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FEDERAL RESERVE B A N K OF CHICAGO Presidents' Annual Report TO MEMBER BANKS ACTIVITIES FOR THE YEAR 1952 FEDERAL RESERVE BANK OF CHICAGO January 30, 1953 OFFICE OF THE PRESIDENT To the Member Banks of the Seventh Federal Reserve District: In order that you may be informed concerning the activities of the Federal Reserve Bank of Chicago, this detailed report has been prepared. It is a pleasure to submit it to your bank and I hope that you will find it both interesting and informative. May I direct your particular attention to the section dealing with the check collection activities, as it covers rather completely one function which is used directly or indirectly by every bank in the Seventh Federal Reserve District. May I express the sincere appreciation of the directors, officers, and staff for the helpful advice and counsel so generously given by both member and nonmember banks in this District. Very truly yours, President Well over a million persons are engaged in Seventh District agriculture Table of Contents Economic Summary 1 Check Department 7 Departmental Summaries Services to Member Banks Safekeeping of Securities 16 Investments 16 Discounts and Other Credits 17 Examination of Banks 17 Currency and Coin 18 Economic Research 20 Collection of Non-Cash Items 21 Services to Treasury Department Servicing of Government Securities 22 Issuance of Government Securities 23 Redemption of Government Securities 24 Collection of Federal Taxes 24 General Bank Activities Personnel 25 Communications 25 Comparative Statement of Condition 26 Comparative Statement of Earnings and Expenses 27 History of Earnings 28 Directors and Officers 30 Seventh District manufacturing provides employment for about three and a half million people. ECONOMIC SUMMARY CIVILIAN AND DEFENSE NEEDS MET-WITHOUT INFLATION! The American economy, in 1952, proved itself capable of supporting a preparedness program, while at the same time providing record supplies of goods and services for a rapidly growing population. Although plagued by a number of inflationary forces and by numerous work stoppages, productive capacity expanded sufficiently to meet most demands. consumer price index was only slightly above the level prevailing at the start of the year. In fact, a number of items—such as TV sets, household appliances, apparel, and in some cases food—cost less at retail in December 1952 than a year earlier. Defense expenditures continued to rise until midyear, then levelled off at an annual rate about one-third above that of 1951. National income rose by 14 billion to a new peak of 292 billion dollars. Output of steel during the 54-day strike in June and July was reduced to a trickle and production of many durable goods had to be sharply curtailed. But industrial production quickly surged to a new peacetime high following the strike, and civilian employment rose to a record 62 million. Consequently labor markets in most centers were very tight at year end. Consumer income rose in the last half of 1952 and consumer buying picked up considerably. The biggest gain was registered in nondurables, which rose about 5 billion. Expenditures for services also increased, but durable goods sales were moderately lower than in 1951. This resulted largely from the steel strike and heavy buying during the first year of the Korean fighting. In the last half of the year, however, production of furniture, home appliances, and TV sets rose sharply, stimulated by the removal of credit controls, inventory reordering, and the seasonal upturn in buying. By fall, output was at the highest point since early 1951. Throughout 1952 prices remained relatively stable with many items selling below their ceilings. In general, wholesale prices declined slowly for most of the year, largely as a result of falling prices of imported raw materials and domestic farm products. At year end the Consumer instalment debt began to climb rapidly last spring following a year and a half of virtual stability. From the beginning of April through November, instalment debt jumped nearly three billion dollars or more than 20 per cent. The renewal of the upward movement Manufacturing production recovered peacetime high after the mid-year interruption . . . . . . with non-agricultural employment reaching record levels in both the nation and the district . . . to a index* (1935-39=100) index* (jan 1952=100) 300 105 100 280 S V N H DISTRICT EET 100 ILLINOIS 100 DURABLES IOWA 100 200 WISCONSIN 100 MICHIGAN 240 100 INDIANA 100 220 <5 ? AL MNFCUIG L A U A T RN MAR and in iqsz +l0 200 JUN SEP 1952 per cent change weekly average earnings. . . . . . outpaced consumer prices. +5 180 N NUALS ODRBE MAR JUN 1952 * Seasonally adjusted. SEP -5 Manufacturing Con- Retail D R BE N N struction Trade U A L JRflBLE O°' All Food. Commodities Rent Apparel ECONOMIC SUMMARY Stocks at district department stores remained stable in the last half of 1952 while sales increased sharply . . . last year and . . . with Indianapolis showing the greatest strength, relative to both the 1947-49 average. INDEX* (1941-49=100) 140 INDEX (1941-49=100) 130 SALES 120 STOCKS 110 120 100 Chicago 110 130 Detroit Indianapolis Milwaukee STOCKS 120 100 110 100MAR JUN SEP 1951 DEC MAR JUN SEP 1952 * Seasonally adjusted coincided closely with the ending of Regulation W early in May. Subsequent relaxation of down payment and monthly repayment requirements attracted new marginal buyers of consumer durable goods and made possible an upgrading in the quality of merchandise purchased on time. The expansion in instalment debt added about three billion dollars to consumer purchasing power last year. Since a large part of all time-payment credit is extended for the purchase of durable goods, the effect has been to stimulate production in these lines. Although inflationary in nature, the rise in credit buying last year did not bring any appreciable price increases in consumer durable lines because its effects were largely offset by other developments. Some retailers welcomed the rise in credit-based demand as an opportunity to reduce inventories, thus "short-circuiting" a part of the demand before it was reflected in manufacturing activity. In addition, excess capacity existed for production of virtually every consumer durable good, with the result that output could be expanded quickly and with relative ease. Finally, the spurt in credit buying has been offset in part by a further decline in the amount of cash purchases of durable goods. 