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FEDERAL RESERVE BANK OF CHICAGO PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS ACTIVITIES FOR THE YEAR 1947 Federal PRESIDENT'S Reserve Bank of Chicago ANNUAL REPORT TO MEMBER BANKS OF THE SEVENTH FEDERAL ACTIVITIES FOR THE RESERVE YEAR DISTRICT 1947 F E D E R A L R E S E R V E BANK OF CHICAGO O F F I C E OF T H E PRESIDENT January 22, 1948 To the Member Banks of the Seventh Federal Reserve District: You will find in the following pages a brief description of the services performed by the Federal Reserve Bank of Chicago for the banks of the Seventh Federal Reserve District, as well as for the government and the general public, during 1947. This past year was one of tremendous volumes of work for us, as it was for you, and our tasks were completed and written into this record only through the wholehearted support of our Member Banks. For that support I would like to extend the warmest thanks of myself and our entire organization. Very truly yours, President CONTENTS OF REPORT SEVENTH DISTRICT FEDERAL OPEN ECONOMIC MARKET SUMMARY Page COMMITTEE. 1 4 ACTIVITIES OF BANK DEPARTMENTS - HEAD OFFICE S e r v i c e s to M e m b e r Banks Discounts and Other Credits Currency and Coin Collection of Checks and Other Items Safekeeping of Securities Investments Economic Research Examination of Banks Bank and Public Relations 5 6 7 8 9 10 11 12 S e r v i c e s to T r e a s u r y Department Issuance of Government Securities Servicing of Government Securities Redemption of Government Securities. Collection of Withheld Taxes 13 14 15 16 Reconstruction 17 Finance B o a r d of G o v e r n o r s Corporation. Activities - Consumer C r e d i t . . . 18 General Bank Activities Accounting Wires, Telephone, Mail, Files Personnel Procurement Maintenance of Building., Legal 19 20 21 22 23 24 ACTIVITIES OF BANK DEPARTMENTS - DETROIT BRANCH S e r v i c e s to Member Banks Discounts and Other Credits Currency and Coin Collection of Checks and Other Items Safekeeping of Securities 25 26 27 28 S e r v i c e s to T r e a s u r y Department Issuance of Government Securities Servicing of Government Securities Redemption of Government Securities Collection of Withheld Taxes 29 30 31 32 Reconstruction 33 Finance Corporation General Bank Activities Accounting Wires, Telephone, Mail, Files Personnel STATEMENT OF E A R N I N G S * AND STATEMENT OF CONDITION EARNINGS DIRECTORS HISTORY AND OFFICERS 34 35 36 EXPENSES 37 38 39 40 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 SEVENTH DISTRICT ECONOMIC SUMMARY Nineteen hundred and forty-seven goes into the records as the greatest year of peacetime prosperity yet attained in the Seventh Federal Reserve District as well as in the nation generally. During the past twelve months virtually every barometer of business established a new all-time level — particularly in dollar terms — and the immediate outlook for 1948 is for a continuation of inflationary trends. Because the goods currently in greatest demand but in shortest supply to meet domestic and world needs are to a very large extent produced in the Seventh District and its economic hinterland, it is not surprising to find that during 1947 more people were at work, more goods produced, more wages and salaries paid, more goods and services purchased, and more profits received than in any previous year of peace. Underlying this "boom," however, is a very apparent feeling that caution is in order in business thinking and planning because the current prosperity is rooted in part upon artificial, war-borne stimulants and cannot be expected to endure indefinitely. Moreover, as prices continue to rise, there has been increasing, although still scattered, evidence of financial stringency as certain individuals and business firms have become more vulnerable to an interruption or slowing down in their incomes or production. The failure of inflationary forces to give ground during 1947 was basically the unexpected result of demand continuing to outrun supply for nondurable as well as durable goods. Of particular marginal significance here was the revived demand for food and textiles in the early months of 1947 consequent upon the poor crop outlook at home and abroad and second round wage increases among organized workers. The end of building controls in midyear stimulated lagging commercial construction and, together with greater working capital requirements resulting from rising prices, increased business demands for funds. These developments changed business expectations, and inflation psychology once again became dominant. Many consumers, moreover, became convinced that price declines were not imminent and revised their buying plans. Residential starts increased more than seasonally throughout the District as well as the nation from June to September and fell less than seasonally in the last quarter. FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947. PAGE 1 SEVENTH DISTRICT ECONOMIC SUMMARY - CONTINUED The Seventh District includes a sufficiently large proportion of the nation's population, industrial and farm production, and financial activities to serve in many respects as a barometer of business trends for the nation as a whole. This condition was particularly evident in 1947. The District, however, appears to have been somewhat more sensitive than the nation to inflationary forces during the year. This resulted from the above normal concentration of durable goods in the District and from the unexpected price strength of cereal grains and livestock which affected not only farmers but also certain important food manufacturing industries such as meat packing. Continuous expanding employment, in contrast to extensive work stoppages during the previous year, was primarily responsible for record Seventh District prosperity in 1947. About seven million persons were at work in nonagricultural pursuits in the District at the end of the year, with approximately three million in manufacturing. Unemployment was virtually non-existent and shortages of workers widely reported, particularly in the larger industrial centers. The 9-10 per cent average increase in consumer prices in the principal Seventh District cities during 1947, slightly above the rise generally in the United States, was reflected in all dollar business trends. Disposable income of individuals exceeded the 12 per cent national increase. Cash farm income in the five District states surpassed the 1946 level .by roughly 25 per cent, rising well above the 19 per cent gain in the nation. Wage and salary advances during 1947 averaged somewhat less than 10 per cent, but living cost increases commonly eliminated the possibility of increases in real income. In an effort to maintain their living standards in the face of mounting prices, consumers in this District as elsewhere spent greater proportions of their larger incomes in 1947 than during the previous year, and made increased use of credit facilities. Retail Sales in Illinois and Michigan, which together account for over three-fifths of the District total, increased 22-24 per cent over their year ago total, while the corresponding national gain was slightly under 14 per cent. Similarly, Seventh District department store sales showed a greater 1946-47 increase, 10 per cent, than in the nation, 7 per cent. PAGE 2 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR1947.PAGE1 SEVENTH DISTRICT ECONOMIC SUMMARY-CONTINUED The year 1947 witnessed an upsurge in the need for business credit, the result of, as well as a contributory factor to, higher prices. Working capital requirements advanced and commonly more funds were needed to meet fixed and operating expenses than anticipated earlier. Commercial and industrial loans of member banks in the Seventh District rose 27 per cent during the year, compared with 29 per cent in the nation. Within the Seventh District, all areas have shared in the District prosperity. The largest industrial centers, Chicago and Detroit, however, have made the most striking gains during the past twelve months, in contrast to their somewhat slower progress during the early postwar reconversion months. The 1946-47 over-all rise in employment of roughly five per cent in the Seventh District was exceeded by Detroit and Chicago, but was slightly above the gains reported in Milwaukee, Indianapolis, and Des Moines. While there was no appreciable difference in the extent of 1946-47 consumer price increases among the principal District cities, Indianapolis was the only area to show a gain of less than the national average of 8.8 per cent. The same general pattern of increases around the District average prevailed in department store sales trends, with the largest areas achieving particularly striking increases. The most substantial increases in construction occurred in Detroit and Indianapolis, with the latter city showing the greatest rate of expansion in new dwelling units. Commercial and industrial loan expansion during the year was largest among banks in Chicago and Milwaukee. FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947. PAGE 1 FEDERAL OPEN MARKET COMMITTEE The United States government securities shown on the December 31, 1947, statement of the Federal Reserve Bank of Chicago represent this bank's share in the portfolio of the System Open Market Account, in which all the Federal Reserve banks participate. The activities of this account are directed by the Federal Open Market Committee, and its transactions are handled principally in New York. This bank's participation has varied from time to time during the year but on December 31, 1947, stood at $3,085,404,000, representing 13.7% of the total portfolio of $22,559,334,000. PAGE 4 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 DISCOUNTS AND OTHER CREDITS SERVICES TO MEMBER BANKS. The Federal Reserve Banks are empowered to make to commercial firms. loans to member b a n k s and, under certain circumstances, G E N E R A L SUMMARY Member bank borrowings for the year aggregated $1,207,743,000, an increase of 17.2% over the previous year. These increased borrowings were due primarily to withdrawals of war loan deposit accounts in member banks and elimination of the practice of permitting member banks to tender U. S. Treasury bills for sale under repurchase agreement. The maximum member bank borrowings outstanding as of any one day were $278,690,000 on March 31, 1947. One emergency loan for $400,000, secured principally by real estate mortgages, was made under Section 10b of the Federal Reserve Act. This loan was to a member bank which had suddenly experienced a loss of approximately one-third of its deposits and enabled the bank