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annua reDort to the directors FEDERAL RESERVE BANK OF MINNEAPOLIS 1951 I N D E X High-Lights of 1951 Directors and Officers J Changes of Directors and Officers .... 8 Monetary Policy Revived .... ...10 Assets...... .21 Liabilities..... .23 Departmental and Other Comments: Check Collection........................................ 28 Credit Controls.........................................29 Currency and Coin........... ............................ 31 Discount and Credit..................................... 35 Duplicating............................................ 36 Examination........................................... 37 Fiscal Agency.......................................... 39 Noncash Collection....................................... 4-5 Personnel..............................................46 Planning...............................................54Protection........................................... 56 Public Services......................................... 57 Purchasing............................................. 59 Research............................................... 60 Reserves (Member Bank)................................... 63 Safekeeping.............................................65 Wire Transfers..........................................66 Miscellaneous...........................................68 Capital Accounts.. ....70 Dividends .73 Bank Premises. .74 Earnings.. .76 Expenses. .82 H I G H - L I G H T S OF 1951 Capital accounts again reach new all-time high. Combined Net earnings and profits reach record high of $9,260 thousand. Check Collection Department establishes new volume records. Processing of new type "punch card" postal money orders began July 1. Daily average loans to member banks show $9 million increase over 1950. Emergency reserve currency supply of |35 million accumulated. Federal Reserve notes in circulation at the close of 1951 were $21 million greater than at the close of 1950. Daily average participation in Open Market holdings of securities was $14-7 million over year ago. New F. R. System life insurance plan became effective November 1. Security Files Program inaugurated. Teletypewriter machine installed for "TWX" service between the Head Office and the Helena Branch. New coin vault completed. New lighting system installed on main floor. HEAD O F F I C E DIRECTORS AND MEMBER OF FEDERAL ADVISO RY COUNCIL Directors Roger B. Shepard, Chairman, and Federal Reserve Agent Paul E. Miller, Deputy Chairman Term Expires December 31 Class A Edgar F. Zelle, Chairman of the Board, First National Bank, Minneapolis, Minnesota 1952 H. N. Thomson, Vice President, The Farmers and Merchants Bank, Presho, South Dakota 1953 Charles W. Burges, Vice President and Cashier, Security National Bank of Edgeley, Edgeley, North Dakota 1954 Class B Homer P. Clark, Honorary Chairman of the Board, West Publishing Company, St. Paul, Minnesota 1952 William A. Denecke, Livestock Rancher, Boseman, Montana 1953 Ray C. Lange, President, Chippewa Canning Company, Chippewa Falls, Wisconsin 1954 Class C F. A. Flodin, President, Lake Shore Engineering Company, Iron Mountain, Michigan 1952 Roger B. Shepard, 322 Endicott Building, St. Paul, Minnesota 1953 Paul E. Miller, Director, University of Minnesota Agricultural Extension Division, St. Paul, Minnesota 1954- Member of Federal Advisory Council Joseph F. Ringland, President, Northwestern National Bank, Minneapolis, Minnesota 1952 O F F IC E R S J. N. Peyton, President A. W. Mills, First Vice President H. G. Core, Vice President in Charge of Personnel Personnel: Cafeteria Education & Welfare Medical Personnel Maintenance Retirement System Social Security Office Boys & Pages C. W. Groth, Vice President H. A. Berglund, Assistant Cashier Assigned to Helena Branch E. B. Larson, Vice President C. Ries, Assistant Cashier Fiscal Agency Securities: Purchase and Sale Federal Taxes H. G. McConnell, Vice President Bank Examination Securities Exchange Act Otis R. Preston, Vice President Clement Van Nice, Assistant Vice President Public and Bank Relations Announcements Circulars Correspondence Press Relations OFFICERS (Contd.) M, H. Strothman, Jr., Vice President George M. Rockwell, Assistant Cashier Industrial Loans Loans & Discounts Regulation V Loans Regulation W Regulation X Sigurd Ueland, Vice President, Counsel, & Secretary Legal A. R, Larson, Assistant Vice President Currency & Coin Noncash Collection Registered Mail Routing Symbol Securities: Safekeeping Vault Kyle K. Fossum, Assistant Cashier Building Duplicating Protection Purchasing Telephone A. W. Johnson, Assistant Cashier Check Collection Equipment Repairs Ordinary Mail Wm. E. Peterson, Assistant Cashier Accounting Custodianships: CCC and others M. 0. Sather, Assistant Cashier Accounting: Expenditures General Books and Bank Accounts Transfer of Funds Foreign Exchange Reports Files & Old Records OFFICERS (Contd.) M. E. Lysen, Operating Research Officer Operating Letters Operating Manuals Planning: Efficiency Studies Equipment Office Forms Suggestions Security Files J. Marvin Peterson, Director of Research F. L. Parsons, Associate Director of Research Library Publications Research Statistics 0. W. Ohnstad, Auditor HELENA BRANCH DIRECTORS G. R. Milburn Chairman Term Expires December 31 John E. Corette, Jr., Vice President, Montana Power Company, Butte, Montana 1952 Theodore Jacobs, President, First National Bank, Missoula, Montana 1952 E. D. MacHaffie, Investments Helena, Montana 1952 G. R. Milburn, Livestock Rancher, Grass Range, Montana 1953 A. W, Heidel, Vice President, Powder River County Bank, Broadus, Montana 1953 - 7 - CHANGES DIRECTORS AMD O FF IC ER S The regular November election resulted in the re-election of Charles W. Burges, Vice President and Cashier of the Security National Bank, Edgeley, North Dakota, as Class A director, and Ray C. Lange, President of the Chippewa Canning Company, Chippewa Falls, Wisconsin, as Class B director Both will serve a three-year term beginning January 1, 1952 and ending December 31, 1954. In November, the Board of Governors redesignated Roger B. Shepard, St. Paul, Minnesota, as Chairman of the Board and Federal Reserve Agent for 1952 and W. D. Cochran, Iron Mountain, Michigan, Deputy Chairman for 1952. Their three-year terms as Class C directors expire December 31, 1953 and 1952, respectively. Mr. Cochran passed away shortly thereafter. Paul E. Miller of St, Paul, Minnesota, was reappointed as a Class C director for a three-year term beginning January 1, 1952, and upon Mr. Cochran's death was designated to succeed him as Deputy Chairman. The Board of Governors appointed F. A. Flodin, President of the Lake Shore Engineering Company, Iron Mountain, Michigan, as a Class C director to complete Mr. Cochran's term ending December 31, 1952. The Board of Governors also reappointed G. R. Milburn, Grass Range, Montana, a director of the Helena Branch for a two-year term begin ning January 1, 1952. Our Board of Directors appointed A. W. Heidel, Vice President of the Powder River County Bank, Broadus, Montana, as a director of our Helena Branch for a two-year term ending December 31, 1953. succeeds former director B. M. Harris of Columbus, Montana. Mr. Heidel Edgar F. Zelle, Chairman of the Board of the First National Bank, Minneapolis, Minnesota, was elected a Class A director of our bank in a special election held in January 1952 to fill the vacancy created by the death in September of director Arthur H. Quay. Mr. Zelle1s term expires December 31, 1952. - 9 - MONETARY P O L I C Y R E V IV E D The year 1951 saw the beginning of a revived monetary policy. For twenty years or more, monetary policy had been eclipsed or shadowed by other economic programs with essentially different approaches to economic problems. In the decade of the 1930*s, monetary policy was largely abandoned in favor of a fiscal policy designed to place new money directly into the hands of people working at the "grass roots" level— unproductive idle urban workers and highly productive farmers with unsalable surpluses. By a process called "pump priming", the new money was expected while permeating the whole economic fabric to stimulate investment and to wash away the red ink from the accounting books of business. This theory assumed that the pump, after prim ing, would work automatically. In the first half of the decade of the 1940*s, war financing back~ grounded monetary policy. At the close of the war, and to the end of the decade, greater attention was paid to measures whereby the effects of the war's financing might be allayed than to a restoration of a complete monetary policy. In 1950, if not earlier, more serious thinking among students of economic policy, including many members of the Congress as well as academic economists and policy-determining bodies of the central banking system, was devoted to the restoration of monetary policy to a position of prime impor tance as a means of achieving greater stability in the economy. After preparatory steps taken earlier, a monetary policy more nearly orthodox than any followed for many years in the United States was initiated by the Federal Open Market Committee in March 1951, This new policy made more difficult the conversion of government securities into - 10 - new money, whereas for two decades policies had been pursued which had made easy the monetization of the public debt. Before reviewing the steps taken to inaugurate the "new" monetary policy of 1951 and its impact on the economy, a glance backward over two decades seems appropriate, EASY MONEY IN »30»S FAILED TO PROMOTE INVESTMENT When a recession in business activity set in after the crash of 1929, the monetary system operated to destroy money in a devastating manner. In the four years ended June 30, 1933, about $14. billion of money was destroyed. Demand deposits of banks fell $8 billionj time deposits dropped $7 billionj and currency outside banks increased $1 billion. Bank loans con tracted almost $20 billion, which factor of decrease in the money supply was only partially offset by factors operating in the other direction. An increase of $1,8 billion in the government security holdings of the Federal Reserve banks and small additions to their discounts and advances were obviously insufficient to stem the tide of credit contraction. In this period, banks, many of them lacking paper eligible for rediscounting, engaged in a frantic and futile effort to gain cash with which to pay depositors1 growing demands for cash by dumping their assets on the open market. It was soon found that the buyer of assets of one bank would withdraw deposits from another bank to pay for them. The banks as a group could not gain a cent of cash by this procedure. They merely discharged some of their deposit liabilities by exchanging assets for deposits. To the extent that they sold assets at less than purchase prices, banks suffered a diminution of capital funds, which in many cases weakened or destroyed their solvency. - 11 - The lesson to be learned from this experience is that bank assets are liquid only so long as there is no universal effort to liquidate them. Only by shifting their assets to a central bank which is able to convert them into new money can the commercial banks gain cash to meet depositors* demand* Under conditions such as those that prevailed in the early 1930’s, when the price level was declining, a fall in interest rates is not likely to stimulate investment. Even though banks and institutional lenders should offer large supplies of funds to lend, prospective borrowers will not wish to go deeply into debt when a strong probability exists that prices will decline further. It was under these conditions that fiscal policy, more particularly government spending, came to be relied upon to stimulate recovery. Monetary policy was discredited and largely abandoned. The role of the Federal Reserve was that of occasionally buying government securities to maintain an orderly market for them. It also served as an instrumentality by which gold purchases of the Treasury were converted into reserve balances of banks. These greater reserve balances stimulated only slight increases in commercial and industrial loans, but they served to make possible greater purchases of government secur ities by banks than otherwise would have been possible, A considerable part of the reserves so created remained "excess’1 on the books of the commercial banks. They could have supported a much larger private credit expansion than took place, THE FEDERAL RESERVE AIDED A FIXED PATTERN OF RATES DURING WORID WAR II Immediately after Pearl Harbor, the Federal Reserve gave assurances that it would lend its facilities to the successful financing of the war. - 12 - This took the form of buying government securities in such amounts as would supply the commercial banks with reserve balances sufficient to cover increased deposit liabilities created by their purchases of government securities. The commercial banks could then buy any amount of each issue of government secur ities that could not be sold to nonbank investors. Federal Reserve purchases also enabled the commercial banks to meet the larger demands of the public for currency. Thus, the Federal Reserve assured an easy and low cost financing of the Treasury deficits during the war years. Selling securities to the banking system was easy because the commercial banks could easily obtain the addi tional reserve balances needed to support the greater deposit liabilities created by their purchases of government securities. Financing the deficit at a constant low cost was made possible by the willingness of the Federal Reserve to buy government securities at a fixed pattern of rates, ranging from 3/3 per cent on the shortest-term securities to 2 l/2 per cent on the longest-term bonds* Since this pattern of rates was fixed at the beginning of the war period and was maintained without variation, there was no withholding of pur chases because of an expectation that yields on government securities would rise or the coupon rate be increased. Thus, the creation of new money pro ceeded evenly with the Treasury’s needs for funds above the amount of funds derived from tax receipts and receipts from sales of securities to nonbank investors. THE FEDERAL RESERVE FEARED POSTWAR MONETIZATION OF DEBT When the war ended, the Federal Reserve warned against the proba bility of large scale sales of government securities to the Reserve banks in - 13 - order to satisfy the great loan demand that would surely develop after con trols were lifted. The Board of Governors proposed measures whereby com mercial