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FEDERAL RESERVE BANK OF CHICAGO
PRESIDENT'S REPORT TO THE DIRECTORS
ACTIVITIES
FOR THE YEAR 1942
PRESIDENT'S REPORT TO DIRECTORS
ACTIVITIES OF TEE HEAD OFFICE AND DETROIT BRANCH
During the Year 1942
STATEMENT OF EARNINGS AND EXPENSES
and
STATEMENT OF CONDITION
** I N D E X **
Page
ACCOUNTING DEPARTMENT:
Bookkeeping Division
Federal Reserve Books Division
General Books Division
1
1
1
BANK EXAMINATION DEPARTMENT
BANK RELATIONS DEPARTMENT
BINDERY AND OLD RECORDS 4
BUILDING DEPARTMENT
1
3
CAFETERIA
CASH DEPARTMENT
CHECK DEPARTMENT
CODES and TELEGRAMS DIVISION
COLLECTION DEPARTMENT
CONSUMER CREDIT DEPARTMENT
5
5
6
7
7
8
4
DISBURSING DEPARTMENT
10
DISCOUNT AND CREDIT DEPARTMENTS
10
EMERGENCY RELIEF CHECKS DEPARTMENT
11
FEDERAL RESERVE NOTE ISSUE DEPARTMENT
FILES DEPARTMENT
11
12
FOREIGN FUNDS CONTROL DIVISION
12
GOVERNMENT BOND DEPARTMENT
13
INVESTMENT DEPARTMENT
14
LEGAL DEPARTMENT
14
MAIL DEPARTMENT
14
MEMBER BANK ACCOUNTS DIVISION
15
OFFICE MACHINE REPAIRS
15
PERSONNEL DEPARTMENT
PLANNING DEPARTMENT
PURCHASING DEPARTMENT
R.F.C. CUSTODY DIVISION
15
l6
17
18
RESEARCH AND STATISTICS DEPARTMENT
19
SAFEKEEPING DEPARTMENT
20
TELEPHONE DIVISION
21
WIRE TRANSFER DIVISION
DETROIT BRANCH
STATEMENT OF EARNINGS AND EXPENSES
STATEMENT OF CONDITION
21
22
24
25
-1ACCOUNTING DEPARTMENT:
Bookkeeping Division
Functioned 2,379,000 entries during the year 1942
to the accounts of our member banks, as compared
with 2,372,000 entries during the year 1941 - an
increase of .3%.
The number of active accounts
at the end of the year 1942 stood at 733 as against
706 at the end of 1941.
Federal Reserve Books Division
Effected 2,082,000 entries during the year 1942 in
maintaining accounts with other Federal Reserve
Banks and Branches, and with our Detroit Branch.
This compared with 2,122,000 entries effected during 1941, and represented a decrease of 2% over
that year.
Other phases of the work of this Division, such as
the investigation of differences and preparation
of adjusting entries, particularly in connection
with direct sent letters, reflected a substantial
increase, however, and more than offset the decrease
in the actual number of entries functioned.
General Books Division
Effected 278,900 entries during the year 1942 compared with 262,400 entries during 1941 - an increase of 6%.
BANK EXAMINATION
DEPARTMENT:
Record of Examinations
Number
of Banks
Regular - State member banks Joint with State Examiners
Regular - State member banks - Independent
Membership - Joint with State Examiners
Membership - Independent
Follow-Up Investigations - Joint with
State Examiners
Follow-Up Investigations - Independent
Total
Trust Departments Joint with State
Trust Departments State Examiners
Trust Departments -
State member banks Examiners
Membership - Joint with
Membership - Independent
Total
Total Resources
of Banks
366
1
17
16
$2,325,069,000.
891,000.
70,469,000.
15,631,000.
1
22
423
242,000.
66,953,000.
$2,479,255,000.
110
5
4
119
$
962,298,000.
-2BANK EXAMINATION
DEPARTMENT:
(Continued)
All State member banks and their trust departments
were examined during the calendar year of 1942 with
the exception of six banks.
Failure to examine
them was due to the fact that the State Departments
vere unable to complete their schedules and we felt
it more practical to defer examining those banks
until after January 1, 1943, when joint examinations
could be made.
Applications for State Bank Membership
Acted Upon or in Process
Applications
Applications
Applications
Applications
Applications
approved - Admitted to Membership
approved - Incomplete
withdrawn
indefinitely deferred
pending in Chicago on December 31, 1942
29
3
3
4
2
41
Two of the applications "approved - incomplete"
were completed on January 2, 1943, and we have been
advised that the third will accept conditions of
membership on January 12, 1943.
There should be no difficulty in completing the two
applications now pending in Chicago.
Changes in State Bank Membership During the Year
Number of State member banks as of December 31, 1941
Withdrawn
New State Members
364
1
29
Number of State member banks as of December 31, 1942
392
The total resources of the 29 new State member
banks, on the date of examination, amounted to
$101,325,561.41.
-3BANK EXAMINATION
DEPARTMENT:
(Continued)
NATIONAL BANKS
SEVENTH FEDERAL RESERVE DISTRICT
Total Resources on June 30, 1942 - $7,833,750,000.
Total number of National banks as of December 31, 1941
Additions during the year
535
2
Farmers-Merchants National Bank of Paxton,
Paxton, Illinois - A conversion of a State
non-member bank.
First National Bank, Marshall, Illinois A conversion of a State non-member bank.
Withdrawals during the year
National Bank of Flint, Flint, Michigan Absorbed by Michigan National Bank,
Lansing, Michigan.
First National Bank of Nora Springs,
Nora Springs, Iowa. Voluntary liquidation.
The National Bank of Adrian, Adrian, Michigan.
Absorbed by Lenawee County Savings Bank,
Flint, Michigan.
The First National Bank of Humboldt,
Humboldt, Illinois.
Absorved by The National
Bank of Mattoon, Illinois.
