the increase in reserve requirements which became effective during the year. In
all instances, borrowings from the Head Office were for
temporary periods pending an orderly liquidation of investment accounts. Detroit Branch advances were for
short periods also, to adjust cash reserves.

The peak in member bank borrowings from the Head
Office occurred on March 28, when, because of reductions
in deposits of Illinois banks over the April 1 tax date,
loans outstanding reached a total of $343,145,000. These
were promptly liquidated shortly after the tax date.
Three commitments, aggregating $472,500, were
entered into during 1948 with financing institutions in
connection with working capital loans to industrial enterprises under the provisions of Section 13b of the Federal
Reserve Act.

STATEMENT OF OPERATIONS
CHICAGO
1948

DETROIT BRANCH
1948
1947

1947

NUMBER OF TRANSACTIONS
ADVANCES TO MEMBER BANKS

Secured by U. S. Government Obligations
Secured by Other Acceptable Assets—
Section 10b

484

430

74
2

INDUSTRIAL LOANS

Advances
Commitments

—

DOLLAR VALUE OF TRANSACTIONS
ADVANCES TO MEMBER BANKS

Secured by U. S. Government Obligations
Secured by Other Acceptable Assets—
Section 10b

$3,046,865,000

$1,207,743,000

50,000

400,000

472,500

345,000

$ 466,045,000

$ 558,040,000
200,000

INDUSTRIAL LOANS

Advances
Commitments

—

ADVANCES TO MEMBER BANKS
Detroit
Chicago
$ BILLIONS

TRANSACTIONS

400——

300

100-

200-

1944 1945 1946 1947 1948

10
0

Number
Amount
1944 1945 1946 1947 1948

SERVICES TO MEMBER BANKS

SAFEKEEPING OF SECURITIES
The Federal Reserve Banks act as depositories for securities
owned by member banks. Securities so held are completely
serviced as to collection of interest, redemptions, exchanges, etc.

A free safekeeping service for U. S. Savings Bonds, Series E, is
extended to members of the armed forces and to the general
public.

GENERAL SUMMARY
The number and dollar value of securities handled
in safekeeping operations declined during the year
1948. Securities on hand at the close of the year were
down $357,000,000 at Chicago, and up $54,000,000 at
Detroit, the latter change due primarily to increased
holdings for member banks and to a larger balance of
member bank securities in process of exchange. The
Branch's storage facilities were increased during the year.
Savings Bonds safekeeping volumes declined generally, although civilian releases increased both at Chicago
and Detroit.

Chicago

Detroit

1945

1946 1947

1948

Pieces Received*
Pieces Released*
1945

1946 1947

1948

* Includes Savings Bonds

STATEMENT OF OPERATIONS
DETROIT BRANCH

CHICAGO
1947

1948

1947

1948

SAFEKEEPING—MEMBER BANKS, ETC.
PIECES

226,869
212,100
934,840

285,520
235,196
879,662

20,891
151,796

25,374
20.835
150,969

$ 8,977,566,386
9,334,846,359
4,428,820,351
79,713,752

$29,594,516,120
30,358,925,792
4,786,100,324
90,658,171

1,261,764,135
1,208,065,590
362,561,984
3,724,445

$ 2,085,896,680
2,169,647,150
308,863,439
5,947,690

24,127
26,682
58,621

31,167
30,059
61,166

2,413
3,125
7.324

3,267
3,678
8,036

36,566
48,755
94,563
53,083
385,003
334,874

52,366
57,459
139,589
51,906
443,000
339,202

65,936

84,735

64,132

60,647

297,746

295,942

2,502,935
9,459,021
5,096,875
6,045,752
19,626,085
54,237,248

3,576,860
8,183,178
6,961,075
6,637,021
22,220,025
50,823,979

6,319,630

6,507,890

4,604,815

4,185,240

24,489,955

22,775,140

Securities—Received
Released
Coupons Detached from Securities
DOLLAR VALUE OF PIECES

Securities—Received
Released
Held as of December 3 1 . . .
Coupons Detached from Securities
Receipts Issued
Receipts Released
Receipts Outstanding

19,082

SAFEKEEPING—SAVINGS BONDS
PIECES

Received—U. S. Army Personnel
Civilian
Released—U. S. Army Personnel
Civilian
Held as of Dec.31--U.S.Army Personnel
Civilian
DOLLAR VALUE OF PIECES

Received—U. S. Army Personnel
Civilian
Released—U. S. Army Personnel
Civilian
Held as of Dec.31--U.S. Army Personnel
Civilian

SERVICES TO MEMBER BANKS

COLLECTION OF CHECKS AND OTHER ITEMS
The Federal Reserve Banks act as nation-wide clearing agents
for the routing of checks between commercial banks in much
the same manner as clearing house associations do in local communities, and accept and pay checks drawn by the Federal

Government. They also collect drafts, notes, bonds, coupons,
acceptances, etc., for member banks and deliver against payment
securities sold by member banks.

GENERAL SUMMARY
The year 1948 brought increased volumes of work to
our check collection systems. Although the number of
government checks handled declined somewhat, a general rise in city and country items was sufficient to produce an over-all increase in total items handled of 6%
at Chicago and 8% at Detroit.
Extensive alterations were made in our Check Department facilities at Chicago. Work areas were enlarged
and improved, additional equipment was obtained, and
the transfer of outgoing cash letters to proof machines
was started, to be completed in 1949. All return checks

are now microfilmed, thus increasing the service we can
render on such items. Negotiations were started during
the year towards routing all checks direct, with payment
to be made to correspondent banks for our account,
where Chicago Exchange would not be available.
Although Saturday closing has been observed by our
Detroit Branch since August 21, 1948, work is continued
there each Saturday to the extent of forwarding country
checks and the preparation of checks drawn on Detroit
banks and the United States Treasury for presentation.

STATEMENT OF OPERATIONS
CHICAGO
1948
CHECKS
Number of Checks Handled
City
Country
Government—Paper
Card
Totals
Dollar Value of Checks Handled
City
Country
Government—Paper
Card
Totals

DETROIT BRANCH
1948

1947

46,916,000
194,543,000
3,432,000
41,645,000
286,536,000

42,718,000
182,390,000
4,081,000
41,835,000
271,024,000

14,019,000
25,320,000
891,000
4,426,000

12,711,000
23,070,000
953,000
4,550,000

44,656,000

41,284,000

$55,257,910,000
36,482,969,000
4,433,454,000
2,529,661,000

$50,198,913,000
33,065,055,000
5,796,590,000
2,567,080,000

$98,703,994,000

$91,627,638,000

$13,034,004,000
5,443,955,000
676,738,000
292,534,000
$19,447,231,000

$10,965,013,000
4,625,857,000
556,484,000
417,531,000
$16,564,885,000

6,064

5,277

549

545

43,167
177,107
505,234

42,246
190,795
486,324

20,760
17,551
25,183

17,987
21,118
25,246

725,508

719,365

63,494

64,351

98,010

106,893

6,572

7,910

129,751,000
575,468,000
923,018,000

43,793,000
58,950,000
51,668,000

56,204,000
70,557,000
71,105,000

DAILY AVERAGE NUMBER OF
CASH LETTERS DISPATCHED
NON-CASH ITEMS
Number of Transactions
City
Country*
Coupon and Security
Totals
•Includes direct sendings to other
Federal Reserve Banks by our
Member Banks
E>ollar Value of Transactions
City
Country*
Coupon and Security
Totals
•Includes direct sendings to other
Federal Reserve Banks by our
Member Banks

131,997,000
472,313,000
829,902,000

$ 1,434,212,000

$ 1,628,237,000

351,765,000

450,347,000

154,411,000

47,367,859

197,866,000

59,137,113

NUMBER OF CHECKS HANDLED
Chicago
Detroit
MILLIONS

ML N
II S
LO

I—150

100

o
50

1944 1945 1946 1947 1948

City
Country
Government

SERVICES TO MEMBER BANKS

INVESTMENTS
The Federal Reserve Banks act as securities agents for member
banks. The purchase and sale of bonds by member banks, either

for their own account or for the account of customers, may be
effected through their Reserve Bank without charge.

GENERAL SUMMARY
Operations of the Head Office Investment Department declined substantially in 1948 from the previous
year, particularly in dollar volume, on account of the
discontinuance of the arrangement in effect during part
of 1947 under which holders of Treasury bills were
permitted to sell them to the Federal Reserve banks at
a stated price with the privilege of repurchase.

However, security transactions in the open market for
the account of member banks, other Federal Reserve
banks, and others, showed an increase from the previous
year of 17% in number of transactions and 45% in
dollar value.
At the Detroit Branch, the number of purchases increased slightly, while the number of sales declined 37%.