2 DEC • 1951 • 1952 In contrast to the rapid rise in defense purchases of goods and services during the first year and a half after Korea, 1952 was a year of relative stability in defense spending. During the last three quarters, outlays were steady at an annual rate of about 50 billion. Despite the fact that national security expenditures did not rise as much as had been expected, the Federal Government showed a small cash deficit in calendar 1952, as opposed to a small cash surplus the preceding year. Government expenditures continued to be an important force in the economy as outlays for all units totaled about 78 billion dollars, nearly one-fourth of the value of all goods and services produced. State and local capital outlays as a whole were up only moderately from 1951. Some categories, however, notably highways and public housing, rose sharply. In general, the sharpest rises took place in those types of projects financed by borrowing. As a result, state-local borrowing increased rather spectacularly—from 3.2 billion last year to 4.5 billion in 1952. In Seventh District states the trends in state and local capital spending have been mixed. Illinois, in particular, as well as Indiana and Wisconsin, showed increases greater than for the country as a whole. Total outlays in ECONOMIC SUMMARY Iowa declined because of a decline in highway construction. Throughout the District, school programs were either about the same or below the levels of the previous year. Outlays on new plant and equipment reached 27 billion in 1952, topping those of 1951 by about 4 per cent. A substantial part of this total is slated for five-year amortization. In some cases, material shortages caused the temporary postponement of expansion programs. Recent surveys indicate a continued high level of capital expenditure during the coming year. There are some signs, however, that the peak has been passed in the Midwest. Construction contract awards for new manufacturing and commercial buildings were off about 40 per cent from 1951 and new orders for machine tools were declining rapidly toward the end of the year. On the other hand, many previously shelved projects will now be revived as material allocations loosen. This is particularly true of new shopping centers and television stations. Business inventories remained remarkably stable through most of 1952. The swift upward movement of inventories which started in mid-1950 was halted. Manufacturers continued to increase holdings somewhat, mainly because of defense needs, but this was offset to a great extent by a decline in distributors' stocks. Mindful of their experience in early 1951, businessmen were wary of large additions to inventory. SEVENTH DISTRICT FARMING District farmers marketed a larger volume of products in 1952 than in the preceding year but due to lower average prices, gross income remained about the same. As usual, livestock and livestock products accounted for the lion's share of District farm income. The Midwest experienced an excellent crop year. Corn, the leading crop, turned in a near-record harvest of high quality. Other feed crops also were produced in adequate volume to support a continued high level of livestock production. Adverse weather in other regions, however, increased pressure on feed supplies. This, along with lower prices for most livestock, narrowed feeding margins and caused farmers to plan further cut. . . accounted for most of the year-end slump in wholesale prices. Sharp declines in prices of major midwest farm commodities . . . INDEX (1947-49=100) 110 processed foods PER CENT CHANGE DURING 1952 -30 "20 "10 0 +10 105 lambs beef cattle farm products 100 JUN MAR DEC SEP wool turkeys 115 eggs corn industrial commodities 110 oats hogs butterfat 105 100 1 —'— L —t MAR J I JUN I 1 1 SEP 1 L DEC wheat soybeans milk lie all-commodity index barley chickens 105 100 MAR JUN SEP DEC 3 ECONOMIC SUMMARY backs in 1953 hog production. These range from 6 per cent in Iowa to 18 per cent in Michigan. Cattle feeding, nevertheless, continued in large volume and profit prospects from the 1952-53 operation are decidedly more promising than the generally disappointing results obtained in 1951-52. The more favorable outlook reflects primarily the much lower prices for feeder cattle and a degree of flexibility in feeding programs which was lacking last year due to "soft corn." Land values, responding to the continued favorable farm situation, advanced gradually during the year. Activity in the farm real estate market was at a low ebb, however, as most owners saw little advantage in disposing of their holdings. Financial requirements of agriculture continued to grow in response to higher land values, additional mechanization, high cash production costs, and a further build-up in cattle herds. Farm mortgage debt continued its postwar rise but remains at a relatively low level. Land values, having risen relative to farm income in the past two years, now probably reflect quite fully the current level of farm income. Farmers' requirements for non-real estate loans eased as cattle prices turned downward, although the volume of cattle on feed at year end probably was at a record level. Most loan repayments were on schedule this fall, and the fourth-quarter rise in outstandings was smaller than in 1950 or 1951. Although there are individual instances of burdensome farm debts, the over-all financial position of Midwest agriculture was very strong at the end of 1952. The decline in farm product prices relative to production costs narrowed profit margins but they still were generally adequate to assure a vigorous and progressive farm economy. HOME BUILDING BOOM CONTINUED Residential construction activity in the Seventh District continued at a relatively high level through 1952. Residential building authorizations in district states were about the same as in 1951 and well above most postwar years, while other construction was off about one-fourth from a year ago. $ million 1000 WISCONSIN DISTRICT STATES •46 800 $ '48 '50 bl million 360- MICHIGAN 600 320 280- 240 400- 200 160 120 200- $ million 100- 80 0 INDIANA 46 60 1946 '46 '48 'SO '52 w] 40200 4 1949 1950 1951 1951 $ MILLION 10 0 1947 1948 , 0 W A Residential Non-Residential i i i i i i i •46 '48 '50 '52 48 50 52 ECONOMIC SUMMARY The number of dwelling units for which building permits were issued during the year was only five per cent less than in 1951, the second best year on record. District home building was off relatively more than in the nation generally, where housing starts slightly exceeded 1951's 1,090,000 and were only 20 per cent under those of 1950. In the Chicago area, the number of units started increased five per cent from 1951 to 1952, while the Detroit area experienced a decline of about 20 per cent. Building permits issued within the city limits of Indianapolis ran about 35 per cent ahead of 1951, but were six per cent behind in Milwaukee and 20 per cent lower in Des Moines. These variations in activity from one community to another within the District evidence the purely local nature of housing markets and the building industry. Suspension of controls over mortgage credit in October apparently had little effect on home-building activity in 1952. Heavy demands for funds by business and consumers continued to restrict the supply of mortgage money, thus limiting the pressure of competition on lenders to liberalize terms. As a result, most lending institutions have not reduced their requirements on conventional loans appreciably below those formerly required by Regulation X. Down payment requirements have been relaxed substantially on VA-guaranteed mortgages, but funds seeking investment at the comparatively unattractive fixed interest rate of 4 per cent continue relatively scarce. Since credit controls were not ended until late in the 1952 building season, however, conclusive evidence of the effects on home-building activity will not be available until the 1953 season is well under way. Major assets and liabilities of district member banks continued to grow in 7 9 5 2 , but their loans and discounts remained well below their holdings of Governments . . . i billion SEVENTH DISTRICT 15 Demand Deposits U.S. Government Securities 10 Time Deposits 5 Loans & Discounts 1948 1949 1950 1951 1952 . . . in sharp contrast to the national picture. $ billion 110 UNITED STATES 100 Demand Deposits DISTRICT BANKING CONTINUES POSTWAR GROWTH Loans of District member banks increased by 9 per cent during 1952, about the same as the average for all banks in the nation. Midyear outstandings were at the same level as at the start of the year, in sharp contrast with 1951 when District banks expanded their loans over 300 million during the first half. Loans continued to edge upward in the third quarter of 1952, then climbed rapidly as the year came to an end. During the last half of the year the loan increase was about 600 million, compared with 500 million in the last half of the preceding year. Although the dollar increase in District bank loans was evenly divided between the larger city banks and those in smaller centers, the percentage rise in the smaller banks was over double that of the city banks. 