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ANNUAL REPORT TO THE DIRECTORS IQ C A 1734 FEDERAL R E S E R V E B A N K OF M I N N E A P O L I S I N D E X Directors and Officers............................................ 1 Changes of Directors and Officers................................. 6 Monetary and Credit Development................................... 9 Assets.............................................................. 19 Liabilities........................................................ 21 Departmental and Other Comments; Check Collection............................................. 25 Currency and Coin............................................ 30 Currency Verification and Destruction....................... 35 Discount and Credit.......................................... 35 Duplicating.................................................. 37 Examination................................................... 37 Fiscal Agency.................................................. 4-0 Noncash Collection............................................ 46 Personnel...................................................... 46 Planning...................................................... 53 Protection.................................................... 54Public Services............................................... 55 Purchasing.....................................................59 Research.......................................................59 Reserves (Member Bank)........................................ .61 Safekeeping................................................... 63 Wire Transfers................................................ 64 Capital Accounts................................................... 66 Dividends........................................................... 69 Bank Premises...................................................... 70 Earnings............................................................ 72 Expenses............................................................ 78 HEAD O F F I C E DIRECTORS AND MEMBER OF FEDERAL ADVISORY COUNCIL DIRECTORS Leslie N. Perrin, Chairman, and Federal Reserve Agent Term Expires December 31 Class A Edgar F. Zelle, Chairman of the Board, First National Bank of Minneapolis, Minneapolis, Minnesota 1955 Harold N. Thomson, Vice President, Farmers and Merchants Bank, Presho, South Dakota 1956 Harold C. Refling, Cashier, First National Bank in Bottineau, Bottineau, North Dakota 1957 Class B Homer P. Clark, Honorary Chairman of the Board, West Publishing Company, St. Paul, Minnesota 1955 J. E. Corette, President and General Manager, Montana Power Company, Butte, Montana 1956 Ray C. Lange, President, Chippewa Canning Company, Inc., Chippewa Falls, Wisconsin 1957 Class C F. Albee Flodin, President and General Manager, Lake Shore Engineering Company, Iron Mountain, Michigan 1955 Leslie N. Perrin, Director, General Mills, Inc., Minneapolis, Minnesota 1956 MEMBER OF FEDERAL ADVISORY COUNCIL Joseph F. Ringland, President, Northwestern National Bank, Minneapolis, Minnesota 1955 - 1 - OFFICERS 0. S. Powell, President A. W. Mills, First Vice President E. B. Larson, Vice President M. B. Holmgren, Assistant Cashier Fiscal Agency Securities i Purchase and Sale Withheld Federal Taxes Commodity Credit Corporation Currency Verification & Destruction Government Coupons H. G. McConnell, Vice President R. K. Grobel, Chief Examiner Bank Examination Securities Exchange Act Otis R. Preston, Vice President Christian Ries, Assistant Vice President Carl Bergquist, Assistant Cashier Public and Bank Relations Announc ements Circulars Correspondence Press Relations M. H. Strothman, Jr., Vice President George M. Rockwell, Assistant Cashier Loans and Discounts Industrial Loans Regulation V Loans Sigurd Ueland, Vice President & Counsel, Secretary Legal A. W. Johnson, Assistant Vice President John Gillette, Assistant Cashier Check Collection Equipment Repairs Ordinary Mail Routing Symbol -2- OFFICERS (Contd.) A. R. Larson, Assistant Vice President Noncash Collection Registered Mail Securities! Safekeeping Vault 0. W. Ohnstad, Assistant Vice President Accounting: Expenditures Monthly & Annual Directors' Reports Building Duplicating Protection Purchasing Security Program Telephone Clement Van Nice, Assistant Vice President Currency and Coin M. 0. Sather, Assistant Cashier Accounting: General Books and Member Bank Reserve Accounts Transfer of Funds Foreign Exchange Reports Files and Old Records M. E. Lysen, Operating Research Officer Operating Letters Operating Manuals Planning: Efficiency Studies Equipment Office Forms Suggestions Space Studies F. L. Parsons, Director of Research Oscar Litterer, Business Economist Research Statistics Publications Library OFFICERS (Contd.) F, J. Cramer, Personnel Officer Personnel: Personnel Maintenance Retirement System Social Security Medical Education and Welfare Cafeteria Office Boys and Pages K, K. Fossum, General Auditor C. W. Groth, Vice President H. A. Berglund, Assistant Cashier Assigned to Helena Branch HELENA BRANCH DIRECTORS Carl McFarland, Chairman George R* Milburn, Vice Chairman Term Expires December 31 George R. Milburn, Manager, N Bar Ranch, Grass Range, Montana 1955 A. W. Heidel, Fresident, Powder River County Bank, Broadus, Montana 1955 Carl McFarland, President, Montana State University, Missoula, Montana 1956 J. Willard Johnson, Financial Vice President and Treasurer, Western Life Insurance Company, Helena, Montana 1956 Geo. N. Lund, Chairman of the Board and President, The First National Bank of Reserve, Reserve, Montana 1956 CHANGES IN DIRECTORATE Charles W. Burges, Vice President and Cashier, Security National Bank of Edgeley, Edgeley, North Dakota, passed away on February 27. served as a Class A director of this bank since January 1, 194-9* He had John W. Scott, President of the First State Bank of Gilby, Gilby, North Dakota, was elected to fill the unexpired term of Mr. Barges ending December 31, 1954-. Paul E. Miller, former Chairman of the Board of Directors of this bank prior to his nomination by President Eisenhower in July this year to serve a 14-year term on the Board of Governors of the Federal Reserve System, died on October 21. Leslie N. Perrin was designated as Chairman of the Board of Direc tors and Federal Reserve Agent to succeed Paul E. Miller and was reappointed effective January 1, 1955. At the annual election in November, Harold C. Refling, Cashier, First National Bank in Bottineau, Bottineau, North Dakota, was elected Class A director to succeed John W. Scott of Gilby, North Dakota. Ray C. Lange, President of the Chippewa Canning Company, Inc., Chippewa Falls, Wisconsin, was re-elected Class B director. Our Board of Directors re-elected Joseph F. Ringland, President, Northwestern National Bank, Minneapolis, Minnesota, as Member of the Federal Advisory Council for 1955. The Board of Governors redesignated Carl McFarland, President, Montana State University, Missoula, Montana, as Chairman and a director of our Helena Branch for a two-year term beginning January 1, 1955. -6- Our Board of Directors reappointed J. Willard Johnson, Financial Vice President and Treasurer, Western Life Insurance Company, Helena, Montana, and Geo. N. Lund, Chairman of the Board and President, The First National Bank of Reserve, Reserve, Montana, for two-year terms effective January 1, 1955. -7- CHANQES IN O F F I C I A L STAFF J. Marvin Peterson, Vice President and Director of Research, passed away on March 28. In August, Franklin L. Parsons, Associate Director of Research since January 14, 1949, was named Director of Research by our Board of Directors. Harold C. Core, Vice President in Charge of Personnel, retired on October 31 after 38 years of service at the bank. Effective November 1, Frederick J. Cramer was elected Personnel Officer. Effective January 1, 1955, three new officers were elected by the Board of Directors. They are Carl Bergquist, Assistant Cashier, Oscar F. Litterer, Business Economist, and Roger K. Grobel, Chief Examiner. -8 - MONETARY AND C R E D I T DEVELOPMENT Total spending by consumers, government and business in 1954- was only slightly less than adequate to provide full employment. The number of people looking for work, while lower than in 1950, was higher than in 1953 so that the actions of government and the monetary authorities were motivated to a large extent by a need to reduce unemployment. Lower spending by the U.S. government occurred in response to a lessened need for military expenditures associated with the end of fighting in Korea. Also, the military buildup of recent years is nearing its goal in terms of weapons, airplanes, etc., so that purchases of such items have slowed; too, the changing character of warfare has influenced military buying. Total business expenditures for capital were also slowed in 1954 despite higher spending for some important types of business capital. Lower spending for inventories gave rise to a liquidation of such capital while expenditures for producers’durable equipment, such as machinery, were also cut back from the 1953 rate. Partly offsetting these reductions in the private investment sector was an increase in construction which brought this type of spending to the highest level in history. More private housing units, as well as more industrial and commercial facilities, were constructed in 1954- than in 1953. The boom in construction ran counter to the experience of most industries and constituted a major source of strength in the econoiry. Not only were private expenditures for construction higher than ever before but so too were public expenditures for construction. New trans - 9- portation facilities, especially, were reflected by the gain from 1953 in public construction as highways and bridges were produced and improved to accommodate the growing number of automobiles on the roads. Schools, sewers, and other public wealth new to the landscape also contributed importantly to the quickened tempo of public works, CONSUMERS FARED WELL It is remarkable that despite the talk of economic distress which flooded the newspapers in 1954-, the standard of living in the United States— the goods and services taken by consumers— was undiminished. More goods and services, in fact, were consumed than ever before; but with an enlarged population the level of consumption was maintained at the 1953 rate on a per capita basis. The paradox of larger expenditures by consumers in the face of larger unemployment can be explained with reference to several developments, A reduction in federal taxes kept income after taxes up despite a drop of income before taxes owing to larger unemployment. Wage and salary rates moved upward so that income did not fall in proportion to employment. Also, unemployment insurance reserves were liquidated to finance benefits for unemployed workers, who received a larger total of such payments in 1954than in any other year. But additional spending by consumers and by state and local govern ments for construction was not sufficient to offset cutbacks by the federal government for national security and by business for inventories and durable equipment, so that total output in the economy declined from 1953 to 195A. Fewer people were required, of course, to produce less output. The inadequacy of spending for a full employment level of output -10- prompted the monetary authorities, in concert with the federal government, to formulate policy with a view to the stimulation of spending; for when spending grows, business sales also grows, and employers are more likely to hire workers. Spending by borrowers was encouraged with a substantial decline in the cost of credit which in turn was produced by a large addition to its supply; additional credit was supplied both by commercial banks and by savers through their intermediaries, such as insurance companies, savings and loan associations, mutual savings banks, and pension funds. Despite a weakened demand for some types of loans in 1954-, com mercial bank credit grew faster than in any year since the end of World War II; this growth supplied America with the largest stock of money in history. The earning assets which were acquired by banks through credit expansion were mostly U.S. government securities. In contrast, during 1953? loans constituted the most important addition to commercial bank assets. But the reserves of the banking system at the end of 1954- were lower than at the beginning. The ability to expand credit in the face of diminishing reserves arose from a reduction in the ratio of reserves to deposits which the banks are required by law to maintain. This reduction in reserve requirements was the most important measure taken by the monetary authorities to make credit more plentiful. In the summer of 1954-, reserve requirements against net demand deposits were lowered from 22 per cent to 20 per cent at central reserve city member banks, from 19 per cent to 18 per cent at reserve city member banks, and from 13 per cent to 12 per cent at country member banks. Requirements against time deposits were lowered from 6 per cent to 5 per cent at all member banks. Since member banks of the Federal Reserve System hold approxi-11- mately 85 per cent of the nation's commercial bank deposits, the lending power of the banking system was greatly augmented. Also, twice in 1954, the discount rate or cost of borrowing at Federal Reserve banks was lowered. In February the discount rate was dropped from 2 per cent to 1 3/4 per cent, in April from 1 3/4 per cent to 1 1/2 per cent. The reduction of discount rates was not, however, accompanied by more loan applications at Reserve banks; rather, the contrary was true, as member banks in need of cash had alternative sources of funds available to them at much lower interest rates than in 1953. The decline of interest rates which attended the expanding supply of credit last year is best illustrated with reference to the market for U.S. government obligations, the valuation of which does not reflect the variable credit risk carried by other securities. Government bonds of the longest maturity declined in yield from 2.93 per cent early in the year to 2.58 per cent