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EIGHTEENTH ANNUAL REPORT of the FEDERAL RESERVE BANK OF KANSAS CITY FOR THE YEAR ENDED DECEMBER 31, 1932 TENTH FEDERAL RESERVE DISTRICT EIGHTEENTH ANNUAL REPORT of the FEDERAL RESERVE BANK OF KANSAS CITY FOR THE YEAR ENDED DECEMBER 31, 1932 TENTH FEDERAL RESERVE DISTRICT LETTER OF TRANSMITTAL March 15, 1933. Sir: I have the honor to transmit herewith the eighteenth annual report of the Federal Reserve Bank of Kansas City, covering the year 1932. Respectfully yours, M. L. McCLURE, Chairman and Federal Reserve Agent. Hon. Eugene Meyer Governor, Federal Reserve Board, Washington, D. C. DIRECTORS AND OFFICERS OF THE FEDERAL RESERVE BANK OF KANSAS CITY FOR 1933 DIRECTORS CLASS A C. C. PARKS (1933), Denver, Colo. FRANK W. SPONABLE (1934), Paola, Kans. E. E. MULLANEY (1935), Hill City, Kans. CLASS B WILLARD D. HOSFORD (1933), Omaha, Nebraska J. M. BERNARDIN (1934), Kansas City, Mo. L. E. PHILLIPS (1935), Bartlesville, Okla. CLASS C E. P. BROWN (1933), Davey, Nebraska H. M. LANGWORTHY (1934), Deputy Chairman, Kansas City, Mo. M. L. MCCLURE (1935), Chairman, Kansas City, Mo. M E M B E R FEDERAL ADVISORY COUNCIL *W. T. KEMPER, Kansas City. Missouri OFFICERS M. L. MCCLURE, Chairman Board of Directors and Federal Reserve Agent H. M. LANGWORTHY, Deputy Chairman A. M. MCADAMS, Assistant Federal Reserve Agent and Secretary S. A. WARDELL, Auditor H. G. LEEDY, Counsel GEORGE H HAMILTON, Governor C. A. WORTHINGTON, Deputy Governor J. W. HELM, Deputy Governor and Cashier JOHN PHILLIPS, J R . , Assistant Cashier E. P. TYNER, Assistant Cashier G. E. BARLEY, Assistant Cashier M. W. E. PARK, Assistant Cashier G. H. PIPKIN, Assistant Cashier N. R. OBERWORTMANN, Assistant Cashier OMAHA BRANCH DIRECTORS AND OFFICERS fW. DALE CLARK (1933), Omaha, Nebraska DANIEL M. HILDEBRAND (1933), Seward, Nebraska A. H. MARBLE (1934), Cheyenne, Wyo. WM. DIESING (1934), Omaha, Nebr. W. E. HARDY (1935), Lincoln, Nebr. T. L. DAVIS (1935), Omaha, Nebr. L. H. EARHART (1933), Managing Director G. A. GREGORY, Cashier W M . PHILLIPS, Assistant Cashier O. P. CORDILL, Assistant Cashier DENVER BRANCH DIRECTORS AND OFFICERS HAROLD KOUNTZE (1933), Denver, Colo. MERRITT W. GANO (1933), Denver, Colo. H . W. FARR (1934), Greeley, Colo. MURDO MACKENZIE (1934), Denver, Colo. R. H. DAVIS (1935), Denver, Colo. HENRY SWAN (1935), Denver, Colo. J . E. OLSON (1933), Managing Director S. A. BROWN, Cashier JOHN A. CRONAN, Assistant Cashier OKLAHOMA CITY BRANCH DIRECTORS AND OFFICERS F. T. CHANDLER (1933), Chickasha, Okla. J. B. DOOLIN (1933), Alva. Okla, N E D HOLMAN (1934), Guthrie, Okla. L E E CLINTON (1934), Tulsa, Okla. AUSTIN MILLER (1935), Oklahoma City, Okla. H. H. OGDEN (1935), Muskogee, Okla. C. E. DANIEL (1933), Managing Director R. O. WUNDERLICH, Cashier R. L. MATHES, Assistant Cashier * Appointed April 12, 1933, to succeed Walter S. McLucas, resigned, t Appointed April 1 3, 1933, to succeed R. O. Marnell, deceased. EIGHTEENTH ANNUAL REPORT FEDERAL RESERVE BANK OF KANSAS CITY The world-wide economic conditions which prevailed throughout 1930 and 1931 were continued and accentuated during the past year, and the situation in the Tenth Federal Reserve District has, of course, reflected national and world conditions. During the early part of the depression its influence in this section of the country was exerted for the most part through low prices for agricultural products and other raw materials and there was relatively little curtailment of production, unemployment, or slackening of business activity. These other phases of depression, however, have developed rapidly during the past year or eighteen months, as continued low prices have drastically cut buying power and forced curtailment of operations. Such favorable adjustments as were made during 1932 were largely negative in character. The further substantial decline in prices of farm and live stock products and the continued low prices for most other commodities should act as a curb on further price recessions; wholesale and retail inventories and cold storage holdings of meats and poultry products are at abnormally low levels; replacements and improvements of plants and equipment have not kept pace with essential requirements; reduced acreage and poor crop prospects promise a substantial cut in production of winter wheat and rye; and adjustments have been made toward lower operating costs on farms and in other industries. Farming operations during 1932 were on about the same scale as in prior years, although the