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FEDERAL RESERVE

BANK OF CHICAGO

PRESIDENT’S ANNU AL REPORT
TO MEMBER BANKS
OF THE SEVENTH
FEDERAL RESERVE D IST RI CT

ACTIVITIES

FOR THE

YEAR

1949

Federal Reserve Bank of Chicago

January 26, 1950

To the Member Banks of the Seventh
Federal Reserve District:
You w ill find in the following pages a
brief description of the services performed by
the Federal Reserve Bank of Chicago for the banks
of the Seventh Federal Reserve District, as well as
for the Government and the general public, during
1949. The operations of our Government Bond
Department, which issues, services, and redeems
Government securities, are described in some
detail.
To this record I would like to add one
important fact that cannot be expressed in a chart,
or a graph, or a tabulation: during 1949 we con­
tinued to enjoy from our Member Banks a whole­
hearted cooperation which alone made the handling
of these volumes of work possible. For that support,
I would like to extend the warmest thanks of myself
and our entire organization.
Very truly yours,
President

7

TABLE OF CONTENTS
Economic Summary...............................................................................................
Federal Open Market Committee.........................................................................
Government Bond Department.............................................................................
Departmental Activities
Services to Treasury Department
Issuance of Government Securities.......................................................
Servicing of Government Securities.......................................................
Redemption of Government Securities.................................................
Collection of Withheld Taxes...............................................................
Services to Member Banks
Discounts and Other Credits.................................................................
Currency and Coin.................................................................................
Collection of Checks and Other Items................................................
Safekeeping of Securities.......................................................................
Investments.............................................................................................
Economic Research...............................................................................
Examination of Banks...........................................................................
Bank and Public Relations.....................................................................
Reconstruction Finance Corporation.............................................................
General Bank Activities
Accounting.............................................................................................
Wires, Telephone, Mail, Files...............................................................
Personnel ...............................................................................................
Procurement...........................................................................................
Building Operations.............................................................................
Legal.......................................................................................................
Statement of Condition.........................................................................................
Statement of Earnings and Expenses.....................................................................
Earnings liisto ry ...................................................................................................
Directors and Officers.............................................................................................
Board of Governors Organization Chart...............................................................

1
6
8
13
14
15
16
17
18
20
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
38
40

SEVENTH DISTRICT ECONOMIC SUMMARY FOR 1949
Business Slide Halted

Reflecting the basic strength of the District’s postwar economy, general business activity
in 1949 as a whole declined only slightly from the peak year of 1948. Unlike previous post­
war years, however, 1949 was characterized by a fairly marked dip during the first half and a
recovery during the last six months.
The dominant aspect of the minor recession and subsequent rise was the change in in­
ventory buying. Excessive caution in business purchases early in the year resulted in cutbacks
in employment and production for many lines. However, consumer expenditures declined less
than manufacturing output and it became evident by the middle of the year that inventory
buying policies had been unduly restrictive. The resurgence of orders beginning about July
was primarily responsible for the advances registered during the second half of the year.
High and rising levels of government expenditures—state and local, as well as Federal
—provided strong support to general levels of business during the year. Increased expendi­
tures for public construction, for instance, to a considerable extent offset the year’s declines
in business expenditures for plant and equipment.
Strikes in steel and coal during October affected economic activity adversely, particu­
larly in the Seventh District, but recovery during November and December was rapid. In
general, however, labor strife was less widespread than in the earlier postwar period.
Industrial Output Lower

Manufacturing production in the Seventh District during 1949 dropped somewhat more
than the eight per cent decline for the nation as a whole because of the greater relative im­
portance of durable goods in this area. However, factory output averaged roughly 75 per cent
above the prewar level. During the final half of the year a distinct recovery from the low
points of June and July was evident despite the handicaps of major work stoppages later
in the year.
Although the year’s volume of production in many types of manufacturing important
to the District was below the record 1948 levels, a few industries established new output
records. Less iron and steel, industrial and farm machinery, furniture, home appliances, and
petroleum products were produced. On the other hand, over six million cars and trucks were
turned out—an increase of about 20 per cent over 1948 to an all-time high record—and
approximately two and one-half million television sets were produced as that industry moved
into truly large-scale production.
Continuing a trend which began in the fourth quarter of 1948, District employment in
manufacturing industries declined steadily until June of 1949- The moderate upturn which
began in July was interrupted by the coal and steel strikes which in turn had secondary effects
later in the year extending to automobiles and other steel-using industries. Employment in
nonmanufacturing industries followed chiefly seasonal trends but remained at relatively the
1

same level as the previous year, with the result that total employment averaged only two
per cent under 1948.
Plant and equipment expenditures by business dropped off substantially after the first
quarter of last year as many industries gradually attained adequate capacity to meet the post­
war levels of demand. An increasing proportion of new capital outlays was for the purpose
of modernization or improvement rather than expansion. Toward the end of 1949 few new
major projects for expansion were contemplated except in the utility fields.
Seventh District housing starts increased significantly during the latter half of 1949 and
at a greater rate than the increase for the nation as a whole. This is in contrast to previous
postwar years in which housing activities lagged behind national developments. Single family
units continued to dominate the field, but a markedly higher number of apartment units were
started than in the previous year. Mortgage funds became more freely available as the year
progressed, partly as a result of the more liberalized mortgage buying program of the Fed­
eral National Mortgage Association. Greater availability of capital funds generally and a
somewhat greater confidence regarding long-run real estate values also contributed to the
increased mortgage funds. The market for newly finished homes continued strong as the
year ended.
Income and Consumer Expenditures Steady

Declining moderately in each quarter of 1949, aggregate personal income in the fourth
quarter reached a level about three per cent below that of October-December 1948, the post­
war peak. The gradual decline during 1949 contrasts with an upward movement of income
during the previous year so that total payments to individuals were only slightly less than
in 1948. Moreover, because of declines in individual income tax rates, it is probable that
1949 disposable income exceeded that of 1948 by a small margin.
Wage and salary payments, the largest component of personal income, appear to have
been about equal to those of 1948, as effects of the third-round wage increase and subse­
quent salary raises offset the moderate decline in employment and average hours worked.
Proprietors’ income, however, declined about ten per cent during the year, owing to substan­
tial reductions in net farm income and some narrowing of merchants’ profit margins. Divi­
dend and interest payments increased moderately during the year. However, unemployment
compensation advanced sharply in response to slackened industrial activity.
Maintenance of total retail sales at near 1948 levels during the past year was marked
by substantially increased price consciousness and buying selectivity on the part of consumers.
Despite small but widespread price declines, retail sales dropped only two to three per cent
from 1948 levels, indicating that physical sales volume probably exceeded that of 1948 by
a small margin. Moreover, increases in service expenditures and purchases of new houses
tended to offset this decline in retail sales, with the result that total consumer expenditures
appear to have virtually equaled those of 1948.
2

Sales of automobiles and television increased sharply to new highs during the year, while
sales of foods and food products about equaled those of 1948. Total Seventh District depart­
ment store sales declined approximately five per cent, however, as men’s and women s apparel,
housefurnishings, and electrical appliances displayed considerable sales weakness, especially
during the spring and early summer months. Credit sales of most types of consumers durable
goods increased substantially, largely as a result of the marked easing in consumer credit
terms which occurred after expiration of Regulation W on June 30.
Prices paid by consumers in the major Seventh District cities eased less than two per cent
during the year. Fairly substantial declines in the prices of clothing and housefurnishings,
and lesser drops in food prices were offset in part by minor increases in most other items.
Wholesale prices generally declined about six per cent during the year.
Farm Income Reduced

Although the physical volume of Seventh District farm products marketed in 1949 was
larger than in the preceding year, a 12 per cent lower average level of prices resulted in
reduced farm income. Cash receipts from marketings were off about eight per cent from
the 1948 level in the five states of the Seventh District. This was moderately less than the
10 per cent decline for the United States as a whole as increased marketings of corn and
livestock partially offset the effects of price declines.
Production costs continued at about the 1948 level with the result that net farm income
declined relatively more than gross cash receipts. Since prices of commodities purchased for
family living declined only slightly, the purchasing power of net farm income was materially
less than in the preceding year.
This did not deter farmers, however, from making large additional investments in pro­
duction facilities—soil improvements, machinery and equipment, buildings and fences and
in such living facilities as house modernization, automobiles, and household appliances. Ex­
penditure levels were maintained in some instances by drawing on past accumulations of
cash, deposits, and war savings bonds and in others by increasing debts.
Farm debts, both real estate and non-real estate, increased during 1949 but nevertheless
remained on the whole at relatively low levels. Even so, debts became burdensome in some
instances where production operations returned less than anticipated income. Expanded live­
stock feeding operations necessitated increased borrowing by many farmers.
Farm real estate prices declined inthe District as a whole, although some areas showed
moderate rises during the first half of the year and stable prices during the second half. In
the better areas farm land continued to yield attractive returns and fewer farms were offered
for sale.
Farm Production at High Levels

Crop production in the five states of the Seventh District did not equal the record high
mark set in 1948 even though the 73-3 million acres of principal crops harvested exceeded

the harvested area of a year ago by 350 thousand acres. Corn production of 1,535 million
bushels, although 10 per cent less than the record high output in 1948, was the second
largest crop on record and one-fifth larger than the 1938-47 average. Oat and soybean har­
vests were moderately smaller than in the preceding year but were at high levels relative
to other recent years. Hay production of 20.5 million tons was up about nine per cent,
although the harvested acreage was smaller than in the preceding year, but still was below
the 1938-47 average.
Corn, the most important crop in the District, encountered serious harvesting difficulties.
A severe windstorm on October 10 in part of the District, several weeks of dry weather which
caused the corn stalks to be brittle, and extensive corn borer damage which weakened stalks
and ear shanks caused exceptionally heavy dropping of ears. Favorable weather, however, per­
mitted much of the dropped corn to be saved by hand-gleaning or salvaged by livestock. The
exceptionally large inventory of corn accumulated from the 1948 and 1949 crops is a matter
of concern to many Seventh District farmers as they attempt to assess future prospects.
The large carry-over of feed grains from the 1948 harvest, together with high-level pro­
duction in 1949 encouraged expansion of livestock production, particularly hogs. Farmers in
Seventh District states raised 15 per cent more pigs in 1949 than in the preceding year, account­
ing for 46 per cent of the United States total. Cattle feeding, dairy, poultry, and egg produc­
tion were continued at high levels.
Prices of farm products, which had declined sharply in the second half of 1948, con­
tinued a gradual downward trend during 1949 and at year-end showed net declines of six per
cent for both meat animals and dairy produccts, nine per cent for feed grains, 19 per cent
for poultry and eggs, and 23 per cent for oil bearing crops.
Government price support programs were of increasing importance in the markets for
Seventh District farm products during 1949. Prices of most important crops and of dairy
products and eggs were supported in varying degrees by loan or purchase programs. Sup­
ports were available also for hogs but market prices did not fall below the support level.
Member Bank Earning Assets Increase

