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DO NOT REMOVE FROM ACCOUNTING DEPARTMENT AUDITOR'S REPORT FEDERAL BES3RVE BANK OF MOTEAPOLIS FOR THE TEAS, a. S> 3 9 TO THE DIRECTORS; Through the presentation of the following comparative tables and scheduless with accompanying comments, we have attempted to inform the Directors of the results of our 1939 operations and to indicate the probable trend of 19^0 earnings and expenses* The marked improvement in the earning rate on Government securities during the second half of 1939 enabled us to complete the year with better cur rent earnings than for the previous year 0 but with a smaller profit from the sale of Governments from System Account® We were unable to provide anything this year out of earnings for addition to "Reserve for Contingencies1* but did red\ice the book value of our Land $1009000 0 With maintenance of the present rate on the amount of Governments held during the first part of Januarys all our needs in 19 HO would be comfortably covered*, Our 19I4O Budgat estimates are approxi mately $S 8000 higher than the actual costs of 1939 * Fiscal duties for the Commodity Credit Corporation rapidly expanded and contracted twice during the year. $100*000 more than in 1938 ° Reimbursable expenses were approximately Of the other larger functions8 the cash collections had an increase in volume although there was a decrease in the number of WoPcA® checks handled,, Some expansion took place in currency transactions and safe keeping volume was less* The daily average of member bank balances increased $lHe576»000 to $136c2UlfcOOO in 1939 with the Treasury average balance $3U6071»000 in 1938 and $ ^ * 763*000 for the year just closed® Our notes in circulation were $lUlcU27eOOO on December 31 which was an increase of $Ue5700000 during the year,, The “Frequency of Audits1' approved by our Board has been carried out and the audits performed at Minneapolis and Helena indicate that our operations are being efficiently conducted® January 1 B 19^*0 < INDEX Auditing .............................. ......................... 27-23 Bank Examinations c............ ....... ................... .. Bank and Public Relations ....................................... US Bank Premises »0.... 0............ ..... ..................... ... 30*32 Check Collections - Transit Department »o...... .............. ... 3^-37 Currency and Coin »...... ...................•........... . 0.* 51~52 Deficient Heserve Penalties «...... ............................. U 7 Discounts and Industrial Advances ..... ..................... 0 33 Dividends ... ..... ............ •0..*........ •.... e........... 23 Earnings s Comparative statement 1939-193s *...... ............ .......... 3 Average rates on earning assets ................... .......... 3^ Comments ..................................................... H-6 Expenses; Comparative statement 1939“1938 «.... ........................ 7 Comments ........................................ ............ 8-21 Reimbursable Expendi tures ............ ................... 0 19-20 Failed Banks .............................ft............... ...... 35 Federal Reserve Notes ............. ........................ .... 43-H6 Fiscal Agency Functions....... .......................... ...... U9-51 Franchise Tax paid since organization ..................... ..... 23 Furniture and Equipment «,............... ............... ........ 18 Liabilities ............ .... ....... ............. »****• 2 Member Banks ~ Changes in membership .................... «... 39-^1 Non-Cash Collections ................. ............... 37*33 Profit and Loss ...... ..................... .................. ...... 22-26 Reconstruction Finance Corporation ..................... .53*5^ Resources ................. «. * „. 0 ........... * 1 Securities? Safekeeping ...... ....... .......................... „ 42 Investments ....... ..... .................................... U-5 Surplus and Reserves ........... ........................... .... 23 Taxes ...... .................. ....... ......................... l6 Telephone and Telegraph ........... .............. 0 13 Transfer of Funds ......................... ........... o kf COMPARATIVE STATEMENT OF RESOURCES FEDERAL RESERVE BANK OF MINNEAPOLIS Aim HELENA BRANCH (After closing entries) December Ji t I9^5g Cash Reserves; Gold certificates with F 0 H„ Agent Redemption fund *» lie Notes ....... Inter-district settlement f u n d ......... .. .December 31, 1938 $ 1^7*500,000o00 $ 1^3*500«000o00 219»21802l 605p5S2o12 111,066,127.-10________ 97^952,227,50 Total gold certificate reserves c..... . $ 258,735»3^5«31 $ 2^2*057*809*62 Other cash .............................. . 9,267,700*13 Total cash reserves*................. .. $ 268*053,045«¥ Bills and Securities; Bills secured by U0S0 Government obligations, direct or fully guaranteed *........... . 50 s000 o00 Bills otherwise secured and unsecured oo.«. 215t837*19 Bills bought in open market ............. ..........Industrial advances ........... . 7^2,802,12 67cUUl fl0Q0,,QQ U 0 So Government securities ............ .. 7,786.15S.2U $ 2^9fS ^ ' ^ b C l Total bills and securities ............ 68 , ^ 9 ,639*31 $ ^.OOOoOO 90p657«72 1,903*25 96^e090o22 56,815?500<,00 $ Due from Foreign banks «................. ......... US0o53 F,R0 Notes of other Federal Reserve Banks 00« 1*3^*6*500*00 Uncollected Items; Transit items ........... ............... . Exchanges for clearing house ............. Other cash items .......................... Total uncollected items ............... 1*992<>6o l rU27,900,00 19*71?.285*77 l6,007,617*60 350*699*77 53Qa6oUo2Q 565,122036 512^5550 37 $ l6 888S,921„57 20,7 9 M 6 3 « 5 0 1» 395 *85^ ^5 Bank premises a............................. 57*915»151«.19 1,52^,700*89 Miscellaneous Assets; Premium on securities .............. ...... 1»189-799°23 66l,906o^7 Interest Accrued »«................. ...... 235 ,,773° 58 l69f,290*29 Reimbursable e-tpenditures «............... 2}t$'J208l 3^b3§^»59 Deferred charges <■................... ..... 12*8120l6 18P351“>32 Miscellaneous assets acquired in settlement of claims account failed banks.......... U„292o09 9 p521*38 Industrial Advances past due three months.. 153»052olU 191»5^0o66 All other resources ........ ........ .... * 2 f6 7 3 ° 2 3 _____________ 10c970°Qk Total miscellaneous assets ............ $ TOTAL RESOURCES .... ................ . $ 361 .632 ,758 ***7 1,622*275*2^ $ lf>095»9^6ol5 $ 328c698 ,577*26 COMPARATIVE STATEMENT OF LIABILITIES FEDERAL BESERVE BANK OF MINNEAPOLIS M D HELENA BRANCH T a Fter closing entries) December J L l 2 2 2 2 PggejrterJl, 1938 ?„ B. notes in actual circulation ......... S lUl,Ua7 ,335*00 Deposits? Uo S 0 Treasurer - General account .,...... . 2^,^^1 ,570106^ Members - Heserve account ............. .... 15^*7S7e739*93 Due to foreign banks ............... ....... 9 ®3^6* 1 7 ^ 3 6,,iQ5,60QoI9 Other deposits ..................... ....... $ 136 ,856 ,725,00 Total deposits ...... ....... ....... . $ 191*,691 ,216,10 $ 165 227 ,950 ,,3 s Deferred availability items .......... . $ ^3®29^ety57o^6 113*567?601c59 U 9587,l60.1& 3»776,731019 16 ,361 ,873*70 17.U79,9lU«81 Miscellejaeous Liabilities? Sundry items p a y a b l e .... ................ $ 73»722053 Unearned discount 0.,..... . ,....... • 76O 0O 5 ____12.170.69 All other ...............----- ........... Total miscellaneous liabilities ....... $ Capital stock paid in ................ . $ Surplus Fund - Section 7 .............. * • Surplus Fund - Section 13 -b .............. . Reserves for contingencies ............. ... total liabilities...... . S6»653<>27 84,857*77 5^3«^7 9 9152c99 $ 9,4»57^*23 2 t93i»15^°OQ $ 2*903*350”00 3fi52a^20627 3*^53* *13«^9 1*000,683*96 1,001,l62098 l ?981»^26c17______ 1 »9%1«^26.17 $ 361 *632 ,75 S 0U 7 $ 3283698 ,577.26 ec COMPASATXYa ST^SIffiKT OF GKOSS SARNIKGS KSDuiHAL R&SSR7& BANK OF MINNEAPOLIS AND HiiLBNA BRANCH Minneapolis Karnings from 1939 Discounted bills . . . . . . . . .................... , . . . Purchased “bills ...................... .......... .. . . . , Industrial advances .............................. ........ Commitments to make industrial advances U« S„ Government securities. . . . . . . . . . . . . . . . . . Deficient reserve penalties. . . . . . . . . . . . . . . . . . Interest received on past-due 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 . ........ . . . . . . . . . . . . . . . Commissions on bills bought for foreign banks. . . . . . . . . Interest on Hungarian Credits . . . . . . . . ........ . . . Clearing house fines . . . . . . . . . . . . . . . . . . . . Interest received on personal loans to employees . . . . . . . Interest on misc. assets acquired account Industrial adv.. . . Savings in registration feesB etc. on registered mail shipments for member banks . . . . . . . . . . . . Ail other . . . . . . . . . . . . . . . . . . . . . . . . . . Total Barningg . . . . . . . . . . 1,^70*, Ui 11.08 50 , 206.13 1,29*1.52 1 , 069, 781.82 726.75 Helena Branch 1939 173*56 Combined Comb ined 1939 1938 1 , 643.97 11.08 50 #206o13 1 .2 94 .5 2 l t 0699781 oS2 58.90 ~ 725.65 8 *312.02 8, 3 1 2 .0 2 75-97 25° 35 75,97 25*35 2 . 6 5 9 .3 5 6.54 5 2 .8 7 9 .3 6 1 .7 0 4 .3 3 1 , 018 ,5 4 0 . 1 9 566.42 1 5 .7 8 8 , 0 8 7 . 5 7 9 ,4 3 64.35 28.65 b„ 00 60 72 533.85 44.0 0 481.70 53° 00 50*80 57-64 481070 1. 8 0 5 .9 5 l4„04 1 ,8 05 .9 5 14.04 64 .35 1.13^.599.64 1 *100 *471062 1.1 3^. 367 .1 8 53.00 50oS0 57-64 232.46 Lv 1v EABNINGS Earned at Minneapolis Earned at Helena $ 232o**6 $ l r13Uf599 *6U The above total of our current earnings for 1339 represents an increase of 3«1$£ over the 1938* total current earnings0 Up to the close of November our earnings were less than for the corresponding 11 months of 1938c quarter of 1939 During the last interest received from Governments was nearly 5 &1> greater than for the I93 S quarter0 with the result that our current earnings for the com plete year exceeded those of 193 ^ $3^*128a02o Since 1932 much the greater part of our income has come from interest obtained on investments in United States securities* For 1939 the gross amount of interest received on Governments was $1»o69c7S1cS2 or 9**«3$ of the total earn ings., In 193S this percentage was 92 06%* The daily average of such securities held in 1939 was $75 *2809616* compared to $75»^13»276 held one year earlier,, The proportion allotted us in System Account during the first half of 1939 vas considerably lower than for the like period of 193 &» but during the closing months the daily average for the two years was nearly equalized* We began the year 1939 with a participation of $80,^5^,500 in System Account and of this amount $17,766,000 represented Treasury Bills, $26 ,385,500 Treasury Bonds and $36 ,303,000 Treasury Notes* were not as severe as in the previous year 0 The quarterly System adjustments During September bond holdings in creased followed by some reduction in notes and the elimination of all Treasury Bills in December,, December 3^e 1939 Our participation in System Account on January 1 , 1939, on January 1„ 19^0 after the recent allotments, was as follows? January 1, 1939 United States Bonds United States Notes U 0S 0 Treasury Bills $ $ December 31 , 1939 January l f 19 U0 26,385.500 $ 36,677*000 $ 39,9^7*500 36,303,000 30,76^.000 33,508,500 17.766,000________ None_____ _________ None 80 ,45^,500 $ ~ T 7 , W booo " $ 7 3 *^56 ,000 ~ The System holdings on January 1 , 19 U0 were $2,^8^,270,000 and our portion of the total holdings was 2*956$o Prior to the close of the year our participa tion v/as 2 o71 &> With one exception (June), there was an improvement each month during 1939 in the earning rate on Government securities0 The rate improved more rapidly during the closing months with the greater volume of longer term bonds and the elimination of Treasury Bills, In January the average earning rate had been l<,3l6$, increasing to 1<>706$ in December and giving a daily average rate of 1*^21# in 1939c 4 DARNINGS - Coat5& compared, to in 1938o With the readjustment of allotments on January 1 , 19^0 the earning rate will be lo7 ^ 7 $° This means we are earning $3 ,515 <>OU daily- on our Government holdings, compared to $2,893*21 earned daily one year ago* Before the addition of $6,015*000 to our holdings on January 1» IjkO the amount earned daily was $3 *227 d 6c The profit received from paper discounted for member hanks continued to be a very small part of our earnings amounting to only $1 ,6^3*97 for the year and the smallest amount received since 19360 At Minneapolis the dally average of member discounts was $70*7^7o ^itk the Helena average §10,8580 We had some paper under discount during each month at Head Office, hut Helena had none during the first two months and the closing month of the yearc the average rate was lo6U2$o Because of some 10~b loans There has been no change in the normal discount rate of 1-J$ established August 2U, .1937* On the small amount of purchased paper which we participated in through New York, we had earnings of $llo08o This represented income on investments made through foreign banks,, our portion being $1 c903 »25 „ and since eliminatedc Industrial advances were at the lowest point of the year in December with outstanding current advances $7^ 3*000 on December 31 and a daily average of $8 378000 in 1939 « Warnings on current advances were $50 ,206,1 3 , compared to $52 ,879*36 in 193 S when the daily average was $gg6*000<, There was little change during the year from the amount of advances shown past due at the beginning of 1939 ° 0n December 3 1 » 193 ^ past due total was $2 31 »5^0 »06 p since reduced to $22Sft052ol^ at the close of 1939® amounted to $8r312o02o Payments on account of past due interest The commissions received on commitments to make indus trial advances were reduced from $le70^°33 in 193 ^ to $1 929^„52 for the year just closedo We also obtained $57«61+ interest on a contract covering the sale of assets acquired in connection with an industrial advance* industrial advances amounted to $59»870°3i° $62,209*97* Gross earnings from One year ago gross earnings were Bank funds used in making industrial advances made up 13*060$ with Treasury funds supplied by Surplus (13 b) making up 86„9*IO$f, Our participation in 193 ^ was 21 o102$o Although total earning assets were lower during the last half of 1939, the improved rate on Governments gave us better earnings0 For the complete year earning assets showed a daily average of $76 *36^.000 and an average earning rate EARNINGS - Cent5d of iJ471$ 0 In the previous year the average of earning assets was $76 ,6^ 7*000 and the rate 1 0UoU§6. Miscellaneous sources of revenvie added $ll,6l4„30 to our earnings in 1939. the ffiost important being $89}12002 of past due interest on industrial advances® Through consolidations of shipments of securities for member banks0 we were able to effect a savings in registration fees of $lfi805 o95 » this savings being treated as earnings® Oth^r minor amounts making up the above total included deficient reserve penalties $785065 ; sal© of waste paperc money bags, etc® $75 «9 7 ; service charges on collection items returned unpaid $25®3 5 ; interest on Hungarian credits $4Slo70; clearing house fines $53 *00 ; interest on personal loans to employees $50 .80 ; all other $lH«0 U. 6 COMPARATIVE STATEMENT CURBSST EXPENSES OF THE RSPBRAL RSSSRVB BANK OF MINNEAPOLIS AND HaiiBNA BRANCH Minneapolis 1939 Officers . . . . . . . . . . . . . Employees ....................... o . . Retirement System contributions for current service Legal fees . . . . . . . . . Directors’ fees and expenses * . . . • . . . « o a Federal Advisory Council . „ . * . . * . . » . . o Traveling axoenses . . . . . . . . . . . . . . . . Postage and exnreesage . . . . . . . . . . . Telephone and telegraph „ . . Printing, stationery and supplies . . . . . . . o o Insurance on currency and security shipments O o 0 Other Insurance » * . e . . . . . . . . . . . o o Taxes on bank premises * . . . . . « . . . . « . . Depreciation on bank building » ............ . o o Light, heat, po^er, and water e . « . . . . . o C 0 Repairs and alterations to bank building c «, ° o . Rent . . . o . . . . . . . . o o . « . 0 o o Furniture and equipment . o . . » . « . . . . u . . AX 1 01 ner. o c o . o o . o . e o c c o . . . o Qo Salaries: ©v . . . . a . c o o o . o o . , o O6 o c OO * 0 e e • o o c o o Total Operating Sxpenees 83,884.25 3§b^6k2.03 21,552-70 9,091*46 7,213.46 1*323° **5 19 .232 .U9 104,220.13 9,587.15 20 ,119*21 6 ,632,63 J- 6 , m 53 „ 6 7 .360 .qsl . 31£155»6q 18,108*04 1^.535*35 Helena Branch 1939 1 3 .^95 .^ 38,400.47 2,575*7^ 20 ,,00 1,959.40 2 .362o90 15*148.57 M55o7i 20825 o 6 8 55»80 1,142.63 2 6207.25 3 *180.84 1,514,18 ‘Combined 1939 97.379-67 395,042.50 ' 24,128.44 9,111.46 9 .172 o86 1.323^5 21.595.39 119 ,368,70 13,942.86 22.9^4.57 7,488.43 17.533-16 697567-25 3^.336.44 19 e622..22 1 5 .109 c62 Combined 1938 99.06?o53 4l2.480o?4 25s5 2 5 ^ 7 1 1 ,8 5 1.73 11,764.70 l f261.05 ?3 c272.81 112,722.65 l6 p092 .9S 26 ,229-03 ? s192.31 _ X*JSL3Q. 9 .679.20 29 ,743o10 5 ,658.09 3,l48o81 1 5 ,337.29 32 ,891.91 69.270.14 27.^23.99 16,981.30 1 1 ,855.30 375«00 11.537.95 33.138.67 826,470,78 99.425.44 925,896.22 936,795.45 18,268tH2 4 „536 v.43 i s659c.00 358.26 19 9927* 42 4,894,75 12E7oi,o4 2,893*21 803 ,665.87 97,408.IS 901*074.05 921 ,201.20 574.27 Received from Government agencies for Rental of furniture and equipment . . . . . . . . . . Net Operating Expenses . . . . . Federal Reserve Currency? Original cost, including shipping charges . . . . . Cost of redemption . . . . . . . . . . . . . . . . Total Current Expenses . . . . . . 36 c796066 - 36,796066 39^35. ^2 30„751-78 6 #116056 — - 30,751078 6 ,ll6„56 46,6l9 c34 4,667.35 97^.739-05 1,011.9?3-3i S77.33C.S7 97 ,>108.16 EXPENSES Minneapolis Selena $ 877 d330°87 97,*108.18 $ 97^ =739-05 For the first year since 1932 our total current expenses have been below $l9C00f000o Compared to 193^ a reduction has been shown at Minneapolis of $35*822*19 and at Helena of $1 ^362 *0 7 * The Budget prepared at the beginning of 1939 estimated the Minneapolis costs would be $892*697 and those of Helena $97*079« As in previous years salaries and note costs are the two items most likely to upset estimates* The rapid expansion and sudden contraction of fiscal duties makes it difficult to determine the number of regular bank employees who may be assigned to reimbursable work0 Demand for our notes is affected in several ways* with volume of the issue of silver certificates and the destruction of our notes exercising considerable control over the supply required,, Our estimates for note printing run for fiscal years which begin July 1* while Budget figures are for calendar years* Other items show variations from estimates and from the 1938 ex penses a but the two items mentioned supplied most of the saving in comparison with 1938 costs© Two other items had an important bearing on reduced expense, These are the rentals received from space used in fiscal work and the payments by fiscal agencies for rent of bank owned equipment* Formerly these payments were treated as incomee but are now used to reduce the expense total* At Helena it has been possible to estimate recoveries from fiscal agencies more closely and no note costs are borne by the Branch® As the old building was occupied during part of 1938 * comparison may not be as accurate as will be possible by the close of 19*+0» Through officers and clerks6 all or partially reimbursed by the Reconstruction Finance Corporation and the Commodity Credit Corporation and charges for space and. equipment rental, the Branch was able to show a lower expense total than in 193^o The amounts reimbursed oa officers and employees salaries were $3 ,65^ 0^6 greater than in the previous year* In preparing our Budget figures for 1939 it was estimated that the various fiscal agencies would make reimbursement to us for $182P831 of services at Minne apolis and $19,625 at Helena* The amounts paid and to be recovered were $2^6 ,765 *1+7 at Minneapolis and $22,^35*29 at Helena* While some of the additional payments served to reduce our bank costs, the major portion of the added expense was due to the employment of temporary help and had no bearing on our regular bank pay roll* 8 EXPANSES - Cont 5d SALARIES Minneapolis Helena $ 44oe526a28 51^95*89 $ 492 0422,17 Reduction from 1938 Payments In payments to officers $ 1 #682,86 In payments to employees 17»437q74 Total decrease for 1939..... •$ I9T 126T 0O Decrease at Minneapolis ' $ lp*432*81 Decrease at Helena 3,687°79 Total decrease for 1939*«° ° $ 19>120«o0 The pay roll basis at the beginning of 1939# other than for reimbursable fiscal works indicated a reduction of approximately $20*000 in salaries compared to 1938 9 so that this estimate was fairly close* On December 31 we had a total of 418 employees* of which 377 were attached to Head Office. Of this number 19 Minneapolis employees were released at the close of the year due to the falling off of volume in the Commodity Credit Corporation division which had furnished temporary work to a large number of persons for various periods during the year* On January 1 * 1940 we had 222 men employees and 136 women employees at Minneapolis* with 27 men and l4 women at Helena,, Compared to one year ago changes in personnel were as follows; Minneapolis i m 222 136 358 Men employees Women employees 1938 215 -ill 328 Helena Men employees Women employees ........ 27 l4 ~TT 26 399 367 13 39 There has been an increase of 13 persons during the past year in the bank ing departmentsat Minneapolis and 17 hare been added to fiscal departmentSr The expansion in fiscal duties is indicated from the fact that 191 persons at Minne apolis were all or partially reimbursed by fiscal agents during December, 1939* com pared to 155 similarly employed in December, 1938° The Wage and Hour Law has caused some rearranging of schedules and it was necessary to add a few transit em ployees and make at least one addition to the guard force to avoid paying overtime,, No dismissal payments were made in 1939•> tot in December a payment of $966065 (4 months salary) was made to Joseph Person who had previously been removed from our personnel,. EXPENSES - Cont’d RETIREMENT SYSTEM Current Serv5.ce Contributions Minneapolis Helena $ 2i*552o70 2,575.74 $ 24,128*44 Above amounts are contributed by the Bank and the total is $1»397*03 ^e3E than the payments in 1938« For the first half of 193^ the rate of payment was 5„23$ of the monthly pay roll» From July 1, 193& to June 30, 1939 this rate was 5„21$ and since has been at the rate of 5»13^° effect since March 1, 193^o Current payments have been in All payments prior to that date have been made by the Bank* LEGAL FEES Minneapolis Helena $ 9n09i«46 2QoQ0 $ 9,111*46 Salary of counsel at Minneapolis made up $9,000 of our payment, the bal ance of $91o 46 being expended to protect our interests in several small matters at closed banks* At Helena $20 was paid for legal opinion in connection with taxes on fixtures,, DIRECTORS* FEES AND EXPENSES Minneapolis Helena $ 7?213»46 1,959*40 $ 9,172.86 The curtailment of Discount Committee meetings in 1939 made possible a substantial decrease in payments to directors, this one service costing $3*910 less than in 193^ at Minneapolis,. decrease was $3rI09ol9<> Some other items showed increases but the net At Helena payments to directors were $517*35 greater because of fuller attendance and heavier travel costs0 MINNEAPOLIS DIRECTORS% EXPENSE Regular meetings Attendance at Member Bank Conference Executive Committee meeting Audit Committee meetings Discount Committee meetings Meetings of Chairmen at Washington Entertainment of Directors Luncheons for Directors Luncheons for Discount Committee Luncheons for Executive Committee $ 4 ,503*35 228c45 760.15 403.00 740.00 373»9S 75 c 0 0 1230 I8 2*65 % T72ip^> Helena Board meetings and luncheons Total ...................... 10 9 EXPENSES - Cont & FEDERAL ADVISORY COUNCIL $ i 6323<>^5 Four meetings were attended during the year by our representative,, The amount!also/includes meeting expense and our portion of the salary of the secretary of the Councilo TRAVELING EXPENSES Minneapolis $ Helena 19 .232 .tf9 2 .362-90 $ 21. 535.39 Total travel expense is approximately $10?00 less than in 193s* such costs being $2t569«6^ lower at Head Office and $892o22 greater at the Branch,, * One year ago expense of industrial loan investigations and payments made to the Industrial Advisory Committee were $5s012o440 Lowering of these payments to $2 *921*75 during the past year has mad© possible the reduction in total expense* The annual visits of our officers to banks of the District have cost less than in 1938 with attendance at group meetings and conferences costing more* Travel in connection with memberships has also been heavier than in previous years 0 of showing the bank movie were reduced over $500 in 1939 ° Expenses of the year for travel have been classified as follows* MINNEAPOLIS TRAVEL EXPENSES Showing Bank movie Industrial loan investigations Industrial Advisory Committee expense Bank examinations Visiting banks of the district Group meetings and conventions Closed Bank representatives Presidents8 Conferences Open Market Committee meetings Retirement Committee meetings Auditors9 Conference Conventions outside our District Employees attending AoI 0B 0 Convention Graduate School of Banking (Lysen) Talks before various groups Arranging transit operations at banks Obtaining statistical information Miscellaneous $ 32*35 1*964o3S 957*37 1 . 530*77 890.47 600 <,QS 109„10 410*93 2S3 o25 422„34 254,46 150*15 339.61 118069 253c 46 HELENA TRAVEL EXPENSES Attending member bank conference at Minneapolis $ 117.50 Montana Bankers Convention 97«90 American Bankers5 Association Convention 106.15 Visiting banks and contacting prospective members !•203057 Expense of Head Office auditors 477 ,7 s Per diem allowed Branch auditor 360o00 im wwfca $ "~2T3^90 Costs EXPENSES - Oont 8d POSTAGE AND EXPHESSAGE Minneapolis Helena $ 104c220o13 15>1^S,57 $ 119*368„70 Next to salaries our mail and shipping expenses require the heaviest ex~ penditures* with the 1939 total the highest yet experienced* the increase at Minneapolis was $6,341*03° Compared to 1938 The Minneapolis expense was incurred for the following purposesi Postage jaa. Absorbed on incoming currency shipments Placed on outgoing currency shipments Placed on outgoing coin shipments Net amount used on ordinary mail Postage used on security shipments $ $ J33*. 26,603*1*7 17*353-15 5.9«M9 Ho, 5680 75 T O .88 91 .019 *2^ $ 26 ,009 ,6^ 15*767036 5»1OL7oOS 1+0 ,074.45 $ 86 ,251018 1.017* V5 Expressage Absorbed on incoming currency shipments Absorbed on incoming coin shipments Government checks sent by express Checks to member banks by express Paid Brink9s IncO0 for hauling (one year) Auto expense and miscellaneous 8k 0 49 5,850*55 $ $ >192067 $ 2,849*02 3 ,600 o00 324*16 1 3 «200089 807.69 ... 