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OPERATION OF
FEDERAL
RESERVE BANK
OF CHICAGO
1927
SEVENTH FEDERAL RESERVE
DISTRICT

THIRTEENTH ANNUAL
REPORT TO
THE FEDERAL RESERVE
BOARD




MM • • • • I I

• • | | si i i

st

• • 1• • • • • • • • • • • i t r

FEDERAL RESERVE BANK OF CHICAGO
Jackson Boulevard and La Salle Street, Chicago




OPERATION OF
FEDERAL
RESERVE BANK
OF CHICAGO
1927
SEVENTH FEDERAL RESERVE
DISTRICT

THIRTEENTH ANNUAL
R E P O R T TO
THE FEDERAL RESERVE
BOARD




FEDERAL RESERVE BANK OF CHICAGO
DIRECTORS AND OFFICERS FOR 1928
OFFICERS—(CONTINUED)

CLASS A—DIRECTORS

Charles H. McNider, Mason
Iowa (1928)

City,

President, First National Bank

Elbert L. Johnson, Waterloo, Iowa

James B. McDougal, Governor
John H. Blair, Deputy Governor
Charles R. McKay, Deputy Governor
LOANS AND CREDIT

Stanford, T. Crapo, Detroit, Michigan
(1928)

Kent C. Childs, Controller of Loans
and Credits
Frank L. Purrington, Manager, Discount Department
Eugene A. Delaney, Manager, Credit
Department
Joseph C. Callahan, Manager, Member Bank Accounts Department

Robert Mueller, Decatur, Illinois

Alba W. Dazey, Manager, Investment
Department

(1929)
President, First National Bank, Waverly

George M. Reynolds, Chicago, Illinois
(1930)
Chairman of Board, Continental National
Bank and Trust Company
CLASS B—DIRECTORS
Secretary and Treasurer, Huron
Portland Cement Company

(1929)
Secretary, Mueller Company

August H. Vogel, Milwaukee, Wisconsin (1930)
Vice-President, Pfister and Vogel Leather
Company
CLASS C—DIRECTORS

Frank C. Ball, Muncie, Indiana
(1928)
President, Ball Bros. Company

James Simpson, Chicago, Illinois
(1929)
President, Marshall Field and Company

William A. Heath, Evanston, Illinois
(1930)
Federal Reserve Agent
OFFICERS

William A. Heath, Chairman
James Simpson, Deputy Chairman
William H. White, Assistant Federal
Reserve Agent
Frank M. Huston, Manager, Division
of Research and Statistics
Francis R. Burgess, Auditor
Walter A. Hopkins, Assistant Auditor
Charles L. Powell, Counsel
Frank O. Wetmore, Chicago, Illinois,
Member Federal Advisory Council

INVESTMENTS
CASH AND CUSTODIES

Otto J. Netterstrom, Controller of
Cash and Custodies
Jesse G. Roberts, Manager, Cash Department
Robert E. Coulter, Manager, Cash
Custody Department
Fred Bateman, Manager, Securities
Department
COLLECTIONS

William C. Bachman, Controller of
Collections
Irving Fischer, Manager, Check Department
Louis G. Pavey, Manager, Collection
Department
ADMINISTRATION

James H. Dillard, Controller of Administration
Robert J. Hargreaves, Manager, Personnel Department
Louis G. Meyer, Manager, Service
Department
Frank A. Lindsten, Manager, Disbursing Department
FISCAL AGENCY

Don A. Jones, Controller of Fiscal
Agency Functions

DETROIT BRANCH- •Directors and Officers
George B. Morley, Saginaw, Michigan
President, Second National Bank

David McMorran, Port Huron, Michigan
Treasurer and Manager, McMorran Milling Company

William J. Gray, Detroit, Michigan
President, First National Bank

James Inglis, Detroit, Michigan
President, American Blower Company

N. P. Hull, Lansing, Michigan

President, Grange Life Insurance Co.




*John W. Staley, Detroit, Michigan
President, Peoples State Bank

William R. Cation, Managing Director
Harlan J. Chalfont, Cashier
George T. Jarvis, Assistant Cashier
John G. Baskin, Assistant Cashier
Floyd L. Bowen, Assistant Auditor
Henry M. Butzel, Assistant Counsel
*Died Feb. 17, 1928.

FEDERAL RESERVE BANK
OF CHICAGO
Chicago, January 17, 1928.
SIR:

I have the honor to submit herewith, in accordance with the
usual custom, the thirteenth annual report of the Federal
Reserve Bank of Chicago, covering the year 1927.
Respectfully,
W. A.

HEATH,

Federal Reserve Agent.

HON. ROY A. YOUNG,

Governor, Federal Reserve Board,
Washington, D. C.