to effect an orderly liquidation of its excess loans and investments. Two commitments aggregating $345,000 were entered into during the year with financing institutions in connection with working capital loans to industrial enterprises under the provisions of Section 13b of the Federal Reserve Act. S T A T E M E N T OF O P E R A T I O N S 1947 1946 430 1 395 2 2 $1,207,743,000 400,000 345,000 increase or decrease NUMBER OF TRANSACTIONS Advances to Member Banks Secured by U. S. Govt. Obligations Secured by Mtges. Sec. 10b Industrial Loans Advances Commitments + 8.9% $1,030,155,000 + 17.2% 382,666 - 9.8% DOLLAR VALUE OF TRANSACTIONS Advances to Member Banks Secured by U. S. Govt. Obligations Secured by Mtges. Sec. 10b Industrial Loans Advances Commitments FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 PAGE 5 CURRENCY AND COIN SERVICES TO MEMBER BANKS Currency and coin a r e routed into general circulation through the Federal Reserve Banks, which act a s distributing agents between the Treasury and the Banking community. Commercial b a n k s desiring currency or coin m a y obtain it from this Bank in exchange for their draft, a c h a r g e to their reserve account, etc. Similarly b a n k s having excess c a s h m a y turn it in to this Bank and obtain funds in return. Incoming c a s h is used either to supplement n e w currency and coin in outgoing shipments, or, if unfit for further circulation, is returned to the Treasury for destruction. GENERAL SUMMARY During 1947 Cash Department activities continued in heavy volume and showed substantial increases both in amount and pieces over 1946. In 1947 a large number of member banks availed themselves of a wrapped coin service which was begun in a limited way in the latter part of 1946. This service is being well received by member banks throughout the district and will be further extended as additional mechanical equipment becomes available. The net circulation of our Federal Reserve Notes reached an all-time high of $ 4 , 6 6 9 , 3 3 8 , 0 0 0 on December 24, 1947, as against a high of $4,602,370,000 a year ago, the net increase amounting to $66,968,000. S T A T E M E N T OF O P E R A T I O N S PIECES Currency Outgoing Incoming Forwarded for Redemption Coin Outgoing - Loose Wrapped Total Incoming - from banks from mints from other Feds D O L L A R V A L U E O F PIECES Currency Outgoing Incoming Forwarded for Redemption Coin Outgoing - Loose Wrapped Total Incoming - from banks from mints from other Feds 1947 1946 505,142,656 523,534,850 207.974,832 465,288,540 499,617,483 169,466,861 568,634,136 316.034.000 884,668,136 738,481,403 146,400,000 4,100,000 741,892,988 14.420.000 t 756,312.988 481,142,829 325,250,000 2,400,000 $3,003,754,800 3,118,258,887 772.378.087 $2,749,670,700 2,879,538,129 566.563.229 $ $ $ $ 42,515,060 31.394.450 73,909,510 66,919,297 6,950,000 1,300,000 $ $ 58,639,122 591,000 t 59,230,122 45,851,998 15,100,000 853,500 increase or decrease + 8.6% 4.8% 22.7% - 23.4% + + + + - + 17.0% 53.5% 55.0% 70.8% + 9.2% 8.3% 36.3% - 27.5% + + + 24.8%, 45.9% 54.0% 52.3% 51,540,000 53,918,000 + + 19.8% 34.0% 587,000,000 742,515,000 + 28.2% 16.8% * + - t Figures cover only last 3 months of 1946, when wrapped coin service was inaugurated. F E D E R A L RESERVE NOTE ISSUES - FEDERAL RESERVE AGENT PIECES Received from Washington 61,764,000 Issued to Bank 72,259,000 D O L L A R V A L U E O F PIECES Received from Washington Issued to Bank PAGE 6 $ 752,640,000 867,060,000 $ + FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 SERVICES TO MEMBER COLLECTION OF CHECKS AND OTHER ITEMS BANKS. The Federal Reserve Banks act a s nation-wide clearing agents for the routing of checks between commercial banks in much the e a m e manner a s clearing house associations do in local communities, and accept and p a y checks drawn by the Federal Government. They also collect drafts, notes, bonds, coupons, acceptances, etc., for member banks and deliver against payment securities sold b y member banks. G E N E R A L SUMMARY The number of country checks cleared during 1947 was 8.5% greater than the number cleared during 1946; the volume of all checks handled was up 5.8%. Noncash items processed during the year declined 8.5% from the 1946 volume. S T A T E M E N T OF O P E R A T I O N S 1946 42,717,756 182,389,933 4,080,834 41,835,136 271,023,659 42,435,255 168,024,163 7,004,569 38,745,465 256,209,452 $50,198,913,000 33,065,055,000 5,796,590,000 2,567,080,000 $91,627,638,000 $42,768,284,000 27,343,275,000 6,459,897,000 2.931,456,000 $79,502,912,000 + + + 17.4% 20.9% 10.3% 12.4% 15.3% 5,277 3,795 + 39.1% 42,246 190,795 486.324 719,365 40,451 225,662 520,440 786,553 + - 4.4% 15.5% 6.6% 8.5% 106,893 121,198 - 11.1 84,192,000 694,350,000 1,042,226,000 $ 1,820,768,000 + - 54.1% 17.1% 11.4% - 10.6% $ - 21.0% NUMBER OF CHECKS HANDLED City Country Government - Paper Government - Card Total DOLLAR VALUE OF CHECKS HANDLED City Country Government - Paper Government - Card Total Daily average number of cash letters dispatched NONCASH 0.7% 8.5% 41.7% 8.0% 5.8% ITEMS TRANSACTIONS City Country Coupon and Security Total t Includes direct sendings to other Federal Reserve Banks by our Member Banks DOLLAR VALUE OF TRANSACTIONS 129,751,000 City 575,468,000 Country 923,018,000 Coupon and Security $ 1,628,237,000 Total Includes direct sendings to other Federal Reserve 450,347,000 Banks by our Member Banks RATION increase or decrease 1947 CHECKS CHECKS Number of Items Handled Total Units Processed * Discontinued June 30, 1947 $ 569,830,000 * 415,891 3,628,326,638 728,659 3,099,291,115 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 - 42.1 + 17.1 PAGE 7 SAFEKEEPING OF SECURITIES SERVICES TO MEMBER BANKS The Federal Reserve Banks act a s depositories for securities owned by member banks. Securities so held a r e completely serviced a s to collection of interest, redemptions, exchanges, etc. A free safekeeping service for U. S bavings Bonds, Series E, is extended to members of the armed forces and to the general public. GENERAL SUMMARY During 1947 the number of pieces received exceeded by 50,000 the number released. The large amount of municipal financing, mostly Soldiers' Bonus bonds, was the reason for this increase. The amount of Government securities received was less by $7,570,000,000 than in 1946. Coupons detached from securities in Safekeeping declined 28,000. During 1947, 109,825 Savings Bonds were deposited by the public for safekeeping: 48% by service personnel, and 52% by civilians. Over 190,000 Savings Bonds were released during the year, compared to 414,129 during 1946; and on December 31, 1947, there remained in our safekeeping 782,202 pieces with a maturity value of over $73,000,000. S T A T E M E N T OF O P E R A T I O N S 1946 285,520 235,196 489,266 879,662 281,851 252,522 438,942 907,288 $29,594,516,120 30,358,925,792 4,786,100,324 90,658,171 $37,165,447,774 37,525,805,554 5,550,509,996 113,138,766 31,167 30,059 61,166 33,212 33,318 60,058 + 9.8% 1.8% 52,366 57,459 139,589 51,906 68,981 157,528 352,838 61,291 _ _ _ _ 24.1% 63.5% 60.4% 15.3% 443,000 339,202 530,223 333,649 _ + 16.5% 1.7% 3,779,000 11,377,000 16,010,000 7,139,000 _ _ _ _ 5.4% 28.1% 56.5% 7.0% 25,604.000 49,278,000 _ + 13.2% 3.1% SAFEKEEPING - MEMBER BANKS. ETC. Pieces Securities - Received Released Held as of Dec. 31 Coupons detached from Securities Dollar Value of Pieces Securities - Received Released Held as of Dec. 31 Coupons detached from Securities Receipts Issued Receipts Released Receipts Outstanding SAFEKEEPING - SAVINGS BONDS Pieces Received - U. S. Army Personnel Civilian Released - U. S. Army Personnel Civilian Held as of Dec. 31 U. S. Army Personnel Civilian Dollar Value of Pieces Received - U. S. Army Personnel Civilian Released - U. S. Army Personnel Civilian Held as of Dec. 31 U. S. Army Personnel Civilian PAGE 8 increase or decrease 1947 $ 3,576,860 8,133,178 6,961,075 6,637,021 22,220,025 50,823,979 $ + _ + - _ - _ - _ _ 1.3% 6.9% 11.5% 3.0% 20.4% 19.1% 13.8% 19.9% 6.2% .FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 INVESTMENTS SERVICES TO MEMBER BANKS The Federal Reserve Banks act a s securities agent for member banks. T h e purchase and sale of bonds b y member banks, either for their own account or for the account of customers, m a y b e effected through their Reserve Bank without c h a r g e . G E N E R A L SUMMARY The operations of the Investment Department declined somewhat during 1947 from the previous year. Purchases decreased 24.2% in number and 25.3% in dollar value, while sales declined 10.6% in number and 19.3% in value. The decrease was largely attributable to the discontinuance during the year of the previous arrangement under which member banks sold Treasury bills to the Federal Reserve banks at a stated price with an option to repurchase. S T A T E M E N T OF O P E R A T I O N S PURCHASES y. S. Governments Member Banks and Others Other F. R. Banks Repurchase Agreement Own Account Other Member Banks and Others Total Purchases SALES U. S. Governments Member Banks and Others Other F. R. Banks Repurchase Agreement " " exchanged for Treas. bills due 7 / 3 1 / 4 7 " " matured " " transf. to System Open Market Account Own Account - transf. to System Open Market Account Other Member Banks and Others Total Sales DOLLAR VALUE OF Increase or decrease 1946 1947 NUMBER OF SECURITY TRANSACTIONS 3,205 164 1,146 1 3,772 158 1,951 22 4,538 103 5,984 6,695 420 1,042 7,051 437 1,486 7 278 854 310 - + - 15.0% 3.8% 41.3% ~ • - 5.0% 3.9% 29.9% - 67.4% - - 1 78.6% 24.2% ~ 53 9,881 80 8,833 + - 50.9% 10-6% TRANSACTIONS PURCHASES U ST Governments Member Banks and Others Other F. R. Banks Repurchase Agreement Own Account Other Member Banks and Others Total Purchases SALES V. S. Governments Member Banks and Others Other F. R. Banks Repurchase Agreement " " exchanged for Treas. bills due 7 / 3 1 / 4 7 " " transf. to System Open Market Account " " matured Own Account - transf. to System Open Market Acct, Other Member Banks and Others Total Sales $ 119,820,650 21,398,500 9,590,508,000 39,952,000 569.000 $ 9,772,248,150 $ 175,938,140 8,129,500 7,445,191,000 $ - + - 30.6% 100.3% 25.6% " 792,000 $13,079,004,950 $ 39,952,000 165,058,050 18,069,950 9,561,542,000 - — 28.2% 25.3% - 6.6% 55.0% 22.1% - 62.6% + - - 1,587,479,000 1,236,993,000 - 3,310,899,000 39,952,000 634.900 $10,534,269,540 172,762,850 10,683,100 12,894,767,000 - 235.400 $13,055,804,400 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES t 168.1% 19.3% FOR THE YEAR 1947 PAGE 9 ECONOMIC RESEARCH SERVICES TO MEMBER BANKS Information on current economic developments in which the Federal Reserve System h a s an interest is gathered and interpreted by the Bank. These