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A s ' a n n u l 51 ?!3 3 3 ttandfifiSSIgg 133 S33313111133 ? B 1351311113i3 33 I 3 35111111I I ! 1 13 1 rrfrrfrriiiim Siir rFfrrrrFrrrFKKKRK 3 3! 1333 3 3 9 1 3 1 1 fF II [[[[rrrrrrrrrrrfrr W 'V M M M MEMBER BANKS < 7e ^ Federal R eserve Bank of Chicago <? O F F IC E or January 30, 1951 T H E P R E S ID E N T To the Member Banks: This annual report c a rrie s with it the grateful appreciation of the entire staff of the Federal Reserve Bank of Chicago for the co-operation of the bankers of the Seventh Federal Reserve D istrict, without whose help and advice the accomplishments se t forth herein could not have been attained. Very truly yours 0 Issuing Government bonds Economic Summary..................................................................................................................... 1 Federal Open Market Committee........................................................................................... 5 Departmental Activities Services to Member Banks Discounts and Other Credits..................................................................................... 6 Investments................................................................................................................... 7 Safekeeping of Securities........................................................................................... 9 Currency and Coin...................................................................................................... 11 Collection of Checks and Other Items................................................................... 13 Communications ........................................................................................................ 15 Economic Research .................................................................................................... 16 Examination of Banks................................................................................................ 17 Services to Treasury Department Issuance of Government Securities.......................................................................... 19 Servicing of Government Securities........................................................................ 21 Redemption of Government Securities................................................................... 22 Collection of Federal Taxes....................................................................................... 23 Board of Governors Activities— Regulations V, W , and X ..................................... 24 . . . General Bank Activities ' .rv Personnel ..................................................................................................................... 25 Building Operations.................................................................................................. 27 Statement of Condition............................................................................................................... 28 Statement of Earnings and Expenses......................................................................................... 29 Earnings H istory .......................................................................................................................... 30 Directors and Officers................................................................................................................... 32 ... Proving and forwarding checks SEVENTH DISTRICT ECONOMIC SUMMARY FOR 1950 Business Reaches New Peaks In the year 1950, the Seventh Federal Reserve District as well as the nation reached new peak levels of economic activity. During the first six months business extended its 1949 fall recovery into a period of prosperity, based heavily upon credit expansion. After midyear, spectacular new peacetime records were set in almost all fields during the upsurge in pre-mobilization spending by the private sector of the economy. Throughout most of 1950 the expansion of District production was steady and substantial, but demand for goods grew even more rapidly, particularly after the start of the Korean war. By the end of the year inflationary pressures had grown to serious proportions. The basic factor in the 1950 expansion was the strong ground swell of consumer spend ing. Even before Korea, individuals were purchasing homes and consumer durable goods at extremely high rates. The outbreak of open hostilities at the end of June, however, set off a three-month consumer buying wave of unprecedented proportions in both soft and hard goods lines. Retail sales declined somewhat from these levels thereafter, but the seasonal rise in sales at year-end set a new record in dollar volume. Throughout most of the year, consumers evidenced an increasing willingness to spend their larger incomes, liquidate past savings, and go into debt in order to make desired pur chases while goods were available. Resultant pressures upon the retail price structure were varying but strong, and were reinforced during the last months of the year as cost increases, in the form of higher wage rates and material costs, were reflected at the retail level. To restrain excessive consumer demand, credit controls were imposed during September and October on the two major types of debt incurred by individuals— new residential mort gages and consumer instalment credit. The effects of these controls on Seventh District business were difficult to measure in the first few months of their existence. For example, prices of used automobiles dropped sharply, but production o f new autos did not decline aside from the usual interruptions for model changeovers. In housing, on the other hand, selling prices evidenced little immediate change, while new production, as measured by housing starts, fell moderately from September through November. This latter decline, however, corresponds in both timing and magnitude to the seasonal construction decline witnessed in each postwar year except 1949, and probably is only incidentally due to the imposition of credit controls. Mortgage credit restrictions will not exert the major portion of their influence until more months have passed. Business Spending and Industrial Output Added to the growing volume of consumer spending during 1950 were rising levels of business and governmental outlays. Seventh District concerns made plant and equipment expenditures at unexpectedly high rates during the first months of the year. After Korea, these programs were revised upward, and by the end of the year were absorbing all the men and materials available. Durable goods industries, particularly, raised their capital expen ditures targets. Inventory accumulations during the first half of the year provided a reservoir of finished goods which enabled business to meet the summer consumer buying wave with relative ease. Since that time the total value of inventories has increased considerably, primarily because of higher prices. As a result, many businesses have drawn substantially upon bank credit in their efforts to acquire sufficient holdings of materials to support production schedules. State and local government expenditures remained at seasonally high levels during all of 1950, as both major and minor construction projects were pushed in the face of imminent materials shortages. The projected formidable increase in Federal government spending, mean while, did not materialize in significant volume during 1950. The great rise in demand during the year, therefore, came almost exclusively from private businesses and consumers. To meet the ever growing private demand, industrial output within the Seventh District expanded to record peacetime levels during the year. The automobile industry turned out 8 million vehicles, one-third more than in the previous peak year of 1949- Steel ingot pro duction in the area moved back up to "rated capacity’’ levels by midyear, and was maintained at or near that volume in almost every week thereafter. Most o f the consumer durable goods industries centered in the District likewise reached new output levels sometime during the final half of the year. Nonetheless, by year-end the slowing rate of output expansion above previous capacity ceilings was falling behind the rise in consumer and business