FEDERAL RESERVE BANK OF CHICAGO
Comparative Statement

of Condition

(IN THOUSANDS OF DOLLARS)

Dec. 31,
1927

Dec. 31,
1926

Dec. 31,
1925

(iold with Federal reserve agent
Gold redemption fund with United States Treasury
Gold held exclusively against Federal reserve notes.
Gold settlement fund with Federal Reserve Board
Gold and gold certificates held by bank

247,767
4,267

163,424
8,668

114,683
5,612

252,034
103,172
55,980

172,092
131,482
64,587

120,295
128,969
69,067

Total gold reserves
Reserves other than gold

411,186
16,831

368,161
21,856

318,331
17,494

Total reserves
Non-reserve cash
Jiills discounted:
Secured by United States Government obligations.
Other bills discounted

428,017
9.362

390,017
10.958

335,825
9.568

30,976
21,694

58,929
38,902

55,505
32,455

Total bills discounted
Bills bought in open market.
United States Government securities:
Bonds
'.
Treasury notes
Certificates of indebtedness

52,670
62,295

97,831
50.116

87,960
27.711

48,934
8,070
32,994

20,516
5,491
22,751

20,190
18.955
13,657

Total United States Government securities.
Foreign loans on gold

89,998
0

48,758
0

52,802
1,077

204.96^

i«6.705

169.550

88,620
8,609
1,375

89,874
7,770
2,591

97,279
7,933
1,928

740.946

697,915

622,083_

Federal reserve notes in actual circulation.

265.293

?49.693

180.118

Deposits:
Member bank—reserve account.
Government
Foreign bank
Other deposits

345,676
2,518
639
1,108

311,664
2,582
3,857
943

306,521
434
1,139
888

349.941

319 046

103.982

73,124
17,965
32,778
1,845

78,595
16,716
31,881
1,984

85,020
15.731
30,613
1,619

740.946

697.915

622.083

RESOURCES

Total bills and securities.
Uncollected items .
Bank premises
All other resources.
Total resources
LIABILITIES

Total deposits
Deferred availability items.
Capital paid in
Surplus
All other liabilities
Total liabilities
Ratio of total reserves to deposit and Federal reserv
note liabilities combined
per cen
Contingent liability on bills purchased for foreign cor
respondents




69.5

68.6

68.7

31,571_

7,734

9,706

OPERATION OF THE
RESERVE BANK OF
IN 1927

FEDERAL
CHICAGO

The year 1927 has been a period of considerable economic interest in the
Seventh Federal Reserve district. The outstanding features have been the
unexpectedly improved outlook for agriculture, as the result of autumn
weather conditions conducive to maturing of corn and other major crops
and a rise in value of some farm products, and the downward trend in automobile production, a movement begun in the late months of the preceding
year and resulting in the lowest production figure in December since 1922.
In the Federal Reserve bank, an increased volume of work was carried in
the Collection Department, Fiscal Agency Department, Investment Department, and in safekeeping services for member banks, during 1927. Operations in the Fiscal Agency Department were largely in connection with
redemption activities of the United States Treasury, which involved a
marked expansion in volume of work handled. With these exceptions, the
work within the Federal Reserve bank has varied little in volume or character from 1926.
As was the case in 1926, at the close of the year conditions in this district
in the main are good. Agriculture, the outstanding weak spot in the district's economy a year ago, while benefited greatly by favorable weather
late in the current season, cannot yet be said to have recovered fully from
the distress period of recent years, though psychologically considerable improvement has taken place during 1927. The lowered volume of output
in the automotive industry, reflected in both wholesale and retail distribution figures, prolonged stagnation in the coal industry as an outgrowth of
the strike effective from April to October, and marked slowing-down of
the steel industry in the latter months of the year, less extensive in this
district than in other parts of the country, however, have exerted a retarding influence. Retail trade suffered during the autumn from the extended
period of warm weather which delayed the distribution of winter lines
of merchandise, but nevertheless has enjoyed a volume of business little
different from 1926, an unusually good year.
Total bills and securities of the Federal Reserve bank during 1927 ranged
from a low point of $114,471,000 on May 18, to a high of $230,796,000
December 14, whereas in the preceding year the high point had been
$234,868,000 (December 29) and the low $125,699,000 on March 17. This
slightly lower volume of reserve bank credit in use in the Seventh district
as compared with 1926 is a reflection of the ability of member banks to
care for the needs of their customers without recourse to the reserve bank,
rather than an outgrowth of a lessened demand for banking accommodation
in this district. Loans and discounts of reporting member banks have




THIRTEENTH ANNUAL REPORT
Earnings and Expenses
1927

1926

1925

$2,247,451 $3,015,981 $2,121,979
1,188,546 1,230,850 1,055,291
1,929,874 1,834,450
2,215,536
25,450
50,427
43,069
47,971
314,461
467,848
369,874

Discounted bills
Purchased bills
U. S. securities
Foreign loans on gold
Deficient reserve penalties.
Miscellaneous