639056 i 1 1 *627*92 Total Postage and Expressage ........... . ..00 $ 104,220*13 * 76 *68 6,048,21 4io 037 3,645.41 $ 9 7 *879*10 Payment from October 10, 1938 to January 1* 1939° The postage required on money shipments in 1939 was $49»9^1<>6l and $2,747=53 than needed in 193S* On ordinary mail $53 ,299*20 was needed, or nearly $4,000 more than in 1938. hut more postage was used during the year just closed in connection with fiscal matters and the reimbursement was $12r730o45P compared to $9e37^«09 1938* The excess of recoveries over postage used on shipments of securities was credited to Miscellaneous Earnings in 1939 an^ used to reduce expense in 1938® The net credit amounted to $1 ,297-07 last year compared to $1,017.35 in 1938o Fewer checks were sent to member hanks by express than one year ago0 cost of hauling money and securities shows an increase of $2e800 over 19380 The Our arrangement with Brink’s Inc<> was continued throughout 1939 and had only been in effect since October 10 during 19380 The change has worked satisfactorily, reduced guard expense and eliminated the necessity for purchasing a new armored truck* At Helena postage and expressage showed a net increase of $305 °02* Money costs v/ere $372o34 greater and ordinary mail $311038 greater* Expressage charges assumed on money were $694 compared to $822*39 one year ago,, All other costs under this classification were $835 ®13 in 1939 a*1** $lp073°05 in 1938 ° 12 EXPKBSBS - Cont5d TELEPHONE ASP TELEGRAPH Minneapolis Helena $ 9*587*15 **,355° 71 13*9**20S6 $ The further use of teletype machines by other Federal Reserve Bank© helped the general cost of the private wire system and our payment for private wire ex-? pense was $916 less than for I93 S 0 A larger percentage of messages sent over the private wire reduced payments to the commercial companies $637 compared to the pre vious year0 By arranging the handling of our Sts Paul telephone messages through an outlying exchange, w© received reduced rates and refunds totaling $UU3«>9-2» At Helena there has been some increase in telephone costs during past two years because the Branch makes use of the local telephone company!s equipment for internal calls* Through elimination of a switchboard operator, and convenience of the new plan, money has been saved,, Telegraph expense has been closely watched at Helena* the fluctuations of recent years depending on the demand for services by our member banks® Total telegraph and telephone expense was $96*1*8 greater than the 193 & total* PRINTING, STATIONERY AND SUPPLIES Minneapolis Helena $ 20*119o21 2,S25»36 $ 22,9UU.57 Payments for the above items were $2*739*^6 less at Minneapolis than in 1938 and at Helena the reduction was $5^5° has been customary for several years to charge off in December substantial amounts for printing, stationery and supplies ordered but for which bills will not be submitted until Januaryu For 11 months in 1939 there was small change from on8 year ago* but amounts charged in December were $3*05^*23 compared to $5*883*08 charged in December one year ago® . There has been an upward trend in stationery and printing prices for most of the year and this seems likely to continue# Fiscal agencies reimbursed us for $6 ,6s6 <,g6 of supplies during the year compared to $5#2U4*10 in 1938* Helena payments were norma! for banking department needs* but recoveries from the Reconstruction Finance Corporation and Commodity Credit Corporation were $5 ^ 7-72 compared to $365,07 one year earlier0 INSURANCE ON CURRENCY AMD SECURITY SHIPMENTS Minneapolis Helena $ 6,632063 855*80 $ iMZ.bj There was little change in the insurance charges absorbed on money ship ments from one year agQt the reduction in the amount charged on incoming shipments being offset by the increase in the outgoing volume© One year ago the insurance 13 EXPENSES - Coat’d recoveries on security shipments exceeded the payments by $1 3 7 <>77 * For the year On August I, 1939 the cost of insur just passed we had net charges of $153°6U* ing currency and coin shipments was reduced from 4 3 /U cents per thousand to U l/U cents per thousand* At Helena $573*10 was paid for insuring money shipments in 1939» or $1*0*19 less than last year,. On securities there was a net credit of $17»30„ com pared to a small net charge of $6 „lU in 193^6 OTHER INSURANCE Minneapolis Heiena $ l6B390<53 1 ,1 ^2,63 1 7 *533 ol6 $ Our payments for insurance at Minneapolis during 1938 and 1939 are clas sified belowo These charges should show a further decrease in I9U0 because the yearly premium on our Blanket Bond was lowered to $10,2S6o25 in October, 1939 > The 1939 payment for this bond was $1„200 less than in 1938° fire and tornado policy which we have carried on our property for three years expired on January 1 » I9U0 and we will be refunded approximately $1*300 of the original premium of $2 ,250 * One-third of the amount refunded*, or $^33* will be credited to I9 U0 expense and the balance credited to Profit and Loss* The Branch payments for insurance of $1 ,lU2063 are $2760 25 greater than in 1938o A new burglary and robbery policy requiring payment of $192*88 accounts for most of the increase,, MINNEAPOLIS _ 123i _ Special policebonds Group Life Workmen’s Compensation Non-ownership Auto Liability Collision insurance - Officers and employees Bankers 8 Blanket Bond Premises and Elevator Liability Fire and Tornado Steam Boiler Burglary of Securities Fidelity bonds (Agent and alternates) Auto liability on bank owned cars Camera Property Floater & Fire on Film Les3 ; Dividend on Group Life for policy year ending April l a 1939 p 130.00 $ 125o00 1.^37.to 1 , 398, US 1^030*76 l,l6 lo 3 1 308*§8 381*35 127.1& 11.559-66 330-12 750.00 129*95 216*60 250*00 197*51 151.17 12 ,760*36 362*13 soUcQ 5 63*36 ! 95o93 260*lU 299oUl -,.-53.18 $ 16,593,71 $ 1 7 ,891*22 203 018 $ 16 ,396.53 $ 17.891.22 In order that the Directors may be informed as to the type and amount of insurance carried at Minneapolis and Helena9 with the premiums and maturitiesP the following table will show the coverage in effect at this timeD SUMMARY OF INSURANCE POLICIES CARRIED BY BANK AT MINNEAPOLIS - 1939 INSURER AMOUNT OF POLICY COVERAGE St„ Paul-Mercury Hartford Travelers Fidelity & Deposit tt 11 11 it it n Travelers 11 Hartford Firemen’s Mutual Hartford Travelers Travelers Travelers Travelers Travelers PREMIUM Bankers blanket bond (covers Head Office and Branch) $ 1,000,000 $ 10,2S6o 25 Burglary of securities (covers Head Office only) 9 ,oooflooo 518.60 Burglary of securities (covers Head Office only) 1,000,000 U3 06s Fidelity bond - Walter C. Coffey* Federal Reserve Agent 100,000 100000 H - HoGoMcConnell, Ass’t Federal Reserve Agent 50,000 50*00 M - HoCoTimberlake, Alternate for Ass ’tF 0R„Agent 50,000 50 o00 ” - John Johnson, M " “ 11 50,000 50 o00 Public Liability - Premises, elevators, etc0 50 /100M 990 .U1 Public Liability - Cafeteria 10,000 135.13 Workmen’s Compensation Statutory limits 1 ,261,71 Building & Contents - Fire etc<,( covers Head Office & Brc) * 500,000 2 ,250.00 Steam boiler H ” M 50,000 **9^2** Property floater on motion picture camera and equipment 2,17S **3®55 Fire insurance on bank film H ,000 9063 Chevrolet automobile - Liabo, P„D0, Fire, Theft, etc„ 5/50/100M 82. MU Ford delivery sedan - " n M 11 M 5/50/100M 133*07 Automobile - Non-ownership liability 5/50/100M 381.35 DATE OF POLICY EXPIRATION DATE s-1-39 1-1-38 2- 7-39 12-22-39 7-13“ 39 7-22-39 9- 22=39 12- 1-38 5— 1=37 12- 31-38 1 - 1-37 5-1- 38 II-8-39 11 - 12-39 1-6-39 3-3-39 11 -2-39 S-l-Uo 1-1-Ul 1 - 1-M1 12-22-UO 7-13-*«0 7 - 22-UO 9- 22-UO 12- 1-Ul 5- 1-Uo 12-31-39 1- 1 -Uo 5-I-U1 11 - 8-U0 11 - 12-UO 1 -6-Uo 3 - 3-U0 11 - 2- 1*0 3-5-39 3-5-39 12- 16-37 3-5-40 3-5~Uo 1 - 1-Uo 1- 1 -MO 5- 1-UO SUMMARY OF INSURANCE POLICIES CARRIED BY BASK AT HELENA - 1939 Standard Accident Westchester Firemen’s Mutual ti 11 H II Globe & Republic Travelers U.S0Fid*& Guaranty Hartford UoS.Fido& Guaranty Equitable Life Non-ownership liability $ 5/300M Armored truck. Fire and theft 1,500 & Contents-Fire etc„ (Rider on H o0, policy) 100,000 - Sabotage, vandalism, malicious mischief (Rider on Head Office policy) 2^,000 New Building & Contents-Earthquake (Rider on H o0 * policy) 50,000 Old Building - All direct loss or damage by fire, Co»ins0 17.000 Burglary & Robbery (Securities only - excess over million dollar Blanket Bond, held at Head Office) 500,000 Public Liability - Premises, elevators, etc<> 500,000 Steam Boiler (Rider on Head Office Policy) 50*000 Workmen’s Compensation Statutory limits Automobile Chevrolet New Building New Building 7 SoS6 13 o93 600 o00 30*00 12-6-37 185°00 IOO0I3 U-25-3S 5-5-39 868.00 3-^39 1- 25-39 5-1-38 1-25-39 195*61 S3 o00 2k2M Group life - Contributory (Insures each officer and employee in amount equal to one year’s salary or $5*000, whichever is lower0 Expires at the 65 th birthdayo Includes total and permanent disability prior to age 60* Premium rate 63# Per thousand per month of which 60# is paid by officers and employees and 23# by bank, Dividends* if any* go to the bank.) * Includes sabotage, vandalism and malicious mischief. 5~5«U2 3»U„U2 1- 25-U 2 5-I-U1 1 - 25-Uo EXPENSES - Cont 9d MBS 013 BANK PREMISES Minneapolis Helena $ 67»360oOO $ 69,567025 2,201*25 The amount charged expense for 1939 taxes at Minneapolis to be paid in 19^0 is the same as in 193^ Appraised value of the land is $1*32,000 and build ing $lc2520OOOt or a total of $1 568U,000, 100 mills* Assessed value is $673s>600 and the rate There will probably be a small amount of special taxes in addition* At Helena the tax payment was on the new property only* Taxes on the old property amounted to #323°76 and were paid by a charge to Profit and Loss at the Head Office* In I93 S the payment for the portion of the building coapleted at the time of the assessment was $812<,69» with $l,097*ll-5 assessed on the old property,, DEPRECIATION ON BANE BUILDINGMinneapolis Helena $ 31e155«60 ^tlSOoSU $ 31^ 336 ^ Normal depreciation at Minneapolis is $25 ,665.60 which is 2$ of estimated replacement cost* oil burnerso The additional charge of $5,^90 represents the cost of two new tio.^__— a*'Under Board ruling* we are permitted to charge off during the cur~ rent year the full amount of replacements if not in excess of 10 per cent of the original cost of Fixed Machinery and Equipment„ Depreciation at Helena was double the amount charged in 193^? because the premises were occupied but six months in 1938 ° LIGHT, HEAT, POWER AND WATER Minneapolis Helena $ 18„108o0U 1,51**«18 $ 19,622022 Compared to 1938 there has been an increase of $2,700 at Minneapolis., It was estimated earlier in the year that our lighting costs due to new equipment and greater use of current would average $300 monthly higher in 1939 - total for light and power was $13,126069 during the past year compared to $9 ,5}i5<>09 in 19380 Fuel oil required in 1939 was 70*236 gallons for which we paid $3*321«59° The amount purchased in the previous year was 96023O gallons at a cost of $U,922063 * Through the installation of new oil burners in October we were able to burn a lower grade of oil at a saving of approximately one-half cent per gallon* low pressure boilers reduce the quantity of oil necessaryQ The Our oil expenditures during the last quarter of 1939 were $1 »2^6»79 compared to $2,589 for the like period 16 EXPENSES - Cont5d LIGHT, HEAT, POWER AND WATER - Cont3d of 19380 Use of city water cost $819^56 in 1939 an(* $^9^°50 in 1938» Sewage dis posal which brought a new charge in the latter part of 1938 cost us $665*15 for all of 1939 , compared to a payment of $289*73 for approximately five months in 193 S« A reliable comparison at Helena of heating and lighting costs with 1938 may not be made because both buildings were occupied for part of 193 ^ and light was included in the rental expense paid for temporary quarters used prior to occupying the new building* in November*, In December the heating expense was $77°77 compared to $6U*75 Cost of light was $i+3*’95 I*1 December and $51&82 for November,, For Light $700*67# heat $693 *23 ; the full year 1939 these expenses were as follows; power $51 o^3 ; water $63085 * REPAIRS AND ALTERATIONS Minneapolis Helena $ I***535* 35 57Uo27 $ 15*109*62 The amount required at Minneapolis was substantially greater than in 193S with over one-half the total used for labor and materials in changing and repair ing the outside walls* After occupying these premises for fifteen years we must expect a moderate increase in the amounts needed each year for repairs,, More items make up the 1939 total which were classified as follows; Elevator maintenance contract $ Overhauling steam pump Installing sink in duplicating room Furnishing and installing boiler for hot water plant Acousti-Celotex ceiling for ground floor room Lights on ground floor room 2 Filters for drinking water Rewinding air-conditioning motor Painting smoke-stack and flag pole Connecting city water to compressor Furnishing and installing 8 lavatories Engineering service installing oil burners Labor and material used in repairing outside walls Labor and material used in air-conditioning changes Cage work on 5 ^ level of vault Light fixtures for recreation room MisCo materials purchased for making repairs by our own workmen Less; 2*166*00 113*75 10U*00 U65*00 353-00 127cSO l65P00 115 oS0 ^7«00 73°00 302*00 I 5O 0OO 7«99^ol+3 l 0055->20 29O 0OO 51=35 1^182*jl $ iU , 755.6!* * 220029 '■1^53505 Unused portion of amount reserved in December 193& for plastering HELENA Repainting vault Construction of concrete retaining wall Miscellaneous small items $ 206*29 238*00 ___ 129 «9 S $ 57^.27 17 EXPENSES - Ocmt»d FtlRNITUBE AND EQUIPMENT Minneapolis Helena $ 9 ,679.20 $ 15 .337.29 Of the Head Office purchases $4,569«74 were paid for in December,, the only important items being $2,864 for eight Monroe Adding machines not yet delivered, One year ago the amount expended for furniture and equipment at Minneapolis was $S»2l6 o89 e Helena purchases i*ere $2 6337«03 greater than in 193®* with $2>46l022 of the year’s purchases coming in December when $le924„37 wa8 needed for filing equip ments Classification of 1939 purchases is given balows MINNEAPOLIS National time card machine Tables Chairs Desks Cafeteria equipment Shelvinge files and filing equipment Coin counter Speed attachment for bill counter Scales Ford truck Venetian blinds Endorsing machine 2 Remington Typewriters S Monroe adding machines MisCo items (None over $100) Lessj Articles sold Balo of amounts reserved,, not used $ l6l„52 128*68 l #037oll 589.57 357*00 1*809*97 5290II 175 o66 136052 485*64 319*87 47so47 19^052 2»864o00 532121 $ 9 »8b O l $ 102 o46 84.96 187 t>4l $ 9*679o20 HELENA Files 9 filing cases and equipment Monroe calculator Electric time stamp Tape-shooter for wrapping 2 Walnut desks and 2 chairs Chevrolet truck and armored body Mechanical equipment for shop 2 Burro\ighs adding machines Miser, small items $ 2 ,177*17 337c75 70,76 4s <,65 75*00 l»7*+5»50 169^95 782*55 2^26 $ T ^ > 5 8 o09 MISCELLANEOUS EXPENSES Minneapolis Helena $ 29 ,7 ^3.10 3.1U8.81 $ 32 ,891.91 Miscellaneous items at Minneapolis were $1,253=02 higher than in I93 S 0 There are a number of miscellaneous costs for which we are partially reimbursed* such as rental of furniture and equipment medical supplies and physical ezsininations, 18 8 EXPENSES - Cont d MISCELLANEOUS EXPENSES - Coat'd etCos, with the amounts shown below representing the net cost to the bank* larger items were as follows; The .Rental, repairs and maintenance of furniture and equipment $2 »871 o29 ; outside protections vault inspection $257 .66 ; outside laundry and cleaning $1 *597-,22; local transportation $2S9„15; postage meter rental $308„2U; copies of bank examination reports $3 >?00 ; commercial agency reports $882„2S; medical services and physical examinations $l,080 o9 7 ; cafeteria, net expense $3 o179 °23; entertainment of bankers and others not in bank8s employ $2 ,158063 ; officers’ and employees' dinners $171*30; employees' education, American Institute of Banking and other $2 *263 ; donation to Federal Reserve Club $l,5l6015; memberships .American Bankers Association $250; State and other bankers* associations $3^0; Credit Men’s Associations $205; donation Police and Firemen!s Benevolent