demand, with huge increases in Federal government purchases still to come. Farm Income Below Last Year Although the trend in farm receipts has been definitely upward since midyear, the rise thus far has done no more than offset the decline in farm receipts during the preceding six months. Cash receipts from farm marketings in 1950 for Seventh Federal Reserve District farmers were about equal to the 1949 level, although the volume of marketings was slightly smaller. A rising level of farm production expenses, however, reduced net farm incomes slightly below the 1949 total, and farmers’ real incomes continued the decline started in 1947. Farm product prices, already rising early in the year, increased sharply following the outbreak of hostilities in Korea. As a result, the level of farm prices for the last six months of 1950 averaged 12 per cent higher than for the first half of the year. By the end of the year labor shortages were reported in some dairy sections and farm areas adjacent to booming in dustrial centers, with indications that this situation would become increasingly common in 1951. Farm mortgage indebtedness showed a further moderate increase in 1950 while nonreal estate indebtedness (excluding loans guaranteed by the CCC) in the Seventh Federal Reserve District increased sharply. This was due primarily to a large volume of livestock pur chases, and acquisitions of machinery and other production materials at higher prices. Crop production was again at a high level, being exceeded only in 1948 and 1949- The corn acreage allotment program plus a favorable soybean outlook resulted in much acreage being diverted from corn to soybean, oat, and hay production. Soybean production was the largest on record. Feed grain and hay harvests were large, but expanding livestock produc tion is expected to utilize the total 1950 output as well as part of the large carryover from previous years. The number of pigs raised in 1950 was a peacetime record, and production of dairy products and beef feeding operations continued at high levels. Strong Bank Loan Expansion Like all other elements of Seventh District business, commercial banking was strongly influenced by the intensification of international conflicts. A moderate first-half rise of 175 mil lion in member bank loans grew to a 968 million increase by November 29, as business and consumers drew heavily upon bank credit to finance their record rate of spending. By November 29, total loans, total non-Government investments, total earning assets, and total deposits at all Seventh District member banks stood at all time highs. f During the first half of 1950, loan expansion centered in rural banks, although Chicago banks experienced much less than their usual seasonal decline in credit. After June, however, commercial and industrial borrowings in major financial centers dominated the banking picture. Member banks financed the loan expansion primarily by shifting out of Government securi ties. Holdings of Governments dropped 526 million through November 29, 1950, with all but 76 million of the decline concentrated in the period after midyear. Member bank net current earnings during the first half of 1950 totaled 76 million, nearly 10 per cent higher than for a year earlier. W ith an expanded total of all earning assets, sharply increased holdings of relatively high-yielding loans, and a somewhat higher pattern of interest rates prevalent since September, even larger increases in net current earnings were assured for the second half of the year. FEDERAL RESERVE BANK OF CHICAGO Participation in SYSTEM OPEN MARKET ACCOUNT FEDERAL OPEN MARKET COMMITTEE The Federal Open Market Committee consists of all the members of the Board of Governors of out the objectives of the Federal Open Market Committee. the Federal Reserve System and the presidents of five out of the twelve Federal Reserve banks. The United States government securities shown The president of the Federal Reserve Bank of on the December 31, 1950 statement of the Fed Chicago serves on this Committee in alternate eral Reserve Bank of Chicago represented this years. Its primary activity is the direction of the bank’s share in the portfolio of the System operations o f the System Open Market Account, Open in which all the Federal Reserve banks participate. the Account, on December 31, 1950, amounted 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 Market Account. Our participation in to $3,142,824,000 par value of securities, rep resenting 15.16% of the total portfolio of $20,724,467,000. The former figure is comparable with an amount of $2,817,903,000 par value of the timing of such transactions, with a view to the securities held on December 31, 1949, an increase prevention of violent fluctuations in money rates of $324,921,000. In addition to the increase in and the maintenance of an orderly market for amount, the composition of our participation government securities. The Federal Reserve banks changed substantially during the year, as will be are required by law to co-operate in carrying evident from the following analysis: CHICAGO PARTICIPATION SYSTEM OPEN MARKET ACCOUNT B ills.............................. C of I’s.......................... N o tes............................ Bonds .......................... Total ............................ ................... ................... ................... ................... ................... Dec. 31, 1950 $ 188,646,000 353,976,000 1,899,577,000 700,625,000 $3,142,824,000 Dec. 31, 1949 $ 720,606,000 936,404,000 83,890,000 1,077,003,000 $2,817,903,000 Increase or Decrease —$ 531,960,000 582,428,000 + 1,815,687,000 376,378,000 + $ 324,921,000 It is apparent that the activities of the System count of the pattern of Treasury financing during Open Market Account during the year 1950 re the year, which tended toward the replacement sulted in the disposal of large totals of Treasury of maturing bonds and certificates of indebtedness bonds, bills, and certificates of indebtedness, and with new note issues, not all of which were in the acquisition of an even greater amount of Trea immediate demand by holders of exchangeable sury notes. This result came about largely on ac securities. 5 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 At Chicago, member bank borrowings secured by United States Government obligations increased during 1950. Also, one member bank rediscounted its eligible customers’ notes aggregating $105,991. Member bank borrowings from Detroit were less than 1949 amounts. Seven commitments, totaling $239,000, were granted to financing institutions in connection with working capital loans to industrial enterprises under the provisions of Section 13b of the Federal Reserve Act. STATEMENT OF OPERATIONS CHICAGO 1950 DOLLAR VALUE OF TRANSACTIONS A d v a n ces to M em ber B anks Rediscounts ............................................. Secured by U. S. Government Obliga tions .................................................... Secured by Eligible Paper..................... I n d u s t r ia l L o a n s Commitments ......................................... $ 105,991 $ DETROIT BRANCH 1950 1949 1949 38,029 $ — $ 1,921,630,000 — 1,841,338,000 50,000 146,130,000 50,000 215,150,000 — 239,000 66,533 — — SERVICES TO MEMBER BANKS INVESTMENTS The Federal Reserve banks act as securities agents for member banks. The purchase and sale of bonds by member banks, either for their own account or for the account of customers, may be effected through their Reserve bank. GENERAL SUMMARY banks and others by the Branch increased over 1949 amounts, while sales decreased. At Chicago, the total amount of the securities handled was more evenly divided between purchases and sales than in the previous year, although buyers were still pre dominant in activity, if not in number. The number of sales and purchase transactions pro cessed at Chicago during 1950 declined slightly from 1949 figures. On the other hand, Detroit showed an increase in purchase transactions. Par values involved in securities transactions showed a sizeable increase at Chicago. Purchases for member STATEMENT OF OPERATIONS DETROIT BRANCH CHICAGO 1950 1949 1950 1949 $323,552,900 26,911,125 50,000,000 $305,507,650 15,763,000 $28,943,439 $18,665,118 DOLLAR VALUE OF SECURITIES P urch ases U. S. G o v er n m e n ts Member Banks and Others......... Other F. R. Banks........................... Dealers— Repurchase Agreement O t h er Member Banks and Others............ 