Full text of Annual Report to the Directors of the Federal Reserve Bank of Minneapolis : Auditor's Report for the Year 1938

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AUDITOR* S RJEPOBT

FEDERAL RESERVE BANK OF MINNEAPOLIS

FOR THE YEAR

19 3 8

TO THE DIRECTORS;

On the following pages w© have described the main causes affecting
our operations of the past yearf indicated the sources of revenue and explained
the reasons for expansion or contraction in the various items of expense.
The fact that our current earnings have been insufficient to cover
our needs is largely the result of reduced allotments of Governments in System
Account0

Average holdings of these securities were $7*500,000 less then in

1937, with the rate of earnings also lowered from 1<>557$ to 1*351$*

Our profit

from System sales of Governments was considerably greater than in other recent
years» providing sufficient additional income to cover all requirements and
permit our adding $19S»06lo26 to Reserve for Contingencies0
Expense of operation was nearly $Ulc000 less than in 1937«

Total

salary payments were $26,000 below the 1937 payments, with greater numbers of
regular employees assigned to reimbursable work one of the chief causes for
Regular employees were reduced nine persons during the year9 with

reduction,,

women employees numbering 113 on December 31 , an increase of 32 during the year0
Volume of currency operations showed material falling off, larger
banks sorting bills more closely, thus reducing transactions with us 0

Safekeep«

ing volume reduced except for pledged securities and the holding of Savings
bonds for individuals and banka*
creased in 193S»

Transit items and non-cash collections in

Fiscal operations in most divisions were lower than in 1937e

with the Reconstruction finance Corporation showing a heavy expansion due to
wheat loanso

Total deposits averaged higher in 193^ because of an increase of

over $30,000,000 in the Treasury balance<,
All scheduled audits at Minneapolis and Helena were completed in I93 S
and one examination of Head Office and Branch was made by the Board examiners
as of October 2S«

No irregularities were disclosed and the records of the

Bank appear to reflect the true ccadition0

Respectfully submitted*

isd b x

Auditing..... .......................................... ...

25-27

Bank Examinat Ions •. .....••••••#•••..... ..... ................. U9«52
Bank and Public Relations ............................... .......45-^6
Sank Precises

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

Check Collections - Transit Department •

.... .«..<>«

28~3Q
3^”35

Collections (Non-Cash) 00 •0««e... .00 0.«,. . . . . . . . . . . . 0••• 0«

Currency and Coin ».... •.................»•.. •....»........... »

38-39

Deficient Reserve Penalties »............... •............ •. „«0

Discounts and Industrial Loans ........ ............... ..... .... 3 1
Dividends .......«• »*.. =>.«.*.. 00..«. •....... 0....... •P....... .... 20
Earnings;
Comparative statement 133^“ 2-937 ............ .......... .......3
Average rates on earning assets .......................... ... 32
Comments •.• ».......... *
.............. ....... •
4-6
Sspenses:
Comparative statement 193®*3-937 .......... ............... .... 7
Comments ....... ........... ...................... .
•
2-18
Reimbursable Expenditures
17
Jfeiled Banks ........ ........................ ..... .... ,.. *

Federal Reserve Notes ................... . ...... ...•»

U0-U3

Fiscal Agency Functions.....0.,.......................... •»

H6«=US

Franchise Tax paid since organization *.................. ....... 20
Furniture and Equipment ............ ...... ..................... 1 6
Liabilities ........ ........ ......... ............... . .....
Member Banks - Changes in membership ....... ................ „
Profit and Loss

51-5 2

......... ........ ....... ..... ....19-2U

Reconstruction Finance Corporation .......................... ... 53
Resources ................ .......................... ..........1
Securities:
Safekeeping ......................... ....................... 37
Investments ............ ............. ......... ............ 5
Surplus and Reserves........................... .......... ....20
Taxes ............... ......................... ...... ...... ...lk
Telephone and Telegraph ...... ........... ........ ......... ....12
Transfer of SMnds .................... ......... ............... Hb
Transit Functions........... ...... ....... ....... ..... ...

31+"35

COMPARATIVE STATBMBHT OF RBSOURCSS
PSSBRAL BBSiRTB BANK OP MIHMSAPOLIS JjjP BBLSNA BRANCH
(After closing entries)

December J l , 19 38
Cash Reservess
Gold certificates with F. R. Agent ......... $ 1^3,500,000*00
Redemption fond - F * B. N o t e s ......... .
605,582,12
Inter-district settlement f u n d ............
97.952*227-50
Total gold certificate reserves .........
Other c a s h ............................. .

2*42,057.809*62
7.786,155,2*4

Total cash reserves ......... ...........

2*+9,8*43,96*4*86

Bills and Securities?
Bills secured by U. S* Government obliga
tions, direct or fully guaranteed........
Bills otherwise secured and unsecured......
Bills bought in open market.............. .
Industrial advances..... *.... ...... .....
U. S 0 Government securities ............. .

90.657.72

Total bills and securities

F.R. Hotes of other Federal Reserve Banks ••••

December J l , 1937

$ 1*40,500.000.00
UU 5 ,958*09
**5.2*47,038.71
186,192,996*80
9.671,7 ^ 6 7
195.86*4,7*46.*47

1,903*25
96*4,090.22
56,815,500.00

*43,000.00
17*4,980.81
1,903.25
636,851.23
83,008,500.00

57.915.151.19

83.822,235.29

1 .992.60
1.427.900.00

1,986,41
1.920,000.00

16,007 ,617.60
350.699.77
530,604.20

16,937.208.97
477.559.17
663,625.49

16 .888,921.57

18.078,393.63

1.524,700.89

1.477.3**0.02

661,906.47
169.290.29
34.366.59

689.975.19
264,360.74
26,416.29
14 .567.15
14 .605.53

Uncollected Items*
Exchanges for clearing h o u s e ...........

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

Miscellaneous Assets;
Premium on securities.......... .
Reimbursable expenditures.......... .
Deferred charges..........................
Claims Account Closed Banks .............. .
Miscellaneous assets acquired in settle
ment of claims account closed banks .......
Industrial Advances past due three months ...

18,351-32

9,521.38
191,540.06
10,970.04

8 .650.57
188,551.11
22 ,28*4.96

Total miscellaneous assets ...........

1 .095,946.15

1,229,*411.5*4

TOTAL RSSQURCJSS ................

$ 328.698,577,26

$ 302,394.113.36

COMPARATIVE STATI3IMT OF LIABILITIES
FRD1S&AL HSSSaVg BAHK OF M I M M P O L I S ARP HSLSHA HBANCH
(After closing entries)

December 319 193s

December 31, 1937
$ 137.569.170.00

Depot! te i
**,339.UsU.U8
126, 011 , 198.87
3.990.198.57
3.227.235.08

137 . 568. 057.00
18 , 082, 089.10
Miscellaneous Liabilities!

108, 071,88
70U.98
68. 9U0 . 8S
177.717.68

Total miscellaneous liabilities ...

3.153.*U3.&9

2.893,050.00
3 . 153 .^ 13.69
1 , 001 , 162.98

1 . 981.U26.17

166, 088.00
1.783.36U.91

TOTAL LIABILITIES ................ . . . $ 328.698,577.36

$ 302. 39^ . 113.36

Surplus Pand - Section 13-b ....... «....
Reserve for prior service liability to
Reserves for contingencies.......

m a

ygDSRAL &ESSRVJB BANK 0? MINNEAPOLIS ASP HEXJSNA BflANCH

Minneapolis

1938

Earnings From
Discounted b i l l s ........................................
Purchased b i l l B ............. « . ......................
Industrial advances . . . . . . . . . ...................
Commitments to make industrial a d v a n c e s .................
Uo S. Government securities.......... 1 *018,5^0019
Deficient reserve penalties . . . .......... . ..........
Interest received on past-du© paper of closed banks . . . .
Interest on past-due industrial advances „ ...............
Sale of waste paper, money bags, etc. ....................
Service charges on collection items returned unpaid . . . „
Monthly letters sold . ...................................
Clearing house f i n e s ....................... ............
Commissions on bills bought for foreign bankB
Interest on Hungarian Credits
........
All Other ..............................................

Total Sarnings ...................

Helena Branch
193S

2,55^71
6.5k
52 ,879.36
1*70**<>33
509.23
15,7S8„08
7.579-^3

2 .659.35
6.5U
52.879.36
I.70U .33
1 ,018,5140.19
57.19

64*35

566.42
15,788.08
7.579.43

64.35
28.65
6.00

28*65
6„00
kk«0Q

44. oo

6.72

533*85
64.35

1,100*309*79

Combined
1938

“S S

161.83

1 .100 ,471.62

Combined
1937

4 ,758.46
463.56
43 ,381.11
636.61
1,292.462.53
1.912.35
339.11
6,178.68
131.19

36.60

57.00

1.50
1,350.358.70

EARNINGS
Earned at Minneapolis
Earned at Helena

$ 1,100,309,79
161.83

$ 1,100,U71o62

The toted current earnings in 1938 were nearly 19£ below those of 1937*
One year ago the current income was sufficient to cover all needs without making
use of special credits and recoveries handled directly through Profit and Loss
Account.

In order to meet all requirements of 1938, a portion of the profit from

sales of Governments was used as will he later explained*
Our reduced income in 1938 is entirely the result of a lowered volume of
Governments in Participation Account with an earning rate that had a downward trend
for the first eight months of 1938 and only a small improvement since.

During the

first quarter we held approximately $83,250,000 of Governments, increasing about
$5,000,000 for the second quarter.

As it appeared we would have a substantial

excess at the close of the year, the Open Market Committee reduced our holdings
to $73,^30,000 on July
October 1*

followed by another reduction of nearly $17,000,000 on

As a result, our participation in the System holdings was $56 ,815,50°

during the closing months of this year,

From monthly interest earnings of

$108,996.98 in January, there was a reduction to $62,595*68 earned during December.
Total interest received from Governments during the year was $1,018,5U0.19* or
92.6$ of our total current earnings*

The amount received was $27^,000 less than

in 1937 when 95«7# of ell current earnings came from Governments.
The daily average of Governments held in 1938 was $75»*H3»000 and the aver
age earning rate 1.351$6.
and the rate 1.557/&*

One year esrlier the daily holdings averaged $83,02^,000
the close of December 1937 the amount of our participation

was $83,009,000 with $56,815,000 held on December 31 , 1938*

Under the plan for

reallocation of Government securities each quarter, we were notified on December

29 by the Open Market Committee that on January 1, 1939 we would have our partici
pation increased $23,639*000, making a total of $80,1*5*1,500 in Governments allotted
this bank.

On December 31 we were receiving $2,0^3*91 daily as income from Govern

ments, the earning rate being 1«31^»

After the additional allotment the dally

amount of interest in January will be $2,893*21, the rate remaining the same.
Eased on our earnings of recent months, the increase in our allotment will not
provide sufficient additional earnings to cover all our needs and further adjust
ments will be in order should other sources of revenue prove inadequate*
For purposes of comparison, our holdings on December 31 , 1937* December 31 ,
1938, and after the allotment of January 1 , 1939, areas follows\

EARNINGS - Continued

2SSf.Jl'
United States Bonds
United States Treasury Notes
United Stetes Treasury Bills

gec> 31> 1938
l8 .633.5OO
25 ,636,000
12.546,000
56.815,500

$ 24.331,500
37.392*000
21.285,000
$ S3 .00S .500

Jan, 1, 1939

26 .3S5.500
36 .303.000
17.766.000
SO.%4.500

During the past yeer there h?s been no change in the total amount of Govern-*
ments held in System Account, the figure being $2,564,015,000*
proportion of the holding was 3 «237^$*

One year ago our

In Cecem*)er« 193s* 01*r percentage of the

total was 2 .216$ ana since the increase in our allotment our holdings are 3 *138$ of
the total*
The various purchases and sales during 1938 have resulted in reductions in
the amount of bills and notes and increase in the bonds held*
now held, 47*7$ mature within two years*
holdings matured within two years*

Of all the securities

At the close of 1937. **9*51$ of total

On December 31 , 1938 securities maturing within

five year8 were 70*35$ of the total and 2 9 . 6 5 over five years*
matured within five years and 27*33$ over

One year ago 72 *67#

years*

Discounts for member banks in 193S remained a minor factor in our earnings
with $2 ,659*35 the total amount of discount received from this source*

Discounted

paper was current for every month of the year at Minneapolis, while Helena had no
discounts in January, February and December.
paper under discount in 1938 was $159»679*

The daily average of member bank
la the previous year paper under dis

count for members averaged $271,071 and the earnings were $4,758*46.

The regular

discount rate has been lj$, unchanged since August 24, 1937*
Earnings from purchased paper were $6*54 only and represented our participation in investments made through foreign banks by the Open Market Committee*
There has been little profit from this source for several years*
Industrial advances averaged $979*817 during 1938* and were $964,000 on
December 31 *

Current advances had been reduced to $550,000 at the close of April

and on May 1 were increased $523,000 through loan made to the Escanaba Paper Com
pany*

The advance to this company was later increased to $641,500, on which

$80,000 has since been paid*

The net change in other current advances during 1938

has been a reduction of $206,000*

At the close of the year we were carrying ad

vances to the amount of $231 ,5^0*06 which had been past due over three months, com
pared to $203,551.11 held in past due classification one year earlier*

Earnings

from current industrial loans were $52 ,879.36, or approximately $9,500 more than
in 1937*

Commissions on commitments to make advances amounted to $1,704*33 com

pared to $636*61 in 1937*

Collections of past due interest were $7,579*43 in 1938

EARNIKGS - Continued.
and $6,178.68 in 1937.
Funds of this Bank applicable to industrial advances, commitments* etc*,
made up 21.102# of the total required with the Treasury Department supplying
78.898$.

Gross earnings were $62,209c97*
After deducting $35*936*27 for expenses and setting aside $25,000 as addi

tional reserve for possible losses, there remained $1 ,00U «92 as net profit for the
Treasury and $268.78 for the Bank.
The daily average of all current earning assets during 1938 was $76,6^6,000
with the high average $89i7^3#000
ber.

the low average $58,2^8,000 in Decem

For 1936 the average earning rate was l.Uotyo*

In 1937 total current earn

ing asset8 averaged $8H,lUl,000 and the rate l*595fc»
Miscellaneous earnings were $2^4,681.85 for the year.

The most important

item in this total was $15 *788.08 and represented interest collected from closed
bank paper at three South Dakota points*
Interest of $7»579*^3 obtained from past due industrial advances is also
included in the miscellaneous total.

Deficient reserve penalties were the

smallest in many years with $566.*+2 assessed during the year, compared to
$1,912.35 one year ago.

Other small amounts credited included the following;

Earnings from property acquired in settlement of industrial loan $U6.85*» interest
on Hungarian credits $533°85» ssdo of waste paper $6U„35 ; service charges on collec
tion items returned unpaid $28*65 ; monthly letters sold $6 .00 ; commission on bills
bought for foreign banks $6 *72 ; clearing house fines $U4«00; all other $1 7 *50 .