Total number of National banks as of December 31, 1942
BANK RELATIONS
DEPARTMENT:
During the calendar year 1942 calls, other than
scheduled examinations, were made on national banks,
State member banks, State non-member banks, and
group meetings by the Bank Relations Department,
Mr. A. J. Mulroney, Vice President, and staff of
examiners and assistant examiners, as follows:
4
-4BANK RELATIONS
DEPARTMENT:
(Continued)
National banks
State member banks
State non-member banks
Group meetings
Conferences
Special investigations
167
77
249
27
4
2
526
During the year addresses were made before trade
associations, credit associations, bankers associations, credit union associations, finance companies,
clubs, and various other organizations as follows:
Credit Department - Regulation V
Mr. A. L. Olson, Assistant Vice President
and assistants
6
Consumer Credit Department - Regulation W
Mr. C. T. Laibly, Manager, and assistants
70
Research and Statistics Department
Mr. J. K. Langum, Assistant Vice President,
and assistants
75
151
BINDERY AND
OLD RECORDS:
This Division bound 12,300 books of bank records
during the year 1942, compared with 11,000 in *
1941.
On account of increases in the volume of
old records created out of government financing,
as well as expected constantly increasing quantity
of these records, the force has been increased
from two to four men, with the probability that
more men will have to be added.
BUILDING DEPARTMENT:
In the year 1942 a total of 38,800 square feet of
office space and 6,000 square feet of storage space
was rented in three local buildings. Further, the
RFC Agency vacated 19,836 square feet at the end of
August. With the exception of small enlargements
of a few departments, the increased space thus becoming available was assigned to the Fiscal Agency
operation.
The Fiscal Agency was using 19,000
square feet on January 1, 1942, compared with 63,000
square feet at the beginning of 1943.
Included in
the renting operations above referred to, is the
leasing for three years (fourth year optional) of
30,000 square feet of space on the second and third
-5BUILDING DEPARTMENT:
(Continued)
floors, and vault space in the basement, of the
120 South LaSalle Street Building.
Due to governmental restrictions on new construction, only necessary renovations have been undertaken this past year. However, we completed in
early 1942 the renovation of the l4th floor, which
included the removal of the gymnasium, which not
only converted 5,000 square feet of floor space
into suitable condition for office use, but rendered the other 11,300 square feet on the floor
more serviceable through presenting an open area
for economical work flow.
More than eight tons of scrap were contributed during the year to the Scrap Metal Drive.
A number of projects like improved lighting, extension of sound reduction and floor covering,
brighter decorations, and new furniture, which
have been recognized as desirable, have been necessarily suspended for the duration.
CAFETERIA:
The average number of meals served daily in our
Cafeteria and Dining Rooms during the year 1942
was 1,336, against 1,049 for the year 1941. The
average Cafeteria check in December 1942 was 23.5
cents, against 2 3 . 1 cents in the previous December.
We still serve for 25 cents, meat and potatoes or
other vegetable, bread and butter, dessert and
beverage.
This year we inaugurated a late afternoon light lunch service for evening workers, which
has met with excellent response. Better to handle
the crowds at noon, we installed a second cafeteria
service counter, built of non-critical and used
materials. We absorbed $20,887.52 of the expenses,
or 17.8% in 1942, against $15,639.45 or 17.4% in
1941. We served 401,000 meals last year, against
308,000 in the previous year.
CASH DEPARTMENT:
There was a very substantial increase in
and payments of currency and coin during
1942 over the preceding year, due to the
in payrolls of industries engaged in war
and also to the large amount of currency
the armed forces.
receipts
the year
increase
production,
shipped to
The dollar value of currency paid out during the
year 1942 amounted to $1,933,365,000 as compared
$1,647,332,000 during the year 1941 - an increase
of 17%.
-6CASH DEPARTMENT:
(Continued)
The number of pieces of currency paid out during
the year 1942 amounted to 385,375,493 as compared
with 348,588,200 during 1941 - an increase of 11%.
The dollar value of currency received and counted
during the year 1942 amounted to $1,544,616,013 as
compared with $1,368,922,844 during 1941 - an increase of 13%.
The number of pieces of currency received and
counted during the year 1942 amounted to 354,038,174
as compared with 334,997,526 during 1941 - an increase of 6%.
The dollar value of coin paid out during the year
1942 amounted to $4l,052,411 as compared with
$35,998,495 during 1941 - an increase of 14%.
The number of pieces of coin paid out during the
year 1942 amounted to 512,136,484 as compared with
492,631,121 during 1941 - an increase of 4%.
The dollar value of coin received and counted during the year 1942 amounted to $30,729,690 as compared with $23,302,968 during 1941 - an increase
of 32%.
The number of pieces of coin received and counted
during the year 1942 amounted to 3 6 1 , 7 3 1 , 2 9 4 as
compared with 204,103,253 during 194l - an increase
of 11%.
CHECK DEPARTMENT:
This department handled 29,910,793 City Checks during the year 1942, with a dollar value amounting
to $24,542,730,000, which is an increase of 9.17%
in City Checks handled and 21.60% in the dollar
value of City Checks handled compared with the year
1941.
The number of Country Checks handled was 122,485,097,
with a dollar value of $15,502,741,000, which is an
increase of 2.89% in Country Checks handled and 19.71%
in the dollar value of Country Checks handled, compared with the year 1941.
12,421,740 Government Checks were handled, with a
dollar value of $7,676,736,000, which is an increase of 45.55% in Government Checks handled and
206.68% in the dollar value of Government Checks
handled compared with the year 1941.
Total number of checks handled for the year 1942 was
164,817,630, with a dollar value of $47,722,207,000,
-7CHECK DEPARTMENT:
(Continued)
which is an increase of 6.35% in total checks
handled and 33.92% in dollar value of total
checks handled compared with the year 1941.
CODES and
TELEGRAMS DIVISION:
During 1942 there were handled through the Chicago
relay station a total of 765,154 telegrams, an increase of 14.2% over 1941 (670,159).