acreage of field crops harvested in the District was 4.8 per cent under the 1931 acreage and the value of production declined sharply for the third successive year. The most important changes in crop production were in winter wheat, which dropped 54 per cent from the record harvest of 1931, and in corn, which increased substantially over 1931 and was greater than in any year since 1927. The reduction in the wheat crop was due to drought and other unfavorable growing conditions, following a reduction from the previous year of 13.2 percent in the fall sown acreage. The United States Department of Agriculture estimates a further reduction of 4.8 per cent in the acreage of winter wheat sown in this District last fall, and states that this reduced acreage and the abnormally poor condition of the crop at this time promise a 1933 winter wheat harvest substantially smaller than any crop for many years. Feed grains other than corn were produced in about normal volume, as was true of cotton, tame and wild hay, forage crops, and white potatoes and most other vegetables. The yields of sugar beets and fruits were substantially below average. All grain prices at the close of the year were at the lowest levels of the present century, with wheat the lowest in the history of the American grain trade. On December 28, No. 2 hard and dark wheat at Kansas City was quoted at 36}4; No. 2 mixed corn, 2 0 £ 5 EIGHTEENTH ANNUAL REPORT No. 2 white oats, 17; No. 2 kafir, 41; No. 2 rye, 30>^; and No. 2 barley, 2 2 ^ cents per bushel. The 1931 closing prices were wheat, 50; corn, 36; oats, 29; kafir, 61; rye, 40; and barley, 36 cents per bushel. In 1929 wheat closed at $1.27; corn, 90; and oats, 46 cents per bushel. The following table, showing four years' production of selected crops in the seven States whose areas or parts thereof comprise the Tenth Federal Reserve District, is prepared from reports of the United States Department of Agriculture. The figures stated are in thousands of units of measure: Winter wheat, bu Spring wheat, bu All wheat, bu Corn, bu Oats, bu Barley, bu Grain sorghums, bu White potatoes, bu Cotton, bales Tame hay, tons Wild hay, tons Sugar beets, short tons Dry beans, bags Apples, bu Peaches, bu Pears, bu 1929 271,017 12,539 283,556 548,990 180,262 49,991 48,731 36,356 1,453 16,931 5,198 4,153 4,832 9,142 3,908 1,622 1930 310,440 10,531 320,971 488,040 187,036 45,091 25,006 44,157 1,205 10,702 4,021 5,094 3,775 4,042 987 648 1931 424,382 4,504 428,886 531,480 193,287 34,528 42,979 30,931 1,651 9,836 3,260 3,975 1,952 11,306 3,471 1,426 1932 196,278 6,340 202,618 676,625 174,410 39,702 39,231 35,391 1,441 10,878 4,248 3,184 1,016 5,561 1,676 643 The live stock industry of the District has suffered severely from three successive years of declining prices, and operations of both raisers and feeders of live stock have been generally unprofitable. The number of animals handled through the public markets of the District has declined substantially, reflecting an increase in direct movements from farm to feed lot, gradual growth of sales direct to packers, and the unwillingness of growers to offer animals for sale at present prices. The year's receipts of cattle, calves, and sheep, at the six principal markets in the District, were the lightest since 1914, 1918, and 1927, respectively. Swine receipts were slightly larger than in 1931 but were smaller than in any other year since 1927. At various times during the year all species of live stock sold at the lowest levels in twenty years or more, and end-of-year prices were, in most instances, near the bottom. The December top at Kansas City for beef steers was §6.75 per hundredweight, as compared to the year's best price of $9.75. Top prices in recent years have ranged from $18 in 1927 and 1928 to $12 in 1931. Prices of stocker and feeder steers held up better than other classes, with net losses varying from 50 cents to $1 per hundredweight. Hogs seldom sold above $4 per hundredweight during the year and closed at $2.80, the lowest in fifty-three years. The 1931 top was $8 and the best closing price $4.30. The highest post-war top was $15 in 1925. Sheep and lamb values were more in accord with those of the preceding year than either pork or beef. Best lambs sold up to $10 per hundredweight in March and down to $5.55 in October, as against $5.45 the year before, and closed the year at $5.85. The 1929 top for lambs was $20.50, 1930 top $13.75, and the 1931 top $12 per hun- FEDERAL RESERVE BANK OF KANSAS CITY dred pounds. Wool