COMPARATIVE STATEMENT
CURRENT EXPENSES OP TBS FEDERAL RESERVE BANK OF MINNEAPOLIS AND
HELENA BRANCH
Minneapolis

193 S
Salaries:

Officers ................. ...........
Employees •
fietireoent System contributions for current service .
Legal f e e s ..................... . . . .........
Directors* fees and e x p e n s e s ............. . . . .
Federal Advisory C o u n c i l ......... ...............
Traveling expenses ........ « ...................
Postage and expressage * . . . . . ...............
Telephone and telegraph ................ ..........
Printing, stationery and supplies .................
Insurance on currency and security shipments. . . , .
Other Insurance . . . . .
................ .
Taxes on bank p r e m i s e s ................. . . . . .
Depreciation on bank building . ...................
Light, heat, power, and water ♦ * «, . . . . . . . . .
Repairs and alterations to bank building . ........
H e n t ........... ........................ .
Furniture and equipment „ . . ................ .
All O t h e r ............... .......................
Total Operating Expenses

........

Received from Government agencies for
Rental of space ................................
Rental of Furniture and equipment . . . .
„ . . .
Net Operating Expenses
Board Assessment ................................
Federal Reserve Currency:
Original cost, including shipping chargeB . „ „ .
Cost of fiedemption..................... .

Total Current Espouses

Helena Branch
1938

8U,000.03
371.959.06
22 , 757.08
11,851.73
10,322.65
1,261.05

15 .062.50

21,802.13

28 , 1+90.08

1 ,1*70.68
llj.8H3.55
H.259.23
3 . 370.36
919.H2
866.38
I.910.1H
1 . 590.39
1 . 562.52
HH3.63
375.00
3,321.06
H.6H8.59

$ 837.H20.38
12 , 208 , Hi

97.879.10
x i. 833.75
22,858,67
6,272.29
17.891.22
67.360.00
25.833.60
15.H1s.7s
11,1*11.67
8,216.89

2*781.02
$ 822 ,H30.95
39 .H35 .H2

H0.521.18

2 . 768.39
1.HH2.05

Combined

• 1938

1937

99.062.53
H12 .H80.2H
■25.525.H7
n.851.73
11 .76H .70
1,261.05
23,272.81
112,722.65
16,092.98
26,229.03
7.192.31
18 . 757.60
69 , 270 .lH

100 .HHH.21
H37.115.38
27 . 012.27
9 . 195 . 6H

12.10H.09
995.05

375.00
11.537.95
33 . 138.67

22.630.H3
llH , 381.61
17 . 815.35
26 .518.59
8 , 717.37
19 . 677.15
72,101.92
28 , 809 „ 3H
17.160.72
15.150.73
90.00
19.778.56
25.H3H.00

99 . 375.07

936 . 795 .H5

975 . l 32 .Hi

H92.63
112,19

12.701.0H

s,%93 .si

10.H75.95
2 . 2 H2.31

98,770.25

921 , 201.20
39 .H35 .H2

962.H1H.15
HO.3H6.2H

H6.6i9.3H
H,667.35

H3,739.82
6 . 359.07

lcon.923.31

1.052,859.2s

H6.619.3H
H,667.35
$ 913.153.06

Combined

98 . 770.25

27.H23.99

16.981.30
11 . 855.30

EXPENSES
Minneapolis
Helena

913*153»0^
98.770.25

1,011,923.31

Operating costs for 193& vrere $H0,935*97 less than In 1937^

Minneapolis

costs showing a decrease of $*&,925.19 with Helena costs Increasing $3,989*22.

had estimated the 193*5 expenses would he approximately $7 *3°° below the 1937 costs.
Prom an estimated monthly average expense of $87tl25 we have been able to show a
monthly reduction of $2 ,79g» Qu* estimates are subject to several important
changes, chief of which is reimbursement for services rendered fiscal agencies.
Through slackened work in soiae banking functions, we are sometimes able to transfer
employees to fiscal posts and make salary recoveries.

Expansion of fiscal work

also increases our revenue from rental of space required for fiscal work and also
from bank equipment used on fiscal work.
During the last quarter of 1938 fiscal expenses were considerably in
creased largely through expansion in the Reconstruction Finance Corporation.

The

total of reimbursable expense was increased to $l63 »952*92 , or nearly $29,000 more
than estimates.

Of this total $12H,6H2.15 represented salaries and $15,59^*25

rent of space and equipment.

This was an increase of $6,200 in salary payments

and $2,800 in rentals, compared to 1937*

Fiscal expense for which no reimbursement

was permissible amounted to $^9 »7^1*^7 *n 1938*
The expense of caking industrial advances is included with other operating
cos18, but a separate record is made up in order that the earnings from advances
xcay be applied against costs before disposition is made of the excess income.
Total expense in connection with industrial advances in 1938 was $35,936.27, which
is $1,000 less than in 1937*

Gross earnings were greater than in 1937 and amply

covered expense.
Increased expense at Helena was the result of changing to new quarters
and the entertainment in connection with the dedication of the new building.

Prior

to transferring the Branch Reconstruction Finance Corporation custody work to
Minneapolis in 1937* tbe reimbursable expense was approximately $5,000*

With these

duties now returned to Helena and the volume expanded, the additional amounts reim
bursed are quite likely to offset the higher operating costs incurred through
occupancy of new and larger quarters®

EXPMSES - Continued

SALARIES
Minneapolis
Helena

$ ^55,553*09
55.583*68

5ll^k2 0 f7

Het Changes from 1957
Not Decreases
la payments to officers
In payments to all other employees

Total decrease for 1938 * . . . • $
Decrease at Minneapolis
Decrease at Helena

1 ,381068
2*tc635al*f
26f0l6082

2^,721*57
1,295*25

Total decrease for 193S . , . . 0$

26,0l6o82

It was indicated at the 'beginning of 1933 that the salary payments of the
year would be approximately $25,000 less than in 1937®

At the close of the year

we had 32S employees at Minneapolis and 39 at Helena* a total of 36 ?* compared to

33 U one year ago . Of the increased number of personse 23 were added at Minneapolis
and 10 at Helena*

At Minneapolis fiscal employees increased 32 persons and regular

employees were reduced nine persons*

Some of the reduction of the salary total

paid regular bank employees results from temporary transfers of these employees
to fiscal duties.

During December the salaries of three officers and 152 others at

Minneapolis were ail or partially reimbursable0

At Helena the increase from 29 to

39 during the year was the result of transferring back to Helena the custody work
of the Reconstruction Finance Corporation which had been brought to Minneapolis
during the previous year*

Eight of the added employees are on fiscal pay roll* the

others being minor employees.

During 1938 w® included among the deletions eight

persons who had been on the staff sufficiently long to be entitled to dismissal
wages*

The amount paid these eight persons was $2,890*

Our pay roll basis at

January 1, 1939» other than for fiscal work, indicates that salary payments in 1939
should be approximately $20,000 less than in 193®»
of employing more woman for the minor posts*

This is to some degree the result

During 3-93^ the number of women in

creased 32 , the present staff of women numbering 113 <>
Complying with the conditions of the Federal Wage and Hour Law will likely
have some effect on our total pay roll«

Adjustments in working hours have been

made in a number of departments* but no payment of overtime has been necessary*
Should our operations expand, it may be necessary to add to the staff to avoid
such payments o

IjffI&3342NT SYSTEM
CURRENT SERVICE (fOBTRIBUTIONS
Minneapolis
Helena

$ 22,757*08
2,768.39

25 ,525 ,1+7

Payments tjr the Bank to the Hetironent Syatea were about $1,500 loss than
in 1937 for two reasons; a reduction in monthly pay roll and lowering of the per
centage rate for contributions®
of the monthly salary*

Up to July lt 1938 we paid the Trustees

Since that date we have paid at the rate of 5 °21$*

Prior service contributions have also been made monthly out of funds
already provided*

On December 31 the full amount provided for payment in 1939«

$S3,0U8s was remitted to the Trustees, completing the total prior service payment
of this Bank which amounted to $^33»5^^c6S0

LSOAL ff&ES
Minneapolis
Helena

$ 11*851*73
- ___

11,851*73

With the exception of payments made to expert witnesses in connection
with our real estate tax suit and a few minor payments to protect our interests
at closed bsjiks* the regular retainer paid Ueland and Ueland of $750 per month
covered all legal expense,

The amount paid the four witnesses referred to above

was $2s75®«

DIRECTORS; FEES AKD EXPENSES
Minneapolis
Helena,

$ 10,322*65
1,1**12,05

11,76^0 70

Payments in connection with directors9 services were $3*10 less than for
the previous year*

At Minneapolis this expense was $621 lower with Helena expense

$221*55 higher, because of 12 board meetings held compared to ten in 1937*

Classi

fication of the Minneapolis expense was as follows?
Regular meetings at Minneapolis
Meeting held at Helena
Executive Committee Meetings
Discount Committee Meetings
Luncheons for directors
Football tickets and transportation
Helena Board meetings and luncheons

FEDERAL ADVISORY QOUICIL

$
538»60
200*00
650*00
109*60
71»25
$ 10 ,322.65
1,4^2*05
$ 11 ,7^*70
$ 1,261*05

Four meetings were paid for during 1938 * which accounts for tke increase
over the payment of $995*05

1937

three meetings were paid for,, to our

Coimcil member*

EXPENSES - Continued

TRAVELI&G EXPENSES
Minneapolis
Helena

$ 21 :802«,13
1,^70*68

23,272,81

Our travel costs covered many purposes during the past year, som9 items
being expanded with others considerably lessened®

Industrial Loan meetings and

investigations required $5 ,012 «,Ul* in 193s, an increase of $1,800 over 1937°

Bank

examination expense increased $1,500 end bank visitations by our officers in

creased $2 ,000, this latter item including expense incurred in connection with new
memberships©

Items showing reduction included showings of the bank movie* $950

less than in 1937 * a reduction of $650 in the amount expended attending group meet
ings and conventions, and $2,^00 less in the cost of maintaining representatives
on closed bank work,

The classification of travel expense was as follows s
MINNEAPOLIS TBAVSL EXPEHSES

Showing Bank movie
Industrial Loan investigations
Industrial Advisory Committee expense
Bank examinations
Bank visitations
Group meetings and conventions
Retirement Committee meetings
Closed bank representatives
Open Market Committee meetings
Special conferences outside district
PresidentsConferences
Attending opening of Helena building
Attending Rutgers University (Preston & Lysen)
Attending our December meeting (McKnight)
Attending study conference at University
of Michigan (Preston)
Miscellaneous

5^2«55
3*801*55
1 #210„89
5*5^3°93
§*3^5°9^
852 06 k
132o90
7^5«6o
UU^e2^
7^0d6
357*83

156063
39^°^9
57*10
60d0
U25o5S
$ 21 ,802c13

HELENA TRAVEL EXPENSES
Visiting banks and attending group meetings
Examination by Head Office auditors
Living allowance paid Branch auditor

565020
3&Q 0OO
1 ,470.68

112 *722*65

POSTAGE AMi EXPRESSAGE
Minneapolis
Selena

$ 97*879*10
lH,8U3«55

Total costs of the above nature were approximately $1,660 less than in
1937 0

The net decrease at Helena was larger than at Head Office because of

greater proportionate falling off in the volume of currency shipments»

The saving

at Minneapolis was $522oGSo
Postage used on money shipments at Minneapoliswas $47.19^*08? compared to
$1*9 ,251,98 in 1937 °

‘The amount of $26 E009«6U was absorbed on incoming currency

shipments which is $200 more than in the previous year*

On outgoing shipments of

currency we placed $15e?67»36 ia postage, which is nearly $1,900 less than the

EXPENSES - Continued

amount required in 1937®

Coin

shipments required $5,Ul7*OS postage, which is $U00

less than one year ago*

Surcharges included in above costs were $12,U32o05 in I93S

and $lU,U30.**S in 1937*

Ordinary mail required $U0,07U.ty> in I93 S and $Uo,65^*38

in the previous year.
Sxpressag© at Minneapolis shows an increase of approximately $1,300 over

1937 , The major items are coin shipments sent us collect hy member banks $6,OHg»21
and checks sent by express to member banks $3o6H5*'41«>

The corresponding figures

for 1937 were $5 »ty)3 ® ^ £°r coin and $3 »^33*25 for checks*
the past year was $639*561 compared to $933.01 in 1937°

Automobile expense for

Since we have made no use •

of our armored truck for hauling money and securities, that service now is being
performed by Brinks Express on a basis of $300 P®r nonth for 150 trips.
in excess of 150 will be paid for at a rate of $2*50 per trip*
result in higher expressag© charges for 1939 ®
reducing guard expense and eliminate armored

Any trips

This change will

arrangement will result in
truck operating costs, also the

necessity for purchasing a new truckc
At Helena the net decrease was $1 ,136 .90 , compared to 1937®
shipping costs of $S,HlSo56 were $1 ,381 „UU less than one year ego*

Currency
ISxpressage

costs were $lHU*15 less in 1938 # partly because of elimination of garage rental
after June 15c

Ordinary mail costs increased $^2ty*6U.

TELEPHONE M D TELEGRAPH
Minneapolis
Helena

$ 11,833*75
U,259o23

16 ,092.9S

Further progress was made in reducing telegraph and telephone costs dur
ing 1933, the net reduction being $1,722*37 with $1,500 of the saving effected at
Minneapolis.
Our payment to the Board in connection with the leased wire was about
$900 less than in 1937®

This results from more of the Federal reserve banks using

the teletype machines, under which plan payment is made for the time used only*
Further study is being mad© which may be the means of placing additional banks
on the new plan and bring about further reductions*

The greater use of leased

wires by fiscal agencies brought us $215 no?® reimbursement in 193 S than for the
year previous*

Cost to us of commercial messages was $350 less than in 1937®

Telephone expense was approximately $200 lower in 1938 at Minneapolis*
Wire costs at Helena decreased $286*79 with telephone expense $88*7^
greater than in 1937®

Branch now makes use of the regular switch-board for

handling inter-department messages and may make outside connections without

EXPENSES

requiring a regular operator0

-Continued.