studies are made a v a i l a b l e not only to the officers and directors of this Bank and to the Board of Governors, but also to member b a n k s and business firms in the Seventh Federal Reserve District, an informational service being a very important activity of the Research Department. Members of the research staff maintain continuing close contact with leaders of banking, industry, agriculture, and trade so a s to obtain first-hand information on banking and business in this Reserve District. GENERAL SUMMARY During 1947 the Research Department continued its emphasis on the gathering of economic information in the Seventh Federal Reserve District and strengthening its ties with businessmen, agricultural leaders, and other sources of current information. The Library staff, economists, and others in the Research Department participated as usual in providing information for the thousands of inquiries for business and financial information which are received by mail, phone, or in person from banks,business firms, and others. Current statistical series were maintained and the usual periodic surveys and studies were conducted. A new project this year was a survey of agricultural loans conducted in approximately 80 member banks as a part of a national Federal Reserve System survey. In addition, a number of studies were made in the fields of agriculture, business, finance, and state government, which were subjects of articles in the monthly review, Business Conditions. The following material was published during the year as a result of current studies and collection of data in the Seventh District: Weekly Agricultural Letter; department store sales; financial statements - Federal Reserve Banks combined statement and member bank statements (national, and cities of Chicago, Detroit, Indianapolis, and New York). Monthly Business Conditions (monthly review); retail trade and consumer credit series department stores, furniture, household appliance, jewelry, shoes; financial reports assets and liabilities of Seventh District member banks, bank debits, bankers acceptances, and commercial paper; other business summaries - business indexes, furniture manufacturing, lumber, and paper and pulp. Quarterly Farm land value survey. Annually Department store sales by departments; deposit survey; meat packing study and supplement; member bank operating ratio study; retail credit survey; and agricultural credit data. The usual number of intrabank publications were prepared, and in connection with the vast amount of data collected from Seventh District reporting banks and business firms, summary reports of these figures were prepared and sent to the Board of Governors. To the extent that these data and other activities of the Research Department are a part of the national program of research of the Federal Reserve System, members of the research staff participated in a number of System conferences and studies of national economic conditions. PAGE 10 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER B A N K S - A C T I V I T I E S FOR THE YEAR 1947 EXAMINATION OF BANKS SERVICES TO MEMBER BANKS An examination of the state member banks in its district is made e a c h calendar y e a r by the Federal Reserve Bank. Field investigations required in connection with applications to exercise banking functions are also carried out. Various applications and reports required b y l a w to be rendered by organizations performing banking services in this Reserve District are analyzed and reviewed by the Bank before being submitted to the Board of Governors. GENERAL SUMMARY Nine banks, 6 national and 3 state, were admitted to membership in 1947. The staff of the Bank Examination Department completed 573 examinations during the year. S T A T E M E N T OF O P E R A T I O N S NUMBER OF EXAMINATIONS MADE Regular Membership Trust Departments Follow-up Investigations Holding Company Affiliate - NUMBER OF MEMBER BANKS IN 7TH F. R. DISTRICT National Banks As of January 1 Additions (see Note A) Withdrawals (see Note B) As of December 31 State Banks As of January 1 Additions (see Note A) Withdrawals (see Note B) As of December 31 1947 1946 433 2 137 1 447 7 141 2 l 559 6 4 561 550 10 1 559 443 3 4 442 446 10 13 443 Note A - Additions to Membership National Banks Commercial National Bank of Berwyn, Berwyn, Illinois First National Bank of Byron, Byron, Illinois dencoe National Bank, Glencoe, Illinois Tampico National Bank, Tampico, Illinois Wheaton National Bank, Wheaton, Illinois The Midland National Bank, Midland, Michigan State Banks Manteno State Bank, Manteno, Illinois Waverly Savings Bank, Waverly, Iowa The Citizens Bank of Saline, Saline, Michigan Note B - Withdrawals National Banks 4 - assumed by other banks State Banks 2 - converted to national banks 2 - voluntary withdrawals FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 PAGE 11 BANK AND PUBLIC RELATIONS SERVICES TO MEMBER BANKS The personnel assigned to the public relations staff visit member and non-member banks, attend conventions and group meetings, deliver public addresses, etc., and in g e n e r a l attempt to determine w a y s in which the Bank's services to its members m a y be improved. GENERAL SUMMARY The development of good relationships between the Federal Reserve Bank of Chicago and its member banks particularly, but also nonmember banks, corporations, and individuals was the over-all objective of the Bank and Public Relations Department during 1947. In the pursuit of this objective, all segments of the public were contacted by means of personal calls, participation in the programs of bankers' organizations, conferences with industrial leaders, and speeches before service clubs, chambers of commerce, other business organizations, and university and college groups. In addition, the general public was acquainted with Federal Reserve activities through the use of articles and press releases to publications. The development of a better understanding of Federal Reserve System policies and services was carried out through meetings held in the Federal Reserve Bank and organized tours through the Bank. Joint staff meetings of the Bank Examination, Bank Relations, and Research Departments were held each month. These meetings were study conferences designed to improve the presentation of Federal Reserve Bank service to the public. Assembling of information of financial, economic, and fiscal problems was carried on throughout the year. The gathering of this information on topics of importance to bankers was one of the major activities of representatives. These opinions were summarized monthly for the use of the officers and directors, and quarterly for the use of the Board of Governors. During the year, officers and representatives made 2,553 calls on banks throughout the District. All bankers' conventions of the five District states were attended as were all bankers' group meetings. Speakers were furnished for 96 meetings in the District and for national organizations. The promotion of the services of the Bank was carried on with special emphasis on such matters as proper handling of withheld tax, procedures for cashing Armed Forces Leave Bonds, prompt remitting for bonds sold, promotion of the Bond-A-Month plan, development of the use of coupon collection letters, encouraging protection of currency shipments, increasing the use of the Check Routing Symbol, checking reasons for deficiency in reserve requirements, and other services to the operating departments. P A G E 12 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 SERVICES TO TREASURY DEPARTMENT ISSUANCE OF GOVERNMENT SECURITIES The Federal Reserve Bank, acting a s agent of the Treasury Department, performs all operations relative to tne placing of n e w Treasury issues in the hands of the general public, and r e l a y s information from Washington throughout this district. The Bank qualifies commercial b a n k s and others in the district a s agents in the sale of U. S. Savings Bonds, Series E, to the public; and services these agents a s regards supplies of n e w bonds, applicable Treasury directives, the processing of paid registrations, etc. The Bank analyzes the sales of U. S. Savings Bonds, and furnishes the Treasury Department and others with detailed reports showing what the public purchased in the various counties and states in this district. GENERAL SUMMARY As no cash (new money) offerings for market securities were made during the year, an over-all decrease in the volume of work will be noted. Market securities issued during the year were all offered on an exchange or refunding basis. Sales of Series E Savings Bonds by Issuing Agents indicate a decrease of 29% in pieces whereas the maturity value sold shows an increase of 3%, this being the result of a decline in pay roll purchases and an increase in the purchase of large denominations by investors. The processing of Armed Forces Leave Bond stubs which started late in 1946 is now on a rapidly declining basis and will end in September 1948. S T A T E M E N T OF O P E R A T I O N S 1946 171,750 18,700 181,400 22,700 5.3% 17.6% 181,800 300,450 185,150 398,050 1.8% 24.5% $13,797,900,000 16,935,000 $20,575,700,000 19,590,000 32.9% 13.6% 10,212,335,000 16,935,000 14,702,380,000 19,590,000 30.5% 13.6% NEW ISSUES Subscriptions Forms Received Treasury (Other than E Bonds) " E " Bonds Subscribers Involved Treasury (Other than E Bonds) " E " Bonds Dollar Value of Subscriptions Received Treasury (Other than E Bonds) " E " Bonds Allotted Treasury (Other than E Bonds) " E " Bonds ISSUING AGENTS Series E Savings Bonds Sold Pieces Maturity Value Number of Qualified Issuing Agents as of December 31 Number of Geographical Sales Reports Prepared (E, F & G Savings) Dollar Value 9,775,000 775,410 r 000 + 29.6% 3.3% 3,128 3,236 - 3.3% 2,820 $ 1,382,800,000 5,700 $ 1,306,670,000 + 50.5% 5.8% 173,000 6,985,000 161,000 9,280,000 450,550 1,623,850 2,074,400 44,160 960,350 1,004,510 $ SHIPPING AND DELIVERY Pieces Shipped Treasury (Other than E Bonds) " E " Bonds ARMED FORCES LEAVE BONDS Stubs Processed Pieces Army Issuing Officers Navy " Total Face Value Army Issuing Officers Navy " Total increase or decrease 1947 $ $ 6,877,000 800,690,000 95,522,000 322,259,000 417,781,000 $ $ $ 10,776,000 205,245,000 216,021,000 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 + 7.5% - 24.7% The processing of Armed Forces Leave Bond stubs began in October 1946 PAGE 13 SERVICING OF GOVERNMENT SECURITIES The Federal Reserve Banks handle the servicing of all government securities. transfers, custody of blank stock, accounts of depositary banks, etc. GENERAL SERVICES TO TREASURY DEPARTMENT Such work includes exchanges SUMMARY The