STATEMENT OF OPERATIONS

DETROIT BRANCH

CHICAGO

1948
N U M B E R OF SECURITY
PURCHASES
U . S. GOVERNMENTS

1947

1948

1947

TRANSACTIONS

Member Banks and Others
Other F. R. Banks
Repurchase Agreement
Own Account
System Open Market Account

3,045
162

3,205
164
1,146
1

631

625

631

625

634

1,007

634

1,007

OTHER

Member Banks and Others
Total Purchases

22
4,538

3,227

SALES
U . S. GOVERNMENTS

Member Banks and Others
Other F. R. Banks
Repurchase Agreement
Repurchase Agreement
Exchanged for Treasury Bills Due 7-31-47
Repurchase Agreement Matured
Repurchase Agreement
Transferred to System Open Market Account
Own Account—Transferred to System Open
Market Account

8,630
436

6,695
420
1,042
7
278
315
1

OTHER

Member Banks and Others
Total Sales

80^
8,838

48
9,114

D O L L A R V A L U E OF SECURITIES
PURCHASES
U . S. GOVERNMENTS

Member Banks and Others
Other F. R'. Banks
Repurchase Agreement
Own Account
System Open Market Account

13,795,134

21,971,181

13,795,134

21,971,181

26,799,201

119,820,650
21,398,500
9,590,508,000
39,952,000

130,174,450
9,810,400

30,574,157

26,799,201

30,574,157

1,000,000

OTHER

Member Banks and Others
Total Purchases

291,000
$

141,275,850

569,000
$ 9,772,248,150

SALES
U . S. GOVERNMENTS

Member Banks and Others
Other F. R. Banks
.'
Repurchase Agreement
Repurchase Agreement
Exchanged for Treasury Bills Due 7-31-47
Repurchase Agreement Matured
Repurchase Agreenment
Transferred to System Open Market Account
Own Account—Transferred to System Open
Market Account

308,371,730
24,157,500

175,938,140
8,129,500
7,445,191,000
39,952,000
1,236,993,000
1,699,583,000
39,952,000

OTHER

Member Banks and Others
Total Sales

759,250
333,288,480

634,900
$10,646,373,540

SERVICES TO MEMBER BANKS

ECONOMIC RESEARCH
Information on current economic developments in which the
Federal Reserve System has an interest is gathered and interpreted by the Bank. These studies are made available not only
to the officers and directors of this Bank and to the Board of
Governors, but also to member banks and business firms in the
Seventh Federal Reserve District, an informational service being

a very important activity of the Research Department. Members
of the research staff maintain continuing close contact with
leaders of banking, industry, agriculture, and trade so as to
obtain first-hand information on banking and business in this
Reserve District.

GENERAL SUMMARY
During 1948 the current research and reporting work of the Research Department
continued along the same lines as in recent years, with the usual emphasis on the study of
economic conditions in the Seventh Federal Reserve District. Current developments in the fields
of bank credit and business finance, Federal fiscal policy, labor and industry, retail trade, consumer credit, state and local public finance, agriculture, and farm credit received close attention.
Included among the special studies completed during the year were a survey of the Chicago
industrial area and a seven-year index study of department store indexes of sales and stocks
by departments.
A few minor statistical series were discontinued during the year and a number of others
were revised and improved. As a part of the System wide study, all of the statistical series were
reviewed and evaluated.
The following material was published during the year as a result of current studies and
collection of data in the Seventh District:
Weekly
Agricultural Letter; department store sales; bank condition statements—member bank (national, and cities of Chicago, Detroit, Indianapolis, and New
York) and Federal Reserve Banks combined.

Monthly
Business Conditions (monthly review); retail trade and consumer credit series
—department stores, furniture, household appliance, jewelry, and shoes;
financial reports—assets and liabilities of Seventh District member banks,
bank debits, bankers acceptances, and commercial paper; other business summaries—business indexes, farm business conditions, and paper and pulp.

Quarterly
Farm land value survey.

Annual and Special Reports
Department store sales and stocks by departments; deposit ownership survey;
meat packing study supplement; Chicago industrial area survey; member bank
operating ratio study; member bank earning asset analysis; member bank bad
debt loss analysis; and retail credit survey.

Many of the above reports are based on figures assembled as a part of the national collection
of data by the Federal Reserve Banks for the Board of Governors. The customary current and
special reports of Seventh District statistical material were prepared and sent to the Board.
Members of the research staff participated in the usual System conferences and studies of
national economic conditions.
21

SERVICES TO MEMBER BANKS

EXAMINATION OF BANKS
and reports required by law to be rendered by organizations
performing banking services in this Reserve District are analyzed
and reviewed by the Bank before being submitted to the Board
of Governors.

An examination of the state member banks in the District is
made each calendar year by the Federal Reserve Bank. Field
investigations required in connection with applications to exercise banking functions are also carried out. Various applications

GENERAL SUMMARY
Department completed 587 examinations during the
year.

Nine banks, 7 national and 2 state, were admitted to
membership in 1948. The staff of the Bank Examination

STATEMENT OF OPERATIONS
CHICAGO
1948
NUMBER

OF EXAMINATIONS

DETROIT BRANCH
1947

1948

Regular
Membership
Trust Departments
Follow-up Investigations

443
2
140
2

433
2
137
1

561
7
1
567

559
6
4
561

442
2
3
441

443
3
4
442

N U M B E R O F M E M B E R B A N K S I N 7th F. R. D I S T R I C T
NATIONAL BANKS

As of January 1
Additions (See Note A)
Withdrawals (See Note B)
As of December 31
STATE BANKS

As of January 1
Additions (See Note A)
Withdrawals (See Note B)
As of December 31

NOTE A—ADDITIONS TO MEMBERSHIP DURING 1948
NATIONAL BANKS

First National Bank of Evergreen Park, Evergreen Park, Illinois
National Bank of Joliet, Joliet, Illinois
National Bank of Petersburg, Petersburg, Illinois
National Bank of St. Anne, St. Anne, Illinois
Wauconda National Bank, Wauconda, Illinois
Eagle Grove National Bank, Eagle Grove, Iowa
First National Bank of Tipton, Tipton, Iowa
STATE BANKS

Central Bank, Grand Rapids, Michigan
Monroe County Bank, Sparta, Wisconsin
NOTE

B—WITHDRAWALS

DURING

NATIONAL BANKS

1—assumed by another bank
STATE BANKS

2—voluntary withdrawals
1—voluntary liquidation

1947

MADE

1948

INCLUDED IN
CHICAGO DATA

SERVICES TO MEMBER BANKS

BANK AND PUBLIC RELATIONS
The personnel assigned to the public relations staff visit member
and non-member banks, attend conventions and group meetings,
deliver public addresses, etc., and in general attempt to deter-

mine ways in which the Bank's services to its members may be
improved.

GENERAL SUMMARY
The emphasis in the bank and public relations program during 1948 was on services to
banks. Many of the bank relations calls made during the year were to improve relationships
between the various operating departments of the Federal Reserve Bank of Chicago and the
banks being called on. The calls also proved valuable as a means of increasing understanding and friendship for the Federal Reserve System and as a way of getting bankers' opinions
on local business and agricultural conditions and national and international problems, the
reports of which are helpful in the preparation of monthly reports to the officers and directors
of this Bank and quarterly reports to the Board of Governors. Officers and representatives
of the Head Office and Detroit Branch made 3122 calls on banks in 1948.
As a part of its bank relations program, the Bank and Public Relations Department
started a series of conferences designed to better acquaint the officers and representatives of
the Federal Reserve Bank of Chicago with the banking departments of the various District
states. Thus far, conferences to create a better working relationship have been held for the
members of the banking departments of two of the Seventh District states.
All meetings in the Seventh Federal Reserve District sponsored by bankers' associations
were attended.
Public Relations activities of the Head Office and Branch included attendance at 240
industrial and other meetings and the furnishing of speakers for 144 business and civic groups.
By means of press releases and articles, the general public became further informed on
the activities of the Federal Reserve Bank of Chicago.
The number of meetings held at the bank was increased in 1948 and those in attendance included bankers, business executives, representatives of state, local and national Governmental organizations, and representatives of the various bank regulatory agencies.
An increasing number of bankers and students, as well as other interested persons, were
conducted on tours through the Federal Reserve Bank of Chicago and the Detroit Branch.
The Bank and Public Relations Department, together with the Research and Bank Examination Departments, continued its monthly staff meetings held for the purpose of ensuring a
constantly improving relationship between the bankers in the Seventh Federal Reserve District
and their Federal Reserve bank.