On April 1st of 1942 there was put into operation
in the Chicago relay office a "turret" switchboard
for transmission of these telegrams, the principal
benefit of which is the ability to relay a "book"
message (intended for several or all offices) at
one and the same time, which transmission can be
handled by one operator by means of the "turret"
switching arrangement.
This "book" feature alone formerly required the
services of as many operators as there were stations involved, and has enabled us to handle the
increased volume with actually less operators and
operating detail.
During 1942, 146,755 telegrams were handled by the
Codes and Telegrams Division of the Federal Reserve
Bank of Chicago, of which 83,488 were incoming telegrams and 63,267 were outgoing telegrams, as against
a total of 140,067 in 1941, of which 81,422 were incoming and 58,625 were outgoing, showing an increase
for 1942 of 4.8% for the total; 2.5% for the incoming, and 7.9% for the outgoing telegrams.
COLLECTION DEPARTMENT:
The number of City transactions handled during the
year 1942 was 49,8l6, compared with 52,156 during
1941 - a decrease of 4%.
The number of Country transactions handled during
the year 1942 was 305,377, compared with 341,810
during the year 1941 - a decrease of 11%.
The number of Coupon and Security transactions
handled during the year 1942 was 147,832, compared
with 162,218 during the year 1941 - a decrease of
9%.
The decrease in Security transactions handled during
1942 was partly due to the fact that the special
service of receiving against payment securities purchased by member banks from banks or brokers, which
payments had been made by the Collection Department,
-8COLLECTION DEPARTMENT:
(Continued)
was transferred to the Safekeeping Department because practically all securities so received are
eventually lodged in the Safekeeping Department
for the accounts of the purchasing hanks.
CONSUMER CREDIT
DEPARTMENT:
The activities of the Consumer Credit Department
during the year of 1942 included the licensing of
some 21,000 Registrants under Regulation W, the
answering of about 28,000 inquiries regarding particular phases of the Regulation (through correspondence, telephone and personal interviews), addressing groups of Registrants on the subject of
the Regulation, and conducting investigations of
the books and records of over 1,600 dealers and
vendors, in order to determine the extent of their
compliance with the provisions of the Regulation.
This work is now handled by sixteen employees at
the Head Office and three employees at the Branch
in Detroit. At the beginning of the year twentyfive employees were engaged in this work at the
Head Office but, as the type of activity changed,
thirteen of that number were transferred (or resigned) and four investigators were added to the
staff.
CORRESPONDENCE: During the year over 9,800 letters
were received requiring a dictated reply involving
an interpretation of the Regulation or an application of interpretations to specific instances. Over
6,500 other written inquiries were received which
were answered with form letters in most instances.
In addition approximately 400 letters were received
conforming with requests of investigators that this
Bank be advised when corrections of non-conforming
transactions disclosed in the respective investigations had been effected.
SPEAKERS FURNISHED: During the year the Consumer
Credit Department conducted seventy talks on Regulation W. In every case speakers were furnished
in answer to specific requests; the majority of
such requests were received from retail credit
groups. The total attendance at these meetings
was 11,480.
From remarks passed following these
meetings, correspondence which has come to our attention, and merchants' comments incorporated in
our Investigators' reports, these meetings have had
a great educational value.
INVESTIGATIONS: The first investigation of the books
and records of a Registrant under Regulation W con-
-9CONSUMER CREDIT
DEPARTMENT:
(Continued)
ducted in this Federal Reserve District occurred
on June 22, 1942. Between that date and the end
of the year a total of 1,665 investigations were
made, 553 of which disclosed a total of 1,744- violations.
There are at the present time seven men actively
engaged in conducting investigations in this District, five working out of the Head Office and two
from the Detroit Branch. An average of two to three
hours has been spent in each investigation, but it
is expected that this average time will increase,
inasmuch as the early investigations were confined
to the smaller Registrants, involving less investigation time.
Investigations have been confined, with the exception of
finance companies, to vendors, of which
there were some 27,000 registered with this bank as
of December 31, 1942. Certain of the investigations
have involved Registrants extending charge account
credit only, who have not filed a Registration Statement. An attempt has been made, however, to apportion the investigations of various classifications
of Registrants in order that a representative percentage of each classification might be reflected
over a given period.
During the period of June 22 to September 1, most
of the investigations made were within the metropolitan Chicago area and were made by assignment
from the Registration Statements. After the latter
date, however, investigators were placed in the
field outside the metropolitan Chicago area and investigations were conducted without the benefit of
prior reference to a Registration Statement. This
change of practice resulted in a total of 187 calls
(not included in the above figure) on merchants
selling listed articles on a cash basis only. In
each such case the investigator satisfied himself
that the merchant was not extending any credit subject to Regulation W.
For the most part, very little opposition to the
Regulation has been encountered. In many cases the
Registrants were not only willing to make all records available to the investigator, but regarded
the investigator's visit as a "privilege" in that
they were thus enabled to discuss their problems
arising under the Regulation with a representative
of the Federal Reserve Bank. Most Registrants investigated have indicated voluntarily their approv-
-10CONSUMER CREDIT
DEPARTMENT:
(Continued)
al of the Regulation and a great many have expressed
their conviction that the Regulation should " e
b
continued
after the present emergency as a permanent
regulatory measure.
DISBURSING DEPARTMENT:
Due to increasing activities throughout the bank,
especially in the Fiscal Agency units, which directly affects the volume of work handled by this department, operations increased approximately 33% in
1942 over 1941.
DISCOUNT AND CREDIT
DEPARTMENTS:
Guarantees under Regulation V.
The principal activity during the year centered
around the functioning of guarantees on behalf
of the War Department, Navy Department, and the
Maritime Commission under the provisions of
Regulation V of the Board of Governors of the
Federal Reserve System. 617 applications for
guarantees were received at the Head Office in
connection with loans aggregating $437,158,130.
