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1958

FEDERAL RESERVE BANK
MINNEAPOLIS

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CONTENTS
Highlights of 1958 Operations

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16

Financial Statements

a.

Personnel and Management

24

TO THE MEMBER BANKS OF THE
NINTH FEDERAL RESERVE DISTRICT:
W e are pleased to send you this Annual Report of the Federal
Reserve Bank of Minneapolis for the year 1958. By custom, this sum­
mary of operations is directed to the member banks of the Ninth
district. Yet, more broadly, it is addressed to the public and the entire
financial community of the area in recognition of the responsibilities
of this bank in participating in the formulation of System policy, the
effects of which diffuse throughout all phases of the economy.
Our Annual Report this year presents some facts and figures on
our operating experience during 1958. Certainly implicit in the con­
tinued expansion of work volumes, which this report documents, is an
exciting challenge to prepare for the even greater demands of tomorrow
on our banking system.
On behalf of the directors, officers and staff we extend our thanks
to the financial community and the public of the N inth district for their
cooperation and counsel during the past year.

Chairman of the Board

2




President

HIGHLIGHTS
OF
1958
OPERATIONS
A t the risk of drawing a “ how-many-times-have-I-heard-this-before”
look from our readers, we find it still in good accuracy to report to you
that new heights of activity were reached in most departments of the
ban\ during 1958. Most of you perhaps know that our principal depart­
ments (measured in terms of volume of business and number of em­
ployees) are those concerned with these three functions: (1) collecting
government, personal and business checks forwarded to us by other
banks, (2) supplying and redeeming currency and coin for commercial
banks, and (3) issuing and redeeming public debt securities of the
United States. Our Annual Report this year is so organized that opera­
tions in the three larger departments—Check Collections, Currency
and Coin, and Fiscal Agency, as they’re called—are summarized first.
Then, completing the “ Operations” part of this report are capsule
reviews of the year’s activities in other staff and operating departments
most often in contact with our member banks and the public. We
thought such a choice would lay before you those operating facts of most
interest and at the same time minimize your reading effort. Of course,
we admit that even the best hand-culled collection of operating figures




3

never made very exciting reading for anyone. Nevertheless, the figures
do tell a story of the growing level of operations at your Federal Reserve
Bank—and it’s a story we think useful to tell.
When you’ve read through “ Operations,” you will have entered part
two of this report (“ Personnel and Management,” by name), where you
will find a discussion of changes in Directors and the Official Staff at
both our Minneapolis and Helena offices. Finally, a crisp review of
our financial statements (appropriately titled, “ Financial Statements” )
wraps up our Annual Report for 1958.
As you can see by the foregoing bill of fare, our emphasis this year
is on what’s happened at the Federal Reserve Bank of Minneapolis dur­
ing 1958—no economic review or report on research; you’ll find that
covered issue-by-issue in our Monthly Review. But before we get on to
the departmental summaries, perhaps a few general comments might
help place the operating data in perspective.
Nineteen fifty-eight was the first complete calendar year of occu­
pancy of our eight new floors, and the additional space and facilities
have made our operations easier and better. In several departments
located in the old portion of the bank, remodeling still in process
tended to be somewhat disruptive of routine, yet these departments con­
tinued to do a creditable job. It is expected that most of the remodeling
will be finished within a year or so.
It is of interest to note that the bank operated with a smaller staff in
1958 than in 1957, in spite of a generally expanded work volume. While
operating technique is gradually being improved, reduced employee
turnover this year was an important factor contributing to greater
efficiency.
A goodly share of the statistics we offer you in the ensuing sections
are in the form of comparisons between 1957 and 1958. And these will
display mostly ‘plusses’ with a sprinkling of ‘minusses.’ Of course, the
changes shown here are but one short segment of the longer-term trends
affecting our operations. Indeed these periodic statistical tallies are more
than simply year-end accounting records—they also serve as an annual
reminder that we’ve got to keep a part of our thinking directed toward
the growing work load of the future.

