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1956

TO THE DIRECTORS




I N D E X

Directors and Officers

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

Changes in Directors and Officers

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

6

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

8

National Economic and Credit Conditions
Assets

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

Liabilities

1

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

19

21

Departmental and Other Comments:
Accounting
......... . .......... .
Chock Collection
............................ . .
Currency and Coin
............. ................
Discount and Credit
........... .......... .
................... ................
Duplicating
Examination
................. . ................
Fiscal Agency
................... . . . . . . . .
Noncash Collection
..............................
......... ...........................
Personnel
Planning
.......................................
Protection
. . . . . . ...........................
Public Services ..................................
Purchasing
. .....................................
Research
.........................................
Safekeeping
....................................
Capital Accounts
Dividends

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

. . . . . . . . . . .

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

Bank Premises

25
29
34
39
44
45
50
56
57
65
67
68
72
73
77
79
82

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

83

Earnings

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

86

Expenses

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

93

HEAD O F F IC E DIRECTORS
AND MEMBER OF FEDERAL AD VI SO RY COUNCIL

DIRECTORS
Leslie N. Perrin, Chairman, and Federal Reserve Agent
0 . B. Jesness, Deputy Chairman
Term Expires
December 31
Class A
Harold C. Refling, Cashier, First National Bank in Bottineau
Bottineau, North Dakota

1957

Joseph F. Ringland, President, Northwestern National Bank of
Minneapolis, Minneapolis, Minnesota

1958

Harold N. Thomson, Vice President, Farmers and Merchants Bank,
Presho, South Dakota

1959

Class B
Ray C. Lange, President, Chippewa Canning Company, Inc.,
Chippewa Falls, Wisconsin

1957

T. G. Harrison, President, Super Valu Stores, Inc., Hopkins,
Minnesota

1958

J. E. Corette, President and General Manager, Montana Power
Company, Butte, Montana

1959

Class C

0 , B. Jesness, Head, Department of Agricultural Economics,
University of Minnesota Institute of Agriculture,
St. Paul, Minnesota

1957

F. Albee Flodin, President and General Manager, Lake Shore,
Inc., Iron Mountain, Michigan

1958

Leslie N. Perrin, Director, General Mills, Inc., Minneapolis,
Minnesota

1959

MEMBER OF FEDERAL ADVISORY COUNCIL
Julian B. Baird, Chairman, The First National Bank of Saint
Paul, St. Paul, Minnesota




1957

-1-




OFFICERS

0 . S. Powell, President
A. W. Mills, First Vice President

C. W. Groth, Vice President and Cashier
General Supervision over all internal operations
Building:
Construction
Maintenance
Telephone Equipment
Protection
Purchasing
Duplicating
Vault Assignments
Equipment Repairs

M. B« Holmgren, Vice President
W. C. Bronner, Assistant Cashier
Fiscal Agency
Securities:
Purchase and Sale
Withheld Federal Taxes
Commodity Credit Corporation
Government Coupons
Destruction of Unfit U. S. Currency
Registered Mail

A. W. Johnson, Vice President
J. J. Gillette, Assistant Cashier
Check Collection
Non-cash Collection
Ordinary Mail
Check Standardization and Routing Symbol

E. B. Larson, Vice President

H. G. Me Connell, Vice President
R. K. Grobel, Chief Examiner
Bank Examination
Security Exchange Act
Secretary, Board of Directors




OFFICERS (C o n t d .)
M. H. Strothman, Vice President
Loans and Discounts
Industrial Loans
Regulation V Loans
Secretary, Discount Committee

Sigurd Ueland, Vice President & Counsel
Legal
Secretary of the Bank

0. W. Ohnstad, Assistant Vice President
Expenditures
Operating Reports
Security Program
Loan Assistant
Telephone Personnel

C. Ries, Assistant Vice President
Currency and Coin
Securities:
Safekeeping

Clement Van Nice, Assistant Vice President
Carl E. Bergquist, Assistant Cashier
Public & Bank Relations
Announcements
Circulars
Correspondence
Press Relations

George M. Rockwell, Assistant Cashier

M. 0. Sather, Assistant Cashier
Accounting:
General Books and Member Bank
Reserve Accounts
Transfer of Funds
Foreign Exchange Reports
Files and Old Records

Ji E. Lysen, Operating Research Officer
'.
Operating Letters
Operating Manuals
Planning:
Efficiency Studies
Equipment
Office Forms
Space Studies
Suggestions
Retirement System Trustee




OFFICERS (Contd.)

F. L. Parsons, Director of Research
0. F. Litterer, Business Economist
Research
Statistics
Publications
Library

F. J. Cramer, Personnel Officer
Personnel:
Personnel Maintenance
Retirement System
Social Security
Modical
Education and Welfare
Cafeteria
Office Boys and Pages

A. J. McNulty, General Auditor

K. K. Fossum, Vice President
H. A. Berglund, Assistant Vice President
J. L. Heath, Assistant Cashier
Assigned to Helena Branch

-4-

HELENA BRANCH DIRECTORS

Carl McFarland, Chairman
George R. Milburn, Vice Chairman

Term Expires
December 31
George R. Milburn, Manager, N Bar Ranch, Grass Range,
Montana

1957

A. W. Heidel, President, Powder River County Bank, Broadus,
Montana

1957

Carl McFarland, President, Montana State University,
Missoula, Montana

1958

J. Willard Johnson, Financial Vice President and Treasurer,
Western Life Insurance Company, Helena, Montana

1958

Geo. N. Lund, Chairman of the Board and President, The
First National Bank of Reserve, Reserve, Montana

1958




-5-

CHANGES IN DIRECTORATE

At the annual election in November, Harold N. Thomson, Vice President
of the Farmers and Merchants Bank, Presho, South Dakota was re-elected Class A
director and J. E. Corette, President and General Manager of the Montana Power
Company, Butte, Montana was re-elected Class B director.
Each was chosen for a term of three years expiring December 31, 1959The Board of Governors reappointed Leslie N. Perrin, Director, Gen­
eral Mills, Inc., Minneapolis, Minnesota as Class C director for a three-year
term beginning January 1 , 1957 and redesignated him as Chairman and Federal
Reserve Agent for 1957*
The Board also redesignated Dr. Oscar B. Jesness, Head of the Depart­
ment of Agricultural Economics at the University of Minnesota, as Deputy Chair­
man for 1957*
Our Board of Directors re-elected Julian B. Baird, Chairman, The
First National Bank of Saint Paul as member of the Federal Advisory Council
for the coming year.
At the Helena Branch Dr. Carl McFarland, President, Montana State
University, Missoula, Montana was reappointed by the Board of Governors to
serve as a director for a two-year term beginning January 1, 1957.
Our Board of Directors re-elected J. Willard Johnson, Financial Vice
President and Treasurer, Western Life Insurance Company, Helena, Montana and
Geo. N. Lund, Chairman of the Board and President, The First National Bank of
R e se rv e ,

Reserve, Montana for two-year terms commencing January 1, 1957.
The Helena Branch directors elected Carl McFarland, Chairman, and

George R. Milburn, Vice Chairman for the year 1957.




CHANGES IN O F F I C I A L STAFF

Effective March 1, Oliver S. Powell and A. W. Mills were reappointed
as President and First Vice President of the bank respectively for five-year
terms.
On April 1, Otis R. Preston, Vice President retired from active
service.
On December 17, the following promotions were announced,
effective January 1, 1957s




Clarence W. Groth was promoted to Vice President and Cashier.
A. W. Johnson was promoted to Vice President.
M. B. Holmgren was promoted to Vice President.

NATIONAL ECONOMIC AMD C R ED I T CO ND IT IO NS

Despite a receding level of output in two important industries,
autos and housing, the American economy in 1956 produced goods and services
at a faster pace than ever before.

This prodigious outpouring of wealth

was accomplished in an environment of relatively scarce credit, a condi­
tion reflected by the highest level of interest rates generally since the
start of the depression of the 'thirties.

Statistical measures of the

great prosperity were numerous,
Gur most valuable resource, labor, was employed in larger quan­
tities than ever before.

The number of people at work grew more rapidly

than the labor force with the result that unemployment declined to a level
little higher than the historical, irreducible minimum.

The degree to

which available labor is utilized constitutes one of the most meaningful
measures of economic welfare.
Negotiated in an atmosphere of labor scarcity, 1956 wage agree­
ments were generous.

In canufacturing, average wages rose a dime an hour,

the same increase as in 1955.

Real wages grew somewhat less rapidly than

money wages owing to rising prices.

Indeed, the practice of adjusting wage

rates with changes in the "cost of living" index has become a part of many
labor agreements.
A more comprehensive measure than wage rates of our people's
economic welfare is the level of real, per capita, disposable (after taxes)
income.

This figure, since it is adjusted for price changes, allows us to

observe changes in the average American's "standard of living" —
of goods and services his income will buy after payment of taxes.

the amount
It is

remarkable that despite the highest level of Federal tax receipts in
history and despite the upward drift of consumer prices, U. S. per capita




income after taxes would buy more goods and services in 1956 than ever
before.

Thus, judged by the criterion of how well it satisfies human wants,

our economic system performed admirably last year.
For analytical convenience, the Department of Commerce distin­
guishes three groups who, together, purchase the nation's output.

These

are— in order of importance— consumers, government and business (capital
expenditures).

Each of the groups mentioned increased their spending in

1956.
The most noteworthy change in the pattern of consumer expendi­
tures was a decline in the level of spending for durable goods which was
more than offset by higher spending for nondurables and for services.
Lowered sales of new automobiles were chiefly responsible for the lesser
rate of spending on durables.

Assemblies of new cars fell from 7.9 mil­

lion in 1955 to 5.8 million in 1956 ; this was a drop of more than 26 per
cent.

For other than autos, consumers spent freely in 1956; retail sales,

for example, averaged more than 3 per cent higher in 1956 than in 1955 —
despite the inclusion of new car sales in the retail figure.
ing by consumers, at £264. 1 billion, was up
.

U

Total spend­

per cent from 1955 .

Besides curtailing their expenditures for new cars, Americans
also cut back on spending for new housing.

The number of homes erected

fell by 16 per cent from 1955 to 1956 ; the figures were 1 ,324- thousand and
1,120 thousand respectively.

The dollar value of new homes built fell much

less (from C l
? 6.6 billion to $15.5 billion or 6.5 per cent) than the number
of homes started owing to higher average prices.

Most of these homes will

be paid for over the next 20 or 25 years.
But construction spending by business and government rose more
than enough to offset the decline in residential construction.




Spending

for construction by business alone, up £1.9 billion, was enough to offset
the $1.1 billion drop in residential construction.
Spending by business increased too owing to larger purchases of
capital equipment.

A gain of

cent in this type of spending.

billion represented an increase of 17 per
Spending by business for the purpose of

adding to inventories was little changed from 1955 .
It might be noted that capital formation by business has been
growing since 1953 ; this has constituted an important offset to the decline
in government expenditures which followed the conclusion of the Korean War.
Spending by consumers, on the other hand, has increased in every year since
the beginning of World War II.
Federal Reserve efforts to stop inflation were aided by the re­
duction in federal government expenditures which took place in 1954 and
1955.

In 1956 the U. S, Treasury spent approximately the same amount as

in 1955.

But in 1957 the official budget indicates an upturn.
Unlike the federal government, state and local governments have

increased their spending in every year during the postwar period.

From

1955 to 1956 nonfederal government spending rose from £30.1 billion to
>
032.6 billion.

The continued rapid growth in population and housing, of

course, has required stepped-up state and local budgets for schools, sewers
and other public improvements.

The fraction of the nation's output taken

by all levels of government fell to 19 per cent in 1956 ; not since 1951 had
it been less than 20 per cent and in 1953 it was 23 per cent.

Most of the

improvement came because of expanded output rather than cutbacks in spend­
ing.
The increase in spending of consumers, business and government
was greater than the increase of goods and services available for purchase




-10-

with the result that prices for a wide variety of things moved up in 1956 .
The inflationary threat motivated a continuation of credit restraint by
the Federal Reserve,

This policy allowed interest rates to rise higher

than at any time in more than twenty years.

The demand for credit was

growing faster than the supply.
That spending could rise so much without a comparable increase
in the nation's supply of money is explained with reference to the turn­
over, or velocity, of money.

Turnover continued to rise in 1956 as it had

in 1955 .
All types of money market instruments were yielding substantially
more at the end of 1956 than at the beginning.

Treasury bills went from

2 .5 per cent to 3 .3 per cent in yield; long term governments went from 3
per cent to 3.4-5 per cent (and 3.5 per cent early in 1957).

In keeping with

market yields, the Federal Reserve discount rate was lifted from 2*5 per
cent to 3 per cent.
It is worthy of note that the policy of credit restraint in 1956
was accomplished not by reducing the reserves or the "lending power” of
banks but simply by failing to provide banks with additional reserves.

Thus,

interest rates rose because credit demands grew, not because the supply of
credit was reduced.

DISTRICT ECONOMY
The district's most important industry, agriculture, enjoyed a
slightly higher total of cash receipts in 1956 than was true in 1955 .
Preliminary income estimates indicate that cash receipts from marketing farm
products may be up 3-4- per cent in Minnesota and North Dakota.

The same

estimates show a slight drop in Montana receipts and a more substantial




-II-

decline from a year ago in South Dakota, perhaps 10 per cent.
District farmers experienced both good and bad crop conditions
during 1956— with weather and moisture accounting for most of the differ­
ences.

Such differences took on a distinctly regional pattern for the

most part.

Across the western Dakotas and eastern Montana, drouth and the

threat of drouth was a major concern during the spring and the summer
months.

Particularly damaging was a siege of hot, searing winds about mid-

June which caught early seeded small grains, particularly oats, at a tender
stage and cut yields over a wide area, including parts of southern Minnesota.
The 1956 season was unusual in that late-seeded small grains on spring plow­
ing seemed to suffer considerably less damage than early seedings on fall
plowing— contrary to the usual experience.
Early-season dryness cut hay yields sharply in many western areas
of the district, with the result that winter feed supplies were reduced from
normal.
Even where early heat and dryness hurt hay and small grains, how­
ever, many of these same areas got enough moisture at just the right time
to produce one of the best corn crops in several years.

Further east,

Minnesota produced a record corn crop, even with some 1 + per cent less
/
acres planted to corn than in 1955 and despite some conversion of land to
the soil bank.

In fact, most of the eastern district, including much of

North Dakota and some areas of eastern South Dakota enjoyed excellent crops,
while crops in western areas of the district were reduced well below normal.
Despite area extremes, however, crop production for the district
as a whole was relatively large, but about 6 per cent below 1955 output.
Most of the reduction was in wheat, down 12 per cent from 1955.

Production

of durum wheat was the exception— good crop yields throughout much of North




-12-

Dakota, helped by newly-developed rust resistant varieties along with weather
conditions favorable to rust free development, produced a durum crop of 39
million bushels, the largest in recent years.
Although some cattle liquidation occurred in severely dry areas,
cattle production continued large for the district as a whole.

Numbers on

feed were down about 9 per cent from a year ago on October 1, but by the end
of the year had increased more than seasonally to 5 per cent more cattle on
feed than a year ago.
Hog production, on the other hand, was cut back even further in
district states than the estimated national cutback of 8 per cent.

Reduc­

tions in 1956 spring pig farrowings in district states ranged from 17 to 26
per cent, and farrowings for the year were down 16 to 23 per cent.