These applications were in connection with guarantees on behalf of the three branches of the
armed services. Each application required a
separate analysis and preparation of recommendations to the Board of Governors of the Federal
Reserve System. 4l9 guarantees were issued during the year in connection with loans aggregating
$267,693,834. Approximately 78 of the guarantees
were terminated during the year as the result of
payment of the loans guaranteed. Guarantee fees
collected during the year aggregated $187,514.12
and our expenses incident to the handling of the
Regulation V activities aggregated $48,l87.87,
which amount is reimbursed to us by the respective branches of the armed services on whose behalf guarantees have been entered into.
Advances under Section 13b of the Federal Reserve Act.
36 applications for loans and commitments aggregating $1,542,194.90 were received. 26 applications were approved and loans disbursed in the
amount of $452,043.80; three commitment agreements were entered into under which we agreed to
purchase from financing institutions loans aggregating $351,250. The major portion of the applications related to financing of Government contracts.
-11DISCOUNT AND CREDIT
DEPARTMENTS:
(Continued)
Advances to Member Banks
Only 4 member banks were accommodated during
the year. Advances were made to these banks
in an amount aggregating $528,000 on their
notes secured by United States Government obligations.
Miscellaneous
It is our practice to require monthly progress
reports in connection with guarantees outstanding, as well as in connection with loans made
under Section 13b. Interim balance sheets and
operating figures are also requested when available. The servicing of the guaranteed loans, as
well as loans under Section 13b, requires the
maintenance of credit files on each individual
name. All reports received are carefully analyzed with a view to detecting any unfavorable
trends and taking whatever steps appear advisable. Credit files are also maintained on approximately 100 firms to which our Collection
Department has occasion to deliver securities
from time to time. In some instances it is necessary to deliver securities under trust receipt
or on payment against uncertified checks. Delivery under such circumstances is authorized by
the Credit Department if warranted.
EMERGENCY RELIEF
CHECKS DEPARTMENT:
During the year 1942 this department handled
2 , 9 6 7 , 6 8 6 checks, which is a reduction of 32.30%
compared with the number of checks handled during
the year 1941.
The dollar value of the checks handled in the year
1942 was $100,402,373, which is a decrease of
52.64% compared with the dollar value of checks
handled in the year 1941.
FEDERAL RESERVE
NOTE ISSUE DEPARTMENT:
Federal Reserve Notes received from Washington by
the Federal Reserve Agent amounted to $845,000,000.
Federal Reserve Notes issued to the Federal Reserve
Bank of Chicago by the Federal Reserve Agent amounted to $830,695,000.
Federal Reserve Bank Notes on hand January 1,1942,
amounted to $32,315,000.
Federal Reserve Bank Notes received from Washington
by the Federal Reserve Agent during the year 1942
amounted to $47,000,000.
-12FEDERAL RESERVE
NOTE ISSUE DEPARTMENT:
(Continued)
Federal Reserve Bank Notes issued to the Federal Reserve Bank of Chicago by the Federal Reserve Agent
amounted to $58,395,000.
CAPITAL STOCK
Paid-in
Capital
$16,305,950
15,612,900
December 31, 1942
December 31, 194l
Increase
925
899
26
$
Number of adjustments
in stock holdings due
to increases in capital
and surplus
Number of adjustments
due to decrease in
capital and surplus
FILES DEPARTMENT:
No. of
Members
693,050
541
24
The full impact of government financing has been
felt in the volume offered the General Files Division during 1942. As against 1,353,000 pieces in
1941, close to 2,900,000 pieces were filed in
1942, and this volume is expanding at a rapid rate.
Against a personnel of eight at the end of last
year, we now are employing twenty people.
FOREIGN FUNDS
CONTROL DIVISION:
The Foreign Funds Control Division for the year
1942 received 7,730 applications for licenses, of
which 6,l6l, or approximately 80%, were acted on
by this hank without reference to the Treasury
Department, and 1,569 were forwarded to the Treasury Department for consideration. The falling off
in the number of applications was occasioned largely by the issuance of a number of General Licenses
by the Treasury Department, together with the drying
up of import and export transactions with Europe and
the Far East subsequent to the outbreak of war.
-13FOREIGN FUNDS
CONTROL DIVISION:
(Continued)
The Foreign Funds Control Division also received,
examined and forwarded to the Treasury 5,132 census reports of foreign property on Form TFR-300.
At the end of the year there were six employes engaged full time in Foreign Funds Control activities
and three part time, against eleven full time and
four part time at the beginning of the year.
GOVERNMENT BOND
DEPARTMENT:
The operations of the Bond Department during the
year 1942, continued to show considerable expansion
and the largest portion of this increase in activity
is represented in the handling of War Savings Bonds.
Beginning September 1, 1942, the Federal Reserve Bank
took over the handling of sales analysis, formerly
handled by the Treasury Department. This activity
consists of furnishing reports to State Administrators and other Federal Reserve Banks of geographical break-down of sales by city, county, and state.
With the exception of the month of March, 1942, the
Treasury Department had monthly offerings of new
issue and during December this was represented by
three different series of securities with the total
offering being of substantial proportion. The following comparative figures for 1942 with 1941 gives
some idea of the increased activities of the Fiscal
Agency Department.
%
of
1942
1941
Increase
19,596,000
16,900,000
2,096,000
1,224,000
644.0%
1280.7%
204,000
31.4%
313,000
242.8%
113,000
1,498,000
91,000
259,000
24.2%
478.4%
Incoming Registered Mail
849,000
169,000
402.4%
1,800,000
909.2%
Bond Custodian
Pieces received from Treasury
Pieces prepared for delivery
Denominational Exchange
Pieces handled
268,000
Issuance of New Securities
Subscriptions and
applications received
1,073,000
Bonds Redeemed
Coupon bonds
Registered bonds
Number of transactions
Shipping and Delivery
Number of pieces shipped
18,166,000
-14-
GOVERNMENT BOND
DEPARTMENT:
(Continued)
Due to the increases indicated above, plans were
consummated as of January 4, 1943, transferring
the Registered Surrender Division to our Annex at
Number 120 South La Salle Street.