volume in pieces and maturity value of securities received and issued on denominational exchange and public debt transfers indicates an over-all decrease over 1946. This is the result of the absence of new money financing by the Treasury Department and the relative inactivity during the past year in the Government Bond market with less shifting in Government Bond portfolios on the part of banks and other financial institutions. Activities in the Depositary Bank Division show a decrease of 17% in the number of payments handled. This is a result of the Government's Debt Reduction Program with heavy withdrawals from War Loan Accounts and with the opportunity of depositaries to make only limited additions to their War Loan balances. S T A T E M E N T OF O P E R A T I O N S DENOMINATIONAL EXCHANGE Pieces Received Marketable Issues Public Debt Transfers Pieces Issued Marketable Issues Public Debt Transfers Maturity Value Received Marketable Issues Public Debt Transfers Issued Marketable Issues Public Debt Transfers Depositary Banks Number of Payments Handled Depositary Balances Dec. 31 Number of Qualified Depositaries - December 31 Custody - General Stock Pieces Received from Treas. Dept. Prepared for Delivery Security Mail Pieces Received PAGE 14 increase or decrease 1947 1946 107,500 31,650 135,750 39,900 - 20.8% 20.7% 106,300 24,500 124,000 35,250 - 14.3% 30.5% $1,739,910,000 2,701,775,000 $1,933,000,000 3,347,450,000 - 10.0% 19.3% 1,739,910,000 2,685,625,000 1,933,000,000 2,485,000,000 + 10.0% 8.1% 155,200 169,690,000 1,676 188,300 351,794,000 1,669 + 17.6% 51.8% .4% 8,500,000 8,435,000 10,580,000 11,153,000 - 19.7% 24.4% 338,000 375,000 9.9% FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 REDEMPTION OF GOVERNMENT SECURITIES SERVICES TO TREASURY DEPARTMENTIn connection with their duties Government securities eligible Bonds, from commercial banks directed by the Treasury and a s Fiscal Agent of the United States, the Federal Reserve Banks accept (and pay) for redemption, either directly from the holders thereof, or, in the c a s e of savings designated a s paying agents. Securities paid in redemption are processed a s are turned over to the Bureau of the Public Debt for final settlement and disposal. GENERAL SUMMARY The number of pieces of U. S. Savings Bonds redeemed in 1947 was 38.8% less than in 1946, whereas the redemption value indicated a decrease of 15.4% for the same period. The optional redemption of Armed Forces Leave Bonds was authorized effective September 2, 1947, since which time the greater part of 670,000 pieces having a redemption value of $139,987,000 have been handled through paying agents authorized to pay savings bonds. Redemptions of other U. S. Bonds, Notes, Bills and Certificates, as well as U. S. and other Governmental agency coupons, show a decline in volume and dollar amounts over 1946. S T A T E M E N T OF O P E R A T I O N S 1946 1947 REDEMPTIONS U. S. Savings Bonds Pieces By Paying Agents A-E By F. R. B. A-G Total $25 Pieces, Series E, Included Above Redemption Value By Paying Agents A-E By F. R. B. A-G Total Armed Forces Leave Bonds * Pieces By Paying Agents By F. R. B. Total increase or decrease 21,230,000 98.0% 13,600,000 97.1% 2.0% 427.000 413.000 2.9% 14.013.000 100.0% 21.657.000 100.0% 15,718.000 72.6% 9.625.000 68.7% - 35.9% - 3.3% - 35.3% - 38.8% $563,465,000 78.5% $733,823,000 86.5% 154.200,000 21.5% 114,227,000 13.5% $717,665,000 100.0% $848,050,000 100.0% - 23.2% + 35.0% - 15.4% 632,750 37.450 Redemption Value By Paying Agents By F. R. B. Total * Redemption of Armed Forces Leave Bonds Authorized Sept. 2, 1947 Number of Qualified Paying Agents as of December 31 670,200 -0- $132,891,000 7,096,000 $139,987,000 -0- + 1.7% 2.403 2,363 Other Bonds, Notes, Bills and Certificates Redeemed Pieces Amounts 252,000 $7,413,000,000 375,000 $11,187,000,000 - 32.8% - 33.7% U. S. and Other Governmental Agency Coupons Redeemed Pieces Dollar Value $ 2,278,000 140,075,000 - 7.1% - 9.8% 2,116,000 126,410,000 $ FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 PAGE 15 COLLECTION OF WITHHELD TAXES SERVICES TO TREASURY DEPARTMENT The Bank acts a s agent of the Treasury Department, assisting the Bureau of Internal Revenue in the collection of funds deposited in commercial b a n k s b y employers under withholding tax arrangements. GENERAL SUMMARY At the close of the year 1,604 banks were c a r r i e d in our accounts as Depositaries for "Withheld Taxes." Depositaries paid to us during the year approximately 1,089 millions of dollars represented by over 536,000 receipts. The dollar value of the receipts increased approximately 24% over 1946; the number issued increased approximately 4%. Offices of the Internal Revenue Department deposited with us their certificates of deposit amounting to over 1,112 millions of dollars, represented by more than 578,000 receipts. The largest volume received from depositaries on any one day was received on December 11, 1947, and amounted to $24,566,000. S T A T E M E N T OF O P E R A T I O N S NUMBER OF RECEIPTS Issued by Depositaries DOLLAR VALUE OF RECEIPTS Issued by Depositaries PAGE 16 1947 1946 increase 536,141 514,758 + 4.2% $1,088,926,292 $877,315,566 + 24.1% FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER B A N K S - A C T I V I T I E S FOR THE YEAR 1947 SERVICES TO R. F. C. RECONSTRUCTION FINANCE CORPORATION The Federal Reserve Banks are fisccl agents of the Reconstruction Finance Corporation and the Commodity Credit Corporation. In such capacity the Bank disburses the proceeds of loans, makes a d v a n c e s for the accounts of various Governmental corporations, maintains custody of collateral, handles work relative to the redemption and e x c h a n g e of securities, etc. G E N E R A L SUMMARY RECONSTRUCTION FINANCE CORPORATION Reflecting the gradual settlement of outstanding claims and liquidation of inventories and facilities acquired under the Reconstruction Finance Corporation war programs, particularly those of the Office of Defense Plants and of the Office of Defense Supplies, the totals of disbursements and receipts for 1947 were radically reduced from the corresponding totals for 1946. During the year 1947 the Corporation began a process of transferring accounting responsibility, much of which had been handled by the Federal Reserve Banks as fiscal agents, to its local loan agencies. Transfers of accounting responsibility for administrative expenses, Office of Defense Plants transactions, and for mortgages purchased by The RFC Mortgage Company and Federal National Mortgage Association were completed during the year. Although additional transfers were contemplated, accounting responsibility for the Corporation's loan programs, loan guarantees, acquired collateral, investments, and Office of Defense Supplies transactions remained assigned to the fiscal agents throughout 1947. COMMODITY CREDIT CORPORATION Disbursements and receipts for account of Commodity Credit Corporation for 1947 were lower than the corresponding totals for 1946 reflecting termination during 1946 of the war programs of lend-lease and production subsidies. FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 PAGE 17 CONSUMER CREDIT BOARD OF G O V E R N O R S ACTIVITIES The Board of Governors of the Federal Reserve System, worked through the Reserve Banks in its regulation of credit and instalment buying. Each Bank investigated credit activities throughout its district to ascertain whether or not Executive orders and related directives were violated. GENERAL SUMMARY During 1947 a spot check of the books and records of 2,696 Registrants was made for the purpose of determining the extent of compliance of the Registrants' credit transactions with the provisions of Regulation W. In the same period approximately 5,000 inquiries concerning the Regulation were answered and 2,842 new licenses issued. Three hundred twenty-nine municipalities were visited during the year by investigators who filed detailed reports covering their review of 124,401 credit transactions. Violations, totaling 2,430,were disclosed in 1,363 of the 2,696 investigations conducted. Registrants were apparently wilfully violating the Regulation in 2 cases. The activities of the Consumer Credit Department decreased considerably during the current year due primarily to the fact that Regulation W was terminated on November 1, 1947 by an act of Congress passed on August 10, 1947. Following this congressional action, our investigative activities during August, September and October were confined to the few complaints received from Registrants. The clerical and filing staff was retained until December 1, 1947 in order to effect the consolidation and transfer of files and records. S T A T E M E N T OF O P E R A T I O N S Inquiries Received By Letters By Personal Interviews By Telephone Calls Total Mailings Dictated Replies Form Letters Letters written regarding Incorrect Registration Statements received and letters to Registrants concerning violations disclosed in Investigators' reports, as well as other letters, such as follow-ups Circular Letters and Amendments Total Number of Registrants as of December 31 Number of Registration Statements Received Number of Registration Statements Cancelled Licenses Issued Investigations Number Conducted (Including calls on cash dealers) Credit Transactions Reviewed Number of Investigations Disclosing Violations Violations Disclosed t 1947 figures cover a ten-month period only. PAGE 18 1947 1,039 525 3,617 5,181 1946 2,284 723 4,076 7,083 1,039 1,209 2,284 549 566 101.633 104,447 38,314 2,725 1,325 2.842 2,086 140,907 145,826 36,919 2,563 925 2.643 2,696 124,401 1,363 2.430 3,579 314,025 1,442 4,110 increase or decrease - 54.5% - 27.4% - 11.3% 26.9% - 54.5% + 120.2% - 72.9% - 27.9% - 28.4% +3.8 • 6.3% + 43.2% 7.5% - 24.7% - 60.4% - 5.5% - 40.9% * 1947 figure as of October 31, 1947 f e d e r a l r e s e r v e b a n k o f c h i c a g o - p r e s i d e n t ' s a n n u a l r e p o r t t o member b a n k s - a c t i v i t i e s f o r t h e y e a r 1947 ACCOUNTING GENERAL BANK ACTIVITIES The central accounting routines of the Bank include the maintenance of the reserve accounts of member banks, the constant a n a l y s i s of these reserves a s regards the legal minimum of e a c h bank, the maintenance of accounts with other Federal Reserve Banks through an interdistrict settlement fund, the transfer of funds b y wire for member banks, the handling of all Bank disbursements, the compilation of claims for services rendered the government, the a s s e m b l y of cost d a t a and construction of reports, etc. G E N E R A L SUMMARY The number of entries to member bank reserve accounts declined 5.0% during 