240,100 145,000 Total Purchases.................. $400,704,125 $321,415,650 $28,943,439 $18,665,118 U. S. G o v er n m e n ts Member Banks and Others......... Other F. R. Banks............................ Dealers— Repurchase Agreement $289,649,570 26,829,150 50,000,000 $247,362,970 17,047,350 8,152,677 9,162,119 Member Banks and Others............ 39,150 577,410 Total Sales............................ $366,517,870 $264,987,730 $ 8,152,677 $ 9,162,119 S a les O th er f 0 t T " i -i | r r ~ r i | 100 1 1 1 1 | 1 1 1 1 | 200 1 1 1 1 | 1 1 1 1 | 300 1 1 1 1 | L 1 1 1 "i (—r n r 400 0 $ MILLIONS 7 30 * ' Processing securities for safekeeping—vault custody SERVICES TO MEMBER BANKS 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. GENERAL SUMMARY During 1950, the Bank experienced considerable activity in the safekeeping operation. Chicago’s piecesreceived volume for member banks was 34,000, or 18%, larger than in 1949, while Detroit’s figures recorded an increase of 13,000, or 66%. Likewise, the number of pieces released topped 1949 amounts by 6,000, or 4%, at Chicago and 9,000, or 53%, at Detroit. CHICAGO 400 The number of coupons detached from securities by Chicago during 1950 was 158,000 greater than in 1949; Detroit’s figures on coupons detached showed an increase of 11,000. SAFEKEE OF SECURITI The number of pieces of United States Savings Bonds held in safekeeping as of December 31, 1950 declined from 1949 year-end holdings: Chicago’s decrease was 40,000; Detroit’s, 8,000. STATEMENT OF OPERATIONS DETROIT CHICAGO 1950 DETROIT BRANCH 1950 1949 1949 P iec es Securities— Received .................................. Released .................................. Coupons Detached from Securities......... D ollar V a lu e of 226,354 182,498 1,031,985 192,416 176,272 873,652 32,964 25,531 164,989 19,800 16,679 153,449 $10,513,427,538 10,779,162,846 5,119,513,015 88,837,308 $10,152,780,248 9,196,352,276 5,385,248,323 84,143,991 $ 1,353,693,070 1,316,385,463 566,908,357 6,512,833 $ 1,206,608,026 1,039,569,259 529,600,750 4,515,654 44,991 41,411 64,563 61,882 332,600 297.600 40,227 40,899 73,058 57,702 352,172 318,071 52,591 — 60,766 — 289,769 P iec es Securities— Received .................................. Released .................................. Held as of December 31. . ■ Coupons Detached from Securities......... SAFEKEEPING— SAVINGS BONDS P iec es 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 a l u e of — 56,423 — 56,225 — 297,944 — P iec es Received— U. S. Army Personnel........... Civilian.................. Released— U. S. Army Personnel........... Civilian.................. Held as of Dec. 31-U .S. Army Personnel Civilian..................... $ 3,107,060 8,889,256 3,703,375 8,419,382 17,619,310 48.451,793 $ 2,559,945 7,806,110 3,966,405 14,061,439 18,215,625 47,981,919 $ — 5,608,685 — 5,343,565 — 24,952,830 $ — 5,455,100 — 5,257,345 — 24,687,710 9 CASH OPERATIONS VALUE MILLIONS mm > MILLIONS 55001---- VALUE < C H 1C A G 0 > MINTS MINTS SERVICES TO MEMBER BANKS CURRENCY AND COIN 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, C 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. GENERAL SUMMARY Outgoing currency handled during 1950 exceeded the record volumes reached during 1948, and established all-time peaks both as to dollar amount and number of pieces. The 1950 work-load on incoming currency ap proximated that carried in 1949. Outgoing payments of coin, both loose and wrapped, were processed in moder ately increased amounts during 1950, while pieces and amounts of coin received from banks decreased. Net circulation of our Federal Reserve Notes amounted to $4,559,960,000 on December 31, 1950. This figure was $109,378,000 short of the all-time high circulation recorded on December 24, 1947. STATEMENT OF OPERATIONS DETROIT BRANCH CHICAGO 1950 PIECES Currency Outgoing ....................................................... Incom ing......................................................... Forwarded for Redemption......................... 1950 1949 1949 562,888,492 556,958,260 209,091,771 530,888,131 558,377,758 227,775,957 139,320,548 129,657,164 45,618,970 138,959,206 140,140,943 41,762,180 Outgoing— Loose ......................................... W rap p ed .................................. 817,725,390 576,615,000 764,496,603 557,660,600 94,457,591 73,413,000 51,462,807 32,980,000 Total ......................................... Coin 1,394,340,390 1,322,157,203 167,870,591 84,442,807 Incoming— From B an ks.............................. From Mints .............................. From Other F. R. Banks. . . . 1,171,841,129 173,650,000 8,000,000 1,282,457,814 45,100,000 5,000,000 118,618,352 65,850,000 1,447,000 110,937,421 4.500.000 3.545.000 DOLLAR VALUE OF PIECES Currency Outgoing ....................................................... Incoming......................................................... Forwarded for Redemption......................... $3,170,653,000 3,202,911,541 835,909,041 $2,984,250,500 3,207,451,014 847,900,014 $832,485,830 835,211,310 213,069,298 $867,504,156 933,667,769 175,634,606 Outgoing— L o o s e ......................................... Wrapped .................................. $ 53,416,151 58,199,750 $ $ 6,031,125 5,464,250 $ 4,422,446 2,236,700 Total ......................................... $ 111,615,901 $ 105,315,631 $ 11,495,375 $ 6,659,146 Incoming— From B an ks.............................. From Mints .............................. From Other F. R. Banks. . . . $ 101,878,807 4.770.000 1.700.000 $ 106,010,802 550.000 400.000 $ 10,156,482 2,271,000 596,000 $ 9,316,433 117.000 275.000 73.260.000 74.066.000 61.144.000 59.910.000 15.720.000 15.428.000 9,740,000 9,188,020 $ 745,000,000 772,420,000 $ 632,320,000 611,380,000 $195,000,000 190,340,000 $117,000,000 115,200,000 Coin FEDERAL RESERVE NOTE ISSUES— FEDERAL RESERVE AGENT Pieces Received from Washington......................... Issued to Bank................................................ Dollar Value of Pieces Received from Washington......................... Issued to Bank................................................ 47,352,801 57,962,830 11 NUMBER OF CHECKS HANDLED ] Country ] Government SERVICES TO MEMBER BANKS COLLECTION OF CHECKS AND OTHER ITEMS The Federal Reserve banks act as nation-wide clearing agents for the routing of checks between commercial banks in much the same manner as clearing house associations do in local com munities, and accept and pay checks drawn by the Federal GENERAL SUMMARY The number of checks processed during 1950 in creased 5% at Chicago and 10% at Detroit, while the dol lar value of all checks handled increased $11,163,459,000 Government. They also collect drafts, notes, bonds, coupons, acceptances, etc., for member banks and deliver against payment securities sold by member banks. at Chicago and $3,165,036,000 at Detroit. Preparation of outgoing cash letters on proof machines effected a 25% reduction in letters dispatched at Chicago. STATEMENT OF OPERATIONS CHICAGO 1950 DETROIT BRANCH 1950 1949 1949 CHECKS Number of Checks Handled City .................................................. C ountry........................................... Government— P a p e r..................... Card ..................... 48.246.000 214,132,000 3,813,000 41.288.000 47,511,000 201,730,000 3,814,000 40,216-,000 14.863.000 29.504.000 1,080,000 5,124,000 14.764.000 25.491.000 989,000 4,646,000 Totals................................ 307,479,000 293,271,000 50,571,000 45,890,000 Dollar Value of Checks Handled City .................................................. Country........................................... Government— P a p e r..................... Card ..................... $ 57,548,493,000 38,968,304,000 3,230,109,000 2,816,129,000 $50,956,061,000 34,009,768,000 3.725.385.000 2.708.362.000 $14,243,353,000 6,456,731,000 959.238.000 363.959.000 $12,302,979,000 5,361,938,000 884.793.000 308.535.000 Totals................................ $102,563,035,000 $91,399,576,000 $22,023,281,000 $18,858,245,000 DAILY AVERAGE NUMBER OF CASH LETTERS DISPATCHED......... 4,067 5,439 548 552 NON-CASH ITEMS Number of Transactions City .................................................. Country* ......................................... Coupon and Security.................... 25,933 160,987 632,473 28,304 152,434 535,320 21,310 14,218 143,982 24,949 15,573 114,728 Totals................................ 819,393 716,058 179,510 155,250 106,908 98,931 6,007 6,046 *lncludes direct sendings to other Federal Reserve banks by our member banks................................ Dollar Value of Transactions City .................................................. Country* ......................................... Coupon and Security..................... Totals................................ * Includes direct sendings to other Federal Reserve banks by our member banks................................ $ 65,040,000 380.618.000 994.624.000 $ 1,440,282,000 $ 289,251,000 98,851,000 364.684.000 869.692.000 $ 29,377,000 33.778.000 65.540.000 $ 32.716.000 35.297.000 47.996.000 $ 1,333,227,000 $ 128,695,000 $ 116,009,000 $ $ 26,096,000 $ 28,088,000 $ 265,809,000 13 SERVICES TO MEMBER BANKS COMMUNICATIONS 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, with the Reconstruction Finance Corporation, and with the Commodity Credit Corporation. Telegrams effecting transfers of funds for members, Fiscal Agency operations, and other banking transactions are processed. GENERAL SUMMARY The Chicago relay office of the Federal Reserve Leased Wires System processed over 1,100,000 telegrams during 1950, an increase of 11% over the 1949 volume. Messages handled by the Codes and Telegrams Division STATEMENT OF OPERATIONS at Chicago increased 8% over 1949 figures to a total of 188,000. Mail Department activities increased during the year both at Chicago and at Detroit. Also, increases in trans fers of funds were registered at both offices. CHICAGO 1950 DETROIT BRANCH 1950 1949 1949 TELEGRAMS PROCESSED C o m m e r c ia l W ires Received ................................ Dispatched .............................. MAIL HANDLED Number of Pieces Received......... Number of Pieces Dispatched, Mail and Express..................... TRANSFER OF FUNDS Number of Transfers............... Dollar V alue........................ 80,157 70,514 75,040 62,707 24,984 23,847 22,358 20,070 23,004 13,554 22,025 14,480 1,199 1,261 1,224 1,520 2,144,288 1,801,559 294,302 2 8 2 ,9 1 2 4,095,381 3,104,486 345,655 335,991 205,425 $74,658,796,000 196,428 $65,419,048,000 39,876 $22,986,784,000 34,213 $16,627,317,000 MAIL TELEGRAMS TRANSFER OF FUNDS Jr r — ( n ires Received ................................ Dispatched ............................ ■i X L ea sed W ECE'VE D DEI ‘ROM 1946 1947 1948 1949 1950 15 SERVICES TO MEMBER BANKS ECONOMIC RESEARCH The Bank gathers economic information and makes analytical studies which serve as the basis for the formulation and execution of monetary and credit policies. These data and studies are made available not only to the officers and directors of this Bank and to the Board of Governors, but also, in large part, to member banks and business firms in the Seventh Federal Reserve District. This informational service is 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 in order to obtain firsthand information on banking and business in this Reserve District, GENERAL SUMMARY In its studies during 1950 the Research De partment emphasized the impact of interna tional developments and partial mobilization upon Seventh District banking, industry, trade, and agri culture, with the rapid pace of events necessitating close attention to the changing outlook. Special studies of a pioneering nature conducted during the year covered such topics as the presentation of Federal receipts and expenditures on a cash and consolidated basis, the bearing of present than commercial banks; almost 23,000 registration statements under Regulation W were processed. Summary reports of statistical data were pre pared and sent to the Board of Governors. Greater use of collected data by reporting banks and firms was given marked attention. Altogether, 38 peri odic statistical summaries were sent to a total mailing list of over 30,000, with almost half a million individual reports distributed. commitments on future expenditures in the Fed One thousand Seventh District member banks eral budget, and the significance of velocity of received their own operating results recorded in circulation o f the money supply. our booklet M em ber B ank O perating Ratios. The The Department answered a mounting num ber of inquiries for business and financial infor mation received by mail, phone, or in person from banks, business firms, and others. The Research officers and staff made about 150 addresses at banking, business, and agricultural meetings dur ing the year and participated in many conferences concerned with national and District economic conditions. Agricultural Letter, issued weekly during the year, reached a circulation of approximately 6,000. The number of copies published regularly of Business Conditions has now risen to over 15,000, of which 4,000 are sold at cost in bulk subscrip tions to a number of member banks which redis tribute them to their customers. Some issues of Business Conditions were devoted entirely to a single important subject: February— the Federal A great amount of important data again was budget; April— postwar Seventh District banking; collected through the cooperation of Seventh Dis September— old-age pension problems; October— trict reporting banks and business firms. Reports credit, defense, and inflation; November —- the on retail trade were received from firms repre farm outlook. These special issues created a heavy senting about 2,500 stores; reports on instalment demand for extra copies totaling 24,000 beyond loans were received from about 500 firms other the usual distribution. 16 SERVICES TO MEMBER BANKS EXAMINATION OF BANKS An examination of the state member banks in the District is made each calendar year by the Federal Reserve Bank. Such examination includes trust departments and is usually made jointly with a state banking department. A pre-membership examination is made of state banks applying for admittance St to the Federal Reserve System. Investigations in connection with applications to organize national banks are also carried out. Various reports and applications required by law to be rendered by member banks are reviewed and analyzed. GENERAL SUMMARY Seven banks, 4 national and 3 state, were admitted to membership in 1950. The examination work during the year proceeded along the same general lines as hereto fore. In the field of trust department examinations, efforts to widen the scope of examinations were made with a view of bringing to light any possible weakness in administration of trusts. In addition to completing 597 examinations, 9 investi gations were made by the staff of the Bank Examination Department in connection with applications to organize national banks, and 1 investigation was made in connec tion with an application to organize a state bank. STATEMENT OF OPERATIONS NUMBER OF EXAMINATIONS MADE Regular.............................................................................................................. Membership ..................................................................................................... Trust Departments.......................................................................................... Follow-up Investigations................................................................................ Special .............................................................................................................. NUMBER OF MEMBER BANKS IN 7th F. R. DISTRICT N a t io n a l B a n k s As of January 1........................................................................................ Additions (See Note A ) ............................................................... Withdrawals (See Note B ) .......................................................... As of December 31................................................................................ St a t e B a n k s As of January 1...................................................................................... Additions (See Note A )............................................................... Withdrawals (See Note B ).......................................................... As of December 31................................................................................ 1950 1949 441 5 146 3 2 442 565 4 3 566 567 440 3 1 442 2 145 2 0 1 3 565 441 2 3 440 NOTE A— ADDITIONS TO MEMBERSHIP DURING 1950 N a tio n al B anks Park National Bank of Chicago, Chicago, Illinois Union National Bank of Chicago, Chicago, Illinois National Bank of Chenoa, Chenoa, Illinois Peoples National Bank of Bay City, Bay City, Michigan St a te B anks Bank of Silvis, Silvis, Illinois State Bank of Whiting, Whiting, Indiana Farmers State Bank of Breckenridge, Breckenridge, Michigan NOTE B— WITHDRAWALS DURING 1950 N a tio n a l B anks 3— voluntary liquidations (Assets and liabilities assumed by other banks) St a te B anks 1— conversion 17 S £ R / H e s i // m'U ion p, ecE; S A V ,N % \ ° h N ° s iSc; thro*gh 15SU lIiS a g e n t s PI / / / O w #* L l 'ONs / / / / c /• / e '/& ° e r *t J ° o l l a r Va l u b * //A S si cv / , C* G , a * n * o / r '9 S o 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 The number of applications for Treasury Savings Notes processed by Chicago in 1950 dropped consider ably from the previous year, and the dollar value of sub scriptions received for savings issues declined accordingly. This decrease in Notes was the result of higher yields available on Treasury Bills and Certificates, as well as the change in Treasury policy regarding the charging of accrued interest on Savings Notes. The increase in the dollar value of subscriptions re ceived at Chicago for marketable issues is due to a sub stantial increase in tenders for Treasury Bills. The maturity value of Series E Savings Bonds sold by issuing agents during 1950 decreased; however, this decrease was in line with national experience and was due largely to a substantial decline in sales of the larger denominations. STATEMENT OF OPERATIONS CHICAGO 1950 DETROIT BRANCH 1949 1950 1949 SUBSCRIPTIONS AND APPLICATIONS F o rm s R eceived Marketable Issues......................................... 11,300 11,200 480 560 Savings Issues .............................................. 120,300 147,800 10,700 11,930 N um ber of S u b sc r ib er s I nvolved Marketable Issues......................................... 20,700 21,800 1,280 1,300 Savings Issues .............................................. 498,700 486,000 232,500 199,200 Marketable Issues......................................... $12,543,416,000 $10,646,252,000 $578,622,000 $593,173,000 Savings Issues .............................................. 856,073,000 1,292,065,000 441,340,700 342,851,000 Marketable Issues......................................... $ 9,925,942,000 $ 8,091,315,000 $578,572,000 $593,173,000 Savings Issues .............................................. 856,073,000 1,292,065,000 441,431,100 342,301,000 D o lla r V a l u e — S u b sc r ip t io n s R eceived D ollar V a l u e — S u b sc r ip t io n s A llo tted P iec es D elivered on O rigin al I ssue Marketable Issues......................................... 111.500 112,400 8,500 7,830 Savings Issues .............................................. 699.500 712,000 260,620 220,550 SALES B Y ISSUING AGENTS S e r ies E S avings B onds Maturity V a lu e .............................................. Number of Pieces......................................... $ 824,480,000 $194,580,000 $197,054,000 6,572,500 6,873,000 3,328,500 3,165,950 3,039 3,107 361 364 681,396,000 $ NUMBER OF QUALIFIED ISSUING AGENTS AS OF DECEMBER 3 1 .................. 19 Posting control accounts of Government bond operations 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 out standing with the public, reissuing savings bonds, maintaining the Treasury Tax and Loan Accounts, and other miscellaneous services. GENERAL SUMMARY During 1950, the number of pieces issued and related maturity value of marketable issues increased over 1949 volume, both at Chicago and at Detroit. This increased volume resulted primarily from exceptional activity pre vailing in the Government bond market in connection with Treasury Department refinancing in August and December. STATEMENT OF OPERATIONS The number of payments handled in the Treasury Tax and Loan Account in 1950 was considerably greater than that functioned in 1949: Chicago’s payments in creased 51%; Detroit’s, 27%. These increases are ac counted for mainly by the increased number of withheld tax entries arising from the daily reporting requirement instituted in 1950 for depositaries for federal taxes. CHICAGO 1950 1949 DETROIT BRANCH 1950 1949 M A R K E T A B L E ISSU ES D e n o m in a t io n a l and O t h e r E xc h a n g es 5 7,200 6 2 ,8 0 0 $ 1 ,3 8 2 ,5 8 2 ,0 0 0 Pieces R e c e iv e d ............................................. Maturity V a l u e ............................................. $ 1 ,6 1 9 ,0 2 6 ,0 0 0 $ 830 2 9 ,4 6 8 ,9 0 0 1,160 $ 2 7 ,6 7 2 ,0 0 0 Pieces Is s u e d ................................................. Maturity V a l u e ............................................. 8 6 ,7 0 0 8 5 ,7 0 0 $ 1 ,6 1 3 ,7 0 2 ,0 0 0 $ 1 ,3 7 5 ,7 0 8 ,0 0 0 $ 2,740 2 9 ,4 9 4 ,9 0 0 $ 2 7 ,3 5 4 ,0 0 0 8 0 ,7 0 0 $ 5 ,9 4 6 ,9 8 7 ,0 0 0 57,300 $ 3 ,8 9 5 ,3 6 7 ,0 0 0 $ 4 ,9 9 0 8 3 7 ,4 5 5 ,5 0 0 3,560 $ 3 7 3 ,6 0 7 ,0 0 0 2,300 T eleg ra ph ic T r a n sfe r s (C P D ) Pieces R e c e iv e d ............................................. Maturity V a l u e ............................................. Pieces Is s u e d ................................................. 6 1 ,9 0 0 4 8 ,8 0 0 8,200 7,200 Maturity V a l u e ............................................ $ 6 ,2 3 4 ,5 7 8 ,3 5 0 $ 5 ,3 7 9 ,6 0 2 ,0 0 0 $ 1 ,0 0 4 ,7 4 3 ,5 0 0 $ 6 6 2 ,1 0 6 ,0 0 0 $ 9 2 ,7 1 0 1 4 ,1 4 7 ,4 0 0 9 7 ,1 9 0 $ 1 5 ,349,000 $ 9 2 ,4 1 0 13,647,800 94 ,9 6 0 $ 1 2 ,456,000 $ 423 23,425 SA V IN G S B O N D S R eissu e s Pieces R e c e iv e d ............................................. Maturity V a l u e ............................................. $ 6 9 1 ,4 0 0 2 3 7 ,5 4 1 ,6 0 0 $ 2 0 8 ,5 1 2 ,0 0 0 Pieces Is s u e d ................................................. Maturity Value ............................................ $ 5 8 9 ,5 0 0 2 2 3 ,0 5 2 ,8 0 0 $ 6 1 6 ,0 0 0 2 0 2 ,0 3 4 ,0 0 0 $ 7 0 ,6 0 0 6 ,6 5 9 ,4 0 0 $ R eissu es — T r ea su r y C laim C ases Pieces Is s u e d ................................................. Maturity V a l u e ............................................. 6 2 7 ,5 0 0 3 6 ,1 0 0 * 3 ,3 3 2 ,0 0 0 * — — D E P O S IT A R Y B A N K S — T R E A S U R Y T A X A N D LOAN ACCOUNT Number o f Payments H andled............... Depositary Balances as o f December 31 2 9 7 ,5 0 0 $ 3 6 6 ,6 8 2 ,0 0 0 197,000 $ 4 2 5 ,6 2 3 ,0 0 0 2 7 ,1 4 0 $ 21,360 1 3 0 ,9 0 2 ,5 0 0 $ 1 3 8 ,4 8 3 ,0 0 0 Number of Qualified Depositaries as of December 31 ............................................. 1,690 1,696 138 134 Pieces Received from Treasury D ept.. . 8 ,5 8 2 ,6 0 0 8 ,6 9 1 ,0 0 0 3 ,9 1 8 ,4 0 0 3 ,5 8 7 ,4 0 0 Pieces Prepared for D elivery.................... 8 ,0 7 0 ,6 0 0 8 ,7 9 8 ,0 0 0 3 ,8 6 9 ,9 0 0 3 ,595,800 C U S T O D Y O F FISC A L S T O C K *New Activity July 1, 1949 21 SERVICES TO TREASURY DEPARTMENT REDEMPTION OF GOVERNMENT SECURITIES 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 The number of pieces of bearer securities redeemed was greater in 1950 than in the preceding year: Chicago’s increase amounted to 15,000, or 9%, while Detroit’s was 4,000, or 34%. However, the number of registered securities processed declined because of the very sub thereof or through commercial banks designated as paying agents. Redeemed securities are canceled and forwarded to the Treasury Department. stantial reduction in 1950 redemption operations for Treasury Savings Notes. The total number of United States Savings Bonds Series A-E redeemed during the current year increased over 1949 volumes: Chicago processed 807,000 more; Detroit handled an increase of 55,000. STATEMENT OF OPERATIONS DETROIT BRANCH CHICAGO 1950 1950 1949 1949 TREASURY ISSUES— INCLUDING SAV INGS NOTES AND ARMED FORCES LEAVE BONDS Number of Pieces Bearer Securities ..................................... 