$6,167.352 $6,567,043 $5,424,663

Total earnings
CURRENT EXPENSES

Salaries:
Bank officers
Clerical staff
Special officers and watchmen
All other
Governors' conferences
Federal reserve agents' conferences
Federal Advisory Council
Directors' meetings
tTraveling expenses
Assessments for Federal Reserve Board expenses
Legal fees
Insurance (other than on currency and security ship
ments)
Taxes on banking house
Light, heat, and power
Repairs and alterations, banking house
Rent
Telephone
Telegraph
Postage
Expressage
Insurance on currency and security shipments
Printing and stationery
Office and other supplies
Miscellaneous expenses
Federal reserve currency (including shipping charges)
Original cost
Cost of redemption
Total current expenses.

f 296,811 t, 299,523
1,730,516 1,685,405
112,208
97,675
273,338
287,790
274
420
168
230
1,193
1,214
8,969
10,210
25,262
24,630
99,230
106,972
3,199
8,513

! 321,901
1,663,194
95,633
282,265
360
346
992
8,147
25,879
97,955
2,000

36,773
276,000
26,703
21,225
38,700
21,646
40,930
243,272
55,411
68,179
73,073
54,444
85,365

42,082
278,458
27,477
769
38,231
20,698
46,182
239,748
51,446
66,838
76,641
61,721
69,726

46,069
242,374
33,906
34,353
38,364
21,878
49,570
237,061
51,588
64,870
71,329
66,379
77,862

267,131
19,275

275,997
13,60

189,089
20,675

$3,887,058

$3,824,43

$3,744,039

1927

1926

1925

PROFIT AND LOSS ACCOUNT

$6,167,352 $6,567,043 $5,424,663
3,887,058 3,824,437 3,744,039
$2,280,294 $2.742.606 $1.680.62-1

Earnings
Current expenses
Current net earnings

13,061 $

Additions to current net earnings

13,098 $

Deductions from current net earnings:
Depreciation allowances on bank premises.
Reserve for probable losses
Furniture and equipment
All other
Total' deductions

$

Net deductions from current net earnings '.

$ 3.S2.650 $ 488.68

Net

earnings available for
franchise tax

dividends, surplus,
:

Dividends paid
Transferred to surplus account.

165,19
50,809
130,720
18,985

12.646

165,197 $ 165,197
323,097
241,03"
32,718
83,039
50,985
12,513

365.711 $ 501.781 $ 571.997
and

$ 559.351

$1.927.64

$2.253,92:

$1.121.27.'

$1,029,990
897,654

; 985,95
1,267,96

$ 934,016
187,257

, fOther than those connected with governors' and agents' conferences and meetings of
directors and of the advisory council.




FEDERAL RESERVE BANK OF CHICAGO
been in greater volume during 1927 than in 1926, the increases, however,
representing for the most part loans on stocks and bonds, commercial loans
tending downward, especially the latter months of the year which have
been marked by considerable industrial uncertainty.
On September 7 the rediscount rate of the Chicago Federal Reserve
bank, which had been at 4 per cent for all classes and maturities of eligible
paper since June 14, 1924, was lowered to 3]/2 per cent. This change was
in conformity with reductions that were made at about this time at the
other reserve banks.
During the past year a total of 124 banks suspended in the Seivfenth
district, a noteworthy decrease from the 182 in 1926. Of those suspending
in 1927, twenty-five were national banks, nine were state members, and
ninety non-members of which fifteen were private institutions. With these
figures the number of closed banks in the district since 1920 aggregates 647,
including ninety-one national banks and fifty-one state member banks. In
1927 eleven banks re-opened, three national (one of which closed in 1926)
and eight non-member of which one was a private bank.
Despite the uncertainty of outlook which persisted until autumn, the agricultural industry in the Seventh district at the close of 1927 finds itself in
fairly good position, though less favorable, owing to smaller crops, than
in some other sections of the Middle West. The growing season, opening
unusually early, was handicapped by a frost in April which reduced the
outlook for early crops and in a number of instances resulted in lessened
acreages of fall crops, and by continued cold and rainy weather in May
and June. Growth was further adversely affected by intense heat the
fore part of July. More favorable weather after mid-summer, however,
coupled with the fact that frost was experienced later than is the case most
years, resulted in far better yields than had been anticipated. Hay and
forage crops were in bountiful supply, and some increase over last year was
shown in barley, buckwheat, strawberries, and a few varieties of garden
truck. Practically all of the major crops in this district, nevertheless, were
reduced from a year ago; production of fruit was approximately half that in
1926. The spring crops of lambs and pigs were in excess of 1926, but a reduction from a year ago was shown in the autumn crop of pigs. Because of
the relatively smaller corn crop in this district, there was evident some tendency to market hogs earlier this autumn than usual, and a considerable
reduction in cattle feeding was indicated. December 1 farm holdings decreased 12.8 per cent in number of beef cattle, 5.0 per cent in size of lamb
flocks, and 2.7 per cent in the number of hogs of marketable age. Dairy
herds increased 3.0 per cent.
Prices of corn, oats, barley, rye, cattle, calves, butter fat, and apples
advanced over 1926, while those for hay, hogs, chickens, eggs, and wool
declined. Lamb, wheat, and buckwheat quotations showed considerable
fluctuation, but the average was approximately that of 1926.
Total farm income of the five states including the Seventh Federal Reserve district for the 1927-1928 crop year declined nearly two per cent from
1926-1927, according to the best information available.