90 80 70 U.S. Government Securities 60 50 40 " Loans & Discounts" Time Deposits 30 1948 1949 1950 1951 1952 5 ECONOMIC SUMMARY District banks expanded their holdings of Governments by over 7 per cent during 1952. This increase accounted for approximately half of the total dollar rise in Governments held by all U. S. member banks and was concentrated in country banks. Larger city banks were constrained from purchasing Governments by tight reserve positions and active loan demands. Since District banks began the year with 53 per cent of their total earning assets invested in Governments, compared to a 46 per cent national average, their large net purchases were largely for the purpose of investing available funds rather than an attempt to boost their holdings of this type of security. credit demands, the Federal Government also became a substantial net borrower. Furthermore, the suspension of the voluntary credit restraint program, combined with the discontinuance of Federal Reserve selective controls on consumer and real estate credit, removed restraints that in previous years had helped retard credit expansion. Member bank borrowings from the Federal Reserve Banks rose sharply during 1952. In December, daily borrowings, averaged for reserve-weeks, reached 1.8 billion, a 31-year peak. A large share of these Federal Reserve credits passed through the Chicago Bank's discount window. Borrowings from the Chicago Fed ranged from a low of 44 million in May to almost 400 million in early December. At one time during the year District banks' borrowings made up one-third of the U. S. total; the average for the year was about 20 per cent. FEDERAL RESERVE CREDIT POLICY In 1952, the Federal Reserve System continued to pursue the monetary policy established as a result of the Treasury-Federal Reserve "accord" of March 1951. The objective of this policy of limiting bank credit expansion to "amounts consistent with the reasonable requirements of a growing economy operating at a high level without inflation" was more difficult to achieve than in the previous year. Added to increased private and state-local Despite this expansion in member bank borrowings, however, the net increase in total outstanding Federal Reserve credit—including Government security purchases, all loans and advances and float—was considerably smaller in 1952 than in thefirst year of the "accord." The rise in district business loans in the last eight months of the year was less than in 1951 for . . . most industries . . . and purposes ( $ MILLION) -100 0 ( $ MILLION) + 100 +200 +100 +300 1 FOOD, LIQUOR AND TOBACCO DEFENSE METALS AND METAL PRODUCTS TRADE NON DEFENSE SALES FINANCE COMPANIES 11951 6 1952 NUMBER OF CHECKS HANDLED millions Country City Government 400 Postal Money Order 300 CHICAGO 200 DETROIT 100 1951 1949 1952 1950 1948 THE CHECK DEPARTMENT less, unstoppable flow. Each day's paper mountain must The story of the Check Department is VOLUME— be attacked to clear the way for the avalanche that's sure Never ending, ever present volume—approximately a million and a half items a day—-Today, Yesterday, and to come tomorrow. Tomorrow . . . The process of assimilating this forced feeding requires the services of 1,000 employees, almost half of the Bank's entire personnel. Lights in the Check DeOne of the largest paper-work operations in the world partment burn constantly day and night, as the work is is performed by the Check Department of the Federal carried on 24 hours a day on a three-shift basis. Three Reserve Bank of Chicago. The continual pressure of the stories of the Federal Reserve Bank building are devoted incoming work is staggering. Like the stream from a to the functions of the Check Department. hydrant with a broken valve the checks pour in—an end7 CONTROL BLOCKS ARE PREPARED CHECKS ARE RECEIVED FROM BANKS ILL IN MAIL 1ND. IOWA MICH. CHECKS ARE MAILED TO DRAWEE BANKS WIS. ABINGDON BANK AND TRUST CO. NATIONAL BANK OF ALEDO THE FIRST NATIONAL BANK IN AMBOY THE FIRST NATIONAL BANK OF ASSUMPTION THE ATLANTA NATIONAL BANK AURORA NATIONAL BANK Processing checks is essentially a proving and sorting operation. A bundle of checks as received from a sending bank is called a "cash letter" and may contain a few checks or several thousand, depending on the size of the forwarding bank. All the checks in the cash letter 8 are drawn on banks other than the forwarding bank and vary from small personal payments of household expenses, to million dollar corporate payments for purchases of securities. Viewed thru the eyes of a production specialist in the Check Department, the amount of the ABINGDON BARRINGTON CAMBRIDGE PROOF MACHINE CHECKS ARE SORTED ALPHABETICALLY BY CITY VILLA GROVE WALNUT YORKVILLE CHECKS ARE SORTED ACCORDING TO DRAWEE BANK A B C 4 CHECKS ARE ASSEMBLED FOR FINAL SORT V check means little. Each check, large or small, adds one more to the daily item count. As the incoming checks are received each day, they are totaled or "proved" to determine the amount to be w _Y credited to each sending bank. Following the proof, these checks are sorted until all the checks drawn on an individual bank are together in an outgoing cash letter. The total of the outgoing cash letter is charged against the drawee bank. 9 Receiving Cash Letters at Mail Tables The hurried tour of a cash letter thru the Check Department begins on the mail table. The deft thrust of a mail clerk's knife removes the wrapper, and our cash letter, along with hundreds of others, enters the work flow. The proving and sorting operation is performed on a proof machine—a machine so basic in the Check Department function that a closer look might be worth while. A proof machine contains a revolving drum with more 10 than a score of compartments or pockets, and a separate adding register for each compartment. As the operator reads each check she depresses a key to select the proper pocket depending on the name and city of the drawee bank. The drum revolves and the amount of the check is indexed on to the keyboard by the operator as she feeds the check into the proper compartment. The amount of the check is added and recorded on a tape for the pocket selected as well as on a tape for the grand Sorting and Listing Incoming Checks on a Proof Machine total of all the compartments. At any given time the sum of the totals for all the individual pockets will agree with the grand total in the machine. Several hundred proof machines are required to keep up with the daily volume handled by the Check Department. Our cash letter, along with many others, will be proved and "prime-sorted" by an operator of one of these machines. At the end of the prime-sort the total of the cash 11 letter submitted by the sending bank is compared with the grand total in the machine, thus proving the cash letter and providing the amount of the credit due to the sending bank. The checks from our cash letter now repose in various pockets in the drum of the machine according to the initial letter of the city in which the drawee bank is located. A further sort now is necessary to arrange the checks so that