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SECOND ANNUAL REPORT FEDERAL RESERVE BANK OF MINNEAPOLIS Minneapolis, January 1, 1917. MEMBERS OF DISTRICT NUMBER N INE: W e respectfully submit herewith a report of the results of your bank’s operations for the calendar year 1916. The statements and schedules accompanying speak for themselves and need no special comment. Money has been comparatively cheap throughout the district during the entire year, and rediscounts of commercial and agricultural paper did not reach proportions of any consequence. Gur facilities have been available, however, and the assurance which it has given resulted in member banks loaning more closely and freely than they would have felt justified in doing had we not been here prepared to assist them in case of need. Appreciating the necessity of not only employing a sufficient proportion of our funds to pay the deficiency incurred in our initial stages and our current operating expenses, but if possible, to make some returns to our stockholders as contemplated by the Act, our funds in view of the lack of demand at home, were employed so far as market conditions warranted, in Government bonds, short time municipal warrants and bankers’ acceptances. This has resulted in our liquidating the deficiency reported to you one year ago, in providing for the amortization of our furniture, fixture and equipment account, and in making a payment to you on account of accrued dividends, There was left a comfortable amount to carry over as undivided profits. Section 16, providing for the collection and clearing of checks, was put into operation in July. This necessitated an increase in our office and equipment, as well as clerical staff. The business in this department has increased from month to month, which to us is evidence of satisfactory service in that department. We are now handling about 15,C01checks each day, aside from the checks handled on the Twin City banks through our own clearing house. The expense of main taining this department is borne by the banks using the facilities. A charge of l ^ c per item is made to the bank depositing with us the items for collection, and the revenue thus obtained has been sufficient to pay rent for space used, clerical help, postage, stationery and depreciation of furniture and equipment used in that department. If these facilities were made general use of by our members, the charge could be reduced to one cent per item. Your Directors convene monthly, and all are kept in close touch with our operations by report made to them weekly. Your Executive Committee holds daily meetings, the junior officers and employees have been loyal and are doing their part, to the end that transactions with our member banks have been efficiently and expeditiously handled. The loans and investments of national banks, state banks and trust companies in the United States have increased since the establishment of the Federal Reserve System by about $3,000,000,000. The loans and investments of banks in the Ninth Federal Reserve District during this same period have increased about $200,000,000. . W hether this increase is due to the increased price of all the necessaries of life, including the price of labor, whether it is due to the increased population and corresponding development of busi ness, whether it is due to the inauguration of the Federal Reserve System, and a releasing of reserves, whether it is due to large importations of gold, regardless as to what anyone may attribute it, in view of existing conditions throughout the world, we believe the greatest care should be exercised by bankers at this time, confining their extensions of credit so far as possible for the financing of short time, self-liquidating transactions or those that may be liquidated without distress to the borrower. We again desire to express our appreciation for the friendly interest and co-operation of our members, without which the progress made and results obtained would have been impossible. THEODORE WOLD, Governor. STATEMENT OF CONDITION DECEMBER 31, 1916. RESOURCES. Bills Discounted and Collateral Loans to M em bers............................................... Bankers* Acceptances ................................................................................................... United States Bonds and N otes............................................................... ................ State and Municipal W arran ts.................................................................................... Accrued Interest on U. S. Securities......................................................................... Furniture and Equipment (including new vault and safes) .............................. Organization Expense .................................................................................................. Cost of Federal Reserve Notes, Unissued.................................................................. Expenses paid in advance............................................................................................ Due from other Federal Reserve Banks ................................................................. Due from Banks and Bankers, also deferred debits to members ..................... National Bank Notes and Federal Reserve Notes, other b a n k s ...................... Federal Reserve Notes on hand................................................................................... Other lawful m oney....................................................................................................... Gold Certificates and Gold Coin............................................................................... Gold in Settlement F u n d ............................................................................................... Condition Dec. 31,1916. Condition Dec. 31,1915. $1,985,182.75 6,199,999.55 3,178,687.85 569,664.72 15,607.73 59,274.19 None 16,295.18 1,250.00 3,598,997.07 3,449,929.61 18,800.00 2,374,585.00 179,552.47 8,775,637.00 7,064,000.00 $1,244,615.71 477,806.40 1,328,820.00 910,513.28 6,473.42 54,159.64 32,341.71 19,932.85 $37,487,463.12 $16,466,407.16 $2,609,700.00 44,541.27 36,274.45 22,534.74 176.25 886,437.51 5,680.45 4,347,156.58 29,534,961.87 $2,546,850.00 $37,487,463.12 $16,466,407.16 $20,484,045.00 $14,000,000.00 4,390,694.20 *8,945.00 868,390.00 21,416.95 2,747,298.00 4,355,000.00 LIABILITIES. Capital ............................................................................................................................. Profit and L o s s ............................................................................................................... Discount and Interest U nearned................................................................................. Discount and Premium on United States B onds.................................................... . W ithheld for Federal Income T a x ............................................................................. Government Deposits ................................................................................................... Cashier’s Checks ................................................................................................ ............. Due to other Federal Reserve B anks......................................................................... Due to Member B anks........... ........................................................................................ Gold with Federal Reserve Agent to reduce liability for outstanding Federal Reserve Notes ....................................................................................................... 18,963.25 7,069.14 1,822.20 26,340.33 13,865,362.24 PROFIT AND LOSS ACCOUNT. Gross earnings January 1, 1916, to December 31, 19 1 6 ..................................................................... Less: Assessment for expenses Federal Reserve B oard........................................... Cost of new Federal Reserve Notes issued during year ........................ Operating expenses — .......................................................................................... $238,108.68 $8,962.07 9,866.06 79,877.70 98,705.83 Excess of earnings over current expenses.............................................................................. .............. Less the following items charged off: Organization expense ............................................................................................ Reduction of furniture and fixtures ................................................................... Dividend, period Nov. 2, 1914, to July 1, 1915................................................. $139,402.85 $32,341.71 4,800.00 57,719.87 94,861.58 Balance carried forward $44,541.27 GROSS EARNINGS BY MONTHS 1915 AND 1916. 1915. $4,269.52 4,014.08 4,932.92 5,109.33 5,942.45 6,741.82 1916. $11,471.21 10,909.70 11,724.58 12,480.69 15,782.63 17,154.86 January . February March .. April .. . May J u n e ---Total earnings 1916. $238,108.68 1916. $20,350.25 25,074.83 27,170.94 30,212.02 28,660.58 27,116.39 1915. $9,038.91 10,766.40 10,966.71 13,371.14 12,333.42 12,122.61 Total earnings 1915................... $99,609.31 July ........................ August ................... September ............. October ................. November ............. December ............... CLASSIFICATION OF EARNINGS. 1916. FROM— Bills Discounted—Member Banks......................................................................... . Bankers’ Acceptances ................................................................................................ United States Bonds and N otes............................................................................... State and Municipal W arran ts................................................................................. Sundry Profits including interest on transfer drafts....................................... 1915. $60,937.81 50,098.78 69,266.49 34,267.09 23,538.51 $50,488.75 5,247.90 18,793.25 20,930.82 4,148.59 $238,108.68 $99,609.31 VOLUME OF DISCOUNTS FOR 1916. Minnesota 285 No. of member banks ................. 88 No. of member banks served . . . No. of applications made for re 362 discount ....................................... 1,903 No. pieces re-discounted ............. 2,500 Average amount of each piece... Total amounts of re-discounts... $4,824,590 Smallest i t e m ................................. 500,000 Largest item ................................. North Dakota 155 28 South Dakota 125 30 79 447 1,200 $527,890 112 584 1,300 $768,393 Wisconsin Montana 89 78 7 19 21 88 1,800 $157,801 31 198 1,100 $215,893 Michigan 32 2 764 174 5 610 10 3,230 2,800 2,000 $27,501 $6,522,068 Distribution by Maturities of Paper and Short Term Investments Held by the Federal Reserve Bank at Close of Business December 31, 1916. W ithin 10 days Bills Discounted, m em bers.... $596,315.93 Bankers' acceptances ........... 909,962.13 State and Municipal w arrants 81,282.19 After 10 but within 30 days After 30 but within 60 days After 60 but within 90 days $426,319.53 757,607.55 35,000.00 $416,044.93 $139,967.66 1,552,864.19 2,979,565.68 90,550.71 337,831.82 90 days After Totals $406,534.70 $1,985,182.75 .................... 6,199,999.55 25,000.00 569,664.72 CLEARING STATISTICS. Number of Items and Volume Handled Since Beginning of Collection System July 15, 1916. No. of items Total No. of items on Total on Date within district. within district.other districts, other districts. July 15 to July 31........................................... 36,030 $7,131,009.33 761 $2,579,516.37 August .............................................................. 129,004 24,435,164.27 5,331 9,567,653.43 September ........................................................ 244,546 37,896,114.75 10,099 15,514,249.85 October ............................................................ 330,883 53,954,654.88 13,521 20,467,890.62 November ........................................................ 351,088 58,919,187.47 13,019 24,135,306.35 December ........................................................ 380,642 55,940,040.66 14,483 19,285,616.48 T o t a l .......................................................... 1,472,193 $238,276,171.36 Attest: 57,214 $91,550,233.10 FRANK C. DUNLOP, Auditor. FEDERAL RESERVE BANK OF MINNEAPOLIS N IN T H D IS T R IC T OFFICERS THEODORE WOLD, G overnor S. S. COOK, C ashier FRANK C. DUNLOP, A u d ito r GRAY WARREN, T ra n s it M a n ag er DIRECTORS JO H N H. R IC H , C h a irm a n a n d F ed eral R eserve A gent W . H. LIG H TN ER , Vice C h a irm an a n d D ep u ty F ed eral R eserve A gent. J . C . BASSETT, A berdeen, S. D. F. R . BIGELOW, S t. P au l, M in n . JO H N W. BLACK, H o u g h to n , M ich. E. W. DECKER, M in n eap o lis, M in n . L. B. HANNA, F argo, N. D. F . P. HIXON, L a C rosse, Wis. N. B. HOLTER, H elen a, M o n t. CURTIS L. M O SH ER, A ssista n t F ederal Reserve A gent MEMBER ADVISORY CO U NCIL V i. A. ..... ..I. | ■ iim r JK./L J. y W i l U U e B p O a W ' COUNSEL A. UELAND
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