The partial time of one employee gained, more

than offsets the added telephone expense*

PRINTIKG, STATIONERY AND SUPPLIES
Minneapolis
Helena

$ 22 ,858*67
3.370.36

26,229,03

Until December, the amount expended for the above items had remained veil
belov the costs for the similar period of 1937* As the earning outlook for 1939
did not look very encouraging, we thought it better to pay some of our bills in
December, which normally would not appear in our expenses until the following month*
Printed forms for Transit and Collection Departments, envelopes and other supplies
to the amount of $U,666.63 were provided for, bringing the Minneapolis expense
total for printing, stationery, etc* to within $H68*86 of the amount required in
1937.
At Helena costs increased $179*30 over one year ago, which should be ex
pected in view of the supplies required since occupancy of the new building*

INSURANCE ON CURRENCY
AND SECURITY SHIPMENTS
Minneapolis
Helena

6,272*89
919. **2

7.192*31

The amount of insurance paid on currency and security shipments during
1938 was nearly 18# less than in the previous year*

More insurance was absorbed

on incoming shipments this year than last, but $1 ,0^3 more was paid in 1937 on
currency shipments sent by us*

We had a net credit of $137*77 on securities in

sured for member banks during 1938* compared to $219*31 absorbed in 1937* A reduc
tion in volume and a lowering of the insurance rate from 5# pe* M to ^*75^ per M
accounts for the reduced payments*

OTHER INSURANCE
Minneapolis
Helena

$ 17.891*22
866,38

18,757*60

The saving in premiums paid during 193# for the various kinds of insurance
other than mail was $919*55* Most of the reduced cost was obtained by the lowered
payment for Blanket Bond.

Until August 1, 1937

premium for blanket coverage

was $13 ,250 , after that date the cost beiog $12,075 per annum, all of which is
paid by Minneapolis*

Prior to 1938 the Branch had assumed l/lOth of the premium*

EXPEKSBS - Continued

Our group life payments were $l64 less in 193®» because of the lowered pay roll.
Officers and employees were refunded $151*17* representing one-half the collision
insurance premium on cars used in bank work*

Classification of payments in 193^

at Minneapolis are given below;
Special police bond
Group Life
Workmen’s Compensation
Non-ownership Auto Liability
Collision Insurance - Officers and Saployees
Bankers Blanket
Premises and Elevator Liability
Fire and Tornado
Steam Boiler
Burglary on Securities
Fidelity Bonds

$
*

125*00
1,395*48
1,161,31
608.39
151 «17
12,760.36
362*,13
804*95
&3*3§
195*93
260.14

17, 891-22

•EASES OH BANK PREMISES
Minneapolis
Helena

$ 6 7 *360*00
1,910.1*1

69 ,270.1^

Due to a reduction in valuation and tax rate the amount reserved by
Minneapolis in 1938 for payment in 1939 wa}3 $3»627#03 less than in 1937«

W© had

expected to receive a substantial refund in 1936 and subsequent taxes paid under
protest but the Court did not find in our favor*

All back taxes have been paid

and in addition, we paid $1 ,776*76 as interest and penalties on delinquent taxes.
Prior to starting our suit, we were granted a reduction in valuation of $279*750
and have since had another reduction of $86*250*

Based on the new valuation and

rate our saving per year is approximately $11 ,000*
At Helena taxes were paid on both old and new properties*

The Branch re

served $218 monthly for most of the year, but the valuation fixed on March 1
resulted in an adjustment*

No knowledge has been obtained a 3 to the value which

will be used in assessing the old property unless disposed of before March 1, 1939•
The basis for taxes in 193S was $28,520 on the new property and $38,930 on the
former quarters*

DBPHECmiOH ON BANK BUILDING
Minneapolis
Helena

$ 25 .833*60
1 ,590*39

27 ,423,99

Of the total reserved at Minneapolis $25*665*60 is 2$ of the estimated
replacement cost of the bank building*

All the original cost of fixed machinery

and equipment has been provided for, including $168 to cover cost of sewage meter

EXPMSSS - Continued

and installation*

Charges to expense for depreciation at

Helena ware $750 on

estimated replacement cost of building and $SU0«39 on new fixed machinery and
building equipment..

Helena charges represent depreciation for six months*

LICrHT, HBA1% POWER M B WATEH
Minneapolis
Helena

X5*^18a78
ls562052

The net reduction at Minneapolis was $216,560

l6,9Slo30

Daring the past year w©

purchased 96 ,23^ gallons of fuel oil costing $5?G73°^3 coaPare^ *'° 112»102 gallons
at a cost of $5*959*57

1937 ° & price of $5°25 per 100 gallons was in effect

during 193S until October 1*

Our new contract gives us a flat price of 5 cents

per gallon until October? 1939*
in excess of the 1937 cost.j

Power and light expense of $9,5^5°^9 is $33^*71

We have recently installed nev<r lighting fixtures on

the upper floorst after consulting with lighting experts*

It is estimated the

increased cost for power and light bulbs when the installation is completed will
be approximately $2ft000 per year<>

The expense of city water in 193& was $U9U050o

In August a sewage meter was installed and we now pay a monthly charge for aewag©
disposal*

This added charge amounted to $28'9o73

1938°

Our larger building at Helena will increase the heating costse but no
estimate is made at this time0 For the year 193$ heating expense increased $78-50*
Light„ power and water costs were reduced leaving a net increase of $37*1^ for the
above services

The high windows and skylights should keep lighting costs down

even though the building is larger than the former quarters*

Branch now buys no

drinking water^

BSPAIKS AMD ALTERATIONS
Minneapolis
Helena*

$ ll„Uxio67
M-3,,63

ll.S55c30

The amount required for the above purposes was $3»3^0 below the amount
expended in 1937«

At Head Office we charged $6 *996037 for work and materials on

jobs not yet completedo

A list of the important repairs and alterations undertaken

during the past year is as follows;

EXPENSES - Continued

Installation of by-pass around water pump
Elevator maintenance contract
Repairing elevator
Plastering tvo offices (work completed)
Dost filters on air conditioner
Repairs in alley
Installing lighting fixtures and controls
Covering Bkylights
Equipment for boiler room
Plastering (work not completed)
Miscellaneous repairs
Glass and steel frame for switchboard
Misc* supplies for our workmen

298.00
2 ,166.00
223.80

139.2**

128.30
5^1*00
3.592*12
8U7 .OO
157.25
2,400*00

33.60
76.00
809*}6
$ n A ii.ii

Helena expended $1^3.63 for miscellaneous small repairs and set aside

$300 for painting and decorating the main vault.

RENT
Helena, only

375*00

This payment was for the occupancy of temporary quarters In the Montana
Club and the First National Bank and Trust Company, Helena, building during the
period in which the vault was being moved from the old building and the new premises
vere being prepared for the staff*

HJKKITURB AMD EQUIPMENT
Minneapolis
Helena

8,216*39
5,521.06

11,537.95

Over one-half of the Minneapolis purchases vere made in December, with
some machines not yet delivered*
to the extent of $l6,763«9^«

One year ago we anticipated our equipment needs

A list of the 1938 equipment purchases at Minneapolis

follows;

2
2

Varityper
Multigraph Folder
Burroughs Adding machine
Monroe adding machines
Steel tables
Flat top desk
Mailing machine
Monroe Duplex adding machine
Allen Wales Duplex adding machine
National Bookkeeping machines
L. C. Smith typewriters
Miscellaneous files, furniture, etcc

1*99.95
375.00
170*55
1.552.00
q
255 .00\ ^ 3 0 l Z
75.19^

900.00
302*00

3U0.00

2 ,860.00
195.62
...651.5.8
$ 8 ,216,89

Purchases at Helena included $2,125*00 for new desks, chairs and rugs for
Manager's room and directors1 room; $1*65»75 for &n adding machine; 2 typewriters
$162.12 ; check protectograph $90*00 and equipment for lunch and recreation room
$2U0 .00 .

EXPENSES - Continued

MISCELLANEOUS EXPENSES
Minneapolis
Helena

$ 26.U90.0S
4.648*59

33.138.67

Items not regularly classified Increased our total costs nearly $8,000
over 1937*

Important payments at Minneapolis included:

Rental, repairs and main

tenance of furniture and equipment $1 ,309•5^• outside laundry and cleaning $885.34;
newspapers, books, binding, etc« $1 ,911*59 ; copies of bank examination reports
$4,235 ,00 ; commercial agency reports $671*66; medical services and supplies $578*63;
cafeteria net expense $3 *363*66; entertainment of bankers not in our employ $2 ,070 .66;
employees1 education - American Institute of Banking $2,353*50; donations to Federal
Reserve Club $1,525*00; membership American Bankers* Association $250.00; State and
other bankers associations $395*00; Credit Men's Association $213*50; Police and
Firemen's Benevolent Association $150*00; our share of loss of operation foreign
department, Federal Reserve Bank, New York, $2,144.06; Member Bank conference held
March 12, 1938, $2 ,856*52 ; interest and penalties in connection with our real
estate tax suit $1 ,776*76*
Important items at Gelena were as follows:

Rental, repairs and mainte

nance of furniture and equipment $1 ,322 *79 * outside protection and vault inspection
$162.70 ; postage meter rental $217«50 ; copies of examination reports $200*25 ; enter
tainment of bankers in connection with opening of new Branch building $1,490*50;
donation to Federal Reserve Club $300*00; memberships State and other bankers
associations $200*

REIMBURSABLE EXPENSES

$ 163,952*92

Recoveries made for services performed for the various fiscal agencies
reached the above total in 1938#

List of the agencies and the amount of reimburse

ment from each is shown below:
Treasury Department:
U. S. Government Issues
$
Reportix^ foreign exchange transactions
Work Relief Checks
Adjusted Service Bonds
Reconstruction Finance Corporation
Farm Credit Administration:
Federal Farm Mortgage Corporation
Federal Land Banks
Federal Intermediate Credit Banks
Federal Emergency Administration of Public Works
Federal Home Loan Banks & Home Owners * Loan Corp.
Commodity Credit Corporation - Current Issues

50*125*53

29.80
20,492.90
4,265*58
7^*171*68
5,117.12
3*^72*70
11*92
1,302*04
^*369.34
594.31

T ot a l ........................................ $ 163,952.92

EXPENSES - Continued

ASSESSMENT FOR EXPENSES OF THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM

39,^35o^2

Operating costs of the Board and its staff required $910.82 less from
this bank than in 1937*

The assessment for expanses is based on the relationship

the capital and surplus of each bank bears to the total capital and surplus of the
System,

The amount of our assessment for the first half of 1939 will be $18,1*91.77

compared to $20,085.7*1

during the like period of 1938o

FEDERAL RESERVE CURRENCY
Original cost and shipping charges

U6,6l9»3^

Payments for preparation and printing of our notes during the year amounted
to $39»38U, or approximately $3*700 in excess of the 1937 costs.

The amount of

notes broyght to Minneapolis and Helena was less than in the previous year.
shipping charges were $6 ,963*01 in 1938 and $7 ,883.39 in 1937*

Such

Our proportion of

the salaries paid members of the Issue and Redemption Division was $272 .33 .

July 1, 1938 the cost of printing and preparation of our notes was reduced from

$96 per M sheets to $92 per M sheets.

Total costs of our new notes including

shipment from Washington was $^3*739*82 in 1937*
All expense of notes sent Helena from Washington is assumed at Minneapolis.

FEDERAL RES>2?VE CURRENCY
Cost of redemption Including shipping charges

$ k , 667,35

At the close of the fiscal year, June 30( 1938* the amount charged ex
pense for the redemption and destruction of our notes was $1 ,270 ,97*
close of 1937 we had reserved $1,2UU,2U.

No amounts were reserved in 1938 until

October when we began setting aside $100 per month.
to $150 per month in January, 1939*

At the

This amount will be increased

addition to the above payments, we paid

the Federal Beserve Board $1,215.62 in 1938 as our portion of the expense of the
Issue and Bedenption Division,

The redemption charges also include the postage

on fit notes of other Federal Reserve Banks returned to bank of issue, the cost
of shipping unfit notes to Washington by express and the insurance on our notes
returned to us by other Federal Reserve Banks,

PROFIT AND LOSS ACCOUNT Of
FEDERAL RESERVE B A M OF MINNEAPOLIS DURING 1938

Head
Office
Current earnings
Current expenses
Current Net Earnings.

Helena
Branch

$ 1 . 100, 309.79
i.06
187.156.73

Total

iei.83

$ 1 . 100.U71 .es

98,008*^2

88,51*8.31

Additions to Current Het Earnings
Profit on sales of United States Govern
ment securities
$
Recoveries of expense in connection with
failed banks
Proceeds from sale of other real estate
Recovery on transit items previously
charged off
Profit on mutilated currency and coin
Sale of scrap material
Profit on advance to protect collateral
account failed hanks
Net income over expense - other real estate
Sale of fixed machinery and equipment
Difference account
Withdrawn from reserves for;
Prior service liability
Losses on Hungarian Credits
Losses Misc. Assets - Failed hanks
TOTAL ADDITIONS....................... $

281,350.93

281,350.93
IS.323.55
1 ,159.00

is.323.55
1 ,159.00

61.21

6lo21
101066
^3.51

22,89

78*77
18*51

25.00

30.25

30.25
122.89
350.00
UU.30

8?eOU

35.85

350.00
67.92

23.62

166,088.00

166,088.00
5 .225.12
12 .UUU.00

5,225.12
i2 ,UUU.oo
15-53

485,281.00

Deductions from Current Net Earnings
Prior service contributions to Retirement
System
Special ch?rgeoff on bank premise
Counterfeit currency and coin
Discount on foreign currency and coin
Protest fees absorbed on transit items
account of failed banks
Member bank reimbursed account loss of in
terest due to delayed securities collec
tion
Shortage in currency delivered to member
bank
Transferred to Reserve for Losses on
industrial. Aavaaces
TOTAL DEDUCTIONS

Cj 9v w 1VA/
176.u99.it8

2U,032.38

200.531.86

Net additions to or deductions from
current net earnings

308.797.05

2U.0U 7 .9i

2sU.7U9 .1U

Net earnings

u95 .953.78

$ 122,656

373.297.U5

17u.231.27

Dividends paid
Payment to Secretary of Treasury (Sec. 13-b)
Transferred to Surplus (Section 7)

151.223.81*

177.20

1U.86U.16
9 . 162.U7

166,088.00

5.75

182.95

9 . 162.U7

9.97

1.62

83.85

3.00

3.00
Crj §UuUtw

$
$

1 . 00U.92
198. 061.26

DIVIDENDS

Cumulative dividends at the rate of six per centum per
annum on paid in capital stock paid to December 31 ,
1937
Dividends paid during 1938
Total dividends paid since organization ...........