all those drawn on an individual bank are together. Indiana-Illinois Forwarding Units PREPARING OUTGOING The checks from each of the pockets of the primesort machine are sent to another proof machine along with a tape total for that particular pocket. During the secondary sort or "outgoing operation", the checks are added and dropped into pockets according to the name of the drawee bank. At the end of the sort each pocket in the drum contains the checks drawn on an individual bank, and the total for that compartment indicates the amount of the debit or charge against that particular bank. The grand total in the machine, the sum of all 12 the pockets, is compared with the tape total received with the checks from the prime-sort machine. The checks now are ready to be wrapped and returned to their "home" bank, the bank on which they were drawn. The entire operation of the Check Department is practically continuous as the work flows thru with assembly line precision. The process is of such magnitude that the floor area in the Check Department exceeds that of forty newfive-room homes. More people are employed in this one department than are employed by ninety-five per Other Districts and Michigan-Wisconsin Forwarding Units CASH LETTERS cent of the manufacturing establishments in the nation. Unlike a manufacturer, however, the Check Department has no control over its source of raw material. Time never can be taken to "work off inventory". The volume is always there and the trend has been upward every year in the last decade. As the department strives for increased efficiency and greater accuracy it does so with an acute awareness that the primary obstacle consists of man's most inflexible element—Time. Each employee shares in the knowledge that a "plus" effort is required from all. Perhaps the foremost characteristic apparent to an outsider is the atmosphere of hyperactivity that infuses every division of the Check Department. The individual clacking of each proof machine merges into a perpetual, acoustically subdued clamor — background music for the daily performance of "Beat the Clock." 13 Recording Payments Received for Cash Letters CHICAGO NUMBER OF CHECKS HANDLED 1952 City Country Government—Paper Card Postal Money Order**. . . Totals : DETROIT BRANCH 1951 1952 1951 34,115,000 57,955,000 244,937,000 4,898,000 46,360,000 58,420,000 54,121,000 228,125,000 4,694,000 44,891,000 28,501,000 17,123,000 36,122,000 412,570,000 360,332,000 68,272,000 1,393,000 5,522,000 8,112,000 16,100,000 1,339,000 5,374,000 3,763,000 60,691,000 *New Activity July 1, 1951. The number of cash letters sent out to banks each day averages about four thousand throughout the year. Payments are received thru the payoff division of the Check Department and generally are made by bank draft or advice to charge the reserve account. In many cases items 14 are returned and credit toward payment is given by the return items division. When the banks pay for the amount of the checks received, the production cycle is complete. Processing Government Checks DOLLAR VALUE OF CHECKS HANDLED City Country Government—Paper Card Postal Money Order**. . . . Totals **New Activity July 1, 1951. Daily Avg. No. of Cash Letters Dispatched CHICAGO 1952 DETROIT BRANCH 1951 1952 1951 $ 69,326,494,000 46,983,674,000 5,419,881,000 3,238,880,000 785,381,000 $ 66,735,237,000 45,493,769,000 4,417,370,000 2,936,524,000 370,504,000 $ 18,134,430,000 7,665,415,000 2,570,356,000 377,212,000 152,964,000 $ 16,976,870,000 7,913,200,000 1,485,630,000 343,608,000 72,032,000 5125,754,310,000 $119,953,404,000 $ 28,900,377,000 $ 26,791,340,000 3,842 3,958 546 549 U. S. Government checks are handled separately from the general work flow as most of them are issued in the form of punched cards and are processed on punch card equipment. All sorting and proving of these checks can be done mechanically. Government checks both paper and card, account for about thirteen per cent of the total volume during a year. Postal money orders also are channeled to a separate division of the Check Department. They, too, are a form of punched card and are mechanically processed preparatory to their return to the proper Regional Post Office of Issue. This operation is relatively new to the department as the conversion to punch card money orders by the Post Office was effective July 1, 1951. SERVICES TO MEMBER BANKS SAFEKEEPING OF SECURITIES A special arrangement for the safekeeping of custodianship bonds was made with the Veterans' Administration in 1952. As a result, the number of savings bonds in safekeeping increased over holdings of a year ago. The additional activity is reflected in the net increase of $3,561,492 in savings bonds held at the end of the current year as compared with a net decline of $1,111,436 during 1951. Also, 175,902 savings bonds were received in 1952, a 60% increase over the 110,203 pieces taken in during the previous year. CHICAGO DETROIT BRANCH 1952 SAFEKEEPING—MEMBER 180,172 155,727 1,204,132 198,878 150,794 1,143,517 38,771 38,423 183,886 31,159 25,964 180,405 $9,326,290,973 9,431,291,152 4,995,952,049 99,532,080 59,561,411,853 9,579,972,640 5,100,952,229 98,635,596 56,263,580,783 6,060,574,856 821,571,294 11,020,502 54,207,921,000 4,156,262,000 618,565,000 9,158,912 116,547 110,870 603,188 BANKS, 1951 72,988 105,677 597,511 59,355 52,400 279,463 37,215 54,476 272,508 8,781,420 9,313,381 65,539,142 5,968,440 4,596,465 25,745,330 3,881,600 4,461,075 24,373,355 1952 1951 ETC. PIECES Securities—Received Released Coupons Detached From Securities DOLLAR V A L U E OF PIECES Securities—Received Released Held as of December 31 Coupons Detached From Securities SAFEKEEPING—SAVINGS BONDS PIECES Received Released Held as of December 31 DOLLAR VALUE OF PIECES Received Released Held as of December 31 $ 11,579,104 9,389,586 67,728,659 $ INVESTMENTS The dollar volume of security transactions handled by the Investment Department at Chicago during 1952 was practically equivalent to that of the previous year. However, purchases were somewhat larger and sales somewhat smaller. CHICAGO At the Detroit Branch, the dollar volume of securities purchased was approximately 11% less in 1952 than in the previous year whereas sales for 1952 exceeded 1951 figures by 56%. DOLLAR VALUE OF SECURITY TRANSACTIONS PURCHASES SALES 1948 1949 1950 1951 1952 $ MILLIONS 16 DETROIT 100 200 300 400 30 SERVICES TO MEMBER BANKS DISCOUNTS AND OTHER CREDITS Member bank borrowings from the Federal Reserve Bank expanded substantially in 1952. Borrowings by District banks during the year aggregated $12,489,567,000 at the Head Office—almost 3^2 times the previous year's amount—and $1,854,780,000 at the Detroit Branch, somewhat less than twice the 1951 level. Weekly average outstanding borrowings were significantly greater in the second half of the year and hit a peak of close to 400 million dollars in December. This growth in total indebtedness reflected an increased number of borrowing banks requiring greater dollar amounts more frequently or for longer periods. The step-up in borrowing activity, stemmed from increasingly high levels of economic activity, heavy bank loan expansion, and protracted periods of money market tightness particularly in the latter half of the year. Coupled with these developments was the Reserve System's general reluctance to purchase Government secur- ities in the open market, an anti-inflationary policy consistent with the Treasury-Federal Reserve accord of 1951. Member banks, which had formerly sold securities, therefore, resorted to Reserve Bank loans and advances, largely secured by