SERVICES TO TREASURY DEPARTMENT

ISSUANCE OF GOVERNMENT SECURITIES
The Federal Reserve Bank, acting as agent of the Treasury Department, performs all operations relative to the placing of new
Treasury issues in the hands of the general public, and relays
information from Washington throughout this district. The
Bank qualifies commercial banks and others in the district as
agents in the sale of U. S. Savings Bonds, Series E, to the pub-

lic; and services these agents as regards supplies of new bonds,
applicable Treasury directives, the processing of paid registrations, etc. The Bank analyzes the sales of U. S. Savings Bonds,
and furnishes the Treasury Department and others with detailed
reports showing what the public purchased in the various counties and states in this district.

GENERAL SUMMARY
Subscriptions to new Treasury issues other than E
Bonds declined during 1948. The reduction in dollar
value for securities issued at Chicago was due particularly
to cash payments by the Treasury of Treasury bills,
which reduced the amount of securities available for
subscription. Treasury bills were offered both for cash
subscription and on an exchange basis, whereas other
securities issued during the year were offered on an

exchange basis only.
Sales of Series E Savings Bonds by issuing agents
showed some change, Chicago's activity decreasing
84,000 pieces while Detroit's increased 343,000. However, the total maturity value of these sales increased
$48,269,000 for Chicago, and $20,804,000 for Detroit.
Savings Bonds sales were stimulated by the "Drive"
held during the summer of 1948.

STATEMENT OF OPERATIONS
CHICAGO

DETROIT

1948
NEW

BRANCH

1948

1947

ISSUES

SUBSCRIPTIONS

Forms Received
Treasury (Other Than "E" Bonds)
"E" Bonds
Number of Subscribers
Treasury (Other Than "E" Bonds)
"F." Bonds

146,575
28,800

171,750
18,700

10,911
1,840

14,014
1,708

154,420
336,330

181,800
300,450

11,488
176,492

14,455
126,991

$ 9,448,406,000
20,325,000

$13,797,900,000
16,935,000

539,154,000
4,902,000

3,377,000

7,930,905,000
20,325,000

- 10,212,335,000
16,935,000

539,233,000
4,876,000

535,214,000
3,347,000

DOLLAR VALUE OF SUBSCRIPTIONS

Received
Treasury (Other Than "E" Bonds)
"E" Bonds
Allotted
Treasury (Other Than "E" Bonds)
"E" Bonds

ISSUING AGENTS
SERIES "E" SAVINGS BONDS SOLD

Pieces
Maturity Value

Number of Qualified Issuing Agents as
of December 31
SALES ANALYSIS
Number of Geographical Sales Reports
Prepared
Dollar Value
SHIPPING A N D

6,793,000
848,959,000

6,877,000
800,690,000

2,651,000
175,819,000

2,308,000
155,015,000
372

3,097

3,128

1,830
$ 1,272,916,000

2,820
$ 1,382,800,000

140,000
7,011,000

173,000
6,985,000

54,000
259,000

62,000
196,000

4,630
44,820
49,450

450,550
1,623,850
2,074,400

2,157

200,723

2,157

200,723

369

232
698,303,000

129
653,863,000

DELIVERY

PIECES SHIPPED

Treasury (Other Than "E" Bonds)..
"E" Bonds
ARMED

FORCES

LEAVE

BONDS

STUBS PROCESSED

Pieces
Army Issuing Officers
Navy Issuing Officers
Total
Face Value
Army Issuing Officers
Navy Issuing Officers
Total

$
$

744,000
6,772,000
7,516,000

$
$

95,522,000
322,259,000
417,781,000

346,000

41,538,000

346,000

41,538,000

VLE
AU
$ MILLIONS

SERIES "E" SAVINGS BONDS
SOLD THROUGH ISSUING AGENTS
Chicago
Detroit
VALUE
* MILLIONS
PIECES
MILLIONS

1250

400
PIECES
MILLIONS

300

1000

200

750
100

500

1945
250

1946

1947

Dollar Value
(Maturity Value)

Pieces

1945

1946

1947

1948

SERVICES TO TREASURY DEPARTMENT

SERVICING OF GOVERNMENT SECURITIES
tody of blank stock, accounts of depositary banks, etc.

The Federal Reserve Banks handle the servicing of all government securities. Such work includes exchanges, transfers, cus-

GENERAL SUMMARY
"Marketable Issues" activities at Chicago during 1948
were substantially less than those for 1947, primarily
because of a relatively quiet Government bond market;
similar transactions at the Detroit Branch showed little
change from 1947 activities.
"Public Debt Transfers" of Government securities
both at Chicago and Detroit were much greater in 1948
than in 1947, due largely to the fact that Treasury bonds

were permitted to be transferred by wire effective March
1, 1948.

The year's activities in the Depositary Bank Division
at Chicago and Detroit showed a considerable increase
over 1947 levels. Initiation of war loan payments for
withheld taxes in the spring of 1948 and frequent
Treasury Department calls accounted for the increased
volumes.

STATEMENT OF OPERATIONS
DETROIT BRANCH

CHICAGO
1948

1948

1947

DENOMINATIONAL EXCHANGE
PIECES

Received
Marketable Issues
Public Debt Transfers
Issued
Marketable Issues
Public Debt Transfers

614
4,695

618
1,938

2,312
3,889

2,592
2,521

60,550

107,500

93,100

31,650

83,500

106,300

37,500

24,500

$1,102,217,000
4,640,340,000

$1,739,910,000
2,701,775,000

1,102,217,000
4,609,430,000

1,739,910,000
2,685,625,000

194,259,000

10,940,000
245,113,000

155,200
169,690,000

14,242
$ 93,396,000

$ 40,630,000

1,692

1,676

133

131

MATURITY VALUE

Received
Marketable Issues
Public Debt Transfers
Issued
Marketable Issues
Public Debt Transfers
DEPOSITARY BANKS
Number of Payments Handled
Depositary Balances as of December 3 1 . .
Number of Qualified Depositary Banks
as of December 31

190,700
330,095,000

11,559,000
159,598,000

11,559,000

10,940,000

209,090,000

10,986

CUSTODY
PIECES

Received from Treasury Department..
Prepared for Delivery

8,616,000

8,500,000

8,882,000

8,435,000

2,817,000
3,095,000

2,527,000
2,627,000

307,000

338,000

33,000

30,000

SECURITY MAIL
PIECES RECEIVED

SERVICES TO TREASURY DEPARTMENT

REDEMPTION OF GOVERNMENT SECURITIES
In connection with their duties as Fiscal Agent of the United
States, the Federal Reserve Banks accept (and pay) Government securities eligible for redemption, either directly from the
holders thereof, or, in the case of Savings Bonds, from commer-

cial banks designated as paying agents. Securities paid in redemption are processed as directed by the Treasury and are
turned over to the Bureau of the Public Debt for final settlement and disposal.

GENERAL SUMMARY
The number of pieces of ail series of savings bonds
redeemed in 1948 decreased approximately 15% at
Chicago and approximately 16% at the Detroit Branch.
Detroit's total dollar amount of redemptions also decreased about 5% in 1948, but total redemption values
at Chicago showed a 9% increase over 1947. This
increase is accounted for primarily by the greater amount
of matured savings bonds paid out during the current
year. Pieces and dollar amounts redeemed by the Bank
increased from 1947 volumes mainly due to a substantial

increase in redemption of Series F and G Bonds, both
at Chicago and at Detroit.
Pieces of the $25 denomination continued to comprise
the major portion of pieces of savings bonds redeemed.
Redemption of Armed Forces Leave Bonds declined
during 1948.
The dollar value of redemptions other than savings
bonds increased during 1948 at Chicago and Detroit;
both dollar value and number of coupons redeemed declined during the year.

STATEMENT OF OPERATIONS
DETROIT BRANCH
1947
1948

CHICAGO
1947

1948
REDEMPTIONS
U . S. SAVINGS BONDS

Pieces*
By Paying Agents
By Federal Reserve Bank
Total

11,921,000
7,775,000

*$25 Pieces, Series E, Included Above
Redemption Value
By Paying Agents
By Federal Reserve Bank
Total

4,182,000

13,600,000
413,000
14,013,000
9,625,000

11,438,000
483,000

4,995,000

61,000

60,000

4,243,000

5,055,000

3,020,000

3,663,000

$ 564,135,000
217,179,000
$ 781,314,000

$ 563,465,000
154,200,000
$ 717,665,000

$161,912,000
22,000,000
$183,912,000

$175,852,000

190,200
950
191,150

632,750
37,450
670,200

48,872
32
48,904

179,181

132,891,000
7,096,000
139,987,000

$ 10,455,731
7,021
$ 10,462,752

$ 36,176,737
14,373
$ 36,191,110

2,400

2,403

199

200

252,000
$8,155,226,000

252,000
$7,413,000,000

24,000
$681,531,000

$630,286,000

1,919,000
$ 108,164,000

195,000
9,276,000

215,000
$ 11,937,000

18,180,000
$194,032,000

ARMED FORCES LEAVE BONDS*

Pieces
By Paying Agents
By Federal Reserve Bank
Total
Redemption Value
By Paying Agents
By Federal Reserve Bank
Total

$
$

41,119,000
217,000
41,336,000

$
$

66
179,247

* Redemption of Armed Forces Leave
Bonds Authorized September 2, 1947
Number of Qualified Paying Agents
as of December 31
OTHER

BONDS,

NOTES,

BILLS, AND

CERTIFICATES REDEEMED

Pieces
Amounts
U.

