Full text of Annual Report to the Directors of the Federal Reserve Bank of Minneapolis : Annual Report, 1942

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ANNUAL REPORT
FEDERAL RESERVE BANK OF MINNKAPOLIS




Board of Directors,
Federal Reserve Bank of Minneapolis,

This report, revealing the re
suits of our operations during 1942, is
respectfully submitted.

A. W. M i l s
Cashier

January 1, 1943




INDEX

Comment e« *..... .......... ........... 1
Assets and Liabilities..................

4

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

11

Earnings*

Expenses. ..............................

12

Profit and Loss, Surplus and Reserves....

23

Departmental Comments.......... ....... P

25

COMMENTS

The impetus of the first year of actual warfare has had a very
telling effect on the activities of this bank*

Those departments more

closely associated with the war effort experienced a heavy increase in
duties, and other departments of the bank were affected to a greater or
lesser degree*

As an indication of the increased activity during the year,

the staff of this bank (including Helena Branch) numbered 892 at the close
of the year - an increase of 300 employees*

To accommodate this larger

staff, floor space in the bank building is being very carefully conserved
by eliminating unnecessary walls, grilles and partitions; by converting
locker rooms, store rooms and basement space to more useful purposes by
moving desks and equipment closer together; by using furniture which re­
quires less floor spacs and by adequately lighting underlighted areas in
the bank,

7/e feel that we have adequate space to accommodate an addition­

al 200 employees, should the staff be further enlarged*

Fourteen members

of the staff are located in the McKnight Building in space rented for the
use of the Victory Fund Committee,

A resume of the activities of the vari­

ous departments of the bank are included in these comments*

More detailed

statements of the operations of these departments may be found in the last
section of this report.
The most pronounced expansion of work in the bank occurred in the
fiscal apency department and these dutie^, together with fiscal functions
performed for the Treasury Department, Reconstruction Finance Corporation,
armed forces of the United States and other governmental and semi-governraental agencies, resulted in much heavier expenditures.
The greater number of offerings of Government securities with wider
distribution and much enlarged volume of transactions necessitated a much
larger staff in the fiscal agency department and more floor space.
The most prominent activities in our public and bank relations pro­
gram was the distribution, of 22,000 copies of "Your Money and the Federal Re­
serve System" - an educational picture book developed by this bank - to all
banks and high schools in the district and interested parties in other parts
of the United States, and the introduction of a series of biweekly luncheons
with Twin City bank officers as our guests*
speakers discussed topics of the day.




At these luncheons selected

Bank visits (to a limited extent),

movie Bhowings, talks before groups and the showing of the playlet "Mother
Buys a Bond" were anong the oth^r activities#
Banks in the district continue to find it unnecessary to use the
credit facilities of our bank to any great extent.
be low*

The volume continues to

Industrial advances have declined in volume with current advances

mostly for war purposes.

Practically all of the activity of the discount
\
department has been in connection with applications for loans under Regula­

tion "V" for guarantee by the War Department, Navy Department and Faritime
Commission*
Little change occurred in the volume of cash items handled by the
check collection department» There was an increase in the number of country
checks handled, as well as in checks drawn on the Treasurer of the United
States*

The number of work relief checks handled was substantially reduced.

All incoming and outgoing mail is handled in thi3 department, and increased
activity throughout the bank has more than doubled the volume of mail*
The number of collections handled in the noncash collection de­
partment remained practically unchanged from 1941, while the number of grain
drafts collected for member banks showed a small increase.
Incoming currency and coin shipments from member banks remained
practically unchanged, while the volume of outgoing shipments showed a sub­
stantial increase.
The examination department continued its established procedure in
examining State member banks, examining various reports and performing its
usual duties.

Six State banks were admitted to membership, bringing the

total number of State member banks in this district to 94.
Safekeeping facilities performed for member banks, Governmental
agencies and individuals increased very substantially during the year. Govern­
ment securities purchased by member banks, securities pledged as collateral
for public fund3, U. S. Savings bonds held for individuals increased and add­
ed to the amount of securities held in safekeeping.
Duties performed as custodian for the Reconstruction Finance Cor­
poration and its subsidiaries were increased during the year.

Disbursements

for the Defense Plant Corporation, custody of warehouse receipts covering
Australian wool, settlements for tires acquired by the Defense Supplies Cor­
poration under the "idle tire program*’, accepting premiums on war damage in­
surance and loans made to cover "frozen'* or rationed articles and commodi­




ties, and handling of grain p r o g r a m s for the Commodity Credit Corporation
were the principal activities engaged in.
Now that Regulation "W” seems to be quite well understood by lend­
ers and creditors, the principal functions of the consumer credit department
consist of releasing amendments, answering inquiries, making special studies
and circularizing rulings and interpretations made by the Board of Governors*
The staff required to handle this work has been considerably reduced from one
year ago when the regulation was new.
Although several changes were made in the nature of factual infor­
mation collected by the research and statistical department, probably the
most important addition is the beginning of a post-war study under the super­
vision of Dr. A. R. Upgren of the University of Minnesota who is now vice
president and economist of this bank.

At the present time all data and pub­

lications relating to or helpful in determining the trend of post-war de­
velopments are being indexed for future analysis.

It is expected that more

emphasis will be placed on this subject daring the coming months.




CHANGES IN OUR BALANCE SHEET FIGURES

The following statement reflects the changes which have occurred
in our balance sheet figures since December 31, 1941s

COMPARATIVE STATEMENT OF ASSETS
FEDERAL RESERVE BANK OF MINNEAPOLIS AND HELENA BRANCH
Increase or De­
crease since
December 31. 1942
(000 's omiti
Cash Reserves s
Interdistrict settlement fund.....*.... .
Gold certificates with F* R* Agent......... *
Redemption Fund - F» R. Notes........

$ 1.6 7 ,051,021 *05
310,000»000*00
201,986*22

$

Total gold certificate reserves*...........*

$ 4 7 7 ,253>007#27

£ 4- 82,187

._8,.353,1.65..5Q

+

2,935

$ £85,606,172*77

$ +

85,122

-

50

+

55
148

Other cash.................. ........ .
Total cash reserves***••••**•****•*......
Bills and Securitiess
Bills secured by U. S. Government obligations,
direct or fully guaranteed............... .
Bills otherwise secured and unsecured.... .
Foreign loans on gold...................... *
Industrial a
d
v
a
n
c
e
s
.
*
U*S* Government securities....... .
Total bills and securities.........«.••«*..

55,000.00
365,705*05
154,179^000*00

+

87,670

$ 154,599,705*05

$ +

87,527

Due from Foreign banks....................... .
F* R* Notes of other Federal Reserve banks*..***

$

Total uncollected items.......... ........
/

$

Miscellaneous Assets*
Industrial advances past due three months.....
Less reserve
Industrial advances past due 3 months - Net
Misc* assets acquired in settlement of
claims account failed banks*....... .......
F. D* I* C* stock.............. *..... ......
Less reserve..................... ..........
Difference account.* .......... ..... ........
Premium on securities.............
Interest accrued.... *......... .............
Reimbursable expenditures.......... .
Deferred charges. ........ .......... .
All other assets.*.................. .......
Total miscellaneous assets.*..*••••*..... ,*

TOTAL ASSETS




-

459*65
2,107,600*00

Uncollected Items 1
Transit items.*.... ...... ..................
Exchanges for clearing house.... ..... ......
Other cash i t e m s . #
.......

Bank premises...... ....... ...................
Less reserve........*.......... ...... .......
Bank premises - Net

13,614
4- 96,000
199

1,457

30,561,962*58
2,993,333*46
736,091*41

$ +
+

34,291,387*45

$ +

5,732

2,010
21

-

7,721

2,450,579*39
$

1,309,315*13

150,657*26
_____
"
66,657*2o

1*00
3»509,467.65
3»^0;,4o7-o5
436089
1,576,841.03
463,311*26
326,482*26
16,968*41
61,975*06
$

2,512,673*17

$680,427,313*22

+
$ -

«=»

+

-

29
29

25

11

36

+
+
+
+
+

747
199
237

2
?8

1,203

+ 133,000

COITPARATIVE STATEMENT OF LIABILITIES
FEDERAL RESERVE BANK OF MINNEAPOLIS AND HELENA BRANCH

December 31. 1942

F. R. Notes in actual circulation..........

$

302,727,460*00

Increase or De­
crease since
Dec, ]1, 1941
~(00048 omitted^
$

Deposite t
Members - Reserve account*............ .
276,825,558*76
U. 5. Treasurer - General account.........•
35>353,627*08
Foreign balances#................... 15,377,l60«48
Nonmembers - Clearing account...........
666,001.35
Officers9 checks......... ...............
9,127,617.71
Other deposits..... .................... .
2,671.705*43
Total Deposits........ ................

$

Deferred availability items............... .

340,021,670.81

$

27,636,284*52

+

96,218

+
+
+

98,290
17,107
1,419
640
1,944
347

+

8l,4l6

+

5,082

Miscellaneous Liabilities*
Accrued taxes unpaid................... .
63,480«00
2
3,952*70
14
Sundry items payable.................... .
Unearned discount.................... .
Discount on securities.................. .
9,328.13
+
9
Suspense account.........................
527*20
Special reserve......................... . 151.741*00
+____________ 152
Total Miscellaneous Liabilities.........

$

229,029=03

$

Capital stock paid in..............................3,°75s100.00
Surplus Fund - Section 7***»............... ....... 3,220,822.82
Surplus Fund - Section 13b.......... ...... ........ 1,000,298.87
Reserves for contingencies........ ................2.516.647.17
TOTAL LIABILITIES......................

$

680,427,313*22

+

145

+
+

72
68

____ $

+ 183,000

Gold certificate reserve against F. R. Notes
in actual circulation after setting aside
35$ legal reserve against deposits........

121# 1$

-

29$

Reserve ratio against combined net deposits
and note liabilities*....................

75*6$

-

It)*5$

$

-

28

$

+

2,639

Commitments to make industrial advances.....