Government obligations, as a means of replenishing reserves. Regulation V Loans Guaranteed for Defense Production While the volume of guaranteed loans to industries engaged in defense production diminished somewhat during the year 1952, the program nevertheless was very active. Pursuant to the requirements of the Defense Production Act, the Federal Reserve Bank served as fiscal agent in administering Regulation V guarantees for the Departments of the Army, Navy, and Air Force, as well as for the General Services Administration and the Atomic Energy Commission. ADVANCES TO MEMBER BANKS DETROIT CHICAGO 0 0 0 1948 1949 1950 1951 1952 M 0 $ 2 4 6 8 10 12 0 2 BILLIONS EXAMINATION OF BANKS Membership in the Federal Reserve System in the Seventh District totaled 1,008 on December 31, 1952. This membership was composed of national and state banks as follows: National Banks State Member Banks 566 442 Examinations of member banks during the year 1952 are summarized below: Regular Examinations 442 Trust Department Examinations 153 Special Examinations 4 Other Investigations 34 Annual examinations of state member banks usually were made jointly with representatives of the state banking department concerned. In addition to the regular examinations, field investigations were required in connection with applications to organize national banks, applications for the establishment of branch offices, and applications for permission to exercise trust powers. Field work on examinations and related activities was handled by a staff of forty men. Twenty-two of these men are headquartered in Chicago, while the remainder reside in various cities in Indiana, Iowa, and Michigan. 17 SERVICES TO MEMBER BANKS CURRENCY During 1952, the upward trend in currency shipments continued. Shipments of currency to banks were greater than ever before measured either in dollar value or number of pieces. Aggregate receipts of currency were up somewhat from a year ago. Further evidence of increased activity in currency operations was reflected by the $4,997,357,000 in our Federal Reserve Notes in circulation on December 26, 1952—higher than ever before. CHICAGO DETROIT BRANCH 1952 1951 1952 1951 PIECES Incoming from Banks Incoming from U. S. Treasurer Outgoing Unfit—Forwarded for Redemption Unfit—Retained in Reserve 586,318,134 163,348,000 612,680,757 209,936,266 — 568,354,571 168,708,000 595,210,696 160,874,176 47,050,000 156,916,056 30,564,000 173,256,679 34,580,552 142,578,000 41,356,000 159,368,000 32,001,000 DOLLAR VALUE OF PIECES Incoming from Banks Incoming from U. S. Treasurer Outgoing Unfit—Forwarded for Redemption Unfit—Retained in Reserve $3,403,019,091 230,404,000 3,699,344,500 785,279,091 — $3,305,304,478 215,960,000 3,591,359,000 535,958,978 260,550,000 $1,007,490,621 43,332,000 1,142,896,611 141,806,754 $ 955,815,000 54,468,000 1,054,240,000 145,444,000 108,940,000 73,282,000 102,278,000 78,184,000 18,440,000 16,788,000 13,680,000 13,648,000 $1,292,600,000 862,180,000 51,148,420,000 880,780,000 256,500,000 224,640,000 186,500,000 189,860,000 FEDERAL RESERVE NOTE ISSUES—FEDERAL RESERVE AGENT Pieces Received from Washington Issued to Bank Dollar Value of Pieces Received from Washington Issued to Bank CURRENCY (MILLION 600 PIECES) 500 400 INCOMING 500 400 300 300 OUTGOING 200 200 100 100 CHICAGO CHICAGO 0 0 100 DETROIT 1948 1949 1950 1951 1952 18 1948 1949 1950 1951 1952 DETROIT 1948 1949 1950 1951 1952 SERVICES TO MEMBER BANKS AND COIN More widespread popularity of the coin wrapping service of the Cash Department marked the year 1952. During 1951, 59% of the outgoing coin from Chicago was wrapped. Increased demand for this service throughout the year resulted in 71% of the outgoing coin being wrapped in 1952. At Detroit 47% of the coin shipped in 1952 was wrapped compared with 35% during the previous year. Dollar value of coin received from the Treasury Department during the current year was considerably greater at both Chicago and Detroit. COIN Chicago 1250 (MILLION PIECES) 1000 1000 OUTGOING 150 INCOMING 150 500 from Banks 250 500 from Mints 250 Detroit Detroit 0 1948 1949 1950 1951 1948 1949 1950 1951 1952 1948 1949 1950 1951 1952 19481949195019511952 DETROIT BRANCH CHICAGO 1952 PIECES Incoming from Banks—Counted Incoming from Banks—Diverted to Coin Wrapping Received from Mints Received from Other F. R. Banks.. . Outgoing Total Wrapped During Year DOLLAR VALUE OF PIECES Incoming from Banks—Counted Incoming from Banks—Diverted to Coin Wrapping Received from Mints Received from Other F. R. Banks Outgoing Total Wrapped During Year 1952 1951 1952 1951 541,082,692 727,568,424 119,801,889 113,527,000 632,237,000 165,524,000 4,100,000 1,334,890,333 947,959,000 484,194,000 138,910,000 3,240,000 1,360,753,205 803,485,000 45,054,000 425,000 176,063,189 83,415,000 45,425,000 231,000 173,142,000 60,448,000 64,091,237 12,130,572 11,302,000 2,332,000 1,190,000 265,100 15,027,126 7,516,650 231,000 13,561,000 5,537,000 $ 48,749,560 63,562,050 12,481,200 925,000 123,754,299 82,352,600 $ 47,965,150 7,665,000 1,720,000 121,389,161 77,612,150 19 SERVICES TO MEMBER BANKS ECONOMIC RESEARCH As business and government executives encounter problems of increasing complexity, the role of economic research grows in importance. Effective policy decisions require a continuing flow of timely and dependable economic information. Questions of how much, where, when, and why are asked with ever increasing persistence. An important function of economic research therefore—whether in private business, government, or a Federal Reserve Bank—is the provision of background information on which policy decisions may be based. The growing demand for economic information has resulted in a mounting number of inquiries to the Research Department by mail, phone, and in person. As in the past, three major groups were served—the Board of Governors and its staff, the Bank's directors and officers, and a wide range of Midwest bankers, businessmen, and public officials. Information is made available in numerous memoranda, special reports, periodic statistical releases, conferences, and monthly and weekly interpretative publications. Also, there is a continuing demand for speeches. Research officers and staff made over 90 addresses during the year at banking, business, and agricultural meetings. In keeping with this growing demand for up-to-date information the Research Department in 1952 placed additional emphasis on both timeliness and completeness of its reports. The wizardry of modern mechanization was extended to more of the statistical operations. Many bankers and retailers were asked to provide more detailed reports of their operations and the lists of co-operators were re-examined to assure statistical results that would accurately reflect developments in the areas and subjects studied. The raw material of economic research, of course, is the flow of reports from bankers, retailers, industrialists, and government units. Without the prompt co-operation of such groups up-to-date knowledge of business trends could be no broader than the first-hand knowledge of individuals, usually limited to a few lines of activity and covering a relatively small area. 20 Statistical material was received regularly on retail trade from firms representing about 2,500 stores, and data on instalment loans were received from about 500 firms other than commercial banks. Banking data were provided through the co-operation of the more than 1,000 Seventh District member banks. After the data were processed and analyzed, the results were made available to interested users. Altogether, 39 periodic statistical