1947; the number of wire and mail transfers increased 11.7%. Expense vouchers functioned during the year declined 5.9%, and the number of cost entries were down 13.5%. Extensive rearrangements were made in the Bank's expense accounting systems, and a detailed budgetary control setup was evolved and placed in operation. S T A T E M E N T OF O P E R A T I O N S 1947 1946 GENERAL LEDGER Number of Entries Functioned 345,493 341,230 FEDERAL RESERVE BOOKS Number of Entries Functioned 1,358,964 MEMBER BANKS' RESERVE ACCOUNTS Number of Entries Functioned activities Accounts as of December 31 2,404,550 MEMBER BANK RESERVES Excess Over Requirement Maximum Minumum Assessable Deficiencies Banks Amount of Penalties Assessed Period Mar. 15 July 31 TRANSFERS OF FUNDS Number Interdistrict By wire By mail Number Intradistrict - By wire and mall Total Dollar Value EXPENSE DISBURSEMENTS Expense Vouchers Functioned Fiscal Agency Claims Prepared Number of Cost Entries Functioned Amount $148,433,000 99,431,000 $ 89,523 3,080 97,039 189.642 $28,080,347,000 $ 1,362,080 2,530,247 810 Amount $217,692,000 122,285.000 Period Jan. 15 Sept. 30 201 9,900 12,368,440 4.578.435 47,308 increase or decreas decrease + 1.2% - 5.0% - 31.8% 179 9,697 +.12.3% +.2.1% 78,558 2,573 88,698 169,829 $21,496,559,000 + 14.0% + 19.7% + 9.4% + 11.7% + 30.6% 13,150,162 6.363.177 54,672 5.9% - 28.0% - 13.5% $ $ ZL PAGE 19 WIRES, TELEPHONE, MAIL, FILES general bank activities In addition to the usual mail and telephone facilities, the Bank maintains the principal relay center of a l e a s e d wire system having connections with the board of Governors in Washington, with the other Reserve Banks and Branches, with the Treasury Department and with the Reconstruction Finance Corporation. Telegrams effecting transfers of funds for members, Fiscal Agency operations, and other banking transactions a r e processed both incodeandinclear. GENERAL SUMMARY Almost one million telegrams were handled through the Chicago relay office of the Federal Reserve Leased Wires System in 1947, a decrease of 8.3% from the 1946 volume. The Codes and Telegrams Division of the Bank processed 177,000 telegrams during the year, an increase of 3.6% over the previous period. Local outgoing telephone calls decreased from the 1946 average of 27,940 per month to 26,719. Long distance calls dropped from 1,215 per month in 1946 to 1,135 in 1947. Mail Department activities fell off slightly during 1947. Air E x p r e s s service to all Federal Reserve Banks and Branches and to some member banks was instituted; such shipments averaged 19,000 pounds a month. Bookbindings were up slightly during the period to 14,781; case spaces of material stored were up from 36,980 at the end of 1946 to 43,762 at the end of 1947. Over 1,100,000 pieces were handled by the General Files Division during the year. S T A T E M E N T OF O P E R A T I O N S TELEGRAMS PROCESSED Leased Wires Received In Code In Clear Dispatched In Code In Clear Commercial Wires Received In Code In Clear Dispatched In Code In Clear MAIL HANDLED Number of Pieces Received Number of Pieces Dispatched, Mail and Express PAGE 1 30_ increase or decrease 1947 1946 68,747 6,862 65,383 8,806 + 49,786 10,619 49,030 12,985 + - 1.5% 18.2% 18,121 5,267 16,054 4,059 + + 12.9% 29.8% 12,339 5,947 6,540 8,575 + - 88.7% 30.6% 1,803,462 3,251,448 1,863,593 3,414,416 - 3.2% 4.8% - 5.1% 22.1% .FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER B A N K S - A C T I V I T I E S FOR THE YEAR 1947 PERSONNEL GENERAL BANK ACTIVITIES- All general personnel activities of the Bank are handled b y a central personnel unit. Such work includes the hiring of employees, the keeping of s a l a r y and personnel records, the promotion of education and welfare programs, and the maintenance of a medical department and an employees' cafeteria. G E N E R A L SUMMARY The number of employees of the Bank declined further in 1947 to 2,373, a decrease of 137. During the year 700 new employees were hired, and 837 left our employee, the turnover being somewhat less than that of 1946. At the close of the year there were 179 employees in active service who had been with the Bank 25 years or more. A substantial number of e x - s e r v i c e men attending schools under the GI Bill of Rights were employed on a part time basis during the period. A program for the interdepartmental training of key employees was instituted during the year, and the Job Evaluation Plan, which provides grades and commensurate salary ranges for all employees of the Bank, was approved by the Board of Governors of the Federal Reserve System and became effective September 1, 1947. S T A T E M E N T OF O P E R A T I O N S PERSONNEL UNIT Number of Regular Employees As of December 31 New Employees Separations Number of Extra-Help Employees As of December 31 1947 1946 2,373 700 837 2,510 1,118 1,224 64 52 884 32,327 1,647 1,189 51,596 1,670 34 1,813 621 2,468 36 1,803 550 2,389 increase or decrease - 5.5% 37.4% 31.6% 23.1% MEDICAL DEPARTMENT Physical Examinations Requests for Medical Care Visits by Nurse - 25.7% 37.3% 1.4% CAFETERIA Daily Average Number of Meals Served Officers Dining Room Cafeteria - Noon Evening Total Meals PAGE131_.FEDERALRESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE 5.6% + + YEAR 12.9% 3.3% 1947 PROCUREMENT GENERAL BANK ACTIVITIES ThecentralprocurementunitsoftheBankhandle the purchasing of all equipment and supplies, the storage of supplies, and the maintenance of a printshop, an addressing division, and an office machine repair shop G E N E R A L SUMMARY During 1947, the Purchasing Department issued 8,006 purchase orders totaling approximately $685,000 for building supplies, office supplies, The number of orders written increased during the year; this was due partly to the decrease in inventories to six months' supply, which in some instances necessitated the issuing of two purchase orders during the year. The number of items carried in the Bank stock room decreased during the year, but showed an increase in dollar value of 8. 7% S T A T E M E N T OF O P E R A T I O N S PURCHASING Purchase Orders Dollar Value PRINTING Jobs 453 555 1,157 311 1,119 3,595 Duplicating Mimeograph Multilith Multigraph Photostat ADDRESSOGRAPH UNIT Plates Made and Corrected Plates Removed and Transferred Carbon Paper Inserted Into Forms Impressions Made on Forms, Envelopes, Statements, etc. PAGE 22 1947 1946 8,006 $685,000 7,729 $670,000 Impressions 96,000 397,000 9,708,000 1,385,000 46.000 11,632,000 Jobs 372 792 438 369 1.447 3,418 increase or decrease + 3.6% + 2.2% Impressions 45,000 969,000 5,634,000 2,058,000 71,000 8,777,000 3,622 1 754 1,050,000 608,000 4,627,287 4,362,000 4.0% 3.5% 3,772 1,818 + + 72.7% 6.1% FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER B A N K S - A C T I V I T I E S FOR THE YEAR 1947 MAINTENANCE OF BUILDING GENERAL BANK ACTIVITIES. The operation of the Bank's main building and auxiliary space is handled b y a general maintenance staff. This work includes routine duties, such a s janitor service and elevator service, a s well a s major alterations and upkeep. G E N E R A L SUMMARY During the year contracts were let covering conversion of building light and power from Direct Current to Alternating Current, enlarging of the concourse and construction of a new Directors Room on the fifth floor. This work is now all in process. A contract for new elevator installation and modernization was awarded to Westinghouse Company but work on the contract was not begun during the year. Linotile was laid in several areas on the 5th, 6th, 7th floors and 1st basement where the Coin Department was enlarged. Skylight roofing was completed and a new suspended ceiling installed in the Bank Examination Department. Acoustone ceilings were installed in the banking lobby on the second floor and about one-third of the ceiling area on the fourteenth floor. Tabulated below are occupied quarters, owned and rented, at the end of 1947 and 1946: S T A T E M E N T OF O P E R A T I O N S Square Feet Rentable Area in Use at Year-End Owned: 1947 230 South LaSalle Street 1946 243,963 * 243,963 * 11,210 6,000 11,210 50,834 23,524 51,331 6,000 23,524 198 198 329,729 342,226 Rented: 166 West Jackson Boulevard 120 South LaSalle Street 175 West Jackson Boulevard (Insurance Exchange Building South) 725 South Wells Street (Warehouse) 416 Federal Street (Warehouse) Security Trust Building, Room 521, Indianapolis, Indiana Total •The Federal Reserve Bank Building contains 307,138 square feet, the difference of 63,175 square feet being rented to four tenants on term leases. FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947. P A G E 23 LEGAL GENERAL BANK ACTIVITIES Legal matters arising in the course of this Bank's operations (litigation, preparation and approval of documents, preparation of opinions and memoranda relating to F e d e r a l and State regulations and laws) are handled b y the legal department. GENERAL SUMMARY The Legal Department consists of the General Counsel, an Assistant General Counsel and two Assistant Counsels, one of whom serves as the resident lawyer for the Detroit Branch. The legal matters handled by the department during the year included conferences with and advice to the officers and supervisors of the various operating departments; examination and approval of all applications for membership in the Federal Reserve System, applications of national banks to exercise fiduciary powers and all documents evidencing changes in the corporate status of state member banks and trust companies; correspondence and conferences with representatives of member banks concerning banking laws, regulations and rulings of the Board of Governors; consultations and c o r respondence with the Board of Governors and its staff, and also representatives of the Treasury Department with respect to fiscal agency functions; and the examination and approval of court orders relating to the special custody of securities. PAGE 24 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 DETROIT BRANCH S E R V I C E S T O MEMBER DISCOUNTS AND OTHER CREDITS BANKS The Federal Reserve Banks are empowered to make to commercial firms. loans to member b a n k s and, under certain circumstances, G E N E R A L SUMMARY Eight banks, three city and five country, were accommodated with loans during 1947, an increase of one country bank over the previous y e a r . The number and total amount of the loans, however, showed a decline. Included were two 10b loans granted to one country bank. The borrowings were all made for short periods to adjust cash reserves. S T A T E M E N T OF O P E R A T I O N S NUMBER OF TRANSACTIONS Advances to Member Banks Secured by U. S. Government