INVESTMENT DEPARTMENT:
The transactions in Treasury bills under repurchase
agreement amounted to $751,620,000 purchased, and
$633,455,000 sold. This reflects transactions only
for the period September 30 to December 31, 1942.
The arrangement for the purchase of Treasury bills
under repurchase agreement instituted in the latter
part of 1942 has proven extremely popular with banks
in Chicago and the Seventh Federal Reserve district,
and total transactions would undoubtedly have been
much larger had the arrangement been in effect thruout the year.
Trading in outstanding Government securities by member banks was relatively quiet during the year as
the interest of member banks was largely in new
Treasury issues, which were offered in every month
but one of 1942, while individual customers of member banks were to a large extent purchasing savings
bonds rather than outstanding Treasury obligations.
LEGAL DEPARTMENT:
The Legal Department prepared 460 written Guarantee
Agreements involving $250,740,495 for this bank as
Fiscal Agent for the War Department, Navy Department,
and Maritime Commission, pursuant to Executive Order
No. 9112 and Regulation V.
Extensive correspondence with member banks concerning regulations and rulings of the Board of Governors and sundry matters were also carried on.
Examination of law and preparation of written opinions on various legal questions submitted by the
Board of Governors and its staff, and practically
all of the legal work for the Detroit Branch was
handled by this department.
MAIL DEPARTMENT:
The Mail Department's activities have been largely
increased, not only in the servicing of government
securities, but in the circulating of advertising
-15MAIL DEPARTMENT:
(Continued)
material for the Victory Fund Committee and for
activities like Foreign Funds Control and Regulation W.
Incoming mail received during 1942
totaled about 2,200,000 pieces, an increase of
57% over 1941; while outgoing mail dispatched
totaled 4,300,000 pieces, an increase of 46%.
The outlay for postage was $165,000 this year,
against $134,000 last year, with reimbursement
by the Treasury of about $84,000 of this year's
postage against close to $34,000 for last year.
Personnel has been increased about 50% to a total
of 74.
MEMBER BANK
ACCOUNTS DIVISION:
Analyses reflected 88 deficiencies in reserves of
65 member banks (head office territory) for computation periods ending in the year 1942. Penalties covering these deficiencies amounted to
$1,067.24, and were assessed in accordance with
regulations. Comparative figures for computation
periods ending in the year 1941 reflected 55 deficiencies in the accounts of 33 member banks, and
the amount involved was $625.21.
The maximum
number of penalties assessed against any one bank
during 1942 was 5 (in one instance), as against 5
(in two instances) for 1941.
During 1942 the reserve requirements against net
demand deposits of Central Reserve City banks
were reduced from 26% to 20% - a 2% reduction
occurring as of each of the following dates —
August 20, September 14, and October 3- The reserves of all member banks in the 7th District
for the year 1942, adjusted on the basis of semimonthly periods, reflected a maximum excess over
requirements of $527,000,000, or 37.82% for the
period January 16-31, and a minimum excess of
$255,000,000 or 16.81% for the period October
16-31.
OFFICE MACHINE
REPAIRS:
The work of this Division, consisting at the present time of four repairmen, increased substantially
during 1942 over the preceding year, due principally to a large increase in the amount of mechanical
equipment purchased and rented, and to the necessity of reconditioning and rebuilding used equipment for service here and at our Detroit Branch.
PERSONNEL DEPARTMENT:
During the year 1942, 1855 persons were hired and
1133 persons left our employ, a net increase of
722. The percentage of turnover was 46.1%.
-16PERSONNEL DEPARTMENT:
(Continued)
Since September 1, 1940, 202 employees have left
to enter military service: Army, 154; Navy, 28;
Marines, 5; Coast Guard, 7; Merchant Marine, 2;
WAACS, 3; WAVES, 3.
During 1942 loans were granted to 65 employees
totaling $7,909.00. As of December 31, 1942, outstanding loans to 44 employees totaled $3,711.28.
In the fall of 1942 a school was established for
girls who would be graduated from high school the
end of January of 1943. Approximately 50 students
were enrolled. The majority are taught typing,
while others are taught key punching. The classes
are held for four hours each Saturday morning. A
similar arrangement has been followed whereby 12
page prospects are being developed.
Men
Women
Total
Annual
Salaries
Employees as of:
December 31, 1941
% of total
833
48.0%
902
52.0%
1735
$2,593,763.
December 31, 1942
% of total
901
36.7%
1556
63.3%
2457
3,959,191.
January 1, 1943
% of total
899
36.4%
1568
63.6%
2467
3,983,471.
PLANNING DEPARTMENT:
During the year 19*4-2 the Planning Department devised and installed the following methods:
Inscribing War Savings Bonds by use of duplicating
machines, which enabled us to inscribe bonds at an
increased rate of speed of at least 1,000% over
our former method of inscribing by use of typewriters. This method has since been adopted by many
banks and corporations throughout the country.
A method of handling the Sales Analysis Report of
War Savings Bonds by use of tabulating machines.
A method was devised and machinery installed to
handle consignment ledger accounts in our Government Bond Department.
A method was devised to handle the 5% Victory Payroll Deduction Plan mechanically by use of our present tabulating equipment.
-17PLANNING DEPARTMENT:
(Continued)
The Planning Department, in conjunction with Treasury Department officials, devised a plan which will
permit this bank to discontinue the sorting of redeemed War Savings Bonds by serial number, and to
allow us to make the necessary records of the redeemed bond numbers by use of tabulating equipment.
Since the turn of the year the Treasury Department
has agreed to allow all Federal Reserve Banks to
make the list of canceled bond numbers by this same
method. The saving in expense and manpower to the
Federal Reserve Banks, by adoption of this method,
will be enormous.
All of the above installations have been a great
saving to the bank in expense and manpower.