banks would be required to hold a special reserve in the form of government securities and hence be prevented from converting at least a part of their holdings into reserve balances. No such plan for impounding a part of the banks' holdings of govern ment securities was adopted by the Congress, At the same time the Federal Reserve was urging the adoption of a security reserve requirement, it urged the elimination of the preferential discount rate and the raising of rates on short-term government securities. Gradually, and in small steps, moves were made in this direction. Over a period of five years, a gradual raising of rates on short term government securities was achieved, while the rates on the longest-term bonds were maintained at the same levels as prevailed in the war years. Finally, in August 1950 an announcement was made which cast doubt on the con tinuing willingness of the Federal Reserve to support the long-term bonds at par or better. This announcement of the Board of Governors said in effect that general credit conditions would guide open market policy. Prices of government securities would, presumably, become a secondary consideration, but it was specifically stated in the announcement that open market operations would be conducted with a view toward maintaining orderly conditions in the government securities market. In the period from August 1950 to March 1951, a large quantity of government securities was added to the Open Market Account, Commercial banks, nonbank institutional investors, and individuals reduced their holdings in this period. Bank loans expanded in the last half of 1950 more than in any other period of equal length in banking history. Fanned by fears of shortages of civilian goods, such as occurred in World War 11, two great "scare buying" waves on the retail level and great inventory accumulation at all levels intensified inflationary pressures after the outbreak of hostilities in Korea, Although some steps toward a restrictive monetary policy were taken, namely, higher discount rates at the Reserve banks, higher reserve require ments, and higher rates on short-term government securities, it can hardly be said that a monetary policy as vigorously restrictive as the credit situation demanded was pursued until March 1951. This is true because open market opera tions did not adequately complement the measures that were taken to counteract or inhibit general credit expansion, THE TREASURY-FEDERAL RESERVE ACCORD MARKED A REVIVED MONETARY POLICY Prior to the Treasury-Federal Reserve accord, announced on March U, 1951, much discussion took place in academic and financial circles over the efficacy of monetary policy. Unfortunately, undue emphasis was placed in these discussions on the effectiveness of small increases in interest rates to halt strong inflationary tendencies in the econony. Although Federal Reserve authorities contended that changes in interest rates can affect decisions of borrowers and lenders, especially those of marginal borrowers and lenders who by definition are influenced by changes in interest rates, they also contended that yields on government securities fixed at maximum levels by Federal Reserve purchases in the open market induced the creation of additional bank reserve balances and deposits and for those reasons were highly inflationary. It might have been emphasized more that a drop of a few dollars in the market price of a government bond by reason of a refusal by the banking system to buy them would result in a virtual cessation of the monetization of government seeuri- ” 15 - ties, A drop of a few dillars in the market prices of government securities would then mean that lenders would be limited to savings as a source of funds, rather newly created money resulting from the monetization of the public debt. A joint announcement of the Treasury and the Federal Reserve on March 4, which followed heavy selling of government securities, especially long-term bonds, stated that they had reached an accord on debt management and monetary policies in furtherance of their common purpose to assure successful financing of the Treasury's requirements and at the same time to minimize further monetization of the public debt. Two important immediate steps were taken: (l) Federal Reserve pur chases of the short-term securities in order to peg short-term interest rates were discontinued, and (2) The Treasury offered to exchange the longest 2 l/2 per cent restricted bonds for a new 2 3/4 per cent nonmarketable bond with limited redeemability, (Holders of the 2 3/4 per cent investment series bonds could exchange them for a marketable 1 l/2 per cent five-year note.) This exchange had the effect of removing a large part of the long term bonds from the market, thus reducing the volume of selling of the 2 l/2 per cent bonds and the likelihood of an extremely sharp break in their prices once Federal Reserve support purchases should be lessened,, The discontinuance of Federal Reserve support purchases of short term securities at pegged rates made holders hesitant to sell them and at the same time increased the demand for them. After the conversion of the longest-term restricted bonds into the new 2 3/4 per cent investment series was completed, the Federal Reserve grad ually reduced support purchases of long-term bonds, except for relatively small transactions made to help maintain an orderly market. - 16 - This development— the transition of the bond market from dependence upon new money released by an expansion of Federal Reserve credit to one which had to rely upon the supply of investable fuhds not so bolstered— occurred in a market which was callcd upon to absorb a very large volume of new capital security flotations. Industry needed funds to meet the demands of the defense program, for inventory accumulation (which was in part involun tary) and for meeting rising operating costs and higher taxes. It was expec ted that both internal and external sources of funds would be drawn upon heavily. In these circumatances, institutional lenders had made commitments which would require the liquidation of some of their security holdings to meet them. They found, after the Federal Reserve had reduced its open market pur chases j that they could sell long-term government securities only at a loss and that not too many of them could be dumped on the market without greatly weaken ing the market, because nonbank investors* demand was not groat enough to take any possible supply at the price prevailing at any time, (Of course, supply and demand would he equated at a price, but institutional lenders did not want to disturb a "thin" market unduly.) The reluctance of holders of government securities to sell them at a loss and, at times, the difficulties encountered in finding willing nonbank investor buyers at prevailing prices, resulted in their cutting back on new forward commitments and gearing new investments more closely to cash receipts. Fortunately, the transition from less to more "free" market condi tions was made at a time when personal saving was increasing. Except for this development, it would have been more difficult for institutional lenders— the recipients of a great volume of these new savings— to have met their forward commitments without selling more securities than were sold by them. Net purchases and sales of long-term government bonds by the Federal Reserve System, Treasury investment accounts, life insurance compan ies, and mutual savings banks are set forth in the accompanying table. It shows the great decline in net sales of government securities by life insur ance companies and the decline in purchases by the Federal Reserve from the fourth quarter of 1950 to the fourth quarter of 1951* The total holdings of government securities of the Federal Reserve System in February 1952 was about the same as in April 1951» Another significant result of monetary policy in 1951 was that the rise in yields on short-term government securities made bank holders reluct ant to sell them as a means of gaining funds for loan expansion. Banks that wished to expand loans, or those deficient in reserve balances, were there upon induced to use the "discount window11 of the Reserve banks. The signi ficance of this development rests on two bases. The first is that recourse to borrowing from the Reserve banks gives rise to bills payable by the commercial banks which is distasteful to them. That being the case, such transactions are eliminated from their books as soon as possible, thus assuring that such borrowing will be undertaken only to meet temporary needs, and loans are adjusted to avoid oft-repeated borrowings and for large amounts, The other reason that this development is good is that such borrow ings have given the Federal Reserve banks greater control over the volume of commercial bank credit. It was difficult to exercise a desirable degree of control by the Federal Reserve System, while the System was engaged in buying government securities, without much, if any, regard to credit conditions in order to maintain prices and yields of government securities at arbitrary levels. - 18 - NET PURCHASES (+) OR SALES (-) OF LOMOTERM GOVERNMENT BONDS BY SELECTED HOLDERS (In millions of dollars) Quarters 1950 I II III IV 1951 I II III IV Federal Reserve System* + 468 761 730 833 + 924 + 696 + 13 18 + Treasury investment accounts* Life insurance companies*8- + 31 - 4 + 70 + 126 1,121 198 830 + 4 + 14 + 80 + 4 186 - 1,123 - 70^ - 188 75+ Mutual savings banksx + + - 275 194 15 223 - 461 *• 118 - 52 - 129* * Bonds callable in 10 years or more, adjusted to exclude the conversion of June and December 2 l/2’s of 1967-72 into nonmarketable bonds„ «*• Restricted bonds, adjusted to exclude the conversion of June and December 2 1/2's of 1967-72 into nonmarketable bonds. + Partly estimated by the Federal Reserve Bank of New York Sources s Board of Governors of the Federal Reserve System and U.S. Treasury Department. From February 1952 Monthly Review of Federal Reserve Bank of New York, The growth in the use of member bank borrowings at the Reserve banks in 1951 signified the existence of a more effective monetary policy than had previously prevailed. The foregoing observations, although they are not a complete catalog ing of monetary developments in 1951, are perhaps sufficient to indicate the appropriateness of the title of this article— ’’Monetary Policy Revived"* It is possible that future historians and other students of finan cial developments covering the decade of the 19505s will regard developments in 1951 as marking the beginning of a revived monetary policy, not only in the United States but also in several European countries. Perhaps, too, the Report of the Subcommittee on Monetary, Credit, and Fiscal Policies of the Joint Committee on the Economic Report, issued in 1950, will be regarded as the sounding of a call for a vigorous monetary policy as the principal means of achieving economic stability, except in a period of war. It seems appropriate to end this article with three excerpts from the Report on Monetary, Credit, and Fiscal Policies referred to above and known familiarly as the Douglas report: "Monetary policy is strong precisely where fiscal policy is weakest; it is capable of being highly flexible. It can be altered with changes in economic conditions on a monthly, daily, or evenly hourly basis. "Our monetary history gives little indication as to how effectively we can expect appropriate and vigorous monetary policies to promote stability, for we have never really tried them... "We recommend that an appropriate, flexible, and vigorous monetary policy, employed in coordination with fiscal and other policies, should be one of the principal methods used to achieve the purposes of the Employment Act. Timely flexibility toward easy credit at some times and credit restriction at other times is an essential characteristic of a monetary policy that will promote economic stability rather than instability." - 20 - MI LLI ON D O L L A R S L r MILLION DOLLARS COMPARATIVE STATEMENT OF ASSETS MINNEAPOLIS AND HELENA BRANCH COMBINED (Thousands of Dollars) Assets: Cash Reserves: Interdistrict Settlement Fund Gold Certificates with F,R. Agent Redemption Fund - F.R. Notes Total Gold Certificate Reserves Total Other Cash Bills Discounted Foreign Loans on Gold Industrial Loans U. S. Government Securities: Bills Certificates of Indebtedness Notes Bonds Total U. S« Govt. Securities 12-31-51 12-31-50 Change fr< 12-31-50 175,261 150,000 25.018 350,279 156,114 210,000 21,467 387,581 + 19,147 - 60^000 _+..I - 37,302 7,056 6,060 996 mm 134 185 51 14,852 403,955 160,891 749,353 38,487 72,218 387,549 142.940 641,194 - 23,635 +331,737 -226,658 +..26*712 +108,159 1 7,727 1 5,613 + 2,114 85,754 9,037 1,998 96,789 100,136 11,143 1,766 . .165 113,210 - 14,382 - 2,106 + 232 •165 - 16,421 Bank Premises Less Reserve Bank Premises - Net 2,493 1.410 1,083 2,493 1,379 1,114 •m Miscellaneous Assets: Fiscal Agency expense, reimbursable Interest Accrued Premium on Securities Deferred Charges All Other Assets Total Miscellaneous Assets 90 3,392 487 54 — % 4,036 91 2,838 680 28 8 3,645 1,216,458 1,158,603 Due From Foreign Banks F0R. Notes of other F.R# Banks Uncollected Items: Transit Items Exchanges for Clearinghouse Other Cash Items Due From Branches or Head Office Total Uncollected Items Total Assets + + + + + 31 31 1 554 193 26 5 391 + 57,855 MILLION DOLLARS I Mx) V I MILLION DOLLARS COMPARATIVE STATEMENT OF L I A B I L I T I E S MINNEAPOLIS AND HELENA BRANCH COMBINED (Thousands of Dollars) Liabilities: Federal Reserve Notes in Circulation Deposits: Member Bank - Reserve Accounts U«S. Treasurer - General Account Foreign Nonmember Bank - Clearing Accounts Officers* Checks Due to Other F.R. Banks - Collected Funds Other Deposits Deferred Availability Items: U.S. Treasurer - General Account All Other Total Deferred Availability Items Miscellaneous Liabilities: Discount on Securities Sundry Items Payable Suspended Credits Total Miscellaneous Liabilities Total Liabilities Capital Capital Surplus Surplus Reserve Total Accounts: Stock Paid in Fund - Section 7 Fund - Section 13B for Contingencies Capital Accounts Total Liabilities and Capital Accounts Change from 12-31-50 12-31-51 12-31-50 632,029 610,643 +21,386 464,389 8,309 13,013 1,561 124 __2_749 490,145 391,854 22,614 22,193 610 321 2,511 1,467 441,570 +72,535 -14,305 - 9,180 + 951 - 197 - 2,511 + 1.282 +48,575 3,363 -61,754 69,117 5,367 77.374 82,741 - 2j004 -11.620 -13,624 270 125 96 491 61 110 1,191,782 1,135,125 5,363 14,063 1,073 4.177 24,676 5,074 13,168 1,073 4.163 23,478 1,216,458 1,158,603 ms mm 171 + + + + 209 