$

Float absorbed........ ....... ............ .

$

6,655,102*93

Total assets increased from 497 million dollars to 680 million dol­
lars during the twelve month period.
lars or about 37$.

This is an increase of 183 million dol­

Increases in our "gold funds'1 (interdistrict settlement

fund and gold certificates pledged with the Federal Reserve Agent) and in­
creases in our participation in government securities in the System Open Mar­
ket Account are the principal factors in the increase in our total assets.
Increased cash holdings and a greater volume of uncollected items also con­
tributed to this increase, together with other items of lesser amounts.




Cash Reserves.

One of the most significant developments in the

assets of the bank in 1942 was the continuation of the inflow of gold funds
into this district.

During 1942 our gold certificate reserve funds increased

about 170 million dollars (net increase in gold certificate reserves plus net
increase in U. S. Government securities) as compared with a gain of about 88
million dollars in 1941.
pared with 28$ in 1941.

In 1942 this represented an increase of 43$as com­
This increase in gold funds indicates that the dis­

trict fared well in its trade relations with other districts during the year.
This favorable '’trade balance'* may be regarded as evidence that more goods
and services (including farm products and war materials purchased by the
Government) were sold outside the district than were purchased.

Since all

gold funds belonging to the System increased only 51 million dollars between
December 31» 1941 and December 30, 1942, and our interest in the? fund increased

170 million dollars, our larger participation was at the expense of other dis­
tricts.

Our ratio of total cash reserves to total deposit liability has had

a tendency to weaken somewhat during 1942 as compared with 1941.

On December

31, 1941, this ratio was 86$ while on December 31> 1942, the ratio was re­
duced to 7

Now that the monetary gold stock of the country is not being

increased and deposits continue to expand, it is expected that the ratio of
total cash reserves to total deposit liability will continue to be reduced.
Bills and Securities.

The. other noticeable and important change

in our assets is our increased participation in government securities through
the System Account.

On December 3^* 1941 our participation was 66.5 million

dollars in bonds and notes.

During the first quarter of 1942 no substantial

changes occurred in this account.

At the end of the second quarter our parti­

cipation was increased to 78 million dollars..

In the third quarter the total

rose to 89.9 million dollars and at the close of the year our participation
aggregated 154.2 million dollars.
dollars during the year.

This was an increase of about 87*7 million

Member bank deposits are rising and money in circu­

lation is increasing and these two factors tend to reduce excess member bank
reserves.

While reserve requirements could have been reduced as a means by

which excess reserves might have been increased, the purchase of government
securities by the System on the open market »eemed to be a more selective pro­
cedure.

Using this method purchases may be nade in those areas where relief

may be necessary without affecting other localities.

The System may also pur­

chase government securities to assist in maintaining an orderly market in




governments, and it may be necessary to supply member banks with additional
reserves in order that they may continue to effectively support the Treasury*s
war finance program and to offset the drain c,i bank reserves due to increases
in money in circulation.
194-1 volume*

Loans and discounts dropped off materially from the

No loans were held during November and December*

During the

preceding ten months loans average} from a daily average of $100 to $628,000*
As a group the banks in the district do not find it necessary to use the credit
facilities of this bank and have not used these facilities to any appreciable
extent since the early months of 1934*
ing liquidated*

Industrial advances are gradually be­

The few new loans being made are for war purposes*

These ad­

vances dropped from $5*14,000 on December 31, 1941 to $366,000 on December 31,
1942 - a decrease of $148,000*
Uncollected Funds* Uncollected items (cash items in process of col­
lection for member banks and governmental agencies) increased 7*7 million dol­
lars on December 31 > 1942, compared with one year ago, and deferred availabili­
ty items (credit to member banks and governmental agencies deferred pending
collection of the cash itenr?) increased 5*1 million dollars.

Increases in

these two accounts are expected in view of the larger volume of items handled.
The difference between these two items reflects the float we are carrying for
member banks and others.

On December 31* 1941 this float figure was four mil­

lion dollars and on December 31» 1942, float absorbed aggregated 6.6 million
dollars - an increase of 2.6 million dollars.
Bank Premises. No additions were made to the book value of bank
buildings and fixed machinery and equipment either at Head Office or Helena
Branch, and deductions were normal depreciation charges of 2% on bank buildings
and 10$ on fixed machinery and equipment.

The detail of changes in bank prem­

ises account is as follows*
LAND
Head Office
Book value January 1, 1942
(No change during year)

$

Helena Branch

Total

$ 10,000*00

$ 410,520^66

846,965*94
$ 69,750*00
25 6 6 5 * 6 0 ____ 1,500#00
821,300*34
$ 68,250.00

$ 916,715*94
27.165*60
$ 889»550*34

400,520*66

BANK BUILDING
Net book value December 31> 1941
Less* Reserve for depreciation
Net book value December 31> 1942

$
$

FIXED MACHINERY AND EQUIPMENT
Net book value December 31* *941
Less* Reserve for depreciation
Net book value December 31> 1942




(Charged Off)
_____
-

$ 10,924*97
$ 10,924*97
1.680*84_______ 1.680*84
$ 9,244.13
$
9>244*13

BANK PREMISES COMBINED
Head Office
Net book value December 31, 1941
Least Reserve for depreciation
Net book value December 31, 1942
Miscellaneous Assets.

Helena Branch

$1,247,486.60
25.665.60
$1,221,821,00

Total

$ 90,6?4.97
$1,338,16.1.57
^.180.84 v
28.846.44
$ 87,494.13
$1,309,315.13

The larger increases in these assets were8

premium on securities purchased through the System Open Market Account,
$747,000| interest accrual on these securities, $199,000? reimbursable ex­
penditures billed to the Treasury Department and governmental agencies but
not collected, $237,000; other miscellaneous assets, $58,000.

The item $58,000

includes about $47,000 advanced by the bank to the Army and Navy for the pur­
pose of fulfilling a Navy guaranteed agreement to one bank in the amount of
$43,000 under the provision of Regulation V and the purchase of a guaranteed
loan of about $4,000 from a bank at the request of the Army.

This item also

includes a working fund of $5,000 used by the Idle Tire Division of the Defense
Supplies Corporation which is a section of our Reconstruction Finance Corpora­
tion Custodianship Department.

The remainder is miscellaneous sundry items re­

ceivable.
The important changes in our liabilities were the substantial in­
creases in our notes in circulation and deposit liability.
Federal Reserve Notes in Actual Circulation.

Our notes in circula­

tion continue to expand at a very rapid rate and the velocity of this expan­
sion has been and is becoming more pronounced each month.

During 1942 the

increase in January was 55 million dollars and in December 94.5 million dol­
lars.

On December 31, 1942 our notes in actual circulation amounted to

302.7 million dollars as compared with 206.5 million dollars on December 3^?
1941 - an increase of 96.2 million dollars or about 47$.
circulation increased 4 7.8 million dollars or 30

During 1941 our

%. In the entire United

States money in circulation (Currency and Coin) rose from 11.2 billion dol­
lars on December 31, 1941 to 15*3 billion dollars on December 30, 1942. There
are reasons why money in circulation should expand under war conditions such
as we are now experiencing, but what seems to be unwarranted expansion is be­
ing viewed with concern by many informed people.

Certainly the withdrawal

of currency for other than legitimate purposes places an unnecessary strain
on member bank reserves.

If idle monies now in the hands of the public were

returned to the banking system it is possible that it would not have been
necessary for the Reserve System to supply member banks with as large amounts




of reserve funds through open market operations, and secondly, it is possible
that more excess reserves would now be available for Treasury financing#
Member Bank Reserve Accounts and Other Deposits# Member bank bal­
ances with this bank rose from 178*5 million dollars on December 3*, 1941, to
276.8 million dollars on December 3, 1942 - an increase of about 98#3 million
dollars#

During the first quarter of the year member bank reserve balances

fall off to about 172 million dollars, but during the succeeding months these
reserve accounts regained lost ground and made additional advances, reaching
the highest point in the history of the bank.

In comparing the reserve posi­

tion of member banks in thi3 district during the first two weeks of December
1942 7/ith the first two weeks of December 1941, it is noted that the excess
reserve position of reserve city banks remained practically unchanged, while
country banks gained about 10#7 million dollars of excess reserves.

The fol­

lowing analysis shows these changes in reservesf

Ninth District Member Bank Reserves
(In thousands of dollars)
Daily average for the first half of December 1942
Reserve City Banks
Change
since
Dec. 1-15
Dec,1141
Reserve Accounts
Required Reserves
Excess Reserves

Country Banks
Change
6ince
Dec# 1-15
Dec *?41

All Member Banks
Change
since
Dec. 1-15
Dec **4.1

$146,622

$ +42,634

$117,229

$ +32*657

$263,851

$ +75*291

128,526

+42,554

79,397

+21,960

207,923

+64,514

+

37,832

+10,697

55,928

+10,777

18,096

80

Funds on deposit to the credit of the Treasurer of the United States
were somewhat less during 1942 than during 1941#

During 1942 month-end bal­

ances ranged between a low of $5^9,000 in December and a high of 37*7 million
dollars in September.

During 1941 the range was between a low of 21.1 mil­

lion dollars and a high of 52.5 million dollars.

These funds have a tenden*
cy to fluctuate quite widely and the lower balances during 1942 were undoubt­

edly due to a more pressing need for funds by the Treasury.

During 1941 non­

member clearing balances ranged between $920,000 and 1 . 5 million dollars and
retained about that level during the first few months of 1942• When some ad­
ditional restrictions were placed on the use of our services by nonmember
clearing banks about May of 1942, about sixteen of the eighteen accounts were
closed and balances were reduced substantially#

On December 31, 1942 these

balances aggregated about $670,000, a decrease of $640,000 as




compared

with December 31, 1941*

Officers' checks increased from 7*2 million dollars

to 9*1 million dollars between December 31, 1941 am* December 31, 1942, an
increase of 1.9 million dollars.