Obligations Advances to Member Banks Under Section 10b increase or decrease 1946 1947 113 - 34.5% $941,250,000 - 40.7% 74 2 DOLLAR VALUE OF TRANSACTIONS Advances to Member Banks Secured by U. S. Government Obligations Advances to Member Banks Under Section 10b $558,040,000 200,000 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947. - PAGE 25 DETROIT BRANCH CURRENCY AND COIN SERVICES TO MEMBER BANKS Currency and coin are routed into general circulation through the Federal Reserve Banks, which act a s distributing agents between the Treasury and the Banking community. Commercial b a n k s desiring currency or coin m a y obtain it from this Bank in exchange for their draft, a c h a r g e to their reserve account, etc. Similarly, b a n k s having excess c a s h m a y turn it in to this Bank and obtain funds in return. Incoming c a s h is used either to supplement new currency and coin in outgoing shipments, or, if unfit for further circulation, is returned to the Treasury for destruction. GENERAL SUMMARY The number of pieces of outgoing currency handled during 1947 was 9.6% greater than the number of pieces handled during 1946. Likewise, the number of pieces of incoming currency handled during 1947 was 17.8% in excess of the number of pieces handled during the preceding year. Outgoing coin was 33.1% less than in 1946, and incoming coin from banks showed an increase of 83.1%; while incoming coin from mints reflected a 61.8% decrease. S T A T E M E N T OF O P E R A T I O N S increase or decrease 1947 1946 119,530,095 113,721,732 109,041,131 96,539,485 + + 100,925,458 67,931,653 42,365,000 150,809,500 37,103,235 110,960,000 + - 33.1% 83.1% 61.8% $779,261,517 772,650,408 $670,340,229 620,623,523 + + 16.2% 24.5% 7,676,707 5,232,730 3,265,000 8,481,445 3,878,173 4,535,000 + PIECES Currency Outgoing Incoming Coin Outgoing Incoming - from banks from mints - 9.6% 17.8% DOLLAR VALUE OF PIECES Currency Outgoing Incoming Coin Outgoing Incoming PAGE 26 - from banks from mints - - 9.5% 34.9% 28.0% FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR1947.PAGE25 DETROIT BRANCH services t o member COLLECTION OF CHECKS AND OTHER ITEMS banks- The Federal Reserve Banks act a s nation-wide clearing agents for the routing of checks between commercial banks in much the same manner a s clearing house associations do in local communities, and accept and p a y checks drawn by the Federal Government. They also collect drafts, notes, bonds, coupons, acceptances, etc., for member banks and deliver against payment securities sold by member banks. The number of city checks, country checks, and Government card checks handled during 1947 increased 3.5%, 15.0%, and 1.2%, respectively, over the number handled in 1946, while Government paper checks reflected a decrease of 40.3%, resulting in a net increase of 7.4% in the volume of all checks handled. The number of noncash collections declined 1.8% during 1947. This change resulted from decreases of 5.4% in city items and 8.6% in coupon and security items which were offset by an increase of 11.6% in the collection of country items. S T A T E M E N T OF O P E R A T I O N S CHECKS 1947 1946 12,711,000 23,070,000 953,000 4.550,000 41,284.000 12,277,000 20,060,000 1,597,000 4,496,000 38,430,000 $10,965,013,000 4,625,857,000 556,484,000 417,531,000 $16,564,885,000 $ 9,179,236,000 3,776 ; 629,000 1,117,664,000 395,179,000 $14,468,708,000 545 536 17,987 21,118 25,246 1,632 65,983 19,015 18,923 27,611 1,611 67,160 7,910 NUMBER OF CHECKS HANDLED City Country Government - Paper Government - Card Total DOLLAR VALUE OF CHECKS HANDLED Citv Country Government - Paper Government - Card Total Daily average number of cash letters dispatched NONCASH + + - + + 3.5% 15.0% 40.3% 1.2% 7.4% + 19.5% 22.5% 50.2% 5.7% 14.4% + 1.7% + + - + ITEMS TRANSACTIONS City Country t Coupon and Security Purchases and Sales (including open market trans.) Total t Includes direct sendings to other Federal Reserve Banks by our Member Banks DOLLAR VALUE OF TRANSACTIONS City $ Country t Coupon and Security Purchases and Sales (including open market trans.) Total $ t Includes direct sendings to other Federal Reserve Banks by our Member Banks $ RATION increase or decrease - 5.4% 11.6% 8.6% 1.3% 1.8% 6,123 + 29.2% 56,748,390 135,506,970 78,357,349 58,676,314 329,289,023 - 1.0% - - 47.9% 9.3% 10.4% 24.0% 59,137,113 125,140,316 - 52.7% 74,000 4,710,000 129,000 778,964,000 - 42.6% 99.4% 56,203,782 70,557,570 71,104,794 52.545.338 250,411,484 $ $ - + - + - CHECKS * Number of Items Handled Total Units processed •Discontinued June 30, 1947 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 PAGE 27 SAFEKEEPING OF SECURITIES _ DETROIT BRANCH SERVICES TO MEMBER BANKS The Federal Reserve Banks act a s depositories for securities owned b y member banks. Securities so held a r e completely serviced a s to collection of interest, redemptions, exchanges, etc. A free safekeeping service for U S Savings Bonds, Series E, is extended to members of the armed forces and to the general public GENERAL SUMMARY Securities held in Safekeeping declined $81,427,000 during 1947, the principal factor being a reduction in securities held for Member Banks. S T A T E M E N T OF O P E R A T I O N S PIECES Securities - Received Released Coupons detached from securities DOLLAR VALUE OF PIECES Securities - Received Released Held as of December 31 Coupons detached from securities PAGE 28 increase or decrease 1947 1946 110,109 81,482 150,969 117,693 91,832 144,455 - 6.4% - 11.3% + 4.5% $2,092,404,570 2,173,832,390 331,638,579 5,947,690 $1,836,026,343 2,147,803,548 413,066,398 8,586,931 + 14.0% + 1.2% - 19.7% - 30.7% FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR1947.PAGE25 DETROIT BRANCH ISSUANCE OF GOVERNMENT SECURITIES SERVICES TO TREASURY DEPARTMENT The Federal Reserve Bank, acting a s agent of the Treasury Department, performs all operations relative to the placing of new Treasury issues in the hands of the general public, and r e l a y s information from Washington throughout this district. The Bank gualifies commercial b a n k s and others in the district a s agents in the sale of U. S. Savings Bonds, Series E, to the public; and services these agents a s regards supplies of n e w bonds, applicable Treasury directives, the processing of paid registrations, etc. The Bank analyzes the sales of U. S. Savings Bonds, and furnishes the Treasury Department and others with detailed reports showing what the public pur c h a s e d - i n t h e ' v a r i o u s counties and states in this district. GENERAL SUMMARY During 1947, there was a general decrease in practically all Fiscal Agency activities as compared with the previous year. There was a d e c r e a s e in the number of subscriptions to market issues, but an increase in their dollar value. This was brought about by the Treasury Department Refunding policy where short-term s e c u r i t i e s were exchanged for maturing or called bonds. The dollar value of " E " Bonds issued by the Federal Reserve Bank decreased approximately 40% and that of Issuing Agents by 4%. S T A T E M E N T OF O P E R A T I O N S increase or decrease NEW ISSUES Subscriptions Forms Received Treasury (Other than E Bonds) " E " Bonds 1947 1946 14,014 1,708 15,775 2,034 - 11.2% 16.0% Subscribers Involved Treasury (Other than E Bonds) E Bonds (Pieces) 14,455 126,991 16,115 165,825 - 10.3% 23.4% Dollar Value of Subscriptions Received Treasury (Other than E Bonds) " E " Bonds $567,433,800 3,377,100 $504,827,900 5,501,825 + - 12.4% 38.6% Allotted Treasury (Other than E Bonds) " E " Bonds 535,213,800 3,346,850 395,057,075 5,573,650 + - 35.5% 40.0% 2,308,134 $155,014,945 2,752,898 $161,656,515 - 16.2% 4.1% 372 404 - 7.9% 129 $653,863,101 134 $510,135,015 4 3.7% 28.2% 62,032 195,561 60,843 229,759 + - 2.0% 14.9% ISSUING AGENTS Series " E " Savings Bonds Sold Pieces Maturity Value Number of qualified Issuing Agents as of December 31 SALES ANALYSIS Number of Reports Prepared Items Tabulated (dollar value) SHIPPING AND DELIVERY Pieces Shipped Treasury (Other than E Bonds) " E " Bonds f e d e r a l r e s e r v e b a n k o f c h i c a g o - p r e s i d e n t ' s a n n u a l r e p o r t t o member b a n k s - a c t i v i t i e s f o r t h e y e a r 1947 p a g e 29 page DETROIT BRANCH SERVICING OF GOVERNMENT SECURITIES The Federal Reserve Banks handle the servicing of all government securities, transfers, custody of blank stock, accounts of depositary banks, etc. GENERAL SERVICES TO TREASURY DEPARTMENT Such work includes exchanges, SUMMARY Denominational exchanges on marketable issues increased approximately 63% during the year. A great portion of these were for individuals and for trust accounts. The C. P. D. activity shows an increase in the purchase of short-term securities by banks and others in the Detroit District. S T A T E M E N T OF O P E R A T I O N S DENOMINATIONAL EXCHANGE Pieces Received Marketable Issues Public Debt Transfers Issued Marketable Issues Public Debt Transfers Maturity Value Received Marketable Issues Public Debt Transfers Issued Marketable Issues Public Debt Transfers DEPOSITARY BANKS Number of Payments Handled Number of Qualified Depositaries as of December 31 Depositaries' Balances as of Dec. 31 CUSTODY Pieces Received from Treasury Dept. Prepared for Delivery Dollar Value Received from Treasury Dept. Prepared for Delivery SECURITY MAIL Pieces Received PAGE 30 $ increase or decrease 1947 1946 618 1,938 380 3,286 + 2,592 2,521 1,812 2,234 + + 10,940,000 209,089,500 $ 22,766,500 390,220,800 - - - 62.6% 41.0% 43.0% 12.8% 51.9% 46.4% 10,940,000 245,112,500 22,766,500 123,361,000 10,986 11,975 131 40,630,141 131 57,404,344 2,527,286 2,626,640 3,001,321 2,920,689 - 10.1% $1,370,035,000 1,517,608,350 $1,060,490,400 1,332,250,045 + + 29.2% 13.9% 29,973 36,880 - 18.7% - + - - - 51.9% 98.7% 8.3% _ 29.2% 15.8% FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER B A N K S - A C T I V I T I E S FOR THE YEAR 1947 DETROIT BRANCH services t o treasury REDEMPTION OF GOVERNMENT SECURITIES department. In connection with their duties Government securities eligible Bonds, from commercial banks directed by the Treasury and a s Fiscal Agent of the United States, the Federal Reserve Banks accept (and pay) for redemption, either directly from the holders thereof, or, in the c a s e of Savings designated a s paying agents. Securities paid in redemption a r e processed a s are' turned over to the Bureau of the Public Debt for final settlement and disposal. G E N E R A L SUMMARY Redemption of Savings Bonds by both Detroit Branch and its paying agents disclosed a decrease in number of pieces of 12.0% and 39.7%, respectively. However, the dollar value of bonds redeemed