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privilege to submit another A nnual Report of

the Federal Reserve Bank of M inneapolis to its stockholders.
Each report seems more challenging than its predecessors.
Perhaps this is true because our economy is becoming bigger
and more complex as the years go by, imposing on the Federal
Reserve banks a greater volume of w ork and obligating the
System all the more to do all it can to maintain economic
T h e statement of condition of the bank at the close of the
year and its earnings and expenses for the year reveal the
scope of its operations. These statements, however, need the
supplementation given them in the Operations R eport— which
emphasizes the discounting function that last year assumed
a greater importance than at any time during the past two
Continuing the series of feature articles initiated six years
ago, the report this year contains a story on the H elena Branch
and its territory. This serves to emphasize “ regionality” in the
structure of the Federal Reserve System and gives a picture
of an important part of the N inth district.
Thus the report is drafted with the objective to promote a
better understanding of the services of the Federal Reserve
Bank of Minneapolis.


Zke Board of Directors


° f tk e



L Melem Branch

THE FIV E M O N T A N A N S w h o comprised the Branch board during 1952 are
pictured on this page, along w ith the n e w members (at left) w h o began tw o-year terms
Ja n u a ry 1, 1953. A b o v e , clockw ise, the directors are E. D. M a c H A F F IE , Helena;
A . W . HEIDEL, vice president, Po w d e r R iver County bank, Broadus; G. R. M IL B U R N ,
livestock rancher, Grass R ange, chairm an; T H E O D O R E JA C O B S , president, First
N atio n al bank, M isso u la; and JO H N E. CO RETTE, president, M ontana P o w e r co m p an y,
Butte, chairm an for 1953. W ith retirement of directors M acH a ffie and Ja c o b s, n e w
faces on the board are J. W IL L A R D JO H N S O N , financial vice president, W estern Life Insurance
com p an y, H elena; and G E O R G E N. LUND, vice president, First N atio nal bank, Reserve.

feature Subject


Situated in the 'Treasure State’ of Montana

T h e H e l e n a Br a n c h


Serves a Vast Rich Territory

T H E S E T T I N G which Montana provides for the
Helena Branch, far western office of the Federal
Reserve Bank of Minneapolis, is as expansive as
it is unique. Spacious and grandly scenic, rich in
natural resources, and backgrounded in the tradi­
tion of the old west, the “ Treasure State” is a place
where one can still see how the nation grew, al­
though change and grow th continue to m ake the
frontiers recede. T h e story of the Branch—its his­
tory and operations — necessarily seems prosaic
alongside the romantic account its bailiwick
G ive imagination play and you can almost hear
the w ar cries of the Sioux, rattle along in the
stage that ran between V irginia City and Helena,
watch the m iners’ pokes of gold dust and nuggets
spill out onto the assayers’ scales, join a posse
pursuing bank bandits, or see the steamers bring­
ing civilization up the Missouri river from St.
Louis to the head of navigation at Fort Benton.
M ontana has become, since these things grew
remote, a ranking producer of wheat and prime
beef, of copper, zinc, silver, lead, manganese, oil,
and lumber, though prim itive regions remain. In
sections apart from valleys and plains marked with
buildings, fences, and power lines, the visitor finds




towering mountain peaks and virgin forests, buttes
and canyons, Indian caves and the Badlands—
“ H ell Cooled O ff,” where as one wise-cracking
air traveler put it, “ in most places a jack rabbit
would have to carry his lunch to get across it.”

Visitors Enjoy State's D iversity
M ontana is a fascinating variety of things as
history and the contemporary scene mingle. T o the
history-minded it is Robbers’ Roost, early-day ren­
dezvous of road agents; the gold dredge just
ceased operations— last of a long line of gold-

Klk Basin in 1915— and expanding refineries; the
cattle auctions in a dozen localities; and mighty
monarchs of the forest 011 their way to lumber
Montana also is the rich grain farm er who died
leaving an estate of reputedly $3 m illion; the
Black Angus cattle on a $0,000-acre ranch in F er­
gus county; the dozen hydroelectric plants of
Montana Power com pany— with one steam plant
m aking a baker's dozen; and the $75 million
tourist industry which has a wealth ol leatures to
oiler in Glacier park and other attractions.



"G O L D E N "


seekers in the Helena area; the abandoned sodroof cabins of frustrated homesteaders; and the
old west of the roaring Sixties as revived by the
museum at V irginia C ity—gold m ining camp at
A lder gulch that produced f>ioo million in gold.
It can be the site of Custer’s Last Stand in the
battle of the Little B ig H o rn ; Charles Russell
paintings in a Great Falls studio; the ghost town
that was once a silver cam p; the Chinese whose
forebears were brought in to build the railroads;
and the state capital of Helena, which once boasted
more millionaires per capita than any other spot.
T o the student of geology, again, Montana offers
the Lew is and C lark cavern, with its weirdly
formed and beautifully colored rock form ations;
the warm well water that heats a hotel at Boulder;
Grasshopper glacier, where alternate layers of bil­
lions of the insects from another age lie frozen
in ice in the mountains of southern M ontana;
G iant spring, largest fresh water spring in the
world, flowing -$8 S million gallons of water every
24 hours; and Cavity range near Lew istow n—
telling with its crystal and ice caves, H e ll’s Forty
Acres, catacombs, Travertine mountain, and ex­
tinct geyser cones the strange story of the ages.

Industrially and commercially it is also the ore
refineries at Anaconda and Great F alls; the 70
dude ranches that offer resort comfort or rough­
ing it in the wilderness; the famous wild-hay
region of the Big H ole basin; the million bags of
sugar processed annually by a big Billings plant;
the shipments of Christm as trees that mean a cool
million to “ tree farm ers;” and the bountiful water
power, hardly a fifth harnessed.

A Vacation W onderland
T o the vacationer, again, M ontana is the 12 na­
tional and seven state forests (with two million
acres of primitive area), embracing more than a
fifth of the state; the awe-inspiring views of rugged
peaks forming the Continental D ivide; the jew el­
like lakes with their tree-lined shores; the peace
and solitude of cool woodland retreats; and sports
with a backdrop of unsurpassed beauty— whether


T o the businessman or economist, M ontana is
the copper camp of the “ richest: hill on earth” at
Butte (city called “ a mile high and a mile deep” )
which has yielded $2 billion in m inerals; $100
million Fort Peck dam, largest earth-hll struc­
ture in the w orld; wheat farms averaging more
than 1,600 acres; gushing oil w ells—dating from



/ V —

~I * ^

trail riding into the hack country, a ski run at
1 0,000 feet, angling for gam ey trout in a sparkling
stream, or stalking deer, elk, moose, and hear.
Tourists find Montana is the inevitable silver
dollar received in change; Blackfeet Indians in
ceremonial dress; the sculptured rock ot Montana
canyon; the w orld’s largest smoke stack, 5S5 feet
high, of Anaconda smelter; the six units of the
state university — at M issoula, Butte, Bozeman,
Billings, H avre, and D illon ; die breathtaking
beauty of Flathead lake with its 188 square miles:
and, of course, H elen a’s main street, which was
Last Chance gulch, a gold rush locality that yielded
many millions in gold.
A s varied as M ontana’s topography and assets is
its citizenry. One finds copper miner, cowboy,
lum berjack, cattleman, dry-land farmer, sheepherder, dude rancher, oilman, Indian, sportsman,
and many other distinct types. Behind them is the
tradition of fur trader, Indian wars, trail herds,
cattle baron, gold camps, copper king, road agent,
rustler, and vigilante.