Almost all of this increase in officers*

checks outstanding occurred at our Helena Branch and represents cashier’s
checks issued to member banks to be used as collateral security for public
funds.
Surplus Fund (Section 7). After providing for dividends to stockholders,net earnings for the year 1942 were $68*402.55*

The following state­

ment shows changes in earnings and expenses end disposition of net earnings
in 1942 compared with 1941*

Net Earnings
1942
Current earnings
Current expenses
Net current earnings

$ 1 ,478 ,321., 97
1.166.^47.44
*
311,974.53

Additions to earnings
Deductions from earnings

$ .
$

$

50,456.05
___________

$

198,264.31

£

179,789*68
490.14

60,231.74
251,742,79

Disposition of Net Earnings
Dividends paid
Paid to U. S. Treasurer
Transferred to surplus (Sec. 7)
Transferred to reserves for
contingencies




$

$

183,336.33
3.91
68,402.55

251,742.79

$

17.984.49
198,264.31

EARNINGS
Head Office
Helena Branch

$1,478,038.75

28^.22

$1,478,321.97
Practically all of our earnings continue to accrue from our in­
vestment in United States Government securities held in the system open
market account.

As a matter of fact, approximately 98$ of the earnings are

derived from this source.

Our average holdings of these securities in De­

cember was $148,701,000 and earned 1.435$*

The average for the year was

$88,652,600 and the average earning rate was 1.6337**

Our daily average

participation in governments was about 70 million dollars during the first
four months of the year and the earning rate was 1.9/£*

During the fcur

months beginning in Kay, our average participation was increased from 74
million dollars to 91 million dollars, and the aarning rate dropped from
1.8/£ to 1.5#.

The earning rate was reduced because our participation then

included bills and certificates of indebtedness with much lower yields*
During the last four months beginning in September our average participa­
tion was increased from 93*1 million dollars to 148.7 million dollars while
the earning rate changed very little from 1.5^*

During 1941 we held be­

tween 61.6 to 66.8 million dollars in these securities and the earning rate
remained quite steady, around 1.8^.

The distribution of our participation

on December 31, 1942 compared to December 31, 1941 was?

Bonds
Notes
Bills
Certificates of Indebted­
ness
Bills held under repur­
chase agreement

$ 75,729
36,474
11,746

$ 43,272
22,931

306

28,230
2,000
$154,179

$ 66,509

Earnings from industrial advances totaled $21,276.47 from average holdings
of $481,510.96.

Theee investments earned 4.419$.

Earnings from discounted

bills and foreign loans on gold totaled $1,110.62 as compared with $2,649.35
in 1941.
$47 .80.

Earnings on commitments to make industrial advances amounted to
Other earnings were*

interest collected on past due industrial ad­

vances, $5,211.43? deficient reserve penalties, $814.21; sale of waste paper,
etc., $326.54; clearing house fines, $119 .00 ; savings on registry fees on
registered mail shipments made for member banks, $1,074.11; miscellaneous




earnings, $72.82*

Helena Branch earnings were?

deficient reserve penalties,

$274*99? discounted bills, $8 .23 #

EXPENSES
Head Office
Helena Branch

$1,055,136,33
111,161,11
$1,166,347.44

Gross expenses in 1942 totaled $1,996,400 which was an increase of
$526,000 over 1941 co3ts*

Reimbursable expenses totaled $830,000 as compared
Net expenses increased $91 ,000, due prin­

with $395»0°0 the preceding year.

cipally to a larger staff with increased salary costs and increased Federal
Reserve note costs.

SALARIES
Head Office
Helena Branch

$ .>24,482*65
6l.006.76
$ 585 ,489.41

Net salary costs increased $57>000 at Head Office and $1,150 at
the Branch,

During the year our personnel increased from ten officers and

545 employees at Head Office to sixteen officera and 807 employees.

The

Branch staff, during the same period, increased from 34 employees to 67 em­
ployees with a reduction in the official staff from three to two.

In De­

cember we received reimbursement for all or par; of the salaries of eight
officers and 540 employees at Minneapolis and one officer and 49 employees
at the Branch,

The following comparative figures show changes in personnel
\

by departments*

January 1, 194*}
Head Office*
Officers
General staff
Transit and mail departments
Fiscal Agency department
R. F, C, Custody department
Victory Fund Committee

Helena Branch*
Officers
General staff
Transit and mail departments
Fiscal Agency department
R, F, C. Custody department

16
235

138

238
182
14
123

2
20
15
18
14
“T 9

Increase or De­
crease since
January 1. 1942
-f
6
+
26
+
33
+ 116
•f
73
•f 14
+ 266
+
+
+

1
3
1

18
10

■f

31

It is interesting to note, that in order to increase the staff
Head Office from 555 to 823 (268 increase), it was necessary to actually add
566 new employees because 298 people left our employ for the following reasons*




EXPENSES - Cent15d

Death
Military leave
Resignations
Retirement
Other reasons

Men

Women

1
6l
6l
1
16
140

1
2

138
0
17
158

At the Branch 71 new employees were hired and 39 were separated
from the staff*

The reasons for these separations were*
Mon
Military leave
Resignations
Other reasons

Women

8
5
2
15

0
22
_2
24

The percentage of turnover of help, based on the average number of employees
for the year, was 47$ at Head Office and 73$ at the Branch#

RETIREMENT SYSTEM CONTRIBUTIONS
Head Office
Helena Branch

$ 29,505*38
768,0^
$ 33,273.41

In line with increased salary costs, contributions to the Retire­
ment System increased $5,600 at Head Office and $800 at the Branch,

During

the first six months of the year the rate of contribution was 5*66$,

The

last six months of the year, the rate was 6 ,16$,
LEGAL FEES
Head Office
Helena Branch

$
$

7,840,73
14,^0
7,855.03

Legal fees in 1942 were $1,800 less than in 1941, principally be­
cause a large portion of counsel's retainer fee was charged to reimbursable
expenses due to increased legal work in connection with loans guaranteed under
Regulation V,

DIRECTORS9 FEES AND EXPENSES
Head Office
Helena Branch

$ 7,330,40
2,06^,3^
$ 9,393.73

Fees and expenses for 1942 were $5°0 less at Head Office and $200
less at Helena than they were in 1941,

Items contributing to the expense

were 1

1942
Head Office:
Directors* meetings
$ 5,400
Executive committee meetings
300




Increase or De­
crease compared
to 1941______ _
$ -

200
200

EXPENSES - Cont 9d
Increase or De­
crease compared
to 1 9 4 1 __

1942
(Cont’d)
Discount committee meetings
$ TOO
Audit committee meetings
600
Chairmen’s meeting at Y/ashington 200
Directors9 luncheons
100
Incidentals
___- ^00

$ 7,300

$ +

200

$ -

500

TRAVELING EXPENSE
Head Office
Helena Branch

$ 15,281.02
1,282.98
$ 16 ,564.06

Traveling costs in 1942 were $6,400 less than in 1941.

The follow­

ing table shows a comparison of 1942 costa with similar items in 1941?

1942

Increase or Decrease since 1941

Head Office*
Bank examinations
$ 7>077*33 $ 50
Visiting banks in our district
- 3>750
Bank relations (Preston)
722*02
+
100
Industrial loan investigations
544.17
650
Industrial advisory committee expense 291*96
200
Failed banks® expense
350
Presidents" conferences
,
622.02
+
50
Open market committee meetings
100
Retirement system committee meetings
139*30
50
Planning transit operations for now
member banks
106.58
+
50
Showing bank movie
37*20
Graduate school of banking
184.JO
+
100
Obtaining statistical information
100
Visiting newspaper publishers
650
Conference on National Defense
300
Auditors* convention
146.85
100
Employees attending A.I.B. convention 487.69
150
Planning operations at Helena Branch
150
Group meetings, conventions and
conferences
2,994,55
+ 1,000
Talks before various groups
282.91
+
150
Out-of-town meeting Board of Di­
rectors - officers* expense
52*27
150
Installment credit meetings
847 .70
- 1,100
Defense Bonds liaison office, St.Paul 276*94
+
50
Transfer employees Head Office to
Branch - Branch to Head Office
432*83
+
350
Miscellaneous
^4.40
-__%0

$15, 281.02
Helena Branch
Visiting.Montana banks
$
Transfer of employeee, Minneapolis
tc Helena
Head Office auditors - travel costB
Group meetings, conventions and con­
ferences
R„ E. Towle to Minneapolis Victory
Fund conference
Regulation W conferences
Miscellaneous
51. <
$ 1 ,282.98




*16,564.00

$ -

6,050

33*64
375*96
255*02
294.83
166.05
106.46
51*02
$

-

350

$

-

6,400

14

EXPENSES » Gont4d
POSTAGE AMD EXPRESSAGE
Head Office
Helena Branch

$120,891.04
171974*6.7
$138,865,71

Postage and expressage costs for 1942 showed very little change
either at the Head Office or at the Branch as compared with costs of 1941*
At the Head Office these costs decreased $800, while at the Branch this? ex­
pense increased $300 * The detail of postage and expressage costs is as fol­
lows s
Increase or Decrease since 1941

'1942
Postages (Head Office)
Absorbed on incoming currency
shipments
$ 27,757*75
Placed Gn outgoing currency
shipments
22,160.65
Placed on outgoing coin shipments
8,813.24
Net amount used on ordinary mail
44,608.47
Postage used -on security shipments
677*18
$104,017.29

$

“

2,700

$

+
“
+
-

1,700
400
2,100
800
2,700

%

+

100

+

300
loo

+

1,000
700
300
1 9900

Expressage% (Head Office)
Absorbed on incoming currency
shipments
214.29
$
Absorbed on incoming coin ship­
5,919.80
ments
Government checks sent by express
• 687.21
Checks sent to member banks by
express
5,409.16
Paid to Brink’s Inc. for express
service
4,008.50
Mail car expense
63M2
$ 16,873.75
Helena Branch costs %
Postage and expressage on incoming
and outgoing currency shipments $ 6 ,'197*70
Postage and expressage on incoming
and outgoing coin shipments
2,344*75
Postage on security shipments
82*64
Ordinary mail costs
7»6o6.75
Armored truck expense
101.83
All other
l.,;i41.0Q
$ 17,974.67

$

+
+
+

$

+

300

$138,C65«71

$

“

500

TELEPHONE AND TELEGRAPH
Head Office
Helena Branch

%

8,8l8«58
4.932.51
$ 13,751.09

Telephone and telegraph costs in 1942 were $2,000 less at Head Of­
fice and $600 more at Helena than they were in 1941.