in the summer, as lenders bid up the price, competing for a limited supply. Short term governments, 91-day bills that is, fluctuated even more widely in yield from 1.5 per cent early in the year to less than .7 per cent in the summer. The yield on other governments traced a similar path. Besides commercial banks, financial institutions in the market looking for investments included the intermediaries which channel the savings of individuals into the market for loans. The life insurance industry, for example, enjoyed such an inflow of cash that total assets owned grew faster than in 1953. The same was true for savings and loan associations for mutual savings banks and for pension funds. institutions the wherewithal of borrowers. American savers provided these to finance expeditions to the market in search The search, of course, helped to keep the market value of -12- loans (securities) high and the yields low. More important, financial intermediaries accomplished a gigantic transfer of funds from owners of money unwilling to spend, to spenders anxious for loans. Without such transfers, total spending would have suffered, and the problem of unemployment would have been aggravated. The identity of the net borrowers in our economy last year is fairly well known. Some lending and borrowing circumvents the principal financial institutions or is not publicized so that not all debt lends itself to accurate measurement. But the largest components of total debt in the United States can be measured. Such measurements indicate that total debt last year set a new record, as in other recent years. largest single borrower, of course, was the U.S. Treasury. national debt rose by almost $4- billion in 1954-. The Despite important cutbacks in federal spending, Treasury deficits continued as tax collections fell in response to reductions provided by the new tax law and in response to a shrunken base of taxable income. Legislation was passed during the year which lifted temporarily the $275 billion limitation previously imposed by Congress on the size of Treasury debt. U.S. government debt at the end of 1954 was not strictly comparable with the total of other years. To a greater extent than formerly, government agencies were operating on funds derived from their own borrowings rather than on Treasury funds. Except for this development, Treasury debt would be higher. In addition to Treasury debt and the debt of federal government agencies, state and local government debt was issued in large volume during 1954-. The increase in state and local debt outstanding was the largest in history, amounting to $7 billion, or 25 per cent more than the 1953 increase. This statistic, of course, is directly related to the record level of public -13- works, mentioned earlier. Individuals borrowing money to purchase homes added about the same amount to their debts as did state and local governments. In the first nine months of 1954 home mortgage debt was up by $6.3 billion; this compares with a gain of $5.9 billion in the comparable months of 1953. Near the end of 1954 the seasonally adjusted rate of home building was higher than in 1950 when more homes were built than in any other year. The construction of these new homes is one component of private capital formation which partly offset the decline in business inventories, another component. An immense stimulus was provided to home building when Congress passed the Housing Act of 1954. This law lowered the down-payment and amor tization rate requirements for government insured mortgage loans, thereby adding to the number of people who could qualify for such loans. Applications for mortgage insurance at the offices of the Federal Housing Administration subsequent to passage of the new legislation were more numerous than ever before. Also, government insured and guaranteed mortgage loans were more attractive to lenders last year than in 1953. While interest rates on alter native investments were falling, the return on FHA and GI loans was unchanged making such loans relatively more attractive to investors. In the capacity of consumers for items other than housing, indi viduals were less willing to incur debt last year. The total of consumer debt leveled off; it had been rising rapidly since the removal of Federal Reserve controls on such debt in May, 1952. Late in 1954, with the advent of a business recovery movement, consumer debt once again moved upward, possibly reflecting confidence that incomes could be maintained. Corporations, too, were competing for lendable funds in 1954. -14- While a lower volume of corporate stocks and bonds was marketed than in 1953} it is likely that when all the figures are in, they will show an increase in corporation stocks and bonds outstanding approximating the addition to state and local debts. It is not surprising to find corporate flotations falling when sales of the things corporations produce are falling. Too, the accumulation of business plant and equipment— the chief purpose of such flotations— has proceeded at such an uncommonly high rate since World War II that future needs for such capital may be less in proportion to total output than formerly. The demand for short term business loans weakened in 1954-. Much of this debt is incurred for inventory financing, and since inventory liquidation was the rule last year, there was a downward pressure on short term business debt. Reflecting this was the largest drop in commercial and industrial loans of banks since 194-9, when inventory liquidation was also the rule. With the major sources of supply and demand in the market for loans having been examined, the role of debt formation and monetary policy in the determination of spending is easier to appreciate. Without the stimulus to credit expansion provided by the Federal Reserve in 1954-, interest rates would doubtless have been higher with the result that spending financed by borrowings would have been discouraged. The reluctance to borrow when interest rates are high was demonstrated in 1953 when many debt financed projects were abandoned owing to the high price charged by lenders or investors for accommodation. Many such projects, delayed earlier, were undertaken in 1954- after the level of interest rates had fallen. Thus, the influence of the Federal Reserve System on the cost of credit served to discourage spending in early 1953, when the danger of inflation was great, and it served to stimulate spend ing in 1954-, when the danger of deflation and unemployment from lack of spending -15- was present. The level of unemployment which should be regarded as serious is a matter of controversy. The resolution of this controversy has serious im plications for monetary and economic policy, since the danger that additional spending will produce inflation rises as the proportion of the labor force which is unemployed falls. The remarkable stability of prices in America since a flexible mone tary policy was adopted in 1951 is a tribute to the effectiveness of the central bank in providing an environment where spending is neither so great as to depreciate the dollar nor so small as to induce serious unemployment. As 1955 opened, considerable evidence was present that output was rising, in contrast to a movement in the other direction a year earlier. More encouraging, the increments to output where not in the form of armament and such, which add nothing to the standard of living, but consisted of such things as autos and homes which make life more pleasant for everyone. It is doubtful that the transition from a more nearly warlike economy to a more nearly peacelike economy could have been accomplished with much less disturbance than in fact occurred. While Americans produced less in 1954-, they consumed more by allocating a lesser share of output to government and to private capital formation. NINTH DISTRICT STATISTICS ENCOURAGING The cutback in spending for defense and for other things was not without repercussions in the area served by the Minneapolis Federal Reserve Bank. But spending for the district's most important product— agricultural commodities— was well maintained with the result that economic conditions in the district compared favorably with the rest of the nation, -16- Sales at department stores, for example, moved up slightly in our area, while in the rest of the nation a slight decline was reported. Although the magnitude of these movements was not large, their direction does not suggest distress in the district. Nor do the year-end statements of our banks suggest distress. In common with banks throughout the nation, members of the Federal Reserve Bank of Minneapolis saw their deposits and earning assets rise to the highest level in history during 1954.. Also, the most recently tabulated profit and loss statements submitted by our members show the highest earnings ever. A sample of district banks report that a larger dollar volume of checks was drawn in 1954- than in 1953; but the same was true in the rest of the nation with the result that bank resources in the district grew at approx imately the same rate as was true elsewhere. The average amount of loans held during the year moved up by a greater percentage— compared to the previous year— at district banks than at banks elsewhere. The opposite was true for holdings of investment securities. This development should make for earnings' comparisons favorable to district banks. The demand for commercial and industrial loans was stronger here than in other districts; this strength accounted for much of the interdistrict difference in the behavior of total loans. Mortgage loans on residential property were granted in large amounts in the district, as well as in the rest of the country. The continued growth of mortgage loans at our banks is due in part to the high level of residential building activity reported by district communities. The dollar value of building permits issued by a sample of such communities was 15 per cent higher in 1954- than in 1953. Gains were reported -17- in every state except North Dakota. Permits are issued for many kinds of work, but residential construction makes up an important part of the total. Statistics of employment indicate that slightly fewer people were at work in the district during 1954- than a year earlier. On the iron range and at Duluth, employment suffered from a weakening in demand for products made of steel such as weapons and automobiles and farm machinery. The government's cutback in expenditures for national security was felt in the Twin Cities as a large number of men was laid off at the local ordnance plant. But since our area is much less industrialized than other parts of the nation, the unemployment problem here was less serious than in many other parts of the nation. Food processing, an important district activity, was aided by the large amount of products moving off the farms. The physical volume of grain produced was the third largest on record and cattle shipments may have es tablished a new record. Adverse weather conditions stunted agricultural production in a few district localities, but in general the weather was favorable. In con trast, serious damage to crops and livestock was produced by drought in other parts of the nation. Price trends were not the same for everything produced on district farms. Cattle and wheat averaged somewhat higher in price during 1954 than in the previous year. Most other commodities averaged somewhat lower in price. Incomes on dairy farms in particular were pinched as the price support level for milk products was lowered. Estimates by the U.S. Department of Agriculture place cash farm income for the district approximately 4 per cent lower in 1954- than in 1953. A larger drop was estimated for farmers outside the district. -18- MILLION DOLLARS MILLION DOLLARS 1600 1600 1400 1400 1200 1200 i I COMPARATIVE STATEMENT OF A S S E T S MINNEAPOLIS AND HELENA BRANCH COMBINED (Thousands of Dollars) Change from JL2r31.-:53. . 12-31-54 12-31-53 246,328 175,000 .-24*644 44-5,972 8,567 8,848 309,485 175,000 25.562 510,047 7,847 7,658 450 3,333 96 1,350 375 99 53,215 340,909 148,257 68.802 611,183 64,080 14-3,558 327,360 89,862 624,866 1 1 97,867 2,908 ... 622 . 101,402 106,767 4,831 1.258 112,856 Bank Premises Less Reserve Bank Premises - Net 2,462 .....1,45.5. 1,007 2,473 ____ 1*449. 1,024 Miscellaneous Assets: Fiscal Agency expense, reimbursable Interest Accrued Premium on Securities Deferred Charges All Other Assets Total Miscellaneous Assets 190 2,845 151 36 . . . . ...16 . . 3,238 136 3,278 2U 36 ... ...12. 3,681 + 1,184,097 1,269,804 - 85,707 As se ts : Cash Reserves: Interdistrict Settlement Fund Gold Certificates with F.R. Agent Redemption Fund - F.R. Notes Total Gold Certificate Reserves F.R. Notes of Other F.R. Banks Other Cash Bills Discounted Foreign Loans on Gold Industrial Loans U.S. Government Securities: Bills Certificates of Indebtedness Notes Bonds Total U.S. Government Securities Due from Foreign Banks Uncollected Items: Transit Items Exchanges for Clearinghouse Other Cash Items Total Uncollected Items Total Assets - 63,157 - ... .91,8 - 64,075 + 720 + 1,190 + 900 2,958 3 - 10,865 +197,351 -179,103 - 21.066 - 13,683 - 8,900 1,923 631 - 11,454 + 11 6 17 54 4-33 63 — 1 443 -20- MILLION MILLION DOLLARS 1600 1200 1000 ♦ y r+ V >\% % \V V%VVWT< >V < > W ^ V A V A V W A A W >tA < A ^ J W 4» A W A V X tA < ^ DOLLARS COMPARATIVE STATEMENT OF L I A B I L I T I E S MINNEAPOLIS AND HELENA BRANCH COMBINED (Thousands of Dollars) 12-31-54. Liabilities : Federal Reserve Notes in Circulation 12=21r52 Change from >12-31-H 583,511 644,292 -60,781 Deposits : Member Bank - Reserve Accounts U.S. Treasurer - General Account Foreign Nonmember Bank - Clearing Accounts Officers ’Checks Other Deposits Total Deposits 443,527 27,339 12,050 458 142 1*216 485,232 468,968 17,791 10,230 1,382 153 -25,441 + 9,548 + 1,820 924 11 - — .198 -15,606 Deferred Availability Itemss U.S. Treasurer - General Account All Other Total Deferred Availability Items 4,694 81.744 86,438 -21*665 = %321 2 211 129 4 289 159 2 78 30 246 356 Miscellaneous Liabilities: Unearned Discount Discount on Securities Sundry Items Payable Suspended Credits Total Miscellaneous Liabilities _____ 1 347 .... 