S. AND OTHER

25,000

GOVERNMENTAL

AGENCY COUPONS REDEEMED

Pieces
Dollar Value

2,116,000
126,410,000

SERVICES TO TREASURY DEPARTMENT

COLLECTION OF WITHHELD TAXES
The Bank acts as agent of the Treasury Department, assisting
the Bureau of Internal Revenue in the collection of funds de-

posited in commercial banks by employers under withholding
tax arrangements.

GENERAL SUMMARY
At the close of the year, 1,777 banks were carried in
our accounts as Depositaries for "Withheld Taxes."
Depositaries paid to us during the year approximately
1,541 millions of dollars represented by over 676,000
receipts. The dollar value of the receipts increased
approximately 42% over 1947; the number issued increased about 26%.
Offices of the Internal Revenue Department deposited
with us their certificates of deposit amounting to over
1,600 millions of dollars, represented by more than
714,000 receipts.
The largest volume received from depositaries on any

one day was received on February 13, 1948, and
amounted to $46,202,000.
Withheld Tax activities previously performed at the
Detroit Branch were for the larger part absorbed, beginning the first of the year, by the Head Office which
accounts for the increased number of receipts and
dollar value at Chicago.
Effective July 1, 1948 a pilot system was installed
for processing withheld tax receipts by means of
punched-card equipment. The Treasury Department
authorized this change in keeping with their economy
program.

STATEMENT OF OPERATIONS
CHICAGO
Receipts Issued by Depositaries
Dollar Value of Receipts Issued

1948
676,394*
$1,540,960,000*

1947
536,141
$1,088,926,000

DETROIT BRANCH
1948
—*
—*

1947
134,590
$424,712,000

* Detroit Branch withholding tax operation taken over by Chicago effective
January 2, 1948.

DEPOSITARY RECEIPTS RECEIVED
Chicago
Detroit
600

500
400
300
200

10
0
1944 1945 1946 1947 1948

1944 1945 1946 1947 1948
* Detroit Branch Withholding T x
a
Operation Taken Over by Chicago
Effective January 2,1948

SERVICES TO R. F. C.

RECONSTRUCTION FINANCE CORPORATION
The Federal Reserve Banks are fiscal agents of the Reconstruction Finance Corporation and the Commodity Credit Corporation. In such capacity the Bank disburses the proceeds of loans,

makes advances for the accounts of various Governmental corporations, maintains custody of collateral, handles work relative
to the redemption and exchange of securities, etc.

GENERAL SUMMARY
CHICAGO
Reconstruction Finance Corporation
Disbursements, receipts and custody transactions handled for account of the Reconstruction Finance
Corporation during the year 1948 averaged 19.4 per cent less in amount and 46.6 per cent less in number
as compared to the year 1947. This was due to the gradual decline in activities in connection with the
liquidation of national defense programs which the Corporation handled during the war.
Under the reorganization plan, the loan agencies assumed accounting responsibility during 1948 for
all programs administered by the agencies which had not been transferred at the close of 1947. The
Federal Reserve banks, as fiscal agents, continue to perform some of the accounting functions under
programs administered directly by the Washington office of the Corporation. Due to the transfer of
accounting responsibility, a new custody record was established during 1948 to control all documents
remaining in custody of the Federal Reserve Bank under programs administered by the Loan Agency.

Commodity Credit Corporation
Transactions handled for account of Commodity Credit Corporation for the year 1948 averaged
37.9 per cent less in amount and 34.2 per cent less in number than the transactions handled during 1947.
The lower volume in both disbursements and receipts was due to decreased orders for grain and
other commodities by the U. S. Government departments and foreign governments for which. Commodity Credit Corporation handles purchases in the domestic markets.
Although there was less activity during the first three quarters of 1948, in the last quarter the
record grain crops and lower market prices resulted in a marked increase in activity under the grain
loan programs. Disbursements to banks and other lending agencies for purchase of commodity loans
and deposit by the local office of the Corporation of sealing fee payments by producers making loans
increased substantially.

DETROIT BRANCH
During the year 1948 the activities of the R.F.C. Custody Division were further reduced by the
transfer on January 15, 1948 of the accounting responsibility from the custodian to the local loan
agency on loans under the Administration supervision of the Loan Agency Managers. This completed
the transfer of programs designated for decentralization, which began during 1947.
On May 31, 1948, a new Custody Control was established for notes and collateral documents covering all decentralized loans and mortgage purchases.
During the past year the corporation's most active program was the purchase of F.N.M.A. and V.A.
Guaranteed mortgages, a total of over 4,000 mortgages being purchased.
The number of receipt and disbursement transactions handled for the account of the Commodity
Credit Corporation was negligible.
29

BOARD OF GOVERNORS ACTIVITIES

CONSUMER CREDIT
The Board of Governors of the Federal Reserve System, works
through the Reserve Banks in its regulation of credit and instalment buying. Each Bank investigates credit activities through-

out its district to ascertain whether or not Executive orders and
related directives are being violated.

GENERAL SUMMARY
During August 1948, Regulation W was re-established pursuant to the provisions
of Public Law 905 and became effective on September 20.
Administration of the regulation at the head office and the Detroit Branch entailed
the following activities.
Circular mailings with respect to the regulation have exceeded 125,000 in addition
to more than 12,000 letters which have been written to registrants with reference to
registration and other matters arising in connection with the regulation. More than
7,000 inquiries have been answered and 22,765 registration certificates have been issued
to business firms whose activities are subject to the regulation.
Since September 28, representatives of this bank have called upon 2,751 business
concerns to make a spot-check of their books and records to determine their compliance with the provisions of the regulation. These representatives have filed detailed
reports covering their analysis and review of the records and these reports have
revealed that 768 of the concerns have inadvertently violated the regulation. In
addition, two concerns were found to have violated the regulation wilfully.
Our investigations reveal that the registrants on the whole are complying with
the requirements of the regulation in a satisfactory manner, and where inadvertent
violations have been found, the registrants have taken steps to avoid a recurrence.
Our representatives have had most favorable reception and cooperation from the
registrants, most of whom welcome an opportunity to have someone advise them on
the subject. In many cases the registrants have told our representatives the uniform
terms specified in the regulation are regarded as a constructive factor in creating
desirable credit standards for the trade.

GENERAL BANK ACTIVITIES

ACCOUNTING
funds by wire for member banks, the handing of all Bank disbursements, the compilation of claims for services rendered the
government, the assembly of cost data and construction of
reports, etc.

The central accounting routines of the Bank include the maintenance of the reserve accounts of member banks, the constant
analysis of these reserves as regards the legal minimum of each
bank, the maintenance of accounts with other Federal Reserve
Banks through an interdistrict settlement fund, the transfer of

GENERAL SUMMARY
Transfers of funds increased in 1948, both in number of items and dollar amount.

The number of entries to member bank reserve accounts increased during the year, as did entries to other
Federal Reserve Banks. General ledger entries declined
during the period.