Associ ation $150; Christmas donations $117*50; Photographs for personnel records $1630 50; Member Bank Conference $U,132o37» our 3 hare of the loss of operating Foreign Depart ment Federal Keserve Bankg New York, $2 8882*98; preparation and presentation of material for radio broadcast $U49»lU; commissions on collection of closed bank paper $206<.50« Helena miscellaneous items in excess of $100 covered the following: Rental, repairs and maintenance of furniture and equipment $718o08; outside protec tion, vault inspection $H0 1 „2 7 » post office box and postage meter rental $208«8 7 ; copies of bank examination reports $202*50 ; employees* education $223 *65 ; donation to Federal Reserve Club $300*00; membership State Bankers' Association $210; photo graphs of new building for member banks $U52 o08 « REIMBURSABLE EXPENSES Minneapolis Helena $ 2^6,765 *U 7 * 22,H35q29 $ 269 ,200o76 Amounts received from fiscal agencies were much higher at Minneapolis and Helena than in 1938 when the totals were $l6l»3UU„7S and $6B81SoU2# respectively, a total of $l68,l63c20 and over $100,000 less than the 1939 total* Practically all of the increase at Minneapolis resulted from expansion in services for the Commodity Credit Corporation* At Helena no duties were performed for the latter corporation in 193*5 with $10<,882„05 the amount reimbursed in 1939„ Other fiscal services were minor» * Includes $9^8037 of leased wire expense recovered from member banks« EXPENSES - Gont °d RECOVERIES FROM FISCAL AGEHCIES - MINNEAPOLIS Treasury Departmenti Uo So Government Issues $ 2 1 ,787,.27 Ho So Savings Bonds 27*395*79 Work Relief Checks 20*011c57 Reconstruction Finance Corporation 50*5^9<,76 Commodity Credit Corporation 111,3960 77 Federal Farm Mortgage Corporation 4 B296«01 Federal Land Banks 1»7630^9 Federal Intermediate Credit Banks ' 2o20 U 0 So Housing Authority l*Q07o5U Federal Housing Administration 7*20 Federal Emergency Adm 0 of Public Works 6f2c2k Federal Home Loan Banks and Home Owners’ Loan Corpoi'ation 6 S791»3^ Fedex^al Crop Insurance Corporation 135^92 Recoveries from Member Banks - Leased wire service 948o37 Total ............................................ .. $“ 2^ 6 ,7650^7 RECOVERIES FROM FISCAL AGENCIES - HELENA Reconstruction Finance Corporation $ lle296o07 Commodity Credit Corporation 10 6882o05 Federal Farm Mortgage Corporation 153*^5 Federal Home Loan Banks and Home Owners8 Loan Corporation 103*72 Total # o o . .................................... • $ ~22>35o29 ASSESSMENT FOR EXPENSES OF THE BOARD OF GOVERNORS OF THE _____________ FEDERAL RESERVE SYSTEM ___ _ Minneapolis $ 36 ?796066 Our assessment for Board expenses was less than for 1937 or 1938 and on the basis of assessment fixed for first half of 19 UO a further reduction is in prospecto The payment in 1939 was $2*638076 below that of 193^« six months of 19^0 we will pay the Board $17*710*6Uo Eor the first During the like period of 1939 this payment was $1SbH91o77* FEDERAL RESERVE CURRENCY Original cost and shipping charges $30«751°78 There was a very material saving in printing costs for our notes compared to 193So Such costs made up $23a000 of the above total with similar costs $39»3^ in the previous year0 Shipping expense to Minneapolis and Helena from Washington amounted to $3,326o0S in 1939 and $3eU08o81 in 193s ° in the year just closed and $3*55^*20 in 1938* Surcharges of $^,,156 were paid Salaries of the Issue and Redemption Division are also included in above total amounting to $269070 in 1939 and. $272*33 in 1933o Total costs of Federal reserve currency were $1 5 ,867*56 less than in I93 S 0 20 8 EXPENSES ~ Coca d FEDERAL RESERVE CURRENCY - Cont’d Helena pays no part of the expense of printing or shipping our notes0 FEDERAL RESERVE CURRENCY Cost of redemption including shipping charges $6*ll6<,56 During 1939 we reserved $1.50 per month for nine months and $100 per month the remainder of the year to pay Redemption Agency expense and at the close of the year the balance was $S19°36* Charges making up the complete redemption classifica tion in 1939 covered the followings Amount accrued during year for Redemption Division (Paid for year ending June 30 , 1939 $l*103„9l) Paid Federal Reserve Board our share expense Issue and Redemp tion. Division Insurance on our fit notes from other Federal Reserve Banks Postage on fit Federal Reserve Notes to other Federal Reserve Banks Express charges on our cancelled notes to Washington Shipping charges on fit notes to other Federal Reserve Banks by Helena $ 1 *650*00 l,207d5 59lM 2 , 105.79 276060 PROFIT MI) LOSS ACCOUNT OF FEDERAL RESERVE BANK OF MINNEAPOLIS DURING 1939 Head Office Total Current earnings Current expenses Current Net Earnings $ 599‘6k $ I.13lt„367.is $ 97>4.739.05 lg9.S60.59 _____ i l h m - J S L $ 257 ,036.31 5*188*98 5*188,98 139r647*90 960 c.30 1380 U0 707 ,6s 139.61+7,90 Helena Branch $ 232 .U6 — ail*08.18 $ 97.175-7? Additions to Current Net Earnings Withdrawn from reserves for losses on Hungarian credits $ Profit on U,Ss Government Securities sold - Net Profit on sale of other real estate Net Income from other real estate Profit on transactions in foreign exchange Sale of fixed machinery and equipment Sale of scrap material Forfeiture of option to purchase old Branch "building at Helena Profit on mutilated currency and coin Recovery on transit items previously charged to profit and loss TOTAL ADDITIONS , . ................ , , $ 960,30 575*83 *37.*3 153,00 707*68 158,00 157.15 17.15 1 UO0OO 50,00 172 o21 156,117 50,00 15.7*1 1+6,56 TV/ *227 0is $ 11+7.^53*87 $ 100,000,00 $ 100,000c00 $ U6„$6 231.69 Deductions from Current Net Earnings Charge-off on carrying value of hank premises $ Added to reserve for losses on indus trial loans Loss on counterfeit currency and coin Discount on foreign currency and coin Interest paid on account of adjustments not connected with earning assets Losses on personal loans to employees Difference Account 33,000,00 129,31 33.^5 33,000,00 126,31 9.5^ 9. 5^ 31.35 31 ->35 |f5i. 11 .. $ . 133.65^*82 Net additions to current net earnings $ _ 13,572.36 Net Earnings „ . , « , ............ $ 173 *^32.95 Dividends paid $ 17** *905*39 Withdrawn from Surplus (Section 7) $ 993°^2 Withdrawn from Surplus (Section 13 b) $ **79°02 3c 00 ,30 33.15 i $ U91.28 133.591.Bi3 i 1*0*11 36*21 13B767c2l4 $ 19lU8S 270,803,55 $ 97.370.6 DIVIDENDS Cumulative dividends at the rate of six per centum pe.r annum on paid in capital stock as of December 31fc 1938...................................... $ l^339*763*7S Dividends paid during 1933 17U»905o39 Total dividends paid since organization ........................ .. $ ^,^1^6^9717 FRANCHISE TAX Total of franchise tax payments to the United States Government since organization These payments were made out of earnings during the period 191S to 1932* Federal Reserve Act as amended by Section 4 of the Banking Act of 1933 no longer provides for payment of a franchise tax„ $ 5,202,898*50 SURPLUS, (SSCTION 7) Balance in Surplxis (Section 7 ) December 3 1 , 193 S December 30a 1939 ” Withdrawn from Surplus; Net Loss for the year 1939 $ 3.153?^13,69 ______993^^2 $ 3,152t420o27 SURPLUS, (SECTION 13b) Balance in Surplus (Section 13 b) December 31, 1938 December 30* 1939 ~ Withdrawn from Surplus; Net Loss for the year 1939 $ l»OOl0l62<98 U790Qg $ TT o o o TSs J oQ^ RBSSRYES (Other than Reserve for Depreciation Bank Premises) $ 2,1 U9 ,3696*67 Total reserves at beginning of year Credits during year; Added to reserve for losses on past due indus* trial advances Debits during years Losses on miscellaneous assets acquired in settlement of claims account failed banka Withdrawn from reserve for losses on Hungar ian credits and transferred to profit and loss account $ 33,000*00 $ 3 3 ,000*00 $ 6 *906*39 5»lS8o98 $ 12*095*37 20 ,9 0 ^ 6 3 Net Credita to Reserves * . . $ Total Reserves at End of Year $ 2 *170 *601.30 Reserves at end of year for; Contingencies created from, net profits prior to 1937 Contingencies created from surplus during 1937 and thereafter Total reserves for Contingencies .................... Other Reserves at ftnd of Year for; Losses on miscellaneous assets acquired in settlement of claims account failed banks Losses on past due industrial advances Losses on Hungarian Credits $ l t701*2H6o « .......... 18 280,179*99 $ l»981»^2o017 $ 7 U*093 »6 l 73»OO0oOO H2,081,52 Total Reserves at End of Y e a r ................ .. .............. .. » $ 2 B170^601.30 23 PROFIT AND LOSS There was an increase of $34,128*62 in current earnings for the past year and a decrease in expenses of $37#184026 hut the current net earnings of $159(860=59 were insufficient to cover all needs* Although considerably less than in 1938, the profit from System sales of United States securities amounted to $13986 *17090* One year ago this profit was $281,350*93 which permitted us, after all other requirements were filled, to add $198 ,061*26 to "Reserve for Con tingencies* H No additions to such reserve were made at the close of 1939o the preference being for a reduction of $100s000 in the carrying value of the land at Minneapolis® Apart from the profit on sales of Governments no important additions were made to earnings* the largest item being $5#138o98 withdrawn from “Reserve for Losses on Hungarian Credits” with sufficient remaining in the account to provide for expected losses* One year ago the amount reserved for ’’Losses on Hungarian Credits’5 was reduced $5»225<>12 and the amount remaining in the account on December 31c 1939 is $42e081*52* From the sale of other real estate acquired in settlement of claims account failed banks# v/e obtained $960*30 * Income and expense resulting from property taken over by the Bank gave a net credit of $138 ,UO for the year. Costs in connection with the Helena property were $437*43* of which $323076 represented 1939 taxes* Our share of the profit on conversion of sterling exchange into dollars was $707«6S« From the sale of scrap metal at Minneapolis and window grilles at Helena we obtained $157°15» sales of fans and other equipment $158 ; profit on mutilated coin sold for bullion $172 *21 ; forfeiture of option to purchase old Branch building $50 ; recovery on transit items previously charged off $46*560 With $1*134*599*64 of current earnings and $147,227*18 in credits direct to Profit and Loss, we had $le281 0826*S2 of gross earnings* These earnings were applied as follows* CURRENT EXPANSES Minneapolis Helena $ 877•330*87 976408«18 $ 97lU 739*05 Our estimates for 1939 costs were closer to the actual expenditures than usual* Payments at Minneapolis were $15*366*13 less than the estimates with Helena payments exceeding estimates by only $329 *18* The fluctuation in the number of employees on fiscal work and the expansion and contraction in the space required for carrying on fiscal operations make reimbursement difficult to estimates 24 PROFIT AND LOSS - Contjd as will be realized in comparing fiscal costs for the past two years« Subject to final change* the 19^0 budget figures show an estimated net expense of $889*627 at Minneapolis and $93*505 at Kelena® SPECIAL CHARGE-OFF OK LAND Minneapolis $ 100,000 Under approval of the Board of Governors this reduction, the first in twenty years,, was made at the close of the ye&r0 The land was purchased for $600#000 in 1919 and at the close of that year the book value was reduced to $500,000*. The best opinion we can obtain gives our land an approximate value of $*K30*000o RESERVE FOR LOSSES ON INDUSTRIAL. ADVANCES $ 33,000 Including $15«000 reserved at the close of 1937 and $258000 reserved one year ago» there is a total of $ 73»000 reserved for possible loss in connection with advance made the Northwestern Oil Company, Superior, Wisconsin* The orig inal amount of $22^,000 had been reduced to $190 ,^82o22 at the close of 1938 * On December 31f 1939 the balance of principal was $188,982*22c Including past due paper of the above company, the total of past due industrial advances was $226 s052 olU at the close of 1939 „ LOSS ON COUNTERFEIT CURRENCY AND COIN Minneapolis Helena $ 126„31 3*00 $ 129=31 Counterfeit notes not found on first handling at Minneapolis were eleven in number and $100 in amount„ Counterfeit coin returned by banks and others was $26*31 at Minneapolis and $3» at Helena., DISCOUNT ON CANADIAN CURRENCY Minneapolis Helena $ 33°*5 *30 $ 33*^5 This amount was absorbed on small amounts of currencyc the discount on which we preferred not to charge back to member banks0 or on bills which passed our tellerSo LOSSES ON PERSONAL LOANS TO EMPLOYEES Minneapolis $ 3lo35 Between the period from April 15* 1923 to January 21, 1939 w® had losses 25 PROFIT AND LOSS - Cont8d of $1 ,256.50 on loans to employees who could not be financed in any other way,, During the same period the interest received on advances to employees totaled $l 0225o15 and this was applied to reduce the loss to the above amount* DIFFERENCE ACCOUNTS Minneapolis Helena Debit $ 491*28 Credit Uo.Il Helena Overages Minneapolis Shortages Currency and Coin Transit and clearings General $ U 5I 0I7 Net Debit $ 1 31 ,6s *28 Currency and coin Transit and clearings $ 6„51 33°60 $ U60II One year ago we had net overages at Minneapolis of $4U„30 and at Helena of $23 ,62. DIVIDENDS PAID $ 17U,905«39 Capital stock holdings of member banks in this institution were $2t931 o150 on December 3 1 * 1 9 3 9 Average daily amount of stock held during the year brought payments to members of the above dividend.* One year ago the divi dend payment was $17U*231o27 from average holdings of $2 *903 *850* stock at the close of 1939 numbered H68e an Banks holding increase of six banks for the year 0 Total dividends paid since organization $Ufl51^»669°17 TRANSFER FROM SURPLUS, (SECTION 13~b) Gross earnings from industrial advances were $59*870*31 an^ gross expenses $27»U21c29o After providing for the expense of handling these loans and reserving $3 3 0QOQ for probable loss0 it was necessary to draw on Surplus for $550*98* As the Bank participated in 13'^ of these advances $71 *96 ot this deficit was absorbed by the bank and $^79*02 was charged against funds provided by the Treasury (Surplus 13“b ) 0 After this withdrawal Surplus 13~b on December 3 1 » 1939 amounted to $1 1000c68}<>960 TRANSFER FROM SURPLUS? (SECTION 7) Net loss for the year to the Bank after providing for all costs, includ ing depreciations and reserves amounted to $993°l*2 « This covered $71*96 loss in connection with industrial loans and $921 <>U6 loss in the total required for all other purposes* Surplus* Section 7* at the close of 1939 amounted to $3„152{)U20o27„ 26 FEDERAL RESERVE B A M OF MINNEAPOLIS - HEAD OFFICE REPORT OF AUDITS - YEAR I 939 Dates of Audita CASH Cash in Vault - Bank Officers11 Reserve Cash with Tellers F„Ro Notes in Transit from Other Federal Reserve Banks F 0R 0 Notes forwarded for Redemption Other Cash in Transit Redemption Fund - F«Ro Notes Inter-District Settlement Fund F„R9 Agent 9& Gold Certificate Fund Unissued FoR* Currency held by F0R 0 Agent Currency Received account of Ron.