With re­

duced marketings, however, hogs enjoyed significant price improvement during
the latter half of 1956.

In fact, it can probably be said that the turning

point in farm prices was reached about mid-1956 .
A good measure of nonagricultural business in the district is the
level of nonfarm employment.

During 1956, employment rose in all district

states; in the greater part of the district, a new postwar record was
established.

In Upper Michigan and Northwestern Wisconsin nonfarm employ­

ment rose from the relatively low level of 1955 but it did not equal the
level which prevailed from 1950 - 55 .
The volume of nonresidential construction, which proved to be a
main prop to the nation's economy in 1956 , set another record during the
year.

The expansion in this type of construction more than offset the

contraction in home building.

The amount of contracts awarded for all types

of nonresidential construction— industrial, commercial, educational, public
and heavy engineering— aggregated t
>542 million in this district, an increase




of $92 million from

1955.

The district boom in nonresidential construction was less marked
than the national expansion.

Industrial plant expansion, in particular, was

not as strong here in 1956 as in the more industrialized areas.

The smaller

bulge in construction activity is reflected in the relatively moderate em­
ployment rise in this field— 3 per cent above the average monthly total in

1955 for both residential and nonresidential projects.
A strong district rise in manufacturing employment compensated for
the moderate rise in construction.
labor exceeded the national rate.
in 1956 was

U

In this field the hiring of additional
The increase in the average monthly total

per cent; in the whole nation it was only 2 per cent.

Most of

the additional district workers were engaged in the manufacture of durable
goods.
In Minnesota, where nearly 90 per cent of the total district work­
ers in the manufacture of durable goods are employed, the large increase in
employment in 1956 was concentrated in the manufacture of electrical and non­
electrical machinery, excluding agricultural machinery.

(In the latter

industry, the average monthly employment in 1956 was down almost 10 per cent
from 1955.)

Smaller increases in employment occurred in lumber and wood

products, fabricated metal products, stone, clay and glass, and in primary
metals.
In the field of government service, which ranks third among the
employment categories in the ninth district, the 1956 increase averaged 3
per cent, due largely to the hiring of additional teachers in schools and
colleges, one result of the steadily growing school population.

In the other

enterprises— mining, transportation and utilities, trade, finance, insurance
and service— the increases in employment ranged from a fraction of 1 per cent
to a maximum of 2 per cent.




-U -

Not all industries enjoyed prosperity.
clining market was residential building.

One industry to face a de­

The number of new housekeeping

units authorized by permits in ninth district cities was down 19 per cent
from the number authorized in 1955.

During the autumn builders in the larger

cities cut back sharply on their building and laid off some of their workers.
The mining of iron ore was interrupted by labor disputes in the
steel industry and, later, in the Pittsburgh Steamship division of the United
States Steel Corporation.

These disputes drastically reduced shipments of

ore to lower lake ports in July and August.

Shipments in these two months

totaled 10.7 million gross tons as compared with over 12.5 million gross tons
each in fey and in June.

During this period employees lost substantial

amounts of income so that it became necessary for many firms to adjust re­
payments on charge accounts and instalment loans.

Before the end of the

shipping season part of the lost income was recovered through overtime pay.
In the 1956 season 77.6 million gross tons were shipped as compared with 87.5
million in 1955 and 60.8 million in 1954 .
Slow farm implement sales caused layoffs by manufacturers.

Because

of the strong demand for workers in industrial centers, some of these workers
secured either temporary or permanent employment with other firms.

This

shortened the period of idleness and, thereby, reduced the loss of income for
many laid-off workers and their families.

The mild upturn in cash farm

income has created some confidence that the sales prospects for farm imple­
ments will be brighter this spring.
The slump in automobile sales did not affect the economy of this
district as much as it did other regions of the nation.

Only one assembly

plant and a small number of parts-manufacturers are located here.

Obvious­

ly, however, automobile dealers and salesmen were affected by the drop in
sales.




In the four district states the decrease in sales, according to

-15-

registrations, ranged from 9 per cent in Minnesota to 19 per cent in South
Dakota.

Even the latter percentage is small compared with a 3 - per cent
4

decrease in the state of Michigan.

Nationally, passenger car sales dropped

from 7.2 million in 1955 to an estimated 6.0 million in 1956 , a decrease of
16 per cent.

DISTRICT BANKING IN 1956
Judging by the profit and loss statements of district member banks
for the first half of 1956 (last half not yet available) the year just con­
cluded was the most prosperous in history for member banks in the ninth
Federal Reserve district.

Four aspects of district banking in 1956 are

worthy of particular comment:
behavior of deposits.

earnings, loans, interest rates, and the

The latter rose above the previous record level set

in 1954Factors responsible for the improvement of earnings included the
substitution of loans for lower yielding investments and a boosted average
rate of return on both loans and investments.

In 1955 the proportion of

total earning assets represented by loans averaged 4-6 per cent; in 1956
this proportion averaged 52 per cent.

The effect of this change in the com­

position of earning assets was to raise the average rate of return on earn­
ing assets as a whole.
This is because the average yield on loans held by district banks
is more than double the yield on securities held.

It is estimated that the

average yield of loans and investments respectively was 5.22 per cent and

2 .4.0 per cent in early 1956 and 4-.99 per cent and 2.06 per cent in early
1955.

These estimates are based on averages of amounts reported monthly for

holdings of loans and investments and on semiannual reports of earnings from
loans and investments submitted by the banks.




-16-

The upward movement of interest rates generally has added to bank
expense as well as to revenue.

Thus, in the first half of 1956, interest

expense reported by district member banks amounted to 1 ,4.1 per cent of
average time deposits while a year earlier the ratio was 1.34- per cent.
upward trend of interest on time deposits is likely to continue.

The

Beginning

January 1, 1957, member banks and other insured commercial banks were permitted
higher maximum rates on time deposits and certificates than was true previous­
ly.

The highest rate which can now be paid is 3 per cent for savings or for

time deposits and certificates of deposits with a duration of six months or
more.
Not since 1932 has the ratio of loans to deposits been so high at
district member banks.

The loan growth, which occurred in every district

state and part state last year was a phenomenon common to banks throughout
the nation.

A comparison of the autumn (most recent available) Call Reports

for 1955 and 1956 discloses that almost half the indicated 0159 million loan
increase at district banks represented additional commercial and industrial
loans.
Loan Increase In Millions
10-5-55 to 9-26-56
Commercial and Industrial Loans
Real Estate Loans
Automobile Paper
Other Loans
Total Loans

$ 74
49
21
0159

Many lenders found real estate loans of fixed yield less attractive
in 1956 than in 1955 owing to the rising interest yielded by other types of
loans.

Although real estate loans have increased in every postwar year at

district member banks, the rate of increase declined markedly in 1956,

Real

estate loans rose £ 4 9 million in the year ended October 1956 while in the
>-




previous year an increase of $74 million was reported.
The rate of increase in auto paper held by district banks also
fell in 1956, but only slightly.

Paper worth $21 million was added in the

year ended October 1956 while C 25 million was added in the previous year.
>
Of course, new car sales in the district also fell from 1955 to 1956, as
mentioned previously.
At the end of 1956 district member bank loans were $181 million
higher than a year earlier; this was a gain of 10.6 per cent for the year.
In 1955 loans rose 14.6 per cent.

The loan growth in 1956 was financed

mostly with additional deposits but partly by the liquidation of invest­
ments and by borrowing.

Holdings of U. S. government securities were re­

duced by $78 million while other securities were acquired in the amount of

$4 million.
District member banks added almost 3 per cent to total deposits
in 1956.

This increase compares favorably with the 2+ per cent gain re­

ported by member banks in the rest of the nation and represents a reversal
of the net outflow of deposits sustained in 1955.

Deposits were up in every

district state (or part state) except South Dakota.
The South Dakota experience reflected in part the fact that— farm
incomewise— that state fared least well of any in the district last year
largely because of drouth conditions.

In the rest of the district, cash

farm income was up and other business continued at the prosperous level of
1955.

Of course, the reversal of the previous decline in farm product

prices was helpful to deposits at country banks in particular.
Percentagewise, country bank deposits (55 per cent of the member
bank total) were up 3 .5 per cent while city banks reported a 2 .3 per cent
gain.




Country bank loans were up 7 per cent while loans at city banks rose

-18-

MILLION DOLLARS

MILLION

DOLLARS

1600

1600

1400

1400

1200

1200

1000
800

600

400

200

i
i_j
vO
i
11
97



COMPARATI VE STATEMENT OF A S S E T S

MINNEAPOLIS AND HELENA BRANCH COMBINED
(thousands of dollars)
12/31/56
Assets:
Cash Reserves:
Interdistrict Settlement Fund
Gold Certificates with F.R. Agent
Redemption Fund - F.R. Notes
Total Gold Certificate Reserves
F.R. Notes of Other F.R. Banks
Other Cash
Bills Discounted
Foreign Loans on Gold
Industrial Loans
U. S. Government Securities:
Bills
Certificates of Indebtedness
Notes
Bonds
Total U. S. Government Securities
Due from Foreign Banks
Uncollected Items:
Transit Items
Exchanges for Clearinghouse
Other Cash Items
Total Uncollected Items

12/31/55

189,279
150,000
23,729
363,008
9,587
7,908

3,530
625
42

1,355
25
60

38,879
246,937
206,759
63,283
555,858

36,414
143,476
343,283
67.895
591,068

1

1

131,918
2,671
. ..1*356
135,945

132,375
4,010
1.278
137,663

—
+
-

457
1,339
78
1,718

6,257

+
+
+

2,569
44
2,525

+
+
—
+
+
+

19
1,885
44
15
6
1,881

4,719

3,688
1.494
2,194

Miscellaneous Assets:
Fiscal Agency expense, reimbursable
Interest Accrued
Premium on Securities
Deferred Charges
All Other Assets
Total Miscellaneous Assets

207
5,377
45
49
8
5,686

188
3,492
89
34
2
3,805

1,104,447

1,116,674




+ 12,114
777
+ 11,337
+ 4,790
+ 1,411

201,393
150,000
22,952
374,345
14,377
9,319

Bank Premises
Less Reserve
Bank Premises - Net

Total Assets

Change from
12/31/55

1 .5 3 8

+
+
-

2,175
600
18

+ 2,465
+103,461
-136,524
- 4,612
- 35,210

- 12,227

MILLION

DOLLARS

MILLION DOLLARS

1600

1600

1400

1400

1200

1000

t
H
I




COMPARATIVE STATEMENT OF L I A B I L I T I E S

MINNEAPOLIS AND HELENA BRANCH COMBINED
(thousands- of dollars)
Change from
12/31/55

12/31/56

12/31/55

Liabilties:
Federal Reserve Notes in Circulation

498,236

531,709

-33,473

Deposits:
Member Bank - Reserve Accounts
U. S. Treasurer - General Account
Foreign
Nonmember Bank - Clearing Accounts
Officers1 Checks
Other Deposits
Total Deposits

398,117
22,651
7,400
1,460
194
2.182
432,004

405,586
25,108
9,650
457
56
5.180
446,037

- 7,469
- 2,457
- 2,250
+ 1,003
+
138
- 2.998
-14,033

5,615
. 116*982
.
142,597

7,094
101.674
108,768

- 1,479
+35.308
+33,829

2
238
342
13
595

2
233
166
10
411

.,073,432

1,086,925

-13,493

7,182
18,520
1,073
4.240
31,015

6,861
17,586
1,073
.... .4,221
29,749

321
934
+
11
+ 1,266

1,104,447

1,116,674

-12,227

Deferred Availability Items:
U. S. Treasurer - General Account
All Other
Total Deferred Availability Items
Miscellaneous Liabilities:
Unearned Discount
Discount on Securities
Sundry Items Payable
Suspended Credits
Total Miscellaneous Liabilities
Total Liabilities

Capital Accounts:
Capital Stock Paid In
Surplus Fund - Section 7
Surplus Fund - Section 13 b
Reserve for Contingencies
Total Capital Accounts

Total Liabilities & Capital Accounts




+
+
+
+

5
176
3
184

+
+

-22-

almost 15 per cent.
Our member banks face the new year with more loans relative to
deposits than at any time in the past quarter century.

While this develop­

ment has benefited bank earnings, it has also reduced the amount of liquid
assets in banks.

Problems of bank liquidity are likely to occupy more

attention of bankers in the future than in the recent past— particularly
if loan trends of 1956 continue unchanged.

The table below indicates the

ratio of loans to deposits at member banks in the various district states
and at the same banks classified according to city or country location.

Ratio of Loans to Deposits at District Member Banks
12 - 26-56

3S%
U9%
39%
A2%
U2%
38%
A5%
51%

Michigan
Minnesota
Montana
North Dakota
South Dakota
Wisconsin
District
City
Country

FEDERAL RESERVE BANK OF MINNEAPOLIS
Despite a reduction in the volume of borrowing at this bank during
1956, earnings from loans exceeded a million dollars.

This was an increase

of almost 20 per cent over 1955 earnings from loans and was produced by an
increase in the discount rate from 2.5 per cent to 3 per cent in April of
1956.
The average daily volume of borrowing fell 17 per cent in 1956
from the level of the previous year.
largest for the postwar decade.

Even so, borrowings in 1956 were second

Thy average daily volume of borrowings from

the Federal Reserve Bank of Minneapolis is shown in the table below for each




-23-

of the past ten years.

§10
2
2
5
11
16
27
7

1947
194-8
1949
1950
1951
1952
1953
1954
1955
1956

U2

35

Earnings from securities also advanced in 1956 despite a reduc­
tion in the average daily volume held.

This development reflects the

replacement of maturing securities with others yielding higher rates of
interest.

Market yields on government securities of all maturities have

been moving up since mid-1954 .
While gross earnings of the bank rose $3.6 million in 1956, ex­
penses were up §.8 million with the result that net current earnings were
up $2 .8 million.
A 5.7 per cent addition to the amount of dividends paid by the
bank was required by the issue of additional shares.

The paid-up portion

of these shares is held by the member banks in an amount equal to 3 per
cent of their capital and surplus.
The amount paid to the U. S. Treasury as interest on our Federal
Reserve Notes outstanding amounted to 90 per cent of the bank's net earn­
ings after payment of dividends.




The remainder was added to surplus.

-24-

DEPARTMENTAL AND OTHER COMMENTS

ACCOUNTING

Reserves
Reserve requirements in 1956 remained unchanged as shown by the
table below.
Bank
Classification
Country
Reserve City
Central Reserve City

Net Demand
Deposits

Time
Deposits

12$
18$
20$

5$
5$
5$

On April 13 9 the Board of Governors approved the action of the
Federal Reserve Bank of Minneapolis in increasing the discount rate from 2.50$
to 3.00/t.

As penalties for deficiencies in reserves are computed at 2$ above

the current discount rate* this increase raised the penalty rate from 4*50$ to

5. $
00 .
Penalties for deficiencies in reserves assessed

at the Head Office

during the year 1956 showed an increase of ^9 * $ in amount and 16 . $ in number•
5
3
Penalties assessed at the Helena Branch showed a decrease of 8 .8$ in amount and

2 2 o9$ in number.
Penalties for deficiencies in reserves at the Head Office which were
waived decreased 3 -^$ in amount and remained substantially the same in number
and at the Helena Branch waived penalties decreased 51*1$ in amount and 22.^$
in number.