In sharp contrast to the 300 million dollar decline of 1948, earning assets of member
banks in the Seventh Federal Reserve District increased nearly 1,400 million dollars, or nine
per cent, during 1949. This advance, the largest in the postwar years, corresponded to the
national trend and was due almost entirely to the substantial expansion of Government secur­
ity holdings.
During 1949 District member banks expanded their Government securities portfolios by
nearly 1,200 million dollars, with the growth concentrated in the last seven months of the
year. The principal causes of the increase were three reductions in member bank reserve re­
quirements, in May, June, and August. In total, these reductions lowered reserve require­
ments for each class of bank by four percentage points. Country banks, however, acquired a
fairly small amount of additional Government securities. In general they deposited a sizeable

proportion of their freed reserves in correspondent balances, rather than investing directly;
and as a consequence central reserve city banks in this District accounted for 732 million of
the total increase in Government holdings. Almost all of the acquired Governments were in
the form of bills and certificates.
Loans outstanding for District member banks on December 28, 1949 were slightly above
year-ago levels, despite considerable variation during the year. During the first six months, total
loans for District banks declined 225 million dollars, chiefly because of the rapid contraction in
business loans experienced by central reserve city banks. A modest recovery during the fall in
loans of this category, however, plus a substantial and fairly steady rise in real estate and
"other” (largely consumer) loans, served to compensate for the first-half decline. In general,
country and the smaller reserve city banks increased loans, particularly to nonbusiness borrowers,
much more steadily and in greater magnitude than the larger banks. This tendency has been
characteristic of District banking over the last two years.
Deposits at District member banks reached 1evels at the end of 1949 moderately above
those of December 1948, after a decline of 500 million dollars in the first half of the year. All
classes of private deposits shared modestly in the advance. In addition, Government deposits in
weekly reporting banks increased substantially above year-ago figures, especially during the
last few months of the year.
Member bank earnings for the first-half of 1949 were moderately higher than for the com­
parable period of the previous year. The growth in earning assets during the last six months of
the year suggests that bank earnings for the second half will be still higher. Preliminary reports
show this to be particularly true for central reserve city banks, which after suffering an earnings
decline in early 1949 acquired large amounts of Government securities during the late summer
months.

5

FEDERAL RESERVE BANK OF CHICAGO

Participation in

SYSTEM OPEN

6

$ MILLIONS

FEDERAL OPEN MARKET COMMITTEE
The activities of the System Open Market
Account are directed by the Federal Open Market
Committee, consisting of all the members of the
Board of Governors of the Federal Reserve System
and the presidents of five out of the twelve Federal
Reserve banks. The president of the Federal Re­
serve Bank of Chicago serves on this committee in
alternate years.
To the Federal Open Market Committee is
assigned the responsibility of deciding the amount
and character of government securities to be
bought or sold in the open market, together with
the timing of such transactions with a view to the
prevention of violent fluctuations in money rates
and the maintenance of an orderly market for
government securities. The Federal Reserve banks
are required by law to co-operate in carrying out

the objectives of the Open Market Committee. The
United States government securities shown on the
December 31, 1949, 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 Dec. 31, 1949, to
$2,817,903,000 par value of securities, represent­
ing 14.92% of the total portfolio of $18,884,597,­
000. This figure is comparable with an amount of
$3,332,925,000 par value of securities held on
December 31, 1948, a decrease of $515,022,000.
In addition to the decrease in amount, the compo­
sition of our participation changed materially dur­
ing the year as will be noted from the following
analysis:

Dec. 31, 1949

Dec. 31. 1948

Increase or
Decrease

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

$— 76,710,000
+ 72,854,000
— 28,438,000
— 482,728,000

$3,332,925,000

$— 515,022,000

B ills................................
C of I’s ..........................
N otes..............................
Bonds ............................

.............
. ...

$ 720,606,000
936,404,000
83,890,000
1,077,003,000

Total ..............................

.............

$2,817,903,000

It will be evident that the activities of the Sys­
tem Open Market Account during the year 1949
resulted in the net sale of a substantial total of
government bonds, while changes in the holdings

of shorter maturities,—that is, Treasury bills, cer­
tificates of indebtedness and notes,—were minor
in amount.

7

GOVERNMENT BOND DEPARTMENT
Fiscal A gent of the United States

The act of Congress creating the Federal Reserve Sys­
tem stipulates that Federal Reserve Banks shall act as
fiscal agents of the United States. Prior to that time the
fiscal agency functions were performed by Sub-Treasuries
located in various cities, and were confined largely to the
handling of coin and currency. With a Federal debt at
that time of only about $1,000,000,000, most of which
was deposited as collateral to secure national banknote
circulation, there were obviously few services required in
connection therewith.
The tremendous increase in the public debt, resulting
principally from this country’s participation in two world
wars, imposed a large number of new fiscal agency duties
upon the Federal Reserve Banks. During the eight War
Loan Drives of the recent war, for example, about 1,500
employees (constituting about one-third of the total
number of employees of the Federal Reserve Bank in
Chicago and Detroit) were engaged in conducting the
various activities involved in the Treasury’s war financing
program. In the Chicago office alone over $24,000,000,
000 of United States securities, representing more than
50,000,000 pieces, were handled in these operations.

While peacetime activities are on a greatly reduced
scale, the services performed for the Treasury, the com­
mercial banks and the public are similar in nature to
those conducted during the war. A brief outline of these
services, which are performed both at the head office in
Chicago and at the branch in Detroit, follows:
New Issues of M arketable Treasury Securities

When the Secretary of the Treasury announces the
opening of subscription books for a new cash or exchange
offering of Treasury securities, the circulars and subscrip­
tion forms are prepared by the New Issue Division for
distribution to all banks and others in the Seventh Federal
Reserve District.
When the completed subscriptions are returned they
are processed by this division and delivery of the secu­
rities is approved. It may be of interest to note that be­
tween 10 and 14 per cent of the total amount of Treasury
offerings are purchased by banks and other investors in
the Seventh Federal Reserve District.
A pplications for Savin gs Issues

Practically all applications for Series F and G Savings
Bonds and Series D Savings Notes are received by the

miscellaneous items which bring the total interest bearing
public debt to approximately $255,000,000,000.
The Custody Division releases these securities against
subscriptions for new issues, against requisitions of Issu­
ing Agents for blank Series E Savings Bonds, for pur­
poses of denominational exchanges, for the exchange of
registered bonds into coupon bonds, for reissue of savings
bonds, and to complete telegraphic transfers of securities.
Detailed monthly reports by issues and denominations are

Federal Reserve Bank through commercial banks. These
applications are handled in the New Issue Division where
the securities are inscribed in the owner’s name and de­
livered in accord '/ice with his instructions. However,
new marketable s' .urities which are to be issued in regis­
tered form are inscribed at the Treasury Department in
Washington, D. C., where registration books are main­
tained for payment of interest and transfer of ownership.
Custody of Treasury Securities

As fiscal agents of the Treasury, Federal Reserve Banks
carry in their Custody Division a stock of all outstanding
issues of Treasury securities, and whenever a new issue is
offered for subscription a stock of all denominations of
this issue is sent to the Federal Reserve Banks and to
those branches where stocks are maintained. The Detroit
Branch of this bank maintains a full stock of all such
issues. There are presently outstanding the following
number of publicly owned Treasury securities:

made to the Treasury Department to account for the
Federal Reserve Bank’s holdings of all Treasury secu­
rities. These custodies currently aggregate approximately

$8,000,000,000.

Treasury Tax and Loan Account

(Formerly called "War Loan Account” )
When payment for newly issued securities is made by
qualified depositaries under Circular No. 92, the accounts

M arketable Securities

Number of Issues Type of Security

32
2
8
13

Treasury bonds
Treasury notes
Treasury certificates
of indebtedness
Treasury bills

Amount
outstanding
(in millions of dollars)

$104,700
8,400

29,500
12,300

Sa vin gs Securities

4
1

Savings Bonds
(Series D ,E ,F ,G ,)
Savings Notes
(Series D )

57,000

7,000
$218,900
The above figures do not include special issues (not
publicly held) of about $34,000,000,000 and several
9

missioner of the Public Debt. This privilege for many
years applied only to short term securities, but may now
be used in connection with all types of marketable Treas­
ury issues whenever a sale is involved. This activity
together with that of making denominational exchanges
is performed in the Denominational Exchange and CPD
Division.