-Member Banks Currently Currently 3«g, 5-24* «-3l* 11-9 Monthly Weekly 3- 6 , 5- 21*. 8- 3 1 , 11-9 3-8, 5- 24, 8-31. 11-9 Currently EARNING ASSETS Bills Discounted Industrial Advances Participation in System Open Market Acct„ 0oS*Securo Participation in Investments through Foreign Banks Participation in Foreign Loans on Gold 3-11* 3-11, 3-11* 3-n* 3-11. UNCOLLECTED ITEMS Transit It eras*"- F«R® Banks Transit Items - District 9 Exchangesfor Clearing House Federal Returns and Other Deductions Return Items - Member and Non-Member Banks Government Suspense Account Miaco Vault Coupons - In process of collection Coupons on Hand Due from Branch Checks and Other Cash Items 2—28, 5*15 t, 8- 21 * 2-28, 5- 1.5 * 8- 21 , 2-28, 5-15 , 6- 22 , 2-28» 5-15 , 6- 22 , 2-28, 5-15 , 6- 22 , 2-28, 5-15 r 8-21 , 2-6 , 5-26 , 9-11 10-9 >+-8 , 8-3 , : 2-28, 5-15 ■ 8-21« 2-28, 5- 15 , 6- 22 , MISCELLANEOUS ASSETS Misc0 Assets acquired accto industrial Advances Industrial Advances past due Three Months Other Bills and Securities past due Three Months Misce Assets acquired in Settlement of Claims account Closed Banks Claims account Closed Banks Advances to protect Collateral Other Heal Estate Fiscal Agency Expenses Reimbursable Interest accrued on U.S« Securities Interest accrued on Bills and Advances Premium on Securities Overdraft s 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 3-8. 5-2U, *5-31. 11-9 3-8, 5- 21*, 8- 3 1 , 11-9 7* S-7, S-7, 8-7, S-7* 11-14 11-14 11-14 11-14 11-1*4 12 -7 12 -7 8- 21 , 12-7 8—21 , 12-7 8- 21 , 12-7 12-12 12-7 8-21, 12-7 3-11* S~7r 11-14 3-11* s«7, 11-14 3-11* 8-7, 11-14 6 -2 ? 6-27 6-27 6-27 Currently 3-llt s-7, il-l4 Currently 3-11, g-7, n » i 4 Currently 7-11, 11-6 Currently Currently Currently Currently Currently Currently Currently Currently BANK PREMISES Land Buildings Fixed Machinery and Equipment Currently Currently Currently FEDERAL RESERVE NOTES Federal Reserve Notes Outstanding 3- 8 , DEPOSITS Member Bank Reserve Accounts Jion-membsr Clearing Accounts UoSe Treasurer - General Account Foreign Banks Officers5 Checks Federal Reserve Exchange Drafts Other Deposits Monthly Monthly Monthly 3-11, S-7, 11-14 Monthly Monthly 5-2b, g- 3 1 , xi-9 Monthly FEDERAL RESERVE BANK OF MINNEAPOLIS - HEAD OFFICE REPORT OF AUDITS - YEAR 1939 Dates of Audits Deferred Deferred Deferred Deferred Deferred DEFERRED AVAILABILITY ITEMS Credits - Member and Non-Member Banks Credits - Other Federal Reserve Banks Credits - Government Items Credits - Misc* Vault Coupons Credits - Non-Cash Collections CAPITAL STOCK AND SURPLUS .Capital Stock Paid in Surplus Fund (Section 7) Surplus Fund (Section 13 -b) Monthly 2-2S, 5- 15 o 8- 21 , 12-7 2-28, 5- 1 5 , 5-21f 12-12 2-6 , 5- 26 , 9-11 2-6 , 5-26 . 9-11 Currently Currently Currently RESERVES FOR; Contingencies Valuation Reserves; Bank Premises Hungarian Credits Industrial Loans Misc 0 Assets - Failed Banks Currently Currently Currently Currently EARNINGS FROM; Bills Discounted Industrial Advances Commitments to make Industrial Advances Participation in System Open Market Acctn UoSc Secur0 Investments through foreign Banks Deficient Reserve Penalties Miscellaneous Currently Currently Currently 3 - u , s- 7 , ii-iU 3 -1 1 , s- 7 , 11 -lH Currently Currently 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 Currently Currently Currently Currently 3- 11, 8- 7 . 11-lU Currently Currently Currently MISCELLANEOUS OPERATIONS AND ACCOUNTS SUBJECT TO AUDIT COLLATERAL AND CUSTODIES Securities held as Collateral fors Bills Discounted Industrial Advances War Loan Deposits Securities held in Safekeeping Cash Held in Custody for Treasury Department 3- 27* 5- 1 , 10-2 3-27 , 5-5*. 10-2 3 -27 , 5- 1 . 10-2 3- 27 , 5-1 , 10-2 3-8, 5-24, S-31 FISCAL AGENCY QPEhATlONS Subscriptions to and Allotments of U*S 0 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 Treasury Department - Checked Purchase and Sale Transactions Currently Currently Monthly Monthly RECONSTRUCTION FINANCE CORPORATION 1-18 NON-CASH COLLECTIONS 2-6 , 5- 26 , 9-11 BALANCE SHEET AUDIT OF HELENA BRANCH 4-17 (11-9 none held) Currently 3- 27 . 10-2 3-21, S-l4, 11-27 3- 2 7 , 10-2 28 FEDERAL RESERVE BANK OS’MINNEAPOLIS - HELENA BRANCH REFORT OF AUDITS - YEAH 1939 GAS# Gash in Vault - Officora5 Reserve Cash with Tellers Federal Reserve Notes in Transit Dates of Audita 1-17. 2- 1 1 , 3- 9 * 10 - 26 f 1-17. 2- 1 1 , 3-9* 10 - 26 , Currently 5 -10 , 6-28, 7 - 2U, 8-16 # 9-27* 11 - 21 , 12-19 5-10, 6-28, 7 - 2U, 8- 16 , 9-27* 11 - 21 , 12-19 EARNING ASSETS Bills Discounted 5-12. 6-17. 7-8. 8-25. 9-30. 10-17, 11-17 UNCOLLECTED ITEMS Transit Items-Federal Reserve Banks Transit Items-Montana Division Exchanges for Clearing House Federal Returns & Other Deductions Return Items-Meraber & Nonmember Banks Government Suspense Account Coupons on Hand Checks and Other Cash Items 1-1 1 , 1- 1 1 , 1- 1 1 , 1- 1 1 , 1- 1 1 , 2- 1 1 , 1- 20 , 2- 1 1 , 2- 1 1 , 2- 1 1 , 2- 1 1 , 2- 1 1 , 3- 1 3 . 3-1 3 , 3- 1 3 , 3- 1 3 , 3 -1 3 , 6- 1 3 , 6- 1 3 , 6- 1 3 , 6- 1 3 , 6- 1 3 , 7-17* 7- 1 7 , 7-17. 7- 17 . 7- 1 7 . 8-8 , 8- 8 , 8- 8 , 8- 8 , 8- 8 , 10 - 19 , 12-11 10-19, 12-11 10-19. 12-11 10 - 19 , 12-11 10-19, 12-11 6-13, 11-25 2- 1 1 , 3 - 1 3 . 6- 1 3 , 7-13, 8-lU, 9-29. 10- 26 , 11.-7» 12-12 1- 1 1 , 2- 1 1 , 3-1 3 . 6- 1 3 , 7-17* 8-8 , 10 - 19 , 12-11 MISCELLANEOUS ASSETS Fiscal Agency Expenses Reimbursable Overdrafts Deferred Charges Difference Accounts Suspense Account - General Expenses DEPOSITS Currently Currently Currently Currently Currently Currently Member Bank Reserve Accounts Nonmember Clearing Accounts Officers’ Checks Monthly Monthly Monthly DEFERRED AVAILABILITY I T M S Deferred Credits; Member and Nonmember Banks Other Federal Reserve Banks Government items Non-Gash Collections Monthly 2- 1 1 , 3 - 19 , 6- 21 , 8- 22 , 10- 19 , 12-11 2- 1 1 , 6-1 3 , 7 -2 7 , 6- 22 , 10- 18 , 11 -2 5 , 12-11 2- 1 1 , 5- 26 , 11-7 EARNINGS FROM; Bills Discounted Deficient Reserve Penalties Currently Currently MISCELLANEOUS LIABILITIES Unearned Discount - Bills Discounted Sundry Items Payable Suspense Account ~ General Currently Currently Currently MISCELLANEOUS OPERATIONS AND ACCOUNTS SUBJECT TO AUDIT Non-Cash Collections Cash Held in Custody for Treasury Department 2- 1 1 , 5- 26 , 11-7 1 - 1 7 . 3-15. 5-21*. 6-7. 7- 2H, 8- 2 , 9- 25 , 10-18 11 - 2I*. 12-13 29 BANK PR3£4iSES - YEAR 1939 Hsacl Office Total Helena Branch Land Gross Book Value? Beginning of year Additions during year Deductions during year Net book value end of Year................ $ 510 ,520 c66 $ 10 ,000*00 $ 10,000,00 $ 1 0283 ,281,50 $ 7 5 .000 c00 $ 1 *283,2810 50 $ 7 5 .000,00 359 .316.76 $ 75 O 0OO $ 100 ,000 c00 $ *410,520 066 500 t520 c66 100 ?000 c00 $ U00fl520o66 Bank Building Gross Book Value; Beginning of year Additions during year $ l 9358e281o50 Deductions during year End of Y e a r ........ .. Reserve for Depreciation*: Beginning of year Credits to Reserve' Normal Depreciation Other - 0 0 0$ l,35Sr2Slc50 $ 360 f068o76 $ 2 7 ,165^60 25 ,665,60 1 ,500,00 • Debits to Reserve End of Year . . .$ 3g7.234o36 $ 384,984*36 $ 2 ,250,00 Net book value end of year 0 0 e$ 971e047ol4 $ S98P297olU $ 72 ,750.00 Fixed Machinery and Equipment Grose Book Value; Beginning of year Additions during year $ Deductions during yeex End of Year » .................. $ Reserve for Depreciation; Beginning of year Credits to Reserve; formal Depreciation Other $ Debits to Reserve Knd of Year • • • • • • • • • • • $ Net book value end of year, , , ,$ 676 B396*23 $ 5,i+90o00 659,538,35 5 ,490*00 84q „o o 681,046,23 840000 664,238,35 660 ,428074 $ 659e588o35 7 ,1700 84 5,490o00 840c00 840000 666,759*58 664 ,238035 14 ,286065 $ 16 ,807*88 I 6 ,S0 7 o88 $ 84o ,39 l«6S0e84 2 ,521023 $ l U 1286065 BANK PREMISES - MIMNKAP0L1S Puri mg the year 1939 considerable work wae done through alterations and repairs and new installations of equipment in our building,, building was replastered and painted from top to bottoa0 cleaned and paintedo Practically the whole The boiler room was A now hot water boiler and new oil burners were installed,, Air conditioning changes required now ducts on the second floor,, Filters were installed to remove the taste from the water and have proven very satisfactory* The top section of the outer wall was removed and covered with copper sheeting* The inner side of the wall was also cleaned and waterproofed® The kitchen and cafeteria were thoroughly cleaned and some additions Eads to the equip** mento Except for the painting of the smoke stack and the flag polee all redecor ating was done by our own workmen^ Changes in electrical arrangements and installa tions were carried out by our electricians and the making and repairing of all wooden furniture was done in our basement workshop,, tion at the present timeo The building Is in good condi Detail of the repairs end alterations and the cost As shown in the expense classification The expense of material and work required in making repairs and alterations was $1 ^»535®35 compared to $ll9Ull*67 in 193 $* light9 heat, power and water total cost ia higher than in 193^ because of the im proved lighting arrangements and the increased usage of current* higher because of the charge for sewage disposal„ Water costs are Fuel oil costs were lower in 1939 and a further reduction will be in evidence in 19 *K) through the changing over from a high to a low pressure heating system and a saving of 1/2 cent per gallon in cost of fuel oilo Total building operating costs at Minneapolis after deducting $18 »268SU2 for rent from fiscal agencies was $15 3 *971*27 compared to $l4S»370o52 in 193 $o To the reasons previously given for this increase should be added a larger deprecia tion charge explained belowB DEPRECIATION AT KIHNISAPOLIS The normal depreciation on our building has been figured for 15 years at 2% on an estimated replacement value of $1*283*281*50* or $25 *665 o60 o At the close of 1939 depreciation of $38^*98^036 had been accumulated giving a net book value of $898,297ol4 to our Bank building Full cover for the original cost of fixed machinery and equipment had been provided by the close of 193^« During 1939 we 31 DEPRECIATION AT MINNEAPOLIS - Cont»d added $5*^90 to Fixed Machinery covering the cost of two new oil burners and then increased the depreciation account the full amount of the purchase "by a charge to Expense* The reservs for depreciation of Fixed Machinery and Equipment amounted to $66U*238e35 on December 31e 1939° DEPRECIATION AT HELENA No changes were made in the gross book value of the Branch property since December, 1938» At that time the land value was reduced to $10,000 and the build ing account reduced to an estimated replacement value of $7 5 tOOO with $l6 9807 o88 allocated to Fixed Machinery and Equipment was provided at the end of 193 & Depreciation for six months in 1938 the full year3s allowance of 2% on building and 10/o on fixed machinery and equipment reserved at the close of 1939- After providing these reserves the net book value of the Helena property was as follows? Land Bank Building Fixed Machinery and Equipment $ $ 10 , 000,00 72*750*00 lUp2S6o65 9 7 ,036,65 BANK PREMISES - TAXES (See under Expense) 32 LOANS, REDISCOUNTS AND ACCEPTANCES During the year 1939* 25 banks have taken advantage of the rediscount and loan privileges,, borrowing an aggregate amount of $l 8129 fi710 o9U for a *ot;al of l6s items* The same number of banks were accommodated in 193$ ^°r an aggregate amount of $2 b339 *025 o15 for a total number of 21U items* those accommodated,, No Twin City bank was among On December 31 , 1939 loans and rediscounts amounted to $150 a3 7 7 o19 as compared to $1 33 »^57»72 at the end of 193 ^* and $17 M 6980 „S1 at the end of 1937» There was no time during the yoar 1939 that banks were entirely out of our debto The discount rate has remained at 1 during the entire year* The activities of the Industrial Loan Division commenced in August, 193^, advances for working capital being made to industrial and commercial enterprises* 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 cento The volume of activity in industrial loans decreased considerably in 1939, during which year 25 advances were made in the aggregate amount of $308 *7 S0 «l6 6 with participating institutions taking $8 ,8^0*00 of this amount* leaving a net ad vanced by the Federal Reserve Bank of $299»9^0ol6o However, the number 25 includes several advances to each of three borrowers, and the amount of $3O 8 078 O*l6 includes disbursement of $118*500 and $86,2^0 in each of two loans* Repayments on advances during the year reduced the balance $526 *716 *18 „ leaving a net balance of $968085^^26 on December 3 I 0 Repayment of eight loans in the amount of $33p200„05 (our share) appears to have been through refinancing* Commitments made in accordance with the provisions of Section 13 -b amounted to $15164HU075 in 1939e and the contingent lia* bility resulting from such commitments at the end of the year was $62 e129 *1+8 o In addition to advances made and commitments given during 1939* loans totaling $12g500*00 were recommended favorably by the Industrial Advisory Committee and approved by the Discount Committee* These loans will probably be disbursed in the near future* Included in the total of $96s985U026 in industrial advances is $2269052*lU of past due paper, with a loan to the Northwestern Oil Company in the amount of $1SSj,9S2«>22 the principal past due advance* $225e000o The original amount of this loan was Against possible losses a reserve of $73eOOO has been set up during the past three years* 3.3 DAILY AVJBBAGE HOLDINGS OF EARNING ASSSTS Bills Dis counted 1939 I 81.585 193& 166 , 1937 271,071 **7*206 ks,59U 1936 1935 193^ 1933 531.212 6 *267,577 1932 11,933*801 1931 1930 s i s , 935 4 ,0 4 2 ,8 5 9 $ Bills Purchased 1.5X7 1*903 60,465 60 ,864 69.523 589,14-38 2 ,936,456 1,649,414 7 „607»324 7.870,007 $ 836,798 896,491 723.050 1 ,3l.lt,784 1.936.117 265,476 Federal Int. Credit Bank Debentures U« So Secur ities Industrial Advances $ 75 ,2S0 t6lb 75,^13,276 3 3 *024,195 82 ,208 ,224 72,398,064 65,803,357 58 6209 s 321 ^3.72^.651 $ Municipal Warrants $ 63,904 26,761,330 22, 786,786 158 &671 Foreign Loans on Gold 36,7^7 2,5^5 64 ,520 152,197 206 1,635 6,308 l »^69 1^093 97,671 34 ,220 Commitments to make Industrial Advances 126.590 168,430 60 .53 s 94, 390 92.568 6 ,2/5 ATOEA&S HAS! OF EAHSIHGS OH JSARNIKG JlSSiiTS Bills Dia* daunted 1933 193S 1937 193^ 1935 193^ 1933 193? 