prices, the lowest in thirty-five years, ranged from 17 cents a pound for top grades early in the season to 5 cents for low grades in the summer, with the yearly average in the neighborhood of 10 cents a pound. The confusion and uncertainty that existed in the petroleum industry in 1931 was clarified somewhat in 1932. Proration restrictions and agreements continued to curtail production and Tenth District output for the year totaled but 214,141,000 barrels, the smallest for any year since 1922 and equivalent to 80 per cent of the ten-year average. Mid-continent crude oil prices were maintained at higher levels than prevailed in 1931. Quotations which ranged from 61 to 85 cents per barrel, depending on gravity grade, at the beginning of the year, advanced 15 cents per barrel March 24, where they remained until December 15, when reductions carrying closing prices to 45 to 77 cents per barrel were announced by numerous purchasing companies. Field operations, as measured by the number of completions and rigs up and wells drilling, although somewhat more active than in the preceding year, were otherwise the lightest in years. Year-end stocks of crude oil held in Oklahoma and Kansas were the lightest since the forepart of 1927. The District's production of coal for the year is estimated at eighteen million tons, a decrease of 13.3 per cent as compared to 1931 and of 36 per cent as compared to the ten-year average. Cement production declined 39.3 per cent for the year. Output exceeded shipments, and stocks at the close of the year were 7.5 per cent heavier than on December 31, 1931. Shipments of zinc ore and lead ore from mines in Missouri, Kansas, and Oklahoma were 22.1 and 11 per cent, respectively, less than in 1931, and their combined value was the smallest recorded in over thirty-five years. The dollar volume of department store sales, which makes no allowance for price changes, declined 22.3 per cent for the year. In 1931 sales declined 13.3 per cent and in 1930 4.8 per cent, as compared to the preceding year. Dollar sales of five representative wholesale lines combined declined 21.8 per cent as compared to declines of 21.1 per cent and 11.4 per cent one and two years ago. Stocks at both wholesale and retail were reduced during the year, the five wholesale lines reporting a combined reduction of 17.4 per cent and the reporting department stores a reduction of 20.5 per cent. Building activity declined to the lowest levels in many years. The total value of building contracts awarded in the District, as reported by the F. W. Dodge Corporation, declined 46.8 per cent, and of residential contracts 62.7 per cent, as compared to 1931, and 66.7 and 84.9 per cent, respectively, as compared to the five-year average. Banking and credit conditions during the year reflected the long continued low prices and the resultant drain on reserve funds of the depositors and the inability of many borrowers to meet their commitments. In some communities and in individual banks withdrawal of deposits 7 EIGHTEENTH ANNUAL REPORT has reached serious proportions. In many cases, however, the disinclination of solvent customers to extend their operations through the use of borrowed money, and the unwillingness of banks to make other than thoroughly liquid loans, have created an unusually high degree of bank liquidity. The lack of demand for acceptable loans, the low interest return on high grade investment securities, and the development of losses in loan and security accounts combined to make the year an unsatisfactory one for most banks, from the standpoint of earnings. Reports of condition of all member banks in the District, as of December 31, 1932, show a decline in total deposits of about 6.5 per cent from the same date in 1931, and a reduction in total loans and investments over the same period of about 14.4 per cent. The reduction in total loans was about 23.1 per cent, made up of a 26.3 per cent reduction in the item "all other loans" (mostly agricultural and commercial loans), a reduction of 16.5 per cent in loans on securities, and minor changes in the other loan classifications. An increase of 4.4 per cent in United States Government securities and a reduction of 9.6 per cent in other bonds, stocks, and securities combined for a net reduction of 3 per cent in total investments. The 6.5 per cent drop in deposits was considerably less severe than the deposit loss in 1931, and occurred during the first half of the year, the total on June 30 having been somewhat less than on December 31. There