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T his R eport to the stockholders—
the member banks—contains a mes
sage from the president, a feature
article on one of the departments of the bank, and statements
of condition and of earnings and expenses.
The message of President John N. Peyton stresses the impact
of international developments on the economy of our nation
and the N inth Federal Reserve district. It also reviews internal
operations of the bank for the past year.
The feature article entitled Doing a Job for Uncle Sam
presents a description of services performed by the Fiscal
Agency department for the government of the United States,
the banks, and the people. Thus is added one more story to
the series on Federal Reserve services contained in previous
annual reports—stories on coin and currency, on the settlement
of interdistrict balances, and on check collection.
W e hope that these annual reports will serve to make you
more familiar with the role of our regionalized central bank
ing system in the economy.
SALES and REDEMPTIONS of SERIES '£' SAVINGS RONDS
• FISCAL
AGENCY
Feature Subject
of this A n n u a l Report
to the Stockholders
D O I N G A J OB FOR UNCLE S A M
- - - PAGE 13
A t T H E beginning of 1950, most surveyors of
the business scene thought that recovery from the
slight recession of the previous year would surely
last as long as six months. Many were doubtful that
revival of the postwar boom would longer endure.
These prognosticators, true to their working rules,
protected their predictions with the assumption
that the temperature of international relations
would get neither hotter nor colder.
W hen at mid-year fighting broke out on the
38th parallel, longitude about 127, that spark not
P R E S I D E N T P E Y T O N ’S M E S S A G E
only set off an international conflagration and
feverish military mobilization — it set money in
motion.
W hile young men lined up at enlistment and in
duction centers, eager shoppers with currency and
charga-plates in their hands queued up at trading
counters. W hen their supply of ready cash was de
pleted, these busy buyers rushed to lenders and
safe-deposit boxes to reenforce their buying power
—and rushed back to the counters again.
Behind the front lines—the retail counters—sup
ply lines were kept open and a steady stream of
mobile units moved goods from wholesalers’ depots.
Farther behind, in m anufacturing plants, men
tugged at switches and levers setting assembly
lines moving at a faster speed as unfilled orders
piled up. Still farther removed from the front lines,
stockpiles were heightened as men in mines dug
deeper and ships brought from distant lands big
ger cargoes of precious things labeled “strategic.”
One commentator searching for a phrase to
describe the 1950 business scene borrowed one from
a Dickens character, Oliver Twist, who said sim
ply, “Please, sir, I want some more.” People wanted
and got more of almost everything: more houses,
more automobiles, more household appliances,
more food, and more clothing. They also got more
wages, more profits, more bank credit, and more
mortgages.
At the end of the year, with the exhilaration of
bountiful business, came perplexing, sobering prob
lems. It had become apparent that military involve
ments abroad would be of longer duration than
we had hoped earlier, and we faced spiralling in
flation—a threat to economic stability and strength
—at home.
The 1950 E co n o m y
H a d Four P h a se s
The economic history of 1950 divides convenient
ly lor analytical purposes into four periods:
• The period of recovery from the slight recession
of 1949 extended from the year’s beginning to
the outbreak of hostilities in Korea on June 25.
9 The period of “scare buying,” which began the
last week in June, reached its height in July.
• The return to a more normal pulse in consumer
expenditures began in August, accompanied by
hopes for an early return to a quiescent state
in international affairs.
• A period of intensified mobilization followed
the more overt participation by Chinese armies
in the fighting in Korea. The year ended on the
Page Three
sobering note that the nation’s resources would
he severely taxed by great demands of consumers
and the defense program.
M o d e ra te A cceleration
Featured First S ix M o n th s
At the opening of the year, business was en
gaged in a vigorous recovery from the recession of
1949. One measure of this movement was the Fed
eral Reserve index of industrial production, which
had advanced from 161 in July 1949 to 179 in De
cember 1949 ( 1935-39 = 100). That index reached
199 in June 1950. Meanwhile, wholesale prices ad
vanced from 151.2 in December 1949 to 157.3 *n
June 1950 ( 1926= 100). The slower-acting con
sumers' price index rose only 2% from January
to June.
Reflecting confidence in the outlook, business
men had shifted from a policy of inventory liquida
tion early in 1949 to one of inventory accumulation
later in that year—and this was continued in the
first half of 1950. They also invested more freely
m w sw m
in plant and equipment, especially in the second
quarter.
Monetary and credit developments featured a rise
of 11% in outstanding instalment credit in the
first half of 1950. Residential mortgage credit also
rose rapidly, and farmers, who had reduced their
debts in the 1940’s, began to borrow quite heavily.
Bank loans expanded about $2.5 billion in six
months. Total money supply increased only mod
erately as bankers financed a large part of their loan
expansion by selling securities to nonbank investors.
In d e x e s J u m p e d S h a r p ly
A fter J u n e 25
Contrasting sharply with the previous moderate
acceleration, business activity reflected a high state
of inflationary “psychology” beginning the last
week in June. Shoppers, fearing that shortages
would develop and that prices would rise, rushed to
the retail stores and bought almost all kinds of
goods. This was measured by the Federal Reserve’s
seasonally adjusted index of department store sales,
PRODUCTION
1935.39=100
• The Federal Reserve index of industrial produc
tion, which measures the physical volume of goods
produced, indicates that new high peacetime levels
were achieved in 1950. Behavior of this index in the
latter part of 1950 reflected a production level whose
further extension would require plant expansion.
Digitized
FRASER
PageforFour
• In the fourth quarter of 1950, gross national
product (the money value of all goods and services)
was $46.5 billion above the fourth quarter of 1949.
Accounting for most of it, personal consumption
expenditures rose $15 billion and private domestic
investment $29 billion above fourth quarter of '49.
Recent C h a n ge s in Prices
Wholesale prices, which had advanced from
in January to 155.9 m May ( 1926= 100),
rose to 162.9 in July. The index of industrial pro
duction advanced from 195 in May to 209 in
August.
151.1
P e r ce nt in c r e a s e to
J a n u a r y 2 5 , 1951 f r o m :
W eek
Series
J u n e 24
Consumer Prices
All items
Foods ..............................................
Apparel .........................................
Rent ..................................................
ee nd in g
Year ago
5
5
6
?
1
9
6
3
Wholesale Prices
All commodities .............................. 14
Farm products .............................. 18
Grains ......................................... 11
Livestock ..................................... 15
Foods ..............................................
13
Other commodities ................... 14
Textile products ..................... 32
Chemicals ................................
27
Building materials ...............
11
Metals and metal products . . . . 1 0
19
28
16
34
19
16
31
25
17
12
28 Basic Commodities .................
46
Selected items:
Rubber ....................................... 155
Tin ............................................. 140
Lard ............................................. 67
Wool tops .................................. 107
54
Print cloth ..............................
Cocoa ......................................... . 10
Hides .........................................
69
j
Hogs .........................................
Coffee .......................................
13
Cotton ....................................... . 32
?
Sugar, raw ..............................
Steel scrap ...............................
27
W heat .......................................
9
Steers .........................................