1931 1930 1 .6 42 * 1*596 1*755 2 , 00S 2«. 090 2.942 3-50 7 3« 500 4. 265 Bills Purchased Industrial Advances .7 3 0 * *344 60000* 60 000 60 000 60 coo 60 000 60 000 <.767 .921 .844 °54? 1.280 3-961 l „ 74s 2*904 U« S 0 ^scur* it lee Federal Ini, Credit Bank Debenture s 1*421$ 1-351 1.557 1*539 1.785 2o046 2 o02? 2.107 2.233 3.280 Discount Discount Discount. Discount Discount Discount Discount Discount Municipal Warrants Foreign Loans on Gold *008* 1.171 I 0U63 1.595 2.773% 2 c59^ rate rate rate rate rate rate rate rate 3*500* 3o500 3000 1*555 1.500 3.500 3*877 raised May lHs 1929 lowered February 8, 1930 lowered April 15, 1930 lowered September 12e1930 lowered March l6t 193^ lowered January 8>, 1935 lowered May iH, 1935 lowered August 2U# 1937 to to to to to to to to 5* U 3s 3 2^ 2 1-| Commitments to make Industrial Advances 1 .023* 1.012 1,052 1.03S 1.009 F A I L E D B A N K S INDEBTEDNESS No tanks suspended during 1939 that were indebted to us* Principal liability December 3 1 , 1939 Estimated value of collateral to apply on this balance $ 78 ,365,70 Estimated Loss (Against $7H,093°6l reserve) . . .................. $ 73sS65o70 Collections for 1939 ia reduction of original liability In addition* overpayments of original liability which will be applied on recovery of expense Collections on real estate contracts $ 5 ,398*26 Total collections for 1939 , „ . ...................... „ 0 . . » $ ^,500o00 COLLECTIONS 3 »936<>35 1,152.30 10»Us6o91 EXPENSE Cost of field operations for year 1939 . . „ .................... $ fGk0SS CHARGES TO SPECIAL RESERVE Aggregate charges to special reserve at close of 193^ Charges for 1939 $ 253,909e32 - 6.906.39 Total charges to special reserve » . .............. $ 260 .815.71 Probable future charges 73.865.70 $ 33>*(6s i .Ui CLASSIFIED WORTHLESS TRANSFERRED TO SAFEKEEPING Notes classified as worthless and transferred to safekeeping during the year . .................... .........................$ 288 ,809 olJ3 REAL ESTATE We own 19 pieces of real estate carried on our books at $19*00 consist ing of 18 farms (improved and unimproved) end one small-town housed which prop erties are situated in North and South Dakota and Montana,, One farm has been lost by foreclosure of the first mortgage6 Some years back in an endeavor to protect our collateral* we acquired this real estate*, Collections on contracts for sale of portions of this real estate were made as follows? First National Bank, Pollock, S„ Dak» First National Bank 9 Cutbank, Montana Opheim State Bank, Ophelia, Montana a/c S. SQ Olmstead Paisley Land W. Co Kahle $ 110,00 $ 820.00 222,30 l*152o30 An interest in seven other farms is carried in "additional collateral", which were acquired from the so-called Doty Trust in connection with the closing of the First National Bank at Medina, N 0 Dak. Title to these iB in the name of the Ajax Land Company, in which corporation the Federal Reserve Benk holds 1U2.2 shares of a total of 1 9000 outstandingo 35 CHECK COLLECTION FUNCTION (Minneapolis only) The Check Collection Department handled 30 ,351.227 cash items totaling $U,36 1 ,58O ,793-,96 during the year 1939 * which was 3 3 7 *63 ^ items more than the number handled during 1 9 The 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 Belief Checks for the years 193 ^ an(i 1939 ; Year Number of Items 1939 1938 30 .351,227 30. 013,593 Average Number of Employees Amount $ 4 ,361 ,580 ,798.96 **.673>1»8i+( 397„i*9 Total Expense 64.85 $ 92 .990.90 63.98 94,969.80 Last year we reported that the number of cash items handled during 1938 was the highest in the history of the Check Collection Department and in 1939 we established an all-time record by handling 3 3 7 •63 U items more than last yeare The following table indicates the number of items handled by the sub divisions of the Check Collection Function for the years 193s and ^9395 Items Handled on 1938 Twin City Banks (Clearings) Member and Non-member Banks Other Federal Reserve Districts Direct to Member banks other F 0 R» Districts To Helena Branch, Helena, Montana Treasurer of the United States Uo So Government Work Relief Checks **.319*958 16*122,831 3*9^2*52^ 56»77^ 111,101 2*160*55^ 3„2991>851 To, 013 ,593 __ IU'kj- rf ■< •• 1939 ^*3^0,156 16,^78*225 3*^56*904 65,826 12)-',806 2 ,630,^85 2 985^,825 30 ,351,227 The cost of handling 100 items in three units of this function for the years 193 ^ ai1^ 1939 follows: City Checks (Clearings) Year 1939 1938 Country Checks (Outgoing) 15*7 cents 20«5 cents 21 oU cents IJck cents Return Items $ 1*15 l„lU The average number of items handled per person per day in these three units during the years 193 ^ end 1939 follows? Year 1939 1938 • City Checks (Clearings) Country Checks (Outgoing) Return Items 2,872 1,999 2*017 ^60 2*815 ^98 During 1939 we handled 2 6 2 ,^ 9 return items totaling $27,9 9 10837^15 com pared to 282*95^ items totaling $26,02^,793*50 1938 ° Included in these figures are non-par items sent us in error,* non-cash items forwarded to us as cash items* 36 CHECK COLLECTION FUNCTION - Cont*d items returned by drawee ‘banks for various reasons and other items returned to depositorso The daily average number of cash letters received and sents 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 1938 and 1939 are given belowo Year Head Office o n l y _____________Ninth Federal Reserve District___________ Letters Letters Banks Banks vol^ BankST” Banks added Banks reReceived sent reported untarily Reported to our par moved from dally_____ daily_____closed liquidated reopened list_____ par list 1939 1,152 193S 1,235 907 913 5 3 22 9 0 0 1 0 7 12 During the year 1939 we reduced our total expense by $1 ,978*90 compared to 1938 o NON-CASH COLLECTIONS (Head Office Only) During the year 1939 we handled more grain drafts than in 1938* In May and June, 1939» we handled 26,494 more grain drafts than for the same months of 193&* whereas in August and September of 1939 the volume handled was 26,^99 less than for the same months in 193®° Most of the increase for 1939 occurred during November and December when 25 8l66 more items were handled than for the same period in 193 s® A total of 7 5 1 city collections including grain drafts were handled during 1939 * Country Collections handled during 1939 numbered 62 *657 * as compared to 66*507 for 193^° January,, June, August, and October of 1939 we handled more country items than in 19380 A decrease was noted in each of the remaining months of 1939 • Coupon and country security collections showed a total decrease of 125 items for the yearc Member banks forwarded 7,001 collections totaling $15*760,936*37 direct to other Federal Reserve Banks for their credit with us during 1939 and 5*933 items totaling $l4,620*080o48 during 193 ^o 37 NON-CASH COLLECTIONS - Cont'd COMPARISON OF NUMBER OF ITEMS RECEIVED FOE COLLECTION City Collections 123 1 ...... i m 728.H S 751.S3U Country Collections Security Collections 12J S _________ 3 2 1 2 i m ____________ 4232 66b507 38,912 62,657 38.787 1938 $ 225,310,000 $ HU,605,000 $ 22,628,000 1939 255.06^,000 39.575.000 27, 578,000 BAHK EXAMINATION D E P A R T M m 1 There were on December 31 , 19391 eighty-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 1939® As of the end of the yearB eleven State member banks were exercising trust powers* Ten regular examinations and one membership examination were made. Eighty- five national banks held permits to exercise full or limited trust powers, and during the past year fifty of them were exercising certain of these powers0 The trust examiner reviewed eighty-two reports of examination made by the Comptroller of the Currency* Two applications by national banks with respect to fiduciary powers were received during 1939* ons ?or additional powerse which was approved by the Board at Washington* and one for limited powers* which application was still pending on December 31fl 1939* Application for surrender of trust powers of one national bank was received and forwarded to the Boardc and that application together with two similar applications that were pending on December 3 1 *, 1938* was approved* The examinations by this Department in the various States were as follows: Michigan Minnesota Montana South Dakota Wisconsin State Banks 12 19 25 24 4 Examination of Holding Company Affiliates No examinations were made of holding company affiliates during the yearc STATE BANK APPLICATIONS FOR MEMBERSHIP - 1939 Fourteen applications for membership in the Federal Reserve System were re« ceived from State banks during the year 0 Applications of the following banks were .38 BANK EXAMINATION DEPARTMENT - Contf;d approved "by the Board at Washington and membership in the System completed: The Newberry State Bank8 Newberry, Michigan; South Range State Bank, South Range* Michi gan; Farmers State Bank of Lakefield8 Lake field.,, Minnesota; Farmers State Bank of Madeliae Incorporated* Medeliaa Minnesota; Fidelity State Bank* Minneapolis* Minne sota; State Bank of Rockville, Rockville, Minnesota; Welcome State Banke Welcome, Minnesota; Farmers Stats Bank of West ConcordB West Concord, Minnesota; Powder River County Bank* Broadus* Montanas Citizens Bank, Vermillion, South Dakota; and Security Bank., Webster9 South Dakota* The application for membership of the American State Bank of Moorheadp Moor head, Minnesota* received in 19.33a an(i that of the State Bank of Northfield* Northfields, Minnesota*, received in 1939* are being held in abeyance* The application for membership of the Bark River State Bank* Bark Rivere Michigan was approved by the Board at Washington but membership was incomplete on December 31 * 1939° Application of the Union Savings Banke Sioux FallsB South Dakota was forwarded to Washington but approval by the Board had not been received at the close of the year. Status of Applications for Membership Which Were on Hand December 31e 1938 Total number on hand . . . . . . . . . . . Held in abeyance 0 . « • . .......... .. , Status of Applications for Membership Received Total number received 1 1 During 1939 » .......... .. • • Admitted to membership Held in abeyance . . . . . . . . . . . . . Incomplete ............ 1 lU 11 1 2 lU OFFICE WORK Reoorts of Examination of National Banks Number of reports received from the Chief National Bank Examiner0s Office (The cost of these reports was $3»^3^ * Qr calendar year„) 766 Eighty-nine (89) duplicate copies of the reports of examination of Montana national banks were received from the Chief Examiner *3 Office# and the cost of those additional copies was $200„25 for the year*, Reports of Examination of State Member Banks The number of reports of examination received from the various State Banking Departments in the Ninth District during 1939 of State member banks examined independ ently by them was as follows? Minnesota ............ 11 Montana * . . . . * . • 9 South Dakota . . . • «, U Wisconsin 1 Reports of Earnings and Dividends,, Reports of Condition and Related Reports Approximately 4,380 reports of earnings and dividends, reports of condition BANK EXAMINATION DEPARTMENT - Cont»d and related reports were received,. checked8 and recorded,, Applications for Permission to Exercise Fiduciary Power a Received, etc0 Application of the following "bank for additional trust powers was approved "by the Board at Washington; Name of Bank Location Fergus Falls National Bank and Trust Company Fergus Falls8 Minnesota Date Approved 2-1-39 Application of the following bank for limited fiduciary powers was received during 1939 s $ame of Bank Location The Miners’ First National Bank Ishpeming* Michigan Date Received 12-l6«39 Applications of the following hanks for surrender of trust pov/ers were for warded to the Board at Washington and approved? Name of Bank Location First National Bank First Hational Bank of Alger County Deuel County National Bank Lake Lindena Michigan MunisingB Michigan Clear Lake*. South Dakota Date Approved 4- 20 -3 9 11-25-39 3*”1~39 Re Clayton Act In consideration of Section 8 of the Clayton Act and the Board8s Regulation L» examiners5 reports are analyzed and records maintained with a view of ascertain™ ing any relationships that are not in conformity with the law0 No apparent viola* tions have been noted* Applications for Adjustment of Holdingsa etc0 of Federal Reserve Bank Stock During the year two hundred nineteen applications for adjustment of holdings of Federal Reserve Bank stock v/ere received from member banks; stock was also issued to eleven new State bank members^ Five applications for total surrender of stock by member banks were received,, three from national banks in voluntary liquidation* one from an insolvent national bankc and one from a State member bank withdrawing from membership* The Examination Department handles applications for adjustment, for new stock9 and for cancellation of stocks Applications for National Charters Ho applications for national bank charters were referred to this office for recommendation during the yearc 40 B A M EXAMINATION DEPARTMENT - Confd BANK CHANGES IN 1939 (Per Stock Book Records) Total number of member banks in the district January le 1939 New national banks organized State banks admitted 462 0 11 m National banks absorbed by other national banks National banks absorbed by nonmember State institutions National banks liquidated State member banks withdrawn Total number of member banks holding stock in the Federal Reserve Bank of Minneapolis at the end of the year • . • , 468 Membership At the close of the year there were 468 member banks in this district, as There wa 3 a net loss compared with 462 member banks at the beginning of the year,, of 4 national banks and a net gain of 10 State banks0 The total membership at the close of the year was divided into 387 national banks and 81 State banks« State Bank Membership