Head Office expense

for 1941 included an item of $2,700, the cost of sending 3,300 telegrams to
dealers in instalment credit.




PRINTING, STATIONERY AND SUPPLIES
Head Office
Helena Branch

$ 35,023.51
3«898,>53
$ 38,922*04

lo

EXPENSES - Cont *d
Office supplies at Head Office i'i 1942 cost $1,400 less than in
1941, while at Helena Branch these purchases were approximately $1,300 more
than in 1941*

During 1941 we anticipated our needs and did some advance buy­

ing.
INSURANCE ON CURRENCY AND SECURITY SHIPMENTS
$ 6 ,163.29
752c03
$ 27915.32

Head Office
•
Helena Branch

Costs in this unit of expense were reduced $1,500 at Minneapolis
and $350 at the Branch, ' Minneapolis expense was allocated as follows:
Increase or Decrease since 1941

1942
Incoming currency
Outgoing currency
Outgoing coin
Securities

$ 2,391*31
3>730*52
96*93
55*47
$ 6,163.29

$

“

850

~
$

50
600
- 1,500

The premium rate charged on currency shipments to and from mem­
ber banks was reduced during 1942 from .0425 per $1,000 to ,03 per $1 ,000,
and the rate on new Federal Reserve notes shipped to us from Washington was
reduced from «02 to .015 P©** $1,000 and these reductions reduced our in­
surance costs.
OTHER INSURANCE
Head Office
Helena Branch

$

9,5*9.26
909.50
$ 10,428.76

Miscellaneous insurance costs, as described below, are $3 9100
less than in 1941s
1942
Head Offices
Group life insurance
$ 1 ,969.07
Bankers® blanket bond
5 ,650.46
Workmen’s compensation
1 ;434.37
Comprehensive public auto liability
insurance
674.51
750.00
Fire insurance on building and contents
Steam boiler insurance
95.54
“
Burglary - securities
Collision insurance - officers and em­
ployees
92,55
Special police bonds
68^0
Riot and civil commotion
Fidelity bonds (F.R.Agent, Asst. F.R*Agent
and Alternate Asst. F.R.Agent)
40.00
11.00
Notarial bond
Camera propertyfloater and insurance on
bank movie film
54.41
50,00
Unabsorbed premium on War Vandalism
Military service
117.60
Dividend group life insurance
1,338.5:
$ 9,519.49
alena Branch
. 909.50
$10,428,99




1941
$ 1,607.97
9,075.53
1,044.18
613.32
750.00

108.28
70.40
130.86
326.00
450.00
40.00

21.00
56.79
m
$12 ,591.35
971.50
$13,562.85

16

EXPENSES - Cont’d
LIGHT, HEAT, WATER AND POWER
$1 9 ,789.69
2.120o46
$21,910.15

Head Office
Helena Branch

This year’s Minneapolis costs as compared with costs of last year
are shown below1

1942
1941




Heat

Power and
Light

Water

Sewage

$2,449.77
1 ,835-09

$15,563o63
14,770*65

$913.80
853-89

$715*89
672.86

Fuel for
Hot Vfater
$146*60
143.20

Helena Branch costs increased $600.

REPAIRS AMD ALTERATIONS TO BANK BUILDING
Head Office
Helena Branch

$ 16,440.53
„
945.75
$ 17,386.28

Repairs and alterations at Head Office during 1942 were*
Otis Elevator contract
$ 2 ,760,00
Architects* fees - proposed balcony
2,577.00
Fluorescent lighting fixtures
2 ,996.17
Remodeling ground floor space for
office purposes
2 ,863.24
Linoleum
630.00
Blackout tape
340.73
Air conditioning changes
470.50
Plumbing charges
192.21
Alterations to cages and other bank floor
work
990.37
Alterations to second floor
328.93
Alterations to third floor
333.98
Shutoff units added to boilers
500.50
Repairs to freight elevator and dumbwaiter
183*84
Steel covers for skylights
226.45
210.17
Repairs and decorating recreation room
Repairs and decorating women’s rest room
126.28
Miscellaneous
980.14
$16,711.01
To partially reverse amount set up in
1941 cost of dividing coal bin
270.48
$16,440.53
Helena Branch*
Fluorescent light fixtures and instal­
lation
Paint supplies
Christmas decorations
Cleaning steam boiler
Condensers for electric motors
Treads installed on stairways
Repairs to electric door
Miscellaneous

$

$

630.83
96.55
44.12
38.45
20.25
19.75
16.39
79.41
945.75

$1 7 ,386.28
FURHITORE AND EQUIPMSHT
Head Office
Helena Branch

$ 16,514.70
5*644.68
$ 22 )159.38

it

EXPENSES - Confd
Head Office purchases of furniture and equipment, although total
ing $16 ,500 , were $9,000 less than in 1941, Minneapolis purchases included
Tables
$
2,625*43
Desks
1,096,50
Chairs
622*40
File cabinets
2,404.36
Adding and bookkeeping machines
6,682*98
Automobile
2,500*00
Paktyer machine
327* 97
Monroe Calculator
36O 0OO
Furniture and carpets, ladies* lounge
202*91
Miscellaneous purchases
1.315*78
$ 18 ,138.33
Less credit for 17 revolvers sold
Less credit for 17 typewriters paid
for in 1941 but not delivered to
us - order cancelled
Miscellaneous recoveries - equipment
BOld

425*00

1 ,105*00
$

___ 91 4 2
1,623*53

$ 16,514*70
Helena Purchases*
Cabinets
Desks
Chairs
Tables
Duplicating machine
Adding machines
String-tying machine
Files
Floor polishing machine
Typewriters
Time clock
Miscellaneous

162*65
447*50
474*00
355*15
601*31
2,090*34
272*25
346*39
196*00
170*00
150*54

378*55
$ 5*644*6B
$ 22,159.38

ALL OTHER EXPENSES
Head Office
Helena Branch

$ 33,352*53
3,261*32
$ 36 ,613.85

These miscellaneous items cost about $10,500 less at Head Office
and $1,100 more at Helena than in 1941*

Larger items are listed below:

1942
Head Office:
Rental, repairs and maintenance
of furniture and equipment
Outside protection, vault in­
spection, etc.
Newspapers, periodicals, books,
etc.
Supplies furnished member banks
Copies of bank examination re­
ports
Commercial agency credit reports
and services
Medical service and supplies and
physical examinations
Cafeteria net expense
Employees* education: A.I.B.
Federal Reserve Club




1 ,794.91
740.66

Increase or De­
crease compared
to 1 9 4 1 __

$

-

400

- 1,000

16.85

+
-

600
700

3,715.00

+

100

543.80

-

300

3,035.40

1,272.62
3,601.22
1,827.00
3,073.03

•f 300
+
500
■f 200
+ 1,500

EXPENSES - Cont*d
Increase or De~
crease compared
to 1941

1942
Head Office* (Cont’d)
Foreign department
'$ 3,092*74
Member bank conference
Study of official compensation in
F. R* Banks
Educational picture story book
402,04
Conference State Bank superintendents
Manual of transit instructions
Study of career system for executive
personnel
131.27
Victory Fund advertising
5,640*52
Helena Branch*
Rental, repairs and maintainance of
furniture and equipment

$

+
800
- 4,900
- 1,100
- 9*300
** 1,400
500
- 1,100
+ 5,50c

1 ,321*59

+

700

s

BOARD ASSESSMENT
Head Office

$38,277*49

This assessment is made by the Board of Governors of the Federal
Reserve System to defray the expenses of maintaining the Board’s staff and
Board building at Washington*

The 1942 assessment was $2,300 less than the

1941 assessment and within $100 of the assessment made in 1940*

COST OF FEDERAL RESERVE CURRENCY
Original cost (including
shipping charges)
Cost of redemption

$110,946*89
5,089*6l
$116,036750

Our note costs in 1942 were higher than for any year since the
organization of the Federal Reserve System*

Comparative costs for the last

five years are shown below*
12&
$39,400
Printing costs
2,500
Postage
Surcharges
3,600
900
Insurance
Salaries of issue and
redemption division _ J 22
46,700
Cost of redemption
~£Jpo
$51,400

m

2

$23,000

2,500
4,200
900

300
30,900
6.100
$37,000

1240

1941

1242

$18,000
3,400
5,500

$26,000
5,900

$87,800

1,200
200
28,300
,5x6PP
$33,900

10,200
1,600
400
44,10C
JS*282
$49,400

8,000
13,000
2,000
200
111,000
5.100
$116,100

REIMBURSABLE EXPENDITURES
Reimbursable expenses reached an all-time high in 1942*

The total

expended for the Treasury and others during this year was $830,000, and was
classified by units of expense as follows*

Salaries*




Officers
Employees

1942
$ 29,250*45
482,594*30

Increase or De­
crease compared
to 1941______
$ + 17,000
+ 200,000

EXPENSES - Cont9d

1942
Retirement System contributions
Legal fees
Traveling expenses
Postage and expressage
Telephone and telegraph
Printing, stationery and supplies
Other insurance
Rent
Furniture and equipment
Space maintenance
Rental of furniture and equipment owned by Federal Reserve Bank
not owned by Federal Reserve Bank
All other