7

THIRTEENTH ANNUAL REPORT
COMPARATIVE VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS
1927, 1926, AND 1925

1926

1927

NUMBER OF PIECES HANDLED

Bills discounted:
Applications
Notes discounted
Bills purchased in open market for
own account
Currency received and counted
Coin received and counted
Checks handled
Collection items handled:
United States Government
coupons paid
All other
United States securities—issues,
redemptions, and exchanges by
Fiscal Agency department
Transfers of funds
Envelopes received and dispatched..

1925

12,811
59,413

16,831
81,998

16,509
79,204

24,318
354,844,000
263,577,000
119,112,000

21,579
328,450,000
246,233,000
111,800,000

17,316
303,159,000
207,945,000
104,023,000

6,084,000
599,000

6,547,000
556,000

7,158,000
507,000

1,493,000
299,000
5,071,000

858,000
297,000
4,757,000

1,178,000
271,000
4,810,000

Bills discounted
$ 2,778,197,000
Bills purchased in open market for
own account
367,141,000
Currency received and counted
1,979,757,000
Coin received and counted
36,096,000
Checks handled
27,069,498,000
Collection items handled:
United States Government
coupons paid
64,196,000
All other
989,766,000
United States securities—issues,
redemptions, and exchanges by
Fiscal Agency department
1,456,559,000
Transfers of funds
24,367,445,000

$ 2,972,108,000

$ 2,075,378,000

301,759,000
1,872,170,000
34,794,000
27,294,595,000

247,786,000
1,669,703,000
31,540,000
25,356,469,000

76,554,000
922,542,000

80,233,000
832,836,000

639,421,000
23,012,766*000

699,530,000
20,537,448,000

AMOUNTS HANDLED

MOVEMENT OF RESOURCES
Federal Reserve Bank of Chicago, 1920 to 1927 Inclusive

'920

1921

1922

1925

1924

Data as of the last reporting date in each month.




1925

1926

1927

FEDERAL RESERVE BANK OF CHICAGO
Financial Results of Operation—Net earnings of the Federal Reserve
Bank of Chicago for the calendar year 1927 were $1,927,644, compared with
$2,253,923 in 1926 and $1,121,273 in 1925. Out of 1927 net earnings, dividends of $1,029,990 were paid, and $897,654 was transferred to surplus.
No franchise tax was paid the United States Government. Total current
expenses in 1927 were $3,887,058, compared with $3,824,437 in 1926.
Discount Operations in 1927—The loan and discount operations of the
Federal Reserve Bank of Chicago during the year 1927 reflected the usual v
seasonal fluctuations and demand occasioned by Government financing
operations. The high point of loans for the year was January 5, $119,961,000,
and the low point, $30,570,000, September 7.
Demands from banks in agricultural communities followed the usual
seasonal trend and may be evidenced by loans of this bank to Iowa member
banks, which are granted almost entirely for agricultural purposes. In
that state member banks were borrowing $9,358,000, the high point of the
year, on January 10. The reduction from this point was steady until
April 5, with $5,057,000. The customary increase thereafter until May 11
brought loans to Iowa member banks up to $6,353,000, after which there
was a steadjr decline until the low point of $2,177,000 was reached September 16. Thereafter the fall demand brought them up to $7,005,000 on
November 29. The autumn liquidating period reduced them to $4,023,000
December 31. In general the character of agricultural paper submitted
to the reserve bank for rediscount has been of better quality during the
past year than formerly.
During the year, this bank extended credit accommodation to 746 member banks, represented by 12,811 applications and 59,413 notes discounted.
MOVEMENT OF LIABILITIES
Federal Reserve Bank of Chicago, 1920 to 1927 Inclusive

[FEDERAL RES

1920

1921

1923

1924

Data as of the last reporting date in each month.