was a net reduction of 243 banks during the year, bringing the number of operating banks in the District down to 2,430 on December 31, a reduction of 46 per cent from the 4,503 operating banks at the high point in 1921. There were 205 bank suspensions in the District during 1932, of which 28 were national banks, 2 were State bank'members of the Federal Reserve System, and 175 were nonmember State banks. There were 24 banks, all nonmember State banks, reopened during the year. The failures were confined for the most part to the smaller institutions, deposits averaging about $151,000 for each suspension. OPERATIONS OF FEDERAL RESERVE BANK OF KANSAS CITY Member bank reserve deposits declined further during the year, averaging $67,135,000, as compared with averages of $80,156,000 in 1931 and $87,741,000 in 1930. The average figures by months ranged from a high of $70,987,000 in January to a low of $65,257,000 in October. Slight increases occurred in November and December, the average for the latter month being $65,833,000. Federal reserve notes of this bank in actual circulation increased substantially, averaging $87,266,000 as against averages of $69,100,000 in 1931 and $72,950,000 in 1930. Notes in circulation averaged $82,233,000 in January, fluctuated narrowly to a June average of $81,821,000, increased sharply to a July average of $91,105,000 and an August high average of $95,027,000. Succeeding months showed reductions to an average of $90,635,000 in November, followed by a less than usual seasonal increase to a December average of $91,822,000. Credit extended during the year by the Federal Reserve Bank of Kansas City was in the daily average amount of $70,261,000, as com- F E D E R A L RESERVE BANK OF KANSAS CITY pared to $60,010,000 in 1931 and $41,606,000 in 1930. Two thirds of this amount was represented by holdings of United States Government securities, which averaged $42,817,000 for the year. Average holdings of such securities were about $20,000,000 in January and February, with gradual increases thereafter to an average amount of $57,000,000 in August and the succeeding months of the year. Bills discounted for member banks, including a small volume of discounts of adjusted service certificates for nonmember banks, minor direct loans, and advances to Federal Intermediate Credit Banks, averaged $24,780,000 for the year. Bills discounted averaged $33,237,000 in January, increased to an average of $38,566,000 in February, and thereafter declined each month to an average of $12,818,000 in December. There was no demand for advances under the provisions of Sections 10-(a) and 10-(b) of the Federal Reserve Act, and very little demand for advances which could be made direct to individuals, partnerships, and corporations, as authorized in the amendment to Section 13 of the Act, approved February 27, 1932. Such direct loans did not exceed $60,000 at any time. Holdings of acceptances averaged $2,563,000 for the year, the average amount of $9,379,000 for January having been reduced sharply to about $2,000,000 in April and to less than $1,000,000 during the last five months of the year. Federal Intermediate Credit Bank debentures were held during January and February, in amounts averaging $626,000 and $359,000 respectively. Demands from member banks for Federal reserve bank credit were not heavy and this bank was in a position to care for such requests for credit as were made of it by the Federal Intermediate Credit Banks and to participate to a considerable extent in Federal Reserve System purchases of bills and United States Government securities. An aggregate amount of $346,617,000 was loaned at various times during the year to 474 different banks. At the end of the year 253 banks and one corporation were borrowing $11,511,000. At the end of 1931, 245 banks were borrowing $27,725,000. The distribution of loans and the number of borrowing banks, by States, are shown in the following table: DISTRIBUTION OF LOANS Number of banks served State Colorado Kansas ^Missouri Nebraska *New Mexico •Oklahoma Wyoming Totals Number of offerings accepted Average amount of loans outstanding during 1931 1932 1931 1932 66 118 18 102 7 107 18 78 123 18 108 7 115 25 641 1,369 240 1,392 140 1,307 135 1,146 2,193 397 2,278 194 1,647 361 $ 1,624,494.92 2,858,205.23 1,389,423.28 5,348,560.82 240,706.04 4,216,275.73 645,277.98 $ 3,348,903.70 5,015,977.01 3,215,794.11 6,746,000.23 t 477,121.42 4,125,099.38 1,870,770.85 x 436 x 474 5,224 8,216 $16,322,944.00 $24,799,666.70 1931 * Within District No. 10 t Includes loans made direct to 1 private corporation. x Includes 2 Federal Intermediate Credit Banks and 2 nonmember banks. 