It's Two States, V irtu a lly
T h ird largest state in the union with its 147,148
square miles, M ontana remains a place of wide
open spaces between towns where even Paul Bunyan could do setting up exercises without upset­
ting things. W ithin the territory live 591,024
people (1950 census), or an average of four persons
per square mile. Only two states, neighboring W y-










om ing and Nevada, have less population density.
H owever, since the end of W orld W ar II, when
the state’s population was at a low level due to
loss of residents to the armed forces and war
industry in other states, M ontana’s population has
climbed ^2.5 per cent— advancing from 446,000.
As it was expressed by E . A . D ye, editor of the
H elena Independent Record, "‘M ontana is virtually
two states,” for the Rockies, a chain from 100 to
200 miles wide, in effect divide it into two
geographical and economic areas.
W estern Montana, com prising roughly one-third
of the state, is mountainous, heavily forested, with
vast mineral resources and fertile valleys. Its in­
dustries are based upon its lumber, m ineral, and
agricultural resources. T h e tourist trade also fig­
ures importantly.
Butte, second-largest city (33,251— 1950 census)
and m ining locality, is in this area, as is Missoula,
fourth largest (22,485), an educational center. In
the region’s valleys there is extensive diversified
farm ing, much of it irrigated. L arg e lumber mills
are located at Bonner, Colum bia Falls, Kalispell,
and Libby.
T o the east of the Continental D ivide lies the
greater portion of the state— part of the Great
Plains region. Described as a huge plateau, its
elevation drops gradually eastward toward the
Dakotas. H ere are the great wheat farm s and ex­
tensive cattle and sheep operations. H ere, too, are
to be found large lignite and sub-bituminous coal
beds, oil and natural gas fields.


T h is region has the leading wholesale and retail
trade centers of Great Falls (largest city, with
39,124 population) and Billings, third largest
(31,834). T h e state’s heaviest concentration of oil
refining is at Billings. In the area, too, are Miles
City, “ capital of the cow cou ntry;” Bozem an, G a l­
latin valley gatew ay to Y ellow stone; H avre and
Livingston, division points of Great N orthern and
N orthern Pacific railways respectively.

Rail Link Com pleted in '83
Since the late A . M . Holter, leading M ontana
citizen in pioneer days, sawed the first piece of
timber in the territory (population 18,000 in 1868)

M ontana has come a long way.
said to be physically impossible
through the mountains— and in
skeptics and critics said, there
come for.

Once it had been
to build railroads
the second place,
was nothing to

H ow ever, by September 3, 1883, the last spike
was driven at G old Creek, and the Treasure State
— which was admitted to the union in 1889— went
011 to take the important place regionally and na­
tionally that it enjoys today.
A ccording to a pioneer citizen, the state has
progressed more rapidly in farm ing and stock rais­
ing than in m ining— and so its basic income con­
tinues to change. Even so, its important place in
the N in th district’s productiveness is due in a

• H e re you see the Accounting d e p a rtm e n t, which
also contains W ire Transfers a n d G o v e rn m en t D e ­
posits. The view is from the north end to w a rd the
cages a n d the v a u lt d oo r. (D o o r shown is of the book
v a u lt.) S ta n d in g is Lee Pow ell, d e p a rtm e n t h e a d , a t
the desk o f John H e a th . S e a te d a t f a r le ft is Joe
M ille r, o n ly m em ber o f the o rig in a l Branch staff.

• The a ttra c tiv e lo b b y a p p e a rs v irtu a lly the same
as w hen the b uildin g w as o p e n e d in 1 9 2 8 , excep t
fo r the new fluorescent ligh t fixtures. N o te p illb o x
a t u p p er le ft from which v a n ta g e point the g u a rd
on d u ty can survey the entire gro un d flo o r a re a .

large measure, the record books show, to its valu­
able m ineral deposits and its forests.
T h e emergence of farm ing has been evident in
wheat grow in g. In 1915, wheat acreage was the
largest the states in the N inth district had experi­
enced, but Montana was to see its production rise
phenomenally from about 10 million bushels to
51 million by 1940 and 98 million bushels in 19 51.
H arder, heavier, and of finer m illing quality than
any other Am erican wheat, this dry-land grain
commands a premium market.
M ontana’s livestock industry was still on a small
scale in the Sixties, but it was given a powerful
impetus when great herds of cattle were driven


up the Texas trail during the Seventies and E igh t­
ies onto the plains, where they fattened on the
thick, red buffalo grass. Sheep, a source of stability
but become less important, came to the grazing
lands in 1867 when a small flock of ^00 head
were driven in from Oregon. Sheep products have
meant more than $1 billion in income since. M on­
tana’s annual livestock revenue is now more than
$200 million.
W orth noting is the change in marketing that
has gradually taken place. W ith development oi
a dozen cattle auction points in the state, producers
have become more independent ol distant mar
kets, where formerly they had to accept prices
being quoted at those points, with no alternative.

• The 27-to n va u lt d o o r is seeing its second period
of service in its second location, fo r with erection
of the present building it was moved from the first
site. The vault has an em ergency d oo r (not shown).

fornia and Idaho the state’s real mineral wealth
was discovered to lie in grosser metals.

1 he bold outcrops characteristic of the most
distinctive veins of the Butte district attracted the
miners’ attention after the period of placer mining.
"The quest centered chiefly in the search for silver,
and Butte became the greatest producer of that

Gold Find Opened the Territory
M ining in M ontana has been a fabulous indus­
try since the discovery of gold on G old creek
near Garrison in 1852 by Francois Finlay, a breed
trapper. T he rich strikes which came principally
at A lder gulch in the southern section and in Last
Chance gulch opened the territory to wide settle­
ment— and also opened it to an influx of des­
peradoes that for a time spelled lawlessness and
Montana gravel beds and quartz lodes were to
give up many fortunes in gold, but in the years
after prospectors emigrated from diggings in Cali-

N orm an B. Holter, son of the man who in 1867
founded M ontana’s oldest store — Holter H ard­
ware in H elena— at 85 recalls his father telling
of a visit with M arcus D aly, founder of Anaconda
Copper M ining company. A sked how things were
going, D aly replied that he was discouraged. M in­
ing was turning to copper. It was the Anaconda
Silver M ining company at that time, and it was
understandable that the development should be
considered calamitous.
Copper nearly lost its place to zinc in 1951, when
the value of the former was $27,784,000 and the
latter $27,623,000. H ow ever, prelim inary Bureau
of Mines estimates for 1952 show copper produc­
tion valued at $30,773,520—compared to $27,005,220
for zinc. The state holds fourth place nationally.


Zinc Gives State Another 'First'
Zinc, however, should be spelled in capital let­
ters for 1952, because this mineral gave Montana
its second first in national minerals production
alongside the vital steel-making ingredient, man­
ganese— of which the state produced qt per cent
of domestic ores. T h e Treasure State reached the
top with Hi,834 short tons, with Idaho second at
70,911 short tons (prelim inary Bureau estimates).