15 96 320 +56,657 + + 289 895 + ■ 14 + 1,198 +57,855 -2 4 - Our Balance Sheet Figures The two principal assets of a Federal Reserve Bank are its gold certificate reserves and its holdings of government securities,, The first of these is a non-earning asset; the seoond provides practically all its earnings. The gold certificate reserve of the Federal Reserve Bank of Minneapolis fell 037,302 thousand during 1951, compared with a loss of 059,006 thousand in 1950, While the Federal Reserve Bank of Minneapolis lost about ten per cent of its gold certificate reserve, the twelve Federal Reserve banks combined lost only a negligible amount, A Reserve bank may bolster its gold certificate reserve by draw ing upon that of the System as a whole by exchanging a part of its govern ment security holdings for gold certificates. Such transactions, of course, reduce the earnings of the Reserve bank that relinquishes a part of its se curity holdings. An occasional transaction of this type causes no worrisome concern, yet persistent and continuing large exchanges of securities for gold certificates on the part of one of the Reserve banks probably reflects an adverse clearing balance between the district of that Reserve bank and the rest of the country, which would be of interest to the people of that district. It is interesting to observe that a reversal in the gold certifi cate holdings of the System occurred last year, A decline of almost $1 bil lion— from $21,5 billion to $20,5 billion— was suffered from the end of 1950 to the end of May 1951, Thereafter a gradual rise in these holdings took place resulting in approximately the s^me volume being held at the end of the year as was held a year earlier. The monetary gold stock of the United States, of course, followed a similar trend. -2 The share of the Federal Reserve Bank of Minneapolis in the System's holdings of government securities rose from $641.2 million at the end of 1950 to $749.4 million on December 31, 1951— a rise of about 16.5 per cent. In the same year, holdings of the System increased slightly more than $3 billion, from $20.8 billion to $23.8 billion, approximately 14.5 per cent. Most of the increase occurred in the first half of the year, reflecting the impact of the Treasury-Federal Reserve accord whioh had as its objective the minimi zation of public-debt monetization. A significant development in 1951, which was not reflected in the year-end statement of the Reserve banks, was a revival of member-bank redis counting. A reluctance on the part of member banks to show bills payable on their published year-end statement causes them invaribly to eliminate this item, temporarily at least, by the year's end. That being the case, the volume of member-bank borrowings at the Reserve banks can most accurately be measured by the daily average of amounts outstanding during the year. Loans to member banks by the Federal Reserve Bank of Minneapolis in recent years may be shown as follows: Loans to Member Banks, Daily Average of Amounts Outstanding During the Year 1947-49 average $3,913,000 , 1948 2 004,000 1949 1950 1,643,000 1,549.000 1951 ll.oci’ooo The rise in the volume of loans to member banks reflects the high loan demand that prevailed during the year and the decline in open-market purchases of government securities by the Federal Reserve which allowed market yields to rise (prices to fall). Banks, being reluctant to take losses on sales of government securities, went to the "discount window" to obtain fceserves, — 26 — Turning to the liabilities side of the year-end statement of the Federal Reserve Bank of Minneapolis, it will be observed that Federal Reserve notes in circulation were over $21 million greater at the end of December 1951 than a year earlier. For all Federal Reserve banks, the 1951 record of Federal Reserve note liabilities was plus $1.5 billion. The volume of currency outside banks has almost trebled since 194.1 and has increased seven-fold over 1929. Total deposits and currency (the privately-held money supply) increased almost $9 billion in 1951. This great increase in the public's money supply sent the total to $189.5 billion at the end of last year, compared with $176.4- billion at the end of 194-5 and $54-7 billion in 1929. Reflecting a higher level of deposits and heightened reserve requirements made effective in January and February, member bank deposits at the Reserve banks rose $72.5 million at the Federal Reserve Bank of Minnea polis and $2,374-.9 million at all Federal Reserve banks combined. At the end of the year, the reserve ratio of all Federal Reserve banks combined— the ratio of gold certificates to deposits and note liab ilities— stood at 4-6.4- per cent compared with 50.2 per cent a year earlier. That ratio for the Federal Reserve Bank of Minneapolis on December 31> 1951 was 31.2 per cent, down 5.6 percentage points from the end of 1950. - 27 - D t P A K l iVitNi A L AMD O T H E R uOMiVitNIS CHECK COLLECTION DEPARTMENT The volume of checks handled during 1951 in the Check Collection Department surpassed the previous year’s record in every division except Government Paper Checks, which showed a slight decrease. The item volume breakdown of checks handled was as follows: 1951 City checks Country checks Govt, checks - paper Govt, checks - card Other Feds Minneapolis Return items Postal money orders No. of items % of Inc. or 1950 increase (000 Omitted) 11,584 42,605 1,151 9,712 39,058 1,169 1,872 3,547 -18 +19.3 + 9.1 - 1.5 2,492 7,084 627 4.711 70,254 2,021 6,775 577 59,312 471 309 50 4,711 10,942 +23,3 + 4,6 + 8.7 mm +18o4 The dollar value breakdown of checks handled was as follows: Dollar Amount % of Inc. 1950 Inc. or Dec. or Dec. (000 Omitted) City checks Country checks Govt, checks - paper Govt, checks - card Other Feds Minneapolis Return items Postal money orders 112,069,750 $11,433,134 1+ 636,616 7,908,974 6,777,938 +1,131,036 1,058,061 1,107,160 - 49,099 167,377 664,087 282,581 115,526 + 650,975 + 188,486 + + 5,6 +16.7 - 4,4 51,851 +44,9 13,112 + 2.0 94,095 +49.9 -75,230 ~ + .15+222 #22,226,060 $20,273,219 +1,952,841 + 9,6 On three different days during 1951 the daily volume of checks handled exceeded the highest single dayfs record of 297,168 established in 1950. On February 19, checks handled totaled 318,940, on July 9, 344,836, and on August 9 a new record was set when 347,947 checks were processed. A new single day's volume record for clearings was established on November 19 when 95,935 checks were handled. The year 1951 saw many operational changes in the Check Collection Department. On July 1, our bank became paying agent for new type "punch card" postal money orders, and in the following six-month period a daily average of approximately 31 thousand items was processed. Ten specially equipped IBM proof machines were installed for processing these money orders. During the year, further progress was made in the conversion to use of IBM proof machines for handling of country and city items} 4-8 additional machines were installed, making a total of 68 in use for that purpose. The department now has a total of 78 of these machines. In October the Check Collection Department inaugurated a regular five-day work week, Monday through Friday, Saturday work is now being proc essed by a volunteer staff paid at the time-and-one-haIf rate. A new 18-employee shift was added in November, operating Monday through Friday from 10:30 p.m. to 6:30 a.m. This shift processes from 4.5 to 60 thousand checks each night. CREDIT CONTROL Regulation W During the year, 3,067 concerns engaging in transactions subject to Regulation W filed registration statements as required by the regulation, bringing the total number of concerns registered to 12 ,742 . - 29 - Field investigators working out of the Head Office and Branch called on 8,539 business enterprises in 4-55 communities having transactions subject to the regulation's terms. They also called on 3>029 concerns whose activities were found to be not subject to the regulation. Concerns found to have violated the regulation in one way or another number 364.. Twentynine of these violators were requested to attend conferences at the bank to discuss their violations, since it appeared that they had acted in a delib erate and wilful manner. Five cases were reported to the Board of Governors for further action. Four of the cases referred to the Board were given to the Depart ment of Justice for prosecution. At the present time, two cases, one in Minnesota and one in Montana, have been disposed of by conviction in United States District Courts in the respective states. On December 31, seven investigators were spending full time on Regulation W activities and six were dividing their time between Regulations W and X. Regulation X During the year, 179 concerns having transactions subject to the regulation were visited by our field representatives. Generally speaking, compliance with its terms was good. No violations were found that would justify disciplinary conferences. On January 12 and again on February 15, the regulation was amended to include in its scope multi-unit residential property and nonresidential property. On May 11, the Board of Governors announced that all persons engaged in business subject to the regulation would be required to register and by December 31, 2,017 concerns had registered. The restrictions of both Regulations W and X were somewhat relaxed as the result of congressional action last summer in connection with the extension of the Defense Production Act of 1950. CURRENCY AND COIN DEPARTMENT During 1951, the number of outgoing currency and coin shipments to member banks remained about the same as for the year 1950. The dollar amount showed increases of $31 million in currency and $1,768 thousand in coin over a year ago. There was an increase in the denominations from $1 to $100, but there was a substantial decrease in the payment *f $500 and $1,000 bills. The number of incoming currency and coin shipments received increased 54-6 shipments over 1950. The amount of currency received increased $14-,20/+,907 and the amount of coin received increased $880,208, We had an increase of 829*255 pieces in the number of bills received and counted over the previous year and also and increase of 8 ,4.46,934 in the number of coins received and counted. During the year, our Sorting and Count ing Divisions detected 126 counterfeit bills totaling $1,4-71, We received from the Treasury Department $5,700 thousand in new Silver Certificates of $1 and $5 denominations and placed it, together with $4,900 thousand of unfit Silver Certificates which were retired from circula- - 31 - tion, in Joint Custody for the Treasurer of the United States. Also, $24,200 thousand in unfit Federal Reserve Notes was retired to the Federal Reserve Agent to be held for emergency use, if needed. We received from the United States Mints $2,310,200 in coin this year, an increase over 1950 of $524,200. In order to augment our short coin supply a letter was sent in November to nonmember banks in our district, asking them to ship us their surplus coin at our expense. We received over $200 thousand from this source, which represented about 150 shipments. Outgoing Shipments for account of member banks Currency paid out Currency shipped to Helena Branch and for other F.R. banks Coin 1951 Amount Humber $356,332,500 21,831 1950 Amount Number 21,867 $325,239,965 49,583,500 10.946,000 1416,862,000 4.61 37,136,500 14,752 9.177.943 37,080 $371,554,408 509 14.496 36,836 Incoming Shipments for account of member banks Currency Coin 1951 Amount Number 22,816 $383,495,000 4.290 9.009.000 27,106 $392,504-,000 1950 Amount Number 22,616 $369,290,093 3.944 8.128.792 26,560 $377,418,885 Number and Amount of Pieces Handled Currency -1251 Amount Number Bills received and counted 64,983,663 $420,409,560 67,751,600 5,620,427 Bills rehandled 287.758.790 Hand verification of bills 24.04-1.991 94,646,081 $775,919,950 1950 Amount Number 64.,154,408 $404,671,050 61,443,900 5,016,998 249,864.820 20.132.711 89,304,117 $715,979,770 Coin Coins rehandled Coins wrapped 1951 Amount Number 104,789,880 $ 8,823,987 3,610,122 523,378 51.186.000 4,309.400 159,586,002 $ 13,656,765 1950 Number Amount 96,342,946 $ 7,401,903 2,946,371 4.86,027 51.783,500 3.547.625 151,072,817 $ 11,435,555 Amount of Coin Received from U. S. Mints 1951 1950 $2,310,200 $1,786,000 Number of Unfit Bills Forwarded to Treasurer of the United States for Redemption 1951 1950 26,182,316 35,478,732 Return of Federal Reserve Notes to Bank of Issue Fit-for-use Federal Reserve notes returned to other F.R. banks Our fit-for-use Federal Reserve notes received from other F.R. banks 1951 1950 137,907,000 $24,842,500 $40,485,750 $38,243,450 - 34 - DISCOUNT AND CREDIT DEPARTMENT A total of 4.1 banks in Head Office territory borrowed an aggregate ot $1,715,790 thousand, all of which was secured by U, S. government obliga tions. All but ^36,990 thousand of this amount was borrowed by Twin City banks. Aggregate borrowings on governments in 1950 amounted to $881,04-4 thousand and was loaned to 23 banks. Three banks in Montana borrowed $25,190 thousand through the Helena Branch in 1951, 06,620 thousand less than in 1950. One Minnesota bank borrowed $250 thousand and one Montana bank $50 thousand under Section 10b. Our bank's participation in foreign loans on gold during the year totaled $275 thousand. At year's end there was none. Only five applications for industrial loans under Section 13b of the Federal Reserve Act were received. thousand. These applications aggregated $290 Four of the applications were declined and one was withdrawn by the applicant after approval. No applications were pending at the year's end. Industrial loan disbursements aggregating $38 thousand were made. The total amount of industrial advances outstanding on our bank's books on December 31, 1951, was $133,731.04. These funds were being utilized by (1) two farm implement dealers, (2) a paint manufacturer, (3) a dairy, (4 ) a builder's hardware and appliance dealer, (5) a soft water service company, (6) a feed manufacturer, and (7) a retailer of building material. Advances amounting to $7,262,654.08 were made by financing insti tutions under Regulation V, The Department of the Army guaranteed $3,987,063.22; the Department of the Navy $2,959,312.00; and the Department of the Air Force $316,278,86. The Department of the Army has guaranteed #1,076,213.75 of the loans outstanding as of December 31, 1951, amounting to #1,375,184..03, and the Department of the Air Force, $>86,963*30 of $96,625*88. There were no loans outstanding for the Department of the Navy, Twenty-seven applications