9

1925

1926

THIRTEENTH ANNUAL REPORT
with a face value of $2,778,196,715, a decline in dollar amount of $193,911,267
from 1926.
Rediscounted paper aggregating $1,826,645 was taken from rediscounts
and placed in the Failed Banks Account during the year, as a result of
the failure of thirty member banks indebted to this bank at the time of
closing. This represents a reduction of $2,405,795 from the 1926 figure
and reflects the improved condition of member banks.
The aggregate average reserve balances maintained by all member banks
in the Seventh district exceeded the total legal requirements throughout
the year, the excess ranging from a high monthly average of 3.14 in November to a low of 2.27 in February.
Collateral and Safekeeping Operations—The volume of securities held
as collateral in 1927 decreased slightly as compared with 1926; the high
point of the year occurred January 3 with $146,846,257, and the low point
March 15 with $89,830,817. The high point in 1926 was shown November
27—$150,311,000—and the low of $86,535,000 on March 18. On December
31, 1926, securities held as collateral totaled $136,483,000, and on December
31, 1927, $132,894,000.
On December 31, 1927, the safekeeping services of this bank and the
Detroit Branch were being utilized by 704 banks, representing a gain of 17
institutions availing themselves of this service during the year. The total
amount held by the head office and branch was $303,087,521 on December
31, or 86.5 per cent above the corresponding figure the preceding year.
Pieces to the number of 167,055, representing $354,589,646, were received,
the number of pieces increasing 76.6 per cent over the 1926 aggregate.
There were released 128,280 pieces ($241,214,974), representing a gain of
56.9 per cent over 1926. Receipts numbering 23,888 were issued—95.2 per
cent more than in the preceding year—and 15,140 receipts were released,
a gain of 61.3 per cent over 1926. The marked increase in volume of
safekeeping operations in 1927 over the preceding year is partly attributable
to the resolution of the Chicago Clearing House Association adopted January 1, 1927, to the effect that on and after that date Clearing House members make a charge of $1.00 per thousand for the safekeeping serviceis
rendered to their correspondent banks. During the year there were more
than 267,000 pieces of coupons detached, amounting to approximately
$11,000,000, which involved considerable work both in the Records Division
and the Custodian Division before the banks concerned actually received
credit for the proceeds.
Investments—A more active market in United States securities in 1927,
as compared writh 1926, was reflected in the operations of the Investment
Department, the volume of purchases for the account of member banks
amounting to about $35,000,000 compared with $24,000,000 the preceding
year, and sales amounting to $43,000,000 compared with $34,000,000 in 1926.
The increase in volume, as well as in number of transactions, is accounted
for largely by the refunding of the Second Liberty Loan bonds by the
Treasury. Purchases for the account of the Treasurj^ amounted to approximately $55,000,000, as against $50,000,000 last year. Purchases in Chicago




10

FEDERAL RESERVE BANK OF CHICAGO
for the account of the Federal Reserve System amounted to more than
$100,000,000 in 1927, compared with about $25,000,000 in 1926.
There was a noticeable increase in the activity of the market in Chicago
for bankers' acceptances during 1927, which was reflected in purchases of
the reserve bank from member banks; these totaled about $120,000,000
compared with $28,000,000 in 1926. Total purchases amounted to approximately $375,000,000 as compared with $318,000,000 during 1926. These
figures include purchases under sales contract, which totaled over $102,000,000 compared with $80,000,000 in 1926. Holdings of acceptances during
the year were at the low point on August 10 with $18,921,000, and reached
a maximum of $66,203,000 on December 21. On December 31 this item
stood at $62,295,000.
COMPARATIVE TABLE OF GOVERNMENT SECURITY TRANSACTIONS 1927,
1926, AND 1925—AMOUNTS IN THOUSANDS OF DOLLARS
1927
Number
of Transactions
Certificates of Indebtedness, Treasury
Notes, and U. S.
Bonds:
* Market Purchases....
*Market Sales
Bought with Agreement
Sold under Agreement
Totals

5,056
13,167

1926

Amount

Number
of Transactions

$806,585
664,501

5,040
8,931

1925

Amount

Number
of Transactions

Amount

$294,870
249,608

4,423
9,833

$230,748
215,295

395

204,177

508

141,049

581

92,574

538
19,156

197,411
1,872,674

554
15,033

137,273
822,800

519
15,356

90,771
629,388

*These figures include special Certificates of Indebtedness to cover overdrafts amounting
to $384,000,000 in 1927; $112,000,000 in 1926; $78,500,000 in 1925.

Federal Reserve Note and Deposit Liabilities; Reserve Position—The
volume of Federal Reserve note circulation in 1927 was considerably in
excess of the preceding year. The low point was shown on February 16,
$210,803,000, and the high point, $271,754,000, December 28. On the first
reporting date of the year, January 5, Federal Reserve notes in circulation
amounted to $245,440,000, and after declining to the low point the middle
of February, showed a rising trend throughout the year, subject to considerable fluctuation from week to week. The chart on page 9
depicts the trend in Federal Reserve note circulation from 1920
through the current year. Member bank deposits have been on a slightly
higher level than in 1926. A high point of $360,274,000 was reached October 19, and the low point of $297,168,000 on February 23. On January 5,
the first reporting date of the year, this item stood at $336,832,000, and on
December 28 at $346,855,000. Total cash reserves, touching their low
point on January 5, with $385,775,000, on December 28 were $438,551,000,
the high point of the year appearing September 7, $494,183,000. The reserve
ratio of this bank during 1927 ranged from a low of 65.5 per cent January 5, to a high of 83.0 on two successive weekly reporting dates, August
31 and September 7. On December 28 the ratio was 70.3 per cent.