M ontana also ranks high in silver, lead, and
gold output. Silver, now produced almost entirely
as a by-product of zinc and copper m ining, in
1952 placed third. The state was fifth in lead.
Other than coal and petroleum, other minerals
of importance are phosphate rock, vermiculite, and
chromite. In the fall of 1951 a new electric furnace
plant of Victor Chemical W orks at Silver Bow
began production of elemental phosphorous. This
product, shipped in liquid form to processing
plants in Illinois and California, is used in food­
stuffs, detergents, and pharmaceuticals. Phosphor­
ous also has military uses.
Verm iculite has been produced for many years
northeast of Libby, where it is found in high-grade
deposits. Verm iculite, when expanded by heating,
is used as an insulating material, in manufacture
of wallboard, etc.
O f all minerals, none is so widespread in M on­
tana nor found in such tremendous quantities as
coal. A U. S. geological survey estimate placed
reserves at over 200 billion short tons. A new
process announced for use of lignite and other
low-grade non-coking coals in the generation of
electric power and production of coal tar products
is a development holding great promise for the

O il Is in the Ascendancy

" The H e le n a branch was established for the
purpose of pro vid ing better a n d quicker serv­
ice to banks in M o n t a n a . During the years our
objective has b een continuously to improve
that service. W e sincerely hope th a t M o n t a n a
bankers will a lw a ys f ee l fre e to contribute sug­
gestions t o w a r d realizing that objective more
fully —as w e also hope tha t they will alw a ys
know themselves to be w elcom e a t our office."

Even before oil discoveries in the W illiston basin
underscored petroleum’s importance to Montana,
it had been advancing to the point where it chal­
lenged copper and zinc for rank as leading m in­
eral. T he state has been producing oil for nearly
four decades, with the Cut Bank field in north­
western Montana the chief source. Central M on­
tana already had several fields, and the northern
rims of two other important basins— the B ig H orn
and the Powder R iver—extend into the state.
W hen the tenth field in the Montana portion of
the W illiston basin was discovered in December,
the state’s importance as an oil producing area was
further emphasized. T ow n s spotlighted by the
new activity include Glendive, Richey, Sidney,
Terry, W ibaux, W o lf Point, and Poplar, location
of the largest field.
M ontana’s crude oil production in 1952, with
December estimated from the pipe line run,


* Located a t the south end of the lo b b y is the
Personnel d e p a rtm e n t a n d the desk of H a ro ld A .
B erglund, assistant cashier. C o n fe rrin g with him is
Steve Surm an, 3 0 -y e a r e m p lo y e e . Also in this a re a ,
besides the Personnel d e p a rtm e n t, can be fou nd
the sw itch bo ard , sten og rap hic unit, an d central files.

amounted to 9,539,678 barrels, according to the
state conservation board. T h e 39 producible wells
in the Montana portion of the basin yielded
689,998 barrels of crude in 1952.
As for lum bering, the nearly 21 million acres
of forests represent one of the state’s greatest assets.
V irtually all of its timber volume is in softwoods,
with white pine the most valuable. Total standing
timber at the latest count available (1949) approx­
imated 55 billion board feet, and only ponderosa
pine, largest single source of lumber, is not being
replaced as fast as cut.
T h e state leads, incidentally, in m arketing of
Christm as trees, supplying one-seventh. N ew est
industry in the way of wood products—which
range from pulpwood logs and mine timbers to
shingles and wallboard— has come with building
of a match plant near Superior.
From this relatively brief review of M ontana’s
attractions and wealth-producing factors, it can
be seen that it is a state of contrasts as well as
change and grow th. Traverse its challenging ter­
rain by anything from plane to horseback and

they become apparent even before its citizens draw
a word picture of their state for you.

Hotter Cam paigns for Branch
Let's turn now— with the setting established—
to the “ life history” of the H elena Branch before
listening to what Montanans have to say about
their state’s economy and its future.
As has been indicated, no state in the district
was to experience such a change in the pattern
of its economy as M ontana. From 1910 to 1920
the “ land of the shining m ountains" had shifted
from ranching to large-scale wheat farm ing. Then,
with the railroad network completed, good crops,
and the war as factors, a boom was the natural
result. T h e impact 011 Montana was especially
Establishment of the Branch in 1921 grew out
of this situation. N orm an B. Holter, who had
been a member of the first head office directorate,
had learned that 18 new branches had been author­
ized by the Federal Reserve Board, including one
in Salt Lake City but none in Montana.
In M inneapolis at the time, H olter immediately
began a campaign to establish a branch at Helena,
broaching the matter to his fellow directors. “ The
main argument was that if we were going to have
any branches,” he recalled recently, “ H elena was
farther away from a Federal Reserve bank than
any other important financial center in the coun­

At first it appeared his efforts would be rew ard­
ed with an “ agency” only, but a formal presenta­
tion of M ontana’s needs was later made to the
M inneapolis board by Sam Stephenson, the late
president of the Pirst National Bank of Great
Falls, and T . A . M arlow , the late Helena capitalist.
Charles j. K elly, the late chairman of the Metals
Bank and Trust company of Butte, also visited
the M inneapolis office and discussed the proposal.
Associated banks of Helena had petitioned for
the branch, and among the representations made
were: that many government offices were centered
in the capital city; that nine other districts had
branch banks and only one or two districts were
larger than or as large in area as the N in th ; and
that Helena was virtually equidistant from prin­
cipal cities in which the larger banks were located
— namely Butte, Great Falls, Missoula, Billings,
and Bozeman.
Several surveys determined that mail connec­
tions to Helena from other points would make
for satisfactory service— and Helena (population
17,581) won a distinction in becoming the smallest
city in the United States to be the site of a Federal
Reserve bank or branch.
A building at the corner of Park and Edw ards
formerly occupied by an independent telephone
company was obtained for $15,000, and a contract
was let for remodeling and installation of a modern
vault. Rem odeling, mostly of the second floor,
came to $162,474.14, of which $66,580 went for
vault and doors.
As a sidelight, it is recalled that the building
had been erected over old tunnels and sluice boxes
used in the days when Helena was best known
for its Last Chance gulch placer diggings. It be­
came necessary, consequently, to make some heavy
concrete fills to insure against anyone gaining
access to the vault from beneath, as well as to
support its weight.

It W as O nly M oney!
O pening of the Branch on February 1, 1921, was
accompanied by an incredible occurrence. T h is
concerned the casual manner in which a dozen
or more large mail sacks filled with two to three
million dollars in new currency arrived at the
bank from the Bureau of Printing and E n gravin g.


A post office driver, believing the sacks contained
ordinary printed material, dumped them on the
sidewalk outside the bank, then went in and noti­
fied one of the officers that a batch of supplies was
It developed that the currency shipment had

• The views on these p ages a re o f the Check C o l­
lection a n d M a il d ep artm en ts. W a lt e r N achtsheim ,
d e p a rtm e n t h ea d , is seen a t his desk in the fo r e ­
g ro un d in picture a t right, taken looking to w a rd the
southeast corner. The IBM p ro o f machines a b o v e and
b elo w a re a rra n g e d in rows a lo n g the w indow s a t
the south a n d east sides. N o te second m achine in
the picture b elo w with its back open as the o p e ra to r
makes a correction. The rolls of tap es a re fo r the
2 4 "pockets" fo r checks in the m achine's "d ru m ."

lain overnight at Logan on a truck, on a railroad
platform — completely unguarded!
T h e Branch opened with a staff of 36 employees
and officers. One of this original group, Joe M iller
of Governm ent Deposits, is still 011 the job. In ­

cidentally, close to 150 years service is represented
by him and four other long-time staffers. T h e four
are Steve Surm an, B anking department, who is in
his thirty-first year; M ary N eal of Personnel, in
her thirtieth; Lee Powell of Accounting, in his
twenty-eighth; and John Heath of the Banking
department, in his twenty-fifth.
Principal speaker at a luncheon on the occasion
of the opening was Roy A . Y oung, then governor
of the Minneapolis Reserve bank and later chair­
man of the Board of Governors, W ashington, be­
fore becoming head of the Boston Fed— and who
is now chairman of the Merchants National Bank
of Boston. H e promised cooperation of the parent
bank and predicted “ a successful career for the

Branch in every particular.”
John Clay, president of the
stock commission, C hicago;
H olier and T . A. M arlow ;
ernor, Joseph M. Dixon.