4




For example, the task of sorting and listing checks at this bank
involves the handling of more than a hundred million items a year—
many of these more than once. W hile the system in use today, essentially
manual, has and can be further improved in efficiency by more stream­
lined procedures and additional large-capacity accounting machines, the
prospect of doubled check volume in another decade looms as an im­
posing one. For this reason we look to a whole new system: the use of
high-speed electronic machinery that would automatically sort and list
checks pre-coded with magnetic ink symbols. Electronic check opera­
tions on a national scale are under study both within and outside the
Federal Reserve System. While it may be several years before electronics
becomes a thoroughly effective approach here at our bank, some sort
of pilot installation may be made here in a year or so.
N ot all clerical production work lends itself quite so clearly to high­
speed, automatic machine operations. For example, a machine that will
effectively sort ‘worn out’ currency from ‘fit’ currency is probably far
distant in the future.
So you see, there are plenty of challenges left to be faced. Perhaps
the operating figures presented in this Annual Report take on a shade
more of vitality when one begins to understand that they involve a
workaday contest of many people against a great many individual pro­
duction problems—with the frequent result of finding better ways of
performance.

check collections
In terms of both volume and dollar amount, the work of the Check
Collection Department in 1958 surpassed records of all previous years.
The 113.7 million items totaling $33,672 million processed during the
year reflected increases of 5 percent in volume and 6 percent in dollar
amount over 1957. As an indication of how rapidly check volume is
increasing, the 1958 number more than doubled the 55.8 million items
processed just nine years ago in 1949.
Combined city and country check volume increased almost 8 percent
in 1958 over 1957, indicating, at least in part, the intensive job com­




5

mercial banks are doing in selling checking accounts. Postal money
order volume has been declining on a nationwide basis, partly because
several years ago the cost per item to the purchaser increased. Govern­
ment checks handled by this bank decreased 5.5 percent over the previous
year as a result of a change in procedure. Checks formerly payable
through designated Reserve banks are now drawn directly on the Treas­
urer of the United States.
The table below compares volume and amount of items handled the
past two years at the Minneapolis office:
1957

1958

% Change

Total items handled, amount (000)

$31,756,269

$33,672,471

+

6 .0 %

Total items handled, number (000)

108,305

113,684

+

5 .0 %

City checks handled, number (000)

24,270

27,032

Country checks handled, number (000)

63,677

67,538

+

6 .1 %

Government checks handled, nu mber (000)

10,868

10,271

—

5 .5 %

Return items handled, number (000)
Postmasters7 deposits handled, number

+ 1 1 .4 %

898

936

+

4 .2 %

8,592

7,908

—

8 .0 %

The following table indicates comparisons of postmasters’ deposits
handled in 1958 with those handled in 1957:
1957
Postmasters'deposits handled, amount (000)
Postmasters'deposits handled, number

Total number of checks handled, by years
Mi 11ions of Items
MINNEAPOLIS

6




OFRCEj

1958

$373,701

$358,858

312,256

235,783

% Change
—

4 .0 %

— 2 4 .5 %

Postmasters’ deposits decreased because regulations of the Post Office
Department, effective April 30, 1958, permitted postmasters to retain
larger cash amounts and make less frequent remittances, as well as the
fact that post offices in Upper Michigan were transferred to the Chicago
Regional Accounting Office, June 1, 1958. Thus, the number of Post­
masters from whom we receive deposits, declined from 3,477 to 3,291.
The Check Collection Department operates on a 24-hour basis
processing checks continuously from 10:30 p.m. Sunday to 5:00 p.m.
the following Saturday each week.
The Federal Reserve banks are presently considering proposals of
office equipment manufacturers for the production of high speed elec­
tronic equipment to further the Reserve banks’ program of mechanizing
check handling operations. The proposed equipment will employ mag­
netic ink character recognition of a common machine language for
automatic processing of checks.
It has been estimated that there are at present 52 million checking
accounts in the United States and that 10 billion items were issued on
these accounts last year. It has been also estimated that by 1970 approx­
imately 22 billion checks will be issued annually. Pilot installations of
electronic equipment for check handling at several Federal Reserve
banks are expected to be made late in 1959 or early i960.

currency and coin
D uring the year the Currency and Coin Department raised its stand­
ards relating to so-called ‘fit’ currency, that currency which has been
used but is in good condition. As a result, the amount available to be
paid out to member banks requesting fit currency was less than in 1957.
T w in Cities banks, to meet the demands of their customers, commenced
sorting out their own fit money rather than sending it to us. Con­
sequently the number of pieces of currency received and counted by us
during the year decreased by over 8 million, for a $32 million drop; even
though the total amount of fit and new currency paid out increased by
$18 million. Productivity in items handled per man hour within the
department continued to increase in 1958.




7

Currency and coin items handled, by years
of i fe

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40

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194?