11

THIRTEENTH ANNUAL REPORT
Membership—Six state banks of the Seventh district were admitted to
the System in 1927, as follows: Peoples State Bank, Shannon, Illinois;
Wheaton Trust and Savings Bank, Wheaton, Illinois; Ladoga State Bank,
Ladoga, Indiana; Guardian Detroit Bank, Detroit, Michigan; Fordson
State Bank, Fordson, Michigan; and Pigeon State Bank, Pigeon, Michigan. Of these, four were new banks, and two formerly eligible non-members. Twenty state banks withdrew, of which number six did so on six
months' notice, two were liquidated and absorbed by non-member banks,
one consolidated with a new national bank, and the accounts of eleven closed
banks were terminated, seven of these having been closed during 1927 and
four in 1926. These changes resulted in a net reduction of fourteen state
member banks during 1927. The withdrawals of five state banks are pending—two were closed and three are withdrawing on six months' notice.
Eleven national banks were added to membership in 1927; three of them
new; seven successors to other national banks, one of which closed
in 1926, two in 1927, and the remaining four were absorbed; one was a
new bank which consolidated with and succeeded a state member bank.
The memberships of fifty-four national banks were terminated during the
year, seventeen on account of absorption by other banks (nine by other
national banks, five by state member banks, three by non-member banks),
three liquidated voluntarily, one was succeeded by a non-member trust
company, and thirty-three were closed, one in 1925, eleven in 1926, and
twenty-one in 1927. The withdrawals of eight national banks are pending:
two of these were closed; three liquidated voluntarily and have been
absorbed, two of them by non-member banks, and one by a state member
bank; two are contemplating liquidation—one of them to be absorbed by
another national; and one has been absorbed by a non-member bank. Total
membership showed a reduction of fifty-seven from December 31, 1926.
MEMBER BANKS—SEVENTH F E D E R A L R E S E R V E
December 31, 1927

December 31, 1926

DISTRICT
December 31, 1925

Nat'l

State

Total

Nat'l

State

Total

Nat'l

State

Total

Indiana
Iowa

325
175
285
94
111

69
15
64
145
17

69
15
74
148
18

990

310

328
184
314
96
111
1,033

397
199
388
244
129
1,357

333
189
341
90
112
1,065

70
17
90
152
20

Total

394
190
349
239
128
1,300

403
205
431
242
132
1,414

324

349

Authorization and approval by the Federal Reserve Board to exercise
fiduciary powers was given to forty-one national banks, twenty-one of them
receiving full powers, and twenty supplementary or partial, as shown in
the tabulation below.
A total of 1,240 calls was made by representatives of the Bank Relations
Department during 1927, of which 861 were on member banks and 379 on
non-member institutions.
During 1927 twelve addresses were made by officers and other representatives of the Federal Reserve Bank of Chicago.




12

FEDERAL RESERVE BANK OF CHICAGO
MEMBER BANKS AUTHORIZED AND APPROVED TO EXERCISE FIDUCIARY POWERS
ILLINOIS:
Berwyn, First National Bank.
Chicago, Continental National Bank & Trust Co.
(Granted originally to Continental and Commercial
National Bank.)
Chicago, National Builders Bank of Chicago.
*Decatur, National Bank of Decatur.
*Joliet, First National Bank.
Knoxville, Farmers National Bank.
*LaSalle, LaSalle National Bank.
Naperville, First National Bank.
Ottawa, First National Bank.
Paris, First National Bank.
Pekin, American National Bank.
Peru, Peru National Bank.
Sterling, Sterling National Bank.
Wilmette, First National Bank.
INDIANA:
Huntington, First National Bank.
Indianapolis, Continental National Bank.
*LaPorte, First National Bank.
*Mishawaka, First National Bank.
New Castle, Farmers and First National Bank.
*Richmond, Second National Bank.
*Rockville, Rockville National Bank.
*Russiaville, First National Bank
*Tipton, Citizens National Bank.
t*Wabash, Farmers and Merchants National Bank.
IOWA:
Charles City, Citizens National Bank.
*CHnton, City National Bank.
fColumbus Junction, Louisa County National Bank.
Dysart, First National Bank.
*Red Oak, First National Bank.
Sioux City, Live Stock National Bank.
*Waterloo, Pioneer National Bank.
MICHIGAN: *Battle Creek, Central National Bank.
t*Birmingham, First National Bank.
*Flint, First National Bank.
tLudington, First National Bank.
*Port Huron, First National Bank.
St. Joseph, Commercial National Bank.
W I S C O N S I N : Baraboo, First National Bank.
*Janesville, First National Bank.
Kenosha, U. S. National Bank.
Madison, Commercial National Bank.
*Supplementary.

fPartial.