Other speakers were
Clay-Robinson L iv e ­
H elena's N orm an B.
and M ontana’s go v­

T he first expansion in w orking space came with
establishment, during the first year, of the W ar
Finance corporation, an agency of which was
opened in Helena and the Branch made custodian.
Additional personnel and crowded conditions
prompted acquisition of an annex in January
1922 to accommodate 25 employees. H ow ever, as
the volume of work was reduced with closing of

more than half the banks in Montana, and as the
W F C office was moved to Minneapolis, the annex
was closed in 1925.
The low point of member bank reserve balances
at the Branch of $5,520,000 had occurred on D e­
cember 3 1, 1932, as a result of reduced deposits
of the fewer member banks attributable to a lower
volume of loans and depressive withdraw als of
O rganized early in 1932 was the Reconstruction
Finance Corporation. A n agency was established
under Branch management, but the R F C outgrew
its space in about a year, m oving to other quarters.
Later it was transferred to Minneapolis. T h e agen­
cy was returned with opening of the new build-

ing in 193S, and the Branch was also custodian
for the R F C ’s many affiliated corporations as they
came into being.
At the time the Branch opened, member bank
reserve balances were $4,775,024.60, whereas loans
to member banks were $7,664,7 ’7.S6, transferred
from head office. The peak was reached on August
31, 1921, when loans totaled $13,601,252.44, approxi­
mately three times the amount or member bank
reserve balances at that time.
D uring the period from 1921 to 1933, the num­
ber of banks dropped steadily, but the majority
of failures occurred prior to 1927. W ith closing of


for more than two years the Branch continued
operations with the walls of its building cracked
and propped up, inside and out.
Helena, a study determined, continued to be the
logical location for the Branch because of its train
service, and with the quakes subsided to a large
extent a building was erected in 193S on a new
site just north of the post office at Park and
Edw ards.
T h e one-story structure, with approximately
14,000 square feet, cost $75,000 to build. T h is did
not include m oving of the 2S-ton vault door from
the old building at a cost of $2,500.
Speakers at the opening on June 17, 19 ^ , in­
cluded Chester C. Davis, former Montanan and
then a member of the Board of Governors, W ash­
ington; J. N . Peyton, then president of the M in ­
neapolis Reserve bank; and ). E. O ’Connell,
Helena bakery magnate, who was to serve 16 years
011 the head office directorate.
N O R M A N B. HOLTER, one of M o n ta n a 's
le a d in g citizens, is cred ited with starting the
ca m p a ig n th a t g a v e his state a branch
office in the F ederal Reserve System. A t 85
he is still active in the m a n a g e m en t of Holter H a rd w a re com pan y, H e le n a . Looking
back on the years he says, "It's a w o n d e r­
ful thing to see a state g ro w from n o th in g /7

so many hanks the Branch had a great deal of
rediscounted paper to liquidate. In the beginning
this function was handled by the Branch, but it
was soon assumed by the head office.

Build? Earthquake Decides
By iQ35 it became apparent that larger quarters
were needed, but before a committee appointed
to study the situation and determine whether to
build could report, a series of severe earthquakes
rocked Helena, badly dam aging the building.
D uring the forenoon of October 31, 1935, one
tremor collapsed a brick wall in the manager's
oihce and caused other damage. T h e building suftered as severely as any in Helena. T h e need tor
a new building was automatically decided, but


Second Story Added in 1946
Am erican entry into the war in 1941 brought
a further increase in business, chiefly because ol
fiscal agency work, and the decision was made
to erect a second story. Costing $46,000, this was
completed in February 1946.
At a celebration on February 2^ observing the
silver anniversary of the Branch, the principal
speaker was D r. W alter C. Coffey, president em eri­
tus of the University of Minnesota and former
M inneapolis F'ed board chairman. Also in attend­
ance was O liver S. Powell, P'RB first vice president
who became president in July 1952.
Facing east, the present building from its emi­
nence near Mt. Helena affords a fine view of the
valley and the distant mountain ranges in which
the capital city has its setting. T h e building is said
to be not only one of the finest in the System but
also one of the best from the standpoint of utiliza­
tion of space.
Officers of the Branch today are Clarence W .
Groth, vice president, and H arold A . Berglund,
assistant cashier. “ D utch,” as he is known, on
August i(S, 194S, had been made assistant vice
president assigned to the Branch, and he was ad­
vanced to vice president on M ay 5, 1950. H e has

been with the bank since M ay 14, 1923, when he
entered on a part-time basis. “ Bergie” was desig­
nated assistant cashier assigned to the Branch on
June 23, 1950. H e has been with the bank since
A ugust 6, 1917.
T h e board of directors at year-end 1952 was
comprised of G . R . M ilburn, livestock rancher,
Grass Range, chairm an; John E. Corette, presi­
dent, M ontana Power company, Butte; A . W .
H eidel, vice president, Powder R iver County
bank, Broadus; Theodore Jacobs, president, First
National bank, M issoula; and E. D . M acHaffie,
H elena.
W ith directors Jacobs and M acHaffie complet­
ing their terms, they were succeeded January 1,
1953, by G eorge N . Lund, vice president, First
National bank, Reserve; and J. W illard Johnson,
vice president, W estern L ife Insurance company
of Helena.
O riginal directors of the Helena Branch were
T . A . M arlow , president, National Bank of M on­
tana, Helena, chairm an; Charles J. K elly, chair­
man, Metals Bank & T ru st company, Butte; H .
W . Row ley, president, N orthern Hotel company,
B illin gs; R . O. K aufm an, vice president, Union
Bank and T ru st company, H elena; and Lee M.
Ford, president, Great Falls National bank, Great
O riginal officers of the Branch were O. A . C arl­
son, m anager; R. E. T ow le, cashier; and L . W .
Lon g, assistant Federal Reserve agent and auditor.

• When
e a rth ­
q u a k e rocked H e le n a
in O c to b e r 1 9 3 6 , the
first h o m e
of t he
w as
dam aged.
O p e ra tio n s
here, h o w ­
ever, fo r m ore than
tw o years, d uring which
tim e the w alls w e re
p ro p p ed up inside and
out. The b uild in g now
serves as a bus station.

Carlson resigned February 1, 1922, and was suc­
ceeded by T ow le.
T ow le, now state superintendent of Montana
banks, joined the F e d ’s staff in 1914. H e was ap­
pointed manager of the Branch in 1922, m anag­
ing director in 1929, and vice president assigned
to the Branch in 1948, the title he held at the time
of his retirement on December 3 1, 1950.

Volum e Figures Tell of G row th
Operations figures for 1921 ( 1 1 months) when
compared with those for 1952 bespeak the growth
that has taken place during the Branch’s 32 years.
Total resources, which had been $11,931,580.02
when the books were closed on December 31,
1921, were $78,801,061.15 at year-end 1952.
Total items handled by the Transit department
in 1921 came to 2,472,310, aggregating $291,233,000,
while in 1952 total checks handled hit 12,507,353
(including 815,951 postal money orders) having
an aggregate value of $3,000,936,000.
W here 1921 saw 3,19 1 transfers of funds totaling
$56,792,385.96, in 1952 there were 10,032 transfers
aggregating $765,342,217.62.
(Coin shipped and paid out during 1952, not
including uncurrent coin, totaled 17,835,226 pieces
with a value of $4,781,802. Currency shipped and
paid out, not including cancelled notes or notes
returned to other Federal Reserve banks totaled
4,299,817 pieces with a value of $48,393,234.)