According to States Noo of State Bank Members State _ J > ± 3 2 _ Michigan Minnesota Montana North Dakota South Dakota Wisconsin Noo of State Banks Withdraw ing from Membership During Year Noo of State Banks Admitted During Year Noo of State Bank Members 2 li 18 25 0 0 1 0 0 0 0 1 9 13 24 0 21 Jjr 71 6 l o 2 0 11 23 _4 81 MEMBER BANKS SEVERING CONNECTIONS WITH THIS FEDERAL RES:3iVE BANK DURING 1939 national banks absorbed b y other national banks Name of Bank Date 5- 25-39 Location The Commercial National Bank of Sturgis, South Dakota (Absorbed by First National Bank of The Black Hills, Rapid CityB Rapid City, South Dakota) Noo of Shares Surrendered 33 NATIONAL BANKS ABSORBED BY NONMEMBER STATS INSTITUTIONS I-5-39 First National Bank in Phillips, Wisconsin (Absorbed by The State Bank of Phillips, Phillips, Wisconsin) 34 NATIONAL BANKS LIQUIDATED 2-23-39 IO-5-39 The First National Bank of (Insolvency) The Farmers National Bank of Preston, Minnesota 33 Vienna, South Dakota 17 STATE MEMBER BANK WITHDRAWALS 2-6-39 State Bank of Aurora Aurora, Minnesota NUMBER OF MEMBER BANKS IN ACTUAL OPERATION DECEMBER 31, 1939 National banks State Banks Total o 386 81 w 23 REPOET Of SAFEKEEPING- DEPARTMENT FOR TEE _______ ________ g g j a a _____________ Securities hold in our custody for safekeeping and for collateral purposes, exclusive of unissued stock held for the Treasury Department and other governmental agencies, dropped (substantially in 1938 and slightly in 1939 from an all time high total in 1937 . During 1937, our high total v/as $431,373 ,149 ,,SI; 1938 $398 ,0 13 ,765052 ; while during 1939* our high figure was $395*025,196o94* The low total for the year 193 S was $3 U 6 ,6908989 ®81 , while the low for 1939 W£s $346*119*773°97 o*1 October 31 » The figures at the close of 1939 showed a decrease of $20*630*245*27 compared to the close of 1938 » as indicated in the statement at the bottom of this page* The total government and miscellaneous securities held free in safekeep ing for our member banks decreased $38 ,93 ^*137*17 in 1939 » while the total of pledged securities increased $21,242,275°20o During 1939 the total United States Savings Bonds held for individuals, firms, corporations* and non-member banks in creased $3 *375 *650 # compared with an increase the previous year of $3 »552 *300 o Approximately $6,000,000 was reduction of stocks held as sub-collateral account Reconstruction Finance Corporation* Balance was retirement by banks of preferred stock which we held for Reconstruction Finance Corporation,, During 1938, we issued 1,123 safekeeping receipts covering Uo S, Savings Bonds, while during 1939 we issued 1,927® This indicates quite an increase of U* S* Savings Bonds de posited with us in the past two years compared to 817 during 1937 and only 795 total during the year 1935 1936 “ In 1939* we received 48,193 pieces compared to 48,911 in 1938* and de livered 519105 pieces compared to 4S,1S4 the previous year* The number of coupons clipped last year was 236,621 as compared to 255,887 the year before„ COMPARATIVE STATEMENT OF SECURITIES HELD ______ DECEMBER 31, 1938 and 1939 (Minneapolis only) Pec. 31, 1939 Government and miscellaneous securities held in safekeeping for members $ 181B835*8S5o47 Securities pledged to secure public deposits 128„ 191,70?<>73 U cSo Savings bonds held for individuals, firms, corporations, and non-member banks 12 *508 ,100*00 Securities held for U<,S0 Govt* officials 6 , 034, 900*00 Securities held for Public Works Administration 1 , 778, 495*00 Securities held for Reconstruction Finance Corp, 22,040,498*97 Collateral to War Loan Deposits 1 *533, 850*00 Collateral to Discounts, Rediscounts and Industrial Advances 523.737*33 $ 3 5 M47.174.50 P e g o Jk L J& g $ 2200770 ,022*64 106s9^9***32o53 9 *132 .450*00 5 b507j>900*00 737, 242*00 29^353*996c82 If639*750*00 93^,625.78 $ 375*077.419-77 42 FSDEBAL HSSEKVE NOTES The Agents records show the total of our outstanding notes to 1)9 $14698476275 on December 3 1 # 1933» Our °wn tellers load $5*420,000 of our notes on the same date* making the total notes in circulation at the close of the year $l4l0427*000 which was a gain of $4*570*000 in 1939® our circulation contracted $71200000 During the previous year At the beginning of 1936 our circulation was $110B500o000» increasing over $25»000*000 that year., In the next three years the gain was $5 b300 »000o The extent to which silver certificates and legal tender notes are talcing the place of our own issue is shown from the fact that iour total circula tion is higher now than in 193 ^« although)$58 »050*000 was issued to the Bank by the Agent in 193& compared to $35*045,000 issued during 1939® I For three years no 9 5 6s have been issued by the Agent because the Government9a own issues have been sufficient* Our requirement of notes the past year was the lowest obtained from the Agent since 19160 The curtailment of our own $5 notes and the heavy receipts of silver certificate 5's from the Treasury brought about a further substantial lowering in the amount of notes destroyed with $30 b899 b760 thus taken out of circulation compared to $3^o^34»605 in 193 S<> Another result of the replacement of our $5 notes by Treasury issues is in materially lower printing costs during 1938 and 1939* Although the dollar value of circulation has increased during the past year* the number of notes has decreased Nearly $5 *000*000 less in 1 0 ’s were issued during 1939 than in 1938 o The 10 ®s destroyed in 1939 amounted to $17*500*000 or $l*l40,000 more than was issuedo issue of 209s was $14*960*000,, or $3*300c000 more than the amount destroyed,, The The percentages of all denominations of our notes higher than 1 0 8s showed increases in 1939 , Eeceipts of 5®s to $1863604000 in 1938<! 1939 from the Treasury amounted to $20,400*000 compared All receipts of Treasury issues including l ‘s were $4 3 j,480 8000 last year and $39 *500*000 in 193 &” At the close of 1939 the Agent had on hand at Minneapolis $55*850*000 in our Federal reserve notes of which $7*l609000 consisted of 10*s and 20 9so * supply held in Washington* printed and paid for* is $l4le4S0e000 compared to $135 B620*000 held one year ago* The The amount of 109s and 20* a included in the present supply is $97o680,000 which based on present demand is sufficient for three yearSo 43 FED33RAL HES3RVB H0TI3S RECSITO) AND ISSUED BY AGENT IXJRING 1939 IN HANDS OF ASK13T DECEMBER 31, 1938 FIT-F0R~US1‘ ] NEW Fives Tons Twenties Fifties Hundreds Five Hundreds Thousands Total $ 10,400,000 3.440.000 4.640.000 12.825.000 10.240.000 6.700.000 6 .200.000 $ 54,4457000 TX350,000 $ 10,400,000 3.440.000 4.640.000 13.475.000 11.790.000 6.850.000 6 .200.000 J 56,795,000 RETUHHBD BY SXEfc FIT-FOH-USE TOTAL RlSlXVKD $ 650.000 1,550,000 150.000 ______________ RECEIVED PROM TSw Fives i'ens Twenties Fifties Hundreds Five Hundreds Thousands Total 0 0 0 TOTAL 0 _____________ 0 0 16,000,000 14,400,000 16,000,000 14.400.000 1 000,000 1 ,200,000 500,000 1 000,000 F347l00,000 1 000,000 1 200,000 , , , , , 500,000 1 000,000 0 34.100.000 ISSUED TO B A M NSW Fives Tens Twenties Fifties Hundreds Five Hundreds Thousands Total FIT-FOBJUSE 0 0 0 0 16.360.000 14.960.000 506000 5005000 100,000 5759000 1,550,000 150,000 800,000 770,000 $ 2,275,000 TOTAL 16.360.000 14.960.000 625.000 2,050,000 250.000 800.000 J 35,045,000 0 IN H M D S OF ASSHT DECEMBER 30, 1939 KBW Fives Tens Twenties Fifties Hundreds Five Hundreds Thousands Total TOTAL FIT-FO E-USE 0 0 0 10,400,000 3.080.000 4.080.000 13?775,000 10,940*000 7.100.000 6.400.000 F 5 5 , 775,000 10.400.000 3.080.000 4.080.000 13.850.000 10.940.000 7.100.000 6.400.000 $55,850,000 75,000 0 0 0 _______ T757000 RATIO OF ISSUES BY 3OT0MIMTIOHS 1939 Fives Tess Twenties Fifties Hundreds Five Hundreds Thousands 0. 46.68 42,69 lo 78 5o85 o?2 2.28 100 .00# 1936 0. 54.50 36.08 2.13 5,29 .65 Jlv «->«> 100 .00£ 1937 1936 1,935 .50 55.84 36.43 1.37 4*09 #53 4.09 49.63 37.69 2.28 4,67 «43 1.47 51.66 38.76 JwVr>* looloo^ 1.2 1 100 .00$ 2*02 3.79 *76 1*54 100.0055 F32DBBAL H3S3OTS N0TE3 ISSUED TO M S K COMPAHAl’IVB BY MONTHS 1939-1935 1938 1939 $ 1,040,000 January 315,000 February 2,480,000 March April 3,650,000 2,700,000 May June 800,000 3,000,000 July 2,950,000 August September 4,580,000 4,770,000 October 3,490,000 November 5,270,000 December Total for $35,045,000 Year 1937 1936 1935 $ 1#320,000 3,680,000 3,580,000 5,000,000 740,000 1,600,000 3,030,000 2,650,000 4,060,000 3,705,000 4,210,000 5,175,000 $ 865,000 3,660,000 4,290,000 4,720,000 3#080,000 2,420,000 2,570,000 3,930,000 4,760,000 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, W O 6,380,000 4,660,000 4,325,000 5,110,000 $38,750,000 $40,295,000 $58,050,000 $40,862,000 m S K A L BESERVE HDT33S DESTHOYSD AT WASHINGTON COMPARATIVE! BY MOHTHS 1939-1935 193S $ 3,415,050 January 2,049,820 .February 2,741,840 March April 2,572,650 3,024,450 May 3,337,950 June July 2,567,350 2,470,250 August 1,903,100 September 2,924,400 October 1,903,150 November 1,984,750 December Total for $30,899,760 Year 1937 1938 1936 1935 $ 3,306,380 2,619,410 3,032,750 2,475,200 3,919,050 2,851,300 3,329,495 3,155,100 2,790,000 3,102,800 3,354,120 2,499,000 $ 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 3,070,330 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,^40,200 2,237,650 2,894,800 2,282,275 2,754,400 2,833,050 2,671,650 2,321,550 $36,434,605 $33,818,375 $29,348,290 $30,277,775 FEDSHAL KSSKRVE NOTES ISSUED AKD DllOTOWDSTra b^MTzK^toT^ Issued to Ban!': 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 1939 TOTAL Destroyed a* Washington $ 0 0 $ 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 58,050,000 40,295,000 38,750,000 35,045,000 895,955 8,988,095 9,4-21,540 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 30,899,760 $1,099,252,000 $701*042,725 45 ISSUE, HSISSUE AHD DESTRUCTION OF FBDKRAL RESERVE NOTES IsiafegTICTilBrss as o F n Ec m s R 30 , 1959 mm Received from Comptroller Fives Tans Twenties F ifties Hundreds Five Hundreds Thousands Total $201,400.000 321 e840.000 279 200.000 29 800,000 44, 400,COO 11 900.000 15, 300.000 , Ip o if 740t000 Returned to Agent by Bank Total $ 42,000,000 84.250.000 86.400.000 9.965.000 18.035.000 2.944.000 7.768.000 *$251,362,000 $2455,400,000 406.090.000 365.600.000 39.765.000 62.435.000 14.844.000 22.968.000 Ijl7l55,102, OCX) ISSUED TO BA3SK NSW Fives Tens Twenties Fifties Hundreds Fiv« Hundred© Thousands Total $191,000,000 318.760.000 275.120.000 16.025.000 33.460.000 4.800.000 3.800.000 $847^965,000 Total Fit-For-Use $233,000,000 403.010.000 361.520.000 25.915.000 51.495.000 7,744,000 16.568.000 ^17099,252,1)00 $ 42,000,000 84.250.000 86.400.000 9.890.000 18.035.000 2.944.000 75758.000 $251,237,000 DESTROYED AT WASHIBGTOK Returned by Agent Fivei Tens Twenties Fifties Hundreds Five Hundreds Thousands Total $ 4 , 260,000 2 . 545.000 1 . 020.000 25,000 30D000 0 _ ° _ _ $7 , 880,000 Returned by Treasurer $ 4 , 588,235 6 , 310,310 6 , 259,160 557,300 1 , 066,400 136,500 248 , 000 $197165,905 Returned by Minneapolis $ 99,206,900 141,079,000 94,583,600 6 ,110,000 9.450.000 1,579,500 2.040.000 $354,0497000 Returned by Other Fed.Res* Banks Total $ 81,342,680 117,734,990 107,542,900 4,414,250 6.959.000 838,000 1.116.000 $319 947,820 $189,397,815 267,669,300 209,405,660 11,106,550 17,505,400 2.554.000 3.404.000 $701,042,725 In Hands of Agent December 30, 1939 F i v e s ...................... .. • . o . „ TenS o o t o a c o e o a a s c i c p a o o Twenties............. ............. .. • Fifties Hundreds*............ . ............... Five Hundreds « • • • • • • • • • • • • * Thousands « • • . • « « < > * • « • • • « • Total $10,400,000 3,030,000 4,080,000 13,850,000 10,940,000 7,100,000 6 p400, (300 158,680,000 Outstanding December 30, 1 939 $ 1,602,185 51,090,700, 65,714,340 4,843,450 15,954,600 2,246,000 5,396*000 $146,847,275 46 TRANSFER AND CODS DEPARTMENT ('Minneapolis Only) The Transfer Department handled 19c520 transfers amounting to $lp7 ^99997*000 during 1939» compared to 18,981 transfers totaling $ls508c642c000 in 19380 This represents increase of 539 transactions and an increase in amount of $281 *355*0000 The number and amount of incoming and outgoing wire transfers handled during the past five years were as follows; Year Outgoing Wire Transfers dumber Amount 1939 5.985 1938 1937 1936 1935 5,488 6,566 6,111 5.666 $ Incoming Wire Transfers Number Amount 5,930 6,029 399,640,000 310 ,498,000 360 ,148,000 370 ,723,000 344 ,724,000 966 ,115,000 830 ,279,000 1 ,038 ,897,000 914 ,381,000 724 ,422,000 $ 7.411 6,624 5,870 Messages coded and decoded during 1939# other than transfers, numbered 120626 * compared to 13.627 in 1938 ° TELEGRAPH UNIT (Minneapolis Only) During 1939 we sent 234*977 words over the Federal Reserve System leased wires* in comparison with 299*122 in 1938 * COMPARISON OF MEMBER BANK BALANCES (Thousands oniy9 000 omitted) ” Decfl 31, Dec 0 31 0 . 1939 ..._ 1938 Michigan Minnesota Montana North Dakota South Dakota Wisconsin $ $ 6,799 109.465 19,860 5.854 77.3^9 15.854 3.861 6.899 4,584 8,607 . 3.950 $113,767 ..... 5,473. $154,788 31r 1936 Decc 31 s $ 6,329 86,45s 16,009 5*266 8 e01? U.729 ^126,806 31 . 1935 Dec„ .1937 DeCo $ 5,146 80,885 15.876 $ 17,068 5.175 9,578 3*871 ^ 120,531 _ 3*485 58*772 . 6*137 7,297 3.^69 $ 9o ,228 AVERAGE BALANCES i2 2 £ 1222 Member Bank Balances U„ S, Treasurer^ Balance $ 136,241*000 $ 121j>6658000 44s763 >000 3*+»071»000 $ 1810 004,000 $ 155 ,73^ 0 0 0 DEFICIENT RESERVE PENALTIES Minneapolis Helena Combined Combined 1939_________1939,________ 1939 ______ 1938 Amount of Penalties $ 726,75 Number of banks penalized 83 Maximum penalty rate 3 $ 58.90 ® f 3§$ $ 785-65 91 ^ 3*3*^ $ 566,42 133. 