$
$ 4 ,165 ,532.51
174.231.27
$ M39.7b3.78

FRANCHISE TAX
Total of franchise tax payments to the United States
Government since organization
These payments were cade out of earnings during the
period 1918 to 1932* The Federal Reserve Act as
amended by Section U of the Banking Act of 1933 no
longer provides for payment of a franchise tax*

$ 5,202,898.50

SURPLUS, SECTION J
Balance in Surplus Account, Section 7» Dec* 31 , 1937
Dec* 31 , 1933 Transferred to Surplus, net earnings
during 1938
Dec. 31, 1938 Transferred from Surplus to Reserve
for Losses and Contingencies
Net Credit
Balance in Surplus, Section 7» January 1 , 1939

$ 3,153.413.69
$ 19S,06l «26
198»06l»26
j
$ 3.153.413.fe9

SURPLUS, SECTION 13-B
Balance in Surplus, Section 13-b, December 31 , 1938
No change during year*

$ 1 ,001 ,162.98

RESERVES
(Other than Bank Premises Depreciation Reserves)
Reserves at beginning of year

$ 2,110.392.53

Credits during year:
Recovery of loss on discounted bills
$
0
Net profit for the year on U*S*Government securi
ties thru Federal Reserve System Open Market
Account transferred from Surplus, Section 7 to
Reserve for losses and Contingencies
198,061*26
Transferred from Profit & Loss to Reserve for losses
25,000*00
on Industrial Loans
Total Credits ................................
$ 223,061*26
Debits during year;
Loss on Misc. Assets - Failed Banks................ $ 12,Wl*00
Payments of p r io r service liability to Retire
ment System
'................................... 166,088.00
Loss on Hungarian Credits..............................5*225*12
Total Debits ..................................
$ 183,757*12
Net Credit
TOTAL • ,
Reserves after closing entries for;
Losses and contingencies created from net profits
prior to 1938
Losses and contingencies created from surplus sub
sequent to January 1, 1938
Losses on Misc* Assets - Failed Banks
Losses on Hungarian credits
Losses on past due industrial advances
Total January 1 , 1 9 3 9 ............................

39.304.l4

$ 2 ,149.696.67

1,701,246.18
280,179.99
81,000.00

47,270.50
40.000.00
$ 2,149,696.67

PROFIT AND LOSS
The current income in I93S was Insufficient to coves* all our needs,,

only one year sine© 1932 have wo "been able to show any excess of current earnings
over expenses, dividend requirements and normal depreciation, that year being
1937.

Our ability to show a total income large enough to meet normal requirements

has depended on the net profit we received through the sale of United States
secxirities from System Account, credit for which is placed in Profit and Loss
Account*

Such profit in 1938 was $281,350<>93? compared to $S2,118<,73 in 1937°

It has been our desire each year to add the full amount of the profit from System
sales to Reserve for Losses, but the excess which remained after providing for
other needs was $19S»06l ,26 the past year,
Besides the profit from sales of Governments, other additions to profit
and loss aggregated $20 ,172 ,95 *

largest item was $1S,323*55 v? expense re

covered from three South Dakota closed banks making final settlements
ago the collections of expense ©mounted to $1 ,90^,90*

One year

Sot a great deal more of

expense at closed banks will be collected, between $6,000 and $7*000 being the
estimate,, < From the sales of other real estate acquired in connection with closed
bank matters, we obtained $1 ,159 * the largest item being $1,000 as payment on
Staples BroSe, Cut Bank* Montana contract, the original amount being $l,920o
Through the sale of a centrifugal pump no longer of use to us* we received $350*
As our fixed machinery and equipment original costs had already been provided for,
credit was made to profit and loss*

Other small credits resulted from profit on

mutilated coin sold to the Mint, sale of scrap, recoveries on transit items pre
viously charged off and a small net income from other real estate as indicated on
previous pages*

Difference accounts showed net credits of $ ^ c30 at Minneapolis

and $23.62 at Helena,

Considering the volume of currency and transit operations,

this is an excellent record.
Other credit items appearing in Profit end Loss were transfers from
amounts previously reserved out of profits and now disbursed or transferred to
other accounts.

Each year since 193^

have been making payments to the Retire

ment System in connection with the prior service of our employees, with the final
payment to come at the close of 1939®

was determined at the last Presidents5

Conference to complete the prior service contributions at the close of 193S 0
Accordingly, the balance of the amount reserved, $S3,0USo00, was transferred to
profit and loss and paid to the Trustees of the Retirement System, making a total

PROFIT AND LOSS - Continued

of $166 sOSSc00 paid in 1938«

In addition to the transfer from the reserve for

prior service contributions, $5 *225*12 of the amount reserved for losses on
Hungarian credits and $12,444*00 of the amount reserved for losses on failed
bank paper was credited to profit and loss because there was sufficient remain
ing in these accounts to cover expected losses®
The various credits direct to profit and loss aggregated $4S5,281<>00
which added to $1,100,471.62 of current earnings provided $1,585,752.62 gross
incomeo

Those funds were disposed of ss follows?

CURRENT EXPENSES
Minneapolis
Helena'

$ 913 »
98.770*25

$ 1,011,923.31

The Budget for 193$ estimated the total current expense at Minneapolis
would be $940,325o50 and at Helena $I05»180o00t so that a reasonable reduction
was shown at both offices.

Compared to the actual expense of 1937* the past

year shows a decrease of $40,935*97* Minneapolis having a reduced expense of
$44,925019 and Helena an increase of $3 ,989r.22,

Removal of the Reconstruction

Finance Corporation custody division from Helena for the greater part of 1938
lowered Branch recoveries from fiscal agencies compared to the previous year0
Expenses in connection with the opening of the new building at Helena expanded
I33 S costs0 The tentative 1939 Budget figures show an estimated current expense for
Minneapolis of $892,697.00 and for Helena $97,049.00*

SPECIAL CHARGSQFF OH B A M PREMISES
Helena -

9 ,162*47

Prior to the closing entries on December 31» 1938 the land was carried
at $15 ,027 .50 , bank building at $79 *13^°97 end fixed machinery and equipment at
$l6.S07,SSo

It was the opinion that the land could not be disposed of for more

than $10,000 and we obtained approval of the Board of Governors to reduce the
book value to that amounte
In arriving at a basis for calculating normal depreciation on Federal
reserve bank buildings the Board of Governors has approved a figure which is the
mean of the actual construction cost and the lowest price at which the same
property could have been built during a previous period of fifteen years^

estimated this replacement cost to be $75*000 and v/ere authorized to reduce the
book value to that amount0

PROFIT AHD LOSS - Continued

The normal depreciation of 2# on the building and 10$ of the cost of
fixed machinery and equipment has been provided by charges to Expense during -he
last half of 193*5.

Under this procedure $750 has been reserved for Branch build

ing depreciation and $8UO«39 £°r depreciation on fixed machinery and equipment
Depreciation of $25*665«60 on Minneapolis building was also provided by a charge
to Expense®
\

RESERVE FOR LOSSES ON IMDUSTRIAL ADVANCES

25,000c00

The setting aside of the above amount was done with the approval of the
Board of Governors and relates to an increase in the expected loss on the inu, -*•
trial advance made the Northwestern Oil Company, Superior, Wisconsin*
ago we reserved $15*000 making a total of $UO,OOQ now reservedc

One year

It is noted

that $19 »72^*^2 of the $2^,000 reserved came out of earnings from industrial ad
vances which in the absence of losses would be paid to the Treasury Department,
the bank supplying $5*275°52*

The original amount of the Northwestern Oil Com“

pany loan was $225*000, now reduced to $190,US2 o22o
RBIMBURSJEE4SSS? FOR LOSS OF INTEREST

S3«S5

This payment was wade to the Farmers and Merchants State Bank, Spring
field, Minnesota, due to delay in handling a securities collection March 30* 3*937®

COUNTERFEIT CURRENCY
Minneapolis
Helena

177*20
S 75

182c95

The excellent character of the present counterfeits adds to the diffi
culties our tellers experience in detecting forged ;iotes*

Most of the notes

escaping notice are passed by the less experienced women currency sorters*

The

counterfeits are mostly Federal reserve notec of other banks and a few silver
certificates,,
PAYMENT TO TREASURY DEPARTKEM?

l,OOU«,92

After providing for all expenses in connection with industrial loans and
reserving an amount sufficient in our judgment to cover expected losses, we were
able to pay to the Treasury the above amount*

The maximum amount which v/e could

pay the Treasury Department on the basis of funds used during 193& would be
$20 ,023 .26.

PROFIT 0 D LOSS - Continued

DIVIDENDS PAID

174,231.2J

On December 31, 1938 our member banks held capital stock in this bank to
the amount of $2 ,903 ,35 $
pered to $2 ,900,950 In 1937 °

average daily holdings in I93S $2*903*850, com
At the close of the year 462 tanks held stock in

this institution, a decrease of eight members during the yearc

This was a reduc

tion of thirteen in National banks and an increase of five State banks*
Total dividends paid since organisation $4,339 ,763 *78 *
TRANSFER TO SUBPLUS, SBCTIOK 7

198,061*26

Complying with the provisions in the Banking Act, we placed the above
amount in Surplus Account representing the net earnings after providing for operat
ing costs, depreciation and dividends..

Following out our desire to add all

profit from the sale of Governments to “Reserve for Contingencies” we have trans
ferred $19S,06l#26 from Surplus to Reserve for Contingencies, leaving the Surplus
Account, Section 7 at $3,153*4-13*69 *

3Sm8 6,8

c-l*03e

2-937*

It will

be noted that in order to leave the surplus intact we transferred to Contingencies
$83 ,289067 ie6S

t'ke actual profit from Government bond sales«

FEDERAL RESERVE BANK OP MINNEAPOLIS - HEAD OFFICE
REPORT OF AUDITS - YEAR I938
Dates of Audits
CASH
Cash in Vault - Bank Officers1 Reserve
Cash vith Tellers
F.R# Notes in Transit from Other Federal Reserve Banks
F.R. Hotes forwarded for Redemption
Other Cash in Transit
Redemption Fond * F.R. Notes
Inter-District Settlement Fund
F.R. Agent's Gold Certificate Fund
Unissued F.R. Currency held by F.R. Agent
Currency Received account of Non-Member Banks

Deily
Daily
3-15 , 6-6 , 10-17 , 12-21
Monthly
Weekly
3-15 . 6-6 , 10-17 . 12-21
3-15 , 6-6, 10-17 , 12-21
Currently

EARNING ASSETS
Bills Discounted
Industrial Advances
Bills Bought in Open Market
Participation in System Open Market Acct* U.S. Securities
Participation in Investments through Foreign Banks
Participation in Foreign Loans on Gold

1-19.
1-19.
1-19.
1-19.
1-19.
1-19.

UNCOLLECTED ITlfllS
Transit Items - F.R* Banks
Transit Items - District 9
Exchanges for Clearing House
Federal Returns and Other Deductions
Return Items - Member and Non-Member Banks
Government Suspense Account
Collection Items Debits - Misc. Vault Coupons
Coupons on Hand
Due from Branch
Checks and Other Cash Items

2-28, 5-9 , 7-25 , 12-5
2-28, 5-9 , 7-25 , 12-5
2-28. U-26 , 5-9 , 7-25 ,
2-28, lt-26, 5-9 . 7-25 ,
2-28, *1-26 , 5-9 . 7-25 .
2-28, 5-9. 7-25, 12-5
3-I8 , 10-28
1-26 , U-5 , 8-22 , 10-26
Monthly
2-28, U-26 , 5-9 . 7-25 .

M ISCELLANEOUS ASSETS
tiisc. Asset8 acquired acct* Industrial Advances
Industrial Advances past due Three Months
Other Bills and Securities past due Three Months
Misc. Assets accuired in Settlement of Claims
account Closed Banks
Claims account Closed Banks
Advances to protec Collateral
Other Real Estate
F.D.I.C. Stock
Fiscal Agency Expenses Reimbursable
Interest accrued on U.S. Securities
Interest accrued on Bills and Advances
Premium on Securities
Overdrafts
Coupons paid before Maturity
Deferred Charges
Difference Accounts
Sundry Items Receivable
Suspense Account - General
Cost of Federal Reserve Currency
Other Current Expenses
Dividends accrued since Closing Books
Profit and Loss

3-15 , 6-6 , 10-17, 12-21
3- 15 . 6-6 , 10-17 , 12-21

5-23.
5-23.
5-23,
5-23.
5-23.
5-23.

12-10
12-10
11-18
11-18
11-18
11-18

12-5

12-5
12-5

12-5

None to 6—3 , 12—10
1-19, 5-23 , 12-10
None held
4-11
4-11
4-11
4-11
3-15 , 6-6 , 10-17
Monthly
1-19, 5-23 , 11-18 (Verified by NY)
Monthly
1-19, 5-23, 11-18 (Verified by NY)
Currently
6- 15 , 12-28
Semi-monthly
Currently
Monthly
Weekly
Currently
Currently
Monthly
Monthly

BANK PREMISES
Land
Buildings
Fixed Machinery and Equipment

Currently
Currently
Currently

FEDERAL RESERVE NOTES
Federal Reserve Notes Outstanding

3-15 , 6-6 , 10-17 , 12-21

DEPOSITS
Member Bank Reserve Accounts
Non-member Clearing Accounts
U.S. Treasurer- General Account
Foreign Banks
Officers' Checks
Federal Reserve Exchange Drafts
Other Deposits

Monthly
Monthly
Monthly
1-19, 5-23 , 11-18 (Verified by NY
Monthly
Monthly
Monthly

FEDERAL RESERVE BANK OF MINNEAPOLIS - HEAD OFFICE
REFORT OF AUDITS - YEAR 1938
Dates of Audits
Deferred
Deferred
Deferred
Deferred
Deferred

DEFERRED AVAILABILITY ITQ4S
Credits - Member sad Non-Member Banks
Credits - Other Federal Reserve Banks
Credits - Government Items
Credits - Mlsc* Vault Coupons
Credits - Ron-Cash Collections

Monthly
2-28, 5-9. 7-2$, 12-5
2-28. 5-9 , 7-25 , 12-5
3-18, 10-28
3-18, 10-28

CAPITAL STOCK AMD SURPLUS
Capital Stock Paid in
Surplus Fund (Section 7)
Surplus Fund (Section 13-b)

3 31 6-30 . 10-27 , 12-31
Currently
Currently

RTSS^RVES FOR:
Self-Insurance "
Prior Service Liability to Retirement System
Losses not elsewhere provided for

Currently
Currently
Currently

EARNINGS FROM:
Bills Discounted
Bills Purchased
Industrial Advances
Commitments to make Industrial Advances
Participation in System Open Market Acct# U.S. Securities
Investments through Foreign Banks
Deficient Reserve Penalties
Miscellaneous

Monthly
Monthly
Monthly
Monthly
1-19, 5-23 , 11-18 (Verified by HY
1-19. 5-23. 11-18 (Verified by BY
Currently
Monthly

MISCELLANEOUS LIABILITIES
Unearned Discount - Bills Discounted
Unearned Discount - Bills Purchased
Unearned Commitment Fees
Discount on Securities
Accrued Dividends Unpaid
Sundry Items Payable
Suspense Account - General

Monthly
Monthly
Monthly
1-19, 5- 23 , 11-18 (Verified by NY
Monthly
Monthly
Veekly

- .