W ith the greatly increased volume figures one
would also expect an increase in employees, but
thanks to mechanization and the transfer of some
operations to the head office, the total staff today
is 55 compared to the 66 in 1921.
Loans to member banks have been an unpre­
dictable item. D u rin g the 1 1 months of its first
year the Branch had advanced funds to 149 of the
193 members either under bills payable or redis­
counts, the aggregate amount having been more
than $57 m illion. T h is represented 16,822 indi­
vidual notes totaling $32,723,000 and 1,278 col­
lateral loans aggregating $25,162,000.
Figures for ensuing years fluctuated greatly.
T h e total dropped to $28 million in 1922, then to
$7.5 m illion by 1924. Follo w in g the bank holiday
in 1932, funds advanced rose to $18 m illion but
then dropped rapidly. It was not until 1949 that
advances reached earlier proportions— $26,395,000,
all for the purpose of replenishing depleted re­
serves when requirements were increased.
T h e year 1952 saw a substantial increase in ad­
vances as 91 collateral loans aggregating $65,275,000 were made to member banks.

They Like Silver Dollars
T h e circumstance which finds M ontana —
where gold dust was once the medium of ex­
change— a “ silver dollar state” today accounts for
heavy shipments of standards common at the
Branch. In 1952 the total was 3,602,990, with only
73,191 received— m aking a net average weekly
shipment of approxim ately $69,000.
So silver-dollar conscious are M ontanans that
if you hand them a paper dollar you may get
change for a five. It happened three times to one
visitor! T h e tradition, jealousy retained, is based
on the state’s production of metals and the fact
that M ontana was developed largely by m ining.
Branch coin figures reflected an interesting rec­
reational change in 1950 when slot machines were
declared illegal. Coins received jum ped from the
customary three or four m illion annually to 9,135,724— “ slot machine money pure and simple.” T h e
dollar amount was even more significant. W here
for five years less than $300,000 had been received
from banks, in 1950 the dollar total was $1,016,-


• A lounge a n d recreation room fo r m em bers of
the staff has been p ro vid ed in the basem ent. Knotty
pine w alls g ive the p la c e an inviting a p p e a ra n c e .

000. Obviously much of this had been in slots,
and in tills for m aking change.
D urin g the depression period, Branch staffers
recall, money was flown out on more than one
occasion to distressed member banks. Recalled,
too, is how when the late President Roosevelt
called in all the gold, the Branch had more than
a million in coin, and from four to five m illion in
gold-backed currency. T h e hoard made “ quite a
sight” spread out on a table while being counted.

Economy Has Been a t a Peak
A t the time a branch was petitioned for, M on­
tana’s 13 1 national banks had total resources of
$109,166,000 and deposits of $81,775,000 (D ecem ­
ber 31, 19 18 ). There were 266 state banks, and
deposits of all banks were $186,896,000.
Deposits of the 38 national and 45 state m em ­
bers in M ontana at the end of 1952 aggregated
$558 million. T h is figure represents approximately
86 per cent of deposits of all 109 banks (on the
basis of year-end 1951 figures).
A s its bank deposits indicate, the Treasure State
has been enjoying a thriving economy. Witness
these 1951 income figures: farm crops accounted
for nearly $235 million, livestock $215 million,
m ining more than $100 million, lumber about $50
million, oil and gas more than $30 million, and
the tourist industry $75 million. A n estimated $100

million was added to value of products by m anu­
Income payments to individuals, over $ i billion
in 19 51, sounded another prosperity note. Per
capita income payments averaged $1,752, eleventh
highest in the U . S.
(Income from farm m arketings in 1952— pre­
lim inary figures — show that drouth and lower
prices have cut returns. W here in 1951 cash farm
income was $448 m illion, the all-time high, in
1952 it was $385 m illion— 10 months actual. L iv e ­
stock represented $200 m illion of this. T h e effect
of these figures is to reduce the accepted 5 to 1
ratio between farm ing and m ining income.)

Farm ing Is Basic Economy
W hile handbooks may background you on what
makes M ontana’s economy tick, look at the state
through the eyes of representative bankers, busi­
nessmen, editors, and others in its key cities, and
the neat statistics are translated into a prosperous

present emerged from a pioneering past and prom ­
ising a bright future.
Those with a finger on the economic pulse are
agreed on what comprises M ontana’s basic econ­
omy. “ W hile m ining, oil, and alum inum plants
are spectacular and dram atic things,” said A lex
W arden, publisher of the G reat Falls T ribune,
“ we have to remember that basically agriculture
and livestock raising are M ontana’s economy. T h e
ratio is almost 5 to 1 to m ineral. T h at makes it
the basic economy.”
Rem arking that “ this state gets along all right
as long as it is profitable to m arket farm crops,”
the publisher of the state’s largest daily added
that no factor is watched as closely as the weather.
“ They say good weather is no good,” he smiled.
“ It has to be wet and disagreeable to m ake a good
production year in M ontana.”
Recognizing M ontana’s prim ary role as a pro­
ducer of foodstuffs and raw materials, he looks
at its future in this light: “ W e are a production
state. Perhaps of all the states, we don’t live off
each other. W e create new w ealth.”

Grass Is W ealth Factor
• The ta b u la tin g division is located in a sound­
p ro o fe d space on the second flo o r. H ere clearings
a n d Treasury card a n d p a p e r checks a re processed.

Another who recognizes that farm ing is the
basic economy is Errol G alt, president of the First
Continued on P a g e 2 6

Operations Keport_____________________________
Revival of Discounting Featured
Bank’s Services in 1952


T H E D IS C O U N T window at the Federal R e­
serve Bank of Minneapolis was a busy place in
1952 as m ember banks were furnished more re­
serves through loans than in any other year in the
past two decades.
Officials of this bank with long memories w ill
tell you, however, that less paper was handled
last year than in the years of the early Thirties.
T h is is true because borrowing in the earlier years
was based largely on customers paper, whereas
today Federal Reserve advances are based on notes
of banks secured by government obligations.
It is acknowledged, nevertheless, that important
developments took place in discounting last year.
T h e amount of reserves made available to m em ­
ber banks by borrowing from this bank amounted
to nearly half again as much last year as in 1951
— and was higher even than in any year since 1929.
Specifically, average daily dollar volume was up
45 per cent from 1951.
These larger borrowings, which were also ex­
perienced by other Federal Reserve banks, are
backgrounded by significant trends. In the decade
of the Tw enties, banks engaged actively in redis­
counting customers’ paper to provide reserves
needed to support credit expansion. In the next
decade, after 1933, rediscounting customers’ notes
and other methods of borrowing at the Reserve
banks nearly vanished because bank loans had
dropped to a lower level and excess reserves were


more than amply provided by net gold imports.
D urin g the years of W orld W ar II, when addi­
tional reserve balances were needed to support a
deposit expansion caused by bank purchases of
governm ent securities, such reserves were supplied
by Federal Reserve open-market purchases. A fter
the war, a great revival of demand for bank loans
occurred, which caused shifts in the composition
of bank assets. Governm ent security holdings de­
clined and loans climbed rapidly. T h e Federal
Reserve System, through its support-purchases
policy, had made possible for about five years
large-scale selling of governm ent securities by
banks without the market sinking to less than par.
In the spring of 19 51, a significant change in
Federal Reserve policy was made whereby prices
of government securities were allowed to fluctuate
more freely in response to m arket forces. Prices
fell below par in an orderly decline— whereupon
member banks began a trek to the discount w in ­
dows of the Reserve banks in order to obtain the
reserves needed to support higher deposit liabilities
created by a continuing loan expansion.