19
Zinc ............................................
16
Copper .......................................
9
55
296
144
72
126
42
28
80
25
11
42
2
85
9
14
73
33
which after rising from 282 to 290 per cent of the
1935-39 dollar volume, shot up to 362 for July. The
scare buying, particularly in items most scarce in
the previous war, pulled department store stocks
down from 285 for May to 269 for July ( 1935-39 =
100), despite efforts of store managers to keep the
shelves filled.
Trade H a d R e su m e d M o re
N o r m a l Tem po b y Se p te m b e r
W hen it became apparent that supplies of most
goods were ample to satisfy demands for a con
siderable length of time, “scare buying” subsided.
Department store sales by September were not
much higher than for the corresponding period of
the previous year.
That trade had resumed a more normal tempo
did not mean, however, that total business activity
had declined. Retailers, wholesalers, and manu
facturers, whose inventories had declined, placed
extraordinarily high orders for replacement stocks.
Expenditures on plant and equipment were re
vised upward. Construction activity, both in resi
dential and commercial sectors, advanced to new
peak levels.
The index of industrial production reached 217
in October, then levelled off. Prices continued to
rise, overtaking the previous postwar high attained
in 1948. In the meantime, various kinds of controls
had been imposed, such as regulations on instal
ment credit for consumer durable goods and for
residential real estate mortgage credit. Some re
strictions were also imposed on the utilization of
a number of raw materials and on non-essential
construction.
Intensified M o b iliz a tion
B e g a n in N o v e m b e r
Hopes for an early termination of hostilities
were blasted when late in November the massive
assault began on the United Nations forces in
Korea. This development was followed by more
intensified mobilization in the United States, and
it became evident that more stringent curbs on
production of civilian goods would become neces
sary.
W hile persons and boards charged with author
ity to promote the defense effort and also maintain
stability in the economy were searching for for
mulae whereby their tasks might be accomplished,
prices rose precipitously. Finally, an over-all price
and wage “freeze” was ordered at January 26, 1951,
levels. Thus, once more within a decade, price and
wage control mechanisms had been brought into
operation in an effort to prevent spiralling costs,
wages, and prices.
The record of price changes from June 24, 1950,
to January 25, 1951, is revealed in the percentage
rise in selected commodities and price series as
shown in the accompanying table.
R e q u ire m e n ts of D e fen se
P ro g ra m Boosted
The more intensified mobilization program, al
though it began in 1950 and exerted considerable
pressure on the price level in that year, will leave
a more pronounced mark on the economy of 1951.
From July to December, 1950, the Department
of Defense let approximately one-half million con
tracts with a total of about $12 billion involved.
The rate of contract dollars per month was boosted
to $3 billion at the beginning of 1951. A rate of
about $4.5 billion of contracts per month has been
W H O IJ S A It P R IC E S
1926=100
• Wholesale prices at the end of 1950 reached a
level which was higher than the previous postwar
peak in 1948. This also exceeded another peak, the
one reached in M ay 1920 following World W ar I.
PageforSixFRASER
Digitized
blueprinted for m id- 1952. By November 1952 an
estimated total of $87 billion of defense contracts
will have been awarded, according to the program
as now outlined.
Financial Lessons S h o u ld
Be L ea rne d From E xp erience
The inflationary potential in the economy of the
United States and of the world throughout the
i 94o’s was of great magnitude. At the end of the
decade the degree of inflation found in market
places was, fortunately, less than the inflation-potential to be found in financial statistics.
One should not, however, find comfort in that
fact—rather, it should put us 011 guard lest the
disastrous consequences of a full realization of the
inflation potential should befall us. The decade of
the i 95o’s has begun with inflation pressing hard
against controls designed to suppress it.
D uring W orld W ar II—from the end of 1941
to the end of 1945—privately-held money supply
increased approximately $74.5 billion. Although it
is now realized that the war financing should
have been accomplished more by taxation and less
by borrowing from the banking system, it must
be remembered that procedures employed were
taken with a view to winning the war as quickly
as possible, while other considerations received
scant attention.
D uring the war years, many investors thought
that government securities sold to them might
without harmful effects on the economy be mone
tized in a later depression. The opinion was widely
held that a recession would surely follow the end
ing of wartime expenditures.
As things turned out, we had no postwar de
pression. Instead, prosperity ensued and our chief
economic problem became the prevention of in
flation.
To the extent that monetary policy could con
tribute to stability in the postwar years, prudence
required that, when inflation threatened, such poli
cy should be directed toward discouraging the
conversion of securities into cash. At least good
policy would not provide that encouragement be
given to nonbank investors to convert securities
into cash or to banks to convert securities into
CO N SU M ER CREDIT
Outstanding In II. S.
B il l io n D o l l a r s
M ill io n D o l l a r s
• The nation's money supply, comprising privatelyheld bank deposits (both demand deposits and time
deposits) and currency outside banks, rose steadily
in 1950, ending the year at an all-time high level.
• Total consumer credit outstanding, including both
instalment and non-instalment credit, rose to record
levels in the first half of 1950. Average monthly
increase for the year was nearly one-third billion.
reserves that provide a base for bank credit ex
pansion.
It is now quite generally recognized that the
ready convertibility of government securities into
reserve balances was an important factor contribut
ing to monetary expansion in the postwar boom
years. From the end of 1947 to the end of 1950,
reserve funds, gained from a variety of factors,
and a reduction in banks’ holdings of government
securities, allowed total bank credit to expand by
about 1 18 billion.
In 1950, member banks alone, by reason of in
creased reserve balances gained through a variety
of factors, boosted their loan totals by $8.6 billion.
Practically all of this occurred in the last half of
the year, when loans of those banks increased by
$7.1 billion.
1—Government
G u id e s for M a k in g
of P olicy D ecisions
Experiences over the past decade suggest the
following guides for monetary and fiscal policies
under present conditions with inflation threatening
the economy:
expenditures for military and other
purposes should be met to the greatest possible
extent by taxation.
2—If securities must be issued to finance a Treasury
deficit, they should be sold exclusively, if pos
sible, to nonbank investors.
3 —The total am ount of credit should be restricted
in order that future income not be used to pur
chase goods when the demand is already in
ordinately high.
These measures would withdraw from circula
tion the income earned in the production of de
fense goods and would hold down the spending
stream to the limited supply of civilian goods
available. They go straight to the heart of the in
flation problem, since they seek to prevent the
greater relative growth of the money supply over
the supply of goods.
The N in th District in 1950
F o llo w e d N a tio n a l Trends
The course of N inth district business followed
closely that of the national economy. Changes in
I’aoi' Sf
HEAL ESTATE CREDIT
Oyfstandins in U. S.
B il l io n D o l l a r s
• New nonfarm mortgages recorded ($20,000 and
under) were estimated to have reached a total of
$1.6 billion for the month of August 1950. Declining
slightly thereafter, monthly totals nevertheless held
about 5 0 % above those for the same months in '49.
the smaller area followed rhythmically those in the
larger, occurring mostly on the upside.