7 1 *1$ of the amount and ^7 *8$ of the number of all penalties waived
for the year were waived under the Board’s rule which allows a deficiency in
one period to be offset by excess in the following period, provided that such
deficiency does not exceed 2$ of the bank’s required reserve.

The large reserve

city banks in the Twin Cities and Helena account for 56.2$ of the amount and

1 9 .8$ of the number of penalties waived under this rule,



-

25 -

2 5 .2io of the amount and 1 7 .6% of the number of penalties waived were
waived under the rule which permits a penalty to be waived for a deficiency of
not more than 5$ of a member bank's required reserve provided that a penalty has
not been waived under that rule within a two-year period.
Only 3.75b of the amount and 34.6$ of the number of all penalties waived
for the year were waived under the rule which applies to penalties not in excess
of $5.00.
During 1956, 90 banks were penalized for a total of 171 times compared
with 91 banks for 175 times in 1955*
The following is a comparative report by states of penalties for defi­
ciencies in reserves during 1956 and 1955.

Penalties Assessed

No.

1956.
Amount

Michigan
13 $ 470.36
Minnesota
55 2,251.35
No.Dakota
370.85
7
18
So.Dakota
767.72
14
Wisconsin
675.47
Head Offioe
Totals
107 $4,535.75
Helena
Branch
Combined




. .1955 ..
.
.
No. Amount

Penalties Waived
1956
No.. Amount

1955 . .
No., .Amount

Banks Affected
Assessed Wai'ved
1956 1955 1956 195'
No. No, No. No

18 $ 688.51 35 $ 322.78 34 $ 394.19
42 1,156.75 175 4,488.74 178 5,219.86
442.36
12
526.47 34
569.35 26
582.78
774.20 39
13
415.2? 37
7
247.14 23 ..
72.87
25

6
32
8
4
9

11
27
6
9
4

19
84
14
20
26

20
89
16
26
13

92 $3,034.14 304 $6,486.71 302 $6,712.06

59

57

163

164

83

2.012.76

31

34

39

44

171 $31,644.93 175 $L0,829.02 370 $7,469.59 387 $8,724.82

90

91

202

208

64

7.109.18

7.794.88

66

982.88

85

-26-

Wire Transfer Division

On April 12, 1956 we started

using an improved method for sending

and receiving (a) transfers of funds5 (b) transfers of securities, and (c)
allotment transfers of securities over the leased wire system.
The new procedure provides for the transmission of transfer messages
in clear language instead of code and for automatic preparation as a by-product
of transmission at both the sending and receiving points of forms and entry
tickets.
Because of the new procedure, the number of telegrams coded by us
decreased

66%

for the year and the number of telegrams decoded decreased

60 %•

The number of words sent over the leased wire increased 37$*
There was a general volume increase of 10$ for telegrams sent and
received and transfers of funds handled set a new record for number and amount.
The bulk of the increase in transfers of funds was reflected in transfers from
other districts resulting in a net dollar gain to the district of $1.8 billion.
The tables on the following page reflect a comparison of activities
in the Wire Transfer Division for the year 1956 with 1955*




-27-

Transfer of Funds
Dollar Totals
(000 Omitted)

1956
Transfers to other Federal Reserve districts
Transfers from other Federal Reserve districts
Intra-district transfers

Change
from
1955

9,240,986
11,009,722
2.743.715
22,994,423

+1,578,871
+2,304,639
- 133.827
+3,749,683

Number of Transfers Made




19,569
22,240
12.576
54,385

+1,440
+3,726
- 427
+4,739

33,270
3,021
____ 4
36,295

Transfers to other Federal Reserve districts
Transfers from other Federal Reserve districts
Intra-district transfers

+3,123
7

Number of Telegrams Sent

Private Wire
Western Union
TWX

+3,116

Number of Telegrams Received

Private Wire
Western Union

41,650
4,273
855
46,778

+5,125
- 867
- 159
+4,099

Number of telegrams coded by us
Number of telegrams decoded by us

7,969
10,520

-15,897
- 15,880

-28-

CHECK COLLECTION

The 108.5 million items handled by this department in 1956 were 6.3$
more than those handled in 1955? surpassing volume of all previous years.

The

amount of $30 billion was also an increase of 6.3$ over the dollar amount handled
in 1955 and was the highest total in the history of the department.
The table below shows the number and dollar amounts of the items pro­
cessed during 1956 as compared with 19552
Volume
(000 Omitted)

1956
Twin City Checks
Country Checks
Government Checks
Paper
Card— Our District
Card— Other Feds
Return Items
Postal Money Orders

1955

No. of Items
Inc. or Dec.

Per cent of
Inc. or Dec,

22,036
59,278

15,340
60,886

+6,696
-1,608

+4 3 .7$
- 2.6

980
11,237
4,952
805
_ 2. 2 .
,51
108,543

1,157
10,562
4,276
757
9*151
102,129

- 177
+ 675
+ 676
+
48
+ 104
+6,414

-15.3
+ 6.4
+15.8
+ 6.3
+ 1 .1
+ 6.3 $

Dollar .Amount
(000 Omitted)

1956
Twin City Checks
Country Checks
Government Checks
Paper
Card— Our District
Card— Other Feds
Return Items
Postal Money Orders

1955

Dollar taount
Inc. or Dec„

Per cent of
Inc. or Dec

16,360,374
10,636,812

15,375,57^
10,154,620

+
+

984,800
482,192

+ 6.4$
+ 4.7

1,322,803
930,209
494,108
108,331
,.-152^4£
30,005,185

1,135,535
84-9,149
450,625
104,996
142^822
28,220,398

+ 187,268
+
81,060
+
43,483
+
3,335
+
2,642
+1,784,787

+16.5
+ 9.5
+ 9.6
+ 3.2
+ 1.8
+ 6.3 $

Country checks decreased 1.6 million in volume despite the general in­
crease in checks of all classifications.

This was due to the fact that during the

entire year of 1956 checks drawn on certain Minneapolis suburban banks were han­
dled and counted as Twin City checks.




This method of handling checks drawn on

thirteen suburban banks located just outside of Minneapolis began on October 1,
1955.

This accounts for part of the increase of 6.7 million of Twin City checks

processed during 1956 compared to 1955«
On three different days during 1956 the department handled more than
one half million checks of all classifications with
processed on October

8 , 1956.

the highest record of 536 >7^6

This total broke the previous all-time record of

51^*269 se^ on December 7 5 1955#

k

record of 1^1,607 Twin City checks were handled on November 19, 1956

surpassing the previous years’ high of 128s
170 handled on December 19, 1955* The
1955 record was first broken on February 20, 1956 when 138,921 Twin City items
were processed.
Another new record was set in 1956 when 1023
928 Treasury Punch Card
Checks drawn on other Federal Reserve banks were processed on September 10th.

The

former years5 record of 83*550 items handled on August 8 , 1955 was also broken on
May 7 9 1956 when 9^, ^ 8 items were processed.
On August 1, 19563 the Treasury Department began making use of electronic
equipment for processing the payment and reconciliation of government checks and
this equipment will ultimately be used for processing all government checks.

The

conventional government paper checks are being replaced with punch card checks.
Government Disbursing Offices which issue relatively few items use card checks
prepunched as to serial and symbol number, and the Federal Reserve banks key punch
the amounts in such items before forwarding to the Treasury Department.

The Gov­

ernment Disbursing Offices which issue a large volume of items use punch card
checks, prepunched as to serial and symbol number9 but before forwarding to the
payees> also punch the month and year of issue and amounts in the items.

All

Disbursing Offices will issue government checks drawn on the Treasury of the United
States without being payable through a designated Federal Reserve bank and upon
completion of the conversion program approximately 175 million government checks
which, have heretofore been handled annually by two Federal Reserve Offices (one




-3 0 -

receiving the items for deposit and the one through which payable) will be handled
only by the office at which deposited.
The Treasury Department has heretofore furnished without cost the tabu­
lating equipment for handling government checks to Federal Reserve bank head
offices, and the rental for such equipment required under the new program will be
paid for by the Federal Reserve banks.
As government checks hereafter will not be payable through a designated
Federal Reserve bank, the reserve banks will be relieved of the task of sorting
government checks by symbol and serial number, checking items received for stop
payment orders, signatures, etc., and preparing statements of items paid.

Approxi­

mately six million items payable through this bank were received in 1956 from
other Federal Reserve banks and branches out of a total of 11 million such items
issued payable through this bank.

It is expected that the conversion to elec­

tronic accounting of government checks will be completed about July 1, 1957*
As in former years the department continued to check on delayed remit­
tances for cash letters and remittances in other than immediately available funds
in an effort to encourage good banking practices and reduce float.
The department has continued to operate on a 2^-hour basis.

Checks are

functioned continuously from 10:30 p.m. Sunday through 6:00 p.m. Saturday of each
week.

The night shift now operates six nights, Sunday through Friday, each em­

ployee working five nights with a different night off each week.

Postmasters9 Deposits
This bank has been designated by the Treasury Department as a depository
for surplus funds of postmasters since July 2 5 195^*

The deposits include checks,

savings stamp albums, money orders and currency, all of which are processed by this
department after the currency has been removed.




-31-

From July 2, 195^ through December 31, 195^ deposits were received from
postmasters located within the geographical limits of the ninth district.

Frcm

January 1, 1955 through September 30, 1955 deposits were received only from post­
masters in Minnesotas Montana, North Dakota and South Dakota.

Since October 1,

1955 deposits have been received from postmasters located in the ninth district
and also from postmasters located in that portion of Wisconsin assigned to the
Seventh Federal Reserve District,
The table below indicates the number and dollar amounts of deposits
processed during 1956 as compared to 1955*
Volume
No. of Deposits
Inc. or Dec.

Per cent of
Inc. or Dec.

m k
Total Number of Deposits
Number of Deposits Contain­
ing Cash

1251

3?2S218

2^6,016

+126,202

+51.3#

176,581

110,700

+ 65,881

+59.5%

Dollar Mount
(000 Omitted)

mi

1956
Total Amount of Deposits
Total Mount of Cash

376,995
37, 9 ^

,

209 0^8
2 k ,689

Dollar Mount Per cent of
Inc. or Dec. Inc. or Dec.
+167,9^7
+ 13,255

+80.3#
+53 •7 o
/

Volume and dollar amounts increased sharply because 1956 represented
the first full year that deposits were handled from the expanded territory.

Check Routing Symbol
The use of the check routing symbol increased again in 1956 according
to the annual survey made as part of a system-wide study which indicated that
97-3$ of checks drawn on par banks in this district carried the symbol.
The percentage of use of the symbol by ninth district banks is shown
by states in the table on the following page.




Michigan
Minnesota
Montana

96.7
97-3
95-6

North Dakota
South Dakota
Wisconsin

97.3
98-6
98.7

Check Standardization Program
The campaign to improve check design continued during 1956.

Several

National Association of Bank Auditors and Comptrollers groups were addressed and
slides shown to them by our two representatives.
made numerous visits to business firms and banks.

These two representatives also
Legislation affecting municipal

disbursement procedure has now been successfully concluded in Minnesota, North
Dakota, South Dakota and Wisconsin.

It is anticipated that similar legislation

will be presented to the Michigan Legislature in 1957*

Work was also done early

this year in Montana to show the need for similar municipal legislation in that
state but it had to be postponed for lack of sponsorship.




-33-

CURRENCY AND COIN

There appears to be a general increase in the work handled by the
Currency and Coin Department this past year with one exception, and that is the
wrapped coin unit.

The shipments of currency and coin to member banks as measured

in dollar value were approximately 10$ higher than those for 1955*
currency and coin from member banks were up 15$ from a year ago.

Shipments of
The dollar

volume of out-going coin shipments increased 6$ and incoming shipments indicated
an increase of approximately 5$ as compared with a year ago.
Our Currency Sorters counted and sorted better than 3 l/2 million more
bills during the year of 1956 than they did during the year of 1955*
coins wrapped showed a decrease of 6$ and a decrease of
pared with the year of 1955*

6%

The number of

in dollar volume com­

The decrease in our wrapping operation is partly due

to the fact that on December 30, 1955, we had considerable quantities of wrapped
coin on hand in anticipation of possible delays, because of the building expansion
and remodeling program, and partly due to other inconveniences experienced by our
coin wrapping unit during the expansion program.

This is the first time after

showing a continuous increase for nine straight years that a decrease was experienced
in this activity.
In July, 1954, it will be remembered, that the Federal Reserve Act was
amended to permit Federal Reserve Banks to pay out the notes of other Federal
Reserve Banks.

The note circulation of this bank on June 30, 1954, just prior to

the passage of the legislation amounted to 622 million dollars.

At the end of 1954

our note circulation had declined contraseasonally to 584 million dollars.
December 31, 1955, it was down to 532 million dollars.

On

On December 31, 1956, a

further decline was noted, the amount being 498 million dollars.
Meanwhile, cash on hand in our Currency and Coin Department reached a
new high of approximately 71 million dollars at the end of 1956 as compared with




-34-

63 million dollars in 1955•

Approximately

5

million dollars of our cash on hand

is due to an increase in our fit 9-1 notes, the total of which was 36.5 million
dollars in 1955 and 41 million dollars in 1956.
The building expansion and remodeling program which began June 1, 1955,
has not affected the Currency and Coin Department to any great extent, except as
previously mentioned with respect to wrapped coin.
The current year showed a

U5%

decrease in the amount of coin received

from U. S. Mints from the previous year, which was caused by the mints shipping
rather sizable shipments the later part of 1955.

We experienced no trouble meeting

our demand for coin this year, as there were ample stocks of all denominations at
all times.
A very unusual trend has been noticed the past few years with respect to
$50 bills.

The demand for these bills has been consistently dropping off.

on hand at the present time $3,500,000 fit-for-use ^50 bills.

We have

It is anticipated

that a good portion of these bills, as well as other large denominations, of which
we have an excess of our current needs, will be retired with the Federal Reserve
Agent very shortly.
There was quite an increase in the volume of currency handled in the post
office depository division during the year.

There was an increase of

number of deposits received and an increase of
the year compared with 1955*

55%

in the

in dollar value received during

The reason for this large increase in the number of

deposits and in dollar value is as follows:

On January 1, 1955, post offices in

the upper peninsula of Michigan and the ninth district portion of Wisconsin dis­
continued sending their deposits to us.

This left us with only the post office in

North Dakota, South Dakota, Montana, and Minnesota, as depositors, and consider­
ably reduced our work.

On October 1, 1955, we not only got back all of the upper

Michigan and Northwestern Wisconsin post offices, but also added all of the post
offices in the seventh district portion of Wisconsin.

This is the first full year

of operation since we were assigned the new area in October of 1955.




-35-

During December of this year, we received two new Federal Bill Counting
machines to replace two worn out machines.

No other type of equipment was acquired

during the year.
The rate of premium on Canadian currency reached a high of

A%

during the

later part of 1956.




-36-

Currency Paid Out by Denominations to Member Banks

mi

1956
1
5

$ 29 , 636,000

and 2's

.

48.643.000
130.376.000
128 842.000
5,539,000
16 451.000
734.000
936.000
15,000
40.000
$361,
212,000

10
20
50

.