1932 EIGHTEENTH ANNUAL REPORT Notes offered for discount by member banks which were not accepted because of ineligibility, technical irregularities, insufficiency of collateral, unsatisfactory credit showing, etc., amounted to $8,065,000, or about 2.3 per cent of the amount of all paper offered, and consisted of 4,487 notes, or approximately 7.5 per cent of the total number of notes handled. The classification of eligible collateral and rediscounts supporting loans outstanding at the end of the year was substantially as follows: Agricultural and live stock paper, 85 per cent; commercial and business paper, 11 per cent; and United States Government securities and Adjusted Service Certificates, 4 per cent. Total current earnings for the year were about $466,000 greater than in 1931, reflecting substantially larger holdings of earning assets and an increase in the average earning rate from 2.12 per cent in 1931 to 2.49 per cent in 1932, and current net earnings for the year were $408,753.55, as compared to an operating deficit of $109,198.08 for 1931. After adjustment to account for miscellaneous additions to and deductions from earnings, including a substantial profit on United States Government securities sold during the year, and reserves for replacement of bank buildings and fixed machinery and equipment, and after payment of the usual dividends to member banks, the sum of $160,280.32 remained in profit and loss account. This amount was used to create a reserve for self insurance of $100,000, and to add to the existing reserve for possible losses. Surplus account was credited $138,274.26 at the end of the year, being the return of the amount charged direct to surplus at the end of 1931, to permit the establishment of a reserve for depreciation in United States Government securities. This year was the third successive year, and the fourth year since 1919, in which this bank paid no franchise tax to to the United States Government. Franchise tax payments made by the bank since its organization aggregate $6,939,099.60. There were substantial changes from the previous year in the volume of work handled by certain of the departments of the bank and its branches at Omaha, Denver, and Oklahoma City. The notable variations were reductions in the number of checks handled and in the numbers of pieces of currency and coin received and counted, and increases in the number of notes discounted, the numbers of purchases and sales of United States Government securities for other than own account, and in the number of securities handled in connection with safekeeping transactions for member banks. Securities aggregating $154,301,000 were held in safekeeping at the end of the year. These securities were held for account of 732 member banks, or about 96 per cent of the total membership. The bank and each of its branches opened new departments during the year, to handle the work incident to acting as custodian and fiscal agent for the Reconstruction Finance Corporation. This work was carried on, to a large extent, by employees transferred from other departments in which the reduction in the volume of work had resulted in a surplus of help. The discount rate of 3 ^ per cent, for all classes of paper and all maturities, which was established for this bank on October 23, 1931, was maintained throughout the year 1932. 10 FEDERAL RESERVE BANK OF KANSAS CITY MOVEMENT OF MEMBERSHIP The number of active member banks in the Tenth Federal Reserve District decreased from 824 on December 31, 1931, to 785 on December 31, 1932. The distribution of member banks by States, at the end of 1931 and 1932, and the various changes during 1932 which effected a net reduction of 39 in the number of member banks, are shown in the following tables. The number of nonmember banks in each State is shown also, for purposes of comparison: MEMBER BANKS — TENTH FEDERAL RESERVE DISTRICT Active Member Banks December 31, 1931 State Active Member Banks December 31, 1932 tGains fLosses to to Member- Membership ship Totals Natl State Total Natl State Total 105 232 33 158 8 240 25 3 5 5 3 1 1 5 108 237 38 161 9 241 30 1 0 0 4 0 0 0 7 13 1 6 0 16 1 98 219 32 156 8 224 25 4 5 5 3 1 1 4 102 224 37 159 9 225 29 801 Colorado Kansas •Missouri Nebraska *New Mexico •Oklahoma Wyoming 23 824 5 44 762 23 785 * Within District No. 10 t Gains and losses to membership were all national banks except as