Departments or agencies for which thee
TJ. S. Treasury issues
U. S. Savings bonds
V/ork Relief checks
Foreign Exchange
Victory Fund Committee
Reconstruction Finance Corporation
Federal Farm Mortgage Corporation
Federal Land Banks
Federal Intermediate Credit Banks
0* S. Housing Authority
Public Works Administration
Home Owners® Loan Corporation
War Department
Maritime Commission
Navy Department
Defense Contract Service
Federal Housing x\dministration
Leased Wire Service
Photostatic Service
Commodity Credit Corporation




i

Increase or De­
crease compared
to 1941

(Cont'd)
24,816.28
1 ,606.25
8,073.31
157,849,02
15,277.63
44,519.68
420.49
321-57
15 ,421.90
3 7 ,263.37

6 ,550.87
1 ,591.33
4 .510.26
$830 ,066.71

$

+
+
+

12,000
2,000
5,000

+ 134,000
+

7,000

4- 26,000
-

+
+

14,000
10,000

1,000
+
2,000
+
4.000
$ + 434,000

expenses were incurred*
$ 68,549*46
412,815.69

31,000
317,000
5,000
+
5,000

$ +

4-

7 , 472.00
17,790.29
41,190.72
85,233.41

+
+
+
-

4*563*59
911.14
5.33
396.37

-

38.21
2,546.68
21,644.35
1 ,008.88
4,200.51
1,415.24
5.85
1 ,198.19
95.35
158,985.45
$830 ,066.71

41,000
22,000
1,000
1,000

4

• -

+
+
-

$

1,000
22,000
1,000

4,000

22,000
1,000
+ 20.000
+ 434,000

QCMPijBiigTO sg^gsaCiBg o? sjisofss
jsaaarL asssggs

bjj&:

ay sHsa3iL?ox.is jjid aaiasLL j&lach
MlBStojEpOllS
19 U2

Karnings from:

1 ,110.62
21 .276.U7

Discounted. 1)1118 • .........................................$
Industrial advances ........ .......... • • • • . . * • • «
Commitments to make industrial advances » ............. . .
U« S„ Government securities „ * « « . . . ......... „ * o «
Sent received: Banking H o u s e .......................... .
Deficient Heserve penalties ' • • • • • • • ............. .
Interest on past due industrial advances o » » o o « o < > o « , o
Sale of rjaste paper, money bags, 9tc« ............... . . .
Clearing House fines • „ • « . <,..........«> • o • » . » * „
Interest received on personal loans to employees • o . e • » c
Interest received on advances to protect collateral . „ o • •
Monthly letters sold « ......................... . . . . . .
Savings in registration fee, etc„ on registered mail shipments
to member banks o c « ® o « , « , o o o * « o 0 o o - o * o « o
All other ............................................ • .

Total earnings ....................................... .




Combined
19U2

j&iena Branch
. . .

$

191*2
• 8.23

1*7.80
1. **7.985-75

$

1,118.85

21 ,276.U7

U7«80
1^7.9*5.75

66.00
81U.21
5.211 .1*3
326.5U
119.00

27^-99

3.00

660 00
1 ,089.20
5 .211 oU3
326c5U
1190OO
3,00

Increase or Ds
crease since
Dec. 31. 19^1
$

.

1,530.50
U860OI
368„23
f»256t623o83
*
66.00
Hll089
*
837-01
*
19I.U9
33.00
♦
•66
3.00
t

11*00
1 ,071*.11
3.82

$

1 ,1*78 ,038.75

1 .07 U.11
3v82

$

283.22

$1.1*78,321.97

*
*

15-90
10 U7

f255,085.19

COMPARATIVE STATFMKINT
NKT CURRENT flXPBNSES OF THE FEDERAL RESSRVK BANK OF MINNEAPOLIS AND HELENA BRANCH

Minneapolis
19U2
Salaries:

Officers . .............. . .........
Employees .............. „ . . . . 0
Retirement System contributions « . • o ........

.

. . $

.

Directors* foes & expenses
federal Advisory Council fees & expenses „ « • «
Traveling expenses
Postage & expressage , .......................
Telephone & telegraph ................ « . «, o .
Insurance on Currency & Security shipments
Other insurance
.........................«
Taxes on Bank premises

Furniture & equipment
All Other

«

e

*

*

.

o

*

* • •
.

o

>

.

•

.

Received from Government Agencies for:
Rental of s p a c e ........... . . . . . . . . .
Rental of furniture and equipment . « ........

a

e

.

«

o

.

o

$

.

o

92,386.27
*+32,096038
29,505o38
7,8140.73
7 >3 3 0 *Uo
1.37^30
15 ,281.02
120,879o50
8,830.12
35.023-5X
6,163,29
9.519.26
6U.325.9U
25.665.60
19.789.69
l6,UUo.53
16.51 u.70
33.352.53...

91*2.319.15
^5 .^59*^8
5*9.87*33

a

9009872o3^

Helena Branch
. -19>*2

Combined

10.60S.80
50,397-96
3.768.03
lU.30
2.063.33
1,282.98
17.97^.67
U.932.51
3.898.53
752.03
909.50
1.772.85
3.1S0.SU
2.120.U6
9>*5.75
5.6UU.68
3 ,261.32

102,995.07
4s2.U9U.3 U
33.273.Ul
7.855.03
9.393.73
1.37U.30
lb.56U.oo
138 .85U.1 7
13.762.63
38.922.0U
6.915.32
10 .U28.76
66.098.79
28.8U6.UU
21 ,910.15
17.386.28
22.159.38
36 .613.85

113 .528.5U

I.055 .8U7.69

1 ,803.89

191*2

.
lll.l6l.ll

Increase or De~
crease since
Dec,. 31 . 19 U1
T
i
i
—
—
«*>
—

T
T
—
-

T

38 ,103.58

37.263.37
6.550.87

V
Y

10 ,351.12
. .1,126,92

1 ,012 .033 .U5

r

26.625 .5U

3K.277.U9

38.277. **9

U,010.76
5U.233.69
6 ,U25.26
1.810.3U
673.22
22.85
6 .U33.15
U8 7 .9U
1 .UU9.37
156 .1 s
1 .826.27
3 .13 U.09
823.81
731.00
2.103.78
2,017.16
3.80U.22
9.33U.63

2.336.87

Federal Reserve Currency:
Cost of redemption, including shipping charges
Total Current Expenses • . • . ...........




.

.

.

.

©

•

•

o

$

110 *9^ 6.89
5,089.61

. . o . $1 ,055 .I860 33

.

111 ,161.11

U O . 9U6.89
5,089.61

+

1 .166 .3 U7 .UU

+

~

66.805 .5U
175.29
90.918.92

PROFIT /U:D

l o s s acccuot

Current earnings
Current Expenses
Current Ket Warnings

1,^73,321*97
1,166«3^7.>iU
311.97*4.53

PROFITSs
*

Profit on sale of U. S. securities

102,715.65

Profits from sale, liquidation or income from assets
acquired through failed banks;
First
First
First
First
First

Kenmare Kational Bank
Kational Bank
Kational Bank
Kational Bank
National Bank

Kenmare
Van Hook
Sisseton
Poplar
Scobey

i:. D.
l\i. D •
S. D.
Ivjonb.
Mont«

Recovery from Treasury Department for expenditures incurred
in connection with Defense Contract service charged to
Profit & Loss Kay 10, 19*4.1

110.00
100.00
30.00
1*15.32
273.82

i,isU.7U

Recoveries on industrial advances previously charged off:
Cook, Inc.\

Minneapolis Liinn.

130.00

ICet income miscellaneous assets acquired account
industrial advance Ambrose Here. Co.

75*00

Sale of miscellaneous scrap

2>l.75

Profit on sale of mutilated currency and coin

53*13

Interest collected on personal loan to employee
previously charged off

16.73

Cash- left at teller's window - owner unknown
Currency found in bag returned to us - sender unknown
^otal additions

• 75

,

1.00

105 130.99

LOSSES:
Check in Helena's cash letter l0-23«Ul to Federal Reserve
Bank, Chicago, destroyed in airliner crash - source not knov/n
Option to purchase old Farmers & Mechanics Savings Bank Building
option not exercised
Unadjusted differences for 19^2
Shipping charges on securities handled incorrectly by
our Custody Department
Loss on Industrial Advance, Ambrose Here. Co. Property acquired
through foreclosure, lost because of nonpayment of taxes

20.00

500.00
1,099.92

U5.33
1,003.7^

Counterfeit coin and pinball slugs

1,25

Discount on Canadian currency and coin

Uh9




PROFIT A1JD LOSS ACCOUNT - Cont'd

Special reserve (subject to the action of the Beard
of Directors) with regard to proposed supplementary
contribution to the Retirement System of F. R. Banks

*?

11 ,000.00

Reserve for possible loss on Industrial advance
*

Net deductions from current net earnings

*
;?

\

Net earnings

Dividends paid
Credited to U. S. Treasury - IJb loans
Transferred to surplus (Section 7)

151 ,7*41.00

■
?>
*
i

165 .U12.73

60 ,231 .7*1.

251.7**2.79

183,336.33
3*91
68,1*02.55
251 , ^ 2.79

SURPLUS (Section 7)
Surplus (Section 7) December Jl, l$4l
Transferred from Frofit & Loss 12-31-42

*
?

3,152,U20o27
63,U02.55
3 ,220,822082

SURPLUS (STOTIOE 13b)
Surplus (Section 13b) December $1, 19^1
Change during year
Surplus.(Section 13b) December Jl, 19^2

*
A

1.000.298.87
None
1.000.293.87

RESERVES
(Other than for F.D.I.C. Stock and Depreciation on Bank Premises)
Reserves for contingencies December
l$4i
Reserve for losses on past due industrial advances
December 31* 19^1
Total reserves December 31» 19^1

$

2,516,6U7*17

*

73>000.00
2,589^7717

Debits during year
Credits during year*
Added to reserves for losses on past due
industrial advances
Reserves December 31» 19^2
Reserves for contingencies
Reserve for losses on past due industrial advance




None

11 ,000.00
$

2 ,516 ,6^ 7 .1 7
& , 000.00

r

2,600,^7717




DEPARTMENTAL COMMENTS

Bank and Public Relatione#........ .........