100
500
1,000
5,000
10,000

$ 31 ,
258,000
45.255.000
119.042.000
111.841.000
4,887,000
15.454.000
596,000
909,000

0

40.000
$329,
282,000

Outgoing Shipments
for Account of Member Banks

Number
Currency paid out
Currency shipped to Helena Branch
Coin paid out

19,438
101
14.341
33,880

1956
Amount
$361,212,000
12.754.000
14.101.000
$388,067,000

Number

1955
Amount

18,648
78
14.704
33,430

$329,282,000
11,800,000
13.267.000
$354,349,000

Number

1955
Amount

Incoming Shipments
for Account of Member Banks

Number
Currency
Coin

Fit-for-use $l's received from
Helena Branch
Postmasters' deposits received
Total Currency < Coin Received
k




1956
Amount

20,745
A, 269
25,114

$440 ,244,000
12.619.000
$452,863,000

20,946
U, 398
25,344

$380,868,000
12.050.000
$392,918,000

25
198.114
223,253

1,710,000
38.236.281
$492,809,281

13
147.924
173,281

1,020,000
24,
690 .644
$418,628,644

-37-

Number & Amount of Pieces Handled

Currency

Number
Bills received & counted
.
Bills rehandled
Bills hand verified

1956___________
Amount

64,029,945 $436,268,200
4,306,780
72,260,400
21.611.715 242.222.475
89,948,440 $750,751,075

_________ 1955
Number

Amount

60,735,350 $389,388,910
3,707,389
67,831,430
18.058.323 201.926.237
82,501,062 $659,146,577

Coin
1956
Number
k
Coins received < counted
Coins rehandled
Coins wrapped




.........
Amount

129,940,966 $ 12,465,475
900,400
130,500
97,216.000
7.699.000
228,057,366 $ 20,294,975

1955
Number

Amount

121,668,777 $ 11,569,799
768,250
81,725
102.729.000
8.223.950
225,166,027 $ 19,875,474

Amount of Coin Received
From U.S. Mints
1956
$ 1,253,000

1955
$ 2,274,500

Number of Bills Redeemed
1956
28,732,342

1955
30,421,207

-38-

DISCOUNT AND CREDIT

Discounting activity in the Ninth District remained at a relatively high
level during the first part of 1956.

The restrictive monetary policy of the

Federal Reserve System and the strong demand for loans at commercial banks were
responsible for continued borrowing during the first seven months of 1956 at the
rapid pace of 1955•

This trend was reinforced by the seasonal outflow of deposits

in the spring, and by the decline of bank liquidity resulting from the lowering
of bond prices.
Discount rates were raised by all Federal Reserve banks in April in an
attempt to restrict credit expansion and consequent inflationary pressures.

This

bank raised its discount rate from 2 l/2 percent to 3 percent while ten of the
Federal Reserve Banks raised rates to only 2 3/4 percent.

The l/2 percent increase

did not prove to be excessive, however, and the other Banks also went to 3 percent
shortly after the steel strike ended in August.
Discount activity during 1956 divides itself into two periods, JanuaryJuly and August-December.

Borrowing began the year at a high level and continued

to exceed the sizeable figures of a year earlier until the end of July, with a few
exceptions (see Chart 1 on following page).

Average daily borrowings for the

January-July period in 1956 equaled v48.8 million, while borrowings for the com­
parable period in 1955 were $36.6 million.

Peak levels were reached in May and

June, contrasted to 1955 when the spring peak occurred in April,

(This is another

example of the situation in which borrowings rise rapidly shortly after the discount
rate has been raised, despite the higher cost incurred.)




-39-

Chart 1
BORROWINGS

O F M E M B E R B A N K S I N THE N I N T H
(Semi-monthly A ve rag e of Daily Figures)

DISTRICT

The large amount of borrowing by reserve city banks during this period
was particularly striking (see Chart 2 on the following page).

On the basis of

the ratio of borrowings to required reserves for these bankss the Ninth District
was far above the other eleven districts from January through July except for a
few scattered weeks.

Several of the Twin Cities banks were both large and con­

sistent borrowers being in debt to the Federal Reserve on 60-90 per cent of the
days involved.
Although the borrowings of the country banks relative to required re­
serves for all country banks averaged much lower than those of reserve city banks,
the general average hides certain widely varying cases.

For example, if this ratio

is based on required reserves of borrowing banks only, it shows that those country




-40-

Chart 2
RATIO OF B O R R O W IN G S TO REQUIRED RESERVES - RESERVE CITY MEMBER BA N K S




Ninth District Compared With High and Low of 11 Other Districts
(by weekly reserve periods)

-41-

banks were borrowing 28.7 percent of their required reserves for the period
January through July.

Some individual banks, in turn, showed borrowings far in

excess of this average.
A dramatic shift took place after August 1.

Advances to member banks in

this district showed sharp declines both absolutely and relative to the national
average.

These low levels of borrowing provide a significant contrast to the high

levels which prevailed in the fall of ’55. (Chart l)

During the August-December

period, the ratio of borrowings to required reserves averaged only 4 percent in
this district which was slightly below the. national average.

The abnormally

large seasonal increase in deposits during the fall of '56 provides a major
explanation for the sharp decline in borrowings.

During the last two weeks of

December, a sharp upturn in discount activity was experienced.
Statistical Summary;
1256
$3,698,667,000

1255.
$ - 156,277,000
4,

3,4-77,100,000

3,'929,235,000

221,567,000

227,042,000

106

101

From Minneapolis

84

80

From Helena

22

21

Total Amounts Borrowed
From Minneapolis
From Helena
Total Number of Banks Borrowing

(1) With a few exceptions, all advances were secured by direct obliga­
tions of the United States.

These exceptions included:

advances to three banks,

aggregating ^38,740,000 secured by eligible paper; and advances to three banks,
aggregating $2,578,000 made on collateral other than government obligations or
eligible paper under Section 10 (b) of the Federal Reserve Act.
(2) Our bank’s participation in foreign loans on gold during the year
totaled $1,900,000.




-42-

(3 ) No applications for industrial loans under Section 13b of the
Federal Reserve Act were received during the year.

The total amount of industrial

advances (current) outstanding on our bank's books on December 31, 1956, was
$4, ,349 .90 .
2

The borrowers were (a) a packer and shipper of fresh vegetables and

(b) a wholesale and retail grocery business.
(4) Two applications for guaranteed loans under Regulation V totaling
^ 300,000 were received during 1956, one was approved and the other is under con­
sideration.

One guarantee agreement for $800,000 was executed.

(5 ) In 1956, advances totaling $39,384,701.93 were made by financing
institutions under Regulation V:

s>2,800,000 was guaranteed by the Department of

the Air Force; $1,329,812.45 by the Department of the Army; ^>35,245,000 by the
Department of the Navy; and $9,889*48 by the Atomic Energy Commission.
Loans actually outstanding under guarantee agreements at the year end
aggregated $690,000 for the Navy (guaranteed portion $621,000); and $4,292,670.35
for the Atomic Energy Commission (guaranteed portion $4,078,036.83)-




-43-

DUPLICATING

The two more efficient methods of reproduction, mimeographing and
offset duplicating, show substantial increases over 1955*

The Mimeograph had

a total run for the year of 104,135 more than the previous year, and the produc­
tion of the offset duplicators was increased by more than 2,000,000.

This in­

crease was partly due to the acquisition of a new A B Dick duplicating machine
the first of October which made the higher production figure possible.
Multigraph production continued to decline because much of the work
formerly done on this machine can now be done more efficiently on the offset
duplicators.

The amount of work done by the Ditto and Photostat machines re­

mained about the same and there was no material change in the volume of work
performed by the Addressograph section.

mi

1956
Forms
Ditto
Mimeograph
Multigraph
Offset Duplicator
(Multilith-A B Dick
machine)
Photostat




Total Run

Forms

Total Run

489
2,286
593

40,070
541,070
370,355

580
2,161
898

42,619
436,935
545,998

1,685
____
5,053

6,390,965
3.888
7,346,348

1,452
____
5,091

4,329,956
3.997
5,359,505

-44-

EXAMINATION

There were at the close of business December 31* 1956, one hundred
twenty-nine State member banks in this district*

A regular examination of each

of the State member banks was made, and a second examination was made of four of
those banks.

One examination was made in connection with an application of a

State bank for membership in the Federal Reserve System.
As of the end of the year, thirteen State member banks were exercising
trust powers.
ers.

Nine other State member banks are not exercising their trust pow­

Sixty-three national banks held permits to exercise full or limited trust

powers.
The examinations by this department in the various states were as fol­
lows t

State Banks
Michigan
Minnesota
Montana
North Dakota
South Dakota
Wisconsin

31
46

15
13 ^

Holding Company
Affiliates
14
1
1
2
26
2

There are four holding company affiliates which are residents of this
district.

They are Bank Shares Incorporated, First Bank Stock Corporation, North­

west Bancorporation, all of Minneapolis, Minnesota, and Montana Shares, Incorporated, Havre, Montana.
biennially.

It is the policy to examine the holding company affiliates

In line with that policy, an examination was made of Northwest Ban­

corporation and Montana Shares, Incorporated during 1956, Bank Shares Incorporated
and First Bank Stock Corporation having been examined in 1955•
One application for membership in the Federal Reserve System was received
from a State bank, and the bank was admitted to membership.




-4 5 -

Ml

examination reports5 both State and National, were analyzed on

comparative analysis sheets, a copy being furnished to the president of this bank
and to the officer in charge of the discount department, and to the Helena Branch
for Montana member banks.

These analyses include summary statements as to the

management, condition, etc#, of the bank*
Five hundred ninety-five reports were received from the Chief National
Bank Examiner’s office#

The cost of these reports was $5,950#00.

Sixty-seven duplicate copies of reports of examination of Montana
national banks were received from the Chief Examiner’s office, and the cost of
these additional copies was $335*00.
In addition, thirty separate reports of examination of trust departments
were received at a cost of $150.00#
The number of 1956 reports of examination received from the various
State Banking Departments in the Ninth Federal Reserve District of State member
banks examined independently by them was as follows:
Minnesota
North Dakota
Wisconsin

26
1
3

Four calls for reports of condition of each member bank were issued,

ill

member banks were also required to submit semi-annual reports of earnings and
dividends.

The condition and related reports, together with reports of earnings

and dividends, were received, checked, and recorded.
A charter was issued to one bank, application for which had been referred
to us by the Board of Governors of the Federal Reserve System in 1953*
There were two 1955 applications which had been referred to us by the
Board of Governors that were pending at the end of that year.

During 1956 a char­

ter was issued to one bank,and the other application, which had preliminary ap­
proval by the Comptroller of the Currency during 1955, was still pending at the
end of 1956#




-4-6-

Six applications for national bank charters were referred to us during
1956 by the Board of Governors for investigation and recommendation,

A charter

was issued to one bank, two applications were approved by the Comptroller of the
Currency conditionally9 one had preliminary approval, one was disapproved , and one
was pending at the year end.
Five applications for general or limited voting permits were received
from holding company affiliates in the district.

The applications were reviewed

and submitted9 with memorandums and recommendations of our Executive Committee,
to the Board of Governors of the Federal Reserve System for action as to approval
or disapproval.
Two registration statements of bank holding companies were recieved and
processed.

Also two applications of bank holding companies to acquire shares of

bank stock were received and processed.

One of those applications was approved

and the other application is being held in abeyance at the end of the year at the
request of the bank holding company.
Investigation was made in connection with the application of one national
bank for permission to exercise full fiduciary powers*

The application, together

with the recommendation of our Executive Committee, was sent to the Board of Gov­
ernors.

At the year end, the application was still pending.
One hundred eighty-three applications for adjustment of holdings of

Federal Reserve Bank stock were received from member banks.
three new members.

Stock was issued to

Three applications for total surrender of stock were received

and the stock cancelled.

The bank examination department approves applications

for adjustment, for new stock, and for cancellation of stock.
Monthly reports were forwarded to the Board at Washington showing changes
in the status of all state and national banks in the district.

Records are also

maintained and a weekly report sent to the Board with reference to status of appli­
cations received from state banks for membership in the Federal Reserve System,
status of applications for fiduciary powers, and examinations started by our exam­
iners during the week.



-*

47—

The bank examination department handles correspondence and inquiries
with reference to many of the Board’s regulations5 and with respect to Regulation
T prepares and forwards to the Board at Washington consolidated statements of
those firms which are members of national securities exchanges where the home
office of such firms is within this district.
At the close of the year there were ^73 member banks in this district9
the same number as at the beginning of the year.

The number of National banks

increased one and the number of State member bank decreased one.

The total mem­

bership at the close of the year was divided into 3 ^ National banks and 129
State banks.
Total number of member banks in the district
January 1, 1956
National banks organized
State banks admitted

473
2*
476

National banks liquidated
National banks absorbed by nonmember
state banks
State member banks withdrawn from
membership
1
Total number of member banks holding
stock in the Federal Reserve Bank of
Minneapolis at the end of the year

__2 *
.

473

* Does not include the conversion, effective at the close of business December
31, 1956, of Bank of Boyceville, Boyceville, Wisconsin (State member bank),
to National Bank of Boyceville, Boyceville, Wisconsin. The Federal Reserve
Bank stock held by the State member bank had not been cancelled and reissued
in the name of the national bank at the year end.

Stock in the Federal Reserve Bank
Issued to New Member Banks

Date
9-18
10-1
6-28




Name of Bank
First Southdale National Bank
of Edina
Tri-County State Bank of
Ortonville
The Western National Bank of
Rapid City

Location

Edina, Minnesota

No. of Shares
Subscribed

120

Ortonville, Minnesota

39

Rapid City, South Dakota

90

-A 8 -

MEMBER BANKS SEVERING CONNECTION WITH THIS FEDERAL RESERVE BANK DURING 1956
NATIONAL BANKS ABSORBED BY NONMEMBER STATE BANKS

Date

2-27

No. of Shares
Surrendered

Location

Name of Bank

The First National Bank of
Harmony, Minnesota
(Absorbed by Harmony State Bank, Harmony, Minnesota)

60

NATIONAL BANKS LIQUIDATED

11-8

The First National Bank of

Parkston, South Dakota

90

STATE MEMBER BANK WITHDRAWALS
4-2

First State Bank of Pierpont

Pierpont, South Dakota

30

CHANGES IN TITLES OF MEMBER BANKS
Date

Name of Bank

Location

3-1

The Union National Bank of Rochester
changed to
Northwestern National Bank of Rochester

Rochester, Minnesota

6-1

The American National Bank of St. Cloud
changed to
The First American National Bank of St. Cloud

St. Cloud, Minnesota

2 -1

The Commercial National Bank of Bozeman
changed to
First National Bank in Bozeman

Bozeman, Montana

9-1

The First State Bank of Gilby
changed to
Valley Bank of Grand Forks

Gilby, North Dakota

11-1

3-15

First National Bank of The Black Hills,
Rapid City
changed to
First National Bank of The Black Hills
The National Bank of La Crosse
changed to
First National Bank of La Crosse




Grand Forks, North Dakota

Rapid City, South Dakota

La Crosse, Wisconsin

-49-

FISCAL AGENCY

During the year 1956 we received and processed tenders for the
Treasury Department’s weekly offering of Treasury Bills, for cash and in exchange
for maturing bills, as followsi
Tenders Received

Subscribers

4,645

Amount

Accepted

$760,614,ooo $727,169,000

6,646

The lowest average yield on the bills during the year was 2,1731° on the bills
dated March 8 and March 29, 1956,

The highest yield during the year was 3»3311°

on the bills dated December 20, 1956.