STATEMENT OF OPERATIONS
CHICAGO

DETROIT BRANCH

1948
GENERAL LEDGER
Number of Entries
Functioned
FEDERAL RESERVE
BOOKS
Number of Entries
Functioned

Assessable Deficiencies
Banks
Amount of Penalties
Assessed
TRANSFERS OF FUNDS
Number of Transfers..
Dollar Value
EXPENSE DISBURSEMENTS
Expense Vouchers
Functioned
Fiscal Agency Claims
Prepared

1948

1947

307,549

37,409

41,000

1,358,964

285,514

262,941

2,477,706

2,404,550

352,943

350,165

804

Period
Jan. 15 $
Nov. 30

345,493

1,574,299

MEMBER BANKS'
RESERVE ACCOUNTS
Number of Entries
Functioned
Active Accounts as of
December 31
MEMBER BANK
RESERVES
Excess Over Requirement
Maximum
Minimum

1947

795

Period
136,677,000 Mar. 15 $
87,380,000 July 31
206

15,636

Period
148,433,000 Apr. 15 $
99,431,000 May 31
201

9,900

Period
25,053,000 Sep. 30 $
9,472,000 Feb. 28
17

881

25,503,000
9,357,000
22

1,260

199,652
$68,388,569,000

189,642
$49,907,887,000

34,116
$15,475,604,000

29,377
$12,741,185,000

13,336,122
3,731,435

12,368,440
4,578,435

3,058,029
1,005,177

2,939,431
1,399,023

GENERAL BANK ACTIVITIES

WIRES, TELEPHONE, MAIL, FILES
In addition to the usual mail and telephone facilities, the Bank
maintains the principal relay center of a leased wire system
having connections with the Board of Governors in Washington,
with the other Reserve Banks and Branches, with the Treasury

Department, and with the Reconstruction Finance Corporation.
Telegrams effecting transfers of funds for members, Fiscal
Agency operations, and other banking transactions are processed
both in code and in clear.

GENERAL SUMMARY
The Chicago relay office of the Federal Reserve
Leased Wires System handled over a million telegrams
during 1948, an increase of 2.4% over the 1947 volume.
The Codes and Telegrams Division of Chicago processed
181,000 messages during the period, or 2% more than
during 1947. Detroit Branch leased wire activities increased during the year, although the volume of commercial wires handled declined from the 1947 levels.
Head Office Mail Department activities showed a
slight increase during 1948; mail handled at Detroit

decreased somewhat. Air Express service (to all Federal
Reserve Banks and Branches and to some member banks)
increased almost 50% during the year. Local telephone
calls declined in 1948, both at Chicago and Detroit,
while long-distance calls increased at the two offices.
The Chicago General Files Division handled over
1,500,000 pieces during 1948, as compared with 1,100,000 pieces in 1947. Pieces filed at Detroit declined during the period.

STATEMENT OF OPERATIONS
CHICAGO
1948

DETROIT BRANCH
1948
1947

1947

TELEGRAMS PROCESSED
LEASED WIRES

Received
In Code
In Clear
Dispatched
In Code
In Clear

71,706
7,112

68,747
6,862

18,737
3,853

16,246
4,669

56,353
7,839

49,786
10,619

16,138
4,011

15,186
4,863

17,080

5,660

18,121
5,267

1,018
555

1,102
582

10,217
5,309

12,339
5,947

1,845
.48

3,031
93

1,858,174

1,803,462

289,396

301,886

3,267,846

3,251,448

354,484

382,803

COMMERCIAL WIRES

Received
In Code
In Clear
Dispatched
In Code
In Clear
MAIL HANDLED
Number of Pieces Received
Number of Pieces Dispatched, Mail and
Express

TELEGRAMS PROCESSED

Chicago
©

MAIL HANDLED

Detroit
THOUSANDS

Chicago
THOUSANDS

100

Detroit
THOUSANDS

MILLIONS

400

200

2
0

40
20

1947

1948

1946
1

received

1946

1946 1947 1948
Telegrams
dispatched

1947

1948

Pieces of mail
received

1946

1947

1948

dispatched

GENERAL BANK ACTIVITIES

PERSONNEL
tion of education and welfare programs, and the maintenance
of a medical department and an employees' cafeteria.

All general personnel activities of the Bank are handled by a
central personnel unit. Such work includes the hiring of employees, the keeping of salary and personnel records, the promo-

GENERAL SUMMARY
The number of employees increased at Chicago and
declined at Detroit during 1948, and both offices had
lower personnel turnovers during the period. One hundred and ninety Head Office employees have been with
the Bank twenty-five years or more.
At the close of the year, approximately 11 % of Chicago's personnel consisted of students about to graduate
from local high schools and former service men attending schools under government educational programs.
These employees are, of course, carried on a part-time
basis.

The Bank's Job Evaluation Plan was further developed during the year, provision being made for
annual merit ratings and employee interviews.
Permissive legislation with respect to Saturday closing
of banks was passed by the Michigan legislature and
became effective August 21, 1948. In conjunction with
other local Clearing House Association banks, the
Detroit Branch closed to the public on Saturdays beginning that date.

STATEMENT OF OPERATIONS
DETROIT BRANCH

CHICAGO
1948

1947

1948

1947

2,448
823
748

2,373
700
837

372
101

413
117

140

300

936
36,995

884
32,327

117
3,434

110

2,759

829,020
10,714

737,313
10,376

69,844

69,008

1,997

1,813

249

229

NUMBER OF EMPLOYEES
As of December 31
New Employees
Separations
MEDICAL
Physical Examinations
Requests for Medical Care
CAFETERIA
Number of Meals Served—
Cafeteria
Officer's Dining Room
Daily Average Number of Meals Served
Cafeteria—Noon Only

THOUSANDS

NUMBER OF EMPLOYEES
H N RD
UDES
Detroit
Chicago
6
4
2
0

1944 1945 1946 1947 1948

Number of
Employees as
of Dec. 31
0

New Employees Hired

1944 1945 1946 1941 1948

GENERAL BANK ACTIVITIES

PROCUREMENT
The central procurement units of the Bank handle the purchasing of all equipment and supplies, the storage of supplies, and

the maintenance of a printshop, an addressing division, and an
office machine repair shop.

GENERAL SUMMARY
The number of purchase orders written by the
Chicago Purchasing Department for building supplies,
office supplies, printing, stationery, and equipment increased from 8006 in 1947 to 8228 in 1948 while
orders written by the Detroit Branch declined from 2613
in 1947 to 2401 in 1948. The additional Chicago
activity in 1948 was further evidenced by an increase in
dollar value of orders written from about $685,000 in
1947 to about $887,000 in 1948.
A heavier volume of work was handled by the Chi-

cago printshop as indicated by 5949 jobs processed in
1948 as compared to 3595 jobs processed the previous
year. The number of jobs processed by the Detroit
Branch printshop declined somewhat.
In order to maintain the Bank's office machines in
efficient operating condition the Chicago machine repair
shop made over 14,800 service calls during 1948, an
increase of 1100 over 1947. The Detroit Branch's machine service calls dropped about 1700 from the 1947
figures to approximately 8100 in 1948.

STATEMENT OF OPERATIONS
CHICAGO
PURCHASING

DETROIT BRANCH

1948

Purchase Orders

1947

8,228

PRINTING

Impressions

Jobs

323
271
1,672
268
3,415

44,000
160,000
13,019,000
2,068,000
48,000

5,949

15,339,000

Jobs

Impressions

453
555
1,157
311
1,119

96,000
397,000
9,708,000
1,385,000
46,000

—
410
215
—
339

—
167,000
719,000
—
9,000

—
563
135
—
518

—
211,000
351,000
—
3,000

3,595

11,632,000

964

895,000

1,216

565,000

Chicago

1944
34

1945

2,613

Impressions

PURCHASE ORDERS ISSUED
THOUSANDS

1947

2,401

8,006

Jobs

Duplicating
Mimeograph
Multilith
Multigraph
Photostat

1948

1946

1947

1948

Jobs

Impressions

GENERAL BANK ACTIVITIES

MAINTENANCE OF BUILDING
The operation of the Bank's main building and auxiliary space
is handled by a general maintenance staff. This work includes

routine duties, such as janitor service and elevator service, as
well as major alterations and upkeep.