26

Fiscal Agency*........................... ..27
Consumer Credit.••••••................... .28
Check Collection........ ........... ....... 29
Noncash Collection............ ...... ..... 30
Safekeeping... ........ ....... ........... .33Reconstruction Finance Corporation...... ...32
Research and S t a t i s t i c s . ........ ..34
Currency and Coin..*••*.................... 36
Bank Examination........... .............. .37
Discounts. *.............................. .39

REPORT OF BANK AND PUBLIC RELATIONS ACTIVITIES
AT THE FEDERAL RESERVE BAJiK OF MINNEAPOLIS
______________ DURING 194-2___________________

Bank officers and representatives attended 214 meetings, delivered 134addresses to an estimated audience of 16,150 people, and made 159 visits at
member banks and 4-9 visits at nonmember banks in the district.
The attendance at showings of the Federal Reserve Bank movie during 1942
was 20,314.

The bank continued its cooperation with the Wisconsin Bankers Associa­

tion with regard to showings of the Federal Reserve movie.
A comparative statement of operating ratios for 1939, 194-0 and 1941 was
sent to each member bank in the district with a memorandum on how to use the
operating ratio statement.

In addition, operating ratios were computed for the

State banks of North Dakota at the request of the North Dakota Eanking Commissioner,,
The Federal Reserve Club developed two casts for the skit "Mother Buys a
Bond” to assist in the sale of War Bonds and Stamps.

Twenty-two performances

were given in Minneapolis and nearly towns to an estimated audience of 6,805
people.

The play was put on at the Minnesota Bankers Association convention in

Duluth, at parent and teachers association meetings, commercial clubs, etc.
The July meeting of the board of directors was held in Duluth at the
same time as the Minnesota Bankers Association annual convention.
In May the Federal Reserve picture bock "Your Money and the Federal
Reserve System” was completed and 50,000 copies were printed.

An initial

distribution of sample copies was made in May to all banks and high schools
in the district as well as to banking publications and interested parties in
other parts of the United States.

Arrangements were made to place "kits" of

copies in all of the high schools in Minneapolis and St. Paul.

In November

letters were sent to all banks in the district suggesting that they might gain
some public relations value from arranging with their local high school to have
a supply of the booklet placed in the high school library.

In all,21,824

copies of the booklet have been distributed.
Beginning in September a series of biweekly luncheons was held at the
bank with Twin City bank officers as our guests.
held.

Seven such luncheons were

At each luncheon a guest speaker discussed some topic of the day.




Twelve issues of the Monthly Review were printed and distributed
to a mailing list which in December consisted of 5,545 names.

The News Review

was sent to a mailing list of 560 member banks and others each week during the
year.

FISCAL AGENCY FUNCTIONS
Volume of Operations
New issues, redemptions and exchanges of various United States
Government securities handled, including United States Savings Bonds and
Adjusted Service Bonds aggregated 3,359,353 pieces and amounted to
$1,547,625,159*50 as compared with 415,016 pieces amounting to $456,286,413.50
in 1941 .

In addition, on exchange transactions, such as denominational

exchanges, exchanges of coupon

for registered securities and United States

Savings Bonds shipped to issuing agents 2,708,365 pieces were delivered, amount­
ing to $334,233,975.00 as compared with 351,178 pieces amounting to
$122,927,200.00 in 1941 .
The total number of individual securities received and delivered
by the Fiscal Agency Department (including securities of Governmental Agencies)
during 1942 was 6,096,247 totaling $2,000,703,349.50 as compared witk 789,436
totaling $698 ,640 ,340.00 in 1941 .
We redeemed 292,056 Government coupons amounting to $10,885,833.90
during the past year, as compared with 297,227 coupons totaling $8,795,223.96
during 1941.

We also redeemed 133,891 Governmental Agency coupons amounting

to $1 ,911 ,362.20 during 1942, as compared with 155,169 totaling $2,297,716.23
in 1941.
During the year we issued 161,200 United States Treasury checks in
payment of Adjusted Service Bonds, United States Savings Bonds, and other
Public Debt redemptions, as compared with 25,020 checks during 1941.
There were 18 offerings of United States Government Securities
during 1942 for cash and exchange, excluding Treasury Bills.

The total number

of subscribers to these issues was 12 ,234 ; of this number 9,061 were banks;
the total subscriptions aggregated $866,352,200,00.
these subscriptions was $598,696,900.00.




The amount allotted on

It is interesting to note chat in the Victory Fund Drive during
December, which was the largest in the history of our country, there were
3,680 subscribers for the three offerings of which 1,891 were banks.

The

total amount subscribed was $ 235 ,586,500.00 , the total amount allotted being
$192,147,500.00.

The total amount allotted during December was by far

greater than the total amount allotted during the entire year of 194-1 which
was $ 108 ,155 ,900.00.
From January 1, 194-2, through the first week in June, 1942, 178
tenders for Treasury Bills were received amounting to $69,944,000.00 of which
amount $55,418,000.00 was accepted.

After the first week in June through the

end of the year the total amount of tenders received amounted to $ 328 ,899,000.00
of which $284-,290,000.00 was accepted.

This covers 1,990 tenders covering 2,336

subscribers.
At the close of 194-2 there were 94-0 banks and trust companies in this
district which were designated as special depositaries of public moneys as
compared with 108 at the close of 1941.

As of December 31, 1942, 741 of the

qualified depositaries had War Loan Deposits.
In a recent press release issued by the Treasury Department there
were more banks qualified as War Loan Depositaries in this district than in
any other Federal Reserve District.
1942 ANNUAL REPORT OF THE CONSUMER CREDIT DEPARTMENT
On January 1, 1942, the final date for the original registrations
of instalment lenders and vendors under Regulation W, 12,000 individuals,
partnerships and corporations had filed registration statements with this
bank.

By the end of the year an additional 2,100 were registered to make a

total of 14,100.

In addition, our present mailing list includes over 3,000

names that are receiving amendments and other releases.
During the year representatives of the department traveled 16,000
miles for the purpose of discussing the terms of the regulation at 75
meetings.

Over 10,000 business men attended the meetings.
To meet economic changes of an inflationary nature, as well as to

improve its practical workings, Regulation W was amended on 7 occasions
during the year, making a total of 9 amendments to the original regulation
of August 21, 1941*




At the suggestion of the Board, members of the department met with
the state banking examiners and commissioners of Minnesota, North and South
Dakota, and Wisconsin, as well as the Minnesota F.D.I.C. examiners for the
purpose of acquainting the examiners with the terms of the regulation in
order that they might more effectively assist us with any enforcement
problems that might arise.
The enforcement of Regulation W has not been of any consequence
to the present time in the Ninth District.

Although we have received several

telephone complaints of alleged violations only about 20 of these have been
supported by written statements, and upon investigation only 6 required
detailed analysis by our investigators.

A few complaints have been made

concerning misleading advertising, but after discussing the problem with
them these firms in all cases have agreed to refrain from further use of
such ads.

Most reported violations have bean found to be due to errors or

ignorance of the Regulation, rather than willful attempts to avoid its terms.

CHECK COLLECTION DEPARTMENT

The Check Collection Department handled 31,763,000 cash items
/
during the year 194-2 compared to 3 1 ,828,000 items handled during the year
194-1.

The important change in the volume of checks handled in 194-2 compared

\

with 1941 was an increase of 795,000 country checks and 319,000 checks
drawn on the Treasurer of the United States.

However, there was a reduction

of 881,000 work relief checks handled in 194-2 compared to the number of
checks received in 1941 . We have not been notified officially but it is
our understanding that the W.P.A. projects will be discontinued entirely
sometime during the month of February 194-3.
An important change in procedure was adopted and installed in
July 1942 when the five-day work week plan for 30 unit operators and 6
utility operators in the Check Collection Department was put into effect.
The day off is rotated so that each employee under this plan receives a
different day off from Saturday through Friday each work week for a period
of every six weeks.

This plan has proven to be very satisfactory and has

enabled us to operate more efficiently in this division of the department
and also it has been easier to maintain a more uniform daily work hour



schedule within the 4-0 hour work week.
During the latter part of November 1942 we added approximately
25 girls to our staff in the Check Collection Department for the purpose
of training and to use for replacements of any current or future turnover
of help.

By keeping the number of employees in the Check Collection

Department up to or near the present level during the war period we will
be in a position to replace any experienced clerk upon resignation with
a clerk who has had some training and experience.
During 1942 we handled approximately 1,454>000 pieces of outgoing
mail in our mail division which represents approximately 478,400 more pieces
of mail than we handled in 1941*

We have replaced our day force messengers

and also our 4*00 p.m. mail shift clerks with men ranging in age from 50
years to 60 years on account of boys enlisting or being inducted into the
armed forces.

The necessity for making this change is evidenced by the fact

that we had over 100$ turnover in help on the day force and about 300% on
the 4?00 p.m. mail shift during 1942.

NONCASH COLLECTION DEPARTMENT

There was very little change in the number of items handled by
the collection department during 1942 as compared with the previous year.
Grain drafts handled during the year reached an all time high of
822,511 an increase of 15,195 over 1941*

However the city collections fell

off 4>682 items.
Country collections decreased 1,752 and security collections
continued to decrease from the previous year.
Member banks forwarded 6,294 collections totaling $20,480,755*61
direct to other Federal Reserve Banks for their credit with us during 1942
and 6,608 items totaling $20,270,374.42 during 1941*
COMPARISON OF NUMBER OF ITEMS RECEIVED FOR COLLECTION
City Collections
1941
1942

Country Collections
1941__________ 1242

Security Collections
1941___________ 1242

842,536

56,911

30,607

853,049

55,159

28,960

Dollar Volume
(Thousands omitted)
1941
1942



0342,590
408,301

$ 26,646
51,434

$39,316
24,675

SAFEKEEPING DEPARTMENT

Securities held in our custody for safekeeping and for collateral
purposes, exclusive of securities held for the Treasury Department and other
governmental agencies, increased $308,285,458*89 over 1941*

Of this antount

$284 ,042 ,318.88 represented the increase of securities held free in safekeeping
for our member banks, and $24 ,243 ,140.01 the increase in pledged securities.
Securities held as Collateral to War Loan Deposit Accounts increased $112,149,800
over the amount held at the close of business December 31, 1941*

The number of

qualified depositaries increased during the year from 233 to 940 and the active
accounts from 78 to 726.
During 1942 the total U. S. Savings Bonds of all the series held, for
individuals, firms, corporations, and non-member banks increased $4 ,726,BOO
compared with an increase of $1 ,631,925 the previous year, and 16,080 safekeeping
receipts covering U. S. Savings Bonds were issued as compared with 4,207 issued
*

in 1941*

At the close of business December 31, 1942 , 441 non-member banks and

approximately 7,000 individuals and firms availed themselves of the safekeeping
service in connection with U. S. Savings Bonds.
In 1942, we received 81,513 pieces compared to 43,998 pieces in 1941* and
delivered 40,397 pieces compared to 39,748 the previous year.