1 950

1 951

1 952

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1 953

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1954

1955

1 956

f'1 957

1958

During the year a once-a-week currency and coin pickup and de­
livery service by armored car was inaugurated to 44 banks in Minnesota
and 5 banks in Wisconsin, involving three separate routes. These ship­
ments by armored car permit substantial savings in clerical effort here
at the Minneapolis office and additional significant benefits to the mem­
ber banks served. As new routes are contemplated, member banks will
be contacted individually.
Following is a resume of work volume at the Minneapolis office:
1957
Currency received and counted, number
Currency received and counted, amount (000)
Currency items handled per man hour
Coin counted, number
Coin items handled per man hour
Coin w rapped, number
Currency paid out, amount (000)
Unfit notes retired from circulation, number

69,824,346
451,066
2,729
128,710,719
27,017
106,723,000
379,149
34,088,140

1958

% Change

61,525,954
$
418,707
2,858
132,723,945
32,324
114,905,000
$
397,010
37,662,344

— 11.9%
— 7 .2 %
+ 4 .7 %
+ 3 .1 %
+ 19.6%
+ 7 .7 %
+ 4 .7 %
+ 10.5%

fiscal agency
Fiscal Agency transactions increased generally in 1958 with the ex­
ception of redemptions of United States Savings Bonds. The dollar
amount of redemptions decreased by over $100 million from 1957—the




year that the large volume of F and G bonds sold during the seventh
and eighth war loan drives in 1945 matured.
The following table shows total Fiscal Agency transactions in dollar
amounts during 1958 and compares them to 1957 totals:
1957

1958

$1,891,810

$2,157,339

+ 14.0%

Securities transferred by wire (000)

1,463,173

2,065,725

+ 4 1 .2 %

Exchanged for new issues, or redeemed (000)

+ 17.3%

U.S. Government direct obligations issued (000)

% Change

1,714,180

2,010,352

U.S. Savings Bonds sales (000)

155,259

169,683

+

U.S. Savings Bonds redemptions (000)

390,197

284,602

— 27.1 %

Purchases and sales of Government Securities
for banks (000)

125,649

142,120

+ 13.1%

46,348

64,953

+ 4 0 .1 %

Coupons paid from U.S. Government and other
Agency obligations (000)

9 .3 %

D uring the year the Treasury used several innovations in its financ­
ing program affecting the operations of the Fiscal Agency Department.
In the June cash offering, a long-term bond was sold at a premium of $5
per $1,000 with a preferential allotment to investor type subscribers. In
the November refunding of $12.2 billion of December maturities, the
Treasury offered a Certificate of Indebtedness and a Note priced at
99.95 and 99%, respectively. On December 1, 1958, the Treasury depart­
ment announced a change in its weekly financing program of Treasury
bills. It was made known the Treasury would move gradually from a
cycle of 13-week Treasury bills to a new cycle which would include both
13-week and 26-week bills with an outstanding aggregate of $26 billion
instead of $23.4 billion.
T w o significant changes were made during the year to expand the
sale of Series E and Series H United States Savings Bonds. The privilege
to purchase Series E or H savings bonds with the proceeds of Series F
and G savings bonds maturing on or after September 1, 1958, was ex­
tended to individuals and personal trust estates without regard to the
annual limitation. Effective December 1, 1958, the privilege of applying
the proceeds of Series F and G savings bonds, at or after maturity, to
the purchase of Series E or H bonds without regard to the annual
limitation of $10,000 (maturity value) for each series was extended to
all holders of outstanding F and G bonds, except commercial banks.




9

member bank reserves and discounts
When inflationary tendencies gave place in 1957 to a short-lived
recession that reached its low point in mid-1958, national and Ninth
district monetary policies were taken to stabilize the economy and pro­
mote long-term growth. As one of the instruments of economic policy,
reserve requirements were lowered by the Board of Governors at various
times during the year, thereby releasing reserve funds of commercial
banks. On March 1, 1958, the reserve requirements of ‘city banks’ and
‘country banks’ were lowered by l 2 of 1 percent and on April 1 by
/
another l 2 of 1 percent and on April 24 reserve requirements of ‘city
/
banks’ were reduced a further l 2 of 1 percent so that at year end reserve
/
requirements of ‘city banks’ and ‘country banks’ were at i 6 1 2 percent and
/
11 percent, respectively, of net demand deposits. D uring all of 1958 re­
serve requirements against time deposits remained at 5 percent. As a
result of the lowered reserve requirements, the average required reserves
of member banks in the Ninth district dropped slightly in 1958, even
though deposits increased during the year.
Discount rate and reserve requirements, 1957-1958

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mm& REQUIRED fOR COY BANKS AGAINST NET DEMAND DEPOSITS
1ST
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16

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RESERVES REQUIRED FOR COUNTRY BANKS AGAINST NET DEMAND DEPOSITS12

11
, MINNEAPOLIS DISCOUNT RATE Kl
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Nov. 22