500,838 4,857 96,522 ..... ...Z51 703 - 163 -10,084 - Total Liabilities 1,155,528 1,242,355 CaDital Accounts : Capital Stock Paid In Surplus Fund - Section 7 Surplus Fund - Section 13b Reserve for Contingencies Total Capital Accounts 6,360 16,918 1,073 ____ 4 >£1.8 28,569 5,952 16,219 1,073 4.205 27,449 + _._!2 + 1,120 1,184,097 1,269,804 -85,707 Total Liabilities & Capital Accounts -86,827 + + 408 699 - -22- MINNEAPOLIS FEDERAL RESERVE BANK Reflecting the continued growth of member banks in the Ninth District was a gain of almost 7 per cent in the capital stock account at the Minneapolis Federal Reserve Bank during 1954-. The stock is issued to member banks as they enlarge the amount of their capital and surplus. Notable among changes in the deposit accounts was a loss of member bank reserves which was only partly offset by additional balances in other accounts. As noted earlier, the reduction of reserve requirements made it possible for member banks to hold a larger amount of deposits with a lesser amount of reserves than formerly. Outstanding notes issued by the Minneapolis Federal Reserve Bank declined in amount for the second consecutive year in 1954. Federal Reserve notes constitute the most important component of the nation’ currency supply; s the retirement of these notes accompanied a reduced demand for paper money by the public last year. Also, legislation was passed in 1954 authorizing Reserve banks to pay out fit Federal Reserve notes without regard to the bank of issue. De posits of fit notes issued by other Reserve banks were thus employed to fill some requests for currency, whereas formerly these notes were returned to the bank of issue. By the same token, Minneapolis notes were paid out by other Reserve banks. Unfit notes are destroyed and charged to the bank of issue. A lower amount of securities was held at the end of the year than at the beginning. This change resulted from a System move to reduce bank reserves by liquidating investments. The expansionary effect of lower reserve requirements was thus partly offset. A shift from bonds and notes into certificates of indebtedness reflects a Treasury refunding exchange. Earnings from government securities were lower in 1954- than in -23- 1953 } partly because a lesser average amount of securities was held and partly because the average rate of return was lower. Similarly, earnings from dis counts and advances were lower because a lesser average amount was held than in 1953 and because the rate of interest charged for such accommodation was reduced twice early in 1954-» The continued high level of activity in the operating departments of the bank permitted only a small decline in expenses so that net earnings fell by almost as much as earnings from loans and investments. With a larger number of shares outstanding, dividends on our stock were somewhat higher in 1954- than in 1953. Payments to the Treasury as interest on Federal Reserve notes and transfers to the bank's surplus account were both reduced. -24-- DEPARTMENTAL AND OTHER COMMENTS CHECK COLLECTION During 1954- this department handled almost 100 million items. The total of 985613,84-4- checks functioned was more than the combined total of all items handled in 194-7 (46,54-2,000) and 194-8 (49,742,000). There was an over all increase of 5.5% in volume and 6.1$ in dollar amount over 1953. The tables below show the number and amount of items processed during 1954 as compared with 1953: Volume (000 Omitted) 1954 Twin City Checks Country Checks Government Checks Paper Card— Our District Card— Other Feds Return Items Postal Money Orders 1953. No. of Items Inc. or Dec. 14,112 58,840 13,916 54,423 + 196 +4,417 + 1.4 + 8.1 1,209 10,114 3,841 732 1,185 10,059 3,363 637 9.865 93,448 + 24 + 55 + 478 + 95 94 +5,171 + 2.0 + .5 +U.2 +14.9 - 1,0 + 5.5 98,619 Percent 1 Inc. or ' Dollar Amount (000 Omitted) 1254 Twin City Checks Country Checks Government Checks Paper Card— Our District Card— Other Feds Return Items Postal Money Orders $14,310,063 9,425,263 1,420,744 878,948 351,152 105,166 158.462 $26,649,798 1953 Dollar Amount Inc^ or Dec. $13,466, U 5 $+ 8,797,941 + 1,433,472 890,048 290,393 82,867 _ _ _ _ _ $25,120,253 Percent of Inc. or Dec. 843,918 627,322 + 6.3 + 7.1 12,728 11,100 + 60,759 + 22,299 ___________ 221 $+1,529,545 - .9 - 1.3 +20.9 +26.9 =__ 16 + 6.1 - - -25- The all-time record of checks handled on a single day for all classifications was set on December 8, 1954, when 477,380 items were func tioned. The previous year's one-day high on March 9, 1953, numbered 457,789 items which figure was exceeded three times in 1954. On December 14, 1954, the department processed 293,025 country checks for a new high total. The previous year's record made on November 17, 1953, for checks in this classification numbered 259,283 items, but that record was broken four times during 1954. A new record of 68,550 Treasury punch card checks on other Federal Reserve banks was established on September 8, 1954, breaking the former record of 61,525 items set June 8, 1953. Another new record included processing 3,425 return items on November 5, 1954, exceeding the former record of 3,156 items made Septem ber 15, 1953. The department continued to correspond with Ninth District par banks on delayed remittances for cash letters which so far has resulted in all Minnesota par banks remitting promptly. In addition, letters were written to 72 nonpar banks which were slow in remitting in an effort to reduce float and encourage good banking practices. The only items sent to nonpar banks are those received by us which are direct obligations to the government. Other efforts to reduce float, some of which were initiated in recent years, are to process remittances for cash letters to within a few minutes of the clearing hour; to give special handling to Twin City items received in mixed one-day deferred cash letters; to put cash letters for all Michigan banks and some Minnesota and Wisconsin banks directly on trains leaving Minneapolis about 5:00 p.m.; and to reduce to a minimum the number of payment drafts sometimes received in exchange not immediately available. -26- As a result of these efforts, the daily float carried by this bank has been reduced as indicated in the following tabJ.es Year No, of Items __ Handled_ _ Dollar Amount of Items 1951 1952 1953 1954- 70,249,64-8 85,817,961 93,4.4.7,385 98,618,593 $23,026,511,000 23,802,556,000 25,264.,4-98,000 26,649,798,000 Daily Average Float $25,600,000 19,700,000 16,700,000 14,700,000 The float reduction was accomplished despite an increase in the number of banks closed Saturdays, now numbering 176; the granting of oneday deferment instead of two days to Twin City banks on direct sent cash letters to the Federal Reserve Bank of New York containing New York City items deposited with us prior to 2:30 p.m.; the change to one-day deferment from two days on items drawn on St. Louis and Seattle banks; and the in crease in dollar amount and volume of items handled® IoB.M. accounting machines used to process United States Treasury card checks were reduced from five to four new tabulators, and the number of sorters was stabilized at five. The number of tabulators used was reduced because the new machines will tabulate 150 checks per minute, whereas the old machines would tabulate only 125 checks per minute. Addi tional equipment will be needed as usual during the peak tax refund period. The department continued to microfilm all outgoing country checks and return items as in previous years. The microfilms have not only proved to be of assistance to us in locating differences and tracing items in lost cash letters, but to banks, F.B.I., Secret Service and governmental agencies as attested by the numerous requests received for facsimilies and descrip tions of checks. New model microfilmers were installed during the year which take pictures at the rate of 500 checks a minute compared to the old speed of 350 per minute. These machines will microfilm 12 to 13 thousand -27- checks per 100 feet of film, whereas the older type would microfilm 9 to 10 thousand per 100 feet. Since 1952, the department has functioned with the following shifts: Day, Twilite, Nite, and Saturday. The department also maintains a constant training program of all its employees. Postmasters1 Deposits The Treasury Department designated this bank as a depositary for surplus funds of postmasters, and we have been accepting such deposits since July 2, 1954-. Deposits originally were received from postmasters located in the entire Ninth Federal Reserve District, but since the first of the year, we handle deposits only from Minnesota, North Dakota, South Dakota and Montana. The postmasters’deposits include checks, money orders, savings stamp albums, and currency, all of which are processed by this department after the currency has been removed. The Treasurer of the United States is credited daily for the account of the Post Office Department. The table below indicates the totals of such deposits received during the last six months of 1954- s Total No. Deposits Total Amount All Deposits No. Deposits Containing Cash 151,990 $101,324-,000 74-,635 Total Amount Cash________ $17,390,000 Check Routing Symbol During 1954- our campaign was continued for the incorporation of the routing symbol on all checks of par remitting banks. A recent survey to determine our volume growth for the year shows that the Ninth District average is 96%, an increase of U% over the previous year. The averages by -28- states in the Ninth District of checks bearing the symbol follow: Michigan Minnesota Montana 95% 95% 96% North Dakota South Dakota Wisconsin 9-4% 97% 9&% A survey of checks not bearing the symbol was conducted which resulted in over 800 letters being written directly to business concerns explaining the purpose of the symbol and asking cooperation in having it incorporated. Many personal calls by bank representatives of the check department were also made to banks and business establishments. Check Standardization Program During the year our aggressive campaign for check improvement and standardization was also continued. Our representatives assigned to promote this program have made personal contacts with business firms of all kinds— printers, banks and others. Checks were redesigned for many firms so that new checks would not be in the "problem check" category. Many member and par banks in our district have authorized us to handle certain nonbank items as cash items. We recently wrote to 455 banks for a revised list of such items which those banks had authorized us to include in our cash letters. Shortly before the end of the year we visited a sample number of banks and found them very responsive and willing to cooperate in converting nonbank items into checks. In 1955 our efforts will be intensified and it is hoped that eventually most nonbank items will be eliminated. In cooperation with the State Examiner of North Dakota, legisla tion similar to that enacted in Minnesota and Wisconsin has been proposed for presentation to the 1955 North Dakota Session of Legislature. Such legislation, if enacted, will require the use of checks rather than warrants -29- in disbursing municipal funds. In South Dakota, legislation was passed in 1953 affecting municipal warrants, but suggested changes for clarifying the present law have been made for presentation to the 1955 legislature. A similar proposal for legislation in Michigan was presented to the Michigan Bankers Association for sponsorship but no acknowledgment has been received as to any contemplated action. A sponsor was not available in Montana and action for legislation will have to be deferred. CURRENCY AND COIN Generally speaking, the work volume of the department during 1954was about the same as that for 1953. Outgoing payments of currency and coin to member banks were down about 6 per cent (in terms of dollar value) from a year earlier, but incoming coin shipments from member banks were up about 11 per cent and, while incoming currency shipments from members were down $21 million, or about 5 per cent, this reduction was almost entirely offset by the $17.5 million in currency received in post office deposits after we began accepting such deposits on July 1. The number of bills sorted and counted during the year was within .5 per cent of the 1953 figure. One operation which showed a sharp increase in volume for the second consecutive year was coin wrapping. This year's total of more than 96 million coins wrapped was 25 per cent above the 1953 total, which in turn was 39 per cent higher than 1952's volume. Probably the most important development of the year in Currency and Coin operations was the amendment in July of the Federal Reserve Act to -30- allow Federal Reserve banks to pay out the Federal Reserve notes of other Reserve banks without penalty. The purpose of this legislation was to effect a saving in the cost of handling and shipping of such notes, necessary previous to the amendment, because they had to be returned to the bank of issue. The estimated annual savings to the twelve Reserve banks resulting from the elimination of this requirement is $750 thousand and we estimate an annual savings to our own bank (not including the Helena branch) of $14- thousand in shipping charges and $7 thousand in labor. Total savings for the head office and branch should be over $24 thousand a year. Since the Ninth District gains Federal Reserve notes from other Federal Reserve banks over the amount of our notes lost to other districts to the extent of about $34- million annually (based on 1953 figures), the amendment can be expected to reduce our total note circulation. This actually happened during the last half of 1954- with our circulation dropping from $622 million on June 30 to $5^4 million on December 31, although note circulation for the twelve Reserve banks as a whole showed a small increase. The amendment also resulted in a piling up in our vaults of fitfor-use currency in large volume since we were now able to fill currency orders from member banks with notes which heretofore would have had to