M echanical Bookkeeping M achines used in Control unit.

and the collateral records pertaining thereto are main­
tained in the Depositary Bank Division. About 1,800
banks out of a total of 2,500 in this district are qualified
depositaries. Depositaries are periodically grouped into
two classes, A and B, depending upon the amount of
their Treasury Tax and Loan Account balances on a
specified date. The latest date for establishing such
groups was September 16, 1949, and there are currently
1,516 depositaries in Group A with total balances as of
December 31, 1949, of $41,687,000, and 313 deposi­
taries in Group B with balances on that date of $522,­
419,000. This account may also be used under the terms
of Treasury Circular No. 848 in connection with the pay­
ment of Withheld and Social Security Taxes.
"CPD Transfers" and Denom inational Exchanges

When a bank or other investor buys or sells Treasury
securities and delivery thereof is to be made in some
other Federal Reserve city, the transactions may be com­
pleted by utilizing the Leased Wire System of the Federal
Reserve Banks, the transaction being called a "CPD
transfer’’—meaning a transfer authorized by the Com­

Coupon Redemptions

Matured coupons detached from bearer issues of Treas­
ury securities and other Governmental Agencies and pre­
sented to the Coupon Redemption Division by banks or
other investors are paid either by check or by credit
to the member banks’ accounts.
Redemption of Treasury Securities

Marketable Treasury issues in either bearer or regis­
tered forms are redeemed at or after their maturity or
redemption dates in the Securities Redemption Division.
Bearer securities are paid either by check or credit to the
member bank’s reserve account upon presentation, but
registered securities must first be forwarded for release
to the Treasury Department in Washington, D. C., where
permanent registration books for the entire country are
maintained, before payment can be made.
Savin gs Bonds — Issuing Agents

Although a large number of Series E Savings Bonds
are issued at the Federal Reserve Bank, these represent
a small percentage of the total Series E Bonds issued.
Approximately 3,500 Issuing Agents (consisting prin­
cipally of banks, corporations and savings and loan asso­
ciations, but not including post offices) are furnished
blank Series E Savings Bonds by this bank and account to
it for all bonds consigned to such agents. Requisitions
for blank bonds and ledger accounts for all such issuing
agents, as well as transmittal letters forwarded by the
agents in connection with sales of Series E Bonds, are
10

Preparing Blank Series E bonds for shipment to Issuing Agents

handled and maintained in the Issuing Agents Division.
Currently these agents are selling approximately $53,000,
000 issue price of Series E Bonds monthly.
Sa vin gs Bonds — Reissues

It is only natural that with the widespread ownership
of savings bonds, and with resultant changes in the
status of such holders because of death, marriage, etc.,
many occasions arise when savings bonds need to be
re-issued. A separate Reissue Division handles these
transactions, which originate in all sections of this dis­
trict. The head office in Chicago also performs this
function for reissue cases received at the Treasury De­
partment from the entire United States.

dollar redemptions. Except for a small volume of re­
demptions at the Treasury Department the figures quoted
cover total redemptions for this district, whereas sales
figures under Issuing Agents above do not include Post
Office sales.
Savings bonds were first put on sale in 1935, but the
early maturities in 1945 to 1948 were not voluminous.

Sa vin gs Bonds — Redemptions

Prior to October 1944 redemptions of savings bonds
were handled exclusively at Federal Reserve Banks, but
since that date about 97 per cent of all redemptions are
being handled by Paying Agents—mainly banks—who
transmit the paid bonds to the Federal Reserve Banks.
The Redemption Divisions at Chicago and Detroit service
about 2,600 Paying Agents, who, together with the Fed­
eral Reserve Bank, are currently redeeming a monthly
average of approximately 1,230,000 pieces of Series A to
E Savings Bonds aggregating about $65,350,000 redemp­
tion value. Matured savings bonds included in these
figures represent about 16 per cent of total current
11

quent outbreak of war, account for the heavy maturities
starting in 1952 and reaching a peak in 1954. There are
currently outstanding Series E, F and G Savings Bonds
with 1954 maturities in the amount of approximately
$9,000,000,000 (present redemption value). Paying
Agents are given immediate credit upon receipt of the
transmittal letter for the amounts paid out by them in
cashing bonds, subject to later adjustment when the
bonds are processed.
Cancelled Securities

Preparing

registered

m ail shipments
post office

for delivery to

Greatly increased sales resulting from the initiation of
the National Defense Program in 1941 and the subse­

All Treasury securities, marketable and non-market­
able, are cancelled by distinctive cancellation mark, and
they are then sorted according to issue, denomination,
and, in some cases, serial number, and delivered to the
Treasury Department. Marketable issues are returned to
Washington, but savings bonds are delivered to the Sav­
ings Bonds Division of the Treasury Department in Chi­
cago, national headquarters for savings bond operations.

SERIES "E" SAVINGS BONDS
SOLD THROUGH ISSUING AGENTS

12

SERVICES TO TREASURY DEPARTMENT

ISSUANCE OF GOVERNMENT SECURITIES

Although the Treasury Department issues some of its securities
—both marketable and savings issues—directly, by far the major
portion is issued through the Federal Reserve Banks, acting as
fiscal agents of the United States. Information regarding new
Treasury offerings, either for cash or in exchange, is distributed
by the Federal Reserve Banks through commercial banks to the
general public, and subscriptions from investors of all types are

received for processing. The Federal Reserve Banks service agents
for the sale of U. S. Savings Bonds, Series E, by supplying
blank bonds, receiving payment for bonds issued, and maintain­
ing accounts. Detailed sales reports showing geographical and
investor-type distribution of new issues of Government securities
are supplied to the Treasury Department.

GENERAL SUMMARY

During 1949, the sales of savings securities were main­
tained at a rather constant level, and Treasury financing
activities were confined primarily to refunding opera­

tions. As a result, Bank services necessary to handle the
issuance of government securities were about the same
in 1949 as in the previous year.

STATEMENT OF OPERATIONS
CHICAGO
1949

SUBSCRIPTIONS AND APPLICATIONS
F o r m s R eceived

Marketable Issues ...................................
Savings Issues .........................................

N um ber

of

10,950
164,425

560
11,930

450
12,300

21,800
486,000

21,750
469,000

1,300
199,200

1,025
186,950

$10,646,252,000
1,292,065,000

$8,270,875,000
1,197,855,000

$593,173,000
342,851,000

$353,284,000
190,772,000

8,091,315,000
1,292,065,000

6,753,375,000
1,197,855,000

593,173,000
342,301,000

353,284,000
190,825,000

112,400
712,000

111,200
748,800

7,830
220,550

5,960
213,250

824,480,000
6,873,000

$ 848,959,000
6,792,500

$197,054,000
3,165,950

$176,674,000
2,650,000

3,107

3,097

364

369

S u bscribers I n v o lv ed

Marketable Issues ...................................
Savings Issues .........................................

D o l la r V a l u e — S u b s c r ipt io n s
A llotted

Marketable Issues ...................................
Savings Issues .........................................

P ie c es D e liv er ed

on

O r ig in a l I ssue

Marketable Issues ...................................
Savings Issues .........................................

SALES BY ISSUING AGENTS
S e r ies E Sa v in g s B on d s
Maturity V a lu e .......................................
Number of Pieces...................................
NUMBER OF QUALIFIED ISSUING
AGENTS AS OF DECEMBER 3 1 ...............

DETROIT BRANCH
1948
1949

11,200
147,800

Marketable Issues ...................................
Savings Issues .........................................

D o l l a r V a l u e — S u b s c r ipt io n s
R ec eiv ed

1948

$

13

SERVICES TO TREASURY DEPARTMENT

SERVICING OF GOVERNMENT SECURITIES
Servicing of the public debt after it is outstanding in the hands
of the general public is one of the functions of Federal Reserve
Banks in their capacity as fiscal agents of the United States. The
principal services performed are: making denominational and
other exchanges, handling telegraphic transfers of Government

securities, maintaining a general stock of all Treasury issues
outstanding with the public, reissuing savings bonds, maintain­
ing the Treasury tax and loan accounts, and other miscellan­
eous services.

GENERAL SUMMARY

Inasmuch as the servicing of government securities is
closely related to the Treasury’s financing program, the
amount of work handled by the Bank varies with the
volume of Treasury operations.
STATEMENT OF OPERATIONS

MARKETABLE ISSUES
D

e n o m in a t io n a l a n d

Services during the current year closely approximated
those rendered by the Bank during 1948.
The reissues involved in Treasury claim cases (the issu­
ance of duplicate bonds) represented a new activity
in 1949.

CHICAGO
1948
1949

DETROIT BRANCH
1948
1949

O ther

Exchanges

Pieces Received.......................................
Maturity V alu e.......................................
Pieces Issued...........................................
Maturity V a lu e .......................................
T e l e g r a p h i c T r a n f e r s (CPD)
Pieces Received.......................................
Maturity V alu e.......................................
Pieces Issued...........................................
Maturity V alu e.......................................
SAVINGS BONDS
R e is s u e s

Pieces Received.......................................
Maturity V alu e.......................................
Pieces Issued...........................................
Maturity V alu e.......................................

R e is s u e s — T r e a s u r y C l a im C a s e s

Pieces Issued...........................................
Maturity V alu e.......................................

DEPOSITARY BANKS (WAR LOAN)
Number of Payments Handled...............
Depositary Balances as of December 31
Number of Qualified Depositaries as of
December 3 1 .......................................
CUSTODY OF FISCAL STOCK
Pieces Received from Treasury Dept.. .
Pieces Prepared for Delivery...............

62,800
81,250
$1,382,582,000 $1,522,235,000
85,700
98,500
$1,375,708,000 $1,524,658,000

1,160
$ 27,672,000
2,300
$ 27,354,000

960
$ 12,671,000
2,650
$ 12,588,000

57,300
93,100
$3,895,367,000 $4,640,340,000
48,800
37,500
$5,379,602,000 $4,609,430,000

3,560
$373,607,000
7,200
$662,106,000

4,700
$159,598,000
3,900
$194,258,000

627,500
561,400
$ 208,512,000 $ 191,695,000
616,000
661,000*
$ 202,034,000 $ 257,236,000*

97,190
$ 15,349,000
94,960
$ 12,456,000

90,290
$ 10,635,000
87,000
$ 9,664,000

36,100
$3,332,000

—

—

—
—

21,360
$138,483,000

14,240
$ 93,396,000

—

—

197,000
190,700
$ 425,623,000 $ 330,095,000
1,696

1,692

134

133

8,691,000
8,798,000

8,616,000
8,882,000

3,587,400
3,595,800

2,817,300
3,094,800

*Year 1948 includes $79,750,000 involving 110,000 pieces issued upon reissue on special authorization from Treasury Department
and discontinued in June 1948.
14

SERVICES TO TREASURY DEPARTMENT

REDEMPTION OF G O VERN M EN T SECURITIES
thereof or through commercial banks designated as paying
agents. Redeemed securities are cancelled and forwarded to the
Treasury Department.

Federal Reserve Banks as fiscal agents of the United States re­
deem Government securities at maturity, or prior to maturity
in the case of securities eligible for redemption in that manner.
Savings bonds are redeemed either directly from the holders

GENERAL SUMMARY

increase from year to year until a peak is reached in 1954,
the year in which the maximum wartime sales of savings
issues will mature. The reverse is true in the case of
Armed Forces Leave Bonds, as the amount outstand­
ing is decreasing year by year because of redemption of
these securities prior to their maturity.