Mar* 21
Aug. 9

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1957

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- April 18

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A S O N D

Daily average borrowings at the Minneapolis bank, by months
Millions

of

Dollars

In late 1957, as the onset of the recession became apparent, the
Federal Reserve Bank of Minneapolis initially lowered its discount rate
from 3V2 percent to 3 percent. Subsequently in 1958 the discount rate
was established at successively lower rates as the recession was felt more
in the Ninth district. In September, 1958, as evidence appeared that the
economy was recovering, and for technical reasons as well, the discount
rate was raised by % percent and in the following month it was raised
l 2 percent to the year-end level of 2% percent.
/
W ith demand for credit reduced during the recession, and with
more reserve funds available because of the lowered reserve require­
ments, fewer member banks in 1958 came to the Federal Reserve Bank
of Minneapolis to borrow funds to meet their reserve requirements. The
daily average borrowings dropped from over $39 million in 1957 to just
over $7 million in 1958. Even though ‘country banks’ borrowed less than
half as much as in the previous year, the bulk of the reduction came from




11

the ‘city banks’ which borrowed a daily average of over $31 million in 1957
and just under $4 million in 1958. Data from the W ire Transfer De­
partment would suggest that in addition to the borrowing from the
Federal Reserve Bank, member banks borrowed Federal funds at ap­
proximately the same daily average rate as during the previous year.
Those banks finding themselves in a ‘long’ position apparently availed
themselves of Federal funds lending to a greater extent than in 1957.
The following table compares 1957 and 1958 required reserve figures
and daily average borrowing totals of the Minneapolis Federal Reserve
Bank:
1957

Required reserves (000)
Daily average borrowing from
Federal Reserve Bank (000)

1958

$416,414

$413,758

$39,063

$7,274

% Change
—

.6 %

- 8 1 .4 %

bank examinations
One of the stated purposes of the Federal Reserve Act is “ to estab­
lish a more effective supervision of banking in the United States,” and
the functions of the Bank Examination Department are closely related
to that purpose. During 1958, all of the 130 state bank members were ex­
amined. Grand Rapids State Bank, Grand Rapids, Minnesota, applied
for membership, was examined and became a member. Also during the
year, an investigation was made with respect to the application for
membership of the newly chartered Commerce Bank & Trust Company,
Helena, Montana, and that application was approved by the Board of
Governors but the new bank had not commenced business at the year
end. This brought the total number of district member banks up to 476
at year end compared with 474 a year earlier.
W hile the department field and office staff are engaged primarily in
the examination of state member banks and trust departments and the
preparation and analysis of reports of those examinations, the depart­
ment also analyzes the reports of examination of district national banks
and trust departments. In 1958 reports were received and analyzed relat­
ing to the 346 national banks in the district, including the new national
bank chartered during the year. In connection with trust activities the

12




Department has collected information on district common trust funds
since 1955 as part of a Federal Reserve System study on this method of
collective investment. A t the end of 1958 there were 10 common trust funds
in operation in this district.
Various matters were handled by the Examination Department
relating to holding companies of banks in the district, both under the
Banking Act of June 16 ,19 33, as amended, and under the Bank Holding
Company Act of 1956. Investigations were conducted by the depart­
ment in connection with applications for voting permits under the 1933
statute. Annual reports, required of nonexempt holding company affil­
iates, were edited and reviewed, and memorandums of such reviews
were sent to the Board of Governors. There are presently two ex­
empted and four nonexempted holding company affiliates having their
head offices in this district. Examinations of nonexempted holding com­
pany affiliates are made by the department, and examinations, to the
extent considered advisable, are made of affiliates of state member banks.
T he Bank Holding Company Act of 1956, which became effective
in M ay 1956, repealed no statutes relating to holding company affiliates.
The new act defines a bank holding company differently than a holding
company affiliate is defined in the 1933 legislation, and the new act
places with the Federal Reserve System the responsibility of administer­
ing the act. In general, the new act provides for registration of bank
holding companies and for jurisdiction of the Board of Governors
over formation of new bank holding companies, acquisition of new
banking interests by existing holding companies, and divestment of non­
banking interests of bank holding companies. Federal Reserve Banks in
each district were delegated the responsibilities of accepting applica­
tions for formations, acquisitions, hearings as provided for in the act,
and m aking investigations for the Board of Governors on those matters.
Annual reports are required of bank holding companies. Those reports
are edited and reviewed, and memorandums of such reviews prepared
and copies sent to the Board at Washington. There are presently five
registered bank holding companies having head offices in this district.
Those five organizations at the end of 1957 had 193 Ninth district bank
subsidiaries with aggregate deposits of $3,182 million. In 1958 three