Our people displayed the same excesses in spend
ing and lending, buying and borrowing, as did
people elsewhere. W e participated in national in
flationary tendencies and got the share of it to
which each sector of the economy claims it is
entitled.
Thus an insidious characteristic of inflation was
demonstrated in 1950: as persons and groups claim
and receive a fair share of it, further inflation
results.
National trends were reflected in N inth district
measures of business activity, the most important
of these being department store sales, construction,
farm income, bank debits, bank loans, and deposits.
After declining slightly in 1949 compared with
the previous year, department store sales in metro
politan areas reached record levels in 1950. Those
in some smaller communities, however, did not
for the year as a whole measure up to 1948 levels
— although in some months, notably July, sales
Page for
Eight
Digitized
FRASER
everywhere reached an all-time high dollar volume.
Measuring great activity in building of all kinds,
construction contracts awarded reached unprece
dented levels. In 1950 the dollar volume was over
five times the 1935-39 average, almost double that
of 1946, more than 50 per cent above 1948, and
nearly 20 per cent in excess of the 1949 figures.
Cash income from farm marketings of the N inth
district in 1950 were a little short of the 1949 per
formance. Such income last year was 96 per cent
of that in 1949 and about 82 per cent of the extra
ordinary high volume of 1948. Income from live
stock in 1950 compared more favorably with 1949
than was the case with income from grains.
Bank debits in 1950, reflecting the great volume
of transactions, rose above those in 1949. In 108
cities bank debits were reported as totaling $34.8
billion, compared with $31.6 in 1949.
The interrelated items—bank loans and bank
deposits of member banks—were more than three
times as high as the 1935-39 average. Deposits of
all member banks at $3,615 thousand on Decem
ber 31 , 1950, were $112 million above the close of
1949. Loans of country banks were 22 per cent
higher on December 31 , 1950, than a year earlier,
while loans of city banks were 26 per cent higher.
Fed O p e ra tio n s Reflect
1950 B usiness Picture
W hile we know that business activity in general
was at record high levels in 1950, we also know
that not all lines of business enterprise were soar
ing at the same altitude. The problem is to find a
single indicator of the N inth district’s economic
condition as a whole.
A possible answer seems to lie in using volume
of activity in the banking system as a measuring
stick, for the work of banks reflects the activity of
all segments which go to make up the business
community.
Since the volume of work performed by a Fed
eral Reserve bank depends a great deal upon the
work volume of hundreds of banks in all parts of
the district, 1950 combined figures of the Federal
Reserve Bank of Minneapolis and its Helena
branch provide a quick indicator of the general
business climate in the N inth Federal Reserve
district.
W e have already seen that there was a 10 per
cent rise in the bank debits volume of 108 cities
in the district in 1950, and it is interesting to learn
that there was a nearly identical increase in checks
flowing through the Federal Reserve bank.
Dollar volume of checks (not including govern
ment checks) handled by our Check Collection
department last year totaled slightly more than
$20.6 billion as compared with $ 18.7 billion in
1949, or an increase of 10.6 per cent. The bank
also handled $2.1 billion worth of government
checks during the year. Grand total of the value
of all checks going through the bank, therefore,
was $22.7 billion. Num ber of cash items handled
was 69.^ million, as against 65.2 million in 1949.
In our Noncash Collections department, where
grain drafts furnish the large bulk of the items
processed, 1950 also topped 1949, but by a much
smaller margin. Noncash clerks handled 841,000
DEPARTMENT STORE SALES
9th District (1935-39-*100) Seasonally Adj.
• "Scare" buying in July, which subsided in the
following two months, broke the normal seasonal
pattern of department store sales. Pre-holiday buy
ing at department stores in December exceeded
that of the previous year by a substantial margin.
grain drafts worth $712 million in 1950, about 3.5
per cent above 1949 both as to num ber and dollar
volume.
Transfers of funds by the transfer section of our
Accounting department again rose this year with
a 1950 total of | i 1.9 billion, 9 per cent above that
of the year before.
C u rre n cy a n d C oin
S h o w e d Little V ariation
Most of the increased money flow in the district
seems to have been accomplished through the use
of checks, drafts, and bookkeeping transfers, there
being little apparent change in the volume of
pocket money—currency and coin—in the district.
Circulation of Federal Reserve notes issued by
our bank, m aking up the bulk of the paper money
in circulation in the district, was $610.6 million
at year’s end, almost the same as the 1949 year-end
total of $612.2 million.
As Federal Reserve notes and other types of
currency flowed in and out of our bank and the
Idf CONSTRUCTION
•
3-Month Moving Avg.
• Spring and summertime construction contracts
awarded in 1950 exceeded those of 1949. While
dollar volume of new contracts slumped seasonally
in November, construction activity continued brisk,
with a very large number of units still uncompleted.
Helena branch during the year, every bill was
counted and inspected for fitness, genuineness,
etc., by sharp-eyed currency sorters. At year’s end
they found they had counted $463 million in paper
money, slightly up dollar-wise from 1949. H ow
ever, actual num ber of pieces counted— 70.8 mil
lion—was down about 8 per cent.
Coins counted were up both in number and
dollar value, with 105.5 million pieces worth $8.4
million being handled, 15 per cent in number and
7 per cent in value above 1949.
O ur Safekeeping department 011 December 31
held $ 1.3 billion in securities in safekeeping for
member banks. This figure is 8 per cent below that
of December 31 , 1949, and perhaps reflects the
general tendency already noted of banks to reduce
their holdings of Governments in order to satisfy
the increased demands of business for bank credit.
District figures on savings bond sales and re
demptions, compiled by our Fiscal Agency depart
ment, are indicative of the universal urge apparent
the last half of the year to obtain more money and
spend it. The number of savings bonds sold in the
district (not including post office sales) dropped
BANK DEBITS IND1X
9th District (1935-39-* 100) Seasonally Adj.
• Turnover of deposits, as indicated by the index of
debits to deposit accounts, rose sharply during the
first half of 1950, and except in September stayed
at a high level— reflecting record business activity.
Page for
TenFRASER
Digitized
11 per cent from last year, while the num ber of
bonds cashed increased 5.8 per cent. In dollar
figures, redemptions increased 15 per cent over
the previous year, while sales showed little change.
Infla tion D a n g e r B ro u g h t
Federal R eserve A ction
As the danger of inflation grew, actions designed
to minimize it became more apparently necessary.
Actions taken affected relationships of the Federal
Reserve banks with commercial banks and the
general public in a number of ways.
In August the discount rate for member banks
on loans secured by government securities and
eligible paper was raised from i l/ 2 per cent to 1 %
per cent, and interest rates on other types of bor
rowing were increased correspondingly.
In September, pursuant to the provisions of the
Defense Production Act of 1950, and Presidential
executive order, Regulation V loans for defense
production, which had been in effect during the
W orld W ar II period, were reinstituted by the
Board of Governors of the Federal Reserve System.
a g jiiillM M lio iii
9th District Member Ban)
• Contrasting sharply with a dominantly sidewise
movement in 1949, member bank loans rose steadily
in 1950. The rise in the last four months exceeded
the increase of the first eight months of the year.