Comments on previous pages with reference to the Trea­
sury’s financing program during 1949 are applicable in
connection with the redemption of Government secu­
rities. Savings bond redemptions remained on substan­
tially an even keel compared with the previous year.
However, a considerable increase occurred in the re­
demption of matured savings bonds; this condition will
STATEMENT OF OPERATIONS

DETROIT BRANCH
1949
1948

CHICAGO
1949

1948

TREASURY ISSUES—OTHER THAN
SAVINGS AND ARMED FORCES
LEAVE BONDS
Number of Pieces
Bearer Securities ..................................
Registered Securities............................
Maturity Value
Bearer Securities...................................
Registered Securities............................

182,200
38,700

204,500
47,800

13,230
8,940

12,480
11,100

$7,876,693,000
530,309,000

$7,414,046,000
741,180,000

$1,000,622,000
97,184,000

$585,089,000
96,442,000

SAVINGS BONDS
^Number of Pieces
By Paying Agents—A-E......................
By FRB
—A-E......................
By FRB
—F-G......................

10,372,000
321.000
186.000

11,438,000
299,000
184,000

4,057,450
47,100
19.400

4,181,800
44,000
17,500

6,919,000

7,775,000

2,898,000

3,019,500

^Number of Pieces $25 E Bonds Included
in A bove....................................................
Number of Pieces Matured Bonds
Included in Above ...................................
Redemption Value
By Paying Agents—A-E......................
By FRB
—A-E......................
By FRB
—F-G......................
Matured Bonds Included in Above.........

433,000

314,000

76,300

53,300

$ 564.660.000
85,268,000
160.320.000
150,426,000

$ 564,135,000
55.509.000
161,670,000
96.980.000

$ 165,168,000
8,777,500
16.913.000
20.885.000

$161,912,000
6,154,000
15.846.000
14.415.000

ARMED FORCES LEAVE BONDS
Number of Pieces.....................................
Redemption V alue.....................................

67,150
$ 15,465,000

191,150
$ 41,336,000

$

16,500
3,673,000

48,950
$ 10,463,000

NUMBER OF QUALIFIED PAYING
AGENTS AS OF DECEMBER 31, 1949..

2,408

2,400

200

199

U. S. GOVERNMENT AND OTHER
GOVERNMENTAL AGENCY COUPONS
Number of Pieces .....................................
Dollar V a lu e..............................................

1,735,000
$ 99,069,000

1,918,500
$ 108,164,000

179,800
9,141,000

195,600
$ 9,276,000

$

15

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

deposited by employers under withholding tax arrangements,

GENERAL SUMMARY

Depositary banks collected and transferred to us
$1,423,000,000 in Withheld Taxes during 1949, for
which they issued 653,000 depositary receipts. These
figures represent decreases of 8% in dollar value and
3% in number of receipts, as compared with the remit­
tances handled during 1948.
Offices of the Internal Revenue Department charged
to us their certificates of deposit amounting to $1,495,000 , 000 .

During the year, preliminary work was completed on
a revised and expanded system for the collection of both
Withheld Taxes and Social Security Taxes. Under the
new plan, employers may remit either through depos­
itary banks, or directly to the Federal Reserve Banks.
Accordingly, operations under the previous system were
brought to a close December 31, 1949, except for resid­
ual work connected with deposits of 1949 taxes.

STATEMENT OF OPERATIONS

Receipts Issued by Depositaries.......................................................................
Dollar Value of Receipts Issued.......................................................................

CHICAGO
1949
1948
652,881
676,394
$1,423,024,000
$1,540,960,000

DEPOSITARY RECEIPTS
RECEIVED

16

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 Chicago and Detroit
Branch decreased during 1949, primarily because of
reductions in reserve requirements which became effective
during the year.
One advance of $50,000 was made secured by notes
STATEMENT OF OPERATIONS

CHICAGO
1949

NUMBER OF TRANSACTIONS
A dvances

to

M

em ber

evidencing corn loans entered into pursuant to the loan
program of the Commodity Credit Corporation.
Four commitments, aggregating $66,533, were granted
to financing institutions in connection with working
capital loans to industrial enterprises under the pro­
visions of Section 13b of the Federal Reserve Act.

Ba n k s

DETROIT BRANCH
1948
1949

1948

2

Rediscounts .............................................
Secured by U. S. Government Obliga­
tions ....................................................
Secured by Eligible Paper.....................
Secured by Other Acceptable Assets—
Section 10b .........................................

312
1

1

—

4

Commitments .........................................

61
—

—

I n d u s t r ia l L o a n s

484
—

3

70
-—

—-:

DOLLAR VALUE OF TRANSACTIONS
A dvances

to

M

em ber

Banks

Rediscounts .............................................
Secured by U. S. Government Obliga­
tions ....................................................
Secured by Eligible Paper.....................
Secured by Other Acceptable Assets—
Section 1 0 b .........................................

$

Commitments .........................................

O

$

1,841,338,000
50,000

3,046,865,000
—

—

$

50,000

66,533

I n d u s t r ia l L o a n s

Chicago

38,029 $

472,500

215,150,000
—

466,045,000

—

—

—

—
—

ADVANCES TO MEMBER BANKS

$ BILUONS

Detroit
TRANSACTIONS

— number
amount

17

HEAD OFFICE CASH OPERATIONS
CURRENCY
$ BILLIONS

____ ____

i

1 V4iLUE

^

—

—

1945

1946

1947

1948

1949

COIN
PIECES

$ VALUE
$ MILLIONS

* Includes wrapped coin payments
instituted in October of 1946
18

SER VIC ES TO M EM B ER B A N K S

CURRENCY AND COIN

etc. Similarly, banks having excess cash may turn it in to this
Bank and obtain funds in return. Incoming cash is used either
to supplement new currency and coin in outgoing shipments,
or, if unfit for further circulation, is returned to the Treasury
for destruction.

Currency and coin are routed into general circulation through
the Federal Reserve Banks, which act as distributing agents
between the Treasury and the Banking community. Commercial
banks desiring currency or coin may obtain it from this Bank
in exchange for their draft, a charge to their reserve account,

GENERAL SUMMARY

Outgoing currency handled during 1949 declined
moderately from all-time peaks established in 1948.
However, increased volumes of currency for redemp­
tion, wrapped coin, and coin received from banks were
processed in 1949.

The net circulation of our Federal Reserve Notes
amounted to $4,501,280,000 at the end of 1949, as
against $4,598,426,000 on December 31, 1948, the net
decrease amounting to $97,146,000. The all-time high
of $4,669,338,000 was recorded on December 24, 1947.

STATEMENT OF OPERATIONS

CHICAGO

PIECFS
Currency
Outgoing ....................................................
Incoming ....................................................
Forwarded for Redemption......................
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......................
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..............................................

1949

1948

DETROIT BRANCH
1948
1949

530,888,131
558,377,758
227,775,957

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

138,959,206
140,140,943
41,762,180

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

764,496,603
563,457,000
1,327,953,603
1,282,457,814
45,100,000
5,000,000

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

51,462,807
46,889,700
98,352,507
110,937,421
4.500.000
3.545.000

97,388,734
5,700,550*
103,089,284
98,639,931
22,375,000
2,560,000

$2,984,250,500
3,207,451,014
847,900,014

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

$867,504,156
918,374,667
175,634,606

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

$ 47,352,801
58,465,400
$ 105,818,201
$ 106,010,802
550.000
400.000

$ 49,431,921
56,863,182
$ 106,295,103
$ 98,175,709
7.750.000
1.650.000

$ 4,422,446
3,320,900
$ 7,743,346
$ 9,340,413
117.000
275.000

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

61.144.000
59.910.000

55,908,000
57,120,100

9,740,000
9,188,020

8,840,000
9,344,340

$ 632,320,000
611,380,000

$ 594,040,000
625,720,000

$117,000,000 $111,000,000
126,080,000
115,200,000
^Wrapped Coin Service
Inaugurated October 15, 1948.
19

NUMBER OF
CHECKS HANDLED

20

SER VIC ES TO M EM B ER B A N K S

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 com­
munities, 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 number of city and country items processed during
1949 increased 3% at Chicago and 2% at Detroit.
However, the dollar value of all checks handled by
Chicago decreased $7,304,418,000 for the year 1949,
or about $24,000,000 for each working day.
Preparation of outgoing cash letters on proof ma­
chines effected an 11% reduction in letters dispatched
STATEMENT OF OPERATIONS

DETROIT BRANCH
1949
1948

CHICAGO
1949

CHECKS
Number of Checks Handled
City ................................................
Country .......................................
Government-—P aper....................
Card ...................
Totals..............................

and a 17% reduction in the number of employees at
Chicago.
Check Department employees at Chicago work 5 days
each week on a rotating basis in order to comply with
the Saturday closing law in effect since August 6, 1949.
However, operations are continued for six full days each
week in order to render maximum service on check
collections.

1948

47,511,000
201,730,000
3,814,000
40,216,000
293,271,000

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

14,764,000
25,491,000
989,000
4,646,000
45,890,000

14,019,000
25,320,000
891,000
4,426,000
44,656,000

$50,956,061,000
34,009,768,000
3,725,385,000
2,708,362,000
$91,399,576,000

$55,257,910,000
36,482,969,000
4,433,454,000
2,529,661,000
$98,703,994,000

$12,302,979,000
5,361,938,000
884,793,000
308,535,000
$18,858,245,000

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

5,439

6,064

552

549

28,304
152,434
535,320
716,058

43,167
177,107
505,234
725,508

24,949
15,573
114,728
155,250

20,760
17,551
117,890
156,201

98,931

98,010

6,046

6,572

98,851,000
364,684,000
869,692,000

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

$

Totals..............................

$ 1,333,227,000

$ 1,434,212,000

$ 116,009,000

$ 154.411,000

*Includes direct sendings to other
Federal Reserve Banks by our
Member Banks ............................

$ 265,809,000

$ 351,765,000

$

$

Dollar Value of Checks Handled
City ................................................
Country .......................................
Government—P ap er...................
Card ...................
Totals..............................
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 ............................
Dollar Value of Transactions
City ................................................
Country* .....................................
Coupon and Security.................