13

investigations were made with respect to applications of bank holding
companies to acquire additional subsidiary banks and three hearings
were held at this bank under the divestment provisions of the act.

public services
The Public Services program underwent a number of changes in
1958, including reactivation of the Short Course in Central Banking and
omission of the usual annual bankers’ conference in Minneapolis.
The Short Course series, begun in 1948 and discontinued temporarily
during the bank’s 1956-57 building program, consisted this year of 5
sessions attended by 90 member bankers. This brought the grand total
for the last 1 1 years to 67 sessions and 1,041 registrants.
Although the usual spring conference for N inth district bankers
was omitted for the first time since 1953, such a meeting is again sched­
uled for 1959. Other meetings, including the tenth annual Workshop
meeting for college teachers of money and banking and the fifteenth
annual Examiners’ Conference, were held as usual. The bank also put
on a five-lecture course in central banking for the investment bankers
of Minnesota. Average attendance for each session was approximately 140.
Such activities as bank tours, talks by bank representatives, distri­
bution of publications and movies, special bank luncheons, and repre­
sentation at important bankers’ meetings were continued.

research
Emphasis on studies of district economic trends and regional re­
source analysis were major aspects of the work of the Research Depart­
ment during 1958. A comprehensive study dealing with personal in­
come trends in the N inth district was initiated. Another important
statistical study launched in 1958 deals with industrial consumption of
electric energy. The successful completion of the latter project is expected
to lead to the development of a monthly industrial production index for
the district. Both the electric energy series and the personal income
series will add important new periodic measurements for the continuing

14




task o£ analyzing district economic conditions.
A special survey treating the economic impact of the Missouri Basin
Development Program on the economy of the N inth district was com­
pleted and published in March 1958.
The Money and Banking Workshop, held on M ay 3, 1958, was
attended by more than 150 persons. T h e purpose of these annual pro­
grams is to stimulate discussion on monetary and central banking topics
among the teachers of money and banking from colleges and universities
throughout the district.

other departments
In addition to the departments summarized above, there are many
supporting activities necessary to a smooth and successful operation of a
Federal Reserve Bank. The services of such departments as Personnel,
Duplicating, Operations Planning, Protection, and Purchasing con­
tributed to the effectiveness of staff and operating departments whose
activities more directly affect the day-to-day work of member banks.
The Protection and Building Departments, for example, were ex­
panded during the year in order to take care of the increased facilities
of the additional eight floors of bank space. Security zones have been set
up in certain areas of the bank allowing visitors and public tours more
freedom to enter the unsecured zones. The Purchasing Department
has embarked on a regular replacement program for worn and obsolete
furniture and equipment; many purchases had been postponed until
completion of the new building. A significant development affecting our
bank’s centralized personnel system, was the shift toward greater re­
sponsibility for officers, department heads and supervisors over personnel
and operating procedures. Other aspects of the bank’s personnel policies
are discussed in the immediately following section of the report.




15

PERSONNEL
AND
MANAGEMENT
directors
For the second successive year a change in the bank’s directorate
was caused by the death of one of its members. On June 20, Mr. F . Albee
Flodin, President, Lake Shore, Inc., Iron Mountain, Michigan, who had

16




served as a Class C director since 1951, died. A s his successor, the Board
of Governors in August appointed Mr. John H . Warden, President,
Upper Peninsula Power Company, Houghton, Michigan. In December
he was reappointed for a three-year term beginning January 1, 1959.
A t the annual election in November, Mr. John A . Moorhead, Presi­
dent, Northwestern National Bank of Minneapolis, and Mr. T . G. H arri­
son, Chairman of the Board, Super V alu Stores, Inc., were re-elected
Class A and Class B directors, respectively.
In December the Board of Governors redesignated Mr. Leslie N .
Perrin, Director, General Mills, Inc., as Chairman and Federal Reserve
Agent for 1959. A t the same time D r. O. B. Jesness, Agricultural Econ­
omist, St. Paul, was redesignated as Deputy Chairman for the coming
year. The Board of Governors also appointed Mr. John D . Stephenson,
senior partner in the law firm of Jardine, Stephenson, Blewett & Weaver,
Great Falls, Montana, as a director of the Helena Branch for a two-year
term beginning January 1, 1959. H e succeeds D r. Carl A . McFarland,
Missoula, Montana. Dr. McFarland served as Chairman of the Branch
Board in 1957 and 1958.