CASH FARM INCOME
TOTAL B A N K DEPOSITS
9th District
9th District Mem ber Banks
• Attributable mostly to high prices for livestock,
1950 cash farm income in spring months exceeded
that for 1949. Thereafter the pattern for the two
years was almost identical, but the normal seasonal
slump in the late months of 1950 was less severe.
• Deposits of member banks in the Ninth district in
the first quarters of 1949 and 1950 followed a
declining course. In 1950 they advanced slowly until
September, when a vigorous upward movement
commenced which continued to the end of the year.
At about the same time Regulation W was re
imposed to control consumer credit. In October
the Board of Governors, under authority of the
Defense Act and the executive order, issued its new
Regulation X to control real estate credit.
Late in December the Board of Governors an
nounced an increase in reserve requirements for
all member banks of i per cent on time deposits
and 2 per cent on demand deposits to become ef
fective in steps during the month of January, 1951.
This action brought reserve requirements to their
legal maximum for all banks in this district. At
approximately the same time it was announced
that margin requirements on purchases of listed
stocks were being raised to 75 per cent, up 25 per
cent from the previous requirement.
creased in num ber instead of decreasing. Total
employees at the head office and Helena branch
at the end of the year was 673 as compared with
633 at the end of 1949.
Several important changes occurred in member
ship of the boards of directors and official staffs of
both the bank and its Helena branch during the
year. Following the unfortunate death in August
of Henry E. Atwood, class A director, A rthur H.
Quay, who succeeded Mr. Atwood as president of
the First National Bank of Minneapolis, was
named in a special election to fill the unexpired
term on the FRB board.
At the regular election of directors in November,
H . N. Thomson, vice president of the Farmers
and Merchants Bank of Presho, South Dakota,
was named class A director to succeed J. R. McKnight, and W illiam A. Denecke, livestock rancher
from Bozeman, Montana, and at that time director
of the bank’s Helena branch, was named to suc
ceed W alter H . McLeod as class B director.
W ith the resignation in July of Dr. James A.
McCain as chairman and member of the branch
Y ea r S a w C h a n g e s
In B a n k Staff
As a result of a greater volume of work, par
ticularly in connection with the job of administer
ing Regulations W and X, our staff in 1950 for
the first time since the end of W orld W ar II in-
board, John E. Corette, Jr., vice president of the
M ontana Power Company, Butte, Montana, was
named a branch director and later chairman of
the Helena board. G. R. Milburn, Grass Range,
Montana, rancher, was named to fill the vacancy
created on the branch board when Mr. Denecke
became a head office director.
Membership in the two boards was otherwise
unchanged, with Roger B. Shepard being reap
pointed class C director and redesignated board
chairman and Federal Reserve agent, and W . D.
Cochran being redesignated as deputy chairman.
E. D. MacHaffie and Theodore Jacobs were again
reappointed directors of the Helena branch. Joseph
F. Ringland was named for the second year to the
Federal Advisory Council.
The bank’s official family saw the resignation
on September 1 of Oliver S. Powell, first vice
president, to become a member of the Board of
Governors of the Federal Reserve System. H e was
succeeded as first vice president by Albert W .
Mills, who had been vice president and cashier.
The year also brought the resignation of R. E.
Towle, vice president assigned to the Helena
branch, because of ill health, and of C. E. Tillander,
chief examiner, to become executive vice president
of the First National Bank of Little Falls, M in
nesota.
In May, C. W . Groth was promoted from as
sistant vice president to vice president assigned to
the Helena branch, to succeed Mr. Towle, and, in
June, Harold A. Berglund was elected assistant
cashier and assigned to the branch.
Three other changes, which are reflected in the
official staff roster as it appears elsewhere in this
report, did not take place until shortly after the
end of the year. Kyle K. Fossum was elected as
sistant cashier; Maurice H . Strothman, Jr., was
promoted from assistant vice president to vice
president; and Clement Van Nice was advanced
from assistant cashier to assistant vice president.
E duca tiona l P ro g ra m
C o n tin u e d D u r in g Y ea r
As in the past, the Federal Reserve Bank of M in
neapolis tried to keep abreast of business, agricul
tural, and banking developments in the district
during the year. At the same time it attempted to
do its part in contributing to the district’s develop
m ent by supporting, and in some cases initiating,
constructive programs of banking, business, and
agricultural education.
Its educational objectives were carried out in
part through a program of meetings and confer
ences, including the annual Federal Reserve Con
ference of N inth District Bankers, the Federal Re
serve Forum , the Short Course in central banking
series, the W orkshop for money and banking in
structors, and the Conference of Bank Examiners,
all of which had been inaugurated in previous years.
D uring the year our bank also was host to oneday educational meetings of newspaper publishers
and editors and of certified public accountants.
In addition, for several weeks we conducted a series
of counterfeit currency clinics for tellers and others
from Tw in Cities banks.
W e continued our program of bank calls and
also our “farming out” program of sending senior
employees to commercial banks in various parts
of the district for a period of training in commercial
bank operations.
O ur new educational movie, The Federal Re
serve Banl{ and You, which was made available
for public distribution in March, had been shown
to more than 102,000 persons by the end of the
year, not including an unknown number who had
seen it on television.
The advent of the year 1951 finds our country
confronted with the twin perils of foreign war
and domestic inflation. Stabilization of our econo
my in the face of these dangers presents a real
and present challenge to all of us, but particularly
to the banking fraternity and to the Federal Re
serve System. W e sincerely hope that the close of
this year will see substantial progress made in
overcoming the forces which threaten our economy
both within and from without—and toward that
objective the Federal Reserve Bank of Minneapolis
dedicates its efforts.
DOI NG A JOB
FOR UNCLE SAM
W
H E T H E R you are a businessman, house
wife, office worker, or student, you are probab
ly a member of the vast family which has loaned
money to Uncle Sam—the more than 80 million
Americans who own United States savings bonds.
Today our national government owes $58 billion
to holders of savings bonds. Yet, impressive as this
statistic is, these bonds represent less than 23% of
As Fiscal Agents for the Government,
Uncle Sam's IOUs.
Federal Reserve Banks Play an Active
The government finances most of its debt by
selling marketable securities to banks, insurance
Role in Treasury Financing Operations
companies, corporations and others. All told, Uncle
Sam’s obligations comprise the national debt of
$256 billion—$ 1,700 for every man, woman, and
At the Minneapolis “Fed” the Fiscal Agency
child in the United States.
department has a staff of 130 at present. Altogether
they devote more than 5,200 w orking hours a week
H andling the financial paper representing the
to issuing new government securities; redeeming
government's enormous debt is the special respon
matured
and cashed-in issues; typing and tabulat
sibility entrusted to Fiscal Agency departments of
ing
orders
for E, F, and G bonds; providing in
Federal Reserve banks. W henever you read a news
formation
about
government securities; and exec
story about a savings bond drive, an offering of
uting
the
myriad
details connected with Uncle
other Treasury securities, or some other develop
Sam’s
finances.
ment in federal financing, you may be sure the
Federal Reserve banks in their role as fiscal agents
Imagine the mountains of paper work! And as
for the government are actively engaged behind
financing the national defense program gets under
the scenes.
way, these loom even larger.