197,800 182,200 17,790 13,230 Registered Securities .............................. 92,100 105,850 19,620 25,440 Bearer Securities ..................................... $7,814,244,000 $7,876,693,000 $1,411,317,300 $1,000,622,000 Registered Securities .............................. 374,594,500 545,774,000 193,441,900 100,857,000 Maturity Value SAVINGS BONDS ^Number of Pieces 11,186,000 10,372,000 4,113,200 4,057,450 By FRB — A -E....................... 314,600 321.000 47,000 47,100 By FRB — F-G ....................... 209,900 186.000 19,900 19,400 7,194,200 6,919,000 2,947,300 2,898,000 425,400 433,000 84,400 76,300 By Paying Agents— A -E....................... ^Number of Pieces $25 E Bonds Included in Above ....................................................... Number of Pieces Matured Bonds Included in Above....................................... Redemption Value $ 679,944,200 $ 564,660,000 — A -E....................... 78,533,900 85,268,000 8,974,500 8,777,500 — F-G ....................... 184.723.800 160.320.000 17,578,800 16,913,000 Matured Bonds Included in Above. . . 146.098.800 150.426.000 25,690,200 20,885,000 2,412 2,408 201 200 By Paying Agents— A -E ....................... By FRB By FRB $ 174,476,800 $ 165,168,000 NUMBER OF QUALIFIED PAYING AGENTS AS OF DECEMBER 3 1 .............. U. S. GOVERNMENT AND OTHER GOVERNMENTAL AGENCY COUPONS 1,609,300 Number of Pieces......................................... Dollar V a lu e ................................................ 22 $ 90,448,600 1,735,000 $ 99,069,000 179,800 213,900 $ 18,461,300 $ 9,141,000 SERVICES TO TREASURY DEPARTMENT COLLECTION OF FEDERAL TAXES The Bank acts as agent of the Treasury Department, assisting the Bureau of Internal Revenue in the collection of funds repre- senting income and social security taxes withheld from employees, and employers contributions, under Federal Tax regulations. GENERAL SUMMARY Effective January 1, 1950, the Treasury Depart tary bank. Commercial banks desiring to act as ment amended the regulations covering the col lection o f withheld taxes to include taxes collected depositaries for Federal taxes are required to re qualify under the revised Treasury regulations. under the Federal Insurance Contributions Act. A punched card depositary receipt covering both classes of taxes was substituted for the paper receipt formerly used for withheld taxes only. Tax deposits received by the Bank are summar ized below, although the figures are not strictly comparable because the 1949 figures represent withheld income taxes only, while the 1950 figures Under the new procedure, employers have the option of making tax deposits directly with the Federal Reserve bank or with a qualified deposi- cover both withheld income taxes and social security taxes: TAX DEPOSITS RECEIVED 1950 Withheld Income and Social Security Taxes Receipts ........................................................ Dollar V alue............................................... 1949 Withheld Income Taxes 8 0 9 ,0 0 0 6 5 2 ,0 0 0 ...$ 1 ,9 9 3 ,0 0 0 ,0 0 0 $ 1 ,4 2 3 ,0 0 0 ,0 0 0 Collection of Federal taxes during 1950 in volved administering a "dual” system: operations ceipts outstanding were received from collectors pertaining to the old "1949” system had to be completed, and, at the same time, procedures for the new "1 9 5 0 ” system had to be initiated. During the early months of 1950, 38,000 paper receipt copies aggregating $94,200,000 were received from depositary banks in conclusion of the "1 949” system. Throughout the year, 163,000 paper re- receipt copies, leaving a residue o f only 237 of ☆ o f internal revenue and matched against our paper those receipt copies unmatched at the close of the year under the old system. Under the new sys tem, the Bank received a total of 771,000 punched card receipts representing tax deposits of $1,899,000,000. ☆ ☆ 23 BOARD OF GOVERNORS ACTIVITIES REGULATIONS V. W, AND X throughout its district to investigate applications for loan guar antees and to ascertain whether or not Executive orders and related directives are being followed. The Board of Governors of the Federal Reserve System works through the Reserve banks in its regulation of loans guaranteed for defense production, consumer credit, and residential real estate credit. Each Reserve bank carries on specified activities ☆ ☆ ☆ necessary to the defense effort, are eligible to ob Regulation V — Loans Guaranteed for Defense Production tain guarantees of stated percentages of such loans under the Regulation V program. To date, rela tively few applications for guarantees have been received. It is anticipated, however, that as the rearmament program increases in volume, the num ber and amount of V loan guarantees will also increase, and may possibly exceed the very sub stantial volume of such guarantees issued during W orld W ar II. Regulation V was revised effective September 27, 1950. This Regulation is based upon and issued pursuant to the Defense Production Act of 1950, and the President’s Executive Order No. 10161 of September 9, 1950. Banks and other lending institutions making loans to contractors holding prime or sub-contracts calling for procurement ☆ ☆ 16, 1950 the Regulation was amended, tightening down payment requirements and shortening maxi mum maturities on installment credits of all listed articles except home improvement. W ithin 10 days of the effective date of the Regulation, registration statements were made available to all registrants in this District, and, by the end of 1950, the major Regulation W — Consumer Credit Regulation W was reinstated under the autho rity of the Defense Production Act of 1950 on September 18, 1950. Primarily it is intended to assist in curtailing consumer credit which, prior to the Regulation, had been increasing excessively and contributing materially to inflationary pressures. portion of registrants had complied with the Regu Its secondary purpose is to siphon from civilian channels vital materials necessary to defense pro duction. Despite the Regulation, the upward trend of prices continued so that effective October ☆ ☆ lation in filing statements with the Bank. An in vestigation program was instituted promptly and is functioning smoothly. ☆ ☆ Regulation X — Residential Real Estate Credit family units. Registration of those affected by the Regulation X was issued under the authority Regulation has not been required, although regis of the Defense Production Act of 1950, and be came effective October 12, 1950. At this time, the Regulation covers both urban and rural residences serving and designed to include not more than two- tration may be required at the discretion of the 24 Board of Governors of the Federal Reserve System. At the request o f the Board of Governors, no in vestigation of registrants has as yet been made. G EN ERAL BA N K A C TIVITIES PERSONNEL General personnel activities of the Bank are handled by a central personnel department. This work includes: recruiting, selecting, hiring, transferring, promoting, counseling, and terminating services; preparing payrolls and sundry payments; making with holding tax, retirement, and other deductions; making status changes; maintaining individual earnings, retirement system, social security, salary deduction, attendance, and other personnel records; administering wage, sick leave, and vacation policies, the Job Evaluation Plan, education, training, employee-welfare and hospital-surgical insurance programs; preparing the em ployees’ monthly magazine; maintaining the Medical Division, recreational and rental libraries, and employees’ lounges. GENERAL SUMMARY The number of employees at Chicago declined moder ately during the first eight months of 1950, and reached a low of 2,127 on September 8. In the latter part of the year, this trend was sharply reversed because an increase in the volume of work and the addition of two new departments made it necessary to increase our work force. At the Branch, employee turnover during the first half of the year was relatively small; however, during the last half of 1950 the rate of turnover increased substantially. Total personnel assigned to Chicago was 4% lower on December 31, 1950 than at the close of the previous year. This decrease would not have been registered if a STATEMENT OF OPERATIONS general tightening of the employment market had not prevented the Bank from completely meeting its person nel requirements. The Bank has resumed the practice of employing high school students on a part-time basis in order to provide additional workers. These studentemployees will be employed full-time after they are graduated. All changes necessary to effect the integration, on Jan uary 1, 1951, of Federal Old Age Insurance with the Bank’s retirement system were made during the latter part of 1950. CHICAGO 1950 1949 DETROIT BRANCH 1950 1949 NUMBER OF EMPLOYEES As of December 31............................ New Employees................................ Separations......................................... 2,216 469 557 2,304 395 539 385 141 136 380 78 100 MEDICAL Physical Examinations...................... Requests for Medical Care............... 931 31,205 833 33,337 113 2,999 73 3,158 CAFETERIA (See Note Below) Number of Meals Served, Including Officers Dining Room................... Daily Average Number of Meals Served In Cafeteria—Noon Only. 529,608 730,301 1,503 1,859 Branch cafeteria closed August 13, 1949 because of building construction. NOTE: 5-day week adopted effective August 6, 1949. AA EMPLOYEES CH ICAGO DETROIT 1946 1947 r* 194 9[~ * 1950 GENERAL BANK ACTIVITIES BUILDING OPERATIONS The operation of the Bank’s own building, and such outside rented space as is required, involves attending routinely to the services of air, water, heat, light and power, sewage disposal, vertical transportation, building and furniture repairs and main- tenance, and decorating and cleaning. Occasionally, attention is directed to real estate valuation and rate procedure, and, in connection with major alterations, to contract negotiation, archi tecture, engineering, and decorating. GENERAL SUMMARY Operations carried on during 1950 were in furtherance of a renovation program started after World W ar II, aimed at modernizing the Bank building. Since this program has now been prac tically fulfilled, a review is furnished of its more important projects. Projects Completed 1. Air-conditioned the entire building. 2. Installed standard doors in Vault No. 4 ; increased cash vault facili ties 25 % . 3. Enlarged truck concourse 66-2/3% . 4. Converted electric power and all electrical equipment to alternating current. 5. Modernized electric elevator system. 6. Installed under-floor electric outlet network for concentrations of business machines. 7. Installed modern wood and glass office partitions on two floors. 8. Replaced police alarm system. 9. Replaced all electric master-control wall clocks. 10. Made major departmental moves involving floors 13, 12, 11, 10, 9, 8, and 3. 11. Added oil burner alternate to coal burner boilers. 12. Modernized rest rooms. 13- Relocated laundry on 14th floor. Projects Near Completion 1. Increase electrical capacity from 2 to 8 watts per square foot. 2. Relocate Research Department on 5th and 6th floors. 3. Make pilot installation of fluorescent "troffer-lighting” system in Re search Department. A survey of the Bank building is under way in connection with the civil defense program to de termine feasible defense measures, zones of rela tive safety, escape routes, and availability of elemental civil defense tools. basement. Because of the national defense pro gram, these construction projects will be postponed until conditions are more favorable for building. Consideration has been given to the addition Alterations of the Detroit Branch building and the construction of an eight-story addition thereto, which were contracted for on August 19, 1950, will be completed, it is anticipated, late in 1951. Approximately 118,000 square feet of additional space will be provided. Vault capacity will be more of four stories to the Bank building and the con struction o f additional vault space below the third than doubled when construction on the addition to the cash and security vault is completed. In anticipation of future space needs, a com mitment has been made to rent 5,000 square feet of outside space on or before July 1, 1951. 27 ASSETS G old C e r t if ic a t e s O $ 4 , 1 6 0 ,1 8 1 , 8 2 4 .2 3 $ 4 , 3 7 5 ,0 0 7 , 0 1 1 .5 3 o t e s ...................................................... 1 0 0 , 2 7 6 ,2 6 5 .0 0 8 2 , 9 5 6 ,7 8 7 . 5 0 ...................................................................................................................................... 3 3 ,6 3 3 ,0 4 0 .6 7 2 9 , 7 9 9 ,9 3 8 . 2 9 .................................................................................................................. $ 4 , 2 9 4 ,0 9 1 , 1 2 9 .9 0 $ 4 , 4 8 7 ,7 6 3 , 7 3 7 .3 2 ........................................................................................................................ 1 0 5 ,9 9 0 .9 5 9 , 7 5 1 ,8 2 9 . 4 0 and D ue fro m R e d e m p t io n F u n d — F e d e r a l R e s e r v e N O ther Ca sh T o t a l C ash B il l s D is c o u n t e d U . S. T D ec. 31, 1 9 4 9 r e a s u r y .............. n H and D ec. 31, 1 9 5 0 T o t a l B i l l s .................................................................................................................... $ 1 0 5 ,9 9 0 .9 5 $ 9 , 7 5 1 ,8 2 9 . 4 0 U . S . G o v e r n m e n t S e c u r i t i e s ........................................................................................... 3 ,1 4 2 ,8 2 4 , 0 0 0 .0 0 2 , 8 1 7 ,9 0 3 , 0 0 0 .0 0 T o t a l B il l s an d S e c u r itie s ..................................................................................... $ 3 ,1 4 2 ,9 2 9 ,9 9 0 .9 5 $ 2 ,8 2 7 , 6 5 4 , 8 2 9 . 4 0 5 , 0 6 2 ,0 2 1 .9 9 3 , 5 1 4 ,1 9 4 . 1 0 k s ............................................................... 1 7 ,5 4 2 ,5 0 0 .0 0 1 8 , 4 6 4 ,5 0 0 . 0 0 .................................................................................................................. 7 1 6 , 7 5 0 ,2 1 0 . 9 7 4 3 5 , 8 4 8 ,9 9 2 . 8 8 ................................................................................................................................ 1 8 ,4 0 6 ,1 4 1 .0 4 1 5 , 3 6 8 ,0 0 9 . 1 1 T o ta l A s s e t s .................................................................................................................. $ 8 , 1 9 4 ,7 8 1 , 9 9 4 .8 5 $ 7 , 7 8 8 ,6 1 4 , 2 6 2 .8 1 $ 4 ,5 5 9 ,9 5 9 , 7 7 5 .0 0 $ 4 ,5 0 1 ,2 8 0 ,0 5 0 .0 0 2 ,7 9 7 ,8 2 8 , 1 3 0 .4 6 2 ,6 2 7 ,0 7 2 ,4 6 4 .2 0 B a n k P r e m is e s ............................................................................................................................. F ed era l R eserv e N U n c o ll ec t ed It O ther A s s e t s otes o f e m s O ther B a n LIABILITIES F ed era l R eserv e N D o t e s in A c t u a l C i r c u l a t i o n ........................................ . e p o s it s : M e m b e r B a n k — R e s e rv e A c c o u n t ................................................................................ U . S. T re a s u re r— G e n e r a l A c c o u n t ............................................................................... 1 0 2 , 3 0 5 ,0 7 8 . 7 4 5 6 ,2 6 9 ,0 4 0 . 1 9 O th e r D e p o s i t s ........................................................................................................................ 1 3 1 ,6 4 3 ,0 8 3 .8 1 1 1 7 , 4 8 1 ,4 4 9 . 5 7 $ 3 ,0 3 1 ,7 7 6 ,2 9 3 .0 1 $ 2 ,8 0 0 ,8 2 2 ,9 5 3 .9 6 ........................................................................................ 4 8 2 , 6 9 0 ,6 5 8 . 8 5 3 7 0 ,5 1 5 ,1 5 2 . 6 1 ..................................................................................................................... 8 5 5 ,9 0 0 .3 1 1 , 6 7 8 ,4 0 5 . 1 3 T o t a l L i a b i l i t i e s ...................................................................................................... $ 8 ,0 7 5 ,2 8 2 , 6 2 7 .1 7 $ 7 ,6 7 4 ,2 9 6 , 5 6 1 . 