M ore Banks Accommodated in '5 2
It may seem strange to some that banks regard
liabilities wrhich result from borrowing as dis­
tasteful while they welcome and seek to m axim ize
liabilities which arise from deposits. Nevertheless
this is true and it is partly for this reason that

• N e a rly 100 m illion items w ere h an d le d by the
Check Collection d e p a rtm e n t in 1 9 5 2 as the volum e
o f operation s continued an increase which has been
in progress since 1 9 4 2 . The w ork lo a d has increased
in th a t tim e from 3 5 ,9 3 6 ,0 0 0 to 9 8 ,3 2 5 ,0 0 0 items.
The u pp er curve shows d o lla r v a lu e of items p ro ­
cessed as distinguished from the lo w e r curve, which
reflects w ork lo a d . The steeper slope of the higher
curve fo r much of the p eriod reflects to a la rg e
exten t the in fla tio n a ry influence of rising prices.

banks ordinarily resort to borrowing only for
short periods, usually in order to erase reserve
deficiencies resulting from temporary influences
such as adverse clearings.
It is traditional that banks shun borrowings more
on statement dates than at other times. Th is ex­

plains why loans to member banks— the item
“ bills discounted" on this bank's year-end state­
ment—amounts to only $500,000, or less than 4
per cent of the average amount outstanding for
the year 1952.
In 1952, 51 different member banks negotiated
584 loans aggregating more than $2 billion, where­
as in 1951, 44 banks negotiated 420 loans aggre­
gating almost $ 1% billion.
Although these figures serve to illustrate the
magnitude of the increased activity in the dis­
count department, they are not as m eaningful as
are the figures which relate to the average daily
volume of loans outstanding. L arg er borrowings
by member banks in 1952 boosted the average
daily volume figure from $io.S million in 1951


to $15.7 m illion last year, an increase of 45 per
cent. T h e volum e of borrowings last year by m em ­
ber banks located in other districts amounted to
more than twice the 1951 amount.
T h e rate of interest charged by the Federal
Reserve banks on loans to member banks was
raised to 2 per cent in January of 1953. A rate of
1.75 per cent had been in effect since mid-1950.

Check Collection D epartm ent
Records H igher Volume
T h e discount department was only one of sev­
eral departments of the bank which experienced
more activity in 1952. Breaking records has become
a habit with our check collection department,
which employs more people than any other de­
partment of the bank. T he number of items han­
dled by check collection has increased in every
year since 1942. D urin g 1952, 16.7 million more
items than in 1951 were processed by this depart­
ment— or 20 per cent more. T h e 100 million m ark
was approached as 98.3 million items were func­
T h e 16.7 million additional items handled was
composed of additional postal money orders, go v­
ernment checks, and other checks amounting to
5.8 m illion, 2.6 million, and 8.3 million respectively.
M ore than twice as many postal money orders
were processed in 1952 as in 1951. This is because

Federal Reserve banks did not begin to pay money
orders until after the first six months of 1951
had passed.
W ith government expenditures rising it is not
unusual to find the number and dollar value of
governm ent checks deposited with us in 1952 up
substantially from 19 51.
T h e dollar amount of checks passing through
this bank last year, other than those drawn by the
U. S. government, did not increase as much, per­
centagewise, as the number of such checks did.
T h is indicates that the average check was made
out for a smaller amount last year than in 1951.
T h e grow ing use of personal checks, which are
usually made out for smaller amounts than busi­
ness checks, might explain this development. Also,
declining prices, particularly in agriculture, might
have played a part.
T h e constantly grow ing level of activity in our
check collection department does not surprise those
who have observed the grow ing level of deposits
in N inth district member banks. A s the chart
on the opposite page shows, these deposits grew
faster last year than they did in either of the pre­
ceding two years.

People W an ted and Got
M ore M oney Last Y ear
W hile customers of district member banks eiv
larged their deposit balances in 1952, they also re­
quested and received more currency and coin. T h e
satisfaction of this demand left its mark on our
annual statement, which shows a larger amount
of Federal Reserve notes outstanding than ever
before in history. These notes make up the bulk
of our circulating currency.
A s the public’s supply of folding money and
coin grow s, so does the activity in our currency
and coin department. Last year the people in this
department of the bank received, counted, pack­
aged, shipped out, and retired more money than
they had in the previous year.




• Loans to district m em ber banks by the Fed eral
Reserve Bank of M in n eap o lis in 1 9 5 2 a v e ra g e d 4 5
p er cent h ig h e r than they had in the previous y e a r.


Pieces of currency counted totaled 72,488,428,
with a value of $486,442,000, while coin counted
totaled 109,274,295 pieces aggregating $9,946,000.
W rapping increased 9.2 per cent as 63,951,230
coins were packaged.

others noted earlier, reflected the decline in grain
production and prices last year.
T h e dollar value of non-cash collections other
than grain drafts was up in 1952 by 6.4 per cent.
These collections included such items as bond
coupons, matured securities, notes, trade accept­
ances, et cetera.











• Deposits increased fas te r last y e a r a t N inth dis­
trict m em ber banks than th e y did in eith e r o f the
p recedin g tw o years. M uch o f the increase occurred
a t city banks, which a re c on centrated in M inn eso ta.

Th e records ol the department suggest that resi­
dents of other Federal Reserve districts did more
traveling in our district last year than they had
previously. Notes issued by other Federal Reserve
banks are returned to the bank of issue when re­
ceived here. T h e dollar value of such returns in­
creased by iS per cent last year. Notes of this bank
returned by other Federal Reserve banks to us
amounted in 1952 to only 2.7 per cent more than
in 1951.
Transporting currency in a wallet is one way to
accomplish the transfer of funds. But a safer, more
efficient way is to employ the wire transfer facil­
ities of the Federal Reserve banks. T h e wire trans­
fer department of this bank effected 2.1 per cent
more transfers last year than in 1951— 53,351,
am ounting to $13,925,743,000.

Some of the bond coupons collected by our non­
cash collections department are coupons which
had formerly been attached to U. S. government
securities held in our safekeeping department for
the account of commercial bank owners located
111 the Ninth district. People in the safekeeping
department detached and presented for collection
more than 273,000 coupons in 1952.
A t the end of 1952, securities worth $1,484 billion
were held in safekeeping for their owners, an
amount 8 per cent higher than the previous y e a r end total.

Savings Bond Record
Im proved in 1952
Government securities are the chief stock in
trade of our fiscal agency department. Most district
bankers need 110 introduction to the operations of
this department, which range from the adm inis­
tration of Uncle Sam ’s deposit balances at the
commercial banks to the issue, redemption, and
exchange of Treasury securities.
The dollar value of issues, redemptions, and ex­
changes of U. S. governm ent direct obligations
accomplished by fiscal agency in 1952 amounted
to $3,804 billion, or 13.9 per cent more than in 19 51.

Low er grain production as well as lower prices
for grain was reflected by the lessened tempo of
activity in the non-cash collections department.

These figures include the face value of savings
bonds issued and redeemed during the year. It is
interesting to note that the dollar value of savings
bonds issued was up by 7.2 per cent between 1951
and 1952, while the dollar value of redemptions
declined by 16.2 per cent. O nly 5.2 per cent fewer
bonds were presented for redemption. These
figures suggest that a lesser proportion of redem p­
tions is composed of high denomination bonds.

G rain drafts account for almost 75 per cent of
the non-cash items collected by this bank. C om ­
pared to 1951 the number of such drafts collected
was down 4 per cent, while their dollar value was
down 9 per cent. T h is development, as well as

T he grow ing popularity of the payroll savings
plan for bond purchases together with more favor­
able terms for savings bonds announced last year
probably accounts for the improved record of sav­
ings bond sales and redemptions last year.