be returned to the bank of issue. In an effort to reduce this accumulation, we urged our member banks to use and order fit-for-use currency in prefer ence to new currency whenever possible. The legislation also accounted for the fact that our 1954- volume figures on fit notes of other Federal Reserve banks returned by us to them and our fit notes received by us from other Federal Reserve banks are not comparable with the corresponding 1953 figures. Except for possible minor amounts, these two categories will probably disappear from our statistical -31- reports for future years. The amendment also made it feasible for us to discontinue the shipments amounting to several million dollars a month of Federal Reserve Bank of Chicago notes direct to Milwaukee banks. Another important development in our operations in 1954- was the taking over on July 1 of post office deposits. On that date we began accepting deposits from more than three thousand Ninth District postmasters. Deposits sent to us by registered mail, most of which contain cash, were sent to the currency and coin department for removal of such cash before being sent to the check collection department for further processing. A special section was set up in our currency sorting division to handle such deposits, and two new four-pocket currency counting machines, designed for either denominational sorting or our regular unit-count sort, were pur chased along with other equipment to assist us in the job. later, a third such sorting machine was purchased,, Opening and processing the cash from these deposits has proved to be an operation which fluctuates quite sharply in its day-to-day volume. On an average, however, the currency and coin department handled about 750 such deposits containing a total of $135 thousand each working day. In addition to the three four-pocket currency sorting machines purchased for the post office deposit operation, two new eight-pocket machines were added early in the year and a third coin wrapping machine, purchased late in 1953> wns put into operation. In April we were given permission to remove from our vaults and send to the Treasury Department for destruction $21 million in unfit $10 and $20 Federal Reserve notes which we had held for about three years as an emergency currency reserve. In August we were allowed to destroy on our own premises $1,800 thousand in unfit $5 silver certificates, also -32- held as emergency reserve, and it is believed that permission will be given to destroy an additional $3,100 thousand in $1 silver certificates early in 1955. Destruction of the unfit reserve has been made possible by the building up of reserve supplies of new currency. Coin shipments from the mints in 1954- were much fewer but larger in dollar amount per shipment than in 1953, and the total received by us for the year was somewhat less. With a larger return from member banks, however, the coin supply was ample even during the late summer and fall for the first time in several years. The mints continued to ship new nickels and pennies to us by truck, a method of shipment used for the first time in 1953, and for the first time we received several shipments of silver coins via armored car service. Counterfeit bills discovered by our sorters totaled 90 for the year as compared with 72 in 1953, most of the increase representing $5 counterfeit Federal Reserve notes which were much in evidence early in the year. Finally a new, even though very minor, source of income for the bank emanated from the currency and coin department this year when we began selling our canceled postage stamps from incoming currency shipments to a local stamp dealer for a flat rate of $300 a year. Currency Paid Out m k l's and 2's 5's 10's 20's 50's 100's 500's 1,000's 5,000's 10,000's m i $ 30,903,000 $ 32,130,000 45,492,000 4-8,519,000 109,753,000 124-,375,000 106,993,000 115,316,000 5,035,000 5,615,000 18,005,000 18,989,000 94-3,000 637,000 1,221,000 1,253,000 0 0 30.000 _________________ g $318,375,000 $346,834,000 -33- Outgoing Shipments for Account of Member Banks Number Currency paid out Currency shipped to Helena Branch and for other F.R. Banks Coin paid out 1954 Amount Number 19,129 $318,375,000 20,201 $346,834,000 422 14.076 33,627 26,568,000 1 2’ 106.000 $357,049^000 631 15^136 35,968 42.583.000 12.875.000 $402,292j000 Fit-for-use F.R. Notes returned to other F.R. Banks 21.581.000 $378^630,000 J 331. Amount .55*42a*5QQ $457,790,500 Incoming Shipments for Account of Member Banks Number Currency Coin 21,797 ,4,493 26,290 Our fit-for-use F.R. Notes reed, from other F.R. Bks • Fit-for-use $l's received from Helena Branch Postmasters' deposits reed. 97.566 Total Cy. & Coin Reed. 123,856 1954 _______ Amount $392,010,000 $403,662,000 Number 1953 Amount 22,314 4,33? 26,646 $413,040,000 -lO^S^OQO $423,522,000 26.551.000 43,919,200 875,000 17.504.000 $44-8,592,000 750,000 0 . ..... _ A 26,64-6 $468,191,200 Number & Amount of Pieces Handled Currency 1954 Number Bills reed. & counted Bills rehandled Bills hand verified Amount 64,592,019 4,851,697 19.038.797 88,482,513 $429,708,000 85 040,000 , 19. 785,1,500 2 , $734,533,500 , Number M 64,855,637 6,865,569 16.418.834 88,140,040 Amount $456,961,856 97,450,960 207.837.325 $762,250,141 Coin 1953 Number Coins reed. & counted Coins rehandled Coins wrapped Amount Number 125,741,015 485,220 96.3Q8.000 222,624,235 $ 11 , 451,000 61,621 108,742,228 345,475 76.913.500 186 , 001,203 8.359.500 $ 19,872,121 Amount $ 9,649,224 110,467 6.227.325 $ 15,987,016 -34- Amount of Coin Received From U.S. Mints 1254 $1,74-3,500 '*3%a . $1,982,900 Number of Unfit Bills Forwarded to Treasurer of the United States, Washington, D.C., and delivered to the Destruction and Verification Unit at Federal Reserve Bank of Minneapolis for redemption_________________________________ Number of pieces mk 28,522,890 2252 30,959,201 CURRENCY VERIFICATION AND DESTRUCTION Last spring the operation of our currency verification and destruc tion unit was turned over to the noncash department and has continued under that supervision during the year. Our volume is light— less than 2 million pieces a month, and for that reason the noncash collection clerks could be used for the operation. Ten of them were assigned to the unit with two clerks working each day on rotating shifts. Last fall a currency shredder was installed to destroy the cur rency by shredding and burning. Previously the bundles of canceled currency were burned in the incinerator. During the year the unit verified and destroyed 21,144,300 bills. DISCOUNT AND CREDIT A total of 61 banks in head office territory borrowed an aggre gate of $879,580,500 in 1954-, all of which was secured by United States government obligations. All but $55,630,500 of this amount was borrowed -35- by Twin City banks. to 63 banks. Advances on governments in 1953 aggregated $2,735,94-3,000 Nine banks in Montana borrowed $66,320,000 through the Helena Branch in 1954, $51,746,000 less than in 1953. The highest amount outstand ing to member banks in this district was $49,095>000 on April 16, 17 and 18, 1954-. This figure included the borrowings of 21 banks. Our bank's participation in foreign loans on gold in the year totaled $8,100,000. Only three applications for industrial loans under Section 13b of the Federal Reserve Act were received during the year. aggregated $250,000. These applications Two of the applications were declined and one for $125,000 was approved. The total amount of industrial advances (current) outstanding on our bank's books on December 31, 1954-, was $96,070.86. These funds were being utilized by (l) a wholesale and retail grocery business, (2) a manu facturer of automotive parts and (3) a packer and shipper of fresh vegetables. In 1954, advances totaling $24-,914,816.19 were made by financing institutions under Regulation V; $17,540,700 advanced was guaranteed by the Department of the Air Force, $1,688,4-50 by the Department of the Army, $5,260,666.19 by the Atomic Energy Commission and $4-25,000 by the Department of the Navy. Loans actually outstanding under guarantee agreements at the year end aggregated $400,000 for the Air Force (guaranteed portion $360,000)j $367,000 for the Army (guaranteed portion $290,370)j and $5,260,516.19 for the Atomic Energy Commission (guaranteed portion $4,997,490.38). Three applications for guaranteed loans totaling $7,846,000 were received during 1954, one of which was approved, one declined and one with drawn by the applicant. -36- One guarantee agreement for $7,100,000 was executed in 1954. DUPLICATING Total production by all duplicating equipment for the past two years is given in the following table: 1954 Number of Forms Machine Ditto Mimeograph Multigraph Multilith Photostat Total 689 2,120 924 2,199 _____ 2.783 5,932 1953 Total No. of Copies Run Number of Forms 43,373 513,890 490,410 3,907,980 660 2,766 1,037 1,366 _________________ 4,958,436 5,829 Total No, of Copies Run 63,234 676,726 560,310 4,845,455 4.079 6,149,804 These figures show a substantial decrease in work produced, due in a large part to the increasing use of snap-out and continuous forms, which, of course, are purchased from outside firms. As a result of this decreased volume, the number of clerks in the department was reduced during 1954 from a total of 16 early in the year to 13 at the end of the year. The major portion of the work was again done on the multilith machines, because of their greater efficiency. Work of the addressograph section in 1954 was slightly less than the previous year— about 4,400 envelopes and 4,200 miscellaneous forms being addressed daily. EXAMINATION There were on December 31, 1954, one hundred thirty state member banks in this district. A regular examination of each of the state member banks was made and a second examination was made of two of those banks. -37- As of the end of the year, thirteen state member banks were ex ercising trust powers. their trust powers. Nine other state member banks are not exercising Sixty-three national banks held permits to exercise full or limited trust powers. The examinations by this department in the various states were as f ollows: State Banks Michigan Minnesota Montana North Dakota South Dakota Wisconsin 1428 U5 2 27 16 132 Holding Company Affiliates 2 = 2 There are four holding company affiliates which are residents of this district. They are Bank Shares Incorporated, First Bank Stock Corpora tion, Northwest Bancorporation, and Fidelity Securities and Investment Company, Inc. It is the policy to examine the three first-mentioned holding company affiliates biennially. No applications for membership in the Federal Reserve System were received from state banks. Four calls for a report of condition of each member bank were issued. All member banks were also required to submit semiannual reports of earnings and dividends. One application for fiduciary powers was received, from the American National Bank, St, Cloud, Minnesota, but that application was with drawn. Application of the Northfield National Bank, Northficld, Minnesota, to relinquish its fiduciary powers was approved. Of the two applications for national charters referred to us by -38- the Board of Governors of the Federal Reserve System and which were pending at the end of 1953, one application was abandoned and the other, with preliminary approval by the Comptroller of the Currency, is still pending. Five applications for national bank charters were referred to us during 1954- by the Board of Governors for recommendation. Charters were issued to two, one has the preliminary approval of the Comptroller of the Currency, and the other two applications are pending. One state member bank submitted for approval an application for establishment of a branch. The application was conditionally approved by the Board of Governors but the branch has not yet been established. One hundred ninety-two applications for adjustment of holdings of Federal Reserve Bank stock were received from member banks. issued to two new members. Stock was One application for total surrender of stock was received. Bank Changes in 1954 (Per Stock Book Records) Total number of member banks in the district 1/1/54 National banks organized State banks admitted 472 2 __0 4-74 National banks absorbed by nonmember state banks __1 Total number of member banks holding stock in the Federal Reserve Bank of Minneapolis at the end of the year 473 The total membership at the close of the year was divided into 343 national banks and 130 state banks. -39- FISCAL AGENCY Each week during the year 1954, the Treasury Department offered Treasury bills for cash and in exchange for maturing bills. We processed tenders as follows: Number Received Subscribers 4,304 5,689 Amount Accepted $798,839,000 $751,478,000 There were also two offerings of Tax Anticipation Treasury bills during the year for which we processed tenders as follows: Bills Dated 3/22/54 4/27/54 Due Number Received 6/24/54 6/18/54 Subscribers 79 151 232 65 151 218 Amount Accepted $19,858,000 56.086.000 $75,944,000 $17,528,000 30.478.000 $48,006,000 The lowest average yield on the bills during the year was .616% on the bills dated June 10, 1954. The highest average yield during the year was 1.336$ on the bills dated January 14, 1954. The Treasury Department made the following cash offerings of United States Government securities, other than Savings bondsi Issue Subscriptions for Banks Subscriptions for Others Amount Allotted (000 Omitted) 1 7/B% Treasury Notes, Series A-1959 Dated 5/17/54, Due 2/15/59 642 189 $164,354 $37,603 1$ Treasury Certificates of Indebtedness Series C-1955 (Tax Anticipation) Dated 8/2/54, Due 3/22/55 334 39 167,254 70,020 1 5/8$ Treasury Notes Series B-1957 Dated 10/4/54, Due 5/15/57 653 91 162,781 87,476 1,629 319 $494,389 $195,099 -40- The Treasury Department during 1954- offered the following securities in exchange for maturing or called securities; Issue Subscriptions for Banks Subscriptions for Others Allotted in Full 562 164 $ 96,390,000 1,682 543 262, 884,000 1 l/&% Treasury Certificates of Indebtedness Series B-1955 Dated 5/17/54, Due 5/17/55 671 181 73.809.000 1 7/8% Treasury Notes of Series A-1959 