From left to right:
R. C. Lange
T. G . Harrison
H. C . Refling
J . H. W ard en
O . B. Jesness
J . A. Moorhead
G . Murray
J . E. C orette
C. McFarland
J . W . Johnson
H. N. Thomson
L. N. Perrin
F. L. Deming

17

D irectors of th e Fed eral Reserve Ban k
of M in n eap o lis 1
Term Expires

Class A
John A. Moorhead

December 31
President

1958

Northwestern National Bank of Minneapolis
Minneapolis, Minnesota
Harold N. Thomson

Vice-President

1959

Farmers & Merchants Bank
Presho, South Dakota
Harold C. Refling

Cashier

1960

First National Bank in Bottineau
Bottineau, North Dakota

Class B
T. G . Harrison

Chairman of the Board

1958

Super Valu Stores, Inc.
Hopkins, Minnesota
J. E. Corette

President and General Manager

1959

Montana Power Company
Butte, Montana
Ray C. Lange

President

1960

Chippewa Canning Company, Inc.
Chippewa Falls, Wisconsin

Class C
John H. W ard en

President

1958

Upper Peninsula Power Company
Houghton, Michigan
Leslie N . Perrin2

Director

1959

G eneral Mills, Inc.
Minneapolis, Minnesota
O . B. Jesness3

Agricultural Economist

1960

St. Paul, Minnesota

!T he list as it appears above is correct as of December 31, 1958. Changes during the year and
new appointments for the coming year are described in the text.
2Chairman
3 Deputy Chairman

18




Also in December the bank’s own Board of Directors named two
new Helena Branch directors. Mr. H arald E . Olsson, President, Ronan
State Bank, Ronan, will replace M r. George N . Lund, President, First
National Bank, Reserve, and Mr. Roy G. Monroe, President, First State
Bank, Malta, will replace Mr. J. W illard Johnson, Financial Vice Presi­
dent, Western Life Insurance Company, Helena.
Mr. Gordon Murray, President, First National Bank of Minne­
apolis, was re-elected by the Board of Directors as a member of the
Federal Advisory Council for 1959.

officers
Changes in the official staff of the bank during the year were
occasioned by the retirement in July of Mr. Sigurd Ueland, Vice Presi­
dent, Counsel, and Secretary, and in December of M r. Harold Berglund,
Assistant Vice President assigned to the Helena Branch.
Concurrent with the retirement of Mr. Ueland, Mr. H . G . M cCon­
nell, Vice President, assumed the additional title of Secretary and Mr.
M. H . Strothman, Jr., Vice President, assumed the additional titles of
Counsel and Assistant Secretary.
In anticipation of the retirement of Mr. Berglund, Mr. Robert W .
Worcester, formerly an economist in the bank’s Research Department,
was elected Assistant Cashier and assigned to the Helena Branch
September 1.

employees
Improvements in operations and increased efficiency of our em­
ployees took place during 1958. Employee turnover decreased sharply
in 1958 as compared with previous years.
Our total staff at the Minneapolis office on December 31, 1958, was
595—219 men and 376 women—as compared with 620 at the end of
1957. During 1958 we employed 133 new people and during the same
period 158 employees left the bank.
A t the Helena Branch there were 57 employees on December 31,




19

D irectors of th e Fed eral Reserve B an k of
M inneapolis, H elena B ra n c h 1
Appointed by Federal Re$erve Bank

Term Expires
December 31

G e o . N. Lund

Chairman of the Board and President

1958

The First National Bank of Reserve
Reserve, Montana
J. W illard Johnson

Financial Vice-President and Treasurer

1958

W estern Life Insurance Company
Helena, Montana
O . M. Jorgenson

Chairman

1959

Security Trust and Savings Bank
Billings, Montana

Appointed by Board of Governors
Carl McFarland

Missoula, Montana

1958

John M. Otten

Farmer and Rancher

1959

Lewistown, Montana

Member of Federal Advisory Council
G ordon Murray

President
First National Bank of Minneapolis
Minneapolis, Minnesota

Industrial Advisory Committee
Sheldon V. W o o d

Chairman

John M. Bush

Ishpeming, Michigan

A. H. Daggett

St. Paul, Minnesota

A. B. Heian

Chippewa Falls, Wisconsin

W a lte r M. Ringer, Sr.

Minneapolis, Minnesota

Minneapolis, Minnesota

x
The list as it appears above is correct as of December 31, 1958. Changes during the year and
new appointments for the coming year are described in the text.

