View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

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.




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