for guaranteed loans totaling $15,740 thousand were received. Sixteen were approved and guarantees were executed, two were approved but guarantees have not been executed, three were rejected, five were withdrawn or lapsed and one is under consideration. The total amount of guarantee agreements executed was $8,880 thousand. The approvals of applications for guaranteed loans range from $30 thousand to $3,500 thousand, and are in the form of revolving credits. As of December 31, 1951, one Regulation V guarantee was outstand ing under the old V-loan program. It covered $22,866.80 of the remaining $30,901.04 balance due on a loan made by the Reconstruction Finance Corpo ration and guaranteed by the Department of the Army. DUPLICATING DEPARTMENT During 1951, the department turned out 6.3 million pieces of duplicated matter on 6,537 separate production runs. This volume repre sents an approximate overall increase of 14$ compared with total production for 1950. The total is the combined output of four different machines, namely: the ditto, the mimeograph, the multigraph, and the multilith. Use of the ditto process declined somewhat, but was more than offset by an in creased utilization of the other three. The addressograph section of the - 36 - department addressed a daily average of approximately 4,800 envelopes and 4,500 miscellaneous forms, which volume represented an increase of 10$ over similar figures for the year previous. Work done in connection with the various credit regulation activities was largely responsible for the steppedup department work load. Demand for photostatic reproduction of various documents declined 14$ for the year. This was due mostly to a falling off of such service to local offices of the CCC and RFC. We were reimbursed for the cost of ap proximately 1/3 of our 1951 photostat work. An electric powered, hydraulic paper cutter was purchased to re place an obsolete hand-operated cutter. EXAMINATION DEPARTMENT At the close of the year, there were 345 national banks and 131 state member banks in this district - one less national bank than at the end of last year. These banks are geographically distributed as follows: Michigan Minnesota Montana North Dakota South Dakota Wisconsin National Banks State Banks Total 26 178 39 40 35 27 345 15 28 45 2 27 14 131 41 206 84 42 62 1 476 Total membership in this district was decreased by one bank during the year when The First National Bank of Wilton, Wilton, North Dakota, was succeeded by a nonmember bank, First State Bank of Wilton. A regular examination of each of the state member banks was made during the year. - 37 - As of December 31, Welve state member banks were exercising trust powers, While nine others authorized to do so were not. Sixty-five national banks held permits to exercise full or limited trust powers. No applications for membership in the Federal Reserve System were received from state banks during the year. The number of examination report copies received from the Chief National Bank Examiner's office was 680 at an expense of $>6,800. Eightyfour duplicate copies of reports of examination of Montana national banks were received from the Chief Examiner's office for our Helena branch. The cost of these additional copies was $4-20. In addition, nine separate re ports of examination of trust departments were received. The number of reports of examination received from the various state banking departments in this district of state member banks examined independently by them was as follows: Minnesota Montana North Dakota Wisconsin 24 u 3 3 Four calls for reports of condition of each member bank were issued, and, in addition, all member banks submitted semiannual reports of earnings and dividends. One application for additional fiduciary powers and one for limited fiduciary powers were received. The application for additional powers was submitted by The First National Bank of Negaunee, Michigan, and was approved by the Board of Governors July 17, 1951. National Metals Bank of Ironwood, Michigan, applied for limited powers, but that application was withdrawn by the bank. No member bank having fiduciary powers signified its desire to - 38 - relinquish those powers. Applications for adjustments of holdings of Federal Reserve bank stock received from member banks numbered 252, and one application for total surrender of stock was received. One application for a national bank charter was referred to us by the Comptroller's office for recommendation. The application was disapproved by the Comptroller. It is the policy to examine holding company affiliates biennially. In line with this policy, an examination was made of Bank Shares Incorporated and First Bank Stock Corporation during 1951, Northwest Bancorporation having been examined in 1950. FISCAL AGENCY DEPARTMENT No cash offerings of new securities were made by the Treasury De partment during the year 1951, other than the weekly Treasury Bill offer ings and two special offerings of Treasury Bills labeled "Tax Anticipation Series". There was one exchange offering of Treasury Bonds, Investment Series, for Treasury Bonds and six exchange offerings of Certificates of Indebtedness for Treasury Notes and Treasury Bonds. A total of 4,732 ex change subscriptions were received for these issues, 3,257 being for the account of banks. The exchange subscriptions received and allotted amounted to $619,610 thousand compared with $689,560 thousand received and allotted during 1950. During the year, 2,665 tenders for Treasury Bills were received; their total amount was $363,505 thousand of which $350,377 thousand was accepted. These tenders represented 2,804 subscribers. During 1950, 1,874 - 39 - tenders totaling $294,744 thousand representing 2,092 subscribers were re ceived and $285,969 thousand accepted. The average equivalent rate of discount on Treasury Bills increased from 1.382% for the Bills dated December 28, 1950, to 1.865% for the Bills dated December 27, 1951. On October 17, 1951, tenders were accepted for bids to an issue of 144-day Treasury Bills dated October 23, 1951, due March 15, 1952. These Bills were labeled "Tax Anticipation Series"; 132 tenders totaling $73,050 thousand were received and $31,762 thousand accepted. On November 20, 1951, tenders were received for bids to an issue of 201-day Treasury Bills dated November 27, 1951, due June 15, 1952. These Bills were also labeled "Tax Anticipation Scries"; 218 tenders totaling $85,325 thousand were received and $28,650 thousand accepted. The first issue of Treasury bills labeled "Tax Anticipation Series" will be acceptable in payment of income taxes due March 15, 1952. The second issue of these bills may be used to pay income taxes due June 15, 1952. Treasury bills are usually paid for in cash or by maturing bills. However, the two offerings of bills labeled "Tax Anticipation Series" were eligible for payment through the Treasury Tax and Loan account. The Treasury Department on March 19, 1951, announced an offering of nontransferable, registered 2 3/4% Treasury bonds, Investment Series B-1975-80, for which holders of 2 1/2% Treasury bonds of June 15 and Decem ber 15, 1967-72, could at their option, exchange their bonds of either or both series. The 2 3/4% Treasury bonds are not eligible for sale on the open market, but may be exchanged for 1 1/2% five-year marketable Treasury notes, which in turn may be sold on the open market. The total amount of outstanding 2 l/2%, 1967-72 Treasury bonds of - 40 - June 15 and December 15 was $19,656 million. Thb total exchange nation-wide .-amounted to $13,572,74-9 thousand, of which $179,839 thousand was exchanged in this district. United States Savings bonds of Scriws E, F and G amounting to $4.1,285,375 (issue price), involving 227,638 pieces, were issued by our bank. This compares with $127,527,575 (issue price), involving 244,522 pieces, issued in 1950. The Treasury Department conducted a "Defense Bond Drive” for the sale of U. S. Savings bonds during the period September 3 through October 27, 1951, with the accounting period ending November 13, 1951. The total issue price of all Savings bonds sold in this district during this drive was $33,687,192. The total public debt, as of December 31, 1951, was $259,4-45 million as compared with $256,200 million on December 29, 1950. There were 1,409 qualified issuing agents for Series E Savings bonds in this district as of December 31, 1951, the same number as for December 29, 1950. ,?e shipped to issuing agents 980,255 pieces of Series E Savings bonds as compared with 1,074,854 pieces in 1950. Issuing agents in this district issued 931,016 pieces of Scries E bonds amounting to $93,287,829 (issue price) compared with 1,017,280 pieces aggregating $129,423,720 (issue price) during 1950. The Treasury Department permitted the proceeds of the maturing Series D-1941 Savings bonds, owned by individuals and guardianship estates, to be applied against purchases of Series E-1951 Savings bonds without such purchases affecting the annual limitation. The Treasury Department on March 26, 1951, outlined the three - 41 - options that were offered the holders of matured Series E Savings bonds: 1* The owner of any Scries E bond can receive, if he desires, full cash payment for his bond at maturity, 2. The owner of a matured Series E bond has the privilege of retaining his bond for a period not to exceed ten additional years during which time interest will accrue at 2 l/2$ simple interest for the first 7 1/2 years and then increase for the remaining 2 1/2 years to bring the aggregate interest return to about 2.9$ compounded semiannually. No action is required of the owner wishing to take advantage of this extension, 3. Owners of bonds of matured Series E have the option of present ing their matured bonds in amounts of $500 (maturity value) or multiples thereof in exchange for Series G bonds, which will bear the special privilege of redemption at par whenever they are presented for payment. These privileges apply to all outstanding E bonds as they mature and will also apply to all new issues of Series E Savings bonds. At the close of the year, 1,246 banks (with 107 branches) and 28 other organizations in our district were qualified to act as paying agents for Series A through E Savings bonds and Armed Forces Leave bonds. The daily average of all Savings bonds paid by our bank and the paying agents in our district during 1951 was 8.573 pieces as compared with a daily average of 9,791 pieces in 1950, Paying agents in our district were reimbursed for paying Savings bonds and Armed Forces Leave bonds during the first three quarters of 1951 in the amount of $227,922.20 for 1,703,698 pieces as compared with $241,228.50 for 1,802,013 pieces during the first three quarters of 1950. We received a monthly average of 1,166 pieces of Savings bonds for safekeeping as compared with 1,611 pieces per month for 1950, A monthly average of 2,342 were released from safekeeping as compared with 2,728 per month during 1950. On December 31, 1951, 235,666 Savings bonds were held in safekeeping for individuals, fiduciaries, and organizations other than banks as compared with 249,773 bonds held on December 29, 1950, We reissued for all purposes 109,018 Savings bonds with a maturity value of $22,008,895 as compared with 121,649 pieces with a maturity value of $24,398,675 handled for reissue in 1950. The Treasury Department, to avoid an undue strain on the money market that could result from immediate withdrawal of funds from the banking system on account of large quarterly installment payments of individual and corporate income and excess profit taxes, decided that special depositaries of public moneys would be permitted to accept, for deposit in their Treasury Tax and Loan accounts, funds represented by checks of $10 thousand or over that were drawn on such depositaries when these taxes were remitted to Col lectors of Internal Revenue. This provision was made effective for the following periods: March 5, 1951 to March 31, 1951 June 1, 1951 through June 30, 1951 September 1, 1951 through October 1, 1951 For the tax payment period, December 1, 1951 through January 4, 1952, only 50% of the amount of such checks could be deposited in the Treasury Tax and Loan account by a special depositary. In this district, 1,165 banks are now qualified as depositaries for public moneys, and 857 of them have active Treasury Tax and Loan accounts, in which the total deposits as of December 31, 1951, were $67,492,4-20.50 as com pared with $89,430,241.28 on December 29, 1950. The aggregate of all amounts deposited in the Treasury Tax and Loan accounts during 1951 were ^294,648,656.51. Depositaries for Federal Taxes were authorized to accept deposits of Railroad Retirement Taxes from employers who are required to withhold such taxes on wages paid after June 30, 1951, and deposit them each month. These employers use a Railroad Retirement Depositary Receipt punch card, which is similar to the form used by all other employers. On December 31, 1951, 634 banks in the district were qualified as depositaries for withheld income taxes, Federal Insurance Contribution Act taxes, and Railroad Retirement taxes, and as such could accept deposits of those taxes from employers, and deposit the funds in their Treasury Tax and Loan accounts. During the year, the qualified depositaries forwarded to us 112,623 depositary receipts for such withheld taxes amounting to $267,012,652.86, as against 109,485 depositary receipts amounting to $174,420,190.79 during 1950. During the year, we received direct from employers 43,087 depositary receipts for withheld income taxes, Federal Insurance Contribution Act taxes, and Rail road Retirement taxes aggregating $28,965,663.10. The Treasury Department announced on May 14, 1951, an offering of new Treasury Savings notes, Series A, and the discontinuance of the sale of Series D Treasury Savings notes. Interest on the notes accrues monthly on the fifteenth day of each month, from the issue date, at rates ranging from 1.44$ if the notes are held for six months or less to 1.88$ if they are held for the full three-year term, except that interest is paid on notes inscribed in the name of a bank that accepts demand deposits only when presented in pay ment of taxes. The Treasury Department on May 15, 1951, prescribed the regulations — 44 “* which govern the payment of any series of U. S. Savings bonds without the owner's signature on the request for payment. Qualified paying agents, under these regulations, may specially endorse certain Savings bonds in lieu of requiring the owner or co-owner to sign the request for payment and pay such bonds. If they are not