summaries were sent to a total mailing list of about 13,000, with over half a million individual reports being distributed. The Bank's monthly review, Business Conditions, has reached a circulation of 23,000, about 8,500 copies being provided at cost in bulk subscriptions to 107 member banks which redistribute them to their customers. The Agricultural Letter, issued weekly, reached a circulation of about 11,500, of which 8,000 are subscribed in bulk by 68 member banks for distribution to farm leaders and customers in their area. Last spring, District member banks were provided a report of their own operating results compared with those of other banks of similar size in a Member Bank Operating Ratios booklet. Also, other special bank reports were made available during the year on deposit ownership, changes in condition, and loan and investment trends. The administration of regulations in the fields of consumer and real estate credit necessitated special surveys and, as usual, the shifting currents of loan demand at District banks stimulated continuing study of the requirements and uses of credit by business and other borrowers. Bank capital requirements were the subject of a detailed study. In retail trade, the regular weekly and monthly releases on sales and stocks at department stores were supplemented by a Retail Credit Survey. Financial developments in agriculture were followed closely through a periodic sampling of country bankers' opinions and studies of trends in farm credit. SERVICES TO MEMBER BANKS Typing Collection-Letter Forms COLLECTION OF NON-CASH ITEMS Collection-letter forms were prepared on new and improved equipment during 1952. Electric typewriters equipped with pin-feed platens replaced manual typewriters and fanfold billing attachments. Factory-interleaved carbon, precise alignment of all parts of each form, clearly readable copies, and effortless typing are some of the advantages Collection Department personnel have been enjoying since the installation of this new equipment. DETROIT BRANCH CHICAGO * Includes direct sendings to other Federal Reserve Banks by our member banks 20,187 13,808 173,943 21,354 14,788 153,054 834,971 207,938 189,196 103,676 $ 28,807 158,186 647,978 881,172 * Includes direct sendings to other Federal Reserve Banks by our member banks Totals 1951 25,952 156,898 698,322 Totals Dollar Value of Transactions City Country* Coupon and Security 1952 1951 Number of Transactions 1952 City Country* Coupon and Security 105,101 5,311 5,775 58,785,000 361,531,000 757,689,000 $ 75,693,000 381,287,000 870,066,000 $ 27,009,000 41,604,000 85,223,000 $1,178,005,000 $1,327,046,000 $ 153,836,000 $ 282,339,000 $ 302,840,000 $ 35,490,000 $ 38,069,000 33,874,000 57,414,000 $ 129,357,000 $ 25,175,000 21 SERVICES TO TREASURY DEPARTMENT SERVICING OF GOVERNMENT SECURITIES The reduction in securities exchanged in 1952 was mainly due to a smaller volume of coupon bonds presented in exchange for registered bonds and likewise a much lesser amount of registered bonds exchanged for coupon bonds. Reissues of Savings Bonds remained high and followed the pattern of previous years. Payments made by credit through Treasury Tax and Loan Accounts in 1952 exceeded the 1951 total by $1.4 billion. This large increase was due to depositaries receiving credit for more tax money during the year and for the payment of new cash offerings of Treasury securities, including the 2 3/8% Bonds of 1958. The additional activity in the Government bond market at various times during the year was reflected in the increase of about 16% in telegraphic transfers of securities handled in 1952. DETROIT BRANCH CHICAGO 1952 1951 $2,637,696,800 $3,341,627,100 143,500 147,800 $9,971,755,000 $8,843,888,300 $2,417,025,000 $1,773,850,300 115,900 112,300 15,100 15,600 $ 414,081,500 $ 432,973,500 1,272,500 1952 1951 MARKETABLE ISSUES DENOMINATIONAL AND OTHER EXCHANGES Par Value Pieces TELEGRAPHIC TRANSFERS $ 46,359,250 4,177 $ 79,186,000 3,480 (CPD) Par Value Pieces SAVINGS BONDS REISSUES Maturity Value $ 29,471,500 $ 27,478,100 1,226,800 224,100 180,200 $5,700,000,000 $4,700,000,000 $1,950,000,000 $1,600,000,000 623,421,000 398,702,000 211,088,500 129,825,600 Number of Entries to Deposit and Collateral Accounts 321,200 307,600 38,629 34,958 Number of Qualified Depositaries as of December 31 1,712 1,697 137 139 Pieces DEPOSITARY BANKS—TREASURY TAX AND LOAN ACCOUNT Payments by Credit Depositary Balances as of December 31 22 SERVICES TO TREASURY DEPARTMENT ISSUANCE OF GOVERNMENT SECURITIES SERIES E SAVINGS BONDS SOLD D L A VALUE OL R PIECES $millions millions 800 Marketable securities issued at Chicago and Detroit increased about 12% in 1952. Larger weekly offerings of Treasury Bills and greater interest in these offerings because of higher yields accounted for this increase. 9 loo feoo The decline in sales of Treasury Savings Notes during 1952, because of the greater attractiveness of other short term Treasury issues, accounted for the dollar reduction in savings securities issued. More Series E Bonds were sold by issuing agents, both in dollar value and number of pieces, the latter increasing over 22%. CHICAGO 8 7 CHICAGO 500 6 5 400 4 30C 3 20C 1948 49 50 51 52 IOC 0 ,0 1948 49 50 51 52 1951 1952 1952 SAVINGS 1 DETROIT BRANCH CHICAGO MARKETABLE SECURITIES Par Value Issued Pieces Issued Number of Subscribers 2 DETROIT DETROIT 1951 $12,012,001,000 132,000 31,100 $10,580,908,000 $ $ $ 115,200 24,100 735,451,000 10,976 1,275 $ 180,598,000 208,045,000 6,993,400 25,111,600 $ 420,748,000 $ 560,614,000 11,884 1,122 SECURITIES MATURITY VALUE Treasury Savings Notes Series E—By Issuing Agents Series E—By FRB Other Savings Issues Total Maturity Value 334,403,000 702,147,000 553,549,575 21,287,425 171,670,850 $ $ 1,265,573,300 $ 1,448,654,850 $ 22,580 9,197,543 467,657 130,900 28,554 7,092,416 470,584 141,204 4,535 4,259,000 253,000 14,272 6,749 3,877,000 239,400 14,251 9,818,680 7,732,758 4,530,807 4,137,400 3,096 3,109 349 366 415,653,000 621,004,850 20,816,150 208,099,300 189,339,000 6,520,400 19,410,500 549,672,900 N U M B E R OF PIECES Treasury Savings Notes Series E—By Issuing Agents Series E—By FRB Other Savings Issues Total Pieces Number of Qualified Issuing Agents 23 SERVICES TO TREASURY DEPARTMENT REDEMPTION OF GOVERNMENT SECURITIES Redemptions of Treasury Coupon Bonds in Chicago increased from $7,842,000,000 in 1951 to $9,715,000,000 in 1952, but total redemptions showed a decline because of decreases in redemptions of Registered Bonds and Armed Forces Leave Bonds. Redemptions in Detroit during 1951 included large amounts of called issues, a nonrecurring factor in 1952. The decline noted in the volume of Savings Bonds redeemed in the District during 1952 followed the national downward trend of such redemptions. Over 1,600,000 coupons aggregating $122,970,000 were forwarded to this bank and its branch for payment. This is an increase of about 8% in dollar value over 1951. DETROIT BRANCH CHICAGO 1952 $ SAVINGS BONDS Redemption Value By Paying Agents—A-E By FRB —A-E By FRB —F-G 1951 245,400 $10,281,552,000 TREASURY ISSUES* Number of Pieces Maturity Value Number of Pieces By Paying Agents—A-E By FRB —A-E By FRB —F-G 582,408,000 37,922,000 207,271,600 1950 1951 $ 8,808,678,400 31,000 $ 1,971,692,700 51,300 $ 2,503,894,300 $ $ $ 318,000 10,647,800 291,500 197,600 U. S. GOVERNMENT AND OTHER GOVERNMENTAL AGENCY COUPONS Number of Pieces Dollar Value $ 1,495,200 102,026,392 687,699,200 41,978,800 239,808,000 167,263,300 4,023,100 19,613,500 4,371,409 49,549 15,555 11,127,100 281,100 218,500 $ 1,580,400 94,728,276 4,582,491 43,727 17,889 