At the Detroit Branch the installation of handling
consignment accounts in connection with the issuance
of War Savings Bonds, and the redemption of War Savings Bonds, were put into operation under the supervision of the Planning Department.
PURCHASING DEPARTMENT:
During the year 1942 this Department issued 8,455
purchase orders totaling $620,000 for building and
office supplies, printing and stationery, furniture
and equipment, and for such other expenses as were
necessary to the conduct of our business.
These
figures compared with 6,960 orders with a dollar
value of $322,000 during 1941, and represent an increase of 21% in the number of orders and 93% in
the dollar value over that year.
The increase in the dollar value in expenditures
consisted mostly of the cost of furniture and equipment for use in connection with greatly expanded Fiscal Agency functions. Building alterations, greater
activities in various departments of the bank, and a
moderate increase in inventories also helped to account for a smaller portion of the increased cost.
Prices remained fairly stable throughout the year.
While difficulties, delays, and denials in some instances, have been experienced in the securing or
attempted securing of necessary equipment and critical materials, ways and means as a rule have been
found to overcome these problems, and our situation
in this respect at the moment appears favorable for
the immediate months to come.
The expansion described above was reflected in
greatly increased activities in the related stockroom and print shop and addressograph sections;
the two latter divisions being particularly affected by Treasury financing and the work of the Victory Fund Committee.
-18R.F.C. CUSTODY
DIVISION:
In addition to acting as Custodian and Disbursing
Agent for the Reconstruction Finance Corporation
and through it for the Defense Plant Corporation
and Commodity Credit Corporation, there was added
during the year the work of making disbursements
for scrap rubber for account of the Rubber Reserve
Company and the handling of disbursements in connection with the Idle Tire Program of the Defense
Supplies Corporation as well as numerous other
programs including the purchase of alcohol, aluminum rivets, and various restricted articles and
commodities. The handling of premiums submitted
by insurance companies in connection with War Damage insurance is another activity causing a considerable increase in the volume of work handled
by this division, premiums aggregating $10,812,000
having been received since July 1942.
Total disbursements were approximately 275% higher
in 1942 than in 1941, the amount of money disbursed
in 1942 being $1,274,924,000. as compared to the
amount of $341,438,000, in the previous year. The
increase in disbursements for 1942 is largely represented by disbursements of over 845 millions of
dollars on account of the Lend Lease Program as
compared to 232 millions in the previous year and
disbursements of 119 millions of dollars in various
Commodity Credit Corporation programs as compared
to 47 millions in 1941. Defense Plant disbursements
aggregated 247 millions in 1942 as compared to 4l
millions in 1941, while disbursements for various
programs of Defense Supplies Corporation aggregated
34 millions of dollars in 1942, no disbursements for
this Corporation having been made during the previous year. There was an increase in the amount of
disbursements for the Reconstruction Finance Corporation due to numerous small loans in connection
with war activities, the total representing but 13
millions of dollars of the total disbursements made
by this division.
Commodity Credit Corporation activities in connection with corn loans continued about the same as in
the previous year but loans on and purchases of
wheat and the program in connection with soybeans
which started in the latter three months of the year
and numerous smaller programs accounted for the
large increase in disbursements for this Corporation.
During the year, receipts in the form of payments on
grain and commodities aggregated 187 millions of dollars as compared to receipts in the previous year of
102 millions of dollars.
-19R.F.C. CUSTODY
DIVISION:
(Continued)
RESEARCH AND
STATISTICS DEPARTMENT:
While a great deal of detail work was performed
in connection with The RFC Mortgage Company and
Federal National Mortgage Association, the total
disbursements for these corporations aggregate
approximately 9 millions as compared to 16 millions of dollars disbursed during the previous
year. Payments on mortgages and deposits for
taxes and insurance made by mortgagors aggregated
$11,500,000., an amount slightly in excess of the
amount received for 1941.
During 1942 the Research and Statistics Department emphasized in its studies the impact of war
upon Seventh District industry, trade, agriculture, and banking.
The personnel of the department was further strengthened through additions
to the staff of trained specialists, as well as
competent assistants.
Many special studies of a pioneering nature were
conducted during 1942. Illustrative of these
are the Seventh District currency study, factors
of gains and losses in Seventh District reserve
balances, the distribution of deposits, the paper
and pulp industry, the farm machinery industry,
policies of the Commodity Credit Corporation, and
bank holdings of revenue bonds.
A new statistical series covering retail furniture
trade and credit was developed in 1942. Furniture
now represents the most important category of consumer durable goods upon which credit is extended.
Because of the vital interest of the Federal Reserve System in consumer credit, many consumer
credit studies which had been conducted by the
Department of Commerce were taken over and extended. The bank debits series was strengthened thru
the addition of new reporting banks and additional
cities. Significant additions to the department
store reporting group made possible the establishment of a State Street series.
Special emphasis has been placed upon continuing
close contacts by the Research staff as representatives of the Federal Reserve Bank of Chicago
with leaders in industry, trade, agriculture, and
banking.
This matter is important for several
reasons.
(l) Wise and effective central banking
and fiscal policy presupposes a thorough understanding of the basic economic activities upon
which the banking structure depends for its exis-
-20RESEARCH AND
tence. No better way exists for obtaining this
STATISTICS DEPARTMENT: understanding than establishing personal contacts
(Continued)
with
leaders of economic activities. (2) Strengthening the work of the Federal Reserve Banks as regional centers of information and leadership, invited in the letter of July 21 from Governor Evans,
necessitates that Reserve Banks put their roots
down more deeply.
(3) Effective contacts by the
research staff with leaders of economic activities
is essential from the standpoint of public relations alone.
SAFEKEEPING
DEPARTMENT:
The increased activity in Government financing has
resulted in a very substantial increase in the activity of the Safekeeping Department.
The total amount of securities received during 1942
was $ 8 , 0 9 9 , 0 8 0 , 0 3 0 as compared with $ 3 , 0 8 8 , 8 5 6 , 6 5 8
during 1941, an increase of 162%.