3$$ 47 REPORT OF BANK. AKD PUBLIC RELATIONS ACTIVITIES AT THE FEDERAL RESHRVF. BANK OF MINNEAPOLIS DURING 1939 .. .. .. ...... Twelve bank officers and other representatives travelled 78*546 miles on public relations work during 1939 at & travel cost of $6fl998c6g0 They attended six state "bankers'1 association conventions* 70 other bankers5 meetings; delivered 42 addresses (including seven radio addresses) to an estimated known audience of 3,584 people; and made 771 visits at member Thanks and 972 visits at non-member "banks in the district* every bank in the district having been visited at least once by one of our officers.. The attendance at showings of the Federal Reserve Bank movie during 1939 was 1 3 *633 * The bank continued its cooperation with the Wisconsin Bankers’ Association with regard to showings of the Federal Reserve movie0 A Member Bank Conference was held on March 2 5, 1939s being Dr« Jo principal speakers Riddlec Economist* Bankers5 Trust Company, Mew York Cityr and Dr0 William Jo HaleP Chemist and Research Consultant of the Dow Chemical Company* Midland* Michigan,, The entertainment features of the conference consisted of luncheon8 dinnerP and complimentary tickets to the Ice Folliese Seven hundred and thirty-two bank officers and directors attended the conference* In December WCCO commenced a series of eleven weekly broadcasts featuring dramatic incidents in connection with Federal Reserve activities0 The first three broadcasts dramatized the wire transfer of funds, the destruction of wornout currencye and the supplying of an adequate volume of currency for Christmas and holiday trade0 In October representatives of the Federal Reserve Bank took part in the second annual Minnesota Bankers' Conference held at the University of Minnesota, In August a weekly digest of news items of interest to bankers was inaugu rated and mailed to all member banks in the district.-, A comparative statement of operating ratios for 1937 and 1938 was sent to each member bank in the districts. In addition,? operating ratios were computed for the State banks of Uorth Dakota at the request of the North Dakota Bankers’ Association and a number of other special tabulations of these 2'atios were fur nished upon requesto Twelve issues of the Monthly Review were printed and distributed to a mailing list which, in December, consisted of 6250 nemes0 48 .FISCAL AGKNCY FUNCTIONS - 1939 Volume of Operations New issues* redemptions and exchanges of various United States Govern ment securities* including United States Savings bonds and Adjusted Service bonds aggregated 136604s pieces and amount 3d to $274*176*S25o00 as compared with 149*395 pieces amounting to $257 ,797 *575*00 in 193g* We handled 772 purchases and 3»7^2 sales of Government securities totaling $24,786*100; for delivery or payment# or both; we handled for banks and trust companies £09 transactions in Government securities amounting to $136t4g80275o There were also 1*675 transactions of miscellaneous general market securities cleared through us aggregating $9 *613 ,072«33<> Altogether* of these various transactions* there were 7*0180 totaling $170#8S7o247«33» as com pared to 8*893 totaling $198*625*575 in 1938 , Deliveries of 19*577 pieces totaling $96 0287 9126*00 were made on pur chases and resale transactions for other than our own account.. In additionB on exchange transact!cns8 such as denominational exchange* the exchange of coupon for registered securities, etc,, ing to $S0f9^3*400a00* 16 s617 pieces were delivered, amount The total number of pieces delivered was 36,194 amount ing to $1 7 7 *270.526000 in comparison with 45*384 totaling $204,295*508 c00 during the preceding yearp New issues, redemptions and exchanges of securities of Governmental Agencies during 1939 numbered }6tSS3 pieces amounting to $50,422*550,00 as com pared with 9 B501 pieces amounting to $10,881f825000 ^933o In addition* on exchange transactions such as denominational exchangese the exchange of coupon for registered securities, etc* 4 f056 pieces of securities of Governmental Agencies were delivered amounting to $6eS12P950o00 as compared with 3*996 pieces amounting to $4*6870075 <>00 in 193S* The total number of individual securities received and delivered by the Fiscal Agency Department (including securities of Governmental Agencies) during 1939 was 213*181 totaling $50 S B682 ftS51 o00 p as compared with 208*275 totaling $477*659P9S4oOO in 1938 , We redeemed 340*868 Government coupons amounting to $9 *923 *595,97 during the past yearc as compared to 3 ^3**57 coupons totaling $10 ,521 ,239,55 during 1938* We also redeemed 242,421 Governmental Agency coupons amounting to $2,841,414,85 during 1939 , as compared to 279*425 totaling $3 ,224 ,366,36 in 1938 , 49 FISCAL AGENCY FUNCTIONS - Cont°d Other Services During 1939 we received 15,525 individual orders for United States Savings bonds representing 31»657 pieces* amounting to $12,533 ,35O 0OO as com pared with 10*725 individual orders representing 22,227 pieces* amounting to $8i20UpU50o00 during 193^° This increase is approximately ^5$, about the same as for the entire country6 Incidentally, Minnesota holds sixth place in volume of such bonds issued to date0 We received for redemption 37el3^ Adjusted Service bonds amounting to $l,856,900«00f as compared with ing 1938» also compared with 59,969 pieces amounting to $2 0998 c^50 <>00 dur 36,307 United States Savings bonds amounting to $8,957o650s ?B 30*232 pieces amounting to $7 *027 »200000 during 1938 o During the year we issued 26,121 United States Treasury checks in pay ment of Adjusted Service bonds6 United States Savings bonds and other Public Debt redemptionst as compared with 31*921 checks during 193®" We are performing certain services as Fiscal Agent in connection with securities for the followings United States of America Farm Credit Administration Federal Farm Mortgage Corporation Federal Land Banks The 'Twelve Federal Intermediate Credit Banks Home Owners3 Loan Corporation Reconstruction Finance Corporation Commodity Credit Corporation Federal Home Loan Banks Federal Housing Administration United States Housing Authority United States Maritime Commission Without inclusion of Treasury bills there were eight offerings of United States Government securities during 1939• term and four short term* Four of such issues were long We received and handled 1,770 individual subscriptions, contained in 1,052 different applications,) aggregating $121 c2l6eSOO» allotted on these subscriptions was $51 ,123,200* The amount During 1938, ^#55® individual subscriptions were submitted in 2,281 different applications covering eight similar offerings and $69 ,867,100 was allotted„ Although there was the same number of offerings in the decrease in the number of subscriptions and amount in 1939 1939 as 193^ j to the fact that there were seven exchange offerings and only one cash offering as compered to four cash offerings in 193# in addition to the exchange offerings0 la addition to the above* there were eight offerings by the various 50 FISCAL AGENCY FUNCTIONS ~ Coat8d government agencies on which we received 1*513 individual subscriptions con~ taiiied in 1,148 different applications*, aggregating $l64(15S8.850<> The amount luring 1938 & on similar allotted on these subscriptions was $22,394,850D offeringse 3^3 individual subscriptions were submitted in 264 different applications covering three offerings and $4*957*000 was allotted,. During 1939& ^ tenders amounting to $31*750*000 were received by this Agency on 52 offerings of Treasury bills* Of these* 38 tenders ranging from par to a discount of 0O3 per cent and amounting to $30 *3 5 3 *000* were accepted® During 1932* 53 tenders amounting to $25*083*000 were received9 and 19 tenders totaling $l489569000 were accepted on the 5? offerings of Treasury bills made that year*, At the close of 1939 there were 110 banks and trust companies in this district which were designated as special depositaries of public moneys9 as com pared with a like number in 19380 Including the weekly circular giving current market quotations on the outstanding Government issues, 134 circular letters were sent to banks and trust companies in the district during 1939 in connection with Fiscal Agency operationse as compared to 123 circulars in 193 S« CURRENCY AMD COIN (Minneapolis only) VOLUME OF CURRENCY TRANSACTIONS AND SHIPPING CHARGES ABSORBED FOR THE YEARS 1939 , 1938 AND 1 9 3 7 _________ __ Twin City Member Banks Currency received by us§ Amount Number of their shipments Currency delivered by us: Amount Number of our shipments 1939 $ 66fi24o*755*OC2„899 $ 81 ,375 ,700 .0c I s 550 1.936 1937 69*087 ,U 3 o 0 0 88 *575 ,862,00 3*121 3 s>299 79 *13 7 .5^0.00 9 5 ,17 ^.600.00 1*523 1*482 OTHER MEMBER AND NON-MEMBER BANKS Currency received by us; ■toount Shipping charges absorbed Number of their shipments Currency shipped by us; Amount Amount of our shipping costs Number of our shipments $ 69 ,51+6,558000 65 .96 l.575 .OO 30a218o95 30,303o04 1 4, 5 24 $ 6 7 B4 2 9 ?354oOO 20*057*57 lQe288 6s,lUlt„810„00 30*409*13 14,300 13o972 63 , 34 7 *672«00 7 8 , 8 2 3 *8 88 ,0 0 1 9 86 s i 073 17,810*30 I S , 175 20,852 51 3 CURRENCY AND GOIK - Coat d Coin Received by u b from Member and Non-Member Banks i222 Amount $ 3,165,557.00 Shipping charges absorbed i22L. 3,071,126.00 5»850»55 H-smber of shipments 3.UU5 ,070.00 5 »U53 “UU 6 ,0Us .21 1,955 m i 2,019 2.6J8 Coin Shipped by us to Member and Non-Meaber Banks Mount Shipping charges absorbed $ 3.009*162*00 6 , 079c25 20479910Sc00 5*423*19 6*830 6s393 Number of shipments 28633 ,532,00 5 09^3*2S 6*94-7 COMPARATIVE NUMBER OF NOTES RECEIVED AND SORTED Receiving and Sorting Costs $ Average number of receiving tellers and sorters Number of notes received and counted 15,;865*07 l6a329„4l 19e213oS4 9»32 9«2S 10*90 37, 778,300 Average number of notes sorted daily by each employee 37. 32U. 50U U3,367,625 13»131 13a422 Our average currency receiving and sorting costs per each 1000 notes 42# 44# 46# COMPARATIVE AMOUNT OF COINS RECEIVED Expenses Average number of coin tellers Number of coins received and sorted Average number of coins handled by each employee daily Unit cost per 1000 coins $ 3.U08.US 3»63U„01 3» 167^69 1.67 i-78 1 >57 30 .2UU .252 28 .085 .US3 20 .620 .U99 59 ^9^8 52e246 43»347 11# 13# 15# 52 RECONSTRUCTION FINANCE CORPORATION The Reconstruction Finance Corporation activities handled "by us were con siderably increased this year, particularly sine© last springe at which time liquidation of C0 Cc C0 loans on 193^ wheat began and continued for about four monthso These loans aggregated 3^*310 i*1 number and approximated $17*100*000 in amounts The greater portion of these notes were taken up by the makers through settlements based on market valuest which arrangement enabled the producers of the wheat to redeem their obligations at less than the amounts borrowed and realize a profit0 Those notes, which were not disposed of as outlined abovee were either extended until March 3 1 * 19 I10, or canceled by delivery of the collateral grain to the Commodity Credit Corporation, Disbursement of wheat loans on the 1939 crop was begun this fall*, loans now purchased aggregate *+{337 $le250,000, Such number and amount to approximately In addition, we are holding 957 wheat notes in safe-keeping for the account of various Lending Agencies which desire to receive the proceeds of such notes some time prior to or not later than April 30 8 19^0* The Minneapolis Loan Agency estimates that in this district, Montana not included, at least 75,000 loans have been made on 1939 wheat* Because of the recent advance in wheat prices the Commodity Credit Corporation has called off the safe-keeping program it had set up for 1939 wheat loans0 apparently expecting the producers would pay off a considerable number of such loans in the Lending Agencies which hold them, If wheat pricese however„ do not remain high enough to permit the producers to make a profit in excess of the loan values Eet by the Commodity Credit Corporation8 we can expect a considerable volume of business when the Corporation resumes its safe-keeping program© During the year we disbursed Commodity Credit Corporation corn loanB on the 193 S crop in the number of 3 1 *2^9 ai*i in $llBS00«000o approximate amount of Liquidations and extensions of these loans are being handled here instead of at Chicago, which handled the entire liquidation of loans made on 1937 corn. The great majority of these notes are either being extended or re newed until August 1, 19 ^ 0 The remainder are being canceled through delivery of the pledged corn, in which cases we transfer to Chicago for disposition. All loans on corn raised in 1939 are to be handled through the Chicago Agency, Loans are being made to eligible producers of rye raised during 1939, Heretofore, Commodity Credit Corporation loans on grain were confined to wheat RECONSTRUCTION FINANCE CORPORATION - Cont'd and corn0 We had disbursed approximately $522,000 cn 2,537 rye notes as of tho end of this year0 The number of employees working in this department reached a high of 172 last spring and on December 31 had decreased to 72® LOAN BALANCES, ADVANCES, ETC* ON BOOKS AS OF DECEMBER 31 . 1939 Banks, Trust Companies and Mortgage Loan Companies Industrial and Commercial Businesses Drainages Levee and Irrigation Preferred Stock of Banks Secured by Preferred Stock (Issued to Stockholders) Debentures of Banks Bonds (from Public Works Administration) U*S0 Treasury Obligations (Accepted Account Preferred stock and Debenture payments) The RoFoCc Mortgage Company (Direct Loans) The R 0F 0C 0 Mortgage Company (Federal Housing Loans purchased) Disaster Loan Corporation Federal National Mortgage Association (F,H«A0 Loans purchased) Commodity Credit Corporation (193S Corn) Commodity Credit Corporation ( 193^ Wheat) Commodity Credit Corporation (1939 Wheat) * Commodity Credit Corporation (1939 Miscellaneous TOTAL . . . . . . 5718H 2o51 2 , 355. 857.49 $ 836,2660OS 10, 446, 162,00 193. **07038 5*815,966031 4.350.635*21 3*135*100*00 304,163,44 65.657.23 69,955-79 759. 9*»5-*»6 7.9^1.513*69 1.675,79'+* 76 1 .1 7 M 5 7 .5 1 506,763.61 521,089.90 ...................................... * Major portion of such loans still in hands of the Lending i!^enciesP not included in this figureD PUBLIC WORKS ADMINISTRATION Comparatively few blocks of bonds were purchased through us during 1939° The Reconstruction Finance Corporation has purchased most of this Agency’s hold ings*, Its balance of bonds now held with us total fl»778t400o00o FEDERAL CROP INSURANCE CORPORATION We are now acting as Custodian for this Government agency, which deposits warehouse receipts for wheat with us for safekeeping* During the year l*51g receipts were placed in our custody and 296 receipts were withdrawn therefrom* UNITED STATES HOUSING AUTHORITY During the year we began to function as fiscal agent and custodian for this Government agencye The number of transactions handled during 1939 were few in number and the total disbursement amounts to $225»000o00o is part of three commitments totaling $1,250*000*00 made by the This amount United States Housing Authority, 54