by the Branch shows an increase of 3.1%, whereas redemptions through paying agents shows a decrease of 32.7%. This increase in dollar value of Savings Bonds redeemed by the Branch is due to a great extent to redemptions of " F " and "G" bonds. The redemption of other bonds, notes, certificates and bills increased 66„5% in dollar value due to the Treasury Department Refunding Program. On September 1, 1947 the Branch started to redeem Armed Forces Leave Bonds, and from that date to December 31st had redeemed 179,000 pieces having a redemption value of $36,000,000. S T A T E M E N T OF O P E R A T I O N S 1947 REDEMPTIONS U. S. Savings Bonds Redeemed Pieces By Paying Agents By F. R. Bank Total $25 pieces included above Redemption Value of Pieces By Paying Agents By F. R. Bank Total 4,994,881 98.8% 59.776 1.2% 5.054.657 100.0% 3,663,315 72.5% 1946 8,277,038 99.2% 67,923 .8% 8.344.961 100.0% 6,194,421 74.2% $175,851,453 90.6% $261,099,036 93.7% 9.4% 17,633,955 18,180,346 6.3% $194,031,799 100.0% $278,732,991 100.0% increase or decrease - 39.7% - 12.0% - 39.4% - 40.9% - 32.7% 3.1% - 30.4% + Armed Forces Leave Bonds Redeemed Pieces Redemption Value 179,247 $ 36,191,110 Number of Qualified Paying Agents as of December 31 200 199 Other Bonds, Notes, Certificates and Bills Redeemed Pieces 25,365 Maturity Value $630,285,575 36,038 $378,530,925 - 29.6% + 66.5% U. S. and Other Governmental Agency Coupons Redeemed Pieces 215,084 Dollar Value $ 11,937,255 239,358 $ 16,547,738 - 10.1% - 27.9% None None - FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947. + .5% PAGE 31 COLLECTION OF WITHHELD TAXES DETROIT BRANCH SERVICES TO TREASURY DEPARTMENT The Bank acts a s agent of the Treasury Department, assisting the Bureau of Internal Revenue in the collection of funds deposited in commercial banks b y employers under withholding tax arrangements. GENERAL SUMMARY The number of depositary receipts functioned during 1947 exceeded by 3.2% the number handled in 1946. Likewise, the number of receipts credited as Income Tax during the current year was greater by 5.3% than the number credited the preceding year. The dollar value of receipts issued, as well as receipts credited as Income Tax, increased 27.3% and 25.6%, respectively. S T A T E M E N T OF O P E R A T I O N S NUMBER OF RECEIPTS Issued by Depositaries DOLLAR VALUE OF RECEIPTS Issued by Depositaries PAGE 32 1946 increase or decrease 134,590 130,463 + 3.2% $424,712,000 $333,523,000 + 27.3% 1947 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 DETROIT BRANCH SERVICES TO R F. C. RECONSTRUCTION FINANCE CORPORATION The Federal Reserve Banks a r e fiscal agents of the Reconstruction Finance Corporation and the Commodity Credit Corporation. In such capacity the Bank disburses the proceeds of loans, makes a d v a n c e s for the accounts of various Governmental corporations, maintains custody of collateral, handles work relative to the redemption and exchange of securities, etc. GENERAL SUMMARY During the year 1947 the activities of the R. F. C. Custody Division were reduced through the elimination of claims and the liquidation of inventories and facilities required during the war period. These were most noticeable in the Defense Plant Corporation and in the Office of Defense Supplies. During the past year the Reconstruction Finance Corporation began the transfer of the accounting responsibility from the custodian to its local loan agencies. The transferring or the decentralization of these accounts, was made as follows: the Loan Agency Administration Expense, on July 1, 1947; the Office of Defense Plants, on August 1, 1947; the Federal National Mortgage Company and the R. F. C. Mortgage Company, on October 1, 1947. The custodian retained the accounting responsibilities for the corporation's investments and defense supplies transactions, together with the loan programs, loan guarantees and collateral. However, it is contemplated that the loan program, guarantees and acquired collateral will be transferred to the loan agencies within the very near future. The receipts for the account of the Commodity Credit Corporation were lower in 1947 than the previous year due to the elimination of the war programs of lend lease and production subsidies. FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947. PAGE 33 ACCOUNTING DETROIT BRANCH GENERAL BANK ACTIVITIES The central accounting routines of the Bank include the maintenance of the reserve accounts of member banks, the constant a n a l y s i s of these reserves a s regards the legal minimum of e a c h bank, the maintenance of accounts with other Federal Reserve Banks through an interdistrict settlement fund, the transfer of funds by wire for member banks, the handling of all Bank disbursements, the compilation of claims for services rendered the government, the assembly of cost d a t a and construction of reports, etc. GENERAL SUMMARY While the decline in Fiscal Agency functions performed by the bank reduced somewhat the activity in the Accounting Department, there was little change in the overall picture. The decrease in the number of Officers' checks and expense checks issued was primarily responsible for the reduction in number of General Ledger entries for the year. The increase in the Federal Reserve Books division was primarily caused by additional member banks forwarding their cash letters direct and a change in the assignment of activities in connection with direct-sent collection items. The discontinuance of most of the custodial activities previously performed for the Reconstruction Finance Corporation and the decrease in volume of items received by the Savings Bond Department are reflected in the decrease in the amount of Fiscal Agency claims prepared. S T A T E M E N T OF O P E R A T I O N S GENERAL LEDGER Number of Entries Functioned FEDERAL RESERVE BOOKS Number of Entries Functioned MEMBER BANK RESERVE ACCOUNTS Number of Entries Functioned Active Accounts as of December 31 MEMBER BANKS RESERVES Excess Over Requirement Period Requirement Reserve Citv City Maximum Sept. 18 Minumum Mar. 27 Country Maximum Minimum Sept. 15 Feb. 28 Assessable Deficiencies Number of Banks Amount of Penalties increase or decrease 1947 1946 41,000 44,169 - 7.2% 262,941 247,629 + 6.2% + + 3.9% 1.0% - 350,165 99 337,005 98 Amount Period Amount $21,291,000 2,547,000 Aug. 1 Oct. 10 $8,349,000 '2,326,000 $10,965,000 6.866,000 Jan. 1 July 31 $14,501,000 8,223,000 22 $1,260 10 $595 $2,939,431 1,399,023 $ 3,037,801 + 155.0% + 9.5% - 24.4% 16.5% + 120.0% + 111.8% EXPENSE DISBURSEMENTS Dollar Value of Items Handled Vouchers Functioned Fiscal Agency Claims Prepared p a g e 34 2,243,195 f e d e r a l r e s e r v e b a n k o f c h i c a g o - p r e s i d e n t ' s a n n u a l r e p o r t t o member b a n k s - a c t i v i t i e s - 3.2% 37.6% f o r t h e y e a r 1947 DETROIT BRANCH d = l ESTS™. general bank WIRES, TELEPHONE, MAIL, FILES activities In addition to the usual mail and telephone facilities, the Branch is a unit in a leased wire system having connections with all other Federal Reserve Banks and Branches, the Board of Governors, the Treasury Department and the Reconstruction Finance Corporation. Telegrams effecting transfers of funds for member banks, Fiscal Agency work, and other banking transactions a r e processed both in code and in clear. GENERAL SUMMARY The volume of work handled by the several communications services declined further during the year except for telegrams received over leased wire and telegrams received and dispatched over the commercial wire. Incoming leased wires increased 2.1%; outgoing leased wires decreased 2.4%. Incoming commercial wires increased 22.5%; and outgoing increased 4.7% during the year. S T A T E M E N T OF O P E R A T I O N S TELEGRAMS PROCESSED Leased Wire Received In Code In Clear Total Dispatched In Code In Clear Total Commercial Wire Received In Code In Clear Total Dispatched In Code In Clear Total TELEPHONE CALLS HANDLED Calls Handled by Switchboard Outgoing - Local - Long Distance Terminals in Use December 31 MAIL HANDLED Number of Pieces Received & Routed Number of Pieces Dispatched Mail Express CENTRAL FILES Pieces Filed 1947 1946 16,246 4,669 20,915 14,532 5,958 20,490 15,186 4,863 20,049 15,547 4,991 20,538 1,102 582 1,684 952 423 1,375 3,031 93 3,124 2,520 463 2,983 56,484 1,549 102 81,537 2,125 138 301,886 310,088 374,195 8,608 401,728 10,105 209,248 294,916 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 increase or decrease + + - - + + + + + - 11.8% 21.6% 2.1% 2.3% 2.6% 2.4% 15.8% 37.6% 22.5% 20.3% 79.9% 4.7% 30.7% 27.1% 26.1% 2.6% - .as 6.9% 14.8% 29.0% PAGE 35 DETROIT BRANCH PERSONNEL GENERAL BANK ACTIVITIES All g e n e r a l personnel activities of the Bank are handled by a central personnel unit. Such work includes the hiring of employees, the keeping of s a l a r y and personnel records, the promotion of education and welfare programs, and the maintenance, of a medical department and an employees' cafeteria. GENERAL SUMMARY The reduction in number of employees during the year was due primarily to the discontinuance of most of the custodial activities previously performed for the Reconstruction Finance Corporation and to a decrease in the volume of items received by the Savings Bond Department. The Job Evaluation Program initiated in 1946 was completed and became effective October 1, 1947. The procedure for appraising employees is being amended and adapted to this program. The Job Evaluation Program has made possible a systematic plan of promotional sequence for employees and an improved method of salary control. These plans have been initiated and are now in the process of being refined. The supervisory training program, established in 1946, covered only those persons in the higher supervisory levels. This program has been expanded to include all levels of supervision. STATEMENT OF O P E R A T I O N S increase or decrease 1947 1946 PERSONNEL DIVISION Number of Employees As of January 1 New Employees Separations As of December 31 596 117 300 413 672 258 328 602 MEDICAL Number of Cases Physical Examinations Prospective Employees Bank Employees Total 110 110 218 227 - Requests for Medical Care 2 t 759 3,782 - 68,026 186 796 69,008 28,652 50 229 258 CAFETERIA Number of Meals Served Noon Compli mentary - Guest of Bank - Bank Employees Total Daily Average Number of Meals Served Cafeteria Noon PAGE 36 0 9 1,111 29,813 - 11.3% 54.7% 8.5% 31.4% -100.0% 49.5% 51.5% 27.1% Cafeteria established August 13, 1946 .FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 STATEMENT OF EARNINGS AND EXPENSES FEDERAL RESERVE BANK OF CHICAGO C O M P A R A T I V E S T A T E M E N T OF EARNINGS AND EXPENSES y e a r ended december 