The total amount of securities released during 1942
was $5,971,081,890 as compared with $2,962,620,610
during 1941, an increase of 100%.
Total amount of securities held at close of business December 31, 1942, was $ 3 , 0 9 6 , 6 3 1 , 2 3 1 as compared with $968,633,091 as of December 31, 1941,
an increase of 219%.
Number of receipts outstanding at close of business December 31, 1942, was 53,627 as compared with
45,926 as of December 31, 1941, an increase of 17%.
Number of pieces held at close of business December
31, 1942, was 346,908 as compared with 296,800 as
of December 31, 1941, an increase of 17%.
Number of coupons detached from securities on coupon maturity dates was 6ll,9l8 as compared with
537,932 on December 31 of the respective years 1942,
and 1941, an increase of 14%.
Total amount of coupons detached and credited as of
December 31, 1942, amounted to $32,063,737 as compared with $21,145,868 as of December 31, 1941, an
increase of 52%.
In addition, there was transferred from the Government Bond Department function the custody of War
Savings bonds for individuals, as well as the direct
custody of collateral to War Loan account.
-21SAFEKEEPINGDEPARTMENT:
(Continued)
During the year there were received from individuals and non-member banks War Savings bonds in the
amount of $10,700,921, representing 19,763 transactions.
During the year there were released to individuals
and non-member banks War Savings bonds in the amount
of $2,120,075, representing 2,617 transactions.
Total amount of War Savings bonds held at close of
business December 31, 1942, was - - individuals,
$25,377,8265; non-member banks, $3,565,500; total,
$28,943,326.
Securities held in special custody at close of business December 31, 1942, are as follows:
U. S. Treasurer's Account
Other Government Agencies
War Savings Collateral
for "E" Bonds
$ 31,453,050
177,007,010
1,488,050
TELEPHONE DIVISION:
Local telephone calls increased from 14,000 per
month average in 1941, to almost 19,000 average per
month in 1942.
WIRE TRANSFER
DIVISION:
144,250 transfers of funds were made during the
year 1942 compared with 138,500 during the year
194l - an increase of 4.14%.
The dollar value of the Transfers made during the
year 1942 amounted to $27,011,317,000, compared
with $22,140,774,000 during the year 1941 - an increase of 22%.
-22D E T R O I T
B R A N C H
The program to expand the operations of the Detroit Branch to include
all fiscal agency functions for the Government applicable to the Branch
territory, which was started late in 1941, was continued in 1942, and
all of the principal services provided at the Head Office are now available at the Branch. Housing these added functions necessitated the
leasing of a building containing 20,000 square feet located at Number
735 Griswold Street.
Personnel, which at the beginning of the year numbered 265, including
four officers, was increased to 556, including five officers, as of the
end of the year, the additional functions established being largely
responsible therefor. Women have been assigned to many positions formerly held by men and at the end of the year women represented 73% of
the total number of employees, whereas at the beginning of the year they
constituted only 53%.
More lucrative salaries available in industry
for similar positions have been responsible for a large turnover in personnel. 516 clerks were employed during the year while resignations and
releases numbered 225.
Loans and commitments to purchase participation in loans outstanding on
January 1, 1942 totaled $1,874,000 which, in addition to loans and commitments aggregating $425,000 made early in 1942 were liquidated before
the end of the year.
The inauguration of Regulation "V" guaranteed loans in April, 1942,
eliminated the demand that had existed previously for credit accommodations from the Detroit Branch and during the last eight months of 1942
the Detroit Branch as Fiscal Agent for the United States issued on behalf of the War and Navy Departments 85 guarantees covering loans aggregating $90,029,000 and 7 additional loans totaling $6,665,000 were
approved for which guarantees were later issued.
The Cash Department paid out 103,125,780 pieces of currency during the
year 1942 which is an increase of 10$ compared with the number of pieces
paid out in the year 1941. The dollar value of currency paid out amounted to $808,007,774 - an increase of 28$ compared with the dollar value of
currency paid out in the year 1941.
The dollar value of currency received amounted to $516,723,881- an increase of 10$ compared with the dollar value of currency received in the
year 1941. The number of pieces of currency received in the year 1942
was 85,587,128 which was substantially the same number received in the
year 1941.
The number of pieces of coin paid out in the year 1942 was 102,289,732 an increase of 24$ compared with the number paid out in the year 1941.
The dollar value of coin paid out amounted to $8,881,543 - an increase
of 29$ compared with 194l.
The Check Department handled 9,584,359 city checks during the year 1942an increase of 24$ compared with the number of checks handled in the year
1941.
-23D E T R O I T
B R A N C H
(Continued)
14,702,091 country checks were handled during the year 1942 - an increase of 5% and 2,168,288 Government checks were handled - an increase
of 70% compared with the number handled in the year 1941.
The dollar value of all checks handled during the year 1942 amounted to
$17,253,480,107.17 - an increase of 137.58% compared to the dollar value
of checks handled during the year 1941.
The Government Bond Department shipped to issuing agents in the Detroit
territory 4,354,077 War Savings Bonds, the dollar value of which was
$l69,475,675 since August of this year when this function was inaugurated at the Detroit Branch.
l,04l,544 War Savings Bonds and Tax Notes, with a dollar value amounting to $256,213,100 were issued during the year 1942.
53,885 War Savings Bonds, with a dollar value of $1,929,275, were redeemed during the month of December, 1942. This function was inaugurated on November 16 of this year.
228,427 Government coupons were redeemed during the year 1942 - an increase of 18% compared with the number redeemed during the year 1941.
Subscriptions received during the year 1942 for Government securities,
excluding War Savings Bonds and Tax Notes, amounted to $l,405,151,900—
an increase of 141% compared to the amount of subscriptions received during the year 1941.
The Detroit Branch is Custodian, Fiscal Agent and Depository for the Reconstruction Finance Corporation and its affiliates and as of the close
of the year 114 employees were assigned to the Division handling the
Corporation's activities.