The number of coupons

clipped last year was 211,600 as compared with 201,982 the previous year.
For comparative purpuses, we list below a statement of all accounts show­
ing the total securities held at the close of business December 31, 1941 and
December 31, 1942.
Dec. 31. 19A2
Government and miscellaneous securities
held in safekeeping for members
Securities pledged to secure public
deposits
U. S. Savings bonds held for individuals,
firms, corporations, and non-member banks
Securities held for U.S. Govt, officials
Securities held for Reconstruction
Finance Corporation
Collateral to War Loan Deposits
Collateral to Discounts, Rediscounts and
Industrial Advances
Securities held for U.S.Housing Authority
Collateral to Consignment Account— U. S.
Savings Bond Series E
Bonds subject to Foreign Funds Control
Treasury Bills held under Repurchase Option
Safekeeping— Non-Member Accounts
War Savings Stamps




gee*.

U 6 5 ,622,790.%

181,5 30 *472.06

153,263,510.06

^129,020,370.05

22,449,750.00
4,310,600.00

^rz, 722 ,950.00
-^3,379,500.00

15,9a, 530.16

113,886,650.00

/16,243,897.58
z- 1,736,850.00

1,044.50
2,853,028.00

75,846.00
^ 2,257,041.00

690,800.00

1 530 050.00

Hone

12,000.00

, ,

2 ,000,000.00
942,000.00
_______ 21.00
$781,941,724.66

$353,558f976„69
'

1

"'

T

31

RECONSTRUCTION FINANCE CORPORATION CUSTODIAN

Our activities for the Reconstruction Finance Corporation and its
subsidiaries increased considerably during 194-2 , both as to types of transactions
and volume.
Additional activities were:
1.

Disbursements for the Defense Flant Corporation in connection with

erection of plants leased to private concerns for manufacture and building of
acticles essential to prosecution of the war;
2.

Receipt and custody of warehouse receipts for fifty-seven million

pounds of Australian wool placed in warehouces within our district by the Defense
Supplies Corporation and payment of the storage charges on such wool;
3.

Settlements for tires acquired by the Defense Supplies Corporation

under the so-called "Idle Tire Program11, some of which are donated by the owners
and for the balance payments are made by checks,war savings stamps or war savings
bonds— payments of express charges, warehousemens1 charges, appraisers1 fees, etc,
are made by us— about 85,000 shipments have oeen settled for thus far and it is
estimated the total will be close to 250 ,000;
4-,

In connection with War Damage Corporation Insurance, written through

and by insurance companies of the country, we receive premiums less commissions
and fees deducted, with reports to cover and tickets describing coverage, rates,
premiums, commission and fees as to each policy and we are required to verify
correctness of such detail.

On approximately 30,00p policies reported to us,

covering over $1 ,000,000,000 of insurance in force, gross premiums amount to over

$1 ,000,000;
5*

A few matters in connection with activities of the Metals Reserve

Company and the Rubber Reserve Company.

It appears we will have more to do for

them shortly;

6 . Loans made by the Reconstruction Finance Corporation itself to
business enterprises, some for defense or war production purposes, some to cover
frozen or rationed articles or commodities, such as Automobiles, Oil burners,
Typewriters, Tires, etc*, some for coal purchases (by dealers).
frozen or rationed articles listed.
burners.




Purchases of

Thus far the only purchases are 89 oil

Our activities for the Commodity Credit Corporation have this last
year increased both in types of transactions and in volume.

Storage problems

caused the Corporation to move many steel bins from other districts into ours
and to have built for them a very large number of wooden bins, which later in
many cases were sold to farmer-producers. We have disbursed funds in connec­
tion with construction and transportation of such bins, have received proceeds
of sales, including notes taken and repayments on such notes.

In addition to

making loans on grains, the Corporation has purchased and sold large quantities
of grain, mostly wheat*

Wheat has been sold for feed purposes, bought and sold

to facilitate storage, and bought for account of the Federal Crop Insurance
Corporation.

In connection with flax, the Corporation has entered into

contracts with Flaxseed Processors, some of whom are loaned funds,(Minneapolis
handles entire country on this program).

All of this involves transfers of

grain, money receipts and collections, disbursements for purchase, transporta­
tion, storage, etc.

At the present time, we are functioning on twenty-seven

loan programs, five purchase programs and nine pool programs| each year and
each grain constituting a different program.

The pools consist of wheat and

a comparatively small amount of other grains.

At this time we hold in pools

about 160,000 warehouse receipts for over 57,000,000 bushels of grain.

The

1940 crop loans included about 166,000 secured by wheat stored in warehouses
and about 14>000 on wheat stored on the farms.

Because of shortage of ware­

house storage, 1941 crop loans included about 102,000 on wheat in warehouses
and 60,000 on wheat on the farms.

Loans on farm stored wheat have each year

been extended for a second period if the producer so desired and about onehalf of them are extended.
storage.

In connection with the extensions, we have paid

In connection with deliveries, storage is paid and adjustments for

over-deliveries or shortages made as well as for grade differences.
All of the above activities make for a large volume of detail and while
we act in conjunction with the local offices of the Reconstruction Finance
Corporation and Commodity Credit Corporation, we must always know that we act
within authority given by general regulations or specific instructions furnished
us by the Reconstruction Finance Corporation, (the Reconstruction Finance
Corporation is fiscal agent for the Commodity Credit Corporation, and this bank




is fiscal agent for the Reconstruction Finance Corporation).

Our force has

increased to over 180 persons, a very large proportion of which are young
girls, who have done very good work, considering that for the most part
they have come to us without previous experience.

RESEARCH AND STATISTICAL DEPARTMENT

The year 194-2 has seen a great number of changes in the Research
and Statistical Department which have been brought about by the general
expansion in demands for factual information and the corresponding necessity
for changes within the department.
April saw the addition of a new series of reports gathered monthly
from selected banks regarding consumer credit data and titled "Commercial
Bank Report of Consumer Instalment Credit."

The information gathered is

designed to aid in determining the effect of Regulation W as well as to
assist the Board in making decisions relating to the administration of the
Regulation.

We are new gathering figures from an identical group of 26 banks

and preparing a summary for tho Board each month.
The ground work for a retail furniture reporting service was laid
in May when we received a finals outline of the suggested procedure from the
Board of Governors.

Work began immediately to select and make reporting

arrangements vith a group of representative stores in addition to the working
out of preliminary report forms.

Meetings were held with furniture dealers

in Minneapolis, St, Paul, and Duluth-Superior during June and dealers were
contacted, personally to facilitate proper posting of initial furniture store
reports; to answer questions, find to present advantages of the plan and en­
courage cooperation.
in this month.

The furniture reporting series was formally inaugurated

A group of about 60 furniture stores now report their sales,

inventories, collections and receivables to us each month.
Effective in May, the Board made a change in the collection of Bank
Debit figures from a weekly to a monthly basis.

This change, which was

designed to reduce the amount cf work, was more than offset by the fact that
we were also required to report figures on a "per bank" rather than a "per
reporting centcr" basis, as formerly.




While the actual amount of work was

increased somewhat, monthly debit figures have proven more stable, and,
therefore, more workable for comparative purposes than weekly debits.
Because of the Board's responsibility in framing policy with respect
to. consumer credit, it seemed advisable to centralize the collection of
statistics in this field? consequently, in August, the Board of Governors
made arrangements with the Department of Commerce to take over their consumer
credit series on industrial banks, personal finance companies, State and
Federal credit unions, and jewelry and household appliance stores.

While

we were already collecting data on loan volume and outstandings of 29
commercial banks, the addition of the 120 Northwest firms in the Department
of Commerce series greatly increased our scope of information concerning
consumer credit.
Work on post-war studies began in August with the setting up of
postwar files.

All data and publications relating to or in any way helpful

in determining the trend of post-war developments will be included in these
files for futjre analysis.

With the extreme importance of post-war planning

coming to the fore, this bank in November obtained the services of
Dr. Arthur R. Upgren tc act as Vice President and Economist.

It is expected

that more emphasis will be put on the subject during the coming months.
As these studies develop, it will be necessary to add to the existing
personnel of the office.
The department began a survey in April of commercial and industrial
loans made by member hanks from April 16 to May 15.

This spot survey was

for the Board and was to provide information for each bank as to the size
of each loan made or renewed in the period, the business and size of the
borrower, maturity date of the loan, interest rate of the loan, and whether
the loan was for defense or non-defense purposes.

Commercial and industrial

loams outstanding at the beginning and end of the period were also provided
by each bank.
by I. B. M.

This work was completed in May and tabulated on punch cards
Owing to a special need of the Board for information on

Commercial Bank loans? interim reports of loans made from April 16-30
were requested from 16 of the largest member banks in the District.




CURRENCY AND COIN DEPARTMENT

In reviewing the activities of the Currency and Coin Department
for the year 1942 , we find some interesting changes in many of the figures.
Although the amount received from members and others shows an increase of
two per cent, the unfit currency forwarded to the Treasury Department de­
creased to thirty-two per cent of the 194-1 figures.