181,900 $ 20,943,600 188,285,900 4,549,700 17,020,900 $ 185,500 19,771,300 *Includes Savings Notes and Armed Forces Leave Bonds. COLLECTION OF FEDERAL TAXES RECEIPTS $BILLIONS THOUSANDS 3 750 500 2 1 250 The dollar value of validated receipts processed during 1952 ran well over three billion dollars, an increase of 22% over the previous year. Instructions from Directors of Internal Revenue which changed remitting habits of many employers primarily were responsible for the 1952 increase in volume. Prior to April, 1952, many employers remitted quarterly to various offices of Directors of Internal Revenue. After April, these employers were instructed to remit tax payments monthly to Federal Reserve Banks. Statistics on receipts processed during 1952 and 1951 are as follows: 1952 0 Number A 1948 4 9 505152 24 1948 49 50 51 52 Dollar Value 1951 970,000 801,000 $3,424,000,000 $2,797,000,000 GENERAL BANK ACTIVITIES PERSONNEL Defense demands for industrial workers and military personnel continued to encroach on available sources of clerical help. Increased wages, improved working conditions and transportation-free jobs in factories in outlying and suburban areas added to recruitment problems. NUMBER OF EMPLOYEES 2500 Comparativefigures as of the last day of the year show an increase in personnel in Chicago of about 7.5% and a decrease in Detroit of about 3.6%. The continuing upward trend in Chicago was the result of a marked additional volume of work throughout the Bank. To meet demands for staff, advertising and solicitation of high school seniors for part time training was intensified. Training classes in proof machine and keypunch operation and in typing and page work were successfully conducted throughout the year. 200 1500 CHICAGO 1000 500 DETROIT 0 An increase in salary structure to meet market conditions resulted in starting salaries showing a favorable comparison with those in effect in the district. 1948 1949 1950 1951 1952 COMMUNICATIONS Messages handled by the Codes and Telegrams Division increased slightly during the current year despite the loss of commercial wire facilities during April and May because of the strike of Western Union Telegraph Company employees. Approximately 1,370,000 telegrams were processed during 1952 by the Chicago office of the Federal Reserve leased wire system—up 5% from the volume handled during 1951. Early in 1952, a new direct wire from Chicago to New York was added to the leased wire system. This new wire reduced by 40% the messages formerly sent through the Washington relay center of the system. Transfers of funds were up at Chicago and Detroit with both offices registering an increase of 13% in dollar amount. The number of pieces of mail received and dispatched approximated the record levels reached in 1951. DETROIT BRANCH CHICAGO 1952 TELEGRAMS PROCESSED Messages Received Messages Dispatched Total WIRE TRANSFERS OF FUNDS Number of Transfers Total Dollar Value Average Value Per Transfer MAIL VOLUME Pieces Received Pieces Dispatched Total 1951 1952 1951 113,448 94,558 28,269 28,621 32,187 30,881 210,585 208,006 60,456 59,502 224,591 $103,336,345,000 $ 460,109 216,256 $ 91,112,727,000 $ 421,319 48,350 $ 26,094,914,000 $ 539,709 45,299 $ 23,008,248,000 $ 507,920 2,332,921 4,477,856 2,332,279 4,706,444 306,672 302,617 323,149 335,007 6,810,777 7,038,723 629,821 637,624 111,307 99,278 25 FEDERAL RESERVE BANK OF CHICAGO COMPARATIVE STATEMENT OF CONDITION DECEMBER 31, 1952, AND DECEMBER 31, 1951 ASSETS Dec. 31, 1952 $4,430,854,137.32 $4,221,263,933-92 119,452,700.00 122,652,645.00 54,784,083.66 53,922,299.04 $4,605,090,920.98 $4,397,838,877.96 7,360,500.00 340,600.00 3,437,028,000.00 3,521,975,000.00 $3,444,388,500.00 $3,522,315,600.00 6,680,636.02 GOLD CERTIFICATES O N HAND AND DUE FROM U. S. TREASURY Dec. 31, 1951 6,342,488.93 REDEMPTION FUND—FEDERAL RESERVE NOTES OTHER CASH Total Cash BILLS DISCOUNTED U. S. GOVERNMENT SECURITIES Total Bills and Securities BANK PREMISES FEDERAL RESERVE NOTES OF OTHER BANKS 23,133,000.00 22,180,500.00 704,039,961.48 652,609,324.88 22,954,908.03 19,336,519.88 $8,806,287,926.51 $8,620,623,311.65 $4,971,415,290.00 $4,764,080,565.00 3,066,257,823.23 3,227,709,792.94 28,709,863.68 6,862,718.83 UNCOLLECTED ITEMS OTHER ASSETS Total Assets LIABILITIES FEDERAL RESERVE NOTES IN ACTUAL CIRCULATION DEPOSITS: Member Bank—Reserve Account Treasurer—General Account Other Deposits U. S. 85,944,791.80 102,613,235.40 $3,180,912,478.71 $3,337,185,747.17 519,439,776.68 392,025,045.87 1,962,285.84 1,835,009.47 $8,673,729,831.23 Total Deposits $8,495,126,367.51 DEFERRED AVAILABILITY ITEMS OTHER LIABILITIES Total Liabilities CAPITAL CAPITAL PAID IN (Section 7) SURPLUS (Section 13b) SURPLUS OTHER CAPITAL ACCOUNTS Total Liabilities and Capital Accounts 26 ACCOUNTS $ 32,341,950.00 84,628,184.18 1.429,383.78 14,158,577.32 $8,806,287,926.51 $ 30,375,250.00 79,601,206.22 1,429,383.78 14,091,104.14 $8,620,623,311.65 FEDERAL RESERVE BANK OF CHICAGO COMPARATIVE STATEMENT OF EARNINGS AND EXPENSES YEAR ENDED DECEMBER 31, 1952, AND YEAR ENDED DECEMBER 31, 1951 1952 EARNINGS 1951 $ 67,492,987.62 $ 58,699,425.22 $ 13,227,178.27 572,900.00 1,755,196.48 $ 11,993,932.03 566,300.00 1,540,691.88 $ 15,555,274.75 $ 14,100,923.91 $ 51,937,712.87 $ 44,598,501.31 $ 293,142.06 6,171.30 $ — 18,330.10 $ 299,313.36 $ 52,237,026.23 EXPENSES: Operating Expenses Assessment for Board of Governors Cost of Federal Reserve Currency Total Current Expenses 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 $18,330.10 $ 44,616,831.41 DEDUCTIONS FROM CURRENT NET EARNINGS: Loss on Sales of U. S.Government Securities Other Deductions Total Deductions from Current Net Earnings 77,357.86 $ 68,599.16 Net Earnings After Payments to United States Treasury Dividends Paid 52,159,668.37 38,297,505.75 6,920,988.34 6,028,319.63 1,772,556.58 5,026,977.96 4,255,763.05 $ Transferred to Surplus (Section 7) 291,006.03 44,325,825.38 1,894,010.38 Paid United States Treasury (Interest on Federal Reserve Notes) 77,357.86 45,238,680.03 $ Net Earnings 222,406.87 $ $ FEDERAL RESERVE BANK OF CHICAGO SURPLUS ACCOUNT (Section 7) YEAR ENDED DECEMBER 31, 1952, AND YEAR ENDED DECEMBER 31, 1951 1952 SURPLUS $ 79,601,206.22 January 1 TRANFERRED TO SURPLUS—AS ABOVE SURPLUS DECEMBER 31 1951 $ 5,026,977.96 $ 84,628,184.18 75,345,443.17 4,255,763.05 $ 79,601,206.22 27 FEDERAL RESERVE BANK OF CHICAGO S T A T E M E N T OF E A R N I N G S A N D EXPENSES NOVEMBER 16, 1914 (Date of Commencing Business) TO DECEMBER 31, 1952 YEAR CURRENT EARNINGS 1914-15 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 $ Totals $542,934,925 28 268,885 665,937 2,083,164 8,481,747 12,012,078 30,303,218 20,382,170 6,748,863 6,511,359 5,202,169 5,424,663 6,567,043 6,167,352 8,936,418 9,889,451 4,834,153 4,143,601 5,613,671 6,764,554 8,152,371 6,177,615 4,423,476 4,575,583 3,954,026 4,254,602 4,831,217 5,089,095 6,590,508 8,738,325 14,204,919 20,076,761 21,235,190 21,318,967 43,407,727 47,051,999 41,659,635 58,699,425 67,492,988 CURRENT EXPENSES $ 245,584 237,731 584,069 1,478,310 2,450,244 4,164,176 4,734,100 4,080,057 4,373,024 3,946,436 3,744,039 3,824,437 3,887,058 3,696,679 4,092,369 3,805,117 3,524,401 3,432,693 3,854,009 3,551,838 3,697,540 3,453,380 3,199,558 3,318,002 CURRENT NET EARNINGS $ 23,301 428,206 1,499,095 7,003,437 9,561,834 26,139,042 15,648,070 2,668,806 2,138,335 1,255,733 1,680,624 2,742,606 2,280,294 5,239,739 5,797,082 1,029,036 619,200 2,180,978 2,910,545 4,600,533 2,480,075 970,096 1,376,025 636,024 938,250 1,360,053 861,561 1,413,105 3,316,352 3,471,164 4,227,534 5,177,403 5,850,233 6,757,377 6,551,011 7,789,344 8,843,097 