20




1958, consisting of 23 men and 34 women. D uring the year there were
10 accessions and 13 separations.
In June the Minneapolis office converted from semi-monthly to bi­
weekly pay periods for the nonofficial staff. Under this plan employees
are paid every other Friday. Acceptance has been very favorable. The
possibility of conversion to more mechanized payroll procedures is
presently under study.
Total employment for selected years
Number

Number

In June a contract was signed with a local physician to be present in
our Medical Department six hours a week, to conduct pre-employment
and annual physical examinations. D uring 1958 the bank nurse and
physician conducted a refresher course in first aid for some members of
the staff.
W e have continued to encourage employees to enroll in courses
offered by the American Institute of Banking. A t year end, 292 em­
ployees were members of the A .I.B . and during the year there were
135 enrollments in various classes.
Our Executive Development Committee has continued in its objec­
tives to develop and train employees to perform more effectively in their




21

O fficers of th e Fed eral Reserve B an k
of M in n eap o lis 1
Frederick L. Deming

President

Albert W . Mills

First Vice-President

Banking Department
C arl E. Bergquist

Assistant Cashier

Frederick J. Cramer

Assistant Vice-President

John J. G illette

Assistant Cashier

C larence W . Groth

Vice-President and Cashier

Arthur W . Johnson

Vice-President

Milford E. Lysen

Operating Research Officer

Orthen W . Ohnstad

Assistant Vice-President

Christian Ries

Assistant Vice-President

Marcus O . Sather

Assistant Cashier

Clement Van N ice

Assistant Vice-President

Audit Department
Arthur J. M cN ulty

General Auditor

Bank Examination Department
Harold G . M cConnell

Vice-President and Secretary

Roger K. G ro bel

Chief Examiner

Fiscal Agency— Government Securities
Melvin B. Holmgren

Vice-President

W illiam C. Bronner

Assistant Cashier

Legal Department
Maurice H. Strothman, Jr.

Vice-President, Counsel, and Assistant Secretary

Research Department
Franklin L. Parsons

Director of Research

O scar F. Litterer

Business Economist

Helena Branch
Kyle K. Fossum

Vice-President assigned to Helena Branch

John L. Heath

Assistant Cashier assigned to Helena Branch

Robert W . W o rc e ste r

Assistant Cashier assigned to Helena Branch

1
The list as it appears above is correct as of December 31, 1958. Changes during the year and
new appointments for the coming ye ar are described in the text.

22




Percentage turnover of full-time staff
Per c ent

P e rc e n t

30

3Q ;

20

20 ;

10

1CU
1954

1955

1956

19 5 7

1958

o; )
. j

present positions, and to develop a capable group of potential officers,
department heads, supervisors and specialized personnel. One of the
major activities of the committee was to appraise the potential of all
employees in the higher job grades and design a program for their
further development. Selected individuals were released from their
regular duties and given training in Federal Reserve Bank operations
through scheduled observation assignments.




23

Federal Reserve Bank of Minneapolis
Statement of Condition
December 31,1957

Assets
G old Certificates

$

O ther Cash

December 3 1 1958
,
$ 458,383,283

22,171,353

Redemption Fund for F.R. Notes
Total G old Certificate Reserves

390,875,779

22,463,213

$

413,047,132

$

480,846,496

$

8,359,527

$

8,663,803

Bills Discounted
Foreign Loans on G old

120,000

429,600

23,774

8,774

60,462,000

52,251.000

430,167,000

Industrial Advances

392,334,000

U.S. Governm ent Securities:
Bonds

60,325,000

Notes
Certificates of Indebtedness

21,226,000

Bills

47,343,000

Total U.S. Governm ent Securities

$

511,855,000

$

552,253,000

Total Loans and Securities

$

511,998,774

$

552,691,374

348

Uncollected Items

17,588,500

136,191,064

F.R. Notes of O ther F.R. Banks

348

23,008,000

Due from Foreign Banks

145,320,465

10,085,159

8,268,865

$1 ,102,690,004

$1 ,213,379,851

$ 494,826,280

$

M ember Bank— Reserve Accounts

$ 433,490,539

U.S. Treasurer— General Account

18,515,030

$ 419,894,846
24,459,296

Foreign

8,184,000

5,640,000

O ther Deposits

1,335,941

O ther Assets
Total Assets
Liabilities
Federal Reserve Notes in Actual Circulation

598,279,065

Deposits:

Total Deposits
Deferred Availability Items

$

450,954,710

113,263,142

$

129,776,907

$

O ther Liabilities
Total Liabilities

960,568

$ 461,525,510

628,521

933,453

$1 ,070,243,453

$1 ,179,944,135

C apital Accounts
C apital Paid In
O ther C apital Accounts
Total Liabilities and C ap ital Accounts