U ncle S a m O ffe rs
V a riety o f Securities
W hen the U. S. Treasury borrows from the pub
lic, it sells either nonmarketable or marketable
securities. The familiar Series E savings bond is
a “nonm arketable” security. As its name implies,
such securities cannot be bought or sold in finan
cial markets. Only the Treasury and its agents sell
and cash nonmarketable issues.
The main kinds of nonmarketable government
securities are:
# U. S. savings bonds: Series A through E with
maturities of 10 years; Series F and G with m a
turities of 12 years;
# Treasury savings notes (which may be presented
in payment of federal taxes or redeemed for
cash) with maturities of three years.
“M arketable” securities — which make up the
bulk of the national debt—are traded in the open
m arket after they have been issued by the Treasury.
W hen they are bought and sold in the market,
their prices vary according to market forces.
Generally marketable government securities in
clude:
# Treasury bills with maturities up to one year
(currently maturities of bills are 90-92 days);
# Certificates of indebtedness with maturities up
to one year;
# Treasury notes with maturities from one to
five years;
# Treasury bonds with maturities over live years.
In addition to nonmarketable and marketable
public issues, there are special issues to government
trust funds and agencies.
Uncle Sam has a purpose in offering this wide
variety of securities. H e seeks to provide invest
ment opportunities for every kind of investor—
from million-dollar banks to office workers and
housewives.
The Fed A cts A s M id d le m a n
in T rea sury R e fu n d in g s
“R efunding” debt is a common practice in pri
vate business as well as in government financing.
To refund a debt means to refinance it. W hen
Page Fourteen
outstanding bonds or other securities fall due, the
borrower—a private corporation, a local govern
ment, or Uncle Sam—issues new securities to re
place the m aturing ones.
Let’s look at the part Federal Reserve banks
play in a Treasury refunding operation. On D e
cember 15, 1950, 1 ^2% U. S. Treasury bonds, issued
five and a half years previously, m atured; two
weeks later, 011 January 1, 1951, 1 %% one-year
certificates of indebtedness fell due. Altogether,
there were more than $8 billion of the m aturing
securities outstanding—over two-fifths of them in
investment portfolios of commercial banks.
Holders of the m aturing securities faced two
alternatives; they could turn in their bonds or
certificates for cash or they could exchange them
for a new issue of securities offered by the Treasury.
In W ashington, D. C., several weeks before the
December-January issues matured, the wheels for
refunding the bonds and certificates began to turn.
Secretary of the Treasury John W . Snyder and
other Treasury department officials met with prom
inent bankers and businessmen and with the Board
of Governors and other officials of the Federal
Reserve System. The Treasury department, con
sulting with these financial experts, determined
what new security to offer in exchange for the
m aturing issues.
On November 22, 1950, Secretary Snyder sent
confidential telegrams to presidents of the 12 Fed
eral Reserve banks inform ing them that the Treas
ury would offer 1 %% five-year notes in exchange
for the m aturing bonds and certificates of in
debtedness.
Secretary Snyder’s telegram was the starting gun
for Fiscal Agency departments of the Federal Re
serve banks. It was their job to notify banks, in
surance companies, and other investors of the
Treasury’s exchange offering; to accept subscrip
tions for the new issue; and to deliver the new
notes.
If you are a banker in the N inth Federal Reserve
district, you remember receiving from the M in
neapolis Fed an announcement of the DecemberJanuary exchange offering. Shortly after, you re
ceived two subscription forms—a green one for
• Portrayed by the pictorial chart above is the
manner in which redemptions have gradually come
to exceed sales in the Ninth district in recent years.
In 1950 for the first time since 1946, people in this
area— as well as in the nation— cashed in more Series
E bonds than they purchased. (Note: Sales figures
are at issue price, redemption figures at current
redemption values. Redemptions include Series A-D.)
exchanging the m aturing bonds and a yellow one
for the m aturing certificates.
If you chose to accept the Treasury’s offer—as
85% of the holders did—you returned the com
pleted subscription forms to the Minneapolis Re
serve bank in the interval between December 4
and December 7 , 1950, the official dates when “sub
scription books” were open.
Either you submitted the m aturing securities
with your subscription or you informed the Fed
by whom they would be submitted. Perhaps the
maturing bonds or certificates were in safekeeping
in a Minneapolis or St. Paul correspondent bank
and would be delivered by messenger to the Fed
eral Reserve bank, or perhaps they already were in
the Minneapolis Fed in a safekeeping vault and
needed only to be delivered from the safekeeping
department to Fiscal Agency.
Behind the scenes, Fiscal Agency—following the
procedure set by the Treasury—cancelled the ma
tured bonds and certificates they received and
eventually sent them to the Treasury.
Meanwhile a stock of the new 1%% notes was
sent by the Treasury to the Federal Reserve Bank
of Minneapolis and to the other Federal Reserve
banks. Tellers in Fiscal Agency filled the subscrip
tions. On December 15, 1950, and January 2, 1951,
the new notes were delivered according to the sub
scriber’s instructions, either by registered mail,
over-the-counter, or into safekeeping in the Federal
Reserve vault.
• PICTURE
...
S T OR Y
Showing the Main Steps in the Sale
of a United States Savings Bond
• 1— Here you see a familiar scene. Making applica
tion for a Series E bond at his local bank is one of
millions of Americans who invest in savings bonds.
“O ur work must be letter-perfect, both for the
Treasury and for the security holders,” explains
Clarence Swenson, the new-issue teller in the M in
neapolis Fed. “W e check and double-check every
step in processing subscriptions from the minute
they arrive until the new securities are delivered.”
Refundings of matured certificates, notes, or
bonds, occur almost every month. W ithout a hitch,
billions of dollars of old securities are exchanged
for new issues. Besides these, which fall either at
the half-way m ark or at the end of the month, the
Fed handles weekly maturities and new offerings
of Treasury bills.
" C X R s , " " R X C s , " " T R s " - F e d L in go
for Se cu rity Transactions
The bank floor of the Federal Reserve Bank of
Minneapolis looks like that of any large commer
cial bank. Opposite “officers’ row” are the tellers’
cages. W indows 10 and n , labeled “Receiving” and
“Delivery,” are part of Fiscal Agency. Vera Grant,
receiving teller, and Ralph Ennis and Leonard
Johnson, delivery tellers, handle a wide variety of
security transactions.
Digitized
FRASER
Page for
Sixteen
Vera’s biggest job is receiving securities for re
demption and making payment. For example, D e
cember 15 bonds and January 1 certificates belong
ing to holders who decided to ask for cash (rather
than accept the new Treasury notes), wound up
in the receiving teller’s cage. Vera redeems any
matured or called government securities—bonds,
notes, certificates, bills, Treasury savings notes,
and others.