10,843,513 11,608,341 11,909,847 14,100,924 15,555,275 7,447,542 13,525,750 13,445,846 12,475,870 32,564,214 35,443,658 29,749,788 44,598,501 51,937,713 $193,376,266 $349,558,659 2,888,092 ADDITIONS TO CURRENT NET EARNINGS FROM CURRENT NET EARNINGS $ 3,210 NET EARNINGS (See disposition, next page) 299,313 517,991 328,214 154,505 5,961,421 6,419,630 56,411 291,006 77,358 20,091 403,206 1,231,879 6,805,081 8,576,204 25,875,749 14,505,117 1,405,215 1,178,355 909,123 1,121,273 2,253,923 1,927,645 4,763,429 5,424,665 1,054,328 609,895 2,242,725 1,790,493 1,404,491 771,220 932,178 1,687,606 1,090,958 982,917 2,607,974 1,024,465 1,197,161 5,759,353 7,831,437 13,430,311 13,360,768 12,769,223 27,718,412 33,424,543 34,833,017 44,325,825 52,159,668 $ 28,333,881 $ 38,482,617 $339,409,923 $ — — 2,127 — — 69,307 4,826 572,019 41,903 27,857 12,646 13,098 13,061 11,833 8,050 298,510 263,967 874,264 373,245 1,611,990 951,304 1,526,060 811,188 1,637,141 521,313 1,530,021 163,061 386,898 4,137,334 383,895 422,552 243,136 447,858 1,115,619 4,400,515 5,139,640 18,330 25,000 269,343 198,356 985,630 332,600 1,147,779 1,835,610 1,001,883 374,467 571,997 501,781 365,710 488,143 380,467 273,218 273,272 812,517 1,493,297 4,808,032 2,660,159 1,563,978 499,607 1,182,207 476,646 282,100 157 602,842 1,266,073 — $ FEDERAL RESERVE BANK OF CHICAGO S T A T E M E N T OF D I S P O S I T I O N OF NET EARNINGS NOVEMBER 16, 1914 (Date of Commencing Business) TO DECEMBER 31, 1952 PAID U. S. TREASURY TRANSFERRED TO SURPLUS Net Earnings Year Dividends Paid (See detail, previous page) 20,091 1914-15. .$ 403,206 1916.. 1917.. 1,231,879 6,805,081 1918.. 8,576,204 1919-• 1920.. . 25,875,749 1921.. . 14,505,117 1,405,215 1922. . 1,178,355 1923.• 1924.. 909,123 1925.. 1,121,273 2,253,923 1926.. 1,927,645 1927.. 4,763,429 1928. . 5,424,665 1929.1,054,328 1930.. 609,895 1931.• 2,242,725 1932.. 1,790,493 1933.. 1934.. 1,404,491 771,220 1935.. 932,178 1936.. 1,687,606 1937.. 1,090,958 1938.. 982,917 1939.• 2,607,974 1940.. 1941.. 1,024,465 1,197,161 1942.. 5,759,353 1943.1944.. 7,831,437 1945.. 13,430,311 1946.. . 13,360,768 1947.. . 12,769,223 1948.. . 27,718,412 1949.. . 33,424,543 1950.. . 34,833,017 1951.. . 44,325,825 1952.. . 52,159,668 $ Totals . . 4339,409,923 $38,031,121 ADJUSTMENTS— —19,748,517 19,748,517 1,417,702 — 3,207,763 7,615,843 Totals . . .$345,235,705 NOTES: — Section 7 $ — 361,319 862,259 215,799 6,200,446 604,635 7,875,397 700,807 14,688,500 792,769 853,785 2,075,323 876,203 — 657,289 27,398 904,371 — 909,123 934,016 187,257 1,267,964 985,959 1,029,990 897,655 3,663,668 1,099,761 3,651,464 1,170,363 1,211,418 — 157,090 1,170,633 — 560,738 1,029,933 121,279 932,366 858,127 761,334 669,479 — 753,583 153,241 725,553 883,370 763,115 791,007 279,031 819,532 158,265 1,770,131 826,919 100,484 896,766 237,632 955,508 993,684 4,765,619 6,710,302 1,115,422 12,212,414 1,215,381 12,048,976 1,311,792 1,380,234 1,139,227 2,624,684 1,472,491 3,187,004 1,556,097 1,670,666 3,316,622 1,772,55 6 4,255,763 5,026,978 1,894,010 $ — $99,968,621 Franchise Tax Section 13b — — $ — — 215,799 Section 13b $ — Interest on F. R. Notes Outstanding $ — $ $ 20,091 41,887 — 61,978 — — — — — — — — — — — — — — — — — — — — — — 10,394,480 11,576,009 — — — — — — 1,186,301 — — — — — 246,586 — — — — -—• — — — — — •—• — — — — •—- — — — — — — — — — — — — •—- — — — — — — — — — — — — 602,838 — — — — — — — — — — — — — — — — — 1,091,513 — — — — — — 26,322 — — — — — — — — — — — — — — — — — — — — — — — — — — — — 25,030 12,767 206 — — — — — — — — — — — — — 17,637 28,354 28,354 20,714 5,120 10,924 27,215 4,021 50 5,713 — — — — — — — — — — — — — 2,516 — — — — — — — — — — — — — — — — — 427 — — — — — — — — — — — — — $ — — — — 11,681 $25,313,526 $151,045 10,249,335 23,621,237 28,681,442 29,845,729 38,297,506 45,238,680 $175,933,929 —19,748,517 ( l a ) (1) (1) (2) (3) (4) Other Transfers — — Balance to Profit & Loss — — — — $ — $ --19,748,517 ( l b ) 1,417,702 (2) 3,207,763 (3) 7,615,843 (4) $38,031,121 $84,628,184 $1,429,383 $25,313,526 $151,045 $175,933,929 $19,748.517 $ (1) F. D. I. C. Stock: (a) 1934—Purchase. (b) 1947—Retirement (proceeds to Treasury). (2) Payments from U. S. Treasury, Section 13b loans, Years 1934 and 1935. (3) Transferred from Surplus to Reserves for Contingencies, Years 1940, 1942, and 1943. (4) Transferred to Surplus (Section 7) from Reserves for Contingencies, Year 1945. 29 — r DIRECTORS A N D OFFICERS I DIRECTORS J O H N S. COLEMAN, President Burroughs Adding Machine Company Detroit, Michigan Chairman WALTER J . CUMMINGS, Chairman VIVIAN W . JOHNSON, Continental Illinois National Bank and Trust Company of Chicago Chicago, Illinois WILLIAM J . GREDE, President First National Bank Cedar Falls, Iowa ALLAN B. KLINE, President President American Farm Bureau Federation Chicago, Illinois Grede Foundries, Inc. Milwaukee, Wisconsin WALTER E. HAWKINSON, Vice President in charge of Finance, and Secretary Allis-Chalmers Mfg. Co. Milwaukee, Wisconsin NUGENT R. OBERWORTMANN, President The North Shore National Bank of Chicago Chicago, Illinois WILLIAM R. SINCLAIR, Chairman of the Board Kingan and Co. Indianapolis, Indiana OFFICERS CLIFFORD S. YOUNG, President ERNEST C. HARRIS, First Vice President Louis G. MEYER, Vice President HARLAN J. CHALFONT, Vice GEORGE W . MITCHELL, Vice President ARTHUR L. OLSON, Vice President ALFRED T . SIHLER, Vice President WILLIAM W . TURNER, Vice President President NEIL B. DAWES, Vice President and Secretary WILFORD R. DIERCKS, Vice WALTER A. HOPKINS, Vice President President LAURENCE H . JONES, Cashier ERNEST T. BAUGHMAN, Assistant Vice President PHIL C. CARROLL, Assistant Vice President CLARENCE T. LAIBLY, Assistant Vice President MARK A. LIES, Assistant Vice President FRANK A. LINDSTEN, Assistant Vice President HAROLD J. NEWMAN, Assistant Vice President INGOLF J. PETERSEN, Assistant Vice President FRANKLIN L. PURRINGTON, Assistant Vice President H. FRED WILSON, Assistant Vice President EDWARD D . BRISTOW, Assistant Cashier HERBERT H . CONKLIN, Assistant Cashier EDWARD A. HEATH, Assistant Cashier and CARL M . SALTNES, Assistant Cashier ELMER F. SHIREY, Assistant Cashier BRUCE L. SMYTH, Assistant Cashier GEORGE T. TUCKER, Assistant Cashier Assistant Secretary PAUL C. HODGE, General Counsel ORVILLE C. BARTON, Assistant General Counsel and Assistant Secretary 30 JOHN J. ENDRES, General Auditor ARTHUR M. GUSTAVSON, Assistant General Auditor C. PAUL VAN ZANTE, Chief Examiner DIRECTORS A N D 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, D i r e c t o r EDWARD M . KERWIN, V i c e Commonwealth Edison Co. Chicago, Illinois President E. J. Brach and Sons Chicago, Illinois WALTER HARNISCHFEGER, P r e s i d e n t G . BARRET MOXLEY, Harnischfeger Corporation Milwaukee, Wisconsin President Kiefer-Stewart Company Indianapolis, Indiana JAMES L. PALMER, President Marshall Field & Company Chicago, Illinois DETROIT BRANCH DIRECTORS WILLIAM M. DAY, Vice President and General Manager Michigan Bell Telephone Company Detroit, Michigan JOHN A. HANNAH, President Michigan State College East Lansing, Michigan JOSEPH M . DODGE, C h a i r m a n HOWARD P . PARSHALL, P r e s i d e n t The Detroit Bank Detroit, Michigan Commonwealth Bank Detroit, Michigan JOHN A. STEWART, Vice President and Cashier Second National Bank and Trust Company of Saginaw Saginaw, Michigan O F F I C E R S HARLAN J . CHALFONT, Vice President and Manager RICHARD W . BLOOMFIELD, Assistant Vice President RUSSEL A. SWANEY, Assistant Vice President HAROLD L. DIEHL, Cashier JOSEPH J. SRP, JR., Assistant Cashier ARTHUR J. WIEGANDT, Assistant Cashier GORDON W. LAMPHERE. Assistant General Counsel 31