follows: 1 Colorado State bank and 2 Nebraska State banks were admitted to membership, 2 Nebraska State member banks suspended, and 1 Wyoming State member bank was absorbed by a national bank. Organization of national bank Conversion of nonmember bank to national Admission of State bank Total additions Losses to membership: Suspension and insolvency Merger between national banks Absorption of State member by national bank Absorption of national bank by nonmember Conversion of national bank to nonmember Voluntary liquidation 1 1 0 0 4 6 1 9 1 5 1 2 Total Wyoming •Oklahoma •New Mexico 1 1 3 to — — Additions to membership: Nebraska •Missouri Kansas Procedure effecting changes in membership during 1932 Colorado CHANGES IN MEMBERSHIP DURING 1932 0 0 5 9 2 2 2 1 1 0 1 30 6 1 3 2 2 7 1 13 1 6 0 16 1 44 Net change in membership •Within District No. 10 —6 — 13 —1 —2 0 —16 —1 —39 Number Number Number Number 108 102 128 105 237 224 694 619 38 37 203 173 161 159 494 452 9 9 12 11 241 225 269 242 30 29 49 43 824 785 1,849 1,645 Total losses of member banks, end of 1931 of member banks, end of 1932 of nonmember banks, end of 1931 of nonmember banks, end of 1932 11 EIGHTEENTH ANNUAL REPORT Complete statistics of each Federal reserve bank are published in the annual report of the Federal Reserve Board and detailed figures of the operations of this bank are omitted from this report, except that on the following pages are shown the statement of condition at the beginning and end of the year, and comparative tables of earning assets, income and disbursements, and volume of operations. COMPARATIVE STATEMENT OF CONDITION Resources Dec. 31, 1931 Dec. 31, 1932 $ 66,680,000.00 $ 61,480,000.00 Cash reserves held by this bank against its deposits and n o t e circulation: Gold held by the Federal Reserve Agent as part of the collateral deposited by the bank when it obtains Federal reserve notes. This gold is lodged with the Treasurer of the United States or held in the vaults of the Federal Reserve Bank Gold redemption fund in the hands of the Treasurer of the United States to be used to redeem such Federal reserve notes as are presented to the Treasury for redemption 3,125,610.30 2,100,525.11 Gold and gold certificates in vault 12,227,954.50 9,601,152.00 Gold in the gold settlement fund lodged with the Treasurer of the United States for the purpose of settling current transactions between Federal reserve districts 15,737,573.18 13,876,248.53 Legal tender notes, silver, and silver certificates in the vaults of the bank (available as reserve only against deposits) Non-reserve cash, consisting largely of national bank notes and minor coin 7,665,279.00 6,762,029.00 $105,436,416.98 Total cash reserves $ 93,819,954.64 $ 2,653,496.81 $ 3,224,359.89 $ 4,568,283.00 $ 464,176.50 Loans and Investments: Loans: On the security of obligations of the United States (including adjusted service certificates) On the security of or by the discount of commercial or agricultural paper or acceptances 11,047,299.32 23,157,552.67 Acceptances bought in the open market 11,666,125.72 855,195.39 United States Government securities 18,707,600.00 57,252,100.00 400,000.00 0 $ 58,499,561.39 $ 69,618,771.21 $ $ Federal Intermediate Credit Bank Debentures Total loans and investments Miscellaneous Resources: Bank premises, less reserves 3,649,065.89 22,872,601.41 Checks and other items in process of collection 3,558,674.15 19,107,904.57 1,305,020.43 904,321.31 Total miscellaneous resources $ 27,826,687.73 $ 23,570,900.03 Total resources $194,416,162.91 $190,233,985.77 All other miscellaneous resources 12 FEDERAL RESERVE BANK OF KANSAS CITY COMPARATIVE STATEMENT OF CONDITION Liabilities Dec. 31, 1931 Dec. 31, 1932 Currency in Circulation: Federal reserve notes in actual circulation, payable on demand. These notes are secured in full by discounted and purchased paper, United States Government securities, or gold. Gold held as collateral and / o r as reserves must be not less than forty per centum of Federal reserve notes in actual circulation. $ 82,711,485.00 $ 90,490,215.00 $ 82,711,485.00 Total currency in circulation $ 90,490,215.00 Deposits: Reserve deposits maintained by member banks as legal reserves against the deposits of their customers $ 75,228,701.09 $ 68,490,304.39 United States Government deposits carried at the reserve bank for current requirements of the Treasury 1,510,133.26 268,485.73 Other deposits 2,289,090.26 765,555.51 $ 79,027,924.61 $ 69,524,345.63 $ 19,674,173.87 $ 16,631,179.53 Total deposits Miscellaneous