MISCELLANEOUS OPERATIONS AMD ACCOUNTS SUBJECT TO AUDIT
COLLATERAL AMD CUSTODIES
Securities held as Collateral for:
Bills Discounted
Industrial Advances
War Loan Deposits

2 -1 , 10-8
2 -1 , 10-8

Securities held in Safekeeping
Cash Held in Custody for Treasury Department

2- 1, 10-8
3-15 . 6-6 , 10-17 , 12-21

2—1, 10-8

FISCAL AGENCY OPERATIONS
Subscriptions to and Allotments of U.S. Securities
Balances due from Depositary Banks
Securities on Hand
Securities in Process of Redemption, Exchange, Transfer
of Registration, Etc., - Due from Treasury
Securities Delivered
Coupon Securities Redeemed
Reports to Tre-sury Depr-rtment - Checked
Purchase and Sale Transactions

Daily
Currently
Monthly
Monthly test checks

RECONSTRUCTION FINANCE CORPORATION

£-9

NON-CASH COLLECTIONS

3-18 thru 4-1

BALANCE SHEET AUDIT OF HELENA BRANCH

9-13

Currently

2-1
2-16, 6- 27 , 12-28
2-16, 6-27 , 12-28

10-28 thru 11-12

FilDKRAL RiSiRVB BANK OF MlffiiSAPOLlS - HELENA BHA1JCH
REPORT OF AUDITS - YEAR 1938
CASH
Cash in Vault - Officers* Reserve
Cash with Tellers
Federal Reserve Notes in Transit

Bates of Audits

1-15 , 2- 7 , 3-3 . 4- 19, 6-14, 7- 12 , 9- 7 , 10-20 , 12-5
1-15 , 2- 7 , 3-3 . U-19 . 6-iU, 7-12 . 9- 7 . 10-20 , 12-5
Currently

EARITING ASSETS
Bills Discounted

5-23

UKCOLLECTED ITEMS
4—26, 5-23. 6-20, 8-17 .
4-26 , 5-23. 6-20, 8-17 .
4—26, 5-23. 6—20, 8-17 .
4- 26, 5-23. 6-20, 8-17 .
4—26, 5-23. 6-20, 8-17 .

Transit Iterns-Federa! Reserve Banks
Transit Items-Montana Division
Exchanges for Clearing House
Federal Returns and Other Deductions
Return Iterns-Member & Non-member Bks
Government Suspense Account
Coupons on Hand

1-15 •
1- 15 .
1- 15 .
1-15 .
1- 15 .
1-15 .
1-15 .

Checks and Other Cash Items

1- 15 . 2-11, 3-8. 4-26, 5-23. 6—20, 8-17. 10-14, 11-»21

2-11, 3-8,
2-11, 3-8.
2-11, 3-8,
2-11, 3-8 ,
2-11, 3-8,
3-8, 4-26,
2- 7 . 3-21,

10-14,
10-14,
10-14,
10-14,
10-14,

11--21
11-•21
11--21
11-21
11-•21

5-23. 8-17. 11-21
5-3. 16- 15 , 7-11. <B-9, 10-6, 12-8

KISCELLANBOUS ASSETS
Fiscal Agency Expenses Reimbursable
Overdrafts
Deferred Charges
Difference Accounts
Suspense Account - General
Expenses

Monthly
Currently
Monthly
Currently
Weekly
Currently

DEPOSITS
member Bank Reserve Accounts
Non-member Clearing Accounts
Officers* Checks

Monthly
Monthly
Monthly

DEFERRED AVAILABILITY ITEMS
Deferred Credits:
Member and Non-member Bpnks
Other Federal Reserve Bsnks
Government Items
Non-Cash Collections

Monthly
1-15. 3"8. 5-23, 8- 17 , 11-21
1-15. 3-8. 5-23 , 8-17 , 11-21
1-15 ,
8-1 , 12-8

EARUINGS FROM:
Bill8 Discounted
Deficient Reserve Penalties

Monthly
Currently

MISCELLANEOUS LIABILITIES
Unearned Discount - Bills Discounted
Sundry Items Payable
Suspense Account - General

Monthly
Monthly
Weekly

MISCELLANEOUS OPERATIONS AND
ACCOUNTS SUBJECT TO AUDIT
Non-Cash Collections

1-15 thru 1-29; ^

thru 4-18; 8-1 thru 8-l6 j 12-8 thru

12-22
Cash Held in Custody for Treasury
Deo^r tmen t

1-15 , 2- 7 , 3-3 , U-19, 6-14, 9- 7 , 10-20 , 12-5

BANK PREMISES - YEAR 1938

Helena
Head
Branch
Office______ New Bldge

Helena
Branch
Old Bldg.

Total

Land
Gross Boole Value:
Beginning of year
Additions during year

Deductions during year
Net book value
end of year

500,520.66

15 , 000.00
27-50

1.00

515, 521.66
27.50

5.027.50

1.00

5 , 028.50

10 , 000.00

510. 520.66

Bank Building
Gross Book Value;
Beginning of year
Additions during year

$ 1 ,283,281.50

Deductions during year
End of year
Reserve for Depreciation;
Beginning of year
Credits to Reserve;
Normal Depreciation
Other

U.13U.97
-JSiOOO.OO

1 ,283,281.50
$

Debits to Reserve
End of year
Net book value
end of year

12 , 190.02
66.9uu .95

333.653.16

25 ,665.60

750oOO

359.318.76

750.00

923.962.7U

74 , 250*00

...

135 . 000.00

1 . 430, 471,52
66,944.95

135 , 000.00

139.13^<>97
.. 1 *358. 281.50

135 , 000,00

468,653.16
2 6 .4 l5 .6 0

135 . 000.00

■9*

135. 000.00
360, 068,76
998,212.74

Fixed Machinery and Equipment
Gross Book Value;
Beginning of year
Additions during year

Deductions during year
End of year
Reserve for Depreciation;
Beginning of year
Credits to Reserve;
Normal Depreciation
Other
Debits to Reserve
End of year
Net book value
end of year

l6.807.SS

955-00
652.588.3i__

16.807.88

955.00
...i5.215.88,35....
-

16,108.99

16, 108.99

660,375.35
168.00

16, 108.99

660.375.35
168.00

17.063 o99

,.676,396 .23,

676.u8u.3u
1 ,008.39

840,39

16, 108.99
840.39
15.967o49

676,484.34
16,975.88

17 .063.99
660.U28.7U
15.967.U9

BANK PREMISES - MINNEAPOLIS

Building operating esroenae after deducting rents! for space used in
conducting fiscal work amounted to $1 ^8 ,370 *52 e compared to $157*3220 01 in

1937 « During 1937 there was nearly $32,000 additional spent on our property*
the major item 'being $23,000 for &ir~conditioning*

The additional expenditures

were charged to Fixed Machinery and Equipment and did not serve to inflate
operating costs•

Curing 193$ there were no additions to the building equip

ments the work done coming under the classification of Repairs and Alterations
and chargeable to current expenses*
Repairs and alterations cost $lltUll#67* including $7*000 charged for
lighting fixtures and work not yet completed*

The amount provided out of 193$

earnings covers, in addition to the fixtures and electrical work

cost of

$3 *592°12 * covering of skylights to make more efficient lighting $8^ 7 *00 , equip-*
ment for boiler room $157 *258 and $2,400 for plastering- on stairways and other
parts of the building,.

Other important payments during the year include

$2,166,00 to the Otis Elevator Company for ©levator maintenance and $809*36 for
supplies used by c m ’ own workmen in building furniture and making repairs*

Work

done in reinforcing the alley side of the bank required expense of $5^1 *00 ,
Salary payments totaled $32,052,20 for the year, an increase of $1,235
over 1937 * Shis resulted from allocating sore of the officers’ time to the
building and exti-a cleaning expense*

Heating costs were lower in 193$P with

96,230 gallons of fuel oil purchased at a cost of $5 *073 »^3 » °oQPare& to 112,102
gallons at a cost of $5*959*57 on©

ago*

The contract for oil since Octo

ber 193^ is on a lower basis, the price being 5 cents per gallon, compared to
5* cents per gallon during the previous year.

The installation of a sewage

meter was required in August last and a monthly charge is now made for sewage
disposal*

The additional expense for this purpose was $239*73 in 193S 0

DBPHECIATIOH AT MINNEAPOLIS
Total reserve provided for depreciation on our bank building at Minneapolis
amounted to $359»31®«76 at the close of the year*

The addition to the reserve

in 193S was $25 ,665*60 , representing 2j> of replacement value*

The gross book

value of our property is $1,283,221*50 and the net book value after allowing for
the addition to the reserve account is $923 *962.7 ^»
The reserve for Fixed Machinery and Equipment had already been provided for*

t i|«f

2 9

DEPRECIATION AT MINNEAPOLIS - Continued

During 193^ we added $16$ to Machinery and Equipment Account through purchase
of a sewage meter, but reserved a like amount by a charge to Expense.

Worthington pump was sold and the original cost of $955 was withdrawn from both
the Fixed Machinery and Equipment and the Reservo Account,
transactions,,

There were no other

The total amount reserved for depreciation on Minneapolis Fixed

Machinery and Equipment is $659#5SS°35<>

HELENA PROPERTY

The land on which the new Branch buildisag was constructed originally
cost $15,000*

Items amounting to $315,30 were added to the land value and

written off at the close of 1937*

On December 3 1 , 193& we charged off $5,000

from the land value and $27*.50 of expense under approval of the Board of Governorso

Building construction costs of $79 *13^*97 were written down to $75 »000 „

Against the approved valuation of $75*0(50* reserves of $750 were accumulated
in 193S, leaving a net book va3.ue of $7^,250*

That part of the total coat

allocated to Fixed Machinery and Equipment amounts to $16,807<»88 «

Depreciation

for six months at the rate of 10# yearly was provided by charges to expense
during the last half of 1338 in the amount of $8U0.39->

On December 3 1 , 1938 ,

after closing entries, the net book value of the Helena property was as follows?

Land
Bank Building
Pixed Machinery and Equipment

10, 000*00

Total

$ 100 ,217*^9

7^,250.00
15.9i7.-M

Bank Premises (Taxes)
(See under Expense.)

LOANS, REDISCOUNTS AND ACCEPTANCES

With the exception of city bank borrowings, which have been negligible
during 193^» the activity of this department, in so far as deiaand from member
banks for discount accommodations is concerned, has remained about on a par with
1937*

During the year 25 banks have taken advantage of the rediscount and loan

privileges, borrowing an aggregate amount of $2 ,339,025 ,15 .
items were received.

Two hundred fourteen

On December 31* 193*5# loans and rediscounts amounted to

$133 t657*72 as conpared with $174,980.81 at the end of the previous year, and
$3,000 on December 31 , 1936.
vere entirely out of our debt.

There was no time during the year 1938 that banks
The discount rate has remained at 1

during

the entire year.
The activities of the Industrial Loan Division commenced in August,
I93U, advances for working capital being made to Industrial and commercial enter
prises.

Under the Act such advances may be made for a period of not exceeding

five years.

Interest charged by the Federal Reserve Bank of Minneapolis on

such loans is six per cent.
The volume of activity in industrial loans showed an Increase in 1938*
during which year 65 advances were made in the aggregate amount of $926,316.04
with participating institutions taking $89*900.00 of this amount, leaving a net
advanced by the Federal Reserve Bank of $836,4l6.04.

However, the number 65 in

cludes several advances to each of three borrowers, and the amount of $926,316.04
includes disbursement of $681,500.00 in one loan.

Repayments on advances during

the year reduced the balance $480,188.10 , leaving a net balance of $1 ,195*630.28
on December 31.

Repayment of ten loans in the amount of $*42,533*27 (our share)

appears to have been made through refinancing.

Commitments made in accordance

with the provisions of Section 13-b amounted to $718,002.84 in 1938, and the
contingent liability resulting from such commitments at the end of the year was
$211,927.64.
In addition to advances made and commitments given during 1938* six
loans totaling $124,000*00 were recommended favorably by the Industrial Advisory
Committee and approved by the Discount Committee.
probably be disbursed in the near future.

Five of these loans will

One approval of $45,000 will be

cancelled.

DAILY AVERAGE HOLDINGS OF EARNING ASSETS

B I U b Dis
counted

193*
1937
1936
1935
193*+

1933
1932
1931
1930

166,644
271,071
1+7,205

1*8.594
_ 531.212
6.267.577
11.933.801
H.818,935
U.0U2.859

Bills
Purchased
$

1,903
60, 1*65
60 861
69.523

, *

589,U38

Industrial
Advances

896, 1*91
723.050
1 , 311*, 78>*
1.936.117
265, 1*76

2,936,1*56
1 , 61*9 , 1*11*
7 , 607. 32H
7,870,007

U. S. Secur
ities

75.Hi3.276
83.024,195
82,208,221*
72,398,061*
65.803,357
58,209,321
H3.72U,651
26.76l.33O
22 786.786

Federal Int<
Credit Bank
Debentures

6s , 90U
158.671

Foreign
Loans on
Gold

Municipal
Warrants

2 . 5H5
6H.520
152.197
97.671
3U.220

Commitments to
make Industrial
Advances

206
1.635
6,308
1 .H69
i H.093

168.H30
60,538
9H.390
92.568

6,275

AVERAGE RATE OF EARNINGS ON EARNING ASSETS

Bills Elscounted

1938
1937
1936
1935

1.755
2*008
2.030

193^

2.942

1933
1932
1931
1930

3.538
3.507
500
I .265

It596#

BillB
Purchased
.314*56
.767
.921
.SUH
. 5H7
1.280
3.961
I.7H8
2 .90U

Industrial
Advances

6* 000$ .

6.000
6.000
6.000
6.000

U.S. Secur
ities

Federal Int.
Credit Bank
Debentures

1 . 351*
1.557
1.539
1.785
2 . 0U6
2.027
2.107
2.233
3.280
Discount
Discount
Discount
Discount
Discount
Discount
Discount
Discount
Discount
Discount
Discount
Di scount
Discount
Discount
Discount

Municipal
Warrants

Foreign
Loans on
Gold

Commitments to
make Industrial
Advances

1.171#
1.463
1.595
1.555
1.500

1.052
1.038
1.009

3.500#
3.500

2.773#
2«598

3c 500
3.500

3*877
rate
rate
rate
rate
rate
rate
rate
rate
rate
rate
rate
rate
rate
rate
rate

effective
lowered
lowered
lowered
lowered
raised
raised
raised
lowered
lowered
lowered
lowered
lowered
lowered
lowered

. #

1 012

January lf 1922
January 11, 1922
August 15 , 1922
October 14, 1924
September 13 , 1927
February 8, 1928
April 25, 1928
May l4 , 1929
February 8, 1930
April 15 , 1930
September 12, 1930
March 16, 1934
January 8, 1935
May 14, 1935
August 24, 1937

1« 779
5i*
to
to
to
to
to
to
to
to
to
to
to
to
to
to

lb
H

4
3*

h
2

F A I L E D

B A N K S

INDEBTEDNESS
No banks suspended during 1938 that were indebted to us.
Principal liability December 31 , 1938
Estimated value of collateral to apply on this balance

Estimated Loss (Against a $81,000*00 reserve). .................