The U. S. Treasurer has large bank accounts in
the Federal Reserve banks. At the end of each day,
the receiving teller charges the Treasurer’s account
for the amount paid out for redeemed securities.
Bonds are issued in two forms—“coupon” or
“registered.” If the buyer chooses a coupon bond,
he finds numbered coupons attached to the secur
ity. Every six months he clips one of the coupons
and cashes it, thereby obtaining his interest pay
ment. If he buys a registered bond, he finds his
name inscribed on the face of the bond, and the
Treasury, which keeps a record of all registered
bonds outstanding, sends him an interest check
every six months.
The tellers in Fiscal Agency receive coupon
bonds to be exchanged for registered bonds, vice
versa, and also registered bonds to be transferred
from the name of one owner to another. In the
short-cut language of the Fed, there are “CXRs,”
exchanges of coupon bonds for registered bonds;
“RXCs,” exchanges of registered bonds for coupon
bonds; and “TRs,” transfers of names on regis
tered bonds. All of these transactions are sent to
the Treasury for processing, before new securities
can be delivered to the owners.
Perhaps a banker wishes to exchange ten $i,ooo
notes he owns for one $ 10,000 note. This is called
a denominational exchange and is quickly handled
by the bond delivery tellers.
There are also wire transfers which make it
possible to transfer securities from one part of the
country to another in a matter of minutes. By
special arrangements between Federal Reserve
banks, these transfers are made without shipping
the securities, saving much time and expense.
Fiscal Agency tellers also receive and deliver
securities which the Federal Reserve bank has
bought or sold for banks. Buying and selling gov
ernment obligations in the open market, explains
Christian Ries, assistant cashier, is a service the
Fed performs for member and nonmember banks
upon request.
If you were to walk into the purchase and sales
unit of Fiscal Agency, you m ight hear Bea McGaughren or Les Haversack saying over the tele
phone, “W hat will you bid for 100,000 Victories?”
They would be talking to a dealer in government
securities, getting a bid on one-hundred thousand
2 / 2% Treasury bonds of December 15, 1967-72 ,
which some bank desired to sell. The procedure
is to call two or three dealers and accept the best
price available at the time.
Fed Processes U. S. S a v in g s
B ond s for Uncle S a m
For the Federal Reserve banks, the savings bond
program of the past decade has spelled an avalanche
of paper work. Almost every savings bond sold,
reissued, or redeemed goes through the hands of
Federal Reserve workers as the bonds are processed
for the United States Treasury. In 1950 the Fiscal
Agency department of the Minneapolis Fed proc
essed more than four million individual savings
bonds with a value of more than $500,000,000.
“I would like to buy a Series E bond” is a familiar
refrain to today’s bankers. Banks and other issuing
• 2— From the bank's stock of unissued bonds, which
supplied by the Federal Reserve bank, the
teller obtains the requested denomination— such as
this $100 bond. The purchaser gets the bond itself
after it is dated, inscribed with his name and address
and names of any co-owners or beneficiaries, and
stamped with the issuing agent's dating stamp.
<----- are
The original registration stub (middle) is sent to
the Federal Reserve bank. It is a stiff white card
punched with holes which enable sorting and tabu
lating by International Business machines.
The duplicate registration stub (bottom), orange in
color, is kept by the issuing agent for his records.
• 3— Issuing agents send the white stubs of E ----- >
bonds they have sold, along with payments received
for the bonds, to the Federal Reserve bank. At right
you see a messenger delivering mail containing the
stubs and payments to the Federal Reserve bank.
(Picture story is continued on pages 18 and 19.)
Page Seventeen
• 4— First step at the Federal Reserve bank in
savings bonds sold by issuing
agents is examination of stubs and payments. The
total of payments from agents for bonds sold is cred
ited to the Treasurer's account at the end of each day.
<----- processing
• 5— Machines sort stubs into "bins" according to
denominations and serial numbers. After the final
sort, each denomination is in numerical order.
X
agents are performing a real public service by
selling savings bonds. At the same time, the signs
reading “U. S. Savings Bonds Are Issued H ere”
have brought untold numbers of new customers
through the doors of banks and other financial in
stitutions.
W hen a teller hands a savings bond over the
counter, the process of issuing the bond has just
begun. Look at the picture story told on these
pages and see the main steps involved—from the
purchase of the bond at a teller’s window until
the record of the sale is sent by the Fed to the
Treasury savings bond headquarters in Chicago.
Along with bonds sold by banks, Federal Reserve
banks handle bonds issued by authorized business
firms operating on the pay-roll savings plan, by
savings and loan associations, and by other qualified
issuing agents—all in all numbering more than
1,400 in the N inth F'ederal Reserve district.
Moreover, the Feds themselves issue savings
bonds. A customer may come in and buy a savings
bond over the counter in a Federal Reserve bank,
or a business firm not authorized as an issuing
agent may send the Federal Reserve bank its list
of purchasers 011 the pay-roll savings plan and the
Reserve bank issues the bonds.
T he Treasury has printed a thick book of regu
lations describing, among other things, the cir
cumstances under which savings bonds may be
Page Eighteen
reissued, changing the name of the owner or
owners. W hen a beneficiary inherits a savings
bond, he will have the bond reissued in his name,
or a person may add a wife’s or husband’s name
as co-owner 011 a savings bond. A new bride will
want to change her maiden name inscribed on
savings bonds to her married name. There are
many other reasons which the Treasury allows for
changing names on bonds.
No erasures or crossed-out names are permitted
on a valid savings bond. Therefore, bonds requiring
changes are sent to the Federal Reserve bank,
where they are cancelled. Then the bonds are re
issued with the corrected inscription.
In the reissue unit of the Minneapolis Fed, a
crew of six experts examine each application for
reissue. Every detail, including legal evidence when
it is required, must be according to Treasury regu
lations, by which Reserve banks strictly abide.
C a she d -in S a v in g s B o n d s
A re Se nt to the Fed
The redemption unit in the Minneapolis Federal
Reserve bank is staffed at present by 40 employees.
Their work is processing savings bonds paid by the
1,266 authorized paying agents in the N inth Fed
eral Reserve district.
Commercial banks, trust companies, savings
banks, savings and loan associations, and other
financial institutions are authorized to redeem
Series A-E savings bonds. (Paying agents are not
authorized to cash Series F and G bonds. These
are sent directly to Federal Reserve banks for re
demption.)
W hen you cash a bond at your local bank, your
banker pays you from his own till. Periodically,
at least once a month or oftener, he sends the bonds
he has cashed, each signed by the owner and
stamped with the paying agent’s “paid” stamp,
to the Federal Reserve bank. Acting for the Treas
ury, the Fed pays back bankers and other paying
agents for every bond cashed.
The paying-agent redemption unit of Fiscal
Agency is busy as a beehive. The Fed seeks to re
imburse paying agents for cashed bonds as fast as
possible. In fact, payment is made as soon as the
bonds arrive, and adjustments are made later when
errors are discovered.