This is due to the

change in the standard of fitness requested by the Treasury Department in
March 1942.
Fit notes of other Federal Reserve Banks returned to them and also
shipped to members of the Federal Reserve Bank of Chicago show an increase
of sixty-eight per cent which was caused partly by the change in the sort
and partly by the increase in circulation.
The volume of currency paid out increased by thirty per cent in
amount and twenty-five per cent in number of payments.

This increase has

been evidenced in the larger denominations, especially $20 denominations
and up.
We have not paid out new $5 silver certificates since July.

The

last shipment of such notes was received from the Treasury Department in
June.

This, coupled with the increased demand, explains the increase of

our own $5 notes in circulation.

We received no $10 silver certificates

during the year.
The coin movements show very slight changes except the increase
of new coin received from the mints and a similar decrease of current coin
from our members.
Outgoing Shipments
Currency
Number
Local Banks
Country Members
NonmembersOthers
Total




Amount

Number

1,802
22,158

$102,371,900
122,044,075

5.341

18.171,800

29,301

§242,587,775

1,864
20,707
___m

1241

Amour;t

$ 98,278,000
85,737,000
— 2 ,401.000

22,718

$136,4.16,000

10,100

$4,621,000

Coin
8,823

$4,865,550

Incoming Shipments
Currency
1942
Number
Amount
Local Banks
Country Members
Nonmembers-others
Total

1941
Humbsr

Amount

2,683
9,774
2.960

$ 55,993,296
75,272,^60
,20.364.309

2,958
11,723
3.055

$ 65,517,000
76,452,000
5,606.000

15,417

$151,630,065

17,736

$150,575,000

1,976

$ 3,201,000

Coin
2,314

$

2,906,235

BARK EXAMINATION DEPARTMENT

There were on December 31, 194-2, ninety-four State member banks.

Each

State member bank in this district was examined at least once by examiners for
the Federal Reserve Bank of Minneapolis during the calendar year 194.2*
As of the end of the year, fifteen State member banfe were exercising
trust powers, including three having only etcrow and custodianship accounts.
Fourteen regular examinations of trust departments of State member banks were
made.

Eighty-two national banks held permits to exercise full or limited trust

powers.

During the year, one national bank having fiduciary powers went into

voluntary liquidation.

Action has also been taken by another national bank to

relinquish its trust powers.
The examinations by this Department in the various States were as
follows:
State
Banks
Michigan . . . . . . . . .
M i n n e s o t a .............
M o n t a n a ...............
South Dakota . . . . . . .
Wisconsin ............ .

15
24.
26
23
..6
94

Holding Company
Affiliates

1

_
1

Examination of Holding Company Affiliates
An examination of the First Bank Stock Corporation, a holding company
affiliate, was commenced as of the close of business November 30, 194-2; the
examination was not completed as of December 31.
An examination of the Northwest Bancorporation, which commenced as of
the close of business December 8, 194.1, was completed during 194-2.




Si

STATE BANK APPLICATIONS FOR MEMBERSHIP -

1912

Three applications for membership in the Federal Reserve System were
received from State banks during the year.

Applications of the following banks

were approved by the Board at Washington and membership in the System completed:
The Peninsula Bank of Ishpeming, Ishpeming, Michigan, and the Ravalli County Bank,
Hamilton, Montana.
Applications for National Charters
Two applications for national bank charters were referred to this
office for recommendation during the year.
the Comptroller of the Currency.

A charter was granted to one bank by

Although the second application has been approved

by the Comptroller, no further action has been taken with respect thereto.
BANK CHANGES IN 19.12
(Per Stock Book Records)
Total number of member banks in the district January 1, 194-2 . * . . .
National banks organised........... ..................... . . . .
State banks admitted ......................... ....................

National
National
National
National

banks
banks
banks
banks

succeeded by other national banks . . . . . . .
succeeded by State member banks .............
succeeded by nonmembar State banks .........
absorbed by other national banks . . . . . . .

4-53
1
.6
4.60

1
1
3
1

__ 6

Total number of member banks holding stock in the Federal
Reserve Bank of Minneapolis at the end of the y e a r ........

4-54-

Membership
At the close of the year there were 454 member banks in this district as
compared with 4-53 member banks at the beginning of the year.
of 5 national banks and a net gain of 6 State member banks.

There was a net loss
The total membership

at the close of the year was divided into 360 national banks and 94- State banks.
Stock in the Federal Reserve Bank Issued to New Member Banks
No. of Shares
Name of Bank
Location
Subscribed__
The Peninsula Bank of Ishpeming
Austin State Bank
State Bank of Northfield
State Bank of Virginia
Ravalli County Bank
Bank of Menomonie
The First National Bank in Menomonie




Ishpeming, Michigan
Austin, Minnesota
Northfield, Minnesota
Virginia, Minnesota
Hamilton, Montana
Menomonie, Wisconsin
Menomonie, Wisconsin

120
75
4-2
72
60
69
111

State Bank Membership According to States
No. of State
Bank Members
1-1-42

State
Michigan . . . • .
Minnesota . . . .
.
Montana . . . . .
North Dakota . . .
South Dakota • . .
Wisconsin . . . .

No. of State
Banks Admitted
During Year

14

1

21

3

25

1
0
0
1
6

0
23
__ 1

88

No. of State
Bank Members
12-31-42
15
24
26

0
23

6
94

MEMBER BANKS SEVERING CONNECTIONS WITH THIS FEDERAL RESERVE BANK DURING 1942
KATIONAL BANKS SUCCEEDED BI OTHER NATIONAL BANKS
Name of Bank

Location

The First National Bank of Menomonie
Menomonie, Wisconsin
(Succeeded by The First National Bank in Menomonie,
Menomonie, Wisconsin)
NATIONAL BANKS SUCCEEDED BY STATE MEMBER BANKS
The Onida National Bank
Onida, South Dakota
(Succeeded by The Onida Bank, Onida, South Dakota)

NATIONAL BANKS SUCCEEDED BY NONMEMBER STATE BANKS
Name of Bank

Location

The First National Bank of
Waterville, Minnesota
(Succeeded by Citizens State Bank of Waterville, Minnesota)
The First National Bank of
Buffalo, North Dakota
(Succeeded tyr First State Bank of Buffalo, Buffalo,
North Dakota)
The First National Bank of
Goodrich, North Dakota
(Succeeded by First State Bank of Goodrich, Goodrich,
North Dakota)
NATIONAL BANKS ABSORBED BY OTHER NATIONAL BANKS
The First National Bank at
Hubbell, Michigan
(Absorbed by The Superior National Bank and Trust Company
of Hancock, Michigan)

DISCOUNT DEPARTMENT

During the year 1942, 11 banks took advantage of the rediscount and
loan privileges, borrowing an aggregate amount of $14,679,401.74 for a total
of 39 items.

Loans in the amounts of $675.00 and $350.00 were tuade to an

individual.

In 1941, 16 banks were accommodated for an aggregate amount of

$2,645,819.42 for a total of 191 items.




One Minneapolis bank borrowed a total

of $14,200,000 during the last few days of the month of April,

Banks wore

entirely out of our debt May 1, 1942 to May 26, 1942, June 6 , 194.2 to June 20,
194.2, June 30, 1942 to September 19, 1942, and October 9, 1942 to January 1,
1943.

A Minneapolis bank sold U. S, Treasury Bills aggregating $19,000,000.00

to us under repurchase agreements.
The discount rate was reduced from lj$ to 1% on October 30, 1942
and l/2 of 1% on loans secured by direct government obligations with a maturity
of one year or less.
218 industrial advances were made in 1942 for an aggregate amovnt of
$1 ,539 ,868.3 7 , the large majority of which was to borrowers engaged in var
production.

This amount of advances was made to but 13 different borrowers.

Several advances were made every week to one of this number.

Participating

institutions took $243 *860.70 of the advances mad© at time of disbursement
leaving a net amount of $1,296,007.67 advanced by the Federal Reserve Bsnk.
Repayments on advances during the year reduced the balance $1,468,940.37
leaving a net balance of $516,362.31 on December 31.
appears to have been the result of refinancing.

Repayment of two loans

The balance of principal of

one loan amounting to $800.00 was charged to Profit and Loss during the fear.
$180.00 was recovered in 1942 on on© loan charged to Profit and Loss during

1941 and repayments on it are continuing at the rate of $15.00 per month.
No new commitments or extensions of commitments in accordance with the pro-'
visions of Section 13b were made during 1942 and no contingent liability
under commitments remains as of December 31.

As of December 31 no appli5a-

tions were held pending approval of the Industrial Advisory Committee or the
Discount Committee.
Interest charged by the Federal Reserve Bank of Minneapolis on
industrial loans on the eliding scale of 3% to 6% in effect as of October 30,
1940 was reduced to a scale of

to %

as of May 16, 1942.

At the close of business December 31, 1942 our unpaid balance 0 f
5% industrial loans amounted to $44,235.75 a~d t& $321,469.30.

These amounts

represent the balance of loans of 15 borrowers as compared to 31 as of
December 31, 1941.




Advances amounting to $28,94-7,787.12 were made by financing
institutions under Regulation V which amounts were guaranteed by the War
Department, Navy, and Maritime Commission,
guarantees were for 90$,

The large majority of such

$26 ,963 ,801,56 of the advances wae

guaranteed

by the War Department, $1,638,658,56 by the Navy, and $345,327,00 by the
Maritime Commission.

The approvals of applications for guaranteed loans

ranged from $400.00 to $15,000,000.00, the majority of which were in th:
form of revolving credits.
As of December 31, 1942 the amount of loans outstanding, guaranteed
by the War Department was $10,790,935.65, portion guaranteed $ 8 ,996,292.85j
Navy $614,006,12, portion guaranteed $547,824.89; Maritime Commission
$269,376.35, portion guaranteed $262,438.72.

.163 applications for guaranteed

loans were received during the year,of which number 103 were approved, 14
rejected, 18 withdrawn aftar and 10 before approval, 9 under consideration,
and 9 available.




The number of applications approved amounted to $33,193,698,