GENERAL SUMMARY
Bond Department sections occupying 50,000 square
feet in the Insurance Exchange Building were returned
to this building on the 8th and 9th floors in May, 1948,
with the withdrawal of our tenants, Marsh & McLennan,
from that space on May 1, 1948. Withheld Tax and
War Bond Custody operations conducted in 11,000
square feet in the 120 South LaSalle Building were
returned to this building on May 8, 1948, and assigned
vault space and other quarters on. the second and tenth
floors. Because of increased storage requirements and
the absorption of space previously used for storage in
this building, 11,820 square feet were rented as a warehouse in the 900 North Franklin Building as of August
1, 1948, for a term of five years and nine months.
During the year the enlarging of our truck concourse
and construction of a new directors' room on the 5th
floor were completed. Conversion of building light and
power from direct to alternating current and elevator
modernization contracted for in 1947 are now well under
way. The alternating current change-over is about onehalf completed and the elevator installation modernization about one-third. Both are expected to be completed
in the latter half of 1949.
A contract was let for air conditioning the 8th, 9th,
10th, and 13th floors which will see the building one
hundred per cent air conditioned except for two lightly
populated service floors. The completion of this work
is promised in time for the 1949 cooling season.
An installation of under-floor electric ducts has been
undertaken on part of the 10th and all of the 11th and

12th floors to meet the need of the Check Department
for flexibility in location of power outlets for electrically operated office machines; this to be followed by
afloor covering of rubber tile. Deterioration of the 10th
and 11th floors required removal of the maple top floor
and wooden subfloor which were replaced by concrete
and should last the life of the building. The wood in
the 12th floor being in better condition, it was necessary
at this time only to install the under-floor ducts and
rubber tile. The whole program, involving 42,000
square feet, is complete except for an area of 4500
square feet on the 12th floor.
Acoustical tile was applied to the ceilings and in
some cases part of the side walls in all of the first and
second basements, to the balance of the 14thfloor already
partly treated, and to the 8th floor in certain noisy spots
where IBM machines are operating.
Incandescent lighting fixtures of an improved design
were installed on the entire 14th floor, and we have
scheduled such treatment for the whole 12th floor, of
which more than half had been completed by year-end.
Other such operations under way include new police
alarms, fire prevention sprinkler systems and alarms for
air conditioning fan rooms, complete redecoration of
the 11th floor, to be followed by the same treatment for
the 12th floor, and steel plates—some already installed
and some on order—for the floors of the coin and currency sections in the first floor, first and third basements
where heavy hand truck loads have caused rapid deterioration of standard floors.

GENERAL BANK ACTIVITIES

LEGAL
Legal matters arising in the course of this Bank's operations
(litigation, preparation and approval of documents, preparation

of opinions and memoranda relating to Federal and State regulations and laws) are handled by the legal department.

GENERAL SUMMARY
The Legal Department consists of the General Counsel and an Assistant Counsel.
During the latter part of the year the Assistant Counsel serving the Detroit Branch and
the Assistant General Counsel at the head office left the Bank for other connections.
The General Counsel was selected and is acting as legal and technical advisor to
Governor Evans, hearing officer in the proceeding under the Clayton Act instituted by
the Board of Governors against Transamerica Corporation. The General Counsel is
counsel for the Chairman of the System Insurance Committee, and also during the
year served on four System special committees or subcommittees.
The legal matters handled by the department included conferences with and
advice to officers and supervisors of various operating departments; examination for
approval of all applications for membership in the Federal Reserve System, applications of national banks to exercise fiduciary powers and all documents evidencing
changes in the corporate status of state member banks; correspondence and conferences with representatives of member banks and state banking associations concerning
banking laws, regulations and rulings of the Board of Governors; consultations and
correspondence with the Board of Governors and its staff; and examination of court
orders relating to the special custody of securities.

FEDERAL RESERVE BANK OF CHICAGO

STATEMENT OF EARNINGS. EXPENSES. AND DISPOSITION OF NET EARNINGS
NOVEMBER 16, 1914 (Date of Incorporation) TO DECEMBER 31, 1948

EARNINGS AND EXPENSES

YEAR
1914-15
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
Totals

CURRENT
EARNINGS

CURRENT
EXPENSES

CURRENT
NET
EARNINGS

268,885
665,937
2,083,164
8,481,747
12,012,078
30,303,218
20,382,170
6,748,863
6,511,359
5,202,169
5,424,663
6,567,043
6,167,352
8,936,418
9,889,451
4,834,153
4,143,601
5,613,671
6,764,554
8,152,371
6,177,615
4,423,476
4,575,583
3,954,026
4,254,602
4,831,217
5,089,095
6,590,508
8,738,325
14,204,919
20,076,761
21,235,190
21,318,967
43,407,727

$328,030,878

245,584
237,731
584,069
1,478,310
2,450,244
4,164,176
4,734,100
4,080,057
4,373,024
3,946,436
3,744,039
3,824,437
3,887,058
3,696,679
4,092,369
3,805,117
3,524,401
3,432,693
3,854,009
3,551,838
3,697,540
3,453,380
3,199,558
3,318,002
3,316,352
3,471,164
4,227,534
5,177,403
5,850,233
6,757,377.
6,551,011
7,789,344
8,843,097
10,843,513

$140,201,879

23,301
428,206
1,499,095
7,003,437
9,561,834
26,139,042
15,648,070
2,668,806
2,138,335
1,255,733
1,680,624
2,742,606
2,280,294
5,239,739
5,797,082
1,029,036
619,200
2,180,978
2,910,545
4,600,533
2,480,075
970,096
1,376,025
636,024
938,250
1,360,053
861,561
1,413,105
2,888,092
7,447,542
13,525,750
13,445,846
12,475,870
32,564,214

$187,828,999

DISPOSITION OF NET EARNINGS

ADDITIONS DEDUCTIONS
TO
FROM
CURRENT NET CURRENT NET
EARNINGS
EARNINGS

—
—

2,127
—
—

69,307
4,826
572,019
41,903
27,857
12,646
13,098
13,061
11,833
8,050
298,510
263,967
874,264
373,245
1,611,990
951,304
1,526,060
811,188
1,637,141
521,313
1,530,021
163,061
386,898
4,137,334
383,895
422,552
243,136
447,858
1,115,619
$18,476,083

3,210
25,000
269,343
198,356
985,630
332,600
1,147,779
1,835,610
1,001,883
374,467
571,997
501,781
365,710
488,143
380,467
273,218
273,272
812,517
1,493,297
4,808,032
2,660,159
1,563,978
499,607
1,182,207
476,646
282,100
157
602,842
1,266,073

TRANSFERRED TO SURPLUS
NET
EARNINGS

517,991
328,214
154,505
5,961,421

20,091
403,206
1,231,879
6,805,081
8,576,204
25,875,749
14,505,117
1,405,215
1,178,355
909,123
1,121,273
2,253,923
1,927,645
4,763,429
5,424,665
1,054,328
609,895
2,242,725
1,790,493
1,404,491
71,220
932,178
1,687,606
1,090,958
982,917
2,607,974
1,024,465
1,197,161
5,759,353
7,831,437
13,430,311
13,360,768
12,769,223
27,718,412

$31,638,212

$174,666,870

—

DIVIDENDS
PAID
$

361,319
862,259
604,635
700,807
792,769
853,785
876,203
904,371
909,123
934,016
985,959
1,029,990
1,099,761
1,170,363
1,211,418
1,170,633
1,029,933
858,127
761,334
753,583
725,553
763,115
791,007
819,532
826,919
896,766
955,508
993,684
1,115,422
1,215,381
1,311,792
1,380,234
1,472,491
$31,137,792

ADJUSTMENTS
F. D. I. C. Stock
1934 — Purchase
1947 — Retirement (proceeds to Treasury)
Payments from U. S. Treasury, Section 13b loans, Years 1934 and 1935
Transferred from Surplus to Reserves for Contingencies, Years 1940, 1942, and 1943
Transferred to Surplus (Section 7) from Reserves for Contingencies, Year 1945
Totals

SECTION 7
$

—

SECTION 13b

—

SECTION
13b
$

—

215,799

INTEREST ON
F. R. NOTES
OUTSTANDING
$

—

BALANCE

—

—
—
—

—

20,091
41,887
61,978

—

10,394,480
11,576,009
1,186,301
246,586

—

TO
PROFIT
& LOSS

OTHER
TRANSFERS

—

— '

—

—.

—
—

—

602,838

—

1,091,513

—

26,322

—

17,637
28,354
28,354
20,714
5,120
10,924
27,215
4,021
50
5,713
2,516

—

153,241
883,370
279,031
158,265
1,770,131
100,484
237,632
4,765,619
6,710,302
12,212,414
12,048,976
1,139,227
2,624,684
$84,182,254

FRANCHISE
TAX
$

—

215,799
6,200,446
7,875,397
14,688,500
2,075,323
— 657,289
27,398
187,257
1,267,964
897,655
3,663,668
3,651,464
— 157,090
— 560,738
121,279
932,366
669,479

—

PAID U. S. TREASURY

—

25,030
12,767
206

—
$

11,681

—
—
—

—

427

—
$25,313,526

—

10,249,335
23,621,237

151,045

$33,870,572

—

—
—

—

—
—

—

—19,748,517
19,748,517
1,417,702
— 3,207,763
7,615,843
$31,137,792

$68,841,817

$ 1,429,383

$25,313,526

151,045

$33,870,572

$19,748,517

ORGANIZATION CHART-BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Exercises Powers Prescribed in the
Federal Reserve Act and Related Legislation
CHAIRMAN
Active Executive Officer of the Board

VICE CHAIRMAN
Acts In Absence of Chairman

SECRETARY
Serves as Chief Administrative Officer of the
Board in i t s r e l a t i o n s with the divisions of i t s
staff and with the Federal Reserve Banks, and as
A s s i s t a n t Secretary of the Federal Open Market
Committee. Performs other d u t i e s assigned to
him by the Chairman or t h e Board.
Exercises
g e n e r a l s u p e r v i s i o n over a c t i v i t i e s of t h e
S e c r e t a r y ' s Office.