The Treasury Department also offered one

issue of Tax Anticipation Treasury Bills during the year.
December 17, 1956, and will mature on March 22, 1957*

These bills were dated

This issue will be accepted

by Directors of Internal Revenue at face value in payment of income and profits
taxes due on March 15, 1957*

This bank received and allotted tenders for this

issue as followss
Tenders Received

Subscribers

152

152

Amount
$94,442,000

Allotted
$45,832,000

There were also two special offerings of the Treasury Bills for which we received
and allotted tenders as follows i
Issue
Date

Maturity
Date

Oct• 1 7 , 1956
Nov* 16 , 1956

Janc 16, 1957
Febo 15, 1957

Tenders
Received
224
243

Subscribers
225
243

Amount
$101,745,000
128,565$000

Allotted
$45,115,000
68,985,000

On August 6 , 19563 the Treasury Department also offered, for cash,
2 3/4% Treasury Certificates of Indebtedness of Series B-1957* Tax Ancitipation
Series, dated August 15, 1956, due March 22, 1957*

This issue will be accepted

by Directors of Internal Revenue at face value plus accrued interest to maturity
in payment of income and profits taxes due on March 15, 1957*




This bank received and allotted subscriptions for this issue as followss

Applications

Subscriptions
for Banks

Subscriptions
for Others

Amount

Allotted.

39

$2 5 5 ,
454,000

$84,886,000

307

326

The Treasury Department offered the following securities, during 1956,
in exchange for matured or called issues %
Subscriptions
for Banks

Subscriptions
for Others

Allotted in Full

2 5/8^ Treasury Certificates of Indebted­
ness Series A-1957 Dated
3-5-56, Due 2-15-57

237

66

$ 46,858,000

2 7 /8 Treasury Notes of
Series A-1958 (Additional
Issue) Dated 12-1-55, Due
6-15-58

197

39

28,991,000

2 3 / ^ Treasury Notes of
Series D-1957 Dated
7-16-56, Due 8-1-57

660

207

97,466,000

3 l/4$ Treasury Certificates of Indebtedness,
Series C-1957 (Tax Anti­
cipation Series) Dated
12-1-56, Due 6-24-57

123

63

32,591?000

317

118

44,630,000

____

__
_

___________

1,534

493

$250,536,000

Issue

3 l/4fo Treasury Cert ificates of Indebtedness,
Series D-1957 Dated
12-1-56, Due 10-1-57
Totals

We bought and sold marketable government securities . n government
ad
guaranteed securities, on the open market5 for the account of banks in our dis­
trict, as follows;
Sale Transactions

Purchase Transactions

Number
- 1127
Par Value - $70,911,000

Number
- 1018
Par Value - $40,061,300

During the year 1956, we processed exchange transactions covering
United States government securities and government guaranteed securities, as
follows;




-51-

Coupon bonds e xch anged for registered bonds (CXR)
Transactions Received
355

Pieces Received

Transactions Delievered
153

Pieces Delivered
42?

1,058

Par Value
$ 16,460,600

$

Par Value
2,402,050

Registered bonds exchanged for coupon bonds (RXC)
Transactions Received
333

Pieces Received
684

$

Par Value
3,739,850

Transactions Delivered
2 69

Pieces Delivered
495

$

Par Value
2,578,300

Transactions Received
113

Pieces Received
212

$

Par Value
551,700

Transactions Delivered
51

Pieces Delievered
126

$

Transactions Received
2.331

Pieces Received
5,457

Par Value
$146,647,700

Transactions Delivered
2.331

Pieces Delivered
15,900

Par Value
$146,647,700

Transfers (TR)

Par Value

116,100

Denominational Exchanges (DX)

On December 31, 1956, 1,274 banks with 114 branches and 36 other
organizations with 4 branches

in our district were qualified to act as paying

agents for Series A through E United States Savings Bonds and Armed Forces
Leave Bonds.

Two hundred twenty-six of these agents are also qualified to pay

matured Series F and G bonds.

During 1956 these agents and our bank and our

Helena Branch paid bonds as follows %
Series
A through E and matured F and G and
\rmed Forces Leave Bonds paid by agents
(includes \rmed Forces Leave Bonds paid
by our bank)

Pieces

Redemption Value

2,214,544

$163,336,045.99

k through E, F and J and matured G bonds
paid by our bank and the Helena Branch

170,395

119,814,250.00

G, H and K bonds paid by our bank after
release of registration

28,911

40,911,725.00




-

52

-

The paying agents in our district were reimbursed this year for paying
savings bonds of Series A through E and Armed Forces Leave Bonds, paid during the
last quarterly period of the year 1955 and the first three quarterly periods of
1956, in the amount of $297,925.90 for 2,204,257 pieces.

Beginning with the quar­

terly period ending on December 31, 1956, the fees due qualified paying agents for
paying Series 4 through E savings bonds and Armed Forces Leave Bonds will be paid
by Treasury Department checks drawn and mailed direct to the payee, by the Treas­
ury Department in Washington.
There were 1,412 qualified issuing agents for Series E savings bonds in
this district, as of December 31, 1956.

1,289 of these agents were banks.

These

issuing agents were consigned bonds and reported sales during the year as follows:
Number of Shipments

Pieces

Amount (Maturity Value)

10,294

1,650,663

$195,569,650.00

Number of Sales
Reports Received

Pieces Issued

21,541

1,575,034

Mount (issue Price)
$140,217,468.75

Our bank issued United States savings bonds during 1956 as follows;
Series

Number of applications

Pieces

Issue Price

E
H
J
K

287,571
27,435
3,433
4.049
322,488

299,401
52,655
10,808
7.811
370,675

$ 9,179,343.75
55,164,000.00
8,521,470.00
15.364.000.00
$88,228,813.75

During the year 1956, we reissued for all purposes 125,296 savings
bonds with a maturity value of $30,811,940,
Our safekeeping division handled United States savings bonds during the
year 1956 for the account of individuals and organizations other than banks as
follows ?




Number of pieces received for safekeeping
Number of pieces released from safekeeping
Total pieces held in safekeeping on
December 31, 1956

1,245
22,170
186,984

-53-

As of December 31, 1956, 1,198 banks in this district were qualified
as ^Depositaries for Public Moneys", and accordingly, were qualified to maintain
a "Treasury Tax and Loan Account".
Number of active Class A Accounts
Number of active Class B Accounts
Total active accounts

1,002
46
1,048

Aggregate total deposits for the year

$1,017,356,071.11

Total deposits in Treasury Tax and Loan
accounts on December 31, 1956

102,297,669.39

There were 779 banks in this district qualified to act as "Depositaries
for Federal Taxes" as of December 31, 1956.

During 1956 we received from these

qualified depositaries and direct from taxpayers, depositary receipt cards repre­
senting deposits for the following taxes;
Number of
Depositary Receipts

Amount of Taxes

266,972
453
28,021
295,446

$509,005,545.19
23,757,986.66
84.555.911.74
$617,319,443=59

Withheld Income and Federal Insur­
ance Contributions Act Taxes
Railroad Retirement Act Taxes
Excise Taxes
Totals

During the year, interest coupons were redeemed as follows?
Pieces
Coupons from Treasury Issues
Coupons from securities for which the
Treasurer of the United States acts
as Fiscal Agent
Totals

Amount

281,392

$44,855,971*20

14.809
296,201

1.627.919.18
$46,483,890.38

The currency verification and destruction unit verified and destroyed
225
3113000 unfit bills amounting to $34,110,000.00 during the year 1956.
The Fiscal Agency now occupies space on the bank floor and the seventh
floor.

There were 80 full time and 3 part time employees in the department on

December 31, 1956, as compared with 85 full time and 3 part time employees on
December 31> 1955.




-5 4 -

Commodity Credit Corporation

There are 527 agencies in this district qualified to make Commodity
Credit Corporation loans and to service such loans.

According to the Minnea­

polis Office of the Commodity Credit Corporation, all of these agencies were
active in 1956.
These agencies drew 373,010 sight drafts on the Commodity Credit Cor­
poration, which we paid.
There were 14-8,223 collection items handled by us for the Commodity
Credit Corporation.

We issued 31,238 Treasury checks totaling $542,994>391*33

on disbursement schedules received from the Commodity Credit Corporation.
We cleared 118,079 checks totaling $124,224,185.41 deposited by the
Commodity Credit Corporation lending agencies.
There were 2 full time employees and 1 part time employee in this
division as of December 31? 1956.

Reconstruction Finance Corporation Pool Loans

Banks in this district, which service such loans, made 773 remittances
totaling $592,699.22, for payments on the principal and interest of such loans,
during the year 1956.

We credited the Federal Reserve Bank of Chicago, as Fiscal

Agent of the Reconstruction Finance Corporation, for the payments received each
day.




-55-

NONCASH COLLECTION

Amount
COOP Omitted)

Amount Change
from 1955
COOO Omitted)

Number
City Collections
Grain Drafts
City Items
Country Collections
Security Collections

Change
from 1955

601,977
111,041

-185,947
- 17,840

$532,261
69,249

2,161

24,017

+

900

+ 21,211

17,083

+

1,975

23,528
248,056

-

$ - 172,262
- 11,334

Most of the decrease of approximately 31 per cent in city collections grain drafts was caused by a change in operations resulting from an arrangement
between our bank, the American National Bank, St. Paul, and the Farmers Union
Grain Terminal Association.

Under this arrangement, drafts drawn on the Farmers

Union are presented through clearings to the American National Bank.

The banks

sending us these drafts now receive immediate credit instead of the one or two
day deferment of credit in effect heretofore.




PERSONNEL
In October the personnel department returned to a temporary loca­
tion on the seventh floor of the bank building after being located for over
a year in the Thorpe Building, 523 Marquette Avenue.
The staff on December 31, 1956, totaled 627 employees.
hundred ninety-four were women and 233 were male employees.

Three

The accessions

for the year totaled 207 and the separations 220.
Total clerical employment in Minneapolis is at its highest.

The

Minneapolis board of education indicates that approximately one-half of the
graduates from Minneapolis high schools plan to attend a college or univer­
sity instead of entering the labor market.

Because of these and other cir­

cumstances, it was difficult to obtain qualified clerical applicants during
the year.

However, by careful recruitment, interviewing and testing, we

were able to fill our employment requirements.

It appears to be signifi­

cant that separations were again down for the year as they have been for
the last four (see chart below).




NUMBER OF SEPARATIONS FER YEAR

268

1952

1953

1954

1955

1956

-57-

We believe this indicates a good attitude on the part of the staff during a
period when our building expansion has made working conditions less desirable.
During March our board of directors approved a revised policy for
annual medical examinations at bank expense for the officers of the bank.
These examinations are conducted by our bank physician or by the officer's
personal physician if approved by the bank physician.
In order that the nurse could offer the greatest possible aid when
an employee or one of his family needs blood, an appeal for voluntary blood
donors was made in January to the entire staff so that the nurse could have
a list of employees who would like to be contacted to donate blood if the
need arose.
In July staff members were contacted regarding a new group special
diseases insurance policy at a reduced cost with greater coverage, to take
effect August 1, 1956.

The coverage provides for $15,000 maximum reimburse­

ment at a cost of $4 for individual and 09 for family coverage instead of
the previous policy of $10,000 maximum at a cost of $5.40 for individual
and 010.80 for family coverage.

Two hundred-three members of the staff (172

at Minneapolis and 31 at Helena) took advantage of this coverage, which will
be in effect for two years.
Under our Blue Cross-Blue Shield contract for the period August
1955 through July 1956, 1^.6 of our employees had claims under Blue Cross,
totaling ^25,694.29.
by Blue Cross.

Of this amount, $23,172.90, or 90 per cent, was paid

Under Blue Shield, there were 172 claims, amounting to

$7,228.50.
As in past years, we have continued to use the cooperative school
work program to train employees by hiring them on a part-time basis.

Eight

senior girls from local high schools were employed during September on a




-58-

part-time basis to become full-time members of the staff after graduation.
In order to better acquaint local high school and college graduates
with the opportunities afforded by a career in banking, we participated with
other Twin City banks in sponsoring a banking booth at a Career Festival,
which was held at St. Thomas College in St. Paul during April.
In August, based on salary surveys conducted in Minneapolis and
Helena, we received approval from the board of governors in Washington, D. C.
to increase all salary ranges by approximately 7 per cent at the head office
and Helena branch.
In December, the discount committee of the board of directors
amended our vacation policy, to become effective January 1, 1957.

Under

our new policy, employees will be entitled to receive three weeks of vaca­
tion each year after completion of ten years of service instead of fifteen
years, and will receive four weeks of vacation each year after twenty-five
years of service instead of thirty years.
As a security measure, it was decided to microfilm certain
personnel records every six months and send the film to the Helena branch
for safekeeping.

The film would furnish enough vital information so that

records could be reconstructed as to employees' job title, grade, salary,
retirement system and group insurance provisions, last known address, etc.
Our records were microfilmed twice during the year.
In connection with a savings bond campaign sponsored by the
Minnesota Bankers Association, the Federal Reserve Club conducted a solici­
tation of the staff to obtain new bond subscribers.

Fifty staff members

enrolled in this plan, to bring total participation through our payroll
deduction plan to 35 per cent.




For the fourth consecutive year, a campaign was conducted for

-

59-

United Appeal for Charities.
was $7,692.80.

The total amount pledged by our employees

Ninety-six and one-half per cent of our staff partici­

pated in the campaign with an average pledge of $12.87.

Our bank re­

ceived special recognition from the Community Chest by virtue of our
average pledge to the Community Chest exceeding $8 per employee.
In order to insure proper alignment of positions in relation
to all others, we have continued to rewrite and evaluate positions under
our job evaluation program.

During 1956, 37 job descriptions were written

or reviewed and submitted for evaluation, 10 job descriptions no longer
being used were cancelled, 2 jobs were reinstated, and at the end of the
year many others were being processed.

Since our audit of job descrip­

tions was begun three years ago, approximately 80 per cent of our jobs
have been reviewed.
Cur cafeteria, operated by Nationwide Food Service, has con­
tinued to serve wholesome and well-prepared food for our staff at mini­
mum cost.

We are currently absorbing approximately 39 per cent of cafe­

teria costs.
For the twentieth consecutive year, our employees1 suggestion
system has been in operation.

During 1956 there were twenty suggestions

submitted; four were accepted and $130 was awarded.
In 1956 the bank again sent two additional men to the Central
States School of Banking at Madison, Wisconsin, to keep our total enroll­
ment at six.

We also enrolled one officer in the Graduate School of Bank­

ing at Rutgers University, he being our only representative at that school.




-

60-

One senior man completed the two-year course of the Agricultural Credit
School at Iowa State College.
Two senior men were enrolled in the Dale Carnegie Course in
Effective Speech and Human Relations in the fall of 1956 and will com­
plete the course in January 1957.

Two senior men finished classes at

the University of Minnesota last spring and re-enrolled for additional
classes this fall.
The Personnel Development Committee followed its usual prac­
tice of recommending persons from our staff to attend educational con­
ferences during the year.

Among the meetings of this kind at which we

were represented was a Management Development Workshop sponsored by
the Minneapolis Chapter of the National Office Managers Association,
a conference of junior bank officers and staff members sponsored by the
Minnesota Bankers Association, the national convention of the National
Association of Bank Women, and an Industrial Relations Conference
sponsored by the University of Minnesota.

For the second year the bank

sponsored a Junior Achievement group of high school students, and three
members of our staff, on recommendation of the Personnel Development Com­
mittee, agreed to serve as advisers to the group for the 1956-1957 school
year.
The Committee also specifically recommended attendance at an
Agricultural Credit Course sponsored by the American Institute of Banking
for five senior men, all of whom completed the course.