G ra in -D ra ft A ctivity Reflected
Declines in Agriculture


Service Is Bank's Product
A n explanation of the quickened pace at the
M inneapolis Federal Reserve bank last year cannot
be phrased in terms of any single reason. Instead,
an adequate explanation would need to incorporate
reference to developments much too numerous
for individual treatment here.
But it is fairly clear that as the wealth and popu­
lation of the N inth district grow, the demand for
b anking services will also grow . Some evidence
that grow th occurred last year can be found in
the ledger books.
For example, the record of debits to deposit
balances at a sample group of district banks indi­
cates that customers of these banks made more
payments last year than ever before. At the same
time the record of deposit growth shows that more
deposits were made, permitting balances larger
than ever before in the face of larger payments.
District bankers made more credit available to
their customers. Although loan expansion at m em ­
ber banks in the district proceeded at a consider­
ably less rapid clip in 1952 than in 1951, there was
no evidence that deserving borrowers were not
being accommodated. (See chart on opposite page.)
On the contrary, statistics relating to member
bank assets disclose that most of the funds made
available to the banks by deposit growth were
used to purchase securities rather than to make

(Millions of Dollars)
Cash and Due
Total Assets

+ 74
+' 26

Other Liab.

+ 269
+ 4


Total Liab.

+ 284

+ 11

In expanding service to their customers, member
banks required more assistance from their Federal
Reserve bank. Assistance, for example, was pro­
vided in the form of check collection facilities to
accommodate the larger number of items w ith­
draw n and deposited by district bank customers.
It was also provided in the form of currency serv­


ices which insured that retail trade would not be
inconvenienced by inadequate currency and coin.
It was further provided in the form of investment
services such as the purchase of securities by us
for the account of district banks and the safekeep­
ing of such securities.
T h e extension of credit to member banks and
the wire transfer of funds at their request are
other examples of how, by rendering services to
the commercial banks, the Fed makes it possible
for them to render more effective service to their

O. S. Pow ell Becomes President
From a personnel viewpoint the big change in
1952 was, of course, the return of O liver S. Powell
from W ashington to assume the presidency of
the bank upon the retirement on July 1 of John
N . Peyton. M r. Peyton had been president of the
bank for 16 years and had been with the bank
since 1933, having served as chairman of the board
from 1933 to 1936.
M r. Pow ell, who joined the bank in 1920, had
been first vice president from 1936 to 1950, when
he accepted an appointment to the Board of G o v­
ernors of the Federal Reserve System in W ashing­
ton, D . C. H e resigned from the Board upon his
election to the b an k’s top executive position.
M embership of the bank’s directorate remained
unchanged during the year. In Novem ber, Hom er
P. C lark, honorary chairman of the West Publish­
ing Co., St. Paul, Minnesota, and E dgar F. Zelle,
chairman of the First National Bank of M inne­
apolis, w?ere reelected to the board for three-year
terms beginning January 1, 1953. Shortly before
year's end Roger B. Shepard of St. Paul was re­
designated chairman of the board and Federal
Reserve agent for 1953; Paul E. M iller, director of
the University of M innesota’s agricultural exten­
sion division, St. Paul, was renamed as deputy
chairman for 1953; and F* A- Flodin, president of
the Lak e Shore Engineering Co., Iron M ountain,
M ichigan, was reappointed to the board for a
three-year term beginning January 1, 1953.
Joseph F. Ringland, president of the N orth­
western National Bank of M inneapolis, was re­
appointed a member of the Federal Advisory
Council for 1953.

aiiH uassaiJ^




• A ltho ug h loans continued to increase in 1 952,
they increased less ra p id ly than in 1 9 5 1. District
m em ber banks last y e a r e n la rg e d their investment
holdings, on b a la n c e , fo r the first time since 1 949.

There were two new appointments and a re­
appointment to the Helena Branch board. T he
new directors are George N . Lund, vice president
of the First N ational Bank of Reserve, Montana,
and J. W illard Johnson, financial vice president,
Western L ife Insurance Co., Helena, Montana,
both of whom will serve two-year terms beginning
January i, 1 953. John E . Corette, president and
general manager of the Montana Power Co. of
Butte, Montana, was reappointed for a two-year
term beginning January 1 and was named chair­
man of the Branch board for 1953.

Three Changes in O fficial Staff
In addition to M r. Peyton’s retirement there
were three other changes in the official staff during
the year. M ay 1 saw the retirement of W illiam
E. Peterson, assistant cashier. In Novem ber, O. W .
Ohnstad, auditor, was elected assistant vice presi­
dent and K yle K . Fossum, assistant cashier, was
made auditor.
Several other changes, reflected in the official
staff roster as it appears elsewhere in this report,
actually did not take place until after the end of
the year. These included the appointment of John
J. Gillette and M elvin B. H olm gren as assistant
cashiers; the advancement of assistant cashiers
A rthur W . Johnson and Christian Ries to assistant
vice presidents; and the addition of “ vice presi­

dent” to the title of J. M arvin Peterson, director
of research.
T h e number of persons on the ban k’s staff
dropped slightly from a total of 714 at the head
office and branch on Decem ber 3 1, 19 51, to a total
of 695 at year-end 1952. Som e of the decrease un­
doubtedly can be accounted for by the reduction
in staff which resulted from the dropping of con­
sumer credit and real estate credit controls during
the year. T h e number of employees is still some­
what above the postwar low as of December 3 1,
which was set in 1949 when there were only 633
persons on the combined staffs.
In the field of personnel administration the year
witnessed the blanketing in of all employees under
the Federal Reserve System ’s new group life in­
surance program and the turning over of direction
of the bank’s cafeteria to an outside management.
T w o state banks were accepted for membership
in the Federal Reserve System during the year
and one state member w ithdrew , m aking a total
of 476 member banks in the district as of D ecem ­
ber 31, 1952. T h e two new member banks are:

P eo ples S tate B a n k , T



ak es,


i s c o n s in

R a p id C it y T r u s t C o m p a n y ,
R a p id C it y , S o u t h D a k o t a

Assembly Is Introduced
Most notable change in the b an k’s educational
program was discontinuance of the annual Federal
Reserve Conference and the Federal Reserve
Forum and their replacement with a new meeting
called the Member B ank Directors and Officers
Assembly. Th is meeting was held N ovem ber 24
and 25. Unlike the Conference, which was de­
signed for top bank executives only, and the
Forum , which was set up for potential executives,
the Assembly program was designed with bank
directors in mind— and it developed that about
one-third of the nearly 600 persons who attended
were directors of member banks.
T h e M ontana Forum , inaugurated in 1951, was
repeated in 1952 at the H elena branch. A t the head
office our W orkshop for college instructors of
money and banking was repeated, another C on­
ference of Bank Exam iners was held, and nine
more sessions of our Short Course in Central
Concluded on P a ge 2 8


--------- Sawings and Expenses---------7952


Earnings from:
Discounted Bills ....................................................................... $ 286,795
U nited States Governm ent Securities .........................
Industrial Advances ................................................................
All Other ....................................................................................
T otal C urrent E arnings
N et Operating Expenses ..................................................
I 2,981,666
Assessment for Expenses of Board of Governors
Federal Reserve Currency:
O riginal Cost
Cost of Redemption .........................................................
T otal C urrent E xpenses .................................... $ 3,291,556
C urrent Earnings ............................. ..
Additions to C urrent Net Earnings:
Profit on Sales of U. S. Governm ent Securities
All O ther ....................................................................................
T otal ..............................................................................S



Deductions from C urrent N et Earnings:
Loss on Sales of U, S. G overnm ent Securities
Reserve for Registered Mail Losses.................................. $ 14,267
All O ther .......................................................................................
T otal ............................................................................. $ 58d76
Net Addition to or Deduction from Current
Net Earnings ............................................................