eligible for payment by such paying agents, they are to be sent to the Federal Reserve bank of the district for payment. A paying agent, that pays a bond without the signature of the owner or presents a bond to the Federal Reserve bank for payment without the owner's signature, under these regulations shall be deemed to have unconditionally guaranteed to the United States the validity of the transaction. In May, the Bookkeeping Division of the Fiscal Agency Department was moved from the bank floor to the so-called Green Room in the subbasement. In July, the unit that issues U. S. Savings bonds on original issue was moved from the third floor to the bank floor. The Fiscal Agency now occupies space on the bank floor, the Green Room in the subbasement, and the Annex. On December 31, 1951, there were 112 employees in the Fiscal Agency division, as compared with 131 on December 29, 1950. NONCASH COLLECTION DEPARTMENT During 1951, this department handled 922,784 grain drafts totaling $863,903 thousand. This was an increase of 81,181 in the number of items handled and an increase in dollar value of $151 million over that of 1950. There was a decrease of 2,680 items in city collections and a decrease of 3,264 items in country collections compared with 1950. The dollar value of city collections decreased $23,903 thousand, but the dollar value of - 45 - country items increased $6,110 thousand. Coupon and country security collections showed an increase of 19,821 items and a dollar value increase of $674 thousand. Our member banks forwarded 2,539 direct-sent collections to other Federal Reserve banks as compared with 2,753 in 1950. The dollar value of these collections totaled $25 million for 1951 as compared with $19 million for 1950, Exclusive of direct-sent collections, this department handled a total of 1,265,44-1 items with a dollar value of $980 million, of which 39,054 items aggregating $32,636,144.85 were country collections, 1,001,439 items aggregating $935,350,528.57 were city collections, and 224,948 items aggregat ing $12,643,034.88 were security collections. This is an increase over 1950 of 95,058 in number of items handled and $134 million in dollar value. We handled for redemption 367,871 government coupons aggregating $29 million, which is approximately the same amount as in 1950. We also handled 11,810 governmental agency coupons amounting to $436 thousand during 1951, as compared with 12,000 coupons totaling $473 thousand in 1950. PERSONNEL DEPARTMENT The Head Office staff on December 31, 1951, totaled 658 employees as compared with 628 on December 31, 1950. However, employment during 1951 was much greater than the net gain of 30 employees might indicate. Accessions totaled 345 for the greatest total of new employees since 1943, and separa tions totaled 315 for the greatest total since 1945. Separations increased sharply in the fall of 1950 and continued at a high level during 1951. These - 46 - - separations may in part be attributed to increased activity in defense and related industries resulting in an extremely tight labor market for women clerical employees ih the Twin Cities area. Such a market not only forced employers to fill their heeds from a limited supply, but offered available clerical employees a much better opportunity to shop for or choose a posi tion. The chart pictured below indicates the reasons given for separations as indicated on letters of resignations or exit interviews: -4.7- The department has continued its efforts to keep our employees in formed on current items of general and financial significance, "Supervisor's News Service" was circulated to supervisors and department heads and various business and financial publications were distributed among interested indi viduals, A pamphlet entitled "Survival Under Atomic Attack" accompanied by a letter from the president of the bank was sent to the home of each employee. In order to be prepared for emergencies, a class in Red Cross instruction was started. Twenty employees from various departments in the bank have com pleted twelve classes of a 22 class course for standard, advanced, and in structors' certificates in first aid. This course is being taught by a representative from the local Red Cross Chapter. On December 31, 1951, 209 employees were members of the American Institute of Banking. Fifty-two members enrolled in 14 classes in order to further their education and better prepare themselves for their work. One of our senior employees was elected first vice president of the local chapter of the American Institute of Banking, which has approximately 2,400 members. This position will automatically lead to his elevation as president of the chapter next year. In addition, several members have been appointed to AIB committees as chairmen or assistants leading to chairmanship and consuls and. assistant consuls. The first vice president of the AIB and three other em ployees selected as official delegates attended the 49th National AIB Con vention in Pittsburgh in June. In February, this department sponsored for the fourth consecutive year a luncheon for high school counselors and coordinators. This year, the luncheon was attended by 18 counselors and coordinators and two representa tives from the Board of Education, The program included a discussion of problems connected with the employment of high school graduates, a short talk -48- by the Director of Research on "Business and Employment Trends", and a report from the steno-receptionist of the Personnel Department pointing out her em ployment experiences and progress at the Federal Reserve Bank. She is a graduate of a local high school and participated in the cooperative school program. We endeavored by this presentation to concretely point out to the high school representatives that it was our earnest desire, under the prac tices followed by the bank, to insure fair treatment and reasonable progress for beginning employees. In July, an addition was made to our training program by organizing and placing in operation a formal training period for beginning clerical em ployees. A total of 50 trainees completed the training course before it was temporarily terminated in November due to an absence of job openings. course may be reactivated as the need arises. The In addition to instruction on office machines, trainees were taken on tours of the bank, shown movies of the Federal Reserve System and our own bank movie. They also discussed personnel practices and policies with the department head of the Personnel Department. A staff member of the Check Collection Department, by the use of a balopticon projector, displayed on a screen, checks considered to be "tough items" for listers and pointed out the need for caution when listing items of this nature. This has increased accuracy and decreased the amount of check ing necessary. The idea for the use of "tough items" and the use of the balopticon projector was one of the good ideas brought up through the use of the bank’s suggestion system. During the year, 93 suggestions were submitted and 24 were accepted. A total of $358.50 was distributed for suggestion awards. As in past years, we have continued to use the Cooperative School Work Program of hiring employees on a part-time basis. Seven senior girls -4.9- from local high schools were employed during September on a part-time basis to become regular members of the staff after graduation. In keeping with our past practice and belief that parents (especially mothers) are also interested in being informed of the activi ties of the Federal Reserve Bank, we held 11 Mother-and-Daughter luncheons, attended by 64 mothers and daughters. In June, a member of the Personnel Department was assigned the editorship of the "Bank News", a monthly publication for employees. A re porting staff from the various departments was selected and an employee advisory board appointed. News from Helena is covered in a Helena Branch section, and the bank nurse writes a "Nurse's Notes" column which gives her an opportunity to explain changes in welfare benefits, timely tips or cautions as the season or occasion may dictate. The Hospitalization-Surgical Program available through the Connecti cut General Life Insurance Company has continued to be of assistance to em ployees through reimbursement of hospital and surgical charges. The follow ing tabulation shows the costs incurred by employees for surgery and hospi talization and the portions thereof paid by the insurance company Services Claims Total Cost Amount Recovered Surgical 133 $ 8,203.00 $ 5,701.50 Hospital 112 9,223.70 245 $17,426.70 8,222.42* $13*924o12 % of Recovery 69.5 89.1 79.9 *Does not include 23 claims sent directly to insurance company. The Personnel Development Committee continued to function by planning activities aimed toward long range development of a source of em -50- ployees for future department heads and officers. During 1951, these acti vities included: 1. Two men assigned to the Bank Examination Department for six months’ training in examination work both in the metropolitan area and in the country. 2. Changes made in assignments to public relations work in the Ninth District in order to give selected younger men additional contact with country banks. 3. Six men were enrolled in the Central States School of Banking at Madison. Wisconsin. This is an increase of two enrollments over past years. 4. Men were rotated on committee assignments for our con ferences, short courses, forums, etc., in order to give them as broad experience as possiblec 5. Four selected staff members were enrolled in the Dale Carnegie Course "Effective Speaking and Human Relations" at a local business school. 6. Under the Security Files Program, 14 senior men were assigned for approximately three weeks1 training each in handling important records at our Wayzata office, 7. In order to give necessary training in proper letter writing, four men were enrolled in a four-month course in letter improvement. 8. One of the younger men attended a junior employee school held at the University of South Dakota, Vermillion, South Dakota, which was sponsored by the South Dakota Bankers’ Association. During the year, several important changes were made in Personnel practices and procedures. Included in these was the deduction for social security from the salaries of all officers and employees. This deduction was made necessary by an amendment to the Social Security Act, effective January 1, 1951, which made its provisions applicable to employees of the Federal Reserve banks. Another change was that employees, after 15 years service at the bank, are granted three weeks annual vacation with pay. All officers are now granted four weeks annual vacation with pay. Effective November 1, 1951, a new group life insurance plan was entered into by all of the Federal Reserve banks which automatically insures all employees who have active membership in the Retirement System (except special members). The new policy, which was issued by Connecticut General Life Insurance Company, provides insurance on the life of each eligible member in an amount equal to his or her basic salary during the last 12 months of active service. This life insurance is in addition to (and in effect doubles the amount of) the active service death benefit provided by our Retirement System. This new group life insurance plan will replace all existing group life plans involv ing bank participation. It is anticipated, therefore, that our present group life contracts with the Equitable Life Assurance Society will not be renewed by the bank upon expiration April 1, 1952. The Personnel Department attempts to keep informed of changing ideas and new problems in Personnel. In April, the Vice President in Charge of Personnel and an administrative assistant attended a two-day personnel confer ence at the Board's office in Washington, D. C., and on the return trip attended a two-day manpower conference in Chicago sponsored by the American Bankers' Association. An administrative assistant from the department attend ed the two-day Ninth Annual Industrial Relations Conference conducted by the -5 2 - staff of tho Industrial Relations Center of the University of Minnesota. The registrants at the latter conference discussed "Training Programs for Maximum Manpower Effectiveness". During the year, representatives of the department attended monthly meetings held by the National Office Management Association and Twin City bank personnel men. In September, members of the Personnel Committee attended a series of clinics on Wage Stabilization and Salary Stabilization Board regulations held in Minneapolis. The department conducted several studies to develop information essential in determining a policy that would insure compliance with the Wage and Salary Stabilization regulations. The department regularly receives and circulates professional literature on personnel subjects and topical law reports to keep informed of new procedures and changes in current regulations. PLANNING DEPARTMENT In order to provide a plan for performing essential services in the event that an air attack or similar disaster should disrupt the work and services of this bank, a Security Files program was inaugurated under the supervision of the Planning Department early in the year and is in opera tion at the present time. Current information is being maintained of our essential records in space in the basement of the Wayzata State Bank, ffayzata, Minnesota. Fourteen senior employees have been trained on the maintenance of the Security Files records at Wayzata, and fourteen of the officers of the bank have inspected and been informed of the significance and ways in which such records would be used. A detailed plan for providing essential ser vices in this district by utilizing the facilities of other Federal Reserve offices and our Helena Branch has been prepared. A new coin vault was completed early in the year and mechanical equipment installed for the handling of coin. These facilities have sub stantially improved our coin operations, and have also permitted the paying out of coin on an orderly basis of earliest proved coin being used first. An extensive study was made of our present and estimated future space requirements. These studies have been used in planning for the building of additional floors to the bank building. The Planning Department has and is currently engaged in assisting the Check Collection Department in improving its operations. All phases of check collection problems are being considered. The Planning Department also made studies of various operations in several other departments. In addition to surveys