Dated 5/17/54, Due 2/15/59 254 73 55.943.000 1 l/8^ Treasury Certificates of Indebtedness Series D-1955 Dated 8/15/54, Due 8/15/55 355 173 50.054.000 2 l/8$ Treasury Bonds of I960 Dated 8/15/54., Due ll/l5/60 754 165 108.176.000 10 28 1,817,000 4-01 136 54.875.000 1,185 467 192 3 10.000 5,874 1,930 $896 , 258,000 1 5/8% Treasury Certificates of Indebtedness Series A-1955 Dated 2/15/54, Due 2/15/55 2 \/2% Treasury Bonds of 1961 Dated 2/15/54-, Due 11/15/61 1 1/8$ Treasury Certificates of Indebtedness Series D-1955 (Additional Issue) Dated 8/15/54, Due 8/15/55 1 l/4 % Treasury Certificates of Indebtedness Series E-1955 Dated 12/15/54, Due 12/15/55 2 1/2% Treasury Bonds of 1963 Dated 12/15/54, Due 8/15/63 . -41- The Commodity Credit Corporation during 1954 made the following cash offerings of Certificates of Interest, through the Federal Reserve banks, for which we received and allotted subscriptions as follows: Subscriptions from Banks Issue Subscriptions from Others Amount Allotted 2 1/8 % CCC Certificates of Interest Dated 2/2/54, Due 8/2/54 202 $105,038,000 $21,921,000 1 5/8)6 CCC Certificates of Interest Dated 11/12/54, Due 8/1/55 300 154,949,000 45,009,000 502 $259,987,000 $66,930,000 The Reconstruction Finance Corporation during 1954 offered, for cash through the Federal Reserve banks, 3 l/2z> Certificates of Interest dated April 5, 1954, in the Reconstruction Finance Loan Pool. We received and allotted subscriptions as follows: Subscriptions from Banks 193 Others Amount Allotted - $7,750,000 $4,095,000 As of December 31, 1954, 1,260 banks with 110 branches and 33 other organizations, in our district, were qualified to act as paying agents for Series A through E Savings bonds and Armed Forces Leave bonds. Two hundred eighteen of these agents are also qualified to pay matured Series F and G bonds. During 1954 these agents paid bonds as follows: Series A through E and matured F and G Armed Forces Leave Bonds paid by agents and our bank Pieces Redemption Value 2,314,988 $161,728,187.86 2,281 475,336.50 Effective as of August 1, 1954, the Federal Reserve banks do not verify the transmittal letters submitted by paying agents covering paid Savings bonds. We make immediate payment to the paying agent for the total -42- amount as shown on the transmittal letter. Each transmittal letter and the bonds pertaining thereto are then shipped to the Chicago Branch of the Treasury Department for processing. After verification, the department makes all adjustments for errors in the agents' transmittal letters through the Federal Reserve Bank of the district in which the agent is located. The paying agents in our district were reimbursed for paying Savings bonds of Series A through E and Armed Forces Leave bonds, during the first three quarters in 1954, in the amount of $233,282.10 for 1,691,817 pieces. Paying agents are not reimbursed for paying matured Series F and G bonds. During the year, we paid United States Savings bonds submitted to us for payment directly to the owners as follows: Series Pieces A through E, J and matured G (Paid before release of registration) A through K (Paid after release of registration) Redemption Value 124,526 $68,868,329.28 Maturity Value 23,787 $20,238,855 As of December 31, 1954, there were 1,4-01 qualified issuing agents for Series E Savings bonds in this district, of which 1,282 were banks. These issuing agents were consigned bonds and reported sales as follows: Shipments Pieces 10,252 1,381,615 Number of Sales Reports Received 22,479 Pieces Issued 1,318,100 Amount (Maturity Value) $194,741,475 Amount (Issue Price) $137,926,726 -43- Our bank issued United States Savings bonds during 1954- as follows: Series No. of Applications No. of Pieces Issue Price E H J K 300,182 19,892 3,181 5.011 328,266 313,401 4-1,939 10,673 10.604 376,617 $10,069,801 46,566,500 13,448,988 28.587.000 $98,672,289 During the year 1954 we reissued for all purposes 135,088 Savings bonds with a maturity value of $29,368,230. Our safekeeping department handled United States Savings bonds during the year 1954 for the account of individuals and organizations other than banks as follows: Number of pieces received for safekeeping Number of pieces released from safekeeping Total pieces held in safekeeping as of 12/31/54 20,912 25,765 222,598 As of December 31, 1954, 1,180 banks in this district were quali fied as "Depositaries for Public Moneys". Number of active Treasury Tax and Loan Accounts, Class A Number of active Treasury Tax and Loan Accounts, Class B Aggregate total deposits for the year Total deposits in Treasury Tax and Loan Accounts on 12/31/54 942 75 1,017 $943,407,101.18 $111,734-,972.50 On December 31, 1954, there were 714 banks in this district quali fied to act as "Depositaries for Federal Taxes". During 1954 we received from those qualified depositaries and direct from taxpayers a total of 218,216 depositary reccipt cards representing deposits for the following taxes: Withheld Income and Federal Insurance Contributions Act Taxes Railroad Retirement Act Taxes Excise Taxes $385,508,298.93 22,447,714.44 68.812.583.84$476,768,597.21 -4 4 - The Fiscal Agency occupios space on the bank floor, in the sub basement and the annex. There were 89 employees in the department on December 31, 1954, as compared with 103 employees on December 31, 1953. Commodity Credit Corporation There are 871 agencies in this district qualified to make CCC loans and to service such loans. According to the Minneapolis office of the Commodity Credit Corporation, 304 of these agencies were active in 1954. We paid 257,239 sight drafts drawn by these agencies during the year. We handled 118,639 collection items for the CCC. We issued 41,953 Treasury checks on disbursement schedules received from the CCC totaling $725,697,996.47. We cleared 103,299 checks totaling $290,207,300.32 deposited by the CCC lending agencies. There were 3 full-time employees in this division as of December 31, 1954. Reconstruction Finance Corporation Commercial banks service all pool loans under $500,000. When the banks receive payments for the principal and interest on these loans, they remit to us and we credit the payments to the Federal Reserve Bank of Chicago as Fiscal Agent of the RFC, During the year 1954, we received 744- such loan payments totaling $922,246.49. -45- NONCASH COLLECTION Number City Collections* Country Collections Security Collections Government Coupons (direct and indirect) Change from 1953 Amount (000 Omitted) Amount Change from 1953 (000 Omitted) 912,771 34,844 205,076 +51,828 397 +30,551 $790,239 24,313 16,011 $+97,313 - 5,227 + 2,289 264,079 -68,990 32,140 494 * Includes grain drafts PERSONNEL The employment picture in 1954 showed a noticeable change as com pared to the last few years. While the number of applicants in the labor market was not overly abundant, we were fortunate in obtaining good clerical help and were more selective in filling openings as they occurred. The total number of employees on our staff showed a slight decrease due to less turnover and the fact that some of the work previously performed here for the Treasury Department is now being handled at the Federal Reserve Bank of Chicago, The total number of employees at the end of the year was 617 as compared with 649 at the end of last year. totaled 234 and accessions totaled 202. Separations for the year The following chart shows the ins and outs for the last four years: -46- This chart indicates a decrease in turnover as compared to the previous year. The following chart shows the relationship between the number of employees on the staff and the per cent in each length of service group. One hundred and thirty-one employees, representing 22% of our staff, have been with us 15 years or longer. -47- As in previous years the Personnel Uevelopment Committee continued to recommend employees for participation in various schools and training programs. The following is a summary of Personnel Development activities in 1954. I - Outside Educational Programs The bank sent two additional men to the Central States School of -4 8 - Banking at Madison, Wisconsin, and one additional nan to the Graduate School of Banking at Rutgers University in 1954, making total enrollment in the three-year courses at the two schools six and three, respectively. We also had one man enrolled in the second year class of the Agricultural Credit School at Iowa State College. This school offers a two-year course. Our Personnel Officer was enrolled in a two-weeks' course in Personnel Administration conducted by the National Industrial Conference Board. In addition to regular American Institute of Banking classes, atten dance at which is entirely voluntary, the Personnel Development Committee made specific recommendations for certain A.I.B. classes with the result that seven employees completed a Problems of Supervision course, four completed a Job Instruction Training course, and five completed a course in Effective Bank Letters. Seven employees were enrolled in a four months' course in letter writing offered by the Hower Letter Improvement Service of St. Louis, Missouri. Four employees completed the Dale Carnegie course in Effective Speech and Human Relations during the year, and two economists from our research depart ment are attending University courses relating to their work. auditors were enrolled in an auditing course at the University, Four of our Two of our employees also attended a one-day work simplification clinic at the University. II - In Bank Training Programs One employee from our Helena Branch spent two weeks training at the Head Office during the year, being enrolled in our Short Course in Central Banking for one week and assigned to other training for the second week. One of our officers spent four weeks at the Helena Branch for training purposes and as vacation relief. -4 9 - One of our senior employees spent the entire year on a training assignment traveling with the Board of Governors' examining staff. In addition to these assignments, the Personnel Development Com mittee followed its regular practice of recommending to the Personnel Committee the names of employees who, it was believed, would benefit from special assignments such as committee work, calls on banks as field repre sentatives, tour guides, Short Course instructors, and work for such organizations as the Red Cross and Community Chest. Ill - Commercial Bank Training During 1954- eight of our senior employees were sent to commercial banks for a week's training in commercial bank procedures and operations. Of these, six had previously spent a week or more in other banks and two were assigned for the first time. During April the department head and administrative assistant attended the 12th Annual Industrial Relations Conference at the University of Minnesota, Center for Continuation Study. The theme of the conference was "Twenty Year Box-Score of Industrial Relations". The seventh annual high school Counselor - Coordinator Luncheon was held in February. Topics discussed at this meeting included starting rates for June graduates, rates paid for cooperative part-time high school students, and the number of high school graduates who will enter the labor force in June. As we have done in previous years, we employed six part-time cooperative high school students in the fall. Our experience in the last few years concerning A.I.B. membership and enrollments has shown a steady increase. including 35 new members. various classes. In 1954- we had 260 members, Of this number there were 137 enrollments in the The 52nd A.I.B. National Convention in Los Angeles was -50- attended by three employees of the bank staff as delegates. Also, two employees from the research department represented the Minneapolis Chapter at the convention in a debate contest against winners from other sections of the country. They were selected to represent this area by virtue of their debate victories over the other chapter cities in this area. One of our debate representatives was also nominated to the A.I.B. National Debate Committee. In order to keep abreast of salary levels in other local organiza tions as compared to similar positions in our firm, we have continued our practice of having representatives of the personnel department attend meet ings of personnel organizations such as National Office Management Associa tion, Twin City Bank Personnel Group, and Personnel Surveys, Inc., and also participated in salary surveys with these local organizations. The Vice President in Charge of Personnel and the department head attended the Annual Conference of Personnel Officers of the Federal Reserve Banks which was held in Richmond, Virginia, on May 3> 4 and 5. Topics on the agenda included the current employment situation and trends, salaries, hours and overtime, fringe benefits, training and testing, and suggestion plans. In connection with salaries, method and time of payment were discussed. Of the twelve Federal Reserve banks, six pay by cash and six by check; six pay on a semimonthly basis and six biweekly. We have continued our policy of paying semimonthly by cash. There were two major changes in our vacation policy during 1954-. (l) An extra day of vacation is granted when, during an employee's vacation period, there falls a holiday which reduces the employee's work week by one day had he not been on vacation. (2) If an employee in good standing, who is entitled to a vacation under the existing vacation schedule, resigns before -51- taking the vacation to which he is entitled, he receives in lieu thereof pay for each month of service (or major fraction thereof) subsequent to November of the preceding year on the following basiss Employee entitled to Two weeks Three weeks Four weeks Davs pnv in lieu of 1 per month 1 1 / 2 per month 2 per month If an employee elects to split his vacation, the portion of vaca tion taken is deducted from the number of days figures on the above basis. Because of the continued interest shown by mothers of our new employees at the Mother and Daughter Luncheons, they were continued in 1954-. During the year, 33 mothers attended the luncheons with a tour of the bank following. A picture was taken