All others full powers.
13

THIRTEENTH ANNUAL REPORT
Division of Research and Statistics—Beside an increased volume ef statistical data prepared for officials of this bank, the Federal Reserve Board,
and outside sources, particularly member banks, the Division completed
in 1927 a study of the earnings and expenses in 1926 of 1,324 member
banks in the Seventh district, thus providing a basis of comparison with a
similar study for 1924 completed two years ago. The 1926 study was carried further by grouping the member banks according to size of city
wherein located. A special earnings and expense study of all state banks
in Iowa (1926) was completed, and similar studies for other states including the Seventh district are under way. Special compilations of deposits
of state banks in several states over a considerable period of years were
prepared for the use of the Federal Reserve Board. During the year nearly
all monthly business indices were changed from a 1919 to a 1923-1924-1925
monthly average base. The reporting list of chain stores and of foundries
in the district was materially expanded in 1927. In response to the increasing interest of reporting firms in procuring bases for comparing their individual operations, the policy was adopted in 1927 of supplying reporting
firms with special summaries for their particular lines and cities as early in
each month as reports are received from a sufficient number.
Approximately 500 books and pamphlets were added to the reference
library, administered as a part of this division, making a total of over
7,000 volumes now on the shelves.
Fiscal Agency Functions—During 1927 this bank continued to take an
active part in United States Government financing, the work for this year
being augmented by the payment of the Second Liberty Loan.
During the year the bank distributed $479,536,000 of new issues of
United States securities which were allotted on 11,753 subscriptions. Payments for these were made by the surrender of $262,727,350 of maturing
securities, $3,938,260 by cash, and $211,714,490 by credit in War Loan
Deposit Account. The balance ($1,156,000) represented transfers of allotment to and from other Federal Reserve banks.
In the performance of other fiscal agency transactions there were surrendered for exchange, Government securities amounting to $342,451,250,
represented by 693,515 pieces, against which were delivered 160,985 pieces,
aggregating $335,316,600. Government securities to the amount of $634,571,789 were redeemed, represented by 688,364 pieces.
In refunding the Second Liberty Loan there were retired through this
bank by purchase, exchange, and cash redemption $430,261,600 of bonds,
456,417 pieces in coupon form and 95,971 pieces in registered form.
In making telegraphic transfer of United States Treasury Certificates of
Indebtedness and notes, this bank accepted for transfer to other Federal
Reserve banks $217,508,450, and delivered for account of other Federal
Reserve banks, $165,067,900.
Shortly before November 15, 1927, the date on which Second Liberty
Loan bonds were called for payment, the Treasury offered to purchase
bonds of this issue for the Cumulative Sinking Fund at prices ranging
14




FEDERAL RESERVE BANK OF CHICAGO
from par, to par and three thirty-seconds. Under this offer this bank purchased for the Treasurer's account $18,332,750 of 4 and 4J4 per cent bonds.
The total value of United States securities, new issues, redemptions, and
exchanges received by the Fiscal Agency Department during the year was
$1,456,558,640 against $639,420,529 for the year 1926.
Gold Settlement Fund—Transactions between the Seventh and other
Federal Reserve districts through the Gold Settlement Fund resulted in a
net. gain of $3,545,000 compared with a gain of $23,212,000 during the preceding year. Receipts from other Federal Reserve banks aggregated
$16,694,979,000, a rise of $310,628,000 over 1926, and payments to other
Federal Reserve banks totaled $16,691,434,000 as against $16,361,139,000 the
preceding year. The Gold Settlement Fund on December 31, 1927,
amounted to $103,172,323 compared with $131,481,442 at the close of 1926.
Clearings and Collections—The volume of checks handled during the
year 1927 by the head office and the Detroit Branch combined, showed a
very substantial increase over 1926. The total number of checks increased
6.5 per cent; those payable in Chicago and Detroit gained 7.0 per cent,
those payable outside these cities 6.6 per cent, and Government checks 3.1
per cent. The total number of items handled during the year by both
offices was 119,112,000 (including duplications), amounting to $27,069,498,000. Of these, 90.3 per cent of the items were drawn on banks in the
Seventh district, 5.3 per cent on banks in other districts, and 4.4 per cent
on the United States Treasurer. On October 13, 1927, the head office
and branch combined dealt with the largest volume of items in the history
of the check collection department. A total of 653,793 was handled,
amounting to $132,813,000. There were 116,941 of these payable in Chicago and Detroit, 521,075 payable outside of those cities, and 15,777 payable by the Treasurer of the United States. This volume surpasses the
previous high point (October 13, 1926) by 46,751 items and $5,806,000.
The close of 1927 found the check department at the highest point of
efficiency in its existence.
There were thirty-eight fewer non-par banks in the Seventh district at
the close of 1927 than at the beginning of the year. A large number of
Michigan banks requested reinstatement in the par list the early part of
the year.
A total of 599,247 non-cash collection letters, with an aggregate value
of $989,766,422, was handled by the bank and Detroit Branch in 1927,
as against 556,433 letters totaling $922,542,280 in 1926. This represents an
increaseof 7.7 per cent in number of letters. Of this volume, 504,911 items
with a total value of $852,285,549 were handled in the head office, and
94,336 with a total value of $137,480,873 were handled by the Detroit
Branch.
An aggregate of $24,367,445,000' was transferred by wire during 1927,
compared with $23,012,766,000 the preceding year. Of the 1927 total,
$15,602,358,000 was transferred over leased wires as against $14,621,903,000
in 1926, and $2,807,207,000 over commercial wires compared with $2,956,-