$

32,716,000
35,297,000
47,996,000

28,088,000

$

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

47,368,000
21

SER VIC ES TO M E M B ER B A N K S

SAFEKEEPING OF SECURITIES

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

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.
THOUSANDS

Chicago

GENERAL SUMMARY

The dollar value of securities on hand at the close of 1949 increased
considerably over 1948 year-end holdings. Greater holdings for member
banks created increases of $956,000,000 at Chicago and $167,000,000 at
Detroit. Chicago processed $325,000,000 in securities for exchange during
December, 1949.
U. S. Army personnel deposited 10% more Savings Bonds during 1949,
while their withdrawals decreased 23%. The dollar value of civilian releases
increased both at Chicago and Detroit.
THOUSANDS

Detroit

pieces received,*
pieces released*

100

* in clu de s Savin gs Bonds

0

1945

1946

STATEMENT OF OPERATIONS

1947

SAFEKEEPING—MEMBER BANKS, ETC.
Pieces
Securities—Received .................................
Released .................................
Coupons Detached from Securities.........

Receipts Issued ................................................
Receipts Released ............................................
Receipts O utstanding.....................................
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....................
D ollar V alue of P ieces
Received—U. S. Army Personnel...........
Civilian ...................................
Released—U. S. Army Personnel...........
Civilian ...................................
Held as of Dec. 31-U.S. Army Personnel
Civilian....................
22

1949

DETROIT BRANCH
1948
1949

CHICAGO
1948

1949

D ollar V alue of P ieces
Securities—Received .................................
Released .................................
Held as of December 31 ■ ■ ■
Coupons Detached from Securities.........

1948

192,416
176,272
873,652

226,869
212,100
934,840

19,800
16,679
153,449

18,327
19,330
151,796

$10,152,780,248
9,196,352,276
5,385,248,323
84,143,991
22,285
22,937
57,959

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

$ 1,206,608,026
1,039,569,259
529,600,750
4,515,654

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

24,127
26,682
58,621

2,268
2,612
7,463

2,413
3,125
7,324

40,227
40,899
73,058
57,702
352,172
318,071

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

—
56,423
—
56,225
—
297,944

—
65,936
—
64,132
—
297,746

$

2,559,945
7,806,110
3,966,405
14,061,439
18,215,625
47,981,919

$

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

$

—
5,455,100
—
5,257,345
—
24,687,710

—

$

6,319,630
—
4,604,815
—
24,489,955

SER VIC ES TO M E M B ER B A N K S

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

The number of transactions handled by the Invest­
ment Department at Chicago declined somewhat in 1949
from that of the previous year. However, the par value
of the securities involved showed a substantial increase.
Reflecting the relaxation in reserve requirements during
the year and the generally easier money market, purchase

transactions more than doubled in dollar amount, while
securities sold for member banks and others de­
clined 20%.
At the Detroit Branch, the number of purchases
increased 20% while sales transactions declined 22%.

STATEMENT OF OPERATIONS
CHICAGO
1949
NUMBER OF SECURITY TRANSACTIONS
P urchases
U. S. G overnments
Member Banks and Others.....................
Other F. R. Banks.....................................
System Open Market Account...............
O ther
Member Banks and Others.....................
Total Purchases............................
Sales
U. S. G overnments
Member Banks and Others
Other F. R. Banks.............
O ther
Member Banks and Others
Total Sales
DOLLAR VALUE OF SECURITIES
P urchases
U. S. G overnments
Member Banks and Others. .
Other F. R. Banks...................
System Open Market Account,
O ther
Member Banks and Others. .
Total Purchases...........
Sales
U. S. G overnments
Member Banks and Others
Other F. R. Banks.............
O ther
Member Banks and Others
Total Sales.............

1948

2,954
161
—

DETROIT BRANCH
1948
1949
760
—
—

3,045
162
2

631
—
—

—
760

—
—
631
—

___

9
3,124

18
3.227

7,282
474

8,630
436

496
—

634
—

7,818

48
9,114

496

634

$305,507,650
15,763,000

$130,174,450
9,810,400

$18,665,118

$13,795,134

62

________

—

1, 000,000

145,000
$321,415,650

$141,275,850

$18,665,118

$13,795,134

$247,362,970
17,047,350

$308,371,730
24,157,500

$9,162,119

$26,799,201

577,410
$264,987,730

759,250
$333,288,480

$ 9,162,119

$26,799,201

291,000

23

SER VIC ES TO M E M B ER B A N K S

ECONOMIC RESEARCH
Information on current economic developments in which the
Federal Reserve System has an interest is gathered and inter­
preted 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 1949 the Research Department con­
tinued its current research and reporting work
along the same general lines as in recent years.
Greater emphasis was placed on the study of agri­
cultural and business conditions in the Seventh
Federal Reserve District, Federal fiscal policy, and
the functioning of the monetary mechanism. Cur­
rent developments in the field of bank credit and
business finance, labor and industry, retail trade,
consumer credit, state and local government
finance, and farm credit continue to receive close
attention.
The Research Department continued to em­

phasize strengthening its ties with bankers, busi­
nessmen, and agricultural leaders. The Department
answered thousands of inquiries for business and
financial information received by mail, phone, or
in person from banks, business firms, and others.
A great amount of important data was again
collected through the cooperation of Seventh Dis­
trict reporting banks and business firms. The
usual summary reports of statistical data were pre­
pared and sent to the Board of Governors. 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—mem­
ber 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 sum­
maries—business indexes and farm business conditions.
Quarterly

Farm land value survey.

Annual and Special Reports

Department store sales and stocks by departments; deposit ownership survey;
member bank operating ratio study; member bank earning asset analysis; mem­
ber bank bad debt loss analysis; and retail credit survey.
The number of copies published of Business
Conditions has been increasing steadily the past
few years so that it now averages 13,000 monthly,
of which 3,600 are sold at cost in bulk subscrip­
tions to a number of member banks which redis­
24

tribute them to their customers. Approximately
30,000 copies were distributed of the December
issue, which contained special articles on the agri­
cultural outlook for 1950 and the newly enacted
farm legislation.

SER VIC ES TO M E M B ER B A N K S

EXAMINATION OF BANKS

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 exer­
cise banking functions are also carried out. Various applications

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.

GENERAL SUMMARY

Three banks, 1 national and 2 state, were admitted to
membership in 1949. The staff of the Bank Examination

Department completed 591 examinations during the
year.

STATEMENT OF OPERATIONS
CHICAGO
1949

1948

NUMBER OF EXAMINATIONS MADE
Regular ...................................................................................
Membership ..........................................................................
Trust Departments ...............................................................
Follow-up Investigations ....................................................

442
2
145
2

443
2
140
2

NUMBER OF MEMBER BANKS IN 7th F. R. DISTRICT
N ational Banks
As of January 1.............................................................
Additions (See Note A ) .....................................
Withdrawals (See Note B ) ...............................
As of December 31......................................................

567
1
3
565

561
7
1
567

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

441
2
3
440

DETROIT BRANCH
1949
1948

442
2
3
441

INCLUDED IN
CHICAGO DATA

NOTE A—ADDITIONS TO MEMBERSHIP DURING 1949
N ational Banks
Farmers and Merchants National Bank of Monticello, Monticello, Indiana
State Banks
City Bank, Detroit, Michigan
The State Savings Bank of Flat Rock, Flat Rock, Michigan
NOTE B—WITHDRAWALS DURING 1949
N ational Banks
3—voluntary liquidations. (Assets and liabilities assumed by other banks)
State Banks
2—voluntary withdrawals
1—consolidation
25

SER V IC E S TO M E M B ER B A N K S

BANK AND PUBLIC RELATIONS

The personnel assigned to the bank and public relations staff
call on member and nonmember banks, attend conventions and
group meetings, deliver public addresses, and in general attempt

to determine ways in which the Bank’s services to its members
may be improved.

GENERAL SUMMARY

The true value of the bank and public rela­
tions program cannot be presented in tables or
charts, as the end result is best measured by the
increases in understanding and acceptance of the
Federal Reserve System by an ever-widening circle
of bankers, businessmen, and others whose support
is important to the success of its operations. Never­
theless, new goals were set and new records
achieved in all the department’s operations.
During 1949, 3,197 calls on banks were made
by officers of the Head Office and Detroit Branch,
bank relations representatives, and other staff
members. This number of calls sets a new record.
Volume of calls alone, however, is not an adequate
criterion of this work. For instance, many calls
were made to correct situations arising in the
course of every-day transactions. In all such
cases, the person-to-person contact resulted in re­
moving the difficulty and invariably provided the
basis for a cementing of friendships.
One tangible bit of evidence of the residual
value of frequent contacts with our members has
been the interest bankers have been taking in
visiting the Federal Reserve Bank of Chicago.
Officers have been so impressed by their contacts
here that many have arranged to bring their entire
staff to Chicago for an organized tour. In addi­
tion, bankers have sponsored tours by other groups.

26

More than eighty tours were conducted for 1,895
persons at the Head Office and Detroit Branch.
These groups came from business organizations,
schools, universities, churches, foreign countries,
Government offices, and public welfare organiza­
tions.
All State bankers’ conventions, group meetings,
and special purpose bankers’ meetings in the Sev­
enth Federal Reserve District during the year were
attended by officers of the Head Office and Detroit
Branch, economists, or special representatives.
Public relations activities of the Head Office
and Detroit Branch included attendance at 271
industrial, business, and other meetings and the
furnishing of speakers for about 150 business,
banking, and civic groups. By means of press re­
leases and articles, the general public became fur­
ther informed on the activities of the Federal
Reserve Bank of Chicago.
The monthly staff meetings of the Bank and
Public Relations Department, Research Depart­
ment, and Bank Examination Department were
continued for the purpose of exchanging current
economic information and keeping field men thor­
oughly acquainted with changes in bank operating
procedure and Federal Reserve policy in order to
serve member banks in the Seventh Federal Re­
serve District.

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 corpora­
tions, maintains custody of collateral, handles work relative to
the redemption and exchange of securities, etc.