Liabilities: Deferred items, composed mostly of uncollected checks on banks in all parts of the country. Such items are credited as deposits after the average time needed to collect them elapses, ranging from 1 to 7 days 693,501.08 1,273,843.00 $ 20,367,674.95 $ 17,905,022.53 $ $ All other miscellaneous liabilities Total miscellaneous liabilities Capital and Surplus: Capital paid in, equal to 3 per cent of the capital and surplus of member banks Surplus—that portion of accumulated net earnings which the bank is legally permitted to retain 4,184,800.00 4,051,850.00 8,124,278.35 8,262,552.61 Total capital and surplus $ 12,309,078.3 5 $ 12,314,402.61 Total liabilities $194,416,162.91 $190,233,985.77 HOLDINGS OF EARNING ASSETS, EARNINGS THEREFROM, AND ANNUAL RATES OF EARNINGS Year Bills Discounted Bills Purchased United States Government Securities Daily average foldings 1928 1929 1930 1931 1932 $24,034,188 40,823,097 14,816,919 16,322,944 24,799,667 $12,994,944 8,688,491 7,880,069 12,608,768 2,562,927 $21,006,968 4,980,199 18,909,064 30,895,477 42,816,951 Earnings 1928 1929 1930 1931 1932 1,034,216 1,985,508 624,945 544,242 873,477 521,901 447,700 204,411 221,531 97,208 778,027 198,424 530,153 499,884 772,554 2,975 44,060 1928 1929 1930 1931 1932 4.30 4.86 4.22 3.33 3.52 4.02 5.15 2.59 1.76 3.79 3.70 3.98 2.80 1.62 1.80 4.27 4.57 Average rates of earnings (per cent) 13 Other Earning Assets $ Total 69,672 963,893 0 182,336 81,544 0 4,267 3,652 0 2.34 4.48 $58,105,772 55,455,680 41,606,052 60,009,525 70,261,089 2,337,119 2,675,692 1,359,509 1,269,924 1,746,891 4.02 4.82 3.27 2.12 2.49 EIGHTEENTH ANNUAL REPORT INCOME AND DISBURSEMENTS 1931 1932 Earnings: $ 544,242.16 221,530.40 499,884.08 6,947.58 261,649.00 20,830.56 $ 873,477.46 97,208.07 772,554.05 13,655.52 237,862 40 26,710.63 $1,555,083.78 $2,021,468.13 $ 92,551.71 3,585,27 $ $ 96,136.98 $ 103,475.90 For current bank operation, exclusive of cost of currency. These figures include most of the expenses incurred as fiscal agent of the United States $1,614,412.71 $1,562,372.15 For Federal reserve currency, mainly the cost of printing newnotes to replace worn notes in circulation, and to maintain supplies unissued and on hand 49,869.15 50,342.43 From loans and rediscounts From acceptances owned From United States Government obligations owned From penalties for deficient reserves Income from rented space Other earnings Total current earnings Additions to Earnings: Profit on United States Government securities sold All other additions Total additions 98,454.84 5,021.06 Deductions from Earnings: Depreciation and replacement reserves Jon buildings, fixed machinery and equipment 'i 160,510.91 91,081.49 0 Reserve for self insurance 100,000.00 0 60,280.32 Furniture and equipment purchased 5,203.68 14,848.94 All other deductions 6,710.41 663.07 $1,836,706.86 $1,879,588.40 $* 185,486.10 $ 245,355.63 In dividends paid to member banks, at the rate of 6 per cent on paid-in capital $ 253,620.40 $ 245,355.63 In addition to surplus—The bank is authorized by law to accumulate out of net earnings, after payment of dividends, a surplus amounting to 100 per cent of the subscribed capital, and after such surplus has been accumulated, to pay into surplus each year 10 per cent of the net income remaining after paying dividends 0 0 In franchise tax—Any net income remaining after paying dividends and making additions to surplus (as above) is paid to the United States Government as a franchise tax 0 0 Reserve for possible losses Total deductions Net income available for dividends, additions to surplus, and payment to the United States Government Distribution: Charged to surplus—The deficit in earnings, plus the amount paid out in dividends 439,106.50 0 $* 185,486.10 Total net income $ 245,355.63 t * Deficit. t Surplus was also charged $138,274.26 to create a reserve for depreciation in United States Government securities held. This amount was credited back to surplus account December 31, 1932. 