7 0 $ $ T o t a l D e p o s i t s ......................................................................................................... . D eferred O th er A v a il a b il it y I t L ia b il it ie s e m s CAPITAL ACCOUNTS C a p i t a l P a id I n .......................................................................................................................... . S u r p l u s (S e c t io n 7 ) .................................................................................................................. S u r p l u s (S e c t io n 1 3 b ) ......................................................................................................... O t h e r C a p it a l A c c o u n t s .............................................................................................. T o ta l L ia b ilitie s an d C a p ita l A c c o u n ts ...................................................... . 2 8 ,6 9 8 ,3 0 0 .0 0 2 6 , 8 8 5 ,3 5 0 . 0 0 7 5 ,3 4 5 ,4 4 3 .1 7 7 2 , 0 2 8 ,8 2 1 . 7 3 1 ,4 2 9 ,3 8 3 .7 8 1 , 4 2 9 ,3 8 3 . 7 8 1 4 , 0 2 6 ,2 4 0 .7 3 1 3 , 9 7 4 ,1 4 5 . 6 0 $ 8 ,1 9 4 ,7 8 1 ,9 9 4 .8 5 $ 7 , 7 8 8 ,6 1 4 , 2 6 2 .8 1 6 1950 $41,659,635.28 E a r n in g s .............................. 1949 $47,051,999-33 10,064,335.34 473,900.00 1,371,612.24 $11,909,847.58 $29,749,787.70 10,040,239.13 446,200.00 1,121,901.80 $11,608,340.93 $35,443,658.40 $ 5,131,653.36 7,986.71 $ 5,139,640.07 $ 4,268,571.03 131,944.37 $ 4,400,515.40 $34,889,427.77 $39,844,173.80 $ 56,411.31 $34,833,016.46 $ 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 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 dditions to C u r r e n t N e t 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 ed u c t io n s F ro m C u r r e n t N e t 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 ) ................................................................. — 29,845,729.40 $ 4,987,287.06 1,670,665.62 $ 3,316,621.44 FEDERAL RESERVE BANK OF CHICAGO SURPLUS ACCOUNT (Section 7) YEA R ENDED DECEMBER 3 1 , 1950, AND YEA R ENDED DECEMBER 3 1 , 1949 Su r plu s J a n u a r y T r a n sfer r ed to 1 ................................................................................................................... —As A b o v e ........................................................................... 31........................................................................................ Su r p l u s Su r plu s D ec em b er 1950 $72,028,821.73 3,316,621.44 $75,345,443.17 1949 $68,841,817.57 3,187,004.16 $72,028,821.73 29 FEDERAL RESERVE BANK OF CHICAG' STATEMENT OF EARNINGS AND EXPENSES NOVEM BER 16, 1914 (Date of Incorporation) TO DECEMBER 31 , 1950 YEAR CURRENT EARNINGS 1 9 1 4 -1 5 .............. 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 .............. 1950 .............. $ Totals.................. $416,742,512 268,885 665,937 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 41,659,635 CURRENT EXPENSES $ 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 11,909,847 $163,720,067 CURRENT NET EARNINGS $ 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 29,749,788 $253,022,445 DEDUCTIONS ADDITIONS FROM TO 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 4,137,334 333,895 422,552 243,136 447,858 1,115,619 4,400,515 5,139,640 $28,016,238 $ 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 NET EARNINGS ( S e e d is p o s itio n , n ex t page) 517,991 328,214 154,505 5,961,421 6,419,630 56,411 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 34,833,017 $38,114,253 $242,924,430 — $ PAID U. S. TREASURY TRANSFERRED TO SURPLUS Net Earnings ^ ear 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. 1950. Dividends Paid ( S e e d e t a i l, p re v io u s p a g e ) .$ . . . . . . 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 34,833,017 Totals ,..$ 2 4 8 ,7 5 0 ,2 1 2 NOTES: — 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 1,670,666 — — 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 $34,364,555 $90,685,880 $ Totals . .$242,924,430 ADJUSTMENTS— — 19,748,517 19,748,517 1,417,702 — 3,207,763 7,615,843 Section 7 $ Section 13b — — Franchise Tax Section 13b Interest on F. R. Notes Outstanding $ $ Balance to Profit & Loss Other Transfers — — — 20,091 41,887 — 61,978 — — — — — — — — — $ 10,394,480 11,576,009 1,186,301 246,586 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — $ — — 215,799 — — 602,838 — — $ — — $ — — — ■ — — — — — — — — — — — — — — — — — — — — — — — — 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 3,316,622 $ 26,322 — 25,030 12,767 206 — — — — — — — — — — — — 11,681 1,091,513 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — $25,313,526 17,637 28,354 28,354 20,714 5,120 10,924 27,215 4,021 50 5,713 2,516 — 427 — — — — — — — — — — — -— — — 10,249,335 23,621,237 28,681,442 29,845,729 $151,045 $92,397,743 $ — $ -19,748,517 ( l a ) (1 ) (1 ) (2 ) (3 ) (4 ) 19,748,517(lb ) 1,417,702 (2 ) 3,207,763 (3 ) 7,615,843 (4 ) $34,364,555 $75,345,443 $1,429,383 $25,313,526 $151,045 $92,397,743 $19,748,517 ( 1 ) F. D. I. C. Stock: (a) 1934— Purchase. (b ) 1947— Retirement (proceeds to Treasury). Payments from U. S. Treasury, Section 13b loans, Years 1934 and 1935. Transferred from Surplus to Reserves for Contingencies, Years 1940, 1942, and 1943. Transferred to Surplus (Section 7) from Reserves for Contingencies, Year 1945. 31 — DIRECTORS AND OFFICERS DIRECTORS FRANKLIN J. LUNDING, Chairman, Executive Committee Jewel Tea Co., Inc. Barrington, Illinois Chairman JOHN S. COLEMAN, President Burroughs Adding Machine Company Detroit, Michigan Deputy Chairman WILLIAM C. HEATH, President A. O. Smith Corporation Milwaukee, Wisconsin WALTER J. CUMMINGS, Chairman Continental Illinois National Bank and Trust Company of Chicago Chicago, Illinois HORACE S. FRENCH, President The Manufacturers National Bank of Chicago Chicago, Illinois WILLIAM J. GREDE, President Grede Foundries, Inc. Milwaukee, Wisconsin VIVIAN W . JOHNSON, President First National Bank Cedar Falls, Iowa ALLAN B. KLINE, President American Farm Bureau Federation Chicago, Illinois NICHOLAS H. NOYES, Chairman, Finance Committee Eli Lilly and Company Indianapolis, Indiana OFFICERS C. S. YOUNG, President E. C. HARRIS, Vint Vice President J. K. LANGUM, Vice President H. J. CHALFONT, Vice President A. L. OLSON, Vice President N. B. DAWES, Vice President A. T. SIHLER, Vice President W . R. DIERCKS, Vice President W . W . TURNER, Vice President A. M. BLACK, Cashier W . A. HOPKINS, Assistant Vice President L. G. MEYER, Assistant Vice President L. H. JONES, Assistant Vice President I. J. PETERSEN, Assistant Vice President M. A. LIES, Assistant Vice President F. L. PURRINGTON, Assistant Vice President F. A. LINDSTEN, Assistant Vice President H. F. WILSON, Assistant V ice President G. W . MITCHELL, Senior Economist C. P. VAN ZANTE, C hief Examiner E. D. BRISTOW, Assistant Cashier H. J. NEWMAN, Assistant Cashier P. C. CARROLL, Assistant Cashier C. M. SALTNES, Assistant Cashier H. H. CONKLIN, Assistant Cashier E. F. SHIREY, Assistant Cashier E. A. HEATH, Assistant Cashier B. L. SMYTH, Assistant Cashier C. T. LAIBLY, Assistant Cashier R. A. SWANEY, Assistant Cashier P. C. HODGE, General Counsel J. J. ENDRES, Auditor O. C. BARTON, Assistant Counsel A. M. GUSTAVSON, Assistant Auditor DIRECTORS AND OFFICERS MEMBER OF FEDERAL ADVISORY COUNCIL EDWARD E. BROWN, Chairman of the Board The First National Bank of Chicago Chicago, Illinois MEMBERS OF INDUSTRIAL ADVISORY COMMITTEE EDWARD J. DOYLE, President Commonwealth Edison Co. Chicago, Illinois EDWARD M. KERWIN, Vice President E. J. Brach and Sons Chicago, Illinois WALTER HARNISCHFEGER, President Harnischfeger Corporation Milwaukee, Wisconsin G. BARRET M OXLEY, President Kiefer-Stewart Company Indianapolis, Indiana JAMES L. PALMER, President Marshall Field & Company Chicago, Illinois DETROIT BRANCH DIRECTORS WILLIAM M. DAY, Vice President & General Manager Michigan Bell Telephone Company Detroit, Michigan JOHN A. HANNAH, President Michigan State College East Lansing, Michigan CHARLES T. FISHER, JR., President National Bank of Detroit Detroit, Michigan HOWARD P. PARSHALL, President Commonwealth Bank Detroit, Michigan JOHN A. STEWART, Vice President and Cashier Second National Bank and Trust Company of Saginaw Saginaw, Michigan OF FI CERS H. J. CHALFONT, V ice President and Manager R. W . BLOOMFIELD, Assistant Vice President H. L. DIEHL, Cashier A. J. WIEGANDT, Assistant Cashier
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