15

THIRTEENTH ANNUAL REPORT
703,000 the preceding year. All other transfers in 1927 amounted to
$5,957,880,000 as against $5,434,160,000 in 1926. Transactions numbered
298,724 compared with 290,979 the preceding year.
Cash and Currency Operations—The currency and coin operations at
the Federal Reserve Bank of Chicago during 1927 continued to increase,
as has been the case in previous years. Currency received amounted to
$1,963,017,000, compared with $1,913,410,000 in 1926. Payments of $1,954,855,000 during the past year compared with $1,883,179,000 in 1926. The
volume of Federal Reserve notes in circulation in 1927 showed only moderate expansion—$245,440,000 on January 5, the first reporting date of the
year, and $265,293,000 on December 31—the gain being due in part, as was
the case in 1926, to the fact that fewer gold certificates were available for
payment. Gold certificates paid out totaled $586,000,000 as against $696,000,000 in 1926.
Internal Organization, Buildings, and Property—George M. Reynolds,
Class A Director, and August H. Vogel, Class B Director, whose terms
expired with the end of 1927, were re-elected. William A. Heath, Class C
Director, whose term also expired at the end of 1927, was reappointed by
the Federal Reserve Board.
The Directors for the year 1928 will consist of the following:
CLASS A—George M. Reynolds, Chicago, Illinois; Charles H. McNider,
Mason City, Iowa; Elbert L. Johnson, Waterloo, Iowa.
CLASS B—August H. Vogel, Milwaukee, Wisconsin; Stanford T. Crapo,
Detroit, Michigan; Robert Mueller, Decatur, Illinois.
CLASS C—William A. Heath, Evanston, Illinois; Frank C. Ball,
Muncie, Indiana: James Simpson, Chicago, Illinois.
The Federal Reserve Board again designated William A. Heath as Chairman of the Board of Directors and Federal Reserve Agent for the year
1928, and James Simpson as Deputy Chairman.
The Executive Committee for the year 1927 consisted of Governor
James B. McDougal, William A. Heath, Chairman, and the following
Directors: Charles H. McNider, George M. Reynolds, James Simpson,
and August H. Vogel. The Membership Committee for the year 1927 consisted of Mr. Heath, Federal Reserve Agent, Governor McDougal, and
Mr. Vogel. These committees will serve the Board of Directors in 1928
as constituted during the past year.
There was one resignation in the official staff at the Chicago office during
the year 1927. Allen R. LeRoy, Manager of Loans, resigned as of July 31,
1927, and there was one appointment in the official staff during 1927. Frank
L. Purrington was appointed Manager of the Discount Department as of
August 12, 1927.
The following is a comparison of the total number of employes, exclusive of officers, at the Chicago office:
December 31, 1926
1,265
December 31, 1927
1,279
Increase




14
16

FEDERAL RESERVE BANK OF CHICAGO
During the year, a part of the first floor and basement, aggregating 18,000
square feet, was leased to an outside tenant, which brings the total space
leased in this building up to the equivalent of approximately six floors.
The income from the building during the year 1927 amounted to $293,418
compared with $233,136 during 1926.
The Detroit Branch Board of Directors for the year 1928 will be composed of: N. P. Hull, Lansing, Michigan; James Inglis, Detroit, Michigan; William J. Gray, Detroit, Michigan; John W. Staley, Detroit, Michigan: William R. Cation, Detroit, Michigan: David McMorran, Port Huron,
Michigan; and George B. Morley, Saginaw, Michigan.

DETROIT BRANCH OF THE FEDERAL RESERVE BANK OF CHICAGO
Fort and Shelby Streets, Detroit

There was one resignation in the official staff at the Detroit Branch
during 1927. John B. Dew resigned as Cashier February 14, 1927, and
there were two changes of title at the Detroit Branch during 1927. Harlan
J. Chalfont, formerly Assistant Cashier, was appointed Cashier July 1,
1927, and John G. Baskin, formerly Assistant Federal Reserve Agent, was
appointed an assistant cashier July 1, 1927.




17

THIRTEENTH ANNUAL REPORT
The following is a comparison of the total number of employes exclusive
of officers, at the Detroit Branch:
December 31, 1926
17.!
December 31, 192?
203
Increase
30
This increase is largely due to the occupancy of the new building.
The Detroit Branch moved into its new quarters on December 19, 1927,
the new building, contracts for which were let on December 7, 1926, having been practically completed. The building is located on a lot 75 by 130
feet, at the corner of Fort and Shelby Streets. It includes four stories and
basement. Reinforced foundations were provided so that it can be extended sixteen additional stories if necessary. Approximately 4,600 square
feet on the fourth floor have been leased to an outside tenant. The remainder of the building is being retained by the branch for its own use.




18