of the mother and daughter in the daughter’ s department and a print was sent to the mother, A two-colored illustrated manual, "You and Your Job at the Fed", was prepared and distributed to employees. Purpose of the booklet was to give the staff a better understanding of what the bank seeks to ac complish in carrying out its personnel program and how it affects each employee. It outlines the bank's personnel policies, benefits, and educa tional and social activities and specifically explains credit union facili ties, suggestion plan, recreation room, library, twenty year club, formal sick leave plan, vacation policy, and other practices of interest to staff members. For several years we have had a group polio policy at the bank; however, this year the staff was offered a new Group Special Diseases Policy. This new plan, providing a $10,000 maximum reimbursement, covers the employee and each eligible member of his or her household in cases of polio, diptheria, spinal meningitis, smallpox, leukemia, encephalitis, and tetanus. Family -52- coverage under this plan costs $10.80 and individual coverage $5.4-0 for two years. One hundred and seventy-four employees took advantage of this Group Special Diseases Policy. Ninety-three employees had claims under Blue Cross in the first nine months for a total of $13,310.81. Of this amount, $11,461.4-0 or 86% was reimbursed to the employees. At a Presidents' Conference held in the latter part of the year, it was agreed to proceed with the plan under which retired employees may pay for Blue Cross-Blue Shield hospital and surgical coverage on a group basis by authorizing monthly deductions from their retirement allowance. retirees who are eligible to participate. We have 4-5 Even though this plan will not become effective until April 1, 1955, arrangements have been completed with our local Blue Cross-Blue Shield representative, and eligible retirees have been contacted by letter and furnished authorization and enrollment forms. For the 18th year we continued our employee suggestion system. This year, 4-9 suggestions were submitted, 16 were accepted and $153 was awarded. PLANNING During 1954-, the planning department made extensive surveys of the production and unit costs of all principal departments. In those few instances where the production per man hour or unit costs were not favorable in compari son with other Federal Reserve head offices, it was determined that adequate reasons were evident for such relatively higher costs or lower production per man hour. The planning department assisted during the year in the installation of new equipment and systems in the general ledger and proof divisions of the -53- accounting department, the government check division of the check collection department, the currency verification and destruction division of the non cash collection department, and the handling of post office deposit operations. Extensive surveys were conducted for System Committees and informa tion, comments and suggestions furnished in response to the questionnaires received. A detailed analysis was made of the report of the Joint Committee on Check Collection System to the American Bankers Association, Association of Reserve City Bankers and the Conference of Presidents of the Federal Reserve Banks and comments, criticisms and suggestions were submitted to the Committee on Collections and Accounting of the Presidents' Conference. Numerous studies of space requirements of various departments have been made and plans for conducting operations during the period of construction in restricted space within the bank building and in rented space are now being considered. The planning department considers employees' suggestions and makes recommendations to the Personnel Committee for the acceptance or rejection of such suggestions. Forms are reviewed prior to purchasing and new forms are designed by the department. The department supervises the distribution of operating letters and supplements to the banks. PROTECTION Three guards left the employ of the bank during 1954, and two new guards were hired to fill two of these vacancies. As of December 31, 1954, the personnel of the protection department was as follows: 1 superintendent 4 sergeants 23 guards (one acting as chauffeur) -54- The information clerk issued 1,792 passes to outsiders who wished to visit upper floors of the bank during the year; 1,567 work cards were issued to outside workmen, canteen employees, etc. At the request of the bond department, 627 guard escorts were furnished. One hundred three were admitted by memorandum and after-hours passes turned in to the guard office after hours. PUBLIC SERVICES The objective of the public services department of the Federal Reserve Bank of Minneapolis and like departments in all other Federal Reserve banks, is to promote a better understanding of the Federal Reserve System. The progress toward the achievement of this objective cannot be measured statistically but the experience of this bank has been that the activities engaged in by the public services department have a general acceptance both by bankers and by the general public. Necessarily, most of the work of the department is with bankers of the district. During 1954-, no new programs were embarked upon, but activities previously tried were again used. On April 26 and 27, the second Assembly for Member Bank Directors and Officers was held. To this meeting, as to the original meeting held in 1951, were invited the managing officers and selected directors of member banks. A final analysis of the attendance figures indicates that about 20 per cent of the audience were directors which percentage is encouraging but still calls for additional effort in future years to attract more directors to these meetings. The program sought to bring to the attention of the audience -55- current economic and monetary problems and from the comments made by those who attended, the remarks of the speakers were well acceptcd. This bank's most direct effort to acquaint representatives of our member banks with the work of the Federal Reserve continued to be the Short Course in Central Banking. During 1954, nine sessions were held for 150 representatives of member banks. At the close of the Short Course season in May, a questionnaire was sent to all the 1954- registrants and the replies to this questionnaire indicate that after seven years the personnel of our bank who show the registrants the work of our operating departments continue to hold the attention of the groups. Other meetings sponsored by this bank included the Money and Banking Workshop held the first Saturday in May and the Examiners' Conference held the last of November. These meetings, while not strictly for the banking fraternity, sought through the content of their program to bring to the atten tion of their audience current monetaiy and economic problems. As in past years, the Workshop was attended by teachers of money and banking in the colleges of the Ninth District. The Examiners' Conference was attended by the working force of the FDIC, the national bank examiners, the banking departments of the states in the district, and our own examining force. Both of these meetings seem to have reached an attendance average of between 100 and 120 each year. Continuing our effort to acquaint the men in our bank with the bankers throughout the district, an attempt was made to have each bank in the district called on at least once during the year. Unfortunately, death, resignations, illnesses, and pressure of work by those assigned to call on banks resulted in two sections of the district not being visited in 1954. In addition to calls on banks, our bank is represented at the annual convcn- -5 6 - tions of all the state associations, at as many of the group meetings as possible, and at meetings of national associations of bankers. Other work of the department concerns itself more with the general public than with bankers. Again, however, any effort used in connection with services offered by our bank is directed toward the banks in the first instance rather than toward schools or business interests. Our movie, "The Federal Reserve Bank and You", is undoubtedly the best medium used by this bank in the promotion of an understanding of the Federal Reserve. Originally released in 1951, a concerted effort was made then through banks and schools in the Ninth District to have the film shown in schools and to other interested groups. After this initial effort, no other definite promotion of the film was made until in the spring of 1954when the department began writing to the bankers in all areas in which the film had not been shown in the last two years. The response to this effort was immediate and requests for the use of the film shewed a decided upturn. At the end of December 1954-, the film had been shown to Ninth District audiences totaling 233,832, a gain of 33?027 persons during the year. figure compares with an audience total of 5*385 for the year 1953. This In addi tion, the department received requests for other films included in our library. Most of the requests are for the film produced by the Encyclopedia Brittanica for the Board of Governors entitled ’ 'The Federal Reserve System". This film was shown to audiences totaling 4,076 persons during 1954. During the school year, the film produced by Richmond entitled "Your Money's Worth" is in constant demand by college teachers of economics. We also receive occasional requests for the Cleveland film, "A Day at the Federal Reserve Bank of Cleveland” and the Richmond film, "Soil Conservation Pays", , In connection with movies, the opening of television stations in -57- cities throughout the Ninth District resulted in requests by some of these stations for films suitable for telecast. After checking the legal techanicalities, ve found that our film, "The Federal Reserve Bank and You", could be and was released to various television stations for use. Unfor tunately, we were not able to offer these stations a selection of films inasmuch as the other films in our library had not been cleared for use by commercial broadcasting stations. Throughout the years, the bank has on repeated occasions offered to assist instructors in their teaching. One of our publications which has appealed particularly to mathematics instructors in high schools is the booklet, "Your Money and the Federal Reserve System". During the year, we filled 747 requests for 9,468 copies of this booklet. In addition, we mailed to schools and interested individuals 2,766 copies of the revised edition of "The Federal Reserve System, Its Purposes and Functions". The research specialists and officers of the bank have over the years achieved a reputation of having at their disposal facts on the economic situation not generally available to the general public. As a result, representatives of our bank are called on to address bankers and other groups. During 1954, representatives of this bank spoke to 116 audi ences totaling 12,756 persons. In addition to activities which might possibly be classified as educational, the public services department is called on quite often tr assist banks in other ways. During recent years, many of the banks in the district have become more public-relations minded and in an effort to improve their relations in their particular area have held open houses, participated freely in local celebrations, and cooperated with their local school groups in bringing to the people in their area a better understanding of banking, -5 8 - In an effort to be helpful to bankers who require assistance along any of these lines, the department has built up a file on the activities which have proved successful by other banks and has made this file available to any bank which requests it. In addition, banks have been offered the use of the two currency displays of our bank and the counterfeit display furnished us by the Secret Service. PURCHASING A total of 2,817 items were purchased by the department during 1954-, a reduction of 225 from 1953. There were 11,190 items requisitioned from the stockroom in 1954, an increase of 1,193 over the previous year. Although operating expenses of our suppliers rose somewhat during 1954, intensive competition prevented them from passing these increases along to us in most cases. As a result, there were no material price changes for most supplies during the year. RESEARCH The research department entered into a cooperative arrangement with the U.S. Department of Labor to collect building permit statistics. This will enlarge the scope of our statistics and permit more accurate analysis of new construction. The new arrangement will eliminate duplication of effort in the securing of data. Several new special research projects were started during the year. Among these are a study of the paper and pulp industry of the Ninth District; a symposium of farm departments in country banks; and an inventory of regional -59- economic information. Several special research projects are in the planning stage for 1955. These include: The Migration of Industry Into and Out of the District The Importance of Foreign Trade to District Industry Natural Gas Supplies and Prospects in this District Prospects for a Chemical Industry in the District Analysis of Residential Building and Mortgage Credit. Qiring 1954- the research department conducted four special economic surveys at the request of the Board of Governors. These were: Speculative Activity in the Current Inventory Situation Current Monetary and Credit Developments in the District Current Financial Position of District Farmers Current Credit Terms in Consumer Financing. A new feature in the Monthly Review publication was a series of articles called "industry sketches". These are short, usually one-page articles relating to a specific industry within the Ninth District. A list of these articles appearing in 1954- is as follows: An Industry in Granite Black Hills Beryl Gas Processing at Dakota Oil Fields Uranium Discoveries in the Black Hills Area. The Monthly Review mailing list had 4-33 additions during the year and 198 deletions to bring the total circulation at the