The operating statement of the Detroit Branch discloses a general increase in the volume of transactions of most of the other departments of
the bank.
Since May, 1942 the Detroit Branch has provided members of the Detroit
Clearing House Association with quarters for exchanging checks and notes
and has supervised such exchanges and settlements.
Member bank reserve balances carried with the Detroit Branch as of December 31, 1942 totaled $406,547,340 as compared to reserve balances in the
sum of $257,057,881 held on December 31, 1941.
-24Federal Reserve Bank of Chicago
STATEMENT OF EARNINGS AND EXPENSES
For Years 1942 and 1941
Year 1942
$6,590,508.20
5,177,402.95
$1,413,105.25
Current Earnings
Current Expenses
Current Net Earnings
Additions to Current Net Earnings
Net Profit on sales of U.S.Government securities •
Transferred from Reserves for losses on
Industrial Advances
Refund on real estate tax - Year 1939
All other additions
Total Additions to Current Net Earnings . . . .
Year 1941
$5,089,095.08
4,227,533.76
$ 861,561.32
$
$
378,310.71
14,000.00
-
4,433.77
4,104.40
$
386,848.88
147,895.36
-
$
1,008.52
162,903.88
Total Current Net Earnings and
$1,799,954.13
Deductions from Current Net Earnings
Reserve for losses on Industrial Advances
.... $
Retirement system (interest base adjustment)
...
Total Deductions from Current Net Earnings
.. $
Net Earnings
$1,024,465.20
10,000.00
592,793.00
602,793.00
-
-
-
$1,197,161.13
Distribution of Net Earnings
Dividends Paid
Payment to United States Treasury (Section 13-b) .
Transferred to Surplus (Section 7)
$1,024,465.20
$
$
$1,197,161.13
Capital and Surplus Accounts
Paid-in Capital December 31
Surplus (Section 7)
Surplus (Section 13-b)
Earnings on Average Paid-in Capital
Earnings on Average Paid-in Capital and Surplus
Detail of Current Earnings
U.S. Government Direct Obligations
Discounted Bills
Industrial Advances
Commitments to make Industrial Advances
Deficient Reserve Penalties
Income from Banking Houses
All Other
* Transferred from Surplus (Section 7)
to Reserve for Contingencies.
896,766.37
27,214.83
100,484.00
$1,024,465.20
$16,305,950.00
22,924,752.06
1,429,383.78
7.5%
3.1%
$15,612,900.00
22,924,752.06
1,429,383.78
6.9%
2.7%
955,507.94
4,021.06
237,632.13*
$ 6,407,271.63
1,748.51
12,609.41
10,299.59
1,235.90
.
149,024.56
8,318.60
$ 4,884,837.35
1,236.46
17,322.65
4,954.77
440.14
172,940.24
7,363.47
$ 6,590,508.20 $ 5,089,095.08
-25FEDERAL RESERVE BANK OF CHICAGO
STATEMENT OF CONDITION
(in thousands of dollars)
At t h e
close
of
business
Dec.31,1942
Dec.31,1941
$ 3,570,031
1,475
40,0l8
$ 3,611,524
$
A S S E T S
G o l d c e r t i f i c a t e s on hand and due
f r o m U. S . T r e a s u r y
R e d e m p t i o n f u n d - F. R. n o t e s
Other cash
Total reserves
B i l l s discounted:
S e c . b y U. S . Government o b l i g a t i o n s ,
d i r e c t and g u a r a n t e e d
Other b i l l s d i s c o u n t e d
Total b i l l s discounted
I n d u s t r i a l advances
U . S . G o v ' t s e c u r i t i e s , d i r e c t and g u a r a n t e e d
Bonds
Notes
Certificates
Bills
Total U.S.Gov't S e c . d i r e c t & guaranteed . .
T o t a l b i l l s and s e c u r i t i e s
305
$
$
305
110
$
3,423,782
1,122
38,858
3,463,762
$
$
18
18
306
342,801
165,109
127,787
241,198
$
$
Due f r o m f o r e i g n b a n k s
'
F e d e r a l Reserve n o t e s of o t h e r banks
Uncollected items
Bank p r e m i s e s
Other A s s e t s
TOTAL ASSETS
$
876,895
$
.
6
6,415
244,938
2,917
10,859
4,753,969
877,310
198,906
105,406
$
$
1,406
305,718
306,042
6
3,449
180,907
2,971
5,466
$ 3,962,603
$
L I A B I L I T I E S
F . R. n o t e s i n a c t u a l c i r c u l a t i o n
Deposits:
Member b a n k — r e s e r v e a c c o u n t
U. S. T r e a s u r e r - General a c c o u n t
Foreign
Other d e p o s i t s
Total deposits
Deferred a v a i l a b i l i t y items
Other l i a b i l i t i e s i n c l u d i n g
dividends
TOTAL LIABILITIES
C A P I T A L
$ 2,419,593
1,719,536
$
1,762,132
156,906
91,617
3,496
2,014,151
1,925,896
71,445
85,273
4,310
$ 2,086,924
,
accrued
197,776
344
180,340
165
$ 4,704,627
$
3,914,192
$
$
15,613
22,925
1,429
8,444
3,962,603
A C C O U N T S
Capital paid in
Surplus ( S e c t i o n 7)
Surplus ( S e c t i o n 13b)
Other c a p i t a l accounts . . .
TOTAL L I A B I L I T I E S AND CAPITAL ACCOUNTS
Ratio of t o t a l r e s e r v e s t o d e p o s i t
F . R'. n o t e l i a b i l i t i e s c o m b i n e d
C o m m i t m e n t s t o make i n d u s t r i a l
. . . .
$
16,306
22,925
1,429
8,682
4,753,969
$
and
80.1%
advances
*
*
*
. . . .
*
*
*
92.7%
-
1,874
*
1942
F e d e r a l Reserve Board
Regular (Year)
$
1941
Assessment:
$213,773.02
$221,802.47
@FedFRASER