Two of our bank

examiners completed the Inter-Agency School for Bank Examiners in Washing­
ton, D. C. during 1956.
In order to keep abreast of new developments in personnel policy
and salary levels at other local organizations, we continued to have repre­
sentatives of the personnel department attend various local meetings and
conferences of personnel organizations such as the National Office Manage­
ment Association, Twin City Bank Personnel Group, Personnel Surveys, Inc.,
and the University of Minnesota.
In April the bank nurse attended the 16th Annual Continuation
Course for Occupational Nurses at the University of Minnesota, Center for
Continuation Study.

Included among the topics were: the changing emphasis

in occupational health service, advances in drugs, and the expanding em­
ployability of physically handicapped people.

Also discussed was the

rehabilitation of heart and cancer employees.
In February the editor of the Bank News attended the Eleventh
Annual Midwest Editors' Institute at Chicago, Illinois.

Included among

the topics on the agenda were company publications, publication analysis,
and the effect of company publications on employees.
The Administrative Assistant was enrolled in two industrial rela­
tions courses, "Introduction to Industrial Relations" and "Vocational and
Personnel Psychology", at the University of Minnesota.

The courses covered

determination of labor needs, methods of dealing with employees, training
and safety programs, compensation, collective bargaining, and how certain
factors such as age, sex, race, heredity and environment relate to differ­
ences in ability and temperament.
On December 31, 1956, 287 employees were members of the American
Institute of Banking, and during the year 161 members enrolled in 20 classes




-

62

-

in order to further their education and better prepare themselves for their
work.

One of our employees was elected first vice president of the local

chapter of the American Institute of Banking.

In addition, many members of

the staff have been appointed to A.I.B. committees as chairmen or assistants
and counsels or assistant counsels.

The 54-th A.I.B. National Convention in

Dallas, Texas, was attended by the A.I.B. first vice president and three
other employees of the bank staff.
Our most ambitious educational program for junior employees of the
bank during the year was a course of Commercial Bank Training for 10 junior
employees,

iiach of these men spent one week in a member bank becoming

acquainted with commercial bank operations and procedures.
The bank followed its usual policy of reimbursing employees for
tuition costs of American Institute of Banking classes where the class has
been successfully completed.
to the A.I.B.

The bank also gave its usual financial support

In addition to this voluntary attendance of A.I.B. classes,

the Personnel Development Committee specifically recommended that seven
junior employees take classes which would help to fit them for supervisory
work.
One junior member of the staff completed two courses at the Uni­
versity of Minnesota; one member of the staff completed a one-week course
conducted by International Business Machines Corporation; and three staff
members attended a Postal Classification and Rate Clinic sponsored by the
U. S. Post Office.
Two junior members of the staff were carried as "trainees" dur­
ing the year, each being assigned to specific departments for training.
Another junior employee was assigned to a four-months' training program
during which time he was rotated through all departments of the bank before




-63-

being assigned to a permanent job.
In June we employed a male business college graduate as a trainee
in the personnel department.

During his first four months of employment, he

was rotated between all departments in the bank.

He is presently learning

the various jobs in our payroll section and later will be trained in the em­
ployment section.

His addition, after training, will permit us to do a more

complete job in the personnel research area, fringe benefit and salary survey
phase of our work.
As a part of our regular program of bank calls, 13 senior men in
the bank were assigned to regular territories and made calls on all of the
banks in their assigned territories.
During the year, the department heads of safekeeping, currency and
coin, and noncash collections departments were rotated for a four-weeks'
period each for the purpose of training each of them in an alternate job as
well as the purpose of audit safeguard.

The noncash department head spent

an additional month in the safekeeping department for training purposes only.
Also, during the year two officers and four of the senior men from
our Helena branch spent one week each in the head office as a training assign­
ment.




-

6U -

PLANNING

The planning department, during 1956, arranged for and supervised
the necessary moves of employees and equipment occupying space required by
the contractors as the building alteration and construction program proceeded.
Layout plans for the space to be occupied by each department upon completion
of the building program were prepared, including partition requirements.
The planning department supervised the movement in October of de­
partments which occupied space in the Thorpe and Syndicate buildings to
space made available in the bank building, including the sixth and seventh
floors of the new addition.

Our lease of space in the Syndicate building

expired on November 15, 1956, and we cancelled our lease of space in the
Thorpe building as of December 31, 1956.

The accounting and central files

departments were moved in October from space in the subbasement and basement
areas to the sixth floor of the new addition.
The department assisted the Helena branch in preparing plans for
improvements in currency and coin vault and handling facilities, and in the
purchase of the equipment required, including an armored car.
The problems incident to the adoption of Saturday closing of the
Helena branch, effective May 1, 1956, and the operation of the check collec­
tion department on Saturdays on this basis were considered and operating
policies suggested for consideration and approval of management.
Several surveys were conducted for the United States Treasury de­
partment and the check collection departments of the head office and the
Helena branch on the operating problems incident to the conversion of
government check accounting and reconciliation to electronic equipment at
the Treasury department commencing August 1, 1956, with the scheduled com-




pletion of the conversion July 1, 1957.
Extensive surveys were conducted for various system committees and
information, comments and suggestions furnished.

M, E. Lysen, operating

research officer, is currently serving as a member of a Subcommittee on the
Study of Float of a Special Committee of the Federal Open Market Committee,
and extensive research is being conducted for this subcommittee.
The planning department considers employees1 suggestions and makes
recommendations to the personnel committee for the acceptance o * rejection
J
of such suggestions.

New forms are designed by the department and all forms

are reviewed prior to purchasing.

The distribution of operating letters and

supplements to member banks is a responsibility of the department.




-

66

-

PROTECTION

Two guards left the employ of the bank during 1956, and two new
guards were hired to fill these vacancies.

As of December 31, 1956, the

personnel of the protection department was as follows:

1
5
28

Superintendent
Sergeants (one acting as range instructor)
Guards (one acting as chauffeur)

Range work which had been discontinued was resumed in September.
Ammunition for all weapons was renewed and old ammunition was
fired on the range by guards in their weekly practices.
All guards were given training on all arms, as well as their side
arms.
All outside alarms were tested monthly, and all inside alarms were
tested weekly.
The information clerk issued 2,233 passes to outsiders who wished
to visit upper floors of the bank during the year; 1,187 work cards were
issued to outside workmen, canteen employees, etc.
At the request of the bond, noncash collection and currency de­
partments, 390 guard escorts (302 singles and 88 doubles) were furnished.
By memorandum and after-hour passes, 3,4-39 employees were admitted
to the bank after hours.




-67-

PUBLIC SERVICES
The objectives toward which the activities of the Public Services
Department are aimed are similar to those adopted by the Conference of Presidents
of the Federal Reserve Banks in 1953 but are somewhat broader in scope.

In addition

to the twin objectives which the Presidents stated of bringing about a better under­
standing of the Federal Reserve System by the public and of keeping the System aware
of public attitudes towards its activities, the Public Services program of this bank
also hopes to create a feeling among the banks and general public of good will toward
and confidence in Federal Reserve actions.

It is our thought that, while we should

aim for as broad an understanding of the System’s purposes and functions as possible,
there is a limit to the number of persons who will ever achieve a complete under­
standing of these matters.

On the other hand, there is almost no limit to the number

of friends we can make for the Federal Reserve System and for the Federal Reserve
Bank of Minneapolis.
Our Public Services program is divided into two general fields:
(1)

Bank Relations, and

(2)

Public Information and Education

The most ambitious part of our activities in the area of Bank Relations
is our program of bank calls.

During 1956 each of the 1,297 banks in the district

was called on at least once and banks in some of the larger cities were called on
twice.

The district served by our Head Office is divided into 25 areas with one of

our officers or senior men assigned to each area to call on all of the banks located
therein.

Four senior officers make an additional call on the banks in larger cities.

Montana banks are called on by the officers assigned to our Helena Branch.

Reports

are prepared on each individual bank call and a general report of each man’s trip is
sent to the president of the bank.

The calls serve an excellent purpose in keeping us

acquainted with business, banking, and agricultural conditions in the district and in
giving us an avenue through which commercial banks can ask questions about or make
suggestions or complaints on Federal Reserve policies and services.



-

68

-

Our program of meetings was continued in 1956 with our Assembly for
Member Bank Officers and Directors held late in April being attended by 517 persons.
The annual one-day Workshop meeting for college teachers of money and banking and
economics held early in May brought in a record number of 122 guests.

The Examiners

Conference held late in November was attended by 125 persons in addition to our own
staff members.

This meeting is the one gathering in the district where examiners

from the three Federal supervisory agencies, the State banking departments, and the
local clearing house association all get together.

Our Short Course in Central Bank­

ing, which has proved very popular over the years, had to be discontinued this year
because of our building program but we hope to reopen it with several courses in the
winter of 1957-1958.
In addition to meetings sponsored by our own bank, members of our staff
were in attendance at the American Bankers Association convention, all State bankers
conventions, about 25 group meetings, and various other meetings, clinics, schools,
and conferences sponsored by banking groups in this district.

Attendance at such

meetings is most important if we are to develop and maintain a friendly relationship
with our banker friepds.
Our two counterfeit displays were used 24 times during the year mostly by
banks celebrating anniversaries or the opening of new or remodeled quarters.

A dis­

play of counterfeit currency loaned to us by the United States Secret Service was
also used

U

times during the year.

As usual we have a good number of bankers call on us during the year.

We

continued to operate an informal placement service for banks seeking men and men
seeking jobs.
In the field of Public Information and Education, we continued during the
year to distribute 6 movies including our own, "The Federal Reserve Bank and You".
This latter film continued to prove the most popular and was seen by an additional
20,364 persons during the year to bring the cumulative audience definitely reported
to us to 277,217*




The Encyclopaedia Brittanica film, "The Federal Reserve System",

was shown to 5,032 people; the two Federal Reserve Bank of Richmond films, "Your
Money's Worth" and "You and Your Money", were shown to 3,4-79 and 2,912 persons
respectively; and the Federal Reserve Bank of Cleveland films, "A Day at the
Federal Reserve Bank of Cleveland" and "Soil Conservation Pays", were shown to
1,983 and 1,545 persons respectively.
Our picture book, "Your Money and the Federal Reserve System", continued
to’be increasingly popular during the year as we received 998 requests for a total
of 15,329 copies.

This brings the total number of copies distributed since its

publication in 1941 to approximately 130,000.

At the present time we are in the

process of making a major revision of this booklet.

We also distributed 1,071

copies of the Board's publication, "The Federal Reserve System, Its Purposes and
Functions", and 980 copies of "Money:
Reserve Bank of New York.

Master or Servant?" published by the Federal

A new booklet issued by the New York bank in September

called "Federal Reserve Operations in the Money and Government Securities Markets"
has been distributed to all teachers of money and banking in the district as well
as to a number of bankers, a total of 276 copies having been sent out so far.
Members of our staff gave 105 talks to a total estimated audience of
13,400 persons during 1956.

While the majority of these talks were given by members

of our Research staff and covered business, monetary, and agricultural topics,
quite a number of them were on the Federal Reserve System, its policies and opera­
tions, and these for the most part were given by members of our staff Assigned to
the departments other than Research.

In January we set up a speakers' burea con­

sisting of officers other than those assigned to the Research Department for the
purpose of taking some of the speaking load off our Research people.
Only 785 persons toured our bank during the year as compared with more
than 4,000 in 1955 because of cur deliberate policy of restricting tours during
mar building program.




Our building program also limited the number of special luncheons held
during the year.

We had no dining room facilities in the bank but a few luncheons

were held outside the bank in honor of distinguished foreign visitors.
A total of 522 clippings of news stories taken from papers in our district
indicate that press releases prepared by the Research Department and Public Services
Department are being well used by newspapers throughout our area.

This total does

not include news stories appearing in the Twin Cities' newspapers or in the financial
press where we receive excellent coverage.
With the completion of our new banking quarters this spring, we shall be
able to resume some of the activities which have had

to be temporarily discontinued.

These include resumption of bank tours and special luncheons.

We also hope to

reopen the Short Course sometime during the winter of 1957-1958*

Our most ambitious

project for 1957 will be a two-day open house and conference of all banks in the
district early in May in celebration of the completion of our new banking quarters.




PURCHASING

The prices paid for supplies continued to increase moderately dur­
ing the year 1956.

Because of the building program, it was necessary to

continue to limit quantities purchased of many bulky items because of in­
adequate stock room space and the utilization of areas temporarily vacated
to safeguard employees during the heavy erection period underneath the former
sky lights above the side areas on the bank floor.
During the latter part of the year substantial purchases of furni­
ture and equipment were made in anticipation of the utilization of floors in
the new addition to the building.

Such purchases included equipment for the

new cafeteria and dining rooms, the assembly room, etc., and involved the
purchase of such items as chairs, tables, partitions, shelving, etc.




-72-

RESEARCH

The public's increasing interest in monetary policy and the Federal
Reserve System during the past year stepped up the work of the research de­
partment in furnishing information and statistical data for both official and
public use.
The board of governors requested the following information and
surveys during the past year to aid them in policy decisions:




February

The experience of district merchants on
collections and credit availability,

February

A study of mortgage warehousing by large
banks. (Repeated again in May, August and
November.)

February

A survey to determine the extent to which
automobile paper purchased by commercial
banks was on a "recourse" basis.

May

An analysis to show automobile financing
practices of commercial banks.

May

A study to show characteristics of personal
trusts in District commercial banks.

June

A survey of automobile instalment credit to
show terms and practices of automobile
dealers,

June

A new statistical series was requested on a
daily basis showing member bank utilization
of the federal funds market.

July

A new statistical tabulation of member bank
borrowings and required reserves was re­
quested on a weekly and semimonthly basis.

July

A statistical series on repossessions of
automobiles by commercial banks active in
sales financing was instituted.

August

A series on repossession titles issued by
the various state motor vehicle departments
was set up.

October

Home builders operations during 1956 and
intentions for 1957 were surveyed.

-73-

November

The survey of ownership of demand deposits
at commercial banks was re-established.

A major research effort during the year was the Agricultural Loan
survey which was planned during the first half of the year, conducted as of
June 30, and processed during the last half of the year.

This survey in­

volved 14.0 member and nonmember bankers in the ninth district.
Other special projects in the field of agriculture included the
establishment of a monthly series on the volume of agricultural production
loans at a selected group of district banks.

This was part of a pilot survey

initiated by the System Committee on Agriculture to investigate the feasi­
bility of a more current series on agricultural loans.
Two special research studies were published during 1956.

These

were "Pulp and Paper in the Upper Lakes Region” and "Housing and Mortgage
Markets", which were issued as supplements to the Monthly Review.
Other regional research projects developed during the year were as
follows:




January

An analysis of Population Trends in the
Ninth District.

July

A survey of the price of houses in
Minneapolis.

August

A new set of factual and graphic tables on
member bank borrowings which are maintained
on a current basis was set up for use by
the discount committee.

September

The Missouri Basin development program was
resurveyed as a supplement to an earlier
study. Publication of the results is
scheduled early in 1957.

October

A new internal statistical tabulation—
"Business Indicators", was established,
which provides ready access to district
and national economic data on a current
basis.

-74-

November

An investigation of business developments
in suburban areas as they relate to the
field of banking was initiated.

December

A study of forest industries in the
western portion of the district is near
completion and it will be ready for
publication early in 1957.