year-end to 7,4-94-. During 1954, continued emphasis was placed on improving the Review with respect to content, literary quality, technical correctness and attractive ness. The Farm News circulation decreased from 14-, 592 to 11,612 during the year. The decline in circulation is attributable to the fact that be ginning in April 1954- subscribers receiving bulk shipments in excess of 25 copies per month were charged for the excess at the rate of 3 cents per copy. Public relations continued to be an important by-product of the - 60- research department's operations. Numerous special requests for economic and statistical information were received from bankers, businessmen and others. Staff members filled 102 speaking engagements before a combined audience of 12,800 persons. One radio address was given. Staff members attended many professional meetings in order to keep abreast of current economic developments. During the year, increased use was made of the department's library facilities. A regular mimeographed monthly list of new library acquisitions was inaugurated during the year. This list is circulated within the bank to keep the staff informed of new library material. Plans have been formulated for the reinauguration of a monthly Library Letter to district bankers and others starting in January 1955. RESERVES Reserve requirements, which had been unchanged since June 24, 1953, were reduced ty the Board of Governors on June 21, 1954, such change to be effected on a gradual basis over a period of six weeks, as shown by the table below: Bank Classification Country Reserve City Central Reserve City Central Reserve City Net Demnnd Deposits Fjrom In. Effect. Date _____ Time Deposits To Effect. Date From 13$ 19 12$ 18 8/ 1/54 7/29/54 6$ 6 5$ 5 6/16/54 6/24/54 22 21 6/24/54 6 5 6/24/54 21 20 7/29/54 The Board of Governors approved the action of the Federal Reserve Bank of fftnneapolis in decreasing the discount rate from 2$ to 1 3/4$ on February 5, 1954, and again from 1 3/4$ to 1 l/2$ on April 29, 1954. Since - 61- penalties are computed on the amount of the deficiency at the rate of 2% above the current discount rate, the reduction lowered the penalty rate from 4$ to 3 3/4$ and then to 3 1/2$. During the year 1954, penalties for deficiencies in reserves assessed at the Head Office showed a decrease of 10.4$ in amount and a slight increase in number. Assessed penalties for Helena Branch showed a decrease of 50,3$ in amount and a slight decrease in number. Penalties for deficiencies in reserves at the Head Office which were waived increased 34.3$ in amount with a slight increase in number and at Helena Branch decreased 24$ in amount and increased slightly in number. Eighty-six per cent of the amount and 40$ of the number of all penalties waived for the year were waived under the Board's rule which allows a deficiency in one period to be offset by excess in the following period, provided that such deficiency does not exceed 2$ of the bank's required reserve. The large reserve city banks in the Twin Cities and Helena accounted for 73$ of the amount and 44-$ of the number of penalties waived under this rule. Ten per cent of the amount and 13$ of the number of penalties waived were waived under the rule which permits a penalty to be waived for a deficiency of not more than 5$ of a member bank's required reserve provided that a penalty has not been waived under that rule within a two-year period. Only 4$ of the amount and 47.8$ of the number of all penalties waived for the year were waived under the rule which applies to penalties not in excess of $5.00, During 1954, 79 banks were penalized for a total of 116 times com pared with 68 banks for 122 times in 1953. The following is a comparative report by states of penalties for - 62- deficiencies in reserves during 1954- and 1953: Banks Affeeted Penalties Waived______ Assessed Waived 1954No. Amount Combined 1953 ... .. No. Amount 14 $ 600.20 33 1,556.89 6 190.34 12 400.47 8 214.18 23 $ 113.72 145 6,709.58 269.25 23 34 433.35 88.60 20 25 $ 244.48 146 4,585.88 25 388.27 28 233.09 22 214.70 7 31 7 8 3 6 25 2 8 5 u 72 16 22 12 16 75 13 20 16 78 $2,655.05 73 $2,962.08 245 $7,614.50 246 $5,666.42 56 46 136 140 49 $4,022.39 67 $1,055.09 61 $1,, 392,59 23 22 26 31 116 $4,654.55 122 $6,984.47 Helena Branch 1954____ No. Amount 38 $1,999.50 Michigan Minnesota North Dakota South Dakota Wisconsin Head Office Totals _ 195.3.. No. Amount 7 $ 410.16 44 1,304.93 8 170.26 16 539.68 3... 230,02. 312 $8,669.59 307 $7,059.01 79 68 162 171 1954 1953 1954 195 No. No. No. Jia SAFEKEEPING 12/31/54. 12/31/53 Inc. or Dec. (In thousands of dollars) Accounts: (not pledged) $ 983,613 $ 899,654 $+ 83,959 + 48,320 Securities pledged to secure public deposits 398,522 350,202 ^Securities pledged to secure Government deposits 14,665 22,214 **Securities pledged to secure Treasury Tax and Loan Account 250,769 217,930 ***Securities held as collateral for discount and advances 27,070 35,980 Securities held for other Federal Reserve banks 25 Securities held as collateral to Consignment Account - U.S. Savings bonds, Series E 7,549 + 32,839 - 8,910 25 22 Securities held for Public Housing Administration - $1,674,664 22 1.702 $1,527,704 -.1,702 $+146,960 -63- ^Includes $ 2,365*000 held by Commercial banks Includes $31,184,000 held by Commercial banks and other Federal Reserve banks ***Includes $15,000,000 held by Commercial banks The table below shows comparative volume figures for 1954 and 1953. 1254 Receipts issued Pieces received Withdrawals handled Pieces delivered Transfers from one account to another Coupons clipped Custodian receipts issued 195? Inc. or Dec. 10,654 80,470 12,445 78,588 8,406 65,662 9,810 69,650 + 2,248 +14,808 + 2,635 + 8,938 10,252 290,116 1,994 9,621 289,507 1,256 + + + 631 609 738 WIRE TRANSFERS Prior to July 1, 1953? we had no private wire facilities between here and the Helena Branch. over TWX or Western Union. All of the wire volume to or from Helena was Currently, all wires to or from Helena are trans mitted over our new leased wire system while it is open and thereafter over Western Union. This resulted in a decrease in TWX activity for wires sent from 2,156 in 1953 to 7 in 1954 and in wires received over TWX from 1,970 in 1953 to 870 in 1954. This volume of incoming wires over TWX at present consists primarily of incoming messages from member banks requesting trans fers of funds. Although the volume on TWX was greatly reduced, this equipment provides us with "stand-by" equipment for use in case our leased wire system is out of order. The tables shown on the following page reflect a comparison of activities in this division for the year 1953 and 1954. Transfer of Funds Dollar Totals (000 Omitted) 235L Transfers to other Federal Reserve districts Transfers from other Federal Reserve districts Intra-District transfers Change from 1953 6,120,604 7,420,950 2.560.826 +1,307,4-67 +1,180,269 85.468 16, 102,380 +2 , 402,268 15,992 18,130 12.513 46,635 +1,232 +1,376 - 285 +2,323 26,595 2,864 _____ 2 29,466 +1,150 - 173 -2.149 -1,172 34,382 4,861 870 40,113 - 375 + 572 -1.100 - 903 Number of telegrams coded by us 19,858 Number of telegrams decoded by us 26,774 -1,931 - 460 Number of Transfers Made Transfers to other Federal Reserve districts Transfers from other Federal Reserve districts Intra-District transfers Number of Telegrams Sent Private wire Western Union TWX Number of Telegrams Received Private wire Western Union TWX -65- MILLION DOLLARS MILLION DOLLARS CAPITAL ACCOUNTS I 0 ON 1 C A P IT A L ACCOUNTS CAPITAL STOCK paid in totaled $6,360 thousand on December?!, 1954-; an increase of $408 thousand during the year. SURPLUS ACCOUNTS. Surplus (Section 7) was increased $699 thousand on December 31* 1954, which brings the total to $16,918 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 coverage, the reserve of $500 thousand earmarked for losses not covered by the Loss Sharing Agreement or the special reserve for contingencies of $2,476 thousand. The reserve for registered mail losses totaled $242 thousand as of December 31, 1954. This is an increase of $13 thousand during the year. The table below reflects the change made in reserve for registered mail losses during 1954s Reserve for registered mail losses beginning of year 1954Credit: Annual addition based on 2<£ per $1,000 of total shipments of $671,441,44-2 for 12-month period Dec. 1, 1953 through Nov. 30, 1954 Reserve for Registered Mail Losses, Dec. 31, 1954 $228,714.36 13.428.83 $242,143.19 The following table shows currency and coin shipments made during the twelve-month period December 1, 1953 to November 30, 1954, which were the basis for the addition to the registered mail loss reserve: -67- 1954 (OOP Omitted) Registered or Insured Mn.il and Express 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 1953 (OOP Omitted) $138,020 30,684 $103,980 61,325 3,130 3,163 211,552 221,618 288.055 $671,441 294.435 $684,521 Hie disposition of 1954 net earnings and the changes made in the surplus accounts are shown below: Net Earnings Dividends Paid Paid U.S. Treasury (Interest on F.R. Notes) $7,351,078.10 $ 365,162.76 6,287,237.02 $ Surplus (Section 7) December 31, 1953 Transferred from Earnings 1954 Surplus (Section 7) December 31, 1954 6.652.399.78 698,678.32 $16,219,368.01 698.678.32 $16,918,046.33 Valuation Allowances for Losses on Industrial Loans Beginning of year 1954 Reductions Total - Dec. 31, 1954 $6,240.00 300.00 $5,940.00 - 68- DIVIDENDS As of December 31, 1954- capital stock held by member banks totaled , $6,360,250, on which accrued dividends totaling $365,162 were paid. This year's dividend payment is again the largest for any single year in the history of the bank and when combined with previous years' payments, brings the ag gregate total to $8,352,007. Distribution of 1954 and 1953 Dividends ________________________ State 1254 No. of Banks Michigan Minnesota Montana North I&kota South Dakota Wisconsin 40 206 83 40 62 473 _________________________________ Dividend Paid $ 18,730.12 234,870.03 39,407.96 21,896.80 30,276.15 12 , 2s $365,162.76 ________________________ No 2222 of Banks 40 205 82 41 62 JiZ 472 _________________________________ Dividend Paid Chanee $ 18,039.60 225,257.90 37,797.50 20,998.06 27,942.26 18.738.80 $348,774.12 690.52 $+ + 9,612.13 + 1,610.46 + 898.74 + 2,333.89 +.1,^20 $+16,388.64 TABLE OF DIVIDENDS PAID SINCE ORGANIZATION 1914. 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 a/ b/ 2/ $ 57,719.87 &/ 363,894.19 y 168,102.97 180,186.21 195,870.65 211,657.03 213,774.01 212,732.68 202,827.98 193,559.46 187,609.25 180,726.51 181,202.86 184,029.92 184,445.39 180,454.53 s/ 175,494.80 171,568.89 181,117.51 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 $ 185,448.45 179,052.04 174,057.31 174,231.27 174,905.39 177,400.58 179,789.68 183,336.33 190,924.19 206,158.74 221,686.96 238,372.30 253,251.30 262,776.22 272,831.22 294,034.00 314,934.23 327,905.73 348,774.12 365.162.76 $8,352,007.53 For period November 1, 1914 through June 30, 1915. For period July 1, 1915 through December 31, 1917. $134,649.67 withdrawn from Surplus to pay dividend. - 69- BANK P R E M I S E S There was no change in the book value of the Head Office and Branch bank buildings during 1954-. on both buildings. The normal depreciation of 2% was taken Both the book value and reserve for depreciation of Head Office fixed machinery and equipment were reduced $11,081 to reflect release of two turbo generators. An additional reduction of $31,893 was made in depreciation of Head Office fixed machinery and equipment to reflect costs of converting two of our oil furnaces to gas. This reduction has been par tially offset by a normal monthly depreciation of $5,249.4-9, or $20,998.16 to date. The only principal change in repairs and alterations during 1954was a revision of the air conditioning system in the currency and coin department. -70- BANK PREMISES Head Office Total Helena BANK BUILDING: Gross Book Value: Beginning of 1954 . . . . ............... Additions during year .................... Deductions during year ................. $1,384,281.50 $1,283,281.50 $101,000.00 End of Year ............................... $1,384,281.50 $1,283,281.50 $101,000.00 Allowance for Depreciation: Beginning of 1954 . . . . Depreciation ........... $ 771,192.48 27,685.56 $ 74-4,302.76 25.665.60 $ 26,889.72 2.019.96 Bid of Year . . . . . . . $ 798,878.04 $ 769,968.36 $ 28,909.68 $ 585,403.46 $ 513,313.U $ 72,090.32 $ 678,227.34 $ 641,025.35 $ 37,201.99 Net book value December 31, 1954 . . . . FIXED MACHINERY AND EQUIPMENT: Gross Book Value: Beginning of 1954 ........................ Additions during year .................... Deductions during year ................. 1 1 T081.00 . 11,081.00 $ 667,14-6.34 $ 629,944.35 $ 37,201.99 $ 678,227.34 42,974.00 20.9Q8.16 $ 641,025.35 42,974.00 . 20.998.16 $ 37,201.99 $ 656,251.50 $ 619,049.51 $ 37,201.99 . . . . $ 10,894.84 $ 10,894.84 LAND: Net book value December 31, 1954 $ 410,520.66 $ 400,520.66 $ 10,000.00 TOTAL BANK PREMISES: Net book value December 31, 1954 $1,006,818.96 $ 924,728.64 $ 82,090.32 aid. of Y e a r .......... ................... Allowance for depreciation: Beginning of 1954 . . . . Deductions during year . Depreciation ........... End of Year ............. Net book value December 31, 1954 - -71- I fl !U I A IH 12 10 8 6 4 2 0 21 25 29 33 37 41 45 49 53 57 NET EARNINGS & P R O F I T S 1954. Total current earnings Net expenses Current net earnings Additions to current net earnings: Profit on sales of U.S. Government securities (net) All other Total additions Deductions from current net earnings: Reserve for registered mail losses Additional payment of fees to archi tect for project not carried out Payment of supplemental allowance for social security and disability benefits per Retirement System letter 3-20-53 All other Total deductions $10,835,4-15 3.488,741 $ 7,346,674 Change from 1953 $-4,033,492 =-,.115*532 $-3,917,959 $14,804 3.431 $18,235 $+ $- 46,225 -1x158 42,867 $13,429 $- 261 4,250 71,052 =.. _7_,724 $83,287 402 $13,831 Net additions to current net earnings Net deductions from current net earnings $ Net earnings and profits $ 7,351,078* 4,404 $+ 40.420 $-3,877,539 *For disposition of profits see page No. 68 -7 3 - The table below gives a breakdown of Profit and Loss during 1954- • Head Q£fis& $14,804-. 