14 FEDERAL RESERVE BANK OF K A N S A S CITY GROSS AND NET EARNINGS, AND DISTRIBUTION OF NET EARNINGS SINCE ORGANIZATION Franchise Tax Paid to United States Government Transferred to Period Gross Net 1914 to 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 $ 9,898,760 7,409,987 5,712,858 3,094,660 2,993,919 2,262,910 2,309,985 2,677,340 2,304,938 2,597,968 2,976,576 1,667,667 1,555,084 2,021,468 $ 7,085,727 5,540,681 3,056,096 783,036 347,711 (2) 253,182 282,921 756,469 414,726 659,760 1,013,586 (2) 200,976 (2) 185,486 245,355 $49,484,120 $19,546,424 Totals Dividends $ 969,694 257,672 268,620 275,655 275,313 265,697 258,427 252,764 252,754 253,254 256,549 259,397 253,620 245,355 $ 4,344,771 Surplus (1) (3) O) (4) (5) $ 6,116,033 3,042,781 486,918 157,432 7,240 518,879 2,449 50,370 16,197 40,651 75,704 460,373 577,381 138,275 $ 8,262,553 $ 0 2,240,228 2,300,558 664,813 65,158 0 22,045 453,335 145,775 365,855 681,333 0 0 0 $ 6,939,100 (1) Net reduction in surplus account after charging surplus and crediting franchise tax with $208,170.00 paid as an additional franchise tax for 1921. (2) Deficit in earnings before payment of dividends. (3) Deficit in earnings after payment of dividends, charged to surplus account. (4) Deficit in earnings after payment of dividends, $439,106.50, and reserve for depreciation in United States Government securities, $138,274.26, charged to surplus account. (5) Credited to surplus from reserve for depreciation in United States Government securities. VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS Year Number of pieces Amount Notes discounted or rediscounted 1930 1931 1932 29,742 40,624 54,776 Currency received and counted 1930 1931 1932 66,563,635 58,563,679 53,935,549 314,560,708 260,343,100 238,200,565 Coin received and counted 1930 1931 1932 66,617,533 75,763,380 63,342,579 12,286,876 11,643,681 10,669,202 Checks handled 1930 1931 1932 69,881,000 64,412,000 51,085,000 10,430,350,000 8,461,469,000 6,326,036 000 Collection items handled 1930 1931 1932 316,593 353,272 353,827 257,938,231 239,015,625 192,431,000 United States Government coupons paid 1930 1931 1932 1,064,176 980,610 956,372 17,132,331 15,156,663 15,649,926 United States securities— Issues, redemptions, and exchanges by Fiscal Agency Department 1930 1931 1932 86,645 107,047 89,953 142,561,396 259,026,243 248,523,474 Transfers of funds 1930 1931 1932 134,275 123,408 109,122 7,486,269,834 5,376,060,431 3,580,168,722 15 $ 290,628,489 266,449,895 346,617,137 EIGHTEENTH ANNUAL REPORT PERSONNEL ELECTION AND APPOINTMENT OF DIRECTORS E. E. Mullaney, Hill City, Kansas, President of the First National Bank, Collyer, Kansas, was reelected as Class A director by member banks of Group 3, for the term expiring December 31, 1935. L. E. Phillips, Bartlesville, Oklahoma, Chairman of the Executive Committee of the Phillips Petroleum Company, was reelected as Class B director by member banks of Group 3, for the term expiring December 31, 1935. M. L. McClure, Kansas City, Missouri, was reappointed by the Federal Reserve Board as Class C director for the term expiring December 31, 1935. The following were appointed as directors of the Omaha, Denver, and Oklahoma City Branches, to succeed directors whose terms expired December 31, 1932. These appointments were for terms expiring on December 31 of the years indicated: Omaha Branch — L. H. Earhart, Managing Director of Omaha Branch, 1933; T. L. Davis, Vice President, First National Bank, Omaha, Nebraska, 1935; and W. E. Hardy, merchant, Lincoln, Nebraska, 1935. Denver Branch — J. E. Olson, Managing Director of Denver Branch, 1933; Henry Swan, Vice President, United States National Bank, Denver, Colorado, 1935; and R. H. Davis, President, Denver National Bank, Denver, Colorado, 1935. Oklahoma City Branch — C. E. Daniel, Managing Director of Oklahoma City Branch, 1933; H. H. Ogden, President, First National Bank and Trust Company, Muskogee, Oklahoma, 1935; and Austin Miller, manufacturer, Oklahoma City, Oklahoma, 1935. F. T. Chandler, Vice President of the Oklahoma National Bank, Chickasha, Oklahoma, was appointed to serve the unexpired portion of the term ending December 31, 1933, succeeding Wm. Mee, deceased. MEMBER OF ADVISORY COUNCIL Walter S. McLucas, Chairman of the Board of Directors of the Commerce Trust Company, Kansas City, Missouri, was appointed by the Board of Directors to serve as member of the Federal Advisory Council from the Tenth Federal Reserve District for the year 1933. OFFICERS AND EMPLOYEES OF THE BANK AND BRANCHES The Federal Reserve Board reappointed M. L. McClure as Federal Reserve Agent and Chairman of the Board of Directors and H. M. Langworthy as Deputy Chairman of the Board of Directors, and redesignated A. M. McAdams as Assistant Federal Reserve Agent, all for the year 1933. All other officers of the bank and branches were reappointed by the Board of Directors for the year 1933. At the close of the year the bank and branches had a total of 22 officers and 555 other employees, as compared with 22 officers and 548 other employees at the close of 1931. 16