In addition to the special projects outlined above, the research
department has continued with its routine statistical and analytical work.
During 1956 research personnel maintained a complete record of
time spent on various categories of work.
1956 summary of time distribution.

The following tabulation is the

It is interesting to note that more

than a fifth of the department personnel’s time was spent in providing in­
formation to the public in one form or another.
Percent
of Time

Function
Statistical series
Economic studies
Reference library
Public information
Meetings
Nonresearch activities
Total

33%
29
10
22
5
__1
100%

Requests for research staff speakers were numerous.

During the

year, the economists filled 104 speaking engagements before a combined
audience of approximately 14,000.

This year, as in previous years, the

department sponsored the Money and Banking Workshop on May 5.

The popu­

larity of this meeting, which is intended for college professors primarily
in the field of money and banking, is attested by a mounting attendance.
This year the session was attended by 119 guests— the largest of eight
consecutive conferences.




Participation in System committee work was continued, with members

-75-

of the research staff serving on 13 committees and subcommittees.
With respect to department publications, circulation statistics
are as follows:

Circulation, beginning of year
Plus; additions
Less: deletions
Circulation, end of year
Plus: bulk shipments (end of year)
TOTAL distribution, December 31, 1956

Monthly
Review
6,762
1,105
516
7,351
1.130
8,481

Farm
News
6,245
1,290
3.278*
4,257
8,876

*Deletions include 2,700 names not replying to a
circularization of the mailing list in May 1956.

A new format and layout was designed for the Monthly Reviewc

This

will be presented in the January 1957 issue of the Review.
The services offered by the library have been expanded by the addi­
tion of a second librarian.
material is now possible.
questions per month.

More complete cataloging and indexing of library
The library received an average of 340 reference

Of these, approximately 70 per cent originated within

the bank.
The number of employees in the department has remained fairly
constant and has averaged about 30 employees during the year.




-76-

SAFEKEEPING

The over-all picture of the operations in the safekeeping depart­
ment in 1956 continues to show declining dollar volume over the year 1955.
This decline was slight, however, amounting to approximately
$16,000,000.

1%

or

The number of pieces received during the year, however, ex­

ceeded those delivered by us by 5,776 pieces.
The largest increase in the work during the year occurred in the
number of coupons clipped, where the figure was 29,846 pieces above the 1955
figure.
Securities held for safekeeping and collateral purposes as of
December 31, 1956, were §>1,477 million, a decrease of Cl6 million, compared
with |1,493 million held a year ago, as reflected by the comparative figures
for 1956 and 1955 shown on the following page.




-77-

Accounts
Securities held in safekeeping
(not pledged)

Inc. or De
12-31-56
12-31-55
thousands of dollars)
(in
703,476
763,995
- 60,519

Securities pledged to secure
Public Deposits

428,407

413,463

^Securities pledged to secure
Government Deposits

12,247

13,287

#*Securities pledged to secure
Treasury Tax and Loan Account

269,217

230,928

#*-*Securities held as Collateral
for Discounts and Advances

63,390

71,528

Securities held for other
Federal Reserve Banks

-

r\

+ 14,944
-

1,040

+ 38,289
-

8,138
-

Securities held as collateral to
Consignment Account— U.S. Savings
Bonds, Series E
Securities held for Public
Housing Administration

0
1,476,737

0
1,493,201

0
- 16,4-64

^Includes -$1,118,000 held by Commercial Banks
**Includes $17,172,000 held by Commercial Banks & other Federal Reserve Banks
Includes $2,200,000 held by Commercial Banks
The safekeeping department received 70,323 pieces of securities,
issued 7,864- receipts and delivered 64. 5 - pieces in 9,479 transactions, re­
,47
sulting in a net increase of 5,776 pieces of securities.
The department also made 10,185 transfers of securities from one
account to another and clipped 357 thousand coupons from securities held dur­
ing 1956.
The table below shows comparative volume figures for 1956 and 1955.
1956
Receipts issued
7,864
Pieces received
70,323
Withdrawals handled
9,479
Pieces delivered
64,547
Transfers from one account to another 10,185
Coupons clipped
357,145
Custodian receipts issued
1,229




1955
8,138
78,291
9,771
66,345
9,838
327,299
1,573

Inc. or D
i
274
- 7,968
292
- 1,798
+
347
+ 29,846
344

-78-

Ml LION DOLLARS

MILLION

CAPITAL ACCOUNTS
36

36

32

32

28

28

24

24

20

20

1
6

1
6

1
2

1
2

8

8

4

4

0

0




C A P IT A L ACCOUNTS

CAPITAL STOCK paid in totaled $7,182 thousand on December 31,
1956, an increase of $321 thousand during the year.
SURPLUS ACCOUNTS.

Surplus (Section 7 ) was increased $934- thou­

sand on December 31, 1956, which brings the total to $18,520 thousandj
Surplus (Section 13b) remained unchanged at $1,073 thousand.
RESERVE FOR CONTINGENCIES.

No change was made in the reserve

of $1 million set aside for losses in excess of the blanket bond coverage,
the reserve of ^500 thousand earmarked for losses not covered by the Loss
Sharing Agreement or the special reserve for contingencies of $2,476
thousand.
The reserve for registered mail losses totaled $264 thousand as
of December 31, 1956.

During the year we received an additional recovery

of $5 from the Cokato Postmaster in connection with the net loss of $820
which we sustained in a currency shipment made to First National Bank, .Cokato
Minnesota on September 29, 1955*

The regular yearly addition based on

shipments made amounted to $11,458.19.
The following table reflects the changes made in reserve for
registered mail losses during 1956.




-80-

Reserve for registered mail losses
beginning of year 1956

$252,859.1 4

Credit :
Annual addition based on 2 £ per $1,000
<
of total shipments of $572,909,363 for
12-month period Dec. 1, 1955 through
Nov. 30, 1956

11,458.19

Additional recovery received from
Cokato Postmaster on lost shipment
of currency to First National Bank,
Cokato, Minnesota, 9/29/55

______5.00

Reserve for Registered Mail Losses,
Dec. 31, 1956

$264,322.33

The following table shows currency and coin shipments made during
the twelve-month period December 1, 1955 to November 30, 1956, which was the
basis for the addition to the registered mail loss reserve:
12 Months
ended
11/30/56
(OOP Omitted)
Registered or Insured Mail and Express
Net F.R. currency from Washington
Currency and coin between Minneapolis
and Helena
Other currency and coin outgoing Minneapolis and Helena
Other currency and coin incoming Minneapolis and Helena

$ 54,600
14,316
220,838
283.155
$572,909

The disposition of 1956 net earnings and the changes made in the
surplus accounts are shown below:




Net Earnings
Dividends Paid
Paid U.S. Treasury (Interest
on F.R. Notes)
Transferred to Surplus (Sec. 7)

$9,762,543.34
$

422,045.49

8.406.448.87

Surplus (Section 7) December 31, 1955
Transferred from Earnings 1956
Surplus (Section 7) December 31, 1956

8.828.494.36
$ 934,048.98
$17,586,155.47
934.048.98
$18,520,204.45

-81-

DIVIDENDS

As of December 31, 1956, capital stock held by member banks totaled
$7,182,100, on which accrued dividends totaling $422,045 were paid.

This year’s

dividend payments were again the largest for any single year in the history of
the bank and when combined with previous years' payments, brings the aggregate
total to $9 ,173 ,310 .
Distribution of 1956 and 1955 Dividends

State
Michigan
Minnesota
Montana
North Dakota
South Dakota
Wisconsin

1956__________
Dividend
No . of Banks
Pa id
40
207
84
40
60
42
473

$ 20 ,819.06
272 ,281.96
46,383.60
25,528.48
34,985.69
22.046.70
$422,045.49

_______ 1955
No. of Banks
40
206
84
40
61
42
473

Dividend
Paid

Change

$ 19,519-36 $+ 1,299.70
260,503.34 +1 1 ,778.62
42,186.93 + 4,196.67
23,496.85 + 2,031.63
32,322.73 + 2 ,662.96
21.227.72 +
818.98
$399,256.93 $+22 ,788.56

TABLE OF DIVIDENDS PAID SINCE ORGANIZATION
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935

$ 57,719.87a/
363,894.19V
168,102.97
180,186.21
195,870.65
211,657.03
213,774.01
212,732.68
202 ,827.98
193,559.46
187,609.25
180,726.51
181,202.86
184,029.92
184,445.39
180,454.53c/
175,494.80
171,568.89
181,117-51
185,448.45

1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956

a/ For period November 1, 1914 through June 30, 1915*
b/ For period July 1, 1915 through December 31, 1917*
c j $1 34,649*67 withdrawn from Surplus to pay dividend.



$

179,052.04
174,057.31
174,231.27
174,905.39
177,400.58
179,789.68
183,336.33
190,924.19
206,158.74
221 ,686.96
238,372.30
253,251.30
262 ,776.22
2725831.22
294,034.00
314,934.23
327,905.73
348,774.12
365,162.76
399,256.93
422.045.49
$9,173,309.95

BANK P R E M I S E S

The book value of the Head Office and Branch bank buildings did not
change during 1956 s with normal depreciation of
ings.

2?jo being

taken on both build­

All expenditures in 1956 due to our building program were charged to the

building Construction Account.

During the year the Head Office fixed machinery

and equipment account was increased $16,305.03 representing installation costs
of a new incinerator.

By year end, the fixed machinery and equipment accounts

at both Head Office and Branch were fully depreciated.

CONSTRUCTION ACCOUNT
As of December 31, 1956, a total of $4,184,999*82 had been charged
to the construction account in connection with our building program.

From this

total, $406,055.40 was transferred to expense with $350,000.00 being charged
to repairs and alterations and $56,055*40 being charged to furniture and equip­
ment purchases.

The bulk of the repairs and alterations figure is due to

demolition costs and the major portion of the furniture and equipment expense
represents cafeteria equipment.
The table on the following page shows construction expense including
change orders, amounts paid and balances due as work is completed.




BUILDING CONSTRUCTION EXPENSE
(as of 12-31-56)

Total Amount

Amount Paid

Balance Due

Naugle-Leck, Inc. (Orig. Cont.)
Change Orders (Net Amount)
Total, Naugle-Leck

$4,252,122.00
85.709.43
$4,337,831.43

$3,578,413.00

$759,418.43

Otis Elevator Co. (Orig. Cont.)
Change Orders (Net Amount)
Total, Otis Elevator Co.

$

$

259,243.46

$151,622.54

$

219,043.46

$ 20,878.39

Larson & McLaren, Architects
(Original fees on Naugle-Leck
and Otis Elevator Co.)

$

408,573.00
2.293.00
410,866.00

$

233,034.75

Change Orders (Fees)

4,400.12

Fees on items totaling $40,845.64
paid direct to Sterling Electric
Co. (Naugle-Leck receives no
fees on these items)

2,042.28
427.20

Fees for abandoned project
Fees on Insulation Sales Co.
invoice ($350) paid direct
(No fee to Naugle-Leck Co.)
$
Less fees paid but not charged
to Construction Account
Total, Larson & McLaren, in
Construction Account
Miscellaneous Expense (to 12-31)
Miscellaneous Change Order #1
(Paid direct to Sterling Electric
Co. No fees paid to NaugleLeck on this item)
Grand Total
Less amounts transferred tos
Repairs & Alterations expense
Furn. & Equip. Purchases expense
Balance in Construction Account

17.50
239,921.85

-4.736.68
$

235,185.17
132,613.94*

622.64
$5,117,119.18

-4,736.68
214,306.78

$ 20,878.39

132,413.94

200.00

622.64
$4,184,999.82

$932,119.36

$

-35 0 ,000.00
- 56.055.40
$3s77 8 ,944.42

Total expenditure approved by the Board of Governors in Washington was approximately
$5 ,10 5 ,000 .
*Includes $84,362.98 which is not to be considered as chargeable against the
$5 ,
105s000 approval inasmuch as it represents costs for which commitment was made
prior to our receiving the Board’s approval for the new construction program.




-8 4 -

BANK PREMISES

Total

Head
Office

Helena
Branch

BANK BUILDING:
Gross Book Values
Beginning of -1956 . .
Additions during year
Deductions during year

$1 , 384, 281.50 $1 , 283, 281.50 $101, 000.00

End of Year .......

.$1,384,281.50 VI,283,281.50 $101,000.00

Allowance for Depreciation:
Beginning of 1956 . . . .
Depreciation .........

826,563.60 $
27,685*56

795,633.96 $ 30,929.64
25.665.60
2.019-96

.$

854,249*16 $

821,299.56 $ 32,949.6 0

Net book value December 31, 1956 . . . $

530,032.34 $

461,981.94 $ 68,050.40

.$

667,146.34 $
16,305.03

629,944.35 $ 37,201.99
16,305*03

$

683,451.37 $

646,249-38 $ 37,201.99

.$

667,146.34 $

629,944.35 $ 37,201.99

End of Year ...........

FIXED MACHINERY AND EQUIPMENT:
Gross Book Value:
Beginning of 1956 . . . . .
Additions during year . . .
Deductions during year . . .
End of Year

Allowance for depreciation:
Beginning of 1956 . . . .
Deductions during year .
Depreciation .........
End of Year ...........

16.305.03
$

16.305.03

683,451-37 $

646,249.38 $ 37,201.99

LAND:
Net book value December 31, 1956....... $

410,520.66 $

400,520.66 $ 10,000.00

TOTAL BANK PREMISES:
Net book value December 31, 1956 . . . .

940,553*00 $

862,502.63 $ 78,050.40

Net book value December 31, 1956. . . .




$

-85-

MILLION

LLION DOLLARS




NET EARNINGS

DOLLARS

NET EARNINGS AND P R O F I T S

Change
1956
Total current earnings
Net expenses
Current net earnings

$14,113,276
4.346.585
$ 9,766,691

$+3,586,999
+ 827.823
$+2,759,176

Additions to current net earnings:
Profit on sale of U.S. Government Secur­
ities held in System Open Market acct. $ 7,371
To reverse entries in connection with con­
struction program prior to opening our
construction account
Accepted as full payment for our 60$ share
in the industrial loan of Clear Lake
Creamery and Produce Co. which has been
carried in Industrial Loans Past Due
Three Months and against which a 100$
valuation allowance has been provided
All other
377
Total additions
$ 7,748

$-

4,000
570
78,684

Deductions from current net earnings:
Reserve for registered mail losses
All other
Total deductions

$$-

78
.1,534
1,612
77,072

7,409

81,523

—

$11,458
438
$11,896

Net deductions from current net earnings

$____ 4.148

$-

Net earnings and profits

$ 9,762,543*

$+2,682,104

# For disposition of profits see page No. 81,




-

87-

The table below gives a breakdown of Profit and Loss during 1956:

Total
Additions to Current Net Earnings:
Profit on sale of U. S. Government
securities held in system open
market account
Adjustment of prepaid expense on
three Tickometer machines
purchased outright
Unclaimed overage in employee pay
for May 31, 1956, period
Total Additions

Deductions from Current Net Earnings:
Reserve for registered mail losses
Difference account
Difference between actual and
estimated reimbursable expense
for December 1956
Loss on mutilated currency and
coin
Loss on counterfeits
Difference between allotment and
market price on $50,000 Treasury
bills due 10/ll/56, purchased
to correct our error in
interpreting a wired order
of $150,000
Discount on foreign currency and
coin

Head
Office

$ 7,370.70

$ 7,370.70

376.74

294.93

Helena
Branch

.19

.