31, 1947, a n d y e a r ended december 31, 1946 1946 1947 EARNINGS $21,318,967.85 $21,235,190.45 EXPENSES Operating Expenses Assessment for Board of Governors Cost of Federal Reserve Currency Total Net Expenses $ 7,752,397.70 358,627.98 732,071.56 $ 8,843,097.24 $ 6,853,344.65 303,483.83 632,515.27 $ 7,789,343.75 $12,475,870.61 $13,445,846.70 $ $ Current Net Earnings ADDITIONS TO CURRENT NET EARNINGS Profit on Sales of U S. Government Securities Other Additions Total Additions to Current Net Earnings Total Current Net Earnings and Additions to Current Net Earnings DEDUCTIONS FROM CURRENT NET EARNINGS Retirement System (Salary Compensation Adjustment) Other Deductions Total Deductions from Current Net Earnings NET EARNINGS DISTRIBUTION OF NET EARNINGS Paid United States Treasury (Section 13B) Paid United States Treasury (Interest on Federal Reserve Notes) Dividends Paid Transferred to Surplus (Section 7) T o t a l D i s t r i b u t i o n of N e t Earnings $ 340,408.87 107,449.05 447,857.92 231,045.60 12,090.60 243,136.20 $ $12,923,728.53 $13,688,982.90 $ $ $ 154,505.16 154,505.16 281,169.00 47,045.57 328,214.57 $ $12/769,223.37 $13,360,768.33 $ $ 426.82 10,249,335.31 1,380,233.78 1,139,227.46 1,311,792.03 12,048,976.30 $12,769,223.37 $13,360,768.33 FEDERAL RESERVE BANK OF CHICAGO S U R P L U S ACCOUNT — S E C T I O N 7 y e a r ended december 31, 1947, a n d y e a r ended december 31, 1946 1947 1946 Surplus January 1 Transferred to Surplus - as above $65,077,906.26 1,139,227.46 $53,028,929.96 12,048,976.30 Surplus December 31 $66,217,133.72 $65,077,906.26 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 PAGE 37 STATEMENT OF CONDITION FEDERAL RESERVE BANK OF CHICAGO C O M P A R A T I V E S T A T E M E N T OF CONDITION december 31, 1947, a n d december 31, 1946 ASSETS 1947 Gold Certificates on Hand and Due F r o m U. S. Treasury Redemption Fund - Federal Reserve Notes Other Cash Total Cash $4,182,995,550.98 90,073,683.08 42,325,966.94 $4,315,395,201.00 $3,369,272,586.87 136,644,442.30 31,559,710.71 $3,537,476,739.88 $ $ 1946 Bills Discounted U. S. Government Securities Total Bills and Securities 7,056,600.00 3,085,404,000.00 $3,092,460,600.00 18,291,000.00 3,455,402,000.00 $3,473,693,000.00 Bank Premises Federal Reserve Notes of Other F . R. Banks Uncollected Items Other Assets Total Miscellaneous Assets $ $ TOTAL ASSETS $ 3,063,507.26 22,440,500.00 464,387,652.61 16,005,592.50 505,897,252.37 $ 3,056,737.98 22,944,300.00 387,335,826.02 6,952,192.13 420,289,056.13 $7,913,753,053.37 $7,431,458,796.01 Federal Reserve Notes in Actual Circulation $4,636,568,155.00 $4,573,143,890.00 DepositsMember Banks - Reserve Accounts U. S. T r e a s u r e r - General Account Other Deposits Total Deposits $2,655,848,626.09 101,887,281.36 50,467,947.38 $2,808,203,854.83 $2,366,136,539.01 65,227,171.74 68,163,011.09 $2,499,526,721.84 $ $ LIABILITIES Deferred Availability Items Other Liabilities Total Miscellaneous Liabilities Total Liabilities $ 372,809,057.01 2,336,935.09 375,145,992.10 $ 265,651,182.65 1,885,674.25 267,536,856.90 $7,819,918,001.93 $7,340,207,468.74 $ 23,826,650.00 66,217,133.72 1,429,383.78 2,361,883.94 $ 22,434,650.00 65,077,906.26 1,429,383.78 2,309,387.23 $ 93,835,051.44 $ 91,251,327.27 CAPITAL ACCOUNTS Capital Paid In Surplus (Section 7) Surplus (Section 13B) Other Capital Accounts Total Capital Accounts TOTAL LIABILITIES AND CAPITAL ACCOUNTS PAGE 38 $7,913,753,053.37 $7,431,458,796.01 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 FEDERAL RESERVE BANK OF EARNINGS HISTORY CHICAGO STATEMENT OF EARNINGS, EXPENSES, AND DISPOSITION OF NET EARNINGS NOVEMBER 16, 1914 (Date of Incorporation) TO DECEMBER 31, 1947 DISPOSITION OF NET EARNINGS EARNINGS AND EXPENSES CURRENT EXPENSES CURRENT EARNINGS $ 268,885 CURRENT NET EARNINGS $ 245,584 $ 23,301 $ TRANSFERRED TO SURPLUS DEDUCTIONS FROM CURRENT NET EARNINGS ADDITIONS TO CURRENT NET EARNINGS - $ 3,210 NET EARNINGS $ 20,091 DIVIDENDS PAID $ SECTION 7 $ $ $ - 69,307 25,000 269,343 198,356 985,630 332,600 403,206 1,231,879 6,805,081 8,576,204 25,875,749 361,319 862,259 604,635 700,807 792,769 15,648,070 2,668,806 2,138,335 1,255,733 1,680,624 4,826 572,019 41,903 27,857 12,646 1,147,779 1,835,610 1,001,883 374,467 571,997 14,505,117 1,405,215 1,178,355 909,123 1,121,273 853,785 876,203 904,371 909,123 934,016 3,824,437 3,887,058 3,696,679 4,092,369 3,805,117 2,742,606 2,280,294 5,239,739 5,797,082 1,029,036 13,098 13,061 11,833 8,050 298,510 501,781 365,710 488,143 380,467 273,218 2,253,923 1,927,645 4,763,429 5,424,665 1,054,328 985,959 1,029,990 1,099,761 1,170,363 1,211,418 1,267,964 897,655 3,663,668 3,651,464 - 157,090 4,143,601 5,613,671 6,764,554 8,152,371 6,177,615 3,524,401 3,432,693 3,854,009 3,551,838 3,697,540 619,200 2,180,978 2,910,545 4,600,533 2,480,075 263,967 874,264 373,245 1,611,990 951,304 273,272 812,517 1,493,297 4,808,032 2,660,159 609,895 2,242,725 1,790,493 1,404,491 771,220 1,170,633 1,029,933 858,127 761,334 753,583 - 1936 1937 1938 1939 1940 4,423,476 4,575,583 3,954,026 4,254,602 4,831,217 3,453,380 3,199,558 3,318,002 3,316,352 3,471,164 970,096 1,376,025 636,024 938,250 1,360,053 1,526,060 811,188 1,637,141 521,313 1,530,021 1,563,978 499,607 1,182,207 476,646 282,100 932,178 1,687,606 1,090,958 982,917 2,607,974 725,553 763,115 791,007 819,532 826,919 153,241 883,370 279,031 158,265 1,770,131 1941 1942 1943 1944 1945 5,089,095 6,590,508 8,738,325 14,204,919 20,076,761 4,227,534 5,177,403 5,850,233 6,757,377 6,551,011 861,561 1,413,105 2,888,092 7,447,542 13,525,750 163,061 386,898 4,137,334 383,895 422,552 157 602,842 1,266,073 896,766 955,508 993,684 1,115,422 1,215,381 100,484 237,632 4,765,619 6,710,302 12,212,414 - 517,991 1,024,465 1,197,161 5,759,353 7,831,437 13,430,311 1946 1947 21,235,190 21,318,967 7,789,344 8,843,097 13,445,846 12,475,870 243,136 447,858 328,214 154,505 13,360,768 12,769,223 1,311,792 1,380,234 12,048,976 1,139,227 _ $17,360,464 $155,264,785 $284,623,151 $129,358,366 ADJUSTMENTS F . D. I. C. Stock 1934 - Purchase 1947 - Retirement (proceeds to T r e a s u r y ) $25,676,791 $146,948,458 $29,665,301 $81,557,570 1916 1917 1918 1919 1920 665,937 2,083,164 8,481,747 12,012,078 30,303,218 237,731 584,069 1,478,310 2,450,244 4,164,176 428,206 1,499,095 7,003,437 9,561,834 26,139,042 1921 1922 1923 1924 1925 20,382,170 6,748,863 6,511,359 5,202,169 5,424,663 4,734,100 4,080,057 4,373,024 3,946,436 3,744,039 1926 1927 1928 1929 1930 6,567,043 6,167,352 8,936.418 9,889,451 4,834,153 1931 1932 1933 1934 1935 Totals 2,127 - OTHER TRANSFERS $ - $ BALANCE TO PROFIT & LOSS $20,091 41,887 -61,978 - - 10,394,480 11,576,009 1,186,301 246,586 - - - 187,257 - - 560,738 121,279 932,366 669,479 602,838 - 1,091,513 - -26,322 25,030 12,767 206 17,637 - - $ 11,681 28,354 28,354 20,714 5,120 10,924 27,215 4,021 50 5,713 2,516 - - - - - $25,313,526 427 10,249,335 $ 151,045 $ 10,249,335 - 19.748.517 $ $ 19,748,517 1,417,702 Transferred from Surplus to R e s e r v e s for Contingencies, Y e a r s 1940, 1942, and 1943 Transferred to Surplus (Section 7) from Reserves for Contingencies, Year 1945 FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 - 2,075,323 657,289 27,398 Payments from U. S. Treasury, Section 13B loans, Y e a r s 1934 and 1935 Totals $ 215,799 215,799 6,200,446 7,875,397 14,688,500 - FRANCHISE TAX SECTION 13B PAID U. S. TREASURY INTEREST ON F. R. NOTES OUTSTANDING SECTION 13B $29,665,301 3,207,763 7,615,843 $66,217,133 $1,429,383 $25,313,526 $151,045 $ 10,249,335 $19,748,517 $PAGE 39 DIRECTORS AND OFFICERS DIRECTORS CLARENCE W. AVERY President and Chairman, The Murray Corporation of America Detroit, Michigan Chairman of the Board and Federal Reserve Agent PAUL G. HOFFMAN, President The Studebaker Corporation South Bend, Indiana Deputy Chairman WALTER J. CUMMINGS, Chairman Continental Illinois National Bank and Trust Company of Chicago Chicago, Illinois WILLIAM C. HEATH, President A. O. Smith Corporation Milwaukee, Wisconsin HORACE S. FRENCH, President The Manufacturers National Bank of Chicago Chicago, Illinois VIVIAN W. JOHNSON, President First National Bank Cedar Falls, Iowa WILLIAM J. GREDE, President Grede Foundries, Inc. Milwaukee, Wisconsin ALLAN B. KLINE, President American Farm Bureau Federation Chicago, Illinois NICHOLAS H. NOYES, Vice President in Charge of Finances Eli Lilly and Company Indianapolis, Indiana OFFICERS C. S. YOUNG, President C. B. DUNN, First Vice President J. K. LANGUM, Vice President N. B. DAWES. Vice President O. J. NETTERSTROM, Vice W. R. DIERCKS, Vice President A. L. OLSON, Vice President President J. H. DILLARD, Vice President A. T. SIHLER, Vice President E. C. HARRIS, Vice President A. M. BLACK, Cashier W. C. BACHMAN, Assistant Vice L. H. JONES, Assistant Vice M. A. LIES, Assistant Vice President F. A. LINDSTEN, Assistant Vice President President L. G. MEYER, Assistant Vice President President F. L. PURRINGTON, Assistant Vice President W. W. TURNER, Assistant Vice President E. D. BRISTOW, Assistant Cashier C. T. LAIBLY, Assistant Cashier P. C. CARROLL, Assistant Cashier H. J. NEWMAN, Assistant Cashier E. A. HEATH, Assistant Cashier W. A. HOPKINS, Assistant P. C. HODGE, General I. J. PETERSEN, Assistant Cashier C. M. SALTNES. Assistant Counsel Cashier Cashier J. W. GARVY, Assistant General O. C. BARTON, Assistant Counsel Counsel J. J. ENDRES, Auditor Continued on next page FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947 PAGE 40 DIRECTORS AND OFFICERS-CONTINUED MEMBER OF FEDERAL ADVISORY COUNCIL EDWARD E. BROWN, Chairman of the Board The First National Bank of Chicago Chicago, Illinois MEMBERS OF INDUSTRIAL ADVISORY COMMITTEE EDWARD J. DOYLE. President Commonwealth Edison Co. Chicago, Illinois EDWARD M. KERWIN, Vice President E. J. Brach and Sons Chicago, Illinois WALTER HARNISCHFEGER, President Harnischfeger Corporation Milwaukee, Wisconsin G. BARRET MOXLEY. President Kiefer-Stewart Company Indianapolis, Indiana JAMES L. PALMER, Executive Vice President Marshall Field & Company Chicago, Illinois DETROIT BRANCH DIRECTORS CHARLES T. FISHER, JR.. President National Bank of Detroit Detroit, Michigan CHARLES A. KANTER, President The Manufacturers National Bank of Detroit Detroit, Michigan ERNEST GILBERT, Farmer Waldron, Michigan BEN R. MARSH, Vice President & General Manager Michigan Bell Telephone Company Detroit, Michigan RUDOLPH E. REICHERT, President Ann Arbor Bank Ann Arbor, Michigan O F F I C E R S E. C. HARRIS. Vice President R. W. BLOOMFIELD, Assistant H. J. CHALFONT, A. J. WIEGANDT, Assistant Manager H. L. DIEHL, Cashier PAGE 41 Cashier Cashier K. E. HAEFELE, Asst. Cashier and Asst. Counsel FEDERAL RESERVE BANK OF CHICAGO-PRESIDENT'S ANNUAL REPORT TO MEMBER BANKS-ACTIVITIES FOR THE YEAR 1947