90,501.38
12,650,39
77,850*99

It is estimated that from the collateral held, we will collect,
in addition to the $12,650*39 above-mentioned, approximately
$4,700.00 which will be applied on expense incurred and
interest accrued*
#
COLLECTIONS
Collections for 193S in reduction of original liability
In addition, overpayments of original liability which will
be applied on recovery of expense
Recoveries of expense and interest from 193$ collections by
overpayments from three banks on final settlement

26,198*72
6,902*14
28,846*62

Total collections for 1 9 3 8 ....................... ............ $

61,947*48

EXPENSE
Cost of field operations for year 1938
Recovery during 193&

4,886*06
21,842*20

Aggregate charges to special reserve at close of 1937
Charges for 193^

253,909*32

Total charges to special reserve .........

CHARGES TO SPECIAL RESERVE

Probable future charges

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

None

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

253*909*32
77,850»99

331 ,760.31

REAL ESTATE
We own 20 pieces of real estate carried on our books at $20.,00 consisting
of 19 farms (improved and unimproved) and one small-town house, which properties
are situated in North and South Dakota and Montana* One farm has been lost by fore
closure of the first mortgage. Some years back in an endeavor to protect our collateral,
we obtained this real estate. Voluminous reports could be written regardii^ this
real estete, but suffice to say that our ultimate recovery will be exceedingly small.
For some considerable time, the income derived from this real estate has been
virtually negligible*

CHECK COLLECTION FUNCTION
(Head Office Only)

The Check Collection Department handled 30*013*593 cash items totaling
$4,673«^SUaU9 during the year 193S, which was 1 ,235»560 items more than the
number handled during 1937 *

figures given below are the number and amount

of items handled, the average number of employees and the total expense of the
Check Collection Function, which includes Government and Work Relief checks,
for the years 1937 and 193S;

Utaber
of Items

Tear

Amount

30 . 013.593

1938
1937

Average
dumber of
Employees

$ 4,673.USU,397^9
H, 902,1*09,983.53

as.778,033

63.9s
62.12

Total
Expense

$ 9^,969,80
97,035.16

The number of cash items handled during 193^ was the highest in the
history of the Check Collection Department®

The increased volume over last

year was due to more items handled payable in other Federal Reserve Districts
and Work Relief checks*
The following table indicates the number of items handled by the sub
divisions of the Check Collection Function for the years 1937 and 193S:
Items Handled on

1937

Twin City Banks (Clearings)
Member and $on«member Banks (This district)
Other Federal Reserve Districts
Direct to Member banks other ?.R. Districts
To Helena Branch, Helena, Montana
Treasurer of the United States
Uo Se Government Work Belief Checks

4 ,36s,21S
16,231 »6$1
3,101,816
48,924
63,977
2,385,108
2.57^309
28 ,77 s ,033

1938
k,319,958
l6,122,S31
3,9*42,524
56.77^111,101
2,160,554
3>299.851
30,013,593

The cost of handling 100 items in three units of this function for the
years 1937 a&d 193& follows;
Tear
193S

1937

City Checks
(Clearings)

17 oU cents
17*9
tt

Country Checks
(Outgoing)
21„4 cents
«

21 o6

Return
Items
$

l„l4

1 022

The average number of items handled per person per day in these three
units during the years 1937 and 193S follows;

Year

City Checks
(Clearings)

Country Checks
_(Outgoing;)

Return
Items

193S

2,815

2,017

49S

1937

2,793

2.126

496

During 193^ we handled 282,95® return items totaling $26,024,793*50 as

CHECK COLLECTION FUNCTION - Continued

compared to 260*032 items totaling $26,951®732*58 in 1937«

Included in these

figures are non-par items sent us in error* non-cash items forwarded to us as
cseh items, items returned by drawee banks for various reasons and other items
returned to depositors.
The daily average number of cash letters received and sent, the number of
banks reported closed* number voluntarily liquidated, number reopened, and the
number added to or removed from our par list during the years 1937 and 193 S are
given below:

Year
193S
1937

Head Office only
Letters
Letters
Received
sent
dally
daily
1*235

1,252

913
95S

Banks
reported
closed

22
16

Ninth Federal Reserve District
Banks vol~ Banks
Banks added
untarily
reported to our par
liquidated reopened list

Banks re
moved from
par list

12
20

During the year 1938 we reduced our total e^ense by $2 ,865*36 compared to
1937 <

NON-CASH COLLECTIONS
(Head Office Only)

During the first six months of 1938 we handled 66,977 more grain
drafts as compared to the same period of the previous year.

For the entire

year of 193^ we handled only 61,967 more grain drafts than during 1937* A
comparison of these figures reveals that during the last half of the year
1938 we handled 5.010 less grain drafts than during the same period in 1937®
A total of 728,118 city collections including grain drafts were handled
during 1938»
The number of country collection items handled during 1938 was
66,507 as compared to 65,437 for 1937*

There was an increase in the number

of items handled, in each of the first five months of the year, compared to
the same months in 1937«

The balance of the year showed a decrease in number

of items handled with the one exception of December when a slight increase
was recorded*
Coupon and country security collections showed a total decrease of
4,714 items for the year*
Member banks forwarded 5*933 collections totaling $14,620,080*48
direct to other Federal Heserve Banks for their credit with us during 1938
and 6,851 items totaling $17,585,178.44 during 1937*

COMPARISON OF NUMBER OF ITEMS RECEIVED FOR COLLECTION

City Collections
1937
1938

Country Collections
1231__

684,899

65,437

43,626

728,118

______ A

2 3 g

66,507

Security Collections
1938
i—

38.912

1937

$ 260,083,000

$ 52,397.000

$ 32.974,000

1938

$ 225 ,310,000

$ 44,605,000

$ 22 ,628,000

REPORT OF SAFEKEEPING DEPARTMENT FOR THE
________ _____ YEAR 1938________ _______

Securities held in our custody for safekeeping and for collateral pur
poses, exclusive of unissued stock held for the Treasury Department and other
governmental agencies, reached a new high in 1936 and in 1937, hut not in 1938,
During 1936, our high total was $1*26,671 .856,80; 1937, $431,373,149,81; while
during 1938 our high figure was $398,013 .765•52 * Our low total for the year I937
was $381,631,870,5T. while the low for 1938 wa 6 $3 ^6 ,690,9 8 9 81 on December 15 *
The figures at the close of 1938 showed a decrease of $11,962,842,47 compared to
the close of 1937* as indicated in the statement shown at the bottom of this page«
The total government and miscellaneous securities held in safekeeping
for our member banka decreased $15,042,328,46 in 1938. with the total of pledged
securities increasing $13,648,893,18.

Durii^ 193s* the total U. S, Savins Bonds

held for individuals, firms, corporations, and non-member banks increased $3 ,552 ,300 ,
compared with an incresse in the previous year of $3*705.750*

The reduction in safe

keeping volume at Minneapolis is partly through the retirement by banks of preferred
Btock which we held for the Reconstruction Finance Corporation and the transfer to
Helena of the holdings of the Custody Division of the Reconstruction Finance Corpor
ation,

During 1937. ve issued 817 safekeeping receipts covering U, S. Savings Bonds

while during 1938 we issued 1,223*

The total as indicated below does not include

U, S. Savings Bonds held for member banks.
In 1938, we received 48,911 pieces compared to 6l,279 In 1937. and delivered
48,184 pieces compared to 68,077 the previous year.

The number of coupons clipped

last year was 255 ,887, as compared to 277 .327 the year before.
COMPARATIVE STATEMENT OF SECURITIES HELD
DECEfriBEH 31 , 1937 and 1938__________
(Minneapolis onlyT
Dec. 31 , 1938
Government and miscellaneous securities held
in safekeeping for members
$ 220 ,770 ,022,64
Securities pledged to secure public deposits
106,949,4320 53
U.S. Savings bonds held for individuals, firms,
corporations, and non-member banks
9.132.450,00
Securities held for U,S. Govt* officials
5.507.900,00
Securities held for Public Works Administration
737,242,00
Securities held for Reconstruction Finance Corp. 29,353»996o82
Collateral to War Loan Deposits
1,689,750.00
Collateral to Discounts, Rediscounts and
Industrial advances
936,625^78

$ 375.077.^19*77

Dee. 31. 1937
$ 235 ,812,351*10
93.300.539*35

5 .580.150,00
7.375.000,00
421,241,00
42,142,396,79
1,957*500.00
451,084,00
$ 387.040,262,24

CURRENCY AKD COIN
(.Minneapolis only)
THE TABLE GIVEN BELOW SHOWS THE VOLUME OF CURRENCY TRANSACTIONS AND SHIPPING CHARGES
ABSORBED FOR THE YEAR 1938 AS COMPARED TO THE YEARS 1937 AND 1936.

TWIN CITY MEMBER BANKS:
Currency received by us:

1937

1938
$ 69 .087.113
3*121

Amount
Number of their shipments

193$

88 ,575.862
3*299

109,750,002
3*447

Currency delivered by us:
Amount
Number of our shipments

95 ,174,600

$ 79.137.5^0

119 ,627,300

1*523

1,482

1*513

OTHER MEMBER M D NON-MEMBER BANKS:
Currency received by us:
Amount
Number of their shipments
Shipping charges absorbed

$ 65 ,961,575
14,300
30,303,04

6s,144,810
57,466,666
13,972
11,745
30 ,409.13 25,71106o

$ 63 ,347*672
18,175
17,810,30

78,823,888
94,906,022
20,852
23 ,3 H
19,681 <,73
22,063*81

3*071*126
2,019
6,048.21

3*^5*070
2,698
5*^53«^

2 ,471,279
1*850
4,938,11

2,479,108

2 ,633,532
6,947

2,966,121
7*667
6 ,499*25

Currency shipped by us:
Amount
Number of our shipments
Amount of our shipping costa
COIN RECEIVED BY US FROM MEMBER
AND NOK-MEMBER B A M S
Amount
Number of shipments
Shipping charges absorbed
COIN SHIPPED BY US TO MEMBER
AND NON-MEMBER B A N K S __
Amount
Number of shipments
Shipping charges absorbed

6,830
5,423*19

5*903->28

THE FOLLOWING TABLE SHOWS THE NUMBER OF NOTES RECEIVED AND SORTED, AND A COMPARISON OF
THE EXPENSES FOR SPECIFIED PERIOD

Receiving and Sorting Costs
Average number of receiving
tellers and sorters
Number of notes rac’d and counted
Average number of notes sorted
daily by each employee
Our average currency receiving
and sorting costs per each
1000 notes

l6 ,329*41

19e213<s84

10*90

9*28

21,088*00

12^99

37*324,504

43 ,367*625

45*6969000

13«318

13*131

11,610

44#

44^

46^

.38

CtBESNCY AHD COIN - Continued

THE FOLLOWING SCHEDULE SHOWS THE AMOUNT 05' GO BIS B2CMYBD AND COMPARISON OF
THE EXPENSES FOB THE SPECIFIED PERIODS

2&5I
Expenses
Average number of coin tollers
Humber of coins received and
sorted
Average number of coins handled
by each employee daily
Unit cost per 1000 coins

i21°

3 ,63^01

3 *167.69

6.359-99

1.73

1.57

2.27

2S.OS5.4S3

20.620,499

18 ,290,610

52,246

43,347

26,592

13#

15#

35#

Due to the remodeling of the Currency Department and rearrangement of each
post as to location-each post has more space and this has expedited the work of the
department and enables the work to he bandied with more efficiency.

FEDERAL RESERVE NOTES

The amount of our notes held by banks and others at the close of the
ye&x* was $136,857*000, or a decrease of $73.2,000 for the year0

Notes outstanding

according to the Agent’s records amounted to $142,702,035, the difference repre«
senting the notes held by our tellers*
since 1927 .

Our issue of the year was the lowest

During 193S the Agent issued to the Bank $31,375,000 in new notes

and re«issued $7*375*000 of notes still in fit condition#

To a considerable extent

the paying out of our own $5 notes has been replaced by substantial shipments of
silver certificate 5 ’s from the Treasury Department

In 1937 &n& 193^ all fit

5 9s of our own issue were paid out by the tellers, no notes being returned to the
Agent and no new 5 8b were requisitioned from the .Agent*

As a result of this cur

tailments we now have less than $2 ,000,000 in 5 ss outstanding out of a total circu
lation of over $136 ,000,000e

In 193** over 25# of the issue was in 5'so

$38 ,750*000 issued during the year $21 ,120 ,000, or 5^*5# was

Of the

2.0 !s and

$13 ,980,000, or 36 ,08# in 20*80
On December 31 *

the Agent held a stock of $56*795*000 at Minneapolis,

$8,080,000 being in 10*s and 20's*

At Washington there was held, printed and paid

for, a supply of notes amounting to $135*620,000®

Of the denominations most in

demand (IQ's and 20*s) our total supply is $98,600,000, which is sufficient for
from 2| to 3 years, based on 1938 requirements„

The total supply of our notes at

Washington increased $36,000,000 during the year*
The amount of notes destroyed increased $2,600,000 over 1937®
stroyed of $36 ,434,605 is the largest destruction schedule since 1930*

Total de
Since coming

into existence in 1914, the Bank has obtained $815*195*000 in new notes from the
Agent and of this amount 82# or $670 ,142,965 has been destroyed.,

This includes

the retirement of the old large size notes and the replacement of the 1923 series
containing the gold clause®

Although the greater than normal amount destroyed in

1938 indicates heavier printing orders for the larger denominations the fact that
we are conserving our supply of 5 as ®<>re than offsets the increased expense for
printing the higher denominations0

Shipments to us in 193S by the Treasury Depart

ment consisted of $11,240,000 in silver certificate 5 's and $7 ,120,000 in legal 5*80
Other shipments were $2,640,000 of silver certificate 10’s and $18,500,000 of
silver certificate l'a.