DIVISION OF
RESEARCH AND STATISTICS

LEGAL DIVISION
Advises and a s s i s t s the Board with r e s p e c t t o
l e g a l m a t t e r s a r i s i n g in t h e conduct of i t s
business.
Prepares regulations, rulings,
o r d e r s , o p i n i o n s , and correspondence or other
documents of a legal or s e m i - l e g a l c h a r a c t e r .
Handles l i t i g a t i o n involving the Board and the
conduct of hearings before the Board; and cons u l t s with and r e n d e r s a s s i s t a n c e to Federal
Reserve Bank counsel in connection with l i t i g a t i o n involving Federal Reserve Banks. Prepares d r a f t s of proposed amendments to the law,
analyzes and keeps the Board informed with res p e c t t o pending l e g i s l a t i o n on banking and
r e l a t e d s u b j e c t s , prepares material for Board's
Loose Leaf Service, and prepares compilations of
laws r e l a t i n g to the Federal Reserve System and
d i g e s t s of S t a t e laws on c e r t a i n banking subjects.

Keeps Board informed of developments in industry, commerce, a g r i c u l t u r e , and finance with
a view to formulation of c r e d i t and monetary
p o l i c y . P r e p a r e s s t a t i s t i c s and c h a r t s and
currently i n t e r p r e t s developments in production
and d i s t r i b u t i o n of commodities, employment,
income, e x p e n d i t u r e s , s a v i n g s , and the course
of p r i c e s , as well as in b a n k i n g , consumer
c r e d i t , capital markets, and i n t e r n a t i o n a l balance of payments. Makes s p e c i a l s t u d i e s of
f i s c a l and l a b o r problems from the monetary
point of view. Also keeps the Board advised of
p r i n c i p a l f i n a n c i a l and economic developments
abroad with p a r t i c u l a r reference to the i n t e r national financial p o l i c i e s of the U. S. Government. Works with research departments of Fede r a l Reserve Banks on s i m i l a r problems. Has
responsibility for most of the contents of the
Federal Reserve Bulletin and the Board's Annual
Report.
Has c h a r g e of t h e B o a r d ' s g e n e r a l library.

DIVISION OF
PERSONNEL ADMINISTRATION
Handles matters pertaining to personnel, salary
a d m i n i s t r a t i o n , and appointment of d i r e c t o r s of
t h e F e d e r a l R e s e r v e Banks.
Serves as the Board's central personnel unit for
r e c r u i t m e n t , i n v e s t i g a t i o n , and c l a s s i f i c a t i o n
of p e r s o n n e l , as well as the general administ r a t i o n of personnel p o l i c i e s . Maintains p e r sonnel and leave r e c o r d s , handles r e t i r e m e n t
m a t t e r s , and s u p e r v i s e s the emergency medical
room.

OFFICE OF THE SECRETARY
Clears and conducts o f f i c i a l correspondence of
the Board. Prepares minutes covering the
proceedings
taken by, the Board and the Federal Open Market
Committee. Maintains docket of matters awaiting
a c t i o n by the Board and e x e r c i s e s s u p e r v i s i o n
over the o f f i c i a l records of the Board, Gives
s p e c i a l a t t e n t i o n t o general c o r r e s p o n d e n c e
from the public including particularly requests
for information on economic, monetary and banking q u e s t i o n s .

DIVISION OF EXAMINATIONS

DIVISION OF BANK OPERATIONS

(I) Examines the Federal Reserve Banks. Reviews
bank examinatione candd supervisory aacct ti ivoi nise s of the
t
of, and a r o r of p o l i c y
Reserve Banks, and p a r t i c i p a t e s in conferences, to
further coordination of p o l i c i e s and p r a c t i c e s . Reviews the a c t i v i t i e s of the auditing departments of
the Reserve Banks and p a r t i c i p a t e s in conferences
of auditors. (2) Analyzes, and prepares reports
with recommendations to the Board on, applications
and data regarding (a) State banks for membership
in the Federal Reserve System, (b) consolidations,
mergers, out-of-town branches, e t c . , involving State
member banks, (c) holding company a f f i l i a t e s for
voting permits, (d) national banks for t r u s t powers,
and (e) certain other grants of a u t h o r i t y . Reviews reports of examination of State member banks
and reports of examination of, and annual reports
submitted by, holding company a f f i l i a t e s .
(3) Exam ines corporations organized under section 25(a)
of Federal Reserve Act, and, when directed by the
Board, c o r p o r a t i o n s operating under agreements
with the Board made in accordance with section 25
of the Act. (4) Follows developments in banking
p o l i c i e s and p r a c t i c e s , advises the Board regarding
supervisory p o l i c i e s and procedures, and maintains
l i a i s o n with other Federal supervisory agencies r e garding individual banks and general banking matters.

Handles matters coming before the Board r e l a t i n g
t o the c o n d i t i o n , o p e r a t i o n s , and earnings and
expenses of Federal Reserve Banks, t o condition
and e a r n i n g s and expense r e p o r t s of member
banks, and to the banking s t r u c t u r e g e n e r a l l y .
Maintains a record of changes in the s t a t u s of
a l l banks and branches in t h e United S t a t e s ,
including bank groups and chains, and compiles
related data.
Issues the Par L i s t .
Operates
I n t e r d i s t r i c t Settlement Fund. Prepares p r o duction schedules for p r i n t i n g Federal Reserve
n o t e s , and s u p e r v i s e s d i s t r i b u t i o n of paper
currency among Federal Reserve Banks. Superv i s e s Reserve Bank budgetary p r o c e d u r e ; r e ceives and analyzes annual Reserve Bank budget
statements and makes r e p o r t s thereon t o Board;
follows up budgetary matters with Reserve Banks.
Makes f i e l d surveys of o p e r a t i o n s of Federal
Reserve Banks with principal reference t o opera t i n g c o s t s . P r e p a r e s s c h e d u l e s determining
p e r i o d i c r e a l l o c a t i o n of s e c u r i t i e s in t h e
System Open Market Account. Handles m a t t e r s
r e l a t i n g t o loans g u a r a n t e e d by the Federal
Reserve Banks. Maintains records r e l a t i n g t o
discount r a t e s , bank premises, and fiscal agency
and o t h e r o p e r a t i o n s of t h e Federal Reserve
Banks.

DIVISION OF
ADMINISTRATIVE SERVICES
Serves as central budgetary, procurement, duplic a t i n g , c o m m u n i c a t i o n s , s p a c e c o n t r o l , and
service unit of Board. Prepares master budget.
C o l l e c t s funds r e c e i v a b l e , makes a u t h o r i z e d
disbursements, and maintains Board's books of
account. Prepares pay r o l l s and keeps r e l a t e d
records.
Audits o p e r a t i o n s of c a f e t e r i a and
concessions.
D i s t r i b u t e s Board p u b l i c a t i o n s
on a paid, exchange or complimentary b a s i s and
handles correspondence r e l a t i n g t h e r e t o .
Proofreads and p r e p a r e s p r i n t e r ' s copy of
m a t e r i a l for Federal Reserve B u l l e t i n , e t c .
Purchases, s t o r e s and d i s t r i b u t e s s u p p l i e s and
e q u i p m e n t ; and awards c o n t r a c t s for s p e c i a l
s e r v i c e s . Performs offset p r i n t i n g , p h o t o s t a t ,
mimeograph and addressograph work; m a i n t a i n s
mailing l i s t s ; r e c e i v e s , d i s t r i b u t e s and d i s patches a l l mail. Operates c a f e t e r i a , p r i v a t e
d i n i n g rooms and snack b a r ; IBM e q u i p m e n t ;
telegraph switching c e n t e r ; telephone switchboard; main terminal of pneumatic tube system;
p a s s e n g e r a u t o m o b i l e s and d e l i v e r y s e r v i c e ;
i n t e r - d i v i s i o n page s e r v i c e ; and special stenographic and messenger s e r v i c e . Also o p e r a t e s
and m a i n t a i n s B o a r d ' s b u i l d i n g and grounds,
i n c l u d i n g a l l mechanical equipment, such as
elevators, air conditioning , etc.