GENERAL SUMMARY
Reconstruction Finance Corporation

Transactions handled for the account of the Reconstruction Finance Corporation increased consider­
ably during 1949. Disbursements and receipts functioned aggregated 104 per cent more in amount. The
total number of all disbursement, receipt and custody transactions in 1949 increased 35 per cent from
the 1948 volume.
These gains were created by an increase in the number of loans made by the Reconstruction Finance
Corporation to business enterprises and an increase in the number of mortgages purchased by its subsidiary,
the Federal National Mortgage Association.
Commodity Credit Corporation

Transactions handled for account of the Commodity Credit Corporation for the year 1949 were
891 per cent more in number and 127 per cent more in amount than the transactions handled during 1948.
This greatly increased volume in both disbursements and receipts was due to increased activity in the
Commodity Credit Corporation’s price support operations. Disbursements for the purchase of loans from
banks, from production credit associations, and from other institutions which act as lending agencies of the
Corporation under grain loan programs increased substantially. Marked increases were recorded in dis­
bursements for payment of drafts issued by state Offices of Production and Marketing Administration; these
drafts represented purchase, loan, and service transactions related to the various commodity programs.

27

GENERAL BANK ACTIVITIES

ACCOUNTING

funds by wire for member banks, the handling of all Bank dis­
bursements, 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 main­
tenance 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 at Detroit Branch increased in
1949, both in number of items and in dollar amount,
while 1949 figures for Chicago were lower than those
of the previous year.

The number of general ledger entries decreased during
1949, as did entries to member bank reserve accounts.
Chicago’s entries to other Federal Reserve Banks in­
creased during the period.
STATEMENT OF OPERATIONS
CHICAGO
1949
GENERAL LEDGER
Number of Entries
Functioned..................

DETROIT BRANCH
1949
1948

1948
277,632

1,460,758

FEDERAL RESERVE
BOOKS
Number of Entries
Functioned..................
MEMBER BANKS'
RESERVE ACCOUNTS
Number of Entries
Functioned..................
Active Accounts as of
December 31 .............

307,549

33,613

1,440,503

37,409

279,738

285,514

2,241,276

2,457,968

341,617

352,943

814

804

101

99

MEMBER BANK
RESERVES
Excess Over Requirement Period
Period
Maximum .................. July 15 $ 186,782,000 Jan. 15 $
M in imu m ....................
Apr. 30
77,005,000 Nov. 30
Assessable Deficiencies
B anks..........................
134
Amount of Penalties
Assessed.................
$
8,723
$

Period
136,677,000 July 15 $
87,380,000 Dec. 15
206
15,636

Period
34,766,000 Apr. 15 $
10,120,000 May 31
8

$

292

25,053,000
9,472,000
17

$

881

TRANSFER OF FUNDS
Number of Transfers. . .
Dollar V alu e.................

196,428
$65,419,048,000

199,652
$68,388,569,000

34,213
$16,627,317,000

34,116
$15,475,604,000

EXPENSE DISBURSE­
MENTS
Expense Vouchers
Functioned ...............
Fiscal Agency Claims
Prepared ....................

$

$

$

$

28

13,596,737
3,270,509

13,336,122
3,731,435

3,610,413
885,617

3,058,029
1,005,177

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 matched its 1948 volume by processing
over a million telegrams during 1949.
Total messages handled by the Codes and Telegrams
Divisions decreased slightly: wires sent and received by
Chicago totaled 174,000; by Detroit, 45,000.
STATEMENT OF OPERATIONS

Air Express service (to all Federal Reserve Banks and
Branches and to some member banks) was equal to
peak figures established in 1948—shipments averaged
over one thousand pounds a day during 1949.
The 1,700,000 pieces handled by the Chicago General
Files Division represented a 13% increase over 1948
volume.

CHICAGO
1948
1949

DETROIT BRANCH
1948
1949

68,248
6,792

71,706
7,112

18,844
3,514

18,737
3,853

56,300
6,407

56,353
7,839

16,561
3,509

16,138
4,011

Received
In C ode...............................................
In C lear...............................................
Dispatched
In C ode...............................................
In C lear...............................................

16,362
5,663
10,007
4,473

17,080
5,660
10,217
5,309

760
464
1,459
61

1,018
555
1,845
48

MAIL HANDLED
Number of Pieces Received........................
Number of Pieces Dispatched, Mail and
Express ....................................................

1,801,559
3,104,486

1,858,174
3,267,846

282,912
335,991

289,396
354,484

TELEGRAMS PROCESSED
L e a s e d W ir e s
Received
In C ode...............................................
In C lear...............................................
Dispatched
In C o de...............................................
In C lear...............................................
C o m m e r c ia l W

ir e s

M ILL IO N S

THOUSANDS

Chicago
mm received,

e t dispatched

Detroit
29

GEN ER A L B A N K A C TIV ITIES

PERSONNEL

General personnel activities of the Bank are handled by central
personnel units. Such work includes the selection, hiring, trans­
ferring, promotion, counseling, and termination of employees;
the preparation of pay roll and sundry payments to employees,
and making necessary withholding tax, retirement, and other
deductions; the making of status changes and maintenance of

earnings, retirement system, salary deductions, and personnel
records; the administration of the Job Evaluation Plan, educa­
tion, training, employee welfare, and hospital surgical insurance
programs, and a monthly employee’s magazine; the maintenance
of a medical division, recreational library, and employee lounges.

GENERAL SUMMARY

Reduction in the personnel requirements of the Check
and Government Bond Departments accounted for most
of the decrease in number of employees at Chicago
during 1949. Employee stability is reflected in lower
personnel turnover at both offices, and in the continuous
service record of 131 Chicago employees who have been
with the bank thirty years or more.
At the Detroit Branch, an aptitude testing program

was established as an aid in selecting new employees, and
a Michigan state charter was obtained to operate a bank
credit union.
Permissive legislation with respect to Saturday closing
of banks was passed by the Illinois legislature and became
effective August 6, 1949. In conjunction with other local
Clearing House Association banks, the Chicago office
closed to the public on Saturdays beginning that date.

STATEMENT OF OPERATIONS

CHICAGO
1948
1949
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 O n ly .................

DETROIT BRANCH
1948
1949

2,304
395
539

2,448
823
748

380
78
100

404
101
140

833
33,337

936
36,995

73
3,158

117
3,434

719,993
10,308

829,020
10,714

*41,842
—

69,844
—

1,859

1,997

258

249

*because ofclosed August 13, 1949,
Cafeteria building construction.

NUMBER OF EMPLOYEES

H UN DREDS

25

\ ______

TTTT TTTT

10
5
0

30

DETROIT

CH ICA GO
>

/

15

11 L L

20

ew employe es hir<
I ____
_

dl

1945 1946 1947 1948 1949

1945 1946 1947 1948 1949

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 at our head
office for printing, office supplies, stationery, equipment,
etc., during 1949 totaled 7,682, a decrease from the 8,228
orders written during 1948. This decrease was caused
largely by the leveling off of the heavy inventories car­
ried in our warehouse. The dollar value of orders written
during the year amounted to $828,000, as compared with
orders of $887,000 during 1948. This decline resulted
STATEMENT OF OPERATIONS

PRINTING
Duplicating........................ . . . .
M im eograph...................... ___
M ultilith............................ ___
Multigraph ........................ ___
Photostat............................ ___

In our Printshop, the number of impressions and jobs
decreased during the period, largely due to the absence
of work formerly handled for the Reconstruction Finance
Corporation. Our Addressograph Division exceeded
4,000,000 impressions during the year.

CHICAGO

DETROIT BRANCH
1948
1949

1948

1949
PURCHASING
Purchase O rders...............

from a smaller number of orders written, and a down­
ward trend in some prices.

7,682

8,228

2,154

2,401

Jobs Impressions
285
42,000
188,000
215
1,628 9,747,000
3,216,000
283
2,590
46,000
5,001 13,239,000

Jobs Impressions
44,000
323
160,000
271
1,672 13,019,000
268 2,068,000
48,000
3,415
5,949 15,339,000

Jobs Impressions
—
—
120,000
337
279 1,559,000
—
—
2,000
252
868 1,681,000

Jobs Impressions
—
—
410
167,000
215 719,000
—
—
9,000
339
964 895,000

PURCHASE
ORDERS
ISSUED
CHICAGO

31

GEN ER A L BAN K A C TIV ITIES

BUILDING OPERATIONS
The operation of the bank’s main building and auxiliary space
involves real estate valuation and rate procedures; contract
negotiation; architecture, engineering and decorating in connection with major alterations; and the supplying of the services

of air, water, heat, light and power, sewage disposal, vertical
transportation, building and furniture repairs and maintenance,
and decoration and cleaning,

GENERAL SUMMARY

For several years we have been engaged in a heavy
program of renovation which includes five major pro­
jects and a great number of smaller ones. The large
projects are; installation of standard doors in vault
No. 4 and enlargement of our truck concourse, finished
respectively in 1946 and 1948; air conditioning of the
last four floors of our building, finished in 1949; con­
version of our electric power from direct to alternating
current; and full modernization of the electric elevator
system, including a signal control system in the principal
elevators, to be finished in 1950. The smaller projects
include replacement of our obsolete and worn-out police
alarm system and of our master-controlled electric wall
clocks; floor covering; sound reduction; limited lighting
improvements; under-floor electric service to accommo­
date the growing use of electrically operated office ma­
chines; use of varied rather than standardized colors in
decoration; up-to-date treatment of wall, door and win­
dow framing (as alterations are made) ; and relocation
for efficiency of several large departments.
We have two large projects left, neither of which
has been started. The first is replacement with glass and
metal or wood partitions of our obsolete tellers’ caging,
and the second is increasing the capacity of our electric
risers to meet the growing demands indicated by the
increasing use of electrically operated business machines
and the increase in lighting intensities. While we knew
that this expansion in capacity would have to be made
some day, our reserve capacity was exhausted much more
rapidly than expected. Even now we have been compelled
to divert power from its assigned location to serve a
heavy concentration of IBM machines in our Check

32

Department. We have confined our lighting improve­
ment within the limitations of our present capacity and
expect to wait several years for the full development
of the present trend in lighting, especially the fluores­
cent tube.
We have just completed relocation of the Personnel
Department from the third floor and the Medical De­
partment from the 13th floor into a combination suite
on the ninth floor. Our program for 1950 includes the
provision of an enlarged men’s lounge room on the
thirteenth floor in the quarters vacated by the Medical
Department; the relaxation of the crowded conditions
under which cafeteria employees have been working for
several years; and a relocation of departments now on
the third floor into more comfortable quarters. Finally,
we shall relocate the Research Department on the fifth
and sixth floor levels, which will permit returning about
3,500 square feet on the fifth floor to its original use
as an auditorium.
The continued rise in prices is reflected in the con­
tinued increase in the cost of operating our building
according to the uniform accounting system of the Na­
tional Association of Building Owners and Managers.
Under this system we regard the bank as a tenant and
our resulting square foot unit costs represent typical
office building costs such as taxes, depreciation, insur­
ance, elevator operation, cleaning, heating and ventila­
tion and general maintenance. For the first ten months
of 1949 we operated the building at an annual esti­
mated square foot cost of $2.79 against 1948 figures
of $2.14, 1941 figures of $1.20, and 1938 figures
of $1.15.