High-speed IBM machines are used in the pay
ing-agent redemption unit. Skilled workers punch
cards coding a complete record of every bond
paid. The fastest worker in the Minneapolis Fed
punches out 250 cards an hour. “She can really
make that machine talk,” vouches Carl Gadney,
supervisor of the machine unit.
Other IBM machines sort and tabulate the
punched cards. Even checking the redemption
value paid on the bonds is done by machine. In
December 1950, the current redemption value of
a $25 bond issued January 1945 was $20.75 . If a
paying agent has paid a penny too little or too
much, the machine picks up the error.
Each day, Fiscal Agency charges the Treasurer’s
account in the Reserve bank for the am ount paid to
the paying agents. Subsequently the bonds are
sent to the Treasury. (Concluded on page 24 )
• 6— From the punched holes in the original f
registration stubs, tabulating machines assemble a
printed record on a master tape of the denom
inations and serial numbers of the issued bonds.
* 7— After the white stubs are sorted a n d ----- >
tabulated they are packaged and shipped to the
Treasury savings bond headquarters in Chicago,
where records of all savings bonds sold in the United
States are maintained at one central location.
Page .V / tieteen
E A R N I N G S
AND
EXPE N S ES
1950
Earnings from:
Discounted Bills .................................................................
United States Government Securities............................
Industrial Advances .........................................................
All Other ...........................................................................
T o t a l C u r r e n t E a r n i n g s ..................................
Expenses:
Net Operating Expenses...................................................
Assessments for Expenses of Board of Governors ...
Federal Reserve Currency:
Original Cost .................................................................
Cost of Redemption.......................................................
T o t a l C u r r e n t E x p e n s e s ..................................
Current Earnings .....................................................................
Additions to Current Net Earnings:
Profit on Sales of U. S. Government Securities............
All Other ...........................................................................
T o t a l .....................................................................
Deductions from Current Net Earnings:
Reserve for Registered Mail Losses................................
All Other ...........................................................................
T otal .....................................................................
Net Additions to Current Net Earnings..............................
Net Earnings .............................................................................
Dividends Paid .........................................................................
Paid to U. S. Treasury (Interest on Federal
Reserve Notes) .............................................................
Paid to U. S. Treasury (Section 13b)....................................
Transferred to Reserves for Contingencies..........................
Transferred to Surplus (Section 13b)....................................
Transferred to Surplus (Section 7 )........................................
1949
$
81,248
8,441,067
8,581
5,988
$ 8,536,884
$
$ 2,359,069
86,300
$ 2,284,048
80,800
138,749
18,309
$ 2,602,427
$ 5,934,457
98,048
18,213
$ 2,481,109
$ 7,697,921
1,113,176
116
$ 1,113,292
912,889
32
$ 912,921
11,596
518
$ 12,114
$ 1,101,178
$ 7,035,635
$ 294,034
11,565
84,650
96,215
816,706
8,514,627
272,831
6,268,252
6,067,408
0
0
0
674,193
68,198
10,104,928
496
5,408
$10,179,030
$
$
$
$
0
1,277,000
0
696,544
S u r p l u s A c c o u n t (Sect i on 7)
Balance at Close of Previous Year.......................................... $12,493,859
Transferred from Profits of Year............................................
674,193
B a l a n c e at C lose of Y e a r . ... ...................... $13,168,052
$11,797,315
696,544
$12,493,859
S u r p l u s A c c o u n t (Secti on 13b)
Balance at Close of Previous Year ........................................ $ 1,072,621
Transferred to Surplus (Section 13b)....................................
0
B a l a n c e a t C lose of Y e a r .................................. $ 1,072,621
$ 1,072,621
0
$ 1,072,621
STATEMENT
OF
C O N D I T I O N
Dec. 31,1950
Dec. 31,1949
$ 366,114,498
21,466,655
$ 387,581,153
6,060,199
0
185,301
$ 424,248,428
22,338,153
$ 446,586,581
5,906,731
1,787,500
77,892
142,940,000
387,549,000
72,218,000
38,487,000
$ 641,194,000
$ 641,379,301
590
5,612,500
113,210,107
1,114,221
3,645,414
$1,158,603,485
233,658,000
18,200,000
203,156,000
156,337,000
$ 611,351,000
$ 613,216,392
941
5,153,950
79,245,036
1,145,627
3,190,486
$1,154,445,744
Federal Reserve Notes in Actual Circulation ............ $ 610,642,820
Deposits:
Member Bank—Reserve Accounts ......................
391,854,990
U. S. Treasurer—General Account......................
22,613,859
Foreign .....................................................................
22,192,500
Other Deposits .........................................................
4,909,573
T o t a l D e p o s it s .......................................... $ 441,570,922
Deferred Availability Items.............................................
82,741,455
Other Liabilities .............................................................
171,162
T o t a l L i a b i l i t i e s ...................................... $1,135,126,359
$ 612,216,965
ASSETS
Gold Certificates on Hand and Due from
U. S. Treasury.......................................................
Redemption Fund—F. R. Notes..................................
T o t a l G old C e r t i f i c a t e R e s e r v e ..........
Other Cash .......................................................................
Bills Discounted ...............................................................
Industrial Advances .......................................................
U. S. Government Securities:
Bonds .........................................................................
Notes .........................................................................
Certificates of Indebtedness....................................
Bills ...........................................................................
T o t a l U. S. G o v e r n m e n t S e c u r it ie s ..
T o t a l B ills a n d S e c u r i t i e s ......................
Due from Foreign Banks...............................................
F. R. Notes of Other F. R. Banks..................................
Uncollected Items ...........................................................
Bank Premises .................................................................
Other Assets .....................................................................
T o t a l A ssets ...............................................
LIABILITIES
CAPITAL
ACCOUNTS
Capital Paid In ................................................................. $ 5,073,700
Surplus (Section 7 ).........................................................
13,168,052
Surplus (Section 13b).......................................................
1,072,621
Other Capital Accounts...................................................
4,162,753
T o t a l L i a b i l i t i e s , C a p i t a l A c c o u n t s . . $1,158,603,485
394,919,650
36,733,183
19,015,000
4,997,716
$ 455,665,549
63,781,091
354,302
$1,132,017,907
$
4,709,650
12,493,859
1,072,621
4,151,707
$1,154,445,744
Page Twenty-One
FEDERAL
RESERVE
BANK
OF M I N N E A P O L I S
DIRECTORS
R oger B . S h e p a r d
Chairman of the Board and Federal Reserve Agent
W. D . C o c h r a n
Deputy Chairman
R ay C. L a n g e
C. W . B u r g es
President, Chippewa Canning Company
Vice President and Cashier
Chippewa Falls, Wisconsin
Security National Bank
Edgeley, North Dakota
P a u l E. M il l e r
Director, Agricultural Extension Division
H o m e r P. C l a r k
University of Minnesota
Honorary Chairman, West Publishing Co.