of procedures, these studies include space utilization, equipment, flow of work, etc. Several operating letters and supplements were revised and dis tributed to all member banks by the Planning Department. Each year this department conducts a considerable amount of research for System committees in furnishing information for consideration by the Conference of Presidents. This department assisted in conducting a System Float Survey for the Committee on Collections and Accounting, Conference of Presidents. Employees' suggestions are given consideration by the Planning Department and recommendations made to the Personnel Committee for accep tance or rejection. As a result of changes in postal and express rates during the year, it was necessary to reveiw our methods of forwarding checks, currency, and coin, etc., periodically in order to minimize any resulting increase in our expenses. Effective January 1, 1952, in addition to increases in postal rates, size and weight limitations were also imposed. Special regulations issued by the Post Office Department permit the Reserve banks and branches to exceed these weight limitations under certain circum stances provided such shipments are "pouched". Arrangements were completed by the close of the year for the proper handling of all of our shipments under the new postal rates and regulations. PROTECTION DEPARTMENT Personnel Three guards left the employ of the bank during 1951, and one guard was transferred to the office equipment mechanics department. Four new guards mere hired to fill these vacancies. As of December 1951, the personnel of the Protection Department was as follows: 1 Superintendent Sergeants 23 Guards (one acting as chauffeur) U Protection 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, including side arms. All alarms were tested monthly by the Superintendent, All inside alarms were also tested weekly by the sergeant in charge. The information clerk issued 2,370 passes to outsiders who wished to visit upper floors of the bank; 1,839 work cards were issued to outside workmen5 canteen employees, etc. At the request principally of the Bond Department, 4-60 guard escorts (382 singles and 78 doubles) were furnished to cover outside deliv eries. All applicants for employment at the bank were investigated at the Identification Bureau of the Minneapolis Police Department by the Super intendent. -5 6 - PUBLIC SERVICES DEPARTMENT Activities of the Public Services Department during 1951 were largely confined to projects inaugurated in previous years rather than to undertaking of new programs. The movie, "The Federal Reserve Bank and You", initially offered for showing during 1950, continued to be requested by banks, civic groups, and schools. While the demand was not as great as in the previous year, the film's total Ninth District audience increased from 102,758 to 153,203. In addition, reported showings in other Federal Reserve districts brought the audience grand total to 246,316. Audience totals do not include tele vision audiences. the year. Two television stations have reported its use during Bookings for the so-called Board film, produced by the Encyclo pedia Britannica, total 29 showings for an audience total of 2,372« More persons viewed the operations of the bank than in any previ ous year. During May, a record 34 groups totaling 1,000 persons went through the bank, and for the year, 101 organized tours totaling 2,920 persons were conducted compared with 94 and 2,145 for 1950. The booklet, "Your Money and the Federal Reserve System", continued to be requested by teachers, students, and bankers. filled were The total requests 1,142 for 7,306 copies. As additional aids to education we sent out about 200 copies of "The Federal Reserve System, Its Purposes and Functions", and referred inquiries to other Reserve banks for special fea ture booklets issued by those banks. Initial response to our offer of sessions of the Short Course in Central Banking was not enthusiastic; however, registrations received -57- made it possible for us to hold four sessions during the year. All told, 76 persons attended the four sessions of the course, bringing the grand total of those attending the 28 sessions since the course was begun in 194-8 to 371. During the 1951 sessions of the Short Course, the curriculum was changed to include a visit by the registrants to one of the brokerage houses and a seminar session on public relations and advertising. During the early part of the year, an exhibit of old types of currency was prepared by the Personnel Department. This exhibit, consisting of eleven frames, was shown in our bank lobby the morning of the Conference. To date, its use has been offered only to banks holding special celebrations such as anniversaries or openings of new or remodeled buildings. bit has been shown in the lobbies of 14. of our member banks. The exhi It is planned to continue to offer this exhibit to member banks which hold special cele brations. One of the features of the 1950 Forum, the counterfeit clinic, has been modified somewhat in order to allow its use in conjunction with programs of service clubs and schools. In 1951, the modified version was presented at the Minnesota Bankers' Association Junior Conference, to a women's club, and to a school group. As in previous years, the executive officers of banks in the dis trict were invited to the spring conference held April 21. Only the member banks were invited to send senior representatives to the Forum held Septem ber 20-21. The examining authorities were invited to send their examiners to the conference held November 24., and the instructors in money and banking from Ninth District schools were invited to attend the workshop on money and banking held May 5. -58- As formerly, emphasis was placed by the department on the personal visits by our representatives to bankers throughout the district. An attempt was made to have every bank called on at least twice during the year. Final tabulations indicate that twelve banks were not called on at all and approx imately 100 banks were called on only once. Our bank was represented at all conventions of State Bankers associations. In addition, representatives attended group meetings and open houses if invited to do so. To give the new men assigned to the Credit Control Department a better picture of work in the Federal Reserve bank, a short course session was held for them during the latter part of December. The first in a series of Intra-Bank Conferences was held during October 1951. In attendance were staff members from our Examination, Research, Credit Control as were all Public Services Representatives. The purpose of these conferences is to foster a better general understanding of Federal Reserve activities and to acquaint one another with specific phases of bank policy and procedure. PURCHASING DEPARTMENT During 1951, outside procurement of 3,137 supply and equipment items was authorized. Purchase orders covering these items were issued to a wide scattering of supply houses and business firms. The number of items procured in this fashion during 1951 exceeded by approximately 6% the comparable figure for 1950. For the same period, the various departments of the bank drew upon our stock room for a total of 10,156 items, detailed on 5,019 separate -59- requisitions. This volume represents a similar increase in department activity over that of 1950. There was a slow, rather steady rise in the price of most articles purchased in 1951; however, costs on a few items available in good supply declined slightly during November and December, RESEARCH DEPARTMENT An important development in the Research Department in 1951 was a staff reorganization whereby an assistant was attached to each of the senior economists, in their several areas, namely: money and banking, business and industry, and agriculture. This step was taken in recognition of the fact that speaking engagements, attendance at meetings, and administrative duties were absorb ing an increaseing proportion of the time of the regular economists and resulting in either the postponement or shelving of much worthwhile research activity. An example of the type of research project made possible by the addition of these assistants is the study made last year on developments in the Williston oil basin and their impact on the Ninth district economy. Featured in a supplement to the August Monthly Review and entitled "The Upper Midwest Weighs Its Hopes For 'Black Gold' Wealth", this article received an initial distribution of 8,000 copies. Its popularity was attested by requests for 17,000 additional copies, which necessitated a second and third printing. Regular weekly and monthly research activities continued to occupy much of the department's time during 1951. These activities include -60 - publishing three periodicals and compiling and issuing regularly a number of statistical reports. The publications are the Farm News, the Monthly Review, and the weekly News Review. The Farm News now has the largest circulation of the three with nearly 10,000 copies being sent out each month. The circulation was 8,000 at the end of last year and only 6,000 at the end of 194-8. It is sent mainly to bankers and to farmers, either directly or through their banks. One factor in its rapid circulation growth has been the desire of country bankers to have their customers receive this publication. Monthly Review circulation was 8,363 at the close of 1951— an increase of about 500 during the year. In addition to reviewing business, banking, and agricultural conditions in the district, the Review at various times during the year contains special articles on topics of importance. Those printed during 1951 were: January - 1950 Brought Prosperity, Sobering Problems May - Agriculture in Strong Position for Long Pull September - Housing Market Weakens Under High Prices November - Farm Prosperity Likely to Continue in 1952 The policy of sending the Weekly News Review to executive offi cers of member banks and to all other bankers who request it has been continued. Besides the regular publications and reports, the research department undertook a number of special projects during 1951. One of these was a special article for the 1950 Annual Report to the Stockholders. This article, which was entitled "Doing a Job for Uncle Sam", was a story about the Fiscal Agency department of the bank. The Minnesota Resort Survey, which was started in 1950, was con tinued and expanded during 1951. Information about occupancy and reserva tions was obtained from a selected sample of resorts each month from April to October. This material was summarized in monthly reports that were sent to the sample resorts, resort associations, newspaper editors and others who requested them. A more inclusive summary was prepared at the end of the resort season. This included comparisons with other years and with other resort areas as well as a summary of occupancy and reservations for the year. About 800 of these were sent out. During 1951, the research department checked 1,961 Regulation X registration statements that had been returned to the bank and supervised their tabulation on IBM cards. Statistical tabulations were then prepared from these cards and were sent, together with the cards, to the Board of Governors in Washington. In addition to requests from officers and employees of this bank, numerous requests for statistical information from businessmen, bankers, and students were met by members of the research department. Department personnel served on a total of 14- committees of the Federal Reserve System during 1951, and delivered 93 addresses before audi ences totaling 12,500 people. An estimated 5,600 persons used the facilities offered by the research library during 1951. This was about 350 more than last year. In addition to reference work done in the library, patrons checked out 44,500 pieces of library material (books, newspapers, periodicals, etc.). The library staff answered approximately 2,000 personal, telephone, and mail requests during the year. MEMBER BANK RESERVES The Board of Governors of the Federal Reserve System increased the reserve requirements for all member banks by 2% with respect to demand deposits and 1% with respect to time deposits, effective in 1951, as shown below: Net Demand Deposits Bank Classification Country Banks Reserve City Banks Central Reserve City Banks From 1° Time Deposits Effective Date From To Effective Date 5% 6% 1/16/51 12% 13 13% U 1/16/51 2/ 1/51 18 19 19 20 1/11/51 1/25/51 1/11/51 22 23 23 24- 1/11/51 1/25/51 1/11/51 This action was'• taken as a step toward restraining inflationary expansion of bank credit and was timed so as to absorb reserves coming into banks from the post-holiday flow of currency. The year 1951 saw a substantial increase over the previous year in the number and amount of penalties assessed and waived. at the Head Office increased 92% Penalties assessed in number and 98% in dollar amount, and at the Helena Branch 7% in number and 10% in amount. Penalties assessed for Head Office and Helena Branch combined increased 60% in number and 53% in amount. Penalties waived at the Head Office increased 63% in number and 31% in amount, and at the Helena Branch increased 55% in number and 82% in amount. Of the penalties waived, 51% were waived under the rule which -63- applies to penalties not exceeding $5.00j 29% were waived under the rule permitting banks to offset deficiencies in reserves, when such deficiencies do not exceed 2% of the required reserve for the period, by excess reserves in the immediately succeeding periodj 20% w ere waived under the rule which permits a penalty to be waived on a deficiency of not more than 5% of the member bank's required reserve, provided that a penalty has not been waived under this rule within the previous two-year period. During 1951, 104 banks were penalized for a total of 181 times, compared with 63 banks for 113 times in 1950. The following is a compara tive report of deficiencies and reserve penalties by states during 1951 and 1950: Penalties Assessed 1951 No. Amount 1950 No. Amount ____ Penalties Waived 1951 No, Amount Banks Affected Assessed Waived 1950 1951 1950 1951 1950 No. Amount No. No. No. No. Michigan 17 $ 604.28 Minnesota 64 2637.23 North Dakota 20 601.11 South Dakota 18 469.05 Wisconsin 17 363.08 Head Office Totals 136 $4674.75 16 $ 421.34 39 1361.75 5 198.36 8 243.35 3 139.37 32 $ 204.04 15 $ 117.42 8 179 5371.15 114 4566.55 35 25 393.07 20 205.32 11 36 547.53 24 154.53 13 46 185.96 22 83.73 12 5 24 4 6 3 71 $2364.17 318 $6706.75 195 $5127.55 79 42 174 104 Helena Branch 42 $2507.54 68 $1202.27 