GEN ER A L BAN K A C TIV ITIES

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, an Assistant Counsel and a secretary.
In 1948 the General Counsel was selected and
is continuing to act as legal and technical advisor
to Governor Evans, hearing officer in the proceed­
ing 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 dur­
ing the year served on five System special com­
mittees 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, appli­
cations of national banks to exercise fiduciary
powers and all documents evidencing changes in
the corporate status of state member banks; cor­
respondence and conferences with representatives
of member banks and state banking associations
concerning banking laws, regulations and rulings
of the Board of Governors; consultations and cor­
respondence with the Board of Governors and its
staff; and examination of court orders relating to
the special custody of securities.

33

FEDERAL RESERVE B A N K OF C H IC A G O

COMPARATIVE STATEMENT OF CONDITION
DECEMBER 3 1, 1949, AND DECEMBER 3 1 , 1948

ASSETS

Dec. 31, 1949
$4,375,007,011.53
82,956,787.50
29,799,938.29
$4,487,763,737.32
9,751,829.40
$ 9,751,829.40
2,817,903,000.00
$2,827,654,829.40
3,514,194.10
18,464,500.00
435,848,992.88
15,368,009.11
$7,788,614,262.81

Dec. 31, 1948
$4,371,527,751.76
106,421,425.00
40,332,361.59
$4,518,281,538.35
28.157.000.
$ 28,157,000.00
3,332,925,000.00

$4,501,280,050.00

$4,598,426,295.00

2,627,072,464.20
56,269,040.19
117,481,449.57
$2,800,822,953.96
370,515,152.61
1,678,405.13
$7,674,296,561.70

3,121,361,725.57
114,068,871.17
97,380,822.83
$3,332,811,419.57
353,456,394.26
1,752,251.75
$8,286,446,360.58

............................................................................................. $ 26,885,350.00
S u r p l u s (Section 7) .......................................................................................
72,028,821.73
S u r p l u s (Section 13b) ..................................................................................
1,429,383.78
O t h e r C a p i t a l A ccounts ............................................................................
13,974,145.60
Total Liabilities and Capital Accounts........................................... $7,788,614,262.81

$ 25,479,500.00
68,841,817.57
1,429,383.78
8,037,924.98
$8,390,234,986.91

U. S. T r e a s u r y ..........
R e d e m p t i o n F u n d — F e d e r a l R e s e r v e N o t e s .........................................
O t h e r C a s h ....................................................................................................
Total Cash .......................................................................................
Bills D iscounted ...........................................................................................
Total B ills.........................................................................................
U. S. G o v e r n m e n t S e c u r i t i e s .....................................................................
Total Bills and Securities.................................................................
Bank P r e m is e s ...............................................................................................
F e d e r a l R e s e r v e N o t e s o f O t h e r B a n k s .................................................
Uncollected It e m s .......................................................................................
O t h e r A s s e t s .................................................................................................
Total A ssets......................................................................................
G o l d C e r t if ic a t e s

On

H

and and

D

u e fr o m

$3,361,082,000.00

3,191,169.34
22.147.000. 00
464,343,991.35
21,189,287.87
$8,390,234,986.91

LIABILITIES

Federal Reserve N otes in A ctual Circulation .................................
D e p o s it s :

Member Bank—Reserve Account .............................................................
U. S. Treasurer—General Account ..........................................................
Other Deposits .............................................................................................
Total Deposits ................................................................................
D eferred Availability Items ...................................................................
O t h e r L i a b i l i t i e s ...........................................................................................
Total Liabilities .

CAPITAL

C a p i t a l P a id I n

34

A C C O U N T S

00

FEDERAL RESERVE BANK OF CHICAGO

COMPARATIVE STATEMENT OF EARNINGS AND EXPENSES
YEAR ENDED DECEMBER 3 1, 1949, AND YEAR ENDED DECEMBER 3 1. 1948

E a r n i n g s ................................................................................................................

1949
$47,051,999.33

1948
$43,407,726.69

10,040,239.13
446,200.00
1,121,901.80
$11,608,340.93
$35,443,658.40

9,407,419.49
442,736.46
993,356.72
$10,843,512.67
$32,564,214.02

$ 4,268,571.03
131,944.37
$ 4,400,515.40

$ 826,315.07
289,304.22
$ 1,115,619.29

$39,844,173.80

$33,679,833.31

$ 535,630.69
$39,308,543.11
5,884,000.00
28,681,442.18
$ 4,743,100.93
1,556,096.77
$ 3,187,004.16

$ 337,420.86
$33,342,412.45
5,624,000.00
23, 621, 236.98
$ 4,097,175.47
1,472,491.62
$ 2,624,683.85

Ex p e n s e s :

Operating Expenses...........................................................................................
Assessment for Board of Governors.................................................................
Cost of Federal Reserve Currency...................................................................
Total Current Expenses.......................................................................
Current Net Earnings...........................................................................
A d d it io n s

to

C urrent N

et

E a r n in g s :

Profit on Sales of U. S. Government Securities................................................
Other Additions.................................................................................................
Total Additions to Current Net Earnings.........................................
Total Current Net Earnings and Additions to Current Net
Earnings.............................................................................................
D e d u c t io n s F r o m C u r r e n t N

et

E a r n in g s :

Total Deductions from Current Net Earnings...................................
Net Earnings.....................................................................................................
Transferred to Reserves for Contingencies....................................................
Paid United States Treasury (Interest on Federal Reserve N otes).............
Net Earnings After Reserves and Payments to United States Treasury. . . .
Dividends Paid .................................................................................................
Transferred to Surplus (Section 7 ) .................................................................

FEDERAL RESERVE BAN K OF C H IC A G O

SURPLUS ACCOUNT (SECTION 7)
YEAR ENDED DECEMBER 3 1 , 1949, AND YEAR ENDED DECEMBER 3 1, 1948

l .............................................................................................
T r a n s f e r r e d t o S u r p l u s — As A b o v e ..........................................................
S u r p l u s D e c e m b e r 3 1 .........................................................................................

Su rplu s Ja n u a ry

$68,841,817.57
3,187,004.16
$72,028,821.73

$66,217,133.72
2,624,683.85
$68,841,817.57
35

FEDERAL RESERVE BANK OF CHICAGO

STATEMENT OF EARNINGS AND EXPENSES
NOVEM BER 16, 1914 (Date of Incorporation) TO DECEMBER 31, 1949

CURRENT
NET
EARNINGS

YEAR

CURRENT
EARNINGS

CURRENT
EXPENSES

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 ...............
1949 ...............

$ 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
47,051,999

$ 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
11,608,341

$

Totals..................

$375,082,877

$151,810,220

$223,272,657

36

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
35,443,658

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
4,400,515

$22,876,598

$

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
—
517,991
328,214
154,505
5,961,421
6,419,630

$38,057,842

NET
EARNINGS

(S ee d isp o sitio n ,
next page)

$

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
771,220
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
33,424,543

$208,091,413

FEDERAL RESERVE BANK OF CHICAGO

STATEMENT OF DISPOSITION OF NET EARNINGS
NOVEM BER 16, 1914 (Date of Incorporation) TO DECEMBER 31, 1949

TRANSFERRED TO SURPLUS
Net
Earnings

(S ee d ta il,
Year previouse page)
1914-15. .$
20 ,0 9 1
403,206
1916. .
1917. . 1,231,879
1918. . 6,805,081
1919. . 8,576,204
1920. . 25,875,749
1921. . 14,505,117
19 2 2 . .
1,405,215
1923. . 1,178,355
1924. .
909,123
1925. . 1,121,273
1926. . 2,253,923
1927. . 1,927,645
1928. . 4,763,429
1929. . 5,424,665
1930. . 1,054,328
609,895
1931. .
1932. . 2,242,725
1933. . 1,790,493
1934. . 1,404,491
771,220
1935. .
932,178
1936. .
1937. . 1,687,606
1938. . 1,090,958
982,917
1939. .
1940. . 2,607,974
1941. . 1,024,465
1942. . 1,197,161
1943. . 5,759,353
1944. . 7,831,437
1945. . 13,430,311
1946. . 13,360,768
1947. . 12,769,223
1948. . 27,718,412
1949. . 33,424,543
Totals ...$208,091,413

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
1,556,097
$32,693,889

Section 7
$ —
—
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
—
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
3,187,004
$87,369,258

Franchise
Tax
Section 13b
$ —
$ —
—
—
215,799
—
—
—
—
10,394,480
—
—
11,576,009
1,186,301
—
246,586
—
—
—
—
—
—
—
—
—
—
—
602,838
—
—
—
—
■—
1,091,513
—
—
—
— 26,322
—
—
—
25,030
—
12,767
—
206
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$ 11,681 $25,313,526
—

PAID U. S. TREASURY
Interest on
Section
F. R. Notes
Other
13b
Outstanding Transfers
$ —
$ —
$ —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— ■
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
17,637
—
—
28,354
—
—
28,354
—
—
20,714
—
—
—
5,120
—
10,924
—
—
—
27,215
—
4,021
—
—
—
50
—
—
—
5,713
—
2,516
—
—
—
—
10,249,335
—
427
23,621,237
—
—
28,681,442
—
—
$62,552,014 $ —
$151,045

ADJUSTMENTS—
— 19,748,517 (la)
— 19,748,517 (1)
19,748,517 (1)
1,417,702 (2)
1,417,702 (2)
— 3,207,763 (3)
— 3,207,763 (3)
7,615,843 (4)
7,615,843 (4)
$1,429,383 $25,313,526 $151,045
Totals . .$213,917,195
$32,693,889 $72,028,821
NOTES:

Balance
to
Profit
& Loss
$ 20,091
41,887
— 61,978

$ —

19,748,517 (lb )
$62,552,014 $19,748,517

(1) F. D. I. C. Stock
(a) 1934— Purchase.
(b) 1947—Retirement (proceeds to Treasury).
(2) Payments from U. S. Treasury, Section 13b loans, Years 1934 and 1935.
(3) Transferred from Surplus to Reserves for Contingencies, Years 1940, 1942, and 1943.
(4) Transferred to Surplus (Section 7) from Reserves for Contingencies, Year 1945.
37

DIRECTORS AND OFFICERS
DIRECTORS

FRANKLIN J. LUNDING, President
Jewel Tea Co., Inc.
Barrington, Illinois
Chairman
JOHN S. COLEMAN, President
Burroughs Adding Machine Company
Detroit, Michigan
Deputy Chairman
WALTER J. CUMMINGS, Chairman
Continental Illinois National Bank
and Trust Company of Chicago
Chicago, Illinois

WILLIAM C. HEATH, President
A. O. Smith Corporation
Milwaukee, Wisconsin

HORACE S. FRENCH, President
The Manufacturers National Bank of Chicago
Chicago, Illinois

VIVIAN W. JOHNSON, President
First National Bank
Cedar Falls, Iowa

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

ALLAN B. KLINE, President
American Farm Bureau Federation
Chicago, Illinois

NICHOLAS H. NOYES, Chairman, Finance Committee
Eli Lilly and Company
Indianapolis, Indiana
OFFICERS

N. B. DAWES, Vice President
W. R. DIERCKS, Vice President
E. C. HARRIS, Vice President
J. K. LANGUM, Vice President

C. S. YOUNG, President
O. J. NETTERSTROM, Vice President
A. L. OLSON, Vice President
A. T. SIHLER, Vice President
W. W. TURNER, Vice President
A. M. BLACK, Cashier

W. A. HOPKINS, Assistant Vice President
L. H. JONES, Assistant Vice President
M. A. LIES, Assistant Vice President
F. A. LINDSTEN, Assistant Vice President

L. G. MEYER, Assistant Vice President
I. J. PETERSEN, Assistant Vice President
F. L. PURRINGTON, Assistant Vice President
H. F. WILSON, Assistant Vice President

G. W. MITCHELL, Senior Economist

C. P. VAN ZANTE, Chief Examiner

E. D. BRISTOW, Assistant Cashier
P. C. CARROLL, Assistant Cashier
H. H. CONKLIN, Assistant Cashier
E. A. HEATH, Assistant Cashier
C. T. LAIBLY, Assistant Cashier

H. J. NEWMAN, Assistant Cashier
C. M. SALTNES, Assistant Cashier
E. F. SHIREY, Assistant Cashier
B. L. SMYTH, Assistant Cashier
R. A. SWANEY, Assistant Cashier

P. C. HODGE, General Counsel
O. C. BARTON, Assistant Counsel

J. J. ENDRES, Auditor
A. M. GUSTAVSON, Assistant Auditor

DIRECTORS AND OFFICERS
(CO NTINUED)

MEMBER OF FEDERAL A D V ISO R Y CO U N CIL

EDWARD E. BROWN, Chairman of the Board
The First National Bank of Chicago
Chicago, Illinois

MEMBERS OF INDUSTRIAL A D V ISO R Y COMMITTEE

EDWARD J. DOYLE, President
Commonwealth Edison Co.
Chicago, Illinois

EDWARD M. KERWIN, Vice President
E. J. Brach and Sons
Chicago, Illinois

WALTER HARN1SCHFEGER, President
Harnischfeger Corporation
Milwaukee, Wisconsin

G. BARRET MOXLEY, President
Kiefer-Stewart Company
Indianapolis, Indiana

JAMES L. PALMER, President
Marshall Field & Company
Chicago, Illinois

DETROIT BRANCH
D I R E C T O R S

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

CHARLES A. KANTER, Chairman of the Board
The Manufacturers National Bank of Detroit
Detroit, Michigan

ERNEST GILBERT, Farmer
Waldron, Michigan

BEN R. MARSH, Vice President & General Manager
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. J. CHALFONT, Manager

H. L. DIEHL, Cashier
R. W. BLOOMFIELD, Assistant Cashier
A. J. WIEGANDT, Assistant Cashier

39

ORGANIZATION CHART
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

FUNCTIONS
SECRETARY

Serves as Chief Administrative Officer of the Board
in its relations with the divisions of its staff and with the
Federal Reserve Banks, and as Assistant Secretary of the
Federal Open Market Committee. Performs other duties
assigned to him by the Chairman or the Board. Exercises
general supervision over activities of the Secretary’s
Office.
LEG AL D IV ISIO N

Advises and assists the Board with respect to legal
matters arising in the conduct of its business. Prepares
regulations, rulings, orders, opinions, and correspondence
or other documents of a legal or semi-legal character.
Handles litigation involving the Board and the conduct
of hearings before the Board; and consults with and
renders assistance to Federal Reserve Bank counsel in
connection with litigation involving Federal Reserve
Banks. Prepares drafts of proposed amendments to the
law, analyzes and keeps the Board informed with respect
to pending legislation on banking and related subjects,
prepares material for Board’s Loose Leaf Service, and
40

prepares compilations of laws relating to the Federal
Reserve System and digests of State laws on certain bank­
ing subjects.
D IV ISIO N OF RESEARCH AN D STATISTICS

Keeps Board informed of developments in industry,
commerce, agriculture, and finance with a view to formu­
lation of credit and monetary policy. Prepares statistics
and charts and currently interprets developments in pro­
duction and distribution of commodities, employment,
income, expenditures, savings, and the course of prices,
as well as in banking, consumer credit, capital markets,
and international balance of payments. Makes special
studies of fiscal and labor problems from the monetary
point of view. Also keeps the Board advised of principal
financial and economic developments abroad with partic­
ular reference to the international financial policies of the
U. S. Government. Works with research departments of
Federal Reserve Banks on similar problems. Has respon­
sibility for most of the contents of the Federal Reserve
Bulletin and the Board’s Annual Report. Has charge
of the Board’s general library.

O FFICE OF THE SECRETARY

Clears and conducts official correspondence of the
Board. Prepares minutes covering the proceedings of,
and a record of policy actions taken by, the Board and the
Federal Open Market Committee. Maintains docket of
matters awaiting action by the Board and exercises super­
vision over the official records of the Board. Gives
special attention to general correspondence from the
public including particularly requests for information on
economic, monetary and banking questions.
D IV ISIO N OF EXA M IN A TIO N S

(1) Examines the Federal Reserve Banks. Reviews
bank examination and supervisory activities of the Re­
serve Banks, and participates in conferences, to further
coordination of policies and practices. Reviews the activi­
ties of the auditing departments of the Reserve Banks
and participates in conferences of auditors. (2) An­
alyzes, 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, etc.,
involving State member banks, (c) holding company
affiliates for voting permits, (d) national banks for trust
powers, and (e) certain other grants of authority. Re­
views reports of examination of State member banks and
reports of examination of, and annual reports submitted
by, holding company affiliates. (3) Examines corpora­
tions organized under section 25(a) of Federal Reserve
Act, and, when directed by the Board, corporations oper­
ating under agreements with the Board made in accord­
ance with section 25 of the Act. (4) Follows develop­
ments in banking policies and practices, advises the
Board regarding supervisory policies and procedures, and
maintains liaison with other Federal supervisory agencies
regarding individual banks and general banking matters.
DIVISIO N OF BAN K O PERATIO NS

Handles matters coming before the Board relating to
the condition, operations, and earnings and expenses of
Federal Reserve Banks, to condition and earnings and
expense reports of member banks, and to the banking
structure generally. Maintains a record of changes in
the status of all banks and branches in the United States,
including bank groups and chains, and compiles related
data. Issues the Par List. Operates Interdistrict Settle­
ment Fund. Prepares production schedules for printing
Federal Reserve notes, and supervises distribution of
paper currency among Federal Reserve Banks. Super­

vises Reserve Bank budgetary procedure; receives and
analyzes annual Reserve Bank budget statements and
makes reports thereon to Board; follows up budgetary
matters with Reserve Banks. Makes field surveys of
operations of Federal Reserve Banks with principal refer­
ence to operating costs. Prepares schedules determining
periodic reallocation of securities in the System Open
Market Account. Handles matters relating to loans
guaranteed by the Federal Reserve Banks. Maintains
records relating to discount rates, bank premises, and
fiscal agency and other operations of the Federal Reserve
Banks.
D IV ISIO N OF PERSO NNEL AD M INISTRATIO N

Handles matters pertaining to personnel, salary admin­
istration, and appointment of directors of the Federal
Reserve Banks.
Serves as the Board’s central personnel unit for re­
cruitment, investigation, and classification of personnel,
as well as the general administration of personnel poli­
cies. Maintains personnel and leave records, handles re­
tirement matters, and supervises the emergency medical
room.
D IV ISIO N OF AD M INISTRATIVE SERVICES

Serves as central budgetary, procurement, duplicating,
communications, space control, and service unit of
Board. Prepares master budget. Collects funds re­
ceivable, makes authorized disbursements, and maintains
Board’s books of account. Prepares pay rolls and keeps
related records. Audits operations of cafeteria and con­
cessions. Distributes Board publications on a paid, ex­
change or complimentary basis and handles correspon­
dence relating thereto. Proofreads and prepares printer’s
copy of material for Federal Reserve Bulletin, etc. Pur­
chases, stores and distributes supplies and equipment;
and awards contracts for special services. Performs off­
set printing, photostat, mimeograph and addressograph
work; maintains mailing lists; receives, distributes and
dispatches all mail. Operates cafeteria, private dining
rooms and snack bar; IBM equipment; telegraph switch­
ing center; telephone switchboard; main terminal of
pneumatic tube system; passenger automobiles and deliv­
ery service; inter-division page service; and special
stenographic and messenger service. Also operates and
maintains Board’s building and grounds, including all
mechanical equipment, such as elevators, air condition­
ing, etc.

41

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