FEDERAL RESERVE NOTES RECEIVED AND ISSUED BY AGENT DURING- 1938
IN

OF AGENT DECEMBER 31, 1937

NEW
Fives
Tens
Twenties
Fifties
Hundreds
Five Hundreds
Thousands
Total

FIT-FOR-USE

$ 10,400,000
4,360,000
5,520,000
12,900,000
10,540,000
6,700,000
6,400,000
$ 56,820,000

500,000
1,700,000
1,400,000
2,900,000
400,000
325,000
7,225,000

RECEIVED FROM
COMPTROLLER
NEW
Fives
Tens
Twenties
Fifties
Hundreds
Five Hundreds
Thousands
Total

TOTAL
$ 10,400,000
4,860,000
7,220,000
14,300,000
13,440,000
7,100,000
6,725,000
$ 64,045,000

RETURNED BY
BANK
FIT-FOR-USE

TOTAL
RECEIVED

18,200,000
10,400,000

1,500,000
1 ,000,000

19,700,000
11,400,000

0
0
0
0

400,000

0
0
$ 29,000,000

0
400,000

0
0

2,500,000

$ 31,500,000

FIT-FOR-USE

TOTAL

0
2 ,000,000

0
2 1 ,120,000

2,700,000
750,000
1,350,000
250,000
325,000
7,375,000

13,980,000
825,000
2,050,000
250,000
525,000
$ 38,750,000

ISSUED TO BANK
NEW
Fives
Tens
Twenties
Fifties
Hundreds
Five Hundreds
Thousands
Total

0
19,120,000
11,280,000
75,000
700,000

0
200,000
$ 31,375,000

IN HANDS OF AGENT DECEMBER 31, 1938

Fives
Tens
Twenties
Fifties
Hundreds
Five Hundreds
Thousands
Total

NEW

FIT-FOR-USE

10,400,000
3,440,000
4,640,000
12,825,000
10,240,000
6,700,000
6 ,200,000
$ 54,445,000

0
0
0
650,000
1,550,000
150,000

0
$

2,350,000

TOTAL
10,400,000
3,440,000
4,640,000
13,475,000
11,790,000
6,850,000
6 ,200,000
$ 56,795,000

RATIO OF ISSUES BY DENOMINATIONS
1938
Fives
Teas
Twenties
Fifties
Hundreds
Five Hundreds
Thousands

0.
54.50
36.08
2.13
5.29
.65
1.35
ioo.oo#

1937
.50
55.84
36.43
1.37
4.09
.53
1.24
100.005S

1936

1935

1934

4.09
49.63
37.69
2.28
4.67
.43
1.21
100.00£

1.47
51.66
38.76

25.27
40.25
32.31
.72
1.24
0.

2.02
3.79
.76
1.54
100.00$

.21
100.00#

FEDERAL RESERVE NOTES ISSUED TO BANK
COMPARATIVE BY MONTHS 1938-1934
1938
January
$ 1,320,000
February
3.680.000
March
3.580.000
April
5,000,000
May
740,000
June
1.600.000
July
3.030.000
August
2.650.000
September
4.060.000
October
3.705.000
November
4.210.000
December
5.175.000
Total for
Year
$38,750,000

1937

1936

1934

1935

865,000
3.660.000
4.290.000
4.720.000
3.080.000
2.420.000
2.570.000
3.930.000
4.780.000
3.120.000
3.100.000
3.760.000

$ 1,190,000
3.540.000
4.185.000
3.795.000
3.100.000
10,505,000
4.275.000
5.930.000
3.680.000
5.330.000
6.260.000
6,260,000

$ 1 ,000,000
3.770.000
1.984.000
2 .688.000
2.550.000
2.300.000
1.625.000
4.470.000
6.380.000
4.660.000
4.325.000
5.110.000

$ 3,175,000
5.385.000
4.430.000
1.940.000
2.640.000
2.360.000
4.780.000
8.060.000
5.250.000
3.180.000
3.215.000
3.985.000

$40,295,000

$58,050,000

$40,862,000

$48,400,000

FEDERAL RESERVE NOTES DESTROYED AT WASHINGTON
COMPARATIVE BY MONTHS 1938-1934
1938
$ 3,306,380
January
February
2,619,410
March
3,032,750
2,475,200
April
3,919,050
May
2,851,300
June
July
3,329,495
August
3,155,100
September
•2,790,000
October
3,102,800
November
3,354,120
2,499,000
December
Total for
Year
$36,434,605

1937

1936

1935

1934

$ 2,449,950
1,923,970
2,147,635
2,089,050
2.594.450
2,678,935
2,650,500
2.978.200
3.764.450
3.676.450
3.070.200
3,794,585

$ 2,928,505
1,568,905
2.378.850
2,069,250
2,629,000
2.338.850
2,390,050
2.352.650
2,591,180
2.702.650
2,957,950
2,440,450

$ 2,920,050
2.038.050
2,357,250
2,326,850
2,640,200
2.237.650
2,894,800
2,282,275
2,754,400
2.833.050
2.671.650
td 132jl,550

$ 1,969,650
2,532,360
2.503.550
3.172.550
3,120,000
2,497,150
2,930,250
2,157,950
2,604,450
2,872,980
2,674,200
2,432,850

$33,818,375

$29,348,290

$30,277,775

$31,467,940

FEDERAL RESERVE NOTES ISSUED AND
DESTROYED SPICE ORGANIZATION
Issued to
Bank
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
TOTAL

$
260,000
13,742,000
9,880,000
42,230,000
57,140,000
39,990,000
39,450,000
39,265,000
43,360,000
40,205,000
52,030,000
44,330,500
46,702,000
36,694,500
40,015,000
73,754,000
39,052,000
42,180,000
55,905,000
81,665,000
48,400,000
40,862,000
53,050,000
40,295,000
38,750,000
$1,064,207,000

Destroyed at
Washington
$

0
0

895,955
8,988,095
9,421,540
36,771,805
40,766,785
49,748,580
32,784,320
27,320,330
28,173,395
30,108,355
31,835,950
23,970,335
26,808,035
55,134,950
43,217,265
19,595,995
19,894,830
23,359,460
31,467,940
30,277,775
29,348,290
33,818,375
36,434,605
$670,142,965

ISSUE, REISSUE AND DESTRUCTION OF FEDERAL RESERVE NOTES
SINCE OPENING OF BANK AS OF DECEMBER 31, 1938

Received from
Cocsptroller
Fives
Tens
Twenties
Fifties
Hundreds
Five Hundreds
Thousands
Total

$201,400,000
305,840,000
264,800,000
28,800,000
43,200,000
11,400,000
14,200,000
$869,640,000

Returned to
Affent by Bank

Total

$ 43,000,000
84,250,000
86,400,000
9,965,000
18,035,000
2,944,000
7,768,000
$251,362,000

$243,400,000
390,090,000
351,200,000
38,765,000
61,235,000
14,344,000
21,968,000
$1,121,002,000

ISSUED TO BANK

Five 8
Tens
Twenties
Fifties
Hundreds
Five Hundreds
Thousands
Total

NEW

Fit-For-Use

$191,000,000
302.400.000
260.160.000
15.975.000
32.960.000
4,700,000
8 000,000
$815,195,000

$ 42,000,000
84.250.000
86.400.000
9.315.000
16.485.000
2.794.000
7.768.000
$249,012,000

Total
$

233,000,000
386.650.000
346.560.000
25.290.000
49.445.000
7,494,000
15.768.000
$1,064,207,000

DESTROYED AT WASHINGTON

Returned
by Agent
Fives
Tens
Twenties
Fifties
Hundreds
Five Hundreds
Thousands
Total

Returned by
Treasurer

$4,260,000 $ 4,571,445
2.545.000
6,172,770
1.020.000
6,087,080
25.000
543,150
30.000
1,031,700
0
132,500
___ 242^000
___ __________
$7,880,000 $18,780,645
0

Returned by
Minneapolis
$ 99,058,900
131,366,000
88,763,600
5.900.000
8.930.000
1,561,500
2.023.000
$337,603,000

Returned by
Other
Fed.Res.Banks
$ 81,221,580
110,083,790
101,853,500
4,191,850
6,619,100
821,500
1,088,000
$305,879,320

In Hands of Agent
December 31, 1938
Fives ...................................
Tens
Twenties. . . . . . . . . . . . . . . . . .
Fifties • • • • • • • • • • • • • • • • • *
Hundreds* • » • • • • • • • • • • • • • • •
Five Hundreds . . . . . . . . ....... ..
Thousands . . . . . . . . . . . . . . . . .
Total

$10,400,000
3,440,000
4,640,000
*13,475,000
11,790,000
6,850,000
6 ,200,000
$56,795,000

Total
$189,111,925
250,167,560
■197,724,180
10,660,000
16,610,800
2,515,500
3,353,000
$670,142,965

Outstanding
December 31, 1938
$

1,888,075
52,<332,440
62,435,820
4,665,000
14,799,200
2,034,500
4 >647,OQQ
$143,703,035

TRANSFER. AND CODE DEPARTMENT
(Minneapolis Only)-

The Transfer Department handled 18,981 transfers amounting to
$1,508,642,000 during 1938 * compared to 21,525 transfers totaling $1 ,795 *256,000
in 19378

This represents a decrease of 2,5^4 transactions, and a decrease in

amount of $286,614,000*
The number and amount of Incoming and outgoing wire transfers handled
during the past five years were as follows;
Outgoing Wire Transfers
Amount
Humber

Year

$ 310 ,*198,000
360,148,000
370,723*000
344,724,000
268,776*000

5,488

1938
1937

6,566
6,111
5,666

1936
1935

1934

Incoming Wire Transfers
Number
Amount

5*332

6,029
7 .U11
6 .62U
5,870

830 ,279,000
1 ,038 ,897,000
9lU,381,000
7Sk, 1)22,000
75s,917.000

6,723

Messages coded and deooded during 1938* other than transfers, numbered
27*709* compared to 16*894 in 1937®

mSGBAPH T OT
(Minneapolis Only)
During 193S we sent 299*122 words over the Federal Reserve System
leased wires, in comparison with 35^*519 in 1337 «
COMPARISON OF MEMBER B A M BALANCES
*" (Thousands only, 000 omitted!"”
Dec. 3 1 ,
-1938Michigan
Minnesota
Montana
North Dakota
South Dakota
Wisconsin

Dec. 31 ,
1957
$

DeCo *il,

1935

Dec o j?1 *
1935

5«l46

3 M 5
58,772
15,876
1 7 .06s
16,009
3.861
5 9 266
5*175
<5,137
8,015
9*578
6.899
7*297
^72<
_ M____________________________________
50
____
y
M s
J jM L
$1137767
^126,806 $ 120,531
$ 96,*228

5 >85*1
77.3^9
15,85^

6,329
86,458

80,885

Dec* 31,
..1931* ..

3,1)03

68,750
11,121
3.893

6,869

Uffi
$ 97,421

AVERAGE BALANCES

i23£
Member Bank Balances
U e S. Treasurer18 Balance

$ 121 ,665,000
__ 31),071,000

155, 73^000

1221
$ 125 .89s .000
,
3.755.000
$ 129 ,b53,000

DEEICIEHS RESERVE PENALTIES
Minneapolis
1938..
Amount of Penalties
$
Number of banka penalized
Maximum penalty rate

5$9»23
Ilk
3a$

Combined
1938

Helena
_J&? 8_
$

57*19
19 ^
3i$

5^»^2

133 ,
3a$

Combined

__3S2I_
$ 1*912o35

106

REPORT OP BANK AND PUBLIC RELATIONS ACTIVITIES
AT THE FEDERAL RESERVE BANK OF MINNEAPOLIS
________________ DURING 1933_______________ _

Twelve bank officers end other representatives travelled SO,639 miles
on public relations work during 1938

a travel cost of $7,091*60.

They attended

six state bankers1 association conventions, 44 other bankers* meetings, and 26
other meetings; delivered 36 addresses (including one radio address) to an es«
timated known audience of 4,130 people; and made 7^7 visits at member banks and

1,076 visits at nonmember banks in the district, ©very bank - both member and
nonmember - having been visited at least once by one of our officers#
The attendance at showings of the Federal Reserve Bank movie during 1938
was 31,5150

The bank continued its cooperation with the Wisconsin Bankers*

Association with regard to showings of the Federal Reserve movie*
A Member Bank Conference was held on March 12, 1938* the principal speakers
being Dr. John H. Williams, Economic Advisor to the Federal Reserve Bank of
New York City, and Mr. Arthur Newton, Vice President of the First National Bank
of Chicago.

The entertainment features of the conference consisted of luncheon,

dinner, and complimentary tickets to the Ice Follies which were showing in the
city during that week.

Six hundred and seventy-five member bank officers and

directors attended the conference.

After the conference, pamphlets containing the

speeches and answers to questions by Messrs, Williams and Newton were mailed to
all banks in the district.
The Board of Directors of the Head Office waived its June meeting and
substituted an informal trip to Helena, Montana, to attend the ceremonies in con
nection with the opening of the new Helena Branch building.

These ceremonies

consisted of a dedication program in the afternoon, at which the principal address
was delivered by the Honorable Chester Davis, Member of the Board of Governors;
and an evening buffet dinner and dance, tendered by the Helena Brancho

These

ceremonies were incorporated into the program of the Montana Bankers* Association
annual convention.
Gold-lettered signs to be applied to windows and reading, “Member Federal
Reserve System,” were sent to all member banks in the district.
Each member bank was sent a comparative statement showing its operating
ratios for 1937 , together with average operating ratios of member banks of various
sizes in the district.

These average ratios were also published in a two-page

spread in the “Commercial West. 11
A revised edition of our library catalogue was mailed to all banks in the

PUBLIC RELATION ACTIVITIES - Continued

district, with a renewal of our offer to send hooks to any hanker who wished to
reed them at the expense of only the postage outlay "by this bank,
Mr* John Crosby, Member of the Federal Advisory Council, mailed a letter
to all banks in the district, asking for their suggestions for improvement in
the services and relationships of the Federal Reserve Bank of Minneapolis,

The

clerical work of issuing the letter was done in our office0
New credit statement forms for stockmen and for other types of farmers
were prepared and mailed out to member banks for their criticisms«

The stockmen^

credit statement was later issued in final form®
Twelve issues of the Monthly Review were printed and distributed to a
mailing list which, in December, consisted of 6,387 names,

FISCAL AflENCY FUNCTIONS - 1938

VOLUME OF OPERATIONS
New issues, redemptions and exchanges of various United States Govern
ment securities, including United States Savings bonds and Adjusted Service bonds
number 149,395 pieces and amounted to $257 *797 »57^*®75 as compared with 186,502
pieces amounting to $216 ,905 *702*50 in 3.937®
We handled 1*235 purchases and 3»^59 sales of Government securities total
ing $32 ,120 ,200; for delivery or payment, or both, we handled for banks and trust
companies 1,196 transactions in Government securities amounting to $150 ,607 ,250,
There were also 3*003 transactions of Government guaranteed and miscellaneous
general market securities cleared through us aggregating $15 *898,125,

Altogether,

of these various transactions there were 8,893 totaling $198 ,625 ,575 . as com~
pared to 10,452 totaling $186,579,697 in 1937 *
Delivery of 24,452 pieces totaling $94.661,55®• 81 was made on purchase
and resale transactions for other than our own account*

In addition, on ex

change transactions, such as denomination exchange, the exchange of coupon for
registered securities, etc«9 20 ,93^ pisces were delivered, amounting to $109 e633 #950 »
The total number of pieces delivered was 45,384 amounting to $204,295,508,81 in
comparison with 42,982 totaling $211 ,073 *633*67 during the preceding year0
New issues, redemptions and exchanges of securities of Governmental
Agencies during 1938 numbered 9,501 pieces amounting to $10 ,881,825,

In addition,

FISCAL AGBNOY FJKCTJQIS - 1938 - Continued

on exchange transactions such as denomination exchanges* the exchange of coiipon
for registered securities, etc* 3*99& pieces of securities of Governmental
Agencies were delivered amounting to $4,627*075*
The total number of individual securities received and delivered by the
Fiscal Agency Department (including securities of Governmental Agencies) during