Minneapolis, Minnesota
St. Paul, Minnesota
W
illia m
A. D
A rthur H . Q uay
enecke
President, First National Bank
Minneapolis, Minnesota
Livestock Rancher
Bozeman, Montana
H
N. T h o m s o n
Vice President
Farmers and Merchants Bank
Presho, South Dakota
arold
OFFICERS
BANKING
J o h n N. P e y t o n , President
A l b e r t W . M i l l s , First Vice President
DEPARTMENT
M a u r i c e H . S t r o t h m a n , J r .,
A. B e r g l u n d , Assistant Cashier
Assigned to Helena Branch
H a r o l d C . C o r e , Vice President in Charge of
Personnel
K y l e K . F o s s u m , Assistant Cashier
General and Internal Operations
C l a r e n c e W . G r o t h , Vice President
Assigned to Helena Branch
A r t h u r W . Jo h n s o n , Assistant Cashier
Accounting
A r t h u r R . L a r s o n , Assistant Vice President
Noncash Collections
Currency and Coin
Securities Safekeeping
M i l f o r d E . L y s e n , Operating Research Officer
Planning
W i l l i a m E . P e t e r s o n , Assistant Cashier
Accounting
O tis R. P r e s t o n , Vice President
Public Services
G e o r g e M . R o c k w e l l , Assistant Cashier
Discount and Credit
Credit Regulations
M a r c u s O . S a t h e r , Assistant Cashier
Check Collection
H
arold
Vice President
Discount and Credit
Credit Regulations
W a l t e r H . T u r n e r , Assistant Cashier
General and Internal Operations
C l e m e n t V a n N i c e , Assistant Vice President
Public Services
AUDIT DEPARTMENT
O rthen W . O hnstad,
Auditor
BANK EXAMINATION
H
arold
G.
M cC o n n e l l ,
DEPARTMENT
Vice President
FISCAL AGENCY DEPARTMENT
Vice President
Government Securities
C h r i s t i a n R i e s , Assistant Cashier
Government Securities
E a r l B. L a r s o n ,
LEGAL COUNSEL
Vice President, Counsel,
and Secretary
S igurd U e l a n d ,
RESEARCH DEPARTMENT
J. M a r v in P e t e r s o n , Director of
F r a n k l i n L . P a r s o n s , Associate
Research
Research
Director of
HELENA
BRANCH
DIRECTORS
Jo h n
E. C o r e t t e , Jr.
Vice President, Montana Power Company
Butte, Montana
Chairman
B. M. H arris
President, The Yellowstone Banks
Columbus and Laurel, Montana
E. D . M acH
affie
Helena, Montana
G. R. M i l b u r n
Livestock Rancher
Grass Range, Montana
T h e o d o r e J acobs
President, First National Bank
Missoula, Montana
OFFICERS
C larence
W. G r o t h , Vice President
MEMBER
H arold
OF
FEDERAL
COUNCIL
A.
B erglund,
Assistant Cashier
ADVISORY
J o s e p h F. R i n g l a n d
President, Northwestern National Bank
Minneapolis, Minnesota
INDUSTRIAL
ADVISORY
COMMITTEE
S h e l d o n V. W ood
President, Minneapolis Electric Steel Castings Co.
Minneapolis, Minnesota
Chairman
M. B u s h
The Cleveland-Cliffs Iron Company
Negaunee, Michigan
Jo h n
A. H . D
a g g et t
President, Gould-National Batteries, Inc.
St. Paul, Minnesota
L. M il l e r
President, Miller Broom Company
La Crosse, Wisconsin
A lbert
W
a l t e r M. R in g er
President, Foley Manufacturing Co.
Minneapolis, Minnesota
D O IN G A JOB FOR UNCLE S A M
(Continued from Page 19)
S a f e k e e p in g V aults P ro v id e d
for P ub lic's S a v in g s B o n d s
Did you know that the Federal Reserve banks
provide—free of charge—safekeeping vaults for
your savings bonds? Anyone holding savings bonds
may bring or send them to a Federal Reserve bank
or branch, fill out an application for safekeeping,
and have their bonds under the protection of a
Federal Reserve bank vault. On short notice a
bond can be withdrawn from safekeeping if the
owner is properly identified.
Safekeeping of savings bonds at the Fed is very
popular with the public. At the end of 1950, the
savings bond vault in the Federal Reserve Bank
of Minneapolis held almost 250,000 savings bonds
—worth over $30 million—belonging to residents
of the N inth district.
Fiscal A g e n c y P rovid e s
In fo rm a tio n Service
Financial parlance of the Treasury department
is a foreign language to most of us, even though
we may own some government securities. Even
bankers and other members of the financial com
m unity frequently find there are details regarding
governm ent securities which need to be interpreted
or explained. To clear up such technicalities, the
Reserve bank provides an information service.
“I’ve lost my bond. W hat shall I do?” “Can
power of attorney be used in cashing savings
bonds?” “W hat is the current rate of interest on
Treasury savings notes?” Every day Fiscal Agency
answers numerous questions like these, which
people mail, telephone, or present in person.
To come up quickly with the right answers,
Fiscal Agency maintains an up-to-date library con
taining shelves of official Treasury bulletins and
correspondence covering all angles of handling
governm ent securities. An efficient index system
makes it possible for the staff to put their fingers
on pertinent information without delay.
In doing a job for Uncle Sam, Fiscal Agency
covers several more operations. It receives withheld
income taxes and social security payments collected
Page Twenty-Four
by business firms. Taxpayers either send the funds
directly to the Federal Reserve bank or they may
deposit them in a commercial bank authorized to
accept federal taxes. The banks then forward the
payments to the Fed.
Fiscal Agency also keeps records of Treasury
Tax and Loan accounts. These accounts, known
until January, 1950, as W ar Loan Deposit accounts,
are Uncle Sam’s deposits in commercial banks.
Remember the picture story showing the sale of
a savings bond? If the issuing bank is authorized
as a depositary of public monies, it can credit the
amount paid for the savings bond to its Treasury
Tax and Loan account. It can also credit to the
same account the withheld taxes and social security
funds received from business customers. W hen
Uncle Sam wants to make a withdrawal from his
accounts with commercial banks, the depositary
banks are notified by Fiscal Agency.
The Federal Reserve banks are reimbursed by the
Treasury for many of the Fiscal Agency services
performed. From the salaries and wages of the
Fiscal Agency staff to the money paid cashing
Treasury securities, Uncle Sam foots the bill.
E x p a n sio n of Fiscal A g e n c y
D e p e n d s o n W o r ld Events
The work load in Fiscal Agency may increase
considerably as government financing of the cur
rent defense program gets underway. Earl B. L ar
son, vice president, explains that expansion of
Fiscal Agency hinges on international develop
m ent0.
In anticipation of increasing operations, the M in
neapolis Fed last November acquired additional
space on the second floor of the nearby Syndicate
Building, 84 South Sixth Street. A crew of 82, under
supervision of W illiam Bronner, assistant depart
ment head, moved to that location. W ith these
enlarged facilities Fiscal Agency can expand as
conditions warrant.
D uring W orld W ar II, the Federal Reserve
banks throughout the country served tirelessly on
the financial front. In the present emergency, they
again are prepared to do whatever jobs are required
of them—in serving the government, the nation’s
banks, and the general public.
@FedFRASER