44 $ 660.78 25 Combined 45 $2758.06 181 #7432.81 113 $4871.71 386 $7909.02 239 $5788.33 104 21 21 90 16 25 22 31 8 57 15 17 7 23 63 205 127 SAFEKEEPING DEPARTMENT Securities held for safekeeping and collateral purposes on December 31, 1951, totaled $1,370 million, an increase of $54 million over $1,316 million held a year ago, as reflected below: 12-31-51 Securities held in safekeeping (not pledged) Securities pledged to secure public deposits *Securites pledged to secure government deposits ^Securities pledged to secure Treasury Tax and Loan account K**Securities held as collateral for discounts and advances Securities held as collateral to Consignment account-U.S. Savings bonds, Series E Securities held for RFC Securities held for Public Housing Administration Securities held for Housing and Home Finance agency 12-31-50 Inc. or Dec. (In thousands of dollars) $ 829,449 $ 816,915 $+12,534 295,762 298,475 - 2,713 10,064 4,333 + 5,731 203,424 173,151 +30,273 30,242 21,445 + 8,797 45 0 45 144 0 144 1,712 1,718 6 0 $1,370,698 $1,316,268 ..... & 42 $+54,430 #Includes $ 4,350,000 held by commercial banks. **Includes $23,925,000 held by commercial banks and other Federal Reserve banks. ***Includes $25,500,000 held by commercial banks. The Safekeeping Department received 44,497 pieces of securities, issued 5,228 receipts, and delivered 47,359 pieces in 6,442 transactions, resulting in a net decrease of 2,862 pieces of securities held during the year. This department also made 6,198 transfers of securities from one account to another, and clipped 268 thousand coupons from securities held during 1951. -65- The table below shows volume figures for 1951 and 1950: Receipts issued Pieces received Withdrawals handled Pieces delivered Transfers from one account to another Coupons clipped Custodian receipts issued Inc. or Dec 1951 1950 5,228 44,4-97 6,442 47,359 7,029 57,768 9,052 66,097 - 1,801 -13,271 - 2,610 -18,738 6,198 268,662 1,021 6,637 273,698 1,063 - 439 - 5,036 42 WIRE TRANSFER DIVISION During 1951, this division handled a total of $13,6 billion of transfers. Again, this year, a new all-time high in dollar amount was established which exceeds last year's previous record of $11,3 billion by $2,3 billion. Of this $13.6 billion, $4-.7 billion (or 35$) were transfers to other Federal Reserve districts| $6,8 billion (or 50$) were transfers received from other Federal Reserve districts; and the remaining $2.1 billion (or 15$) were transfers within our own district. The total number of individual transfers handled in 1951 was 4.2,656, which is 2,450 more than the 4-0,206 handled in 1950. The average dollar amount of transfers increased to $319 thousand in 1951 from $281 thousand in 1950. A total of 69,164- telegrams was handled, an increase of 7,150 over 1950, Of this number, 56,635 were transmitted over our leased private wire system (an increase of 7,204 over 1950) and the remaining 12,529 were trans mitted over commercial wire (a decrease of 54- from 1950). On November 15, 1951, transfers totaled $123,377,64-0.67, probably the largest single-day total in the history of the bank. During the month of November 1951, we installed a teletypewriter machine, primarily for "TWX" service between the Head Office and the Helena Branch, and as a standby means of communication to other Federal Reserve offices, the Board and the Treasury Department in the event leased wire service should be disrupted. Mi S C E L L A N E O U S CHECK ROUTING SYMBOL During the year, we have had considerable success in our efforts toward having the check routing symbol properly placed on cash items. The officer and the bank representative assigned to promote the use of the routing symbol continued making calls on banks and printers dur ing the year. Our Public Services men, on their bank calls, continued to call attention of the par banks to the matter. Also, in cases where a bank's percentage was low, it was furnished a list of its customers whose checks did not carry the symbol. The State of Wisconsin, Department of Public Instruction, has re vised its entire State school accounting system to permit a uniform and standard type check with the routing symbol. Six thousand of their school districts were circularized by them, requesting the adoption of their recommendation. The educational department for the State of Minnesota has also revised its warrant in order to include the symbol. A survey, as of December 1, 1951, showed that use of the routing symbol averaged 80$ in the several states of the Ninth District. averaged: The states Michigan 80$; Minnesota 80$; Montana 82$; North Dakota 78$; South Dakota 83$; Wisconsin 77$. A booklet was printed by us showing the A.B.A. transit number and check routing symbol of all par banks in the Ninth Federal Reserve District. This booklet was sent to all printers of record, that may print checks for banks and individuals in the Ninth District. FISCAL AGENCY OPERATION OTHER THAN U. S. TREASURY COMMODITY CREDIT CORPORATION Our activities for this corporation continue about the same as for last year, except for some variation in volume. This year, the number of items handled as cash items was approxi mately 90 thousand as against 69 thousand last year; the dollar volume was $147 million as against $173 million last year. Sight drafts, drawn on CCC by the Production Marketing Administra tion’s State Committees, which we paid were approximately 41 thousand in number aggregating $22.5 million, as against 80 thousand for $45 million last year. We paid approximately 2,100 sight drafts, drawn on CCC by Production Credit Associations which service CCC loans and by lending agencies which have agreed to the CCC servicing arrangement, aggregating $60 million, as against 1,700 for $21 million last year. Many additional banks have entered into the servicing arrangement in the past year. We issued approximately 20 thousand checks aggregating $176 million, as against 27 thousand for $395 million last year. -69- M ILLIO N DOLLARS MILLION DOLLARS CAPITAL ACCOUNTS l < 03 1 CAPITAL STOCK paid in totaled $5,363 thousand on December 31, 1951, an increase of $289 thousand during the year. SURPLUS ACCOUNTS. Surplus (Section 7) was increased $895 thou sand on December 31, 1951, which brings the total to $14,063 thousand, Surplus (Section 13b) remained unchanged at $1,073 thousand, RESERVES FOR CONTINGENCIES. No change was made in the reserve of $1 million set aside for losses in excess of the blanket bond coveragej 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 $201 thousand as of December 31, 1951. This is an increase of $14- thousand during the year. No losses were charged against this reserve. The table below reflects the changes made in this account during 1951. Reserve for registered mail losses beginning of year 1951 .. ........................ . . • $186,752.73 Annual addition based on 2$ per $1,000 of the total ship ments of $706,548,307 for the twelve month period December 1, 1950 through November 30, 1951 ............... 14..130.97 Reserve for Registered Mail Losses, December 31, 1951 - Total ................. . . . . . . . $200,883*70 The following table shows currency and coin shipments made during the fiscal year December 1, 1950 to November 30, 1951, which were the basis for the addition to the registered mail loss reserve. Registered Mail New F.R. currency from Washington Fit F,R. notes to bank of issue Currency and coin between Minneapolis and Helena Other currency and coin outgoing Minneapolis and Helena Other currency and coin incoming Minneapolis and Helena Railway Express and Truck Delivery All Other: Other currency and coin outgoing Other currency and coin incoming 1951 (000 Omitted) 1950 (000 Omitted) $176,520 46,582 0100,180 29,465 8,290 * 1,160 211,607 192,075 251,885** 249,031 3,059 8.605** 0706,548 3,323 4.561 0579,795 * During 1951, because of the decentralization of currency from Washington to each Federal Reserve Bank, the Helena Branch ordered its new currency from us, which accounts for this large increase. ** Due to a change in classification used in reporting shipments of currency and coin, the figures for the two years are not comparable. The disposition of 1951 net earnings and the changes made in the surplus accounts are shown below: Net Earnings Dividends Paid 0 314,934*23 Paid U.S. Treasury (Interest on F.R. Notes) 8,050,166.75 Transferred to Surplus (Section 7) 09,259,656.80 8T365.100.98 0 894,555.82 Surplus (Section 7) December 31, 1950 Transferred from Earnings 1951 Surplus (Section 7) December 31, 1951 013,168,051*86 894.555.82 014,062,607.68 Surplus (Section 13b) December 31, 1950 Transferred from Earnings 1951 Surplus (Section 13b) December 31, 1951 0 1,072,621.34 ___________z 0 1,072,621.34 -72- D I V I D E N D S As of December 31, 1951, capital stock held by member banks totaled 05,362,650, on which accrued dividends totaling 0314,934- were paid. This year’s dividend payment is the largest for any single year in the history of the bank and when combined with previous yearls pay ments, brings the aggregate total to 07,310,165. Distribution of 1951 and 1950 Dividends 1950 1951 State No. of Banks Michigan Minnesota Montana North Dakota South Dakota Wisconsin 41 206 Dividend Paid No. of Banks 0017,122.73 205,180.24 32,040.71 18,598.58 24,934.37 ___12jOj52jSO 0314,934.23 84 42 62 JtI 476 Dividend Paid 0 16,294.65 191,548.64 30,225.53 17,343.95 22,844.27 15.776.96 029^,034.00 41 206 84 43 62 _41 477 Change 0+ •828.08 +13.631.60 + 1;S15.13 + 1,254.63 + 2,090.10 .. + > 20 ,900.23 TABLE OF DIVIDENDS PAID SINCE ORGANISATION 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 0 171,568.89 181,117.51 1934 185,448.45 1935 1936 179,052.04 1937 174,057.31 1938 174,231.27 174,905.39 1939 177,400.58 1940 179,789.68 1941 1942 183,336.33 190,924.19 1943 1944 206,158.74 221,686.96 1945 238,372o30 1946 253,251.30 1947 262,776.22 1948 272,831.22 1949 1950 294,034.00 Jl.4^214,2^ 1951 07,310,164.92 0 57,719«87 a/ 363,894.19 b/ 168,102.97 180,186.21 195,870o65 211,657o03 213,774.01 212,732.68 202,827.98 193,559.46 187,609.25 180,726.51 181,202.86 184,029.92 184,445.39 180,454.53 c/ 175,494.80 a/ For period November 1, 1914 through June 30, 1915. ~ ---- u — y — '— ------- o — --------- — -' 7 — '— ^ c/ 0134,64.9.67 withdrawn from Surplus to pay dividend. -73- B A N K P R E M I S E S Improvements made during 1951 to the Head Office building were charged to Repairs and Alterations. A depreciation of 2% was taken on both the Helena and Minneapolis buildings while no additions to the book value of either building were made during the year. Inasmuch as a full reserve had already been established, the reserve for depreciation on fixed machinery and equipment of the Head Office was not increased. The Helena Branch took a normal depreciation of 10$ on fixed machinery and equipment. Below are listed the principal repairs or alterations to the Head Office building during 1951, 1. New fluorescent lighting was installed on the main banking floor, including all executive offices and the directors’ room on that floor; in the files department and the lay-out room in the duplicating department. Additional fluorescent lighting to bring up light levels was installed in the library, the currency department, and the welfare department. 2. A complete rewiring of the underfloor electric system on the second floor was necessitated by the installation of additional IBM proof machines and the rearrangement of all the furniture and equipment in the check collection department. A change was made in the electric branch circuit cabinets on the banking floor, which by elimination of fuses in the neutral connections made more fuses available for positive connec tions , -74- BANK PREMISES Total Head Office Helena Branch BANK PREMISES: Gross Book Value: Beginning of 1951 (no change during year) . . . . $1,384,281.50 $1,283,281.50 $101,000.00 Allowance for Depreciation: 688,135.80 $ 667,305-96 $ 20,829.84 25.665.60 2.019.96 27.685.56 715,821.36 $ 692,971.56 $ 22,849.80 Net book value December 31, 1951 ♦ • • . $ 668,460.14 $ 590,309.94 $ 78,150.20 FIXED MACHINERY AND EQUIPMENT: Gross Book Values Beginning of 1951 (no change during year) . . . . $ 698,171.34 $ 660,969.35 $ 37,201.99 Allowance for Depreciation: Normal depreciation ............. . $ 690,616.22 CV 660,969.35 $ 29,646.37 3.720.24 3.720.24 694,336.46 $ 660,969.35 $ 33,367.11 Net book value December 31, 1951 • • • .$ LAND: Net book value December 31, 1951 . • • . $ 410,520.66 $ 400,520.66 $ 10,000.00 TOTAL BANK PREMISES: Net book value December 31, 1951 $1,082,815.68 $ 990,830.60 $ 91,985.08 3,834.88 $ - $ 3,834,38 -75- M ILLION MILLION DOLLARS DOLLARS NET EARNINGS 1917 21 25 29 33 37 41 45 49 53 E T EAR NGS & P R O F I T S Net earnings and profits for the year 1951 totaled $9,260 thou sand. This figure established a new all-time high and exceeds the 1950 total by $2 ,224. thousand. In 1950 there was a net profit of $1,113 thousand on the sale of U. S. Government securities, whereas this year there was a loss of $52 thousand. This explains the "Change from 1950" of $1,168 thousand shown opposite "Net deductions from current net earnings". A statement of net earnings and profits is shown below. 