193S was 208*275 totaling $477*659*983*56* as compared with 245,925 totaling
$447 ,626,031017 in 1937c
We redeemed 343*157 Government coupons amounting to $10,521*238*55 during
the past year, as compared to 33^*070 coupons totaling $10 P763 ®591»^*6 duriiog 1937 «
We also redeemed 279*^25 Governmental Agency coupons amounting to $3 ,224,366*36
during 193^» as compared to 307*725 totaling $3*424,435*82 in 1937*

OTHER SERVICES
f
During 193^ we received 10,725 individual orders for United States Savings
bonds representing 22 j227 pieces* amounting to $8,204,450, as compared with

7,311 individual orders representing 16,335 pieces, amounting to $6 ,507*850
during 1937 °
W© received for redemption 59*969 Adjusted Service bonds amounting to
$2,998»450, as compared with 127 ,55$ pioces amounting to $6 ,377*900 during 1937 •
also 30*232 United States Savings bonds amounting to $7*027,200, as comj>ared with
14*972 pieces amounting to $3*950*750 during 1937 »
Daring the year we issued 31,921 United States Treasury checks in pay
ment of Adjusted Service bonds, United States Savings bonds and other Public Debt
redemptions, as compared with 48,070 cheeks during 1937°
On May 4, 193®* pursuant to an agreement between the Commodity Credit
Corporation and the Treasury Department, the latter designated us its agent to
perform certain services in connection with the issue, transfer, exchange, pur
chases redemption* payment and retirement of, and the payment of interest on
securities of the corporation®
On October 27* 1938* pursuant to an agreement between the Reconstruction
Finance Corporation and the Treasury Department, the latter designated us its

FISCAL AGENCY FUNCTIONS - 1958

- Coatinued

agent to perfora certain services in connection with the issue, exchange, re
demption, payment, purchase, retirement of, and the payment of interest on secur
ities of the corporation*
Without inclusion of Treasury "bills there were eight offerings of United
States Government securities during 1933 o
and three short terra*

Five of such issues were long term

We received and haE&led 4,556 individual subscriptions

contained in 2,281 different applications aggregating $285,422,550*
allotted on these subscriptions was $69,867*100*

The amount

During 1937» 1*939 individual

subscriptions were submitted in 1,324 different applications covering seven simi
lar offerings and $30 ,093*600 was allotted,,
In addition to the abovee there >;©.re three offerings of guaranteed issues*
One of these was on behalf of the Commodity Credit Corporation, on which we re«
ceived 209 individual subscriptions contained in 1 J1 different applications,
aggregating $20,439,000*
$2,641,000.

The amount allotted on these subscriptions was

The other two issues were on behalf of the Heconstruction Finance

Corporation, on which we received 134 individual subscriptions contained in 93
different applications aggregating $19 *336 *000*

The amount allotted on these

subscriptions was $2 ,316 ,000*
During 1938, 53 tenders amounting to $25,033*000 were received by this
Agency on 57 offerings of Treasury bills*

Of these, 19 tenders, on a discount

basis ranging from par to *11 per cent and amounting to $14,956,000, were accepted*
During 1937, l6g tenders amounting to $23,140,000 were received, and 6l tenders
totaling $9 ,525,000 were accepted on the 75 offerings of Treasury bills mad©
that year*
At the close of 193& fcfcere were 110 banks and trust companies in this
district which were designated as special depositaries of public moneys, as com~
pared with 132 banks and trust companies so designated in 1937 *
Including the weekly circular giving current market quotations on the
outstanding Government issues# 123 circular letters were sent to banks e„nd trust
companies in the district during 193S in connection with Fiscal Agency operations,
as compared to 109 circulars in 1937«»

BANK EXAMINATION DEPARTMENT

There were on December 31 , I93S seventy-one State member banks.

Each

State member bank in this district received at least one examination by examiners
for the Federal Reserve Bank of Minneapolis during the calendar year 19380
Ten State member banks are exercising trust powers, and eleven examina
tions were made of trust departments of State member banks during 1938 (eight by
the trust examiner and three by other examiners).

Eighty-eight national banks have

full or limited trust powers, and forty-nine of those banks are exercising such
powers*

The trust examiner faas made no examinations of trust departments of national

banks during 193®*

trust examiner reviewed during the year ninety-one reports

of trust departments attached to national bank examiners* reports*
One application by a national bank for additional fiduciary powers was
forwarded to Washington, which application was denied*

Applications for surrender

of trust powers of two national banks were received and forwarded to the Board; no
action by the Bo?rd has been taken as yet*
The examinations by this Department in the various States were as follows;

Michigan . . . . . . .
Minnesota......... .
Montana. . ..........
South Dakota • . * . .
Wisconsin...........

Stgte Banks
11
l4
26
22
5
78

Examination of Holding Company Affiliates
No examinations were made of holding company affiliates during the year.
However, a review of the condition of the Northwest Bancorporation as of November

30 , 193S wes made in connection with its application for a voting permit dated
November 25 , 1938 as to a number of banks which v/ere not actually subsidiaries at
the time the first general voting permit was issued to the applicant on December
31, 1936. The application was acted on by the Bosrd at Washington and a general
voting permit was issued December 31 , 193® with respect to those banks.
Reports of Examination of National Banks
Number of reports received from the Chief National Bank Examiner*s
Office, 829*
year*)

(The cost of these reports aggregated $4,145*00 for the calendar

Ninety (90) duplicate copies of the reports of examination of Montana

national banks were received from the Chief Examiner's Office, and the cost of
those additional copies aggregated $202*50 for the year*
Reports of Examination of State Member banks
The number of reports of examination received from the various State

BANK EXAMINATION DEPARTMENT - Continued
Banking Departments in the Ninth District during 1938 of Stc-te member banks ex
amined independently by them was as follows:
Michigan . . ......... .
Minnesota............. .
Montana........... .
South Dakota . ..........
Wisconsin. . ............

0
12
10
0
1

When State member banks are shown by reports of examination to be in an
unsafe or unsatisfactory condition, special letters are written either to the bank
or to the State supervising authorities, calling attention to the unsatisfactory and
criticised matters, with a request or direction that corrective action be taken.
Conferences are held with those at interest in cases where such action appears desir
able and constructive©
Reports of Earnings and Dividends, Reports of Condition and Related Reports
Approximately 4,930 reports of earnings and dividends, reports of condition
and related reports were received, checked, and recorded*
Applications for Permission to Exercise Fiduciary Powers Received, etc.
Application of the following bank for additional trust powers was denied
by the Board at Washington February 15 * 1938:
The First National Bank of Negaunee,

Negaunee, Michigan.

On January 5*1938* The National Bank of South Dakota, Sioux Falls, South
Dakota, was authorized to continue trust powers in the new combined bank with branches
at Vermillion and Huron, the First National Bank in Vermillion and the First National
Bank in Huron having consolidated with the Citizens National Bank & Trust Company
of Sioux Falls under the charter of the latter hank and under the title "The National
Bank of South Dakota, Sioux Falls.'1
September 30 , 1938 the First National Bank of Rapid City, Rapid City, South
Dakota discontinued trust powers as the bank was absorbed by First National Bank of
The Black Hills, Rapid City.
October 15, I93S the First National Bank of The Black Hills, Rapid City,
South Dakota was authorized to continue trust powers in consideration of a previous
consolidation and the present change in title and location, formerly The First
National Bank of Lead, South Dakota*
Applications of The First National Bank of Lake Linden, Michigan and The
Deuel County National Bank of Clear Lake, South Dakota for surrender of trust powers
vere received during 1938 and forwarded to the Board at Washington, but action thereon
is still pendingo

BANK EXAMINATION DEPARTMENT - Continued

He Clayton Act
In consideration of Section 8 of the Clayton Act and the Board*s Regula
tion L, examiners* reports are analyzed and records maintained with a view of as
certaining any relationships that are not in conformity with the law„

No apparent

violations have been noted.
Membership
At the close of the year there were 462 member banks in this district, as
compered with 470 member banks at the beginning of the year.
of 13 national banks and a net gain of five State banks.

There was a net loss

The total membership at

the close of the year was divided into 39*- national banks and 71 State banks.
Stock in the Federal Reserve Bank Issued to New Member Banks
No.of Shares
Subscribed

Location

Name of Bank
The Miners* Stste Bank of Iron River
Commercial Bank of L'Anse
Zapp State Bank
Bank of Belle Fourche
Merchants State Bank
Bradley Bank

Iron River, Michigan
L*Anse, Michigan
St. Cloud, Minnesota
Belle Fourche, South Dakota
Rhinelander, Wisconsin
Tomahawk, Wisconsin

24
75
33

117
50

The application for membership received from the Union State Bank of West
Salem, West Salem, Wisconsin, was withdrawn on request of that bank and the applica
tion not forwarded to the Board at Washington.

Application of the American State

Bank of Moorhead, Moorhead, Minnesota was received late in 193*3; our memorandum in
connection with that application has not yet been completed and consequently not
forwarded to Washington with the application.

State Bank Membership According to States

State
Michigan
Minnesota
Montana
North Dakota
South Dakota
Wisconsin

No. of State
Bank Members
1-1-38
7
12
24

0
21
2

“55

No. of State
Banks Withdrawing from Membership During Year

0
0
0
0
1
JO

No. of State
Banks Admitted
During Year

2
1
0
0
1
2

No. of State
Bank Members
12- 31-38

0
21
71

(

MEMBER BANKS SEVERING CONNECTIONS WITH THIS FEDERAL RESERVE BANK DURING 1958
NATIONAL BANKS CONSOLIDATED WITH OTHER NATIONAL BANKS

Date
l-.5-.3g
1-5-38

I-Iame of Bank

Location

Noe of Shares
Surrendered

First National Bank in Huron
Huron, South Dakota
First -Rational Bank in Vermillion
Vermillion, South Dakota
(Both banks consolidated with Citizens National Bank & Trust
Co. of Sioux falls under charter of that hank and under title
HThe national Bank of South Dakota, Sioux Falls.)

90
75

NATIONAL BANKS ABSORBED BY OTHER RATIONAL BASKS
10-IO-38

First National Bank of Rapid City
Rapid City, South Dakota
(Absorbed by Firct national Bank of The Black Hills,
Rapid City, Rapid City, South Dakota.)

166

RATIONAL BARKS SUCCEEDED BY NONMEMBKR STATE INSTITUTIONS
H-1^38

2-IJ-38
H- l O -38
9-12-38

1-18-38

2-I8-38
5-18-38
11-23-38

The First Rational Bank of
Graceville, Minnesota
(Succeeded by The First State Bazik of Graceville, Graceville,
Minnesota.)
The First Rational Bank of
Jordan, Minnesota
(Succeeded by Northwestern State Bank of Jordan, Minnesota.)
First National Bank in
Wheaton, Minnesota
(Succeeded by The First State Bank of Wheaton, Wheaton,
Minnesota.)
The First National Bank in
Coopers town
Coopers town. North Dakota
(Succeeded by The First State Bank of Cooperstown, North
Dakota.)
First National Bank in
Glen Ullin, North Dakota
(Succeeded by State Bank of Glen Ullin, North Dakota.)
The First National Bank of
Hebron, North Dakota
(Succeeded by The First State Bank of Hebron, North Dakota)
The First National Bank of
Munich, North Dakota
(Succeeded by The First State Bank of Munich, North Dakota.)
The First National Bank of
Highmore, South Dakota
(Succeeded by the First State Bank of Highmore, Highmore,
South Dakota.)

21
27
19
U5

NATIONAL BANKS LIQUIDATED
12-1^-38
12-19-38

The First National Bank of
(Voluntary liquidation.)
The First National Bank of
(Voluntary liquidation.)

Rockland, Michigan

Carpio, North Dakota

STATE MSKBSR BANK SUSPENDED
11-7-38

Jerauld County Bank

Wessington Springs,
South Dakota

NUMBER OF MH4BER BANKS IN ACTUAL OPERATION AT THE CLOSE OF BUSINESS
~ ~
DECEMBER 31» 1938

National Banks
Stcte Banks
Total................

390
71
l)6l

RECONSTRUCTIOH FINANCE CORPORATION

The volume of business handled for the Reconstruction Finance Corpor
ation has increased throughout the year, especially since last July when we
began disbursement of wheat loans mads by the Commodity Credit Corporation,
one of its subsidiary organisations»
These wheat loans now aggregate in
number nearly 15,000 and in amount almost $6 ,000,000*
We are now beginning
disbursement of Commodity Credit Corporation corn loans, which, it is ex
pected, will be of much greater volume than heretofore (volume of corn loans
here has not been heavy on crops subsequent to 1933 )*
liquidation of
corn loans on the 1937 crop (over 5»000 notes aggregating approximately
$1,700,000) was transferred to Chicago on October 24, 193^» relieving us of
a considerable volume of work involved through delivery of corn pledged Instead
of c&sh payment of the notes,.
Our Branch at Helena was again, on September 1st, made an agency for
the Reconstruction Finance Corporation and most of the Montana accounts were
transferred back to it* It also makes Commodity Credit Corporation wheat loans
in considerable volume*
The Reconstruction Finance Corporation created the Federal National
Mortgage Association this past year, and its affairs are tied in with the
parent organization*
We have thus far in its behalf disbursed over a half
million dollars for purchase of 221 Federal Housing Administration insured
mortgageso The number of employees engaged within the department had during
1937 decreased to less than twenty, and now is again increased to approximately
fifty-five•

LOAN BALANCES, ADVANCES, ETC,, AS OF

W M B m 51 > 195S
Banks, trust companies, and Mortgage Loan companies
Industrial and commercial businesses
Drainage, Levee and Irrigation
Preferred stock of banks
Secured by preferred stock (Issued to stockholders)
Debentures of banks
Bonds (from Public Works Administration)
U.S* Treasury obligations (accepted account preferred
stock and debenture payments)
R. Fc C« Mortgage Company (loans)
R. F. Co Mortgage Company (Federal Housing loans
purchased)
Disaster Loan Corporation
Federal National Mortgage Association
Commodity Credit Corporation (Corn)
Commodity Credit Corporation (Wheat)
Miscellaneous

7279 092c11
l,651t620<>79
S'50 *970*86
11,605 *220e00
206,935*15
6 ,258 ,178026
4,423,043o52

3 ,135 ,100*00
288,574.. 12
55* 17°«93
15.858*00
52h ,352«>09
9S,8blo01
5 ,742,827*85
591«999*40

T o t a l ............................................... $ 36,175.304.09

FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS
The number of blocks of bonds purchased through us during 193S was com»
paratively few*
Most of its holdings have been sold to the Reconstruction
Finance Corporation and it now holds with us an aggregate of only $737i200.00
of bonds®

Full text of Annual Report to the Directors of the Federal Reserve Bank of Minneapolis : Auditor's Report for the Year 1938

FRASER