FEDERAL RESERVE BANK OF CHICAGO

COMPARATIVE STATEMENT OF EARNINGS AND EXPENSES
YEAR ENDED DECEMBER 31, 1948, AND YEAR ENDED DECEMBER 31, 1947

1948
EARNINGS

1947

$43,407,726.69

$21,318,967.85

9,407,419.49

7,752,397.70

Assessment for Board of Governors

442,736.46

358,627.98

Cost of Federal Reserve Currency

993,356.72

732,071.56

Total Net Expenses

$10,843,512.67

$ 8,843,097.24

Current Net Earnings

$32,564,214.02

$12,475,870.61

EXPENSES:

Operating Expenses

ADDITIONS TO CURRENT NET EARNINGS:

Profit on Sales of U. S. Government Securities

826,315.07

Other Additions

289,304.22

340,408.87
107,449.05

Total Additions to Current Net Earnings

$1,115,619-29

447,857.92

Total Current Net Earnings and Additions to Current Net
Earnings

$33,679,833.31

$12,923,728.53

DEDUCTIONS FROM CURRENT NET EARNINGS:

Total Deductions from Current Net Earnings
Total Net Earnings

337,420.86

$33,342,412.45

Transferred to Reserves for Contingencies

5,624,000.00

Paid United States Treasury (Section 13b)

—

Paid United States Treasury (Interest on Federal Reserve Notes)

154,505.16

$12,769,223.37
—
426.82
10,249,335.31

$ 4,097,175.47

$ 2,519,461.24

1,472,491.62

1,380,233.78

$ 2,624,683.85

Net Earnings After Reserves and Payments to United States Treasury . . .

23,621,236.98

$ 1,139,227.46

Dividends Paid
Transferred to Surplus (Section 7)

FEDERAL RESERVE BANK OF CHICAGO

SURPLUS ACCOUNT (SECTION 7)
YEAR ENDED DECEMBER 31, 1948, AND YEAR ENDED DECEMBER 31, 1947

SURPLUS JANUARY 1

$66,217,133.72

TRANSFERRED TO SURPLUS — As ABOVE
SURPLUS DECEMBER

$65,077,906.26

2,624,683.85

1,139,227.46

$68,841,817,57

$66,217,133.72
39

FEDERAL RESERVE BANK OF CHICAGO

COMPARATIVE STATEMENT OF CONDITION
DECEMBER 31, 1948, AND DECEMBER 31, 1947

A S S E T S

Dec. 31, 1948
$4,371,527,751.76

$4,182,995,550.98

106,421,425.00

90,073,683.08

40,332,361.59

42,325,966.94

$4,518,281,538.35

$4,315,395,201.00

28,157,000.00

GOLD CERTIFICATES O N HAND AND DUE FROM U . S. TREASURY

Dec. 31, 1947

7,056,600.00

REDEMPTION FUND—FEDERAL RESERVE NOTES
OTHER CASH

Total Cash
BILLS DISCOUNTED

Total Bills

U. S. GOVERNMENT SECURITIES

28,157,000.00

7,056,600.00

3,332,925,000.00
$3,361,082,000.00

$3,092,460,600.00

3,191,169.34

3,063,507.26

22,147,000.00

22,440,500.00

464,343,991.35

464,387,652.61

21,189,287.87

16,005,592.50

$8,390,234,986.91

$7,913,753,053.37

$4,598,426,295.00

$4,636,568,155.00

3,121,361,725.57

2,655,848,626.09

114,068,871.17

101,887,281.36

97,380,822.83

50,467,947.38

$3,332,811,419.57

$2,808,203,854.83

353,456,394.26

372,809,057.01

1,752,251.75

2,336,935.09

$8,286,446,360.58

Total Bills and Securities

3,085,404,000.00

$7,819,918,001.93

BANK PREMISES
FEDERAL RESERVE NOTES OF OTHER BANKS
UNCOLLECTED ITEMS
OTHER ASSETS

Total Assets

LIABILITIES
FEDERAL RESERVE NOTES IN ACTUAL CIRCULATION
DEPOSITS:

Member Bank —Reserve Account
U. S. Treasurer — General Account

Other Deposits
Total Deposits
DEFERRED AVAILABILITY ITEMS
OTHER LIABILITIES

Total Liabilities

CAPITAL
CAPITAL PAID IN
SURPLUS

(Section 7)

SURPLUS

(Section 13b)

OTHER CAPITAL ACCOUNTS

Total Liabilities and Capital Accounts

ACCOUNTS

25,479,500.00

23,826,650.00

68,841,817.57

66,217,133.72

1,429,383.78

8,037,924.98

2,361,883.94

$8,390,234,986.91

$7,913,753,053.37

DIRECTORS AND OFFICERS
DIRECTORS
FRANKLIN J. LUNDING, President
Jewel Tea Co., Inc.
Barrington, Illinois
Deputy Chairman
WALTER J. CUMMINGS, Chairman
Continental Illinois National Bank
and Trust Company of Chicago
Chicago, Illinois

PAUL G. HOFFMAN, Administrator
Economic Cooperation Administration
Washington, D. C.

HORACE S. FRENCH, President

VIVIAN W. JOHNSON, President

The Manufacturers National Bank of Chicago

First National Bank

Chicago, Illinois

Cedar Falls, Iowa

WILLIAM J. GREDE, President
Grede Foundries, Inc.
Milwaukee, Wisconsin

ALLAN B. KLINE, President

WILLIAM C. HEATH, President

NICHOLAS H. NOYES, Chairman, Finance Committee

American Farm Bureau Federation
Chicago, Illinois

A. O. Smith Corporation

Eli Lilly and Company

Milwaukee, Wisconsin

Indianapolis, Indiana

OFFICERS

C. S. YOUNG, President
O. J. NETTERSTROM, Vice President

C. B. DUNN, First Vice President
N. B. DAWES, Vice President
W. R. DIERCKS, Vice President

A. L. OLSON, Vice President
A. T. SIHLER, Vice President

E. C. HARRIS, Vice President

W. W. TURNER, Vice President

J. K. LANGUM, Vice President

A. M. BLACK, Cashier

L. H. JONES, Assistant Vice President
M. A. LIES, Assistant Vice President

L. G. MEYER, Assistant Vice President
F. L. PURRINGTON, Assistant Vice President

F. A. LINDSTEN, Assistant Vice President

H. F. WILSON, Assistant Vice President

W. B. GARVER, Senior Economist

G. W. MITCHELL, Senior Economist

W. E. HOADLEY, Jr., Senior Economist

C. P. VAN ZANTE, Chief

E. D. BRISTOW, Assistant Cashier

C. T. LAIBLY, Assistant Cashier

P. C. CARROLL, Assistant Cashier

H. J. NEWMAN, Assistant Cashier
I. J. PETERSEN, Assistant Cashier
C. M. SALTNES, Assistant Cashier

E. A. HEATH, Assistant Cashier
W. A. HOPKINS, Assistant Cashier

Examiner

R. A. SWANEY, Assistant Cashier

P. C. HODGE, General Counsel

J. J. ENDRES, Auditor

O. C. BARTON, Assistant Counsel

A. M. GUSTAVSON, Assistant Auditor
Continued on Next Page

DIRECTORS AND OFFICERS
(CONTINUED)

MEMBER OF FEDERAL ADVISORY COUNCIL
EDWARD E. BROWN, Chairman of the Board
The First National Bank of Chicago
Chicago, Illinois

MEMBERS OF INDUSTRIAL ADVISORY COMMITTEE
EDWARD J. DOYLE, President

EDWARD M. KERWIN, Vice President

Commonwealth Edison Co.

E. J. Brach and Sons

Chicago, Illinois

WALTER HARNISCHFEGER, President

G. BARRET MOXLEY, President

Harnischfeger Corporation

Kiefer-Stewart Company

Milwaukee, Wisconsin

Indianapolis, Indiana
JAMES L. PALMER, Executive Vice President
Marshall Field & Company
Chicago, Illinois

DETROIT BRANCH

DIRECTORS
CHARLES T. FISHER, JR., President
National Bank of Detroit
Detroit, Michigan

CHARLES A. KANTER, President
The Manufacturers National Bank of Detroit
Detroit, Michigan

ERNEST GILBERT, Farmer

BEN R. MARSH, Vice President & General Manager

Waldron, Michigan

Michigan Bell Telephone Company
Detroit, Michigan
JOHN A. STEWART, Vice President and Cashier
Second National Bank and Trust Company
Saginaw, Michigan

OFFICERS
E. C. HARRIS, Vice President

H. L. DIEHL, Cashier

H. J. CHALFONT, Manager

R. W. BLOOMFIELD, Assistant Cashier
A. J. WIEGANDT, Assistant Cashier

Full text of Annual Report of the Federal Reserve Bank of Chicago : President's Annual Report to Member Banks : Activities for the Year 1948

FRASER