$

81.81

_

$ 7,747.63

$ 7,665*82

$

81.81

$11,458.19
228.04

§>11,458.19
206.35

$

21.69

123-17

123.17

39.96
34.57

87.63
34.57

10.25

10.25-

- 47.67

1.59

1.59

Total Deductions

$11,895.77

$11,921.75

25-98

Net Deductions from Current Earnings

$ 4,148.14

$ 4,255.93

^-107.79




-

88

-

MILLION DOLLARS

MILLION DOLLARS

GROSS EARNINGS

11
97



12
91

1925

1929

1933

1937

14
91

1945

1949

1953

1957

16
91

EA RNI NGS

Despite the fact that our daily average holdings of earning assets
decreased $44,165 thousand in 1956, earnings increased $3,587 thousand from
the previous year due to an over-all increase in our yield rate of .747$*
Borrowing by member banks was reduced from a daily average of $42,456
thousand in 1955 to $35,396 thousand in 1956 but because of higher rediscount
rates during the past year, earnings were $191 thousand greater.
Income from "Foreign Loans on Gold" was only $1,756 in 1956 as compared
with $23,701 in 1955•

During six of the first eleven months of 1956 we had no

loans in this category.
loans were very nominal.

During the other five months of this same period, the
In December the daily average was $445 thousand.

During 1956 the daily average of Industrial Advances was reduced to
$51.4 thousand from the 1955 average of $78.6 thousand.

1956 earnings amounted

to $2,591 as compared with $3,997 in 1955*
Our daily average participation in the System Open Market account
dropped from $579,591 thousand in 1955 to $543,940 thousand in 1956.

Despite

this decrease, earnings from this source increased $3,417,433 to a total of
$13,086,845 for the year.
The following tables show the sources of earnings, average daily
holdings, average earning rates and holdings of securities as of December 31,
1956.




-90-

Total Current Earnings
(Minneapolis and Helena Combined)
Change from
___ 1955

1956
Discounts and advances
Foreign loans on ^old
Industrial advances
U. S. Government securities System account
Deficient reserve penalties
All other:
Clearinghouse fines
Commissions earned on Bankers' Accept­
ances purchased for foreign corres­
pondents
Pro-rata charges on foreign loans
Miscellaneous

$ 1,008,320
1,756
2,591
13,086,845
11,637

$+
-

191,160
21,945
1,406

+3,417,433
+
808

239

+

1,546
342
............... i
$14,113,276

9

+
+

643
342
45
$+3,586,999

Average Daily Holdings

1956
Discounts and advances
Foreign loans on gold
Industrial advances
U, S. Government Securities System account

Change from
1955

$ 35,396,478
47,063
51,427

$- 7,059,952
- 1,427,298
27,150

543.940.164
$579,435,132

-35.650.847
$-44,165,247

Average Earning Rate
1956
Discount and advances
Foreign loans on gold
Industrial advances
U. S. Government Securities System account
Average rate for above accounts




Change from
'
• 1955

2.849%
3.731
5.038

+ .924%
+2.123
- .049

2.406
2.433

+ .738
+ .747




Participation in System Open Market Account
(in thousands of dollars)

12/31/56
Bills
Certificates
Notes
Bonds

$ 33,879
246,937
206,759
63.283
$555,858

Change from
12/31/55
$+ 2,465
+103,461
-136,524
- 4.612
35,210

-92-

MILLION DOLLARS

MILLION DOLLARS

EXPENSES

Vs

11
97




21

25

29

33

37

41

45

49

53

57

6
1

COMPARATIVE STATEMENT OF NET CURRENT EXPENSE
Head
Office
19%
Salaries:
Officers
Employees
Fees;
Directors
Federal Advisory Council
Other
Retirement Contributions;
F.R. Retirement System
Supplemental Death Benefit
Social Security
Traveling Expenses:
Directors
Federal Advisory Council
Other
Postage and Expressage:
Original shipments of F.R. currency
Redemptions of ER. currency
Other
Telephone and Telegraph
Printing, Stationery and Supplies
Insurance
Taxes on Real Estate
Depreciation
Light, Heat, Power and Water
Repairs and Alterations
Rent
Furniture and Equipment:
Purchases
Rentals
Assessment for Expenses of
Board of Governors
Federal Reserve Currency:
Original Cost
Cost of Redemption
411 Other
Total Expense
Less Undistributed Recoveries
Net Current Expense




Helena
Branch
1956,

Combined
.._125£

Combined
........ 1255

$ 262,725
1,705,875

$ 26,428
180,873

$ 289,153
1,886,748

$ 276,546
1,745,368

7,850
1,400
5,627

4,190

2 76

12,040
1,400
5,903

10,760
1,350
3,676

153,543
6,667
33,439

12,914
705
3,711

166,457
7,372
37,150

129,935
9,545
34,710

6,510
668
59,069

3,163
6,067

9,673
668
65,136

8,994
732
59,250

11,079
1,988
369,759
27,938
127,896
41,588
160,128
41,971
41,278
354,841
59,757

623
75,615
8,080
11,671
3,184
5,068
2,020
2,998
29,073
39

11,079
2,611
445,374
36,018
139,567
44,772
165,196
43,991
44,276
383,914
59,796

11,895
2,262
441,003
30,578
112,538
25,530
105,213
56,111
38,156
22,861
58,670

161,335
150,941

20,811
20,212

182,146
171,153

28,228
157,030

132,600

132,600

105,000

18,292
7,322
___ 81.867
$4,033,953

18,292
7,322
87.345
$4,457,152

54,000
8,047
86.390
$3,624,378

5.478
$423,199

105. 531_____5.037_____ 110. 568_____ 105.492
$3,928,422

$418,162

$4,346,584

$3,518,886

-9 4 -

NONREIMBURSABLE EXPENSE

1956
Head Office
Helena Branch

$ 3,928,422
418.162
$ 4,346,584

Change
from 1955
$+750,990
+ 76.708
$+827,698

Net changes in the various subdivisions of the expense accounts at
the Head Office and Branch are distributed as follows:

SALARIES

1956
Head Office
Helena Branch

$ 1,968,600
207.301
$ 2,175,901

Change
from 1955
$+127,569
+ 26.418
$+153,987

The not increase is due mainly to merit and promotional increases,
plus a slight rise in the number of employees and an increase in starting
salary of junior employees caused by a change in the wage and hour law.

FEES - DIRECTORS

1956
Head Office
Helena Branch

$ 7,850
4.190
$12,040

Change
from 1955
$+ 850
+ 430
$+1,280

A larger number of executive meetings in 1956 plus 12 directors'
meetings in 1956 compared with 11 in 1955 accounts for the increase at Head
Office.




-95-

FEES - FEDERAL ADVISORY COUNCIL

Change
from 1955

1956
Head Office

$1,400

$+

50

No important change occurred in this account.

FEES - OTHER

Change
from 1955

1956
Head Office
Helena Branch

v5,627
276
$5,903

$+ 2,343
116
$+ 2,227

Head Office figures include $962 for our pro rata share of the
cost of a special review of the retirement system plus $1,757 paid for complete
medical examinations for officers.

Both of these items were new expense in 1956 .

RETIREMENT CONTRIBUTIONS

Change
from 1955

1956
Head Office
Helena Branch

,>153,543
12.
914
$166,457

*>+35,459
+ 1.063
$+36,522

The increase reflects a $28,280 special contribution for a
retiring officer plus a change making new employees members of the
Retirement System after one month's service rather than after a threemonth period.

Since contributions are in direct relation to salary costs,

larger -salary expense in 1956 also added to the increase.




SUPPLEMENTAL DEATH BENEFIT

1956
Head Office
Helena Branch

$>6,667
705
$7,372

Change
from 1955
$-1,985
■- 188
$-2,173

An increased premium refund in 1956 accounts for the decrease.

SOCIAL SECURITY

1956
Head Office
Helena Branch

v33,439
3.711
137,150

Change
from 1955
$+1,909
+ 531
$+2,440

Due to increased salary costs.

TRAVEL - DIRECTORS

1956
Head Office
Helena Branch

46,510
3,163
$9,673

Change
from 1955
*+347
+332
$+679

There was no material change in this account.

TRAVEL - FEDERAL ADVISORY COUNCIL

1956
Head Office

$668

Change
from 1955
$-64

In 1956 our council member or alternate attended a combined
total

f four out-of-town meetings.




-97-




TRAVEL - OTHER

1956
Head Office
Helena Branch

^59,069
6 .067
$65,136

Change
from 1955
$+6,880
-.-994
$+5,886

The increase at Head Office is accounted for as follows
1956
Bank Examination
$27,445
Public Services
14,142
Travel on general bank
business (schools,
conventions, conferences,
etc.)
17.482
$59,069

1955
$+4,077
+1,907

+ 896
$+6,880

POSTAGE AND EXPRESSAGE
Original Shipments
F.R. Currency

1956
Head Office

$11,079

Change
from 1955

$-816

No material change in this account.

POSTAGE iiND EXPRESSAGE
Redemption
F.R. Currency

1956
Head Office
Helena Branch

No material change in this account.

$1,988
623

$2,611

Change
from 1955
$+392
- A3
$+349

POSTAGE AND EXPRESSAGE
Other

1956
Head Office
Helena Branch

$>369,759
75.615
$445,374

Change
from 1955
$+3,709
+ 662
£+4,371

The bulk of the increase at Head Office is due to moving charges
in connection with our building program.

TELEPHONE AND TELEGRAPH

1956
Head Office
Helena Branch

$27,938
8.080
$36,018

Change
from 1955
$+4,408
+1 .032
$+5,440

Our pro rata share of installation and rental costs for additional
equipment for the improved method for sending and receiving transfer of funds,
transfers of securties, and allotment transfers of securities, in clear language
rather than code accounts for the increase.

PRINTING, STATIONERY AND SUPPLIES

1956
Head Office
Helena Branch

Change
from 1955

$127,896
11.671
$139,567

$+24,771
+ 2.258
h^+27,029

During 1955 purchases were curtailed because of a shortage of
storage space due to our building program.

In 1956, as the space shortage eased,

we again started buying in larger quantities to take advantage of the price
differential for quantity buying.




-99-

INSURANCE

1956
Head Office
Helena Branch

*41,588
3.184$44,772

Change
from 1955
$+19,103
+
139
$+19,242

The increase at Head Office is the net result of the following:
1256,

.

Hospital L Surgical
$21,879
Bankers Blanket Bond
2,622
Workmen's Compensation
4,640
Comprehensive public and
automobile liability
1,224
Building and Contents
10,784
Other
439
*41,588

1255.
$+8,145
+
17
+1,773
- 302
+9,500
r 20
$+19,103

TAXES ON REAL ESTATE

1956
Head Office
Helena Branch

$160,128
5.068
$165,196

Change
from 1955
$+59,795
+
188
$+59,983

Because of the building program at Head Office, its assessed
valuation on the partially completed structure increased from $640,000.
in 1955 to $986,000




in 1956.

The tax rate increased 9*86 mills.

DEPRECIATION

1956
Head Office
Helena Branch

$41,971
2 .020
$43,991

Change
from 1955
$-12,120
_______
$-12,120
-

100-

Normal depreciation of

2%

both Head Office and Helena Branch.

per annum on building was taken at
At the beginning of the year the

Fixed Machinery and Equipment at both offices was fully depreciated.
During the year $16,305 was added to the Head Office Fixed Machinery and
Equipment account and was fully depreciated by year end.

LIGHT, HEAT, POWER AND WATER

1956
Head Office
Helena Branch

$41,278
2.998

$44,276

Change
from 1955
$+6,206
-_ 86
_

v+6,120

The main reason for the increase was the necessity for heating
the building during cold months at a time when the second and third floors,
as well as other areas, had only temporary protection from the weather
because of our building program.

REPAIRS AND ALTERATIONS

1956
Head Office
Helena Branch

-*>354,841
29.073
$383,914

The Head Office figure includes $350,000

Change
from 1955

9 + 334,441
+ 26.612
$+361,053

transferred from our

construction account,and the Helena Branch figure includes coin vault
alterations costing $ 27 ,120 .




-

101

-




RENT

m k
Head Office
Helena Branch

Change
from 1955

$59,757
, ____22
$59,796

$+1,128
A=____2
$+1,126

No material change in this account.

FURNITURE AND EQUIPMENT
Purchases
Change
from 1955

1256
Head Office
Helena Branch

$+138,515
+ 15.403
$+153,918

$161,335
20.811
182,146

$

Head Office purchases include the following:
Movable steel partitions
Transferred from Construction
Account (mainly cafeteria
equipment)
Desks, tables, chairs, adding
machines, typewriters, files,
etc., and outside cost of
repairs to furniture and
equipment

$ 52,214

56,055

53.066
$161,335

Helena Branch purchases include the following!
Armored car
Coin handling equipment
Passenger car
Accounting machine
Miscellaneous

5,646
7,335
2,992
1,713
-1,025
$ 20,811
$

-

102

-

FURNITURE AND EQUIPMENT
Rental

1956
Head Office
Helena Branch

$150,941
20.212
$171,153

Change
from 1955
$+11,686
+ 2.437
$+14,123

Head Office costs increased due to rental of cars to handle
suburban bank clearings, plus substitution of some 32-pocket I. B. M.
machines for 24-pocket machines.
Helena Branch check collection activities required rental of two
additional I. B. M. proof machines.

BOARD ASSESSMENT

1956
Head Office

$132,600

Change
from 1955
$+27,600

This represents our bank's pro rata share paid to the Board of
Governors of the Federal Reserve System to cover its general expenses.

FEDERAL RESERVE CURRENCY
Original Cost

1956
Head Office

$18,292

Change
from 1955
$-35,708

Because of our large stock of Federal Reserve Notes, very few
were printed for us in 1956.




-103-

FEDERAL RESERVE CURRENCY
Cost of Redemption

1956
$7,322

$-725

1956

Head Office

Change
from 1955

Change
from 1955

No material change in this account.

ALL OTHER

Head Office
Helena Branch

$81,867
5.£78
$87,34-5

$- A U
+1.369
$+ 955

Expense for extending the electric burglar alarm system at the
Helena Branch accounts for this increase.




COMBINED REIM B UR SA BL E EXP END ITUR ES OR RE CO VE RI E S

Account of
Public Debt
Federal Taxes
Department of the Army
Department of the Navy
Department of the Air Force
Atomic Energy Commission
Commodity Credit Corporation
F.R.B. Chicago, Fiscal Agent for R.F.C.
Federal Farm Mortgage Corporation
Federal Land Banks
Federal Intermediate Credit Banks
Central Banks for Cooperatives
Federal Home Loan Banks
Federal Public Housing Administration
Federal National Mortgage Association
Coin Wrapping Services
Processing Post Office Money Orders
Destruction of Unfit U. S. Currency
Foreign Assets Control
Miscellaneous
Profit and Loss - over-estimate of
Reimbursable Expense




1956

Change
from 19.55

$401,950
32,19?
265
188
18
203
14,235
514
8
429
42
9
49
6
27
17,423
20,042
5,794
181
29,890

$-28,071
+ 1,460
247
■
f 153
2?4
401
+ 1,528
76
+
3
213
+
*
24
2
531
9
- 1,611
+
872
+ 2,142
619
+
181
+ 7,422

__

929

$524,399

+

806

$-17,085

-1 0 5 -

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