1951 Current Earnings Current Expenses Current Net Earnings Additions to Current Net Earnings: Profit on U, S. Government Securitites sold, net All Other Total Additions Deductions from Current Net Earnings: Loss on U. S. Government Securities sold, net Reserve for Registered Mail Losses All Other Total Deductions $12,464,899 3.138.045 $ 9,326,854 sL A $51,867 14-,131 1.221 $67,219 $+ + + $+ $ Net Earnings and Profits $ 9,259,657* $+3,928,014 + 535.617 $+3,392,397 1-1,113,176 _ = _____ 24 $-1,113,270 22 Net Deductions from Current Net Earnings *For disposition of profits see page no. 72 Change from 1950 67.197 51,867 2,535 703 55,105 $+1.168.375 $+2,224,022 The table below gives a breakdown of Profit and Loss during 1951. Total Helena Branch Head Office Addition to Current Net Earnings: Profit on mutilated currency and coin $ 21.97 $ 23.34 v -1.37 Deductions from Current Net Earnings: Loss on United States Government Securities sold, net Reserve for Registered Mail Losses Discount on foreign currency and coin <*’ $51,867*35 $51,367.35 S 14,130.97 14,130.97 26.67 26.67 Loss on counterfeits 306.62 256.62 50.00 Difference Account 268.57 153•50 115.07 Difference between the estimated and actual expense for Fiscal Agency for December 1950 614.67 614.67 2.12 2.12 Loss on silver bullion shipment to U. S. Mint, Denver, controlled as $25.07, credited as &22.95 Loss on shipment of uncurrent coin to U. S. Mint, Denver 7/10/51 Total Deductions Net Deuctions from Current Net Earnings _____ 1.76_____-________ 1.76 $67,218.73 $67,049.78 $168.95 $67,196.76 $67,026.44 $170,32 -78- MILLION DOLLARS M I L LI O N D O L L A R S 12 10 l 1917 f 25 29 33 37 41 45 49 53 E A R N I N G S An increase during the year of $147 million in our average daily holdings of U. S. Government securities, together with a rise in the average yield from 1.48% to 1.7156, resulted in increased earnings for the year as compared with 1950. The increase in earnings on our holdings of U. S. Government securities, as well as changes in other earnings accounts is reflected in the following table: 1951 Discounts and Advances $ 190,134 186 Foreign Loans on Gold Industrial Loans 7,784 U.S. Government Securities-System Account 12,258,370 Deficient Reserve Penalties 7,446 Sale of Wastepaper, Money Bags, etc. Commission Earned on Bankers' Acceptance purchased for Foreign Correspondents 834 Interest on Personal Loans to Employees Clearinghouse Fines 145 $12,464,899 Change from 1950 $+ 117,727 8,655 797 +3,817,303 + 2,574 474 + 416 7 73 $+3,928,014 The average daily holding of bills discounted for the year 1951 was -$10,853 thousand and resulted in earnings of $190,134 as compared with last year’s average of $4,549 thousand and earnings of $72,407. return for the year was 1.75$. The average October and November were the only months our bank participated in foreign loans on gold, thereby reducing our daily average in 1951 to $11 thousand as compared with $589 thousand for 1950, and earnings decreased to $186 during 1951 from $8,841 in 1950. 1951 was 1.75%• The yield for Our 1951 daily average holding of industrial loans decreased to $156 thousand from $172 thousand in 1950, and as a result, earnings from that source were $797 less than for the previous year. -80- The average yield was 5%. For the year 1951, the average yield from loans to Ninth District banks, foreign loans on gold, U. S. Government securities, and industrial loans was '1.7127%. During 1950 the average yield on these combined holdings was 1.4915%. Our average daily participation in Open Market securities was $716 million, whereas one year ago the daily average was $569 million. 1950. The average yield was 1.71% for 1951 against 1.48% for Earnings from these securities were $12,258 thousand compared with $8,441 thousand one year ago. As of December 31, 1951, the bank's total participation in U. S. Government securities held increased $108 million. The following table indicates the bank's holdings as of December 31, 1951, and shows the dollar increase or decrease in comparison with December 31, 1950. Change 12-31-51 from 1950 (In Thousands of Dollars) Bonds $169,655 Notes 160,891 Bills 14,852 Certificates 422*255. $749,353 $+ 26,715 -226,658 - 23,635 $+108,159 MILLION D O L L A R S MILLION DOLLARS COMPARATIVE STATEMENT OF NET CURRENT EXPENSES Head Office 1951 Salaries: Officers Employees Fees: Directors Federal Advisory Council Other Retirement Contributions: F.R. Retirement System Social Security Supplemental Death Benefit Traveling Expenses: Directors Federal Advisory Council Other Postage and Expressage: Original Shipments of F.R. Currency Redemption of F.R. Currency Other Telephone and Telegraph Printing, Stationery & Supplies Insurance Taxes on Real Estate Depreciation Light, Heat, Power & Water Repairs & Alterations Rent Furniture L Equipment: Purchases Rentals Assessment for expenses of Board of Governors Federal Reserve Currency: Original Cost Cost of Redemption All Other Miscellaneous Recoveries: Coin Wrapping Photostat Rental of Furniture i. Equipment Rental of Space Postal Money Orders Monthly Letters Fire Insurance Loss Difference between Actual & Estimated F.A. salary expense - December 1949 Total Net Current Expenses Helena Branch 1951 Combined 1951 Combined 1950 $ 196,560 1,356,918 $ 18,743 127,800 $ 215,303 1,484,718 210,642 1,185,983 5,350 1,050 5,218 3,025 555 8,375 1,050 5,773 8,900 1,150 4,430 112,349 19,978 2,666 10,775 1,974 230 123,124 21,952 2,896 133,242 5,169 724 72,689 1,529 5,174 6,698 724 77,863 7,172 869 61,991 35,903 9,980 285,114 16,035 109,076 16,989 92,816 25,666 24,649 81,552 48,598 3,202 48,738 8,918 9,068 1,703 4,348 5,740 2,476 11,840 20 35,903 13,182 333,852 24,953 113,144 18,692 97,164 31,406 27,125 93,392 48,618 24,947 10,691 298,538 19,285 116,253 16,678 94,710 31,406 25,975 49,117 6,139 25,223 51,785 3,351 11,359 28,574 63,144 15,379 46,103 103,700 103,700 86,300 127,550 7,695 77,534 127,550 7,695 81,649 113,802 7,618 75,076 - 8,570 26 - 3,030 -37,702 -15,374 84 - 388 - 7,715 44 - 3,269 -36,945 - 7,578 26 - 3,030 -37,335 -14,181 84 4,115 ■ 992 - 367 -1,193 388 _______ ______ _______ $2,856,302 $281,743 $3,138,045 - 1.994 $2,602,429 -83- N O N R E I M B U R S A B L E E X P E N S E 1951 Head Office Helena Branch $2,856,302 281.743 $3,138,045 Change from 1950 $+507,057 + 28.560 $+535,617 Head Office expense, after deduction of reimbursable expense, increased $507 thousand compared with the year 1950. Principal increases over last year were in salaries; retirement system contributions; travel ing expenses-other; postage and expressage; telephone and telegraph; repairs and alterations; rent; furniture and equipment - purchases and rentals. Board assessment; Federal Reserve Currency - Original Cost; 411 other. Helena Branch expense increased $28 thousand over last year. The larger increases were in salaries; postage and expressage; telephone and telegraph; repairs and alterations and furniture and equipment - pur chases and rentals. SAURIES 1951 Head Office Helena Branch $1,553,478 14.6.543 $1,700,021 Change from 1950 $+292,768 + 10.628 $+303,396 Head Office salaries for 1951 totaled $1,553 thousand, an increase of $293 thousand over last year. This increase is due primarily to merit adjustments and an increase in the average number of employees for the year. FEES - DIRECTORS Head Office Helena Branch 1951 Change from 1950 $5,350 3.025 $8,375 $+350 —875 1-525 Twelve meetings were held as compared to eleven in 1950, and there was also an increase in attendance. FEES - FEDERAL ADVISORY COUNCIL Head Office 1951 Change from 1950 $1,050 $-100 In 1951, our Council member attended four local and four out-oftown meetings; in 1950, he attended six local and five out-of-town meetings. FEES - OTHER Head Office Helena Branch 1951 Change from 1950 $5,218 555 $5,773 $+ 906 + 437 $+1,343 This increase is due to more physical examination fees caused by a larger turnover in personnel. RETIREMENT CONTRIBUTIONS F. R. RETIREMENT SYSTEM Head Office Helena Branch 1951 Change from 1950 $112,349 10,775 1123,124 I- 8,811 - 1.307 $-10,ll8 Inclusion of Federal Reserve employees under Social Security, which became effective January 1, 1951, was an important factor in reduc ing the retirement rate from 9.72 to 8.59 on January 1, 1951; 8.59 to 8.37 on July 1 and down to 7.22 on November 1. This resulted in a very consid erable decrease in the total of contributions, notwithstanding a substan tial increase in the amount of salaries paid during the year. SOCIAL SECURITY Head Office Helena Branch 1951 Change from 1950 $19,978 1.974 $21,952 $+19,978 + 1,974 $+21,952 Social Security tax payment became effective January 1, 1951. SUPPLEMENTAL DEATH BENEFIT Head Office Helena Branch 1951 Change from 1950 $2,666 230 $2,896 $+2,666 + 230 $+2,896 Contributions to Supplemental Death Benefit began on November 1, 1951. -8 6 - TRAVEL - DIRECTORS Head Office Helena Branch 1951 Change from 1950 $5,169 1.529 $6,698 $+ 597 -1.071 $~ U 74- Twelve meetings were held during the year as compared to eleven in 1950. TRAVEL - FEDERAL ADVISORY COUNCIL Head Office 1951 Change from 1950 §724 $-145 In 1951 there were four out-of-town meetings as compared to five in 1950. TRAVEL - OTHER 1951 Head Office Helena Branch $72,689 5.174. $77,863 Change from 1950 $+15,778 + 94$+15,872 Practically all of the increase is in Credit Control travel expense, which for 1950 totaled $5,137 in only four months of operation, whereas for the full year 1951 they totaled $21,074.* POSTAGE & EXPRESSAGE Original Shipments of F. R. Currency 1951 Head Office $35,903 Change from 1950 0+10,956 This increase was caused by higher postal rates and also because of additional shipments of currency to us to build up reserve stocks for emergency use. POSTAGE & EXPRESSAGE Redemptions of F. R. Currency Head Office Helena Branch 1951 Change from 1950 $ 9,980 3.202 $13,182 $+1,087 +1,4.04. $+2,491 Increase was because of increases in rates. POSTAGE & EXPRESSAGE - Other Head Office Helena Branch 1951 Change from 1950 $285,1144-8.738 $333,852 $+32,795 + 2.519 $+35,314- Increase postage and expressage costs, together with greater volume accounts for this increase. TELEPHONE & TELEGRAPH Head Office Helena Branch 1951 Change from 1950 $16,035 8,918 024,953 $+4,4-40 +1.228 0+5,668 The major increases were 01,500 in toll calls, $600 in telephone equipment rental due to increased rates and number of stations, and 02,400 in telegraph costs, including leased wire and commercial. PRINTING, STATIONERY & SUPPLIES 1951 Head Office Helena Branch Change from 1950 $109,076 9.068 $118,144 $+1,341 + 550 $+1,891 Increased prices account for most of this. INSURANCE Head Office Helena Branch 1951 Change from 1950 $16,989 1.703 $18,692 $+2,540 - 539 1+2,001 Increased benefits under the Hospital - Surgical Insurance plan, together with larger staff participation accounts for the major portion of this increase. There was also a revision of the portion assumed by the bank. TAXES ON REAL ESTATE 1951 Head Office Helena Branch $92,816 4.348 097,164 Change from 1950 $+2,560 - 106 3+2,454 The increase of 02,560 on Head Office premises was due to a change in the tax rate from 141 mills to 145 mills. DEPRECIATION ON BANK BUILDING & FIXED MACHINERY & EQUIPMENT 1951 Head Office Helena Branch Change from 1950 025,666 5.74-0 031,406 0 0 - Depreciation on buildings, including vaults, is at the of 2% per annum, and on fixed machinery and equipment at per annum of the gross book value. LIGHT, HEAT, POWER & WATER Head Office Helena Branch 1951 Change from 1950 024,649 — 2^76 027,125 0+ 998 + 151 0+1,149 The Head Office total of 024,649 covers m# Light & Power Heat Water Sewage 017,910 4,845 l,36o 526 REPAIRS & ALTERATIONS Head Office Helena Branch 1231 Change from 1950 081,552 11.840 093,392 0+34,183 + 9,994 0+44,177 The larger items of expense at Head Office during 1951 were: 1. Installation of new lighting system on the bank floor, 030 thousand. 2. Completion of new coin vault (Begun in 1950) on the balcony over our main vault, 037 thousand. 3. Painting, plastering, and washing walls and ceilings for general maintenance of building, 05 thousand. 4. Maintenance of elevators, 05 thousand, RENT Head Office 1951 Change from 1950 $4-8,598 0+43,213 The 1951 figure includes a full year*s rental of space in an adjacent building totaling approximately 047,000, whereas in 1950 only one and one-half month's rent of 05,400 was incurred. Also, on January 1, 1951, space was leased in the Wayzata State Bank, in connection with Security Files Program at an annual rental cost of 01,200. FURNITURE & EQUIPMENT - Purchases Head Office Helena Branch 1951 Change from 1950 025,223 3.351 0+11,509 + 1.686 028,574 0+ 13,195 The larger purchases during 1951 were one electric Hi-lift moto truck for use in the new coin vault, 02,982; desks, 03,4-21; chairs, 0713; typewriters, 02,366; files, 01,058; hydraulic power paper cutter, Ol,600; and a 1951 Chrysler four-door sedan, 03,24-4. FURNITURE & EQUIPMENT - Rentals Head Office Helena Branch 1951 Change from 1950 051,785 11.359 063,144. 0+15,126 + 1.915 0+17,041 This increase is chiefly caused by the installation of 58 additional I.B.M. proof machines in the Check Collection Depart ment during the latter months of 1951* BOARD ASSESSMENT 1951 Head Office 0103,700 Change from 1950 0+17,400 The Board of Governors early in each semiannual period, levies upon the Federal Reserve banks in proportion to the capital stock and surplus of each, an assessment sufficient to pay the esti mated expenses and salaries of its members and employees for the period, plus any deficit carried forward from the preceding period# The basis for our assessments for the years 1951 and 1950 are shown on the following page. First Half Capital Stock Surplus (Section 7) Surplus (Section 13b) 1950 m k $ 5,073,700 13,168,052 1.072.621 $19,314,373 Assessment Rate .00291 Total Assessment for First Half 56,200 4,709,650 12,493,859 1T072.621 §18,276,130 $ .00245 0 44,800 Second Half 0 5,235,450 13,168,052 1.072.621 019,4-76,123 0 4 ,896,600 Assessment Rate .00244 .00225 Total Assessment for Second Half 47,500 Capital Stock Surplus (Section 7) Surplus (Section 13b) Total Assessment for Year 103,700 12,493,859 1.072.621 018,4-63,080 0 A 41,500 86,300 FEDERAL RESERVE CURRENCY 1951 Original cost Cost/ of Redemptions 0127,550 7.695 0135,245 Change from 1950 0+13,748 + 77 0+13,825 The increase in original cost is due to greater volume and higher printing costs. ALL OTHER 1951 Head Office Helena Branch 077,534 __Lfl23. 081,649 Change from 1950 0+5,172 +1.049 0+6,221 A recovery of 09,900 from the Board of Governors for onehalf the cost (019,800) of producing a new bank movie in 1949 is reflected in the 1950 expense. Actually, the amount incurred in 1951 was less than fcr 1950, MISCELLANEOUS RECOVERIES 1951 Head Office Helena Branch 062,234 2f9Al 065,175 Change from 1950 0+15,B10 + 1.392 0+17,202 Itemization is: Head Office Coin Wrapping 0 7,578 Photostat 26 Rental of Furniture & Equip, 3,030 Rental of Space 37,335 Postal Money Orders 14,181 Monthly Letters 84 Fire Insurance Loss _____- 062,234 Helena Branch 0 992 368 1,193 388 02,9a Reimbursement of 014,181 was received for handling Postal Money Orders during the last half of 1951. This service was not a part of our activities in 1950, Rent received from government agencies for space, furniture, and equipment (deducted from total expense) totaled 040,365 during 1951 for the Head Office, an increase of 0985 compared with the previous year. -95- R E I M B U R S A B L E Account of E X P E N D I T U R E S 1951 Public Debt 0510,582 Federal Taxes 24,623 Currency Reports 38 Reconstruction Finance Corporation 1,028 Federal Farm Mortgage Corporation 61 Federal Land Banks 148 Federal Intermediate Credit Banks 30 Public Housing Administration 40 Commodity Credit Corporation 9,338 War Department 8,838 Housing & Home Finance Agency 22 Federal Home Loan Banks 130 Home Owners Loan Corporation 85 0554,963 Change from 1950 0+32,587 -11,749 + 17 - 9,329 + 22 - 104 mm- 15 - 2,624 + 8,752 34 + 121 .+.-..-42 0+17,686 -96-
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