16 $14-, 804-. 16 25.65 16.91 Difference between actual and estimated expense for December 1953 105.61 105.61 Reduction in valuation allowance on industrial loan - Clear Lake Creamery and Produce Co., Clear Lake, S. Dak. 300.00 300.00 Profit on U.S. Government securities sold, net Profit on mutilated currency and coin Sale of two turbo generators to Land O'Lakes Creameries, Minneapolis, Minn. Total Additions _.lf .QQQ.*QQ $ 8.74 $ 8.74. • Additions to Current Net Earnings: Helena Branch o o o » o o S-l ajL !Qt, $18,235.4-2 $18,226.68 $13,4-28.83 $13,4-28.83 .13 .13 70.22 70.22 Deductions from Current Net Earnines: Reserve for Registered Mail Losses Discount on Foreign Currency and Coin Loss on counterfeits Difference account Total Deductions Net Additions to Current Net Earnings „ 321 34 * . ...... $13,831.02 $13,807.83 $ $ 4-,4-04-.4-0 $ 4,418.85 $ 23.19 23.19 $—14.4-5 -74- MILLION DOLLARS MILLION DOLLARS GROSS EARNINGS 1917 1921 1925 1929 1933 1937 1941 1945 1949 1953 1957 1961 EARNINGS Earnings during 1954- totaled $10.8 million, a decrease of $4 million from 1953 due mainly to the following; 1, Daily average participation in System holdings of U.S. Government securities decreased 15$ in 1954, or $103 million. Also, holdings of bonds and notes decreased $21 million and $179 million respectively, during the year, but the decrease was nearly offset by an increase of $197 million in certificates. Since the certificates yield a lower return than the bonds and notes released, earnings dropped. The net result of these changes ac counted for 90$ of the $4- million decrease in earnings. 2. Decreases in the discount rate from 2$ to 1 3/4$ on February 5 and then to 1 1/2$ on April 29, as well as a reduction in the daily average hold ings of discounts and advances to $6,9 million from $27.3 million accounted for the balance of the reduction in earnings. The following tables show the sources of earnings for the year, average earning rates for 1954-, and holdings of securities as of December 31, 1954, with comparisons. -76- Total Current Earnings (Minneapolis and Helena Combined) 1954 Discounts and advances Foreign loans on gold Industrial loans U.S. Govt, securities - System account Deficient reserve penalties All other; Clearinghouse fines Commissions earned on Bankers' accept ances purchased for foreign correspondents Interest received on past due indus trial loan $ Change from 1953 117,587 27,216 5,134 10,679,996 4,655 $+ 230 + 423,121 21,182 445 -3,628,619 2,330 78 399 435 198 $10,835,415 + 198 $-4,033,492 m k ______ 1. 53,.-, 9 Average Earning Rates Change from Discounts and advances Foreign loans on gold Industrial loans U.S. Govt, securities - System account Average rate for above accounts 1.695% 1.557 5.128 1.765 1.764- -.284% -.370 +.218 -.255 -.255 Participation in System Open Market Account (In thousands of dollars) Change from . 12-31--5 3 Bills Certificates Notes Bonds $ 53,215 340,909 14-8,257 68.802 $611,183 $- 10,865 +197,351 -179,103 - 21.066 $- 13,683 -77- MILLION DOLLARS MILLION DOLLARS EXPENSES 1917 21 25 29 33 37 41 45 49 53 57 61 COMPARATIVE STATEMENT OF NET CURRENT EXPENSES Head Office 1954 Salaries s Officers Employee s Fees: Directors Federal Advisory Council Other Retirement Contributions: F,R. Retirement System Supplemental Death Benefit Social Security Traveling Expenses: Directors Federal Advisory Council Other Postage and Expressage: Original Shipments of F.R. Currency 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 & Equipment: Purchases Rentals Assessment for Expenses of Board of Governors Federal Reserve Currency: Original Cost Cost of Redemption All Other Total Expense Less Undistributed Recoveries Net Current Expenses 222,397 1,552,214 $ 21,863 158,760 6,200 1,275 3,255 $ Helena Branch 1954 4,060 Combined __ 1212__ Combined .,1254... ... $ 244,260 1,710,974 $ 241,117 1,678,709 144 10,260 1,275 3,399 9,865 1,050 3,385 117,591 6,075 29,296 11,832 680 3,128 129,423 6,755 32,424 127,390 8,207 24,109 6,489 782 48,954 3,005 9,494 782 54,789 7,966 732 59,466 — - 5,835 31,902 6,192 346,023 22,283 91,978 26,775 95,424 46,664 31,015 11,292 51,344 1,469 73,139 6,286 10,570 2,947 4,726 2,020 2,960 3,311 22 31,902 7,661 419,162 28,569 102,548 29,722 100,150 48,684 33,975 14,603 51,366 30,442 19,150 400,909 29,524 133,040 31,763 99,497 27,801 33,562 69,408 52,067 35,130 131,424 2,049 17,849 37,179 149,273 93,530 142,835 105,500 103,700 105,500 - — 116,086 9,483 . 100.239 .. .. 3,185 _ . . . $3,253,282 $339,840 - - 99,941. $3,153,341 4,440 $335,400 116,086 184,996 9,156 9,483 103,424 ... . 78, 357 $3,593,122 $3,701,733 .. 104,381 ... 97,459 .. . $3,488,741 $3,604,274 NONREIMBURSABLE EXPENSE 1954 $3,153,34-1 335.400 $3,4-88,74-1 Head Office Helena Branch Change from 1953 $-114,51; - 1.019 $-115,533 Net changes in the various subdivisions of the expense accounts at the Head Office and Branch are distributed as follows: SALARIES 1954. $1,774,611 180.623 $1,955,234 Head Office Helena Branch Change from 1953 $+30,84-0 + 4.568 $+35,4-08 Merit and other salary adjustments account for the increase. In 1954- the Head Office had a yearly average of 634- employees compared with 650 in 1953. Helena Branch averaged 55 employees in 1954- compared with 56 in 1953. FEES _ DIRECTORS 195L Head Office Helena Branch $ 6,200 4..060 $10,260 Change from 1953 $+200 +195 $+395 There were eleven meetings held in 1954-. -80- FEES - FEDERAL ADVISORY COUNCIL 1954. $1,275 Head Office Change from 1953 $+225 Our council member attended seven local and five out-of-town meetings in 1954-. FEES - OTHER 1954 $3,255 144 $3,399 Head Office Helena Branch Change from 1953 $+ 5 + 9 $+14 No important change occurred in this account. RETIREMENT CONTRIBUTIONS 1954 Head Office Helena Branch $117,591 11.832 $129,423 Change from 1953 1,947 + 86 $+2,033 Retirement System contributions are at the rate of seven per cent of the employee's yearly salary. The amount absorbed is in direct relation to increases or decreases in salary costs. -8 1 - SUPPLEMENTAL DEATH BENEFIT 1954 Head Office Helena Branch $6,075 680 $6,755 Change from IQ53 $-1,452 _____ = $-1,452 In 1954 the special assessment was $232 to adjust the contract year compared with $1,718 in 1953. The rate in 1954 was reduced to .417 per hundred compared with .515 in 1953. SOCIAL SECURITY 1954 $29,296 3.128 $32,424 Head Office Helena Branch Change from 1953 $+7,509 + 806 $+8,315 Social Security contributions are at the rate of two per cent on the first $3,600 of each person's salary. The amount absorbed is in rela tion to the payroll. TRAVEL _ DIRECTORS 1954 Head Office Helena Branch $6,489 3,0P5 $9,494- Change from 1953 $+1,285 + 243 $+1,528 A portion of the increase is due to the June meeting held in Michigan. -82- TRAVEL - FEDERAL ADVISORY COUNCIL 195 4 Head Office $782 Change £roa_1.251 $+50 In 1954- our council member attended five out-of-town meetings. In 1953 four meetings were attended. TRAVEL - OTHER 1954 Head Office Helena Branch $48,954 5.835 $54 /789 Change from 1953 $-3,844 - 833 $-4,677 The decrease in Head. Office travel is accounted for as follows: 1954 Bank Examination Public Services Travel on general bank business (schools, con ventions, conferences, etc.) 1953 $25,175 13,455 $25,482 12,835 10.324 $48,954 14.481 $52,798 POSTAGE AND EXPRESSAGE Original Shipments F.R. Currency 1954 Head Office Change from 1953 $31,902 $+1,460 This represents shipping charges on Federal Reserve currency from -83- Washington to Minneapolis and Helena. During 1954- we received notes total ing $128,120,000. POSTAGE AND EXPRESSAGE Redemption F.R, Currency 1954. Head Office Helena Branch Change from 1953 $6,192 1.4.69 $7,661 $-10,028 - 1.4.61 $-11,4-89 This account covers shipping charges on unfit Federal Reserve notes to Washington and postage on fit notes to issuing Reserve banks. In July 1954- the law prohibiting a Federal Reserve bank from paying out notes of another Reserve bank was repealed. Part of the decrease is the result of savings under the new law. POSTAGE AND EXPRESSAGE Other 1954Head Office Helena Branch Change from 1953 $34-6,023 73.139 $4-19,162 $+ 9,857 + 8.396 $+18,253 The increase is due to larger volume of checks handled and a rate increase in parcel post, second and third class mail. -84- TELEPHONE AND TELEGRAPH 1954 Head Office Helena Branch $22,283 6.286 $28,569 Change from 1953 $+1,039 -1.994 $- 955 A portion of the decrease is due to changing the Branch wire system from TWX to a private wire. PRINTING, STATIONERY AND SUPPLIES 1954 $ 91,978 10.570 $102,548 Head Office Helena Branch Change from 1951 $-32,296 + 1.804 $-30,492 Most of the items in this account are recurring, the requirements each year reflecting the decreases or increases. Supplies totaling $6,600 carried in the 1954 stock of supplies were paid for in 1953. INSURANCE 1954 Head Office Helena Branch $26,775 2.947 $29,722 Change from 1953 $-2,248 + 207 $-2,041 The decrease in insurance is due to refunds received on Blue Cross and Blue Shield group hospital and surgical insurance based on quarterly ex perience reports. -85- TAXES ON REAL ESTATE 1954 Head Office Helena Branch $ 95,424 4.726 $100,150 Change from 1953 $+ 64 +589 $+653 The Head Office tax rate remained at 14-9 mills. DEPRECIATION 1954 Head Office Helena Branch Change from 1953 $46,664 2^.020 $48,684 $+20,998 115 $+20,883 In addition to the normal depreciation of two per cent per annum on our building, $20,998 was set up in reserve for depreciation of fixed machinery and equipment and partially offsets a charge of $31,893 made to our reserve account during the year for the replacement of boilers and conversion from oil to gas. LIGHT, HEAT, POWER AND WATER 12.54 Head Office Helena Branch $31,015 2.960 $33,975 Change from 1953 $+ 77 +336 $+413 There was no important change in the total expense for the year. -8 6 - REPAIRS AND ALTERATIONS 19 5L Head Office Helena Branch $11,292 3.311 $14,603 Change from 1953 $-4-3,052 -11.753 $-54,805 Most of this decrease offsets the increase in 1953 which covered the cost of remodeling the public services offices, and transposing the lighting system. The largest single expense in 1954 was for air condition ing in the currency department costing $3,281. RENT 1954 Head Office Helena Branch Change from 1953 $51,344 22 $51,366 $-695 =__6 $-701 There was no important change in this account during the year. FURNITURE AND EQUIPMENT Purchases 1954 Head Office Helena Branch $35,130 2 f049 $37,179 Changes from 1953 $-54,243 - 2.108 $-56,351 The machine purchases in 1954 were not as large as in 1953. The following principal purchases were made in 1954s -87- 3 currency counting machines 571 steel transfer cases General Ledger machine 1 Shredomatic Typewriters $7,173 5,181 4,909 4,096 965 FURNITURE AND EQUIPMENT Rentals m k Head Office Helena Branch $131,424 17.849 $149,273 Change from 1953 $+6,724 - 3S 6 . $+6,438 In April 1953 we started paying extra shift rental for use of IBM equipment for after regular working hours. The 1954 figures include a full year's expense for this item as compared with a partial year's expense in 1953 and accounts for $1,200 of the equipment rental increase. In July 1954 we started processing postmasters1 deposits and the IBM equipment rental for this activity during 1954 was approximately $1,000. In addition, a small part of the increase is due to changing models on check department IBM machines from an 801 Model renting for $77.50 to an 802 Model renting for $100.00. BOARD ASSESSMENT m k Head Office $105,500 Change from 1953 $+1,800 This represents amounts paid to the Board of Governors of the Federal Reserve System to cover its general expenses. The basis for our assessment for 1954- and 1953 are shown below: 1954 First Half Capital Stock Surplus (Section 7) Surplus (Section 13b) $ 5,952,400 16,219,368 ...1,022,621 $23,244,389 $ 5,719,300 15,131,297 _1,072 ,.621 $21,923,218 .00214 .00216 $49,700 $47,400 $ 6,072,550 16,219,368 1.072.621 $23,364,539 $ 5,806,750 15,131,297 1.072.621 $22,010,668 .00239 .00256 $55,800 $56,300 $105,500 $103,700 Assessment Rate Total Assessment for First Half Second Half Capital Stock Surplus (Section 7) Surplus (Section 13b) Assessment Rate Total Assessment for Second Half Total Assessment for Year 1953 FEDERAL RESERVE CURRENCY 1954 Original Cost Cost of Redemption Change from 1953 $116,086 9*4.83 $125,569 $-68,910 + 327 $-68,583 Original cost covers bank's pro rata share of expenses of the Federal Reserve Issue and Redemption Division of the Office of the Comptroller of the Currency for the year 1954. -89- ALL OTHER 1954 Head Office Helena Branch Change from 1953 $100,239 3.185 $103,424 $+25,U 7 80 $+25,067 The large items in 1954- which did not appear in 1953 follow: Holabird, Root & Burgee (consultants) Sewer line from building to Nicollet C. F. Haglin & Sons Engineering Service - well installation $11,248 4,000 1,295 450 A portion of the above will be set up in our building account when it is started. COMBINED R E IM B U RS A BL E EX P END IT U RE S OR R EC O V E R IE S Account of 1954 Change from. 19: $465,763 27,031 1,866 815 1,017 725 14,424 499 22 374 96 4 24 40 5 34 14,720 34,915 6,343 32,484 $-30,492 + 1,291 + 399 114 110 + 725 + 3,494 + 499 26 + 145 + 40 12 + 24 29 + 5 + 34 + 2,424 - 7,180 + 3,005 + 3,252 . I,£42 + ;,,949 $603,044 Public Debt Federal Taxes Department of the Army Department of the Navy Department of the Air Force Atomic Energy Commission Commodity Credit Corporation F.R.B. Chicago, Fiscal Agent for R.F.C. Federal Farm Mortgage Corporation Federal Land Banks Federal Intermediate Credit Banks Central Bank for Cooperatives Housing and Home Finance Federal Home Loan Banks Federal Public Housing Administration Federal National Mortgage Association Coin Wrapping services Processing Post Office Money Orders Destruction of Unfit U.S. Currency Miscellaneous Profit and Loss - over-estimate of Reimbursable Expenses $-20,457 The single important change occurred in Public Debt expense, due in part to a reduction in equipment rental and reduction in personnel.