24




$

7,425,950

$

8,387,400

25,020,601

25,048,316

$1 ,102,690,004

$1 ,213,379,851

FINANCIAL
STATEMENTS
statement of condition
Changes in the condition of the Federal Reserve Bank of Minne­
apolis between the end of 1957 and the end of 1958 reflect, among other
things, the implementation of a monetary policy designed to cope with
the 1958 recession in economic activity. Thus, the increase of govern­
ment securities held by the bank in 1958 was occasioned by Federal
Reserve System open market operations. Open market operations are, of
course, one of the most powerful tools of monetary policy.
Another tool of monetary policy, reserve requirements, must be
considered to properly interpret the change in member bank reserves
disclosed by this bank’s comparative statement. Reserve balances fell
somewhat despite substantial growth in district member bank deposits.
This was possible because percentage reserve requirements against mem­
ber bank deposits were reduced during the year, again, to implement
the ‘easier’ monetary policy.
Bills discounted—loans to member banks—are shown to be zero at
the end of both 1957 and 1958. The year-end figures, however, fail to
disclose that district member banks borrowed almost six times as much
—on the average—in 1957 than in 1958.
Although Federal Reserve Notes make up a major part of the
nation’s currency circulation, the addition to this bank’s notes in circula­
tion during 1958 resulted more from a change in operating procedures
during the year than from changes in the public demand for currency.




25

Federal Reserve Bank of Minneapolis
Earnings and Expenses
1957

Earnings from:
Discounted Bills

$ 1,216,307

1958
$

15,971,951

U.S. Governm ent Securities

158,536
15,530,096

1,618

813

26,653

10,714

$17,216,529

$15,700,159

$ 4,561,573

$ 4,743,966

182,500

142,400

Original Cost

49,591

79,121

Cost of Redemption

10,107

13,740

$ 4,803,771

$ 4,979,227

$12,412,758

$10,720,932

$

$

3,949

60,800

$

4,350

11,108

$

11,816

Industrial Advances
All O ther
Total Current Earnings
Expenses:
O perating Expenses
Assessment for Expenses of Board of Governors
Federal Reserve Currency

N et Expenses
Current N et Earnings
Additions to Current N et Earnings:
Profit on Sales of U.S. G ovt. Securities (net)

4,302
56,498

All Other
Total Additions

$

401

Deductions from Current Net Earnings:
Reserve for Contingencies

$

260,627

All Other

1,230

$

271,735

$

13,046

N et Deductions from Current N et Earnings

$

210,935

$

8,696

N et Earnings before payment to U.S. Treasury

$12,201,823

$10,712,236

10,587,139

9,212,205

438,339

476,455

1,176,345

1,023,576

$18,520,204

$19,696,549

Total Deductions

Paid to U.S. Treasury (Interest on F.R. Notes)
Dividends Paid
Transferred to Surplus (Section 7)
Surplus Account (Section 7 ):
Balance at Close of Previous Year
Transferred from Profits of Year
Balance at Close of Year

1,176,345
$19,696,549

*lncludes $64,874 transferred from Section 13(b) Su rplus.

26




1,088,450s
$20,784,999

earnings and expenses
A reduction of income at the Federal Reserve Bank of Minneapolis
in 1958, amounting to just under 9 percent, was occasioned chiefly by
lower interest rates and a diminished level of member bank borrow­
ing. With continued growth in the physical volume of work per­
formed, operating expenses were up only slightly for the year. A s a
result of these divergent movements in earnings and expense, net earn­
ings available for the payment of dividends to member bank stock­
holders, for the payment of interest on Federal Reserve Notes to the
U.S. Treasury, and for transfer to surplus, were lower than in 1957
by $1.5 million or approximately 12 percent.
Although interest earned on member bank borrowing has consti­
tuted but a small part of the bank’s total earnings in recent years, twothirds of the $1.5 million decline of 1958 income can be traced to this
source. Less interest was received on loans to member banks in 1958
because the average daily volume of such loans was $7.2 million in con­
trast to $39 million in 1957 and because the discount rate averaged much
less in 1958 than in 1957 owing to several reductions beginning in
November of 1957. Interest received on government securities was also
reduced in 1958, even though holdings increased, because of sharply
lower yields on new issues during the year.
The larger dividend payments indicated for 1958 reflect payment of
the statutory 6 percent annual dividend on a larger amount of stock than
was outstanding in 1957. The increase of stock outstanding reflects
growth in the capital and surplus of member banks since their holdings
of Reserve Bank stock are related to the size of their capital accounts.
The bank’s reserve ratio rose somewhat during the year as the sum
of note and deposit liabilities grew proportionately less rapidly than
gold certificate reserves. The improvement of gold reserves resulted in
part from the changed operating procedures for the issuance of this
bank’s notes.




27




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