$ 190,320
$ 2,850,014
$ 3,138,045
$ 9,326,854




$ ’" 6^2 68


$ 11,013,616

Dividends Paid ..........................................................................



Paid to U. S. Treasury (Interest on Federal
Reserve Notes) ..........................................................





Net Earnings

Transferred to Surplus (Section






Surplus Account (Section 7)
Balance at Close of Previous Y e a r .......................................
Transferred from Profits of Year .......................................

B alance



C lose


Y ear ...............................

$ 14,062,608

$ 15, 131,297

$ 13, 168,052


$ 14,062,608

-----------Statement of Condition----------D ec. 31, 1952

Gold Certificates ................................................................... $ 327,605,820
Redem ption F und for F. R. Notes ..............................
T otal G old C ertificate R eserve . . . . $ 353,155,220
O ther Cash ............................................................................... $ 5,878,973
Bills Discounted ...................................................................
Foreign Loans on Gold .....................................................
Industrial Advances ..............................................................
U. S. G overnm ent Securities:
Bonds .................................................................................
Notes .................................................................................
Certificates of Indebtedness .....................................
Bills .....................................................................................
T otal U. S. G overnment S ecurities . $ 764,400,000
T otal L oans and S ecurities .................. $ 765,801,883
D ue from Foreign Banks ...................................................
F. R. Notes of O ther F. R. B a n k s ................................
Uncollected Items ...................................................................
Bank Premises ..........................................................................
O ther Assets ..........................................................................
T otal A ssets ................................................... $1,244,300,139
Federal Reserve Notes in Actual C irculation ...........
M em ber Bank— Reserve Accounts .......................
U. S. T reasurer— General Account .....................
Foreign ............................................................................
O ther Deposits ..............................................................
T otal D eposits ..............................................
Deferred Availability Items ..............................................
O ther Liabilities .....................................................................
T otal L iabilities ............................................

$ 325,261,086
$ 350,279,252
$ 7,055,811
$ 749,353,000
$ 749,486,731

$ 650,889,010

$ 632,028,690

$ ”482,079^41

$ 490,145,107

Capital Paid In ........................................................................ $ 5,719,300
Surplus (Section 7) ..............................................................
Surplus (Section 13b) ............................................................
O ther Capital Accounts .....................................................
T otal L iabilities , C apital A ccounts . $1,244,300,139

D ec. U , 1951


$ 1,216,457,635


federal Kesern Bank ofM inneapolis
Chairman of the Board and Federal Reserve Agent

R o ger B . S h e p a r d
S t. Paul, Minnesota
Deputy Chairman
P a u l E. M il l e r
Director, University of Minnesota Agricultural Extension Division
St. Paul, Minnesota
C. W. B u r g es
Vice President and Cashier
Security National Bank
Edgeley, North Dakota
H o m e r P. C l a r k
Honorary Chairman, West Publishing Co.
St. Paul, Minnesota
W il l ia m A. D e n e c k e
Livestock Rancher, Bozeman, Montana

F . A. F l o d in
President, Lake Shore Engineering Co.
Iron Mountain, Michigan
R AY C. L a n g e
President, Chippewa Canning Co.
Chippewa Falls, Wisconsin

a r o ld

N. T

h o m so n

Vice President, Farmers and Merchants Bank
Presho, South Dakota

E dgar F. Z e l l e
Chairman, First National Bank, Minneapolis, Minnesota



O l iv e r S . P o w e l l , President
W . M il l s , First Vice President


Audit Department

Banking Department



C . C o r e , Vice President in Charge

K y l e K . F o s s u m , Auditor

of Personnel

J o h n J. G il l e t t e , Assistant Cashier
M e l v in B . H o l m g r e n , Assistant Cashier
A r t h u r W . J o h n s o n , Assistant Vice President
A r t h u r R . L a r s o n , Assistant Vice President
M il f o r d E . L y s e n , Operating Research Officer
O r t h e n W . O h n s t a d , Assistant Vice President
O t is R . P r e s t o n , Vice President
C h r is t ia n R ie s , Assistant Vice President
G eo r g e M . R o c k w e l l , Assistant Cashier
M a r c u s O . S a t h e r , Assistant Cashier
M a u r ic e H . S t r o t h m a n , J r ., Vice President
C l e m e n t V a n N ic e , Assistant Vice President


Bank Examination Department


a r o ld

G . M c C o n n e l l , Vice President
Fiscal Agency Department

E a r l B . L a r s o n , Vice President
Legal Counsel

S ig u r d U

e l a n d , Vice President, Counsel,

and Secretary

Research Department
j. M a r v in P e t e r s o n , Vice President and
Director of Research
F r a n k l in L . P a r s o n s , Associate Director of

Helena Branch

J o h n E. C o r e t t e
President, Montana Power C o .
Butte, Montana
A. W. H eidi*l
Vice President, Powder River County Bank
Broadus, Montana


J. W

G . R. M il b u r n

il l a r d

Jo h n s o n

korge N.

L und

Vice President, First National Bank
Reserve, Montana
Livestock Rancher
Grass Range, Montana

Financial Vice President, Western Life
Insurance Co.
Helena, Montana

C l a r e n c e W. G r o t h , Vice President


a r o ld A.

B e r g l u n d , Assistant Cashier

Member of federal „Advisory Council
J o s e p h F. R in 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
J o h n M. B u s h

A l b e r t L. M il l e r
President, Miller Broom Co.
La Crosse, Wisconsin

The Cleveland-Cliffs Iron Co.
Negaunee, Michigan

A . H. D

ag g et t

President, Gould-National Batteries, Inc.
St. Paul, Minnesota



M . R in g e r

Chairman, Foley Manufacturing Co.
Minneapolis, Minnesota


A s for sheep— 1,676,000 in number January 1,
1952, where they once were 6 million— he doesn’t
see how the industry can survive. “ Costs of sheep
ranching are entirely out of line.” R ealizin g the
day of the commercial operation is done, he grants
that “ returns can be pretty good for the fam ily
type of operation, but where ranchers depend on
hired help they are in trouble.” W ith sheep-herders
not being replenished, the labor problem is known
to be critical. Also, the First N ational’s chief re­
minds, “ sheep ranching is a business that requires
a lot of close attention—24 hours a day.”



Continued from Page 15

N ational B an k of Great Falls. “ W et and disagree­
able” weather to him means there will be good
grass. “ W hen you are talking about natural re­
sources,” he declared, “ grass is the best one we
have. It is the base for an industry that brings
more new wealth into our state each year than
any other single enterprise.” A dd in g that grass
is “ the main support of our livestock industry,”
he observed, “ W e ’ll always be a big cattle produc­
ing state.”
G reat Falls, he reminds you, is in the center of
one of the finest wheat grow ing areas in the state,
w ith its largest industries the two flour mills of
M ontana F lo u r M ills and General Mills compa­
nies. A n aconda’s electrolytic smelter and its wire
m ill are also important payrollwise. As a cattle
auction point, Great Falls is the third largest.

Drouth Is the Bugaboo
M ontanans are “ always more concerned about
drouth than economic conditions,” according to
F red H einecke, president of the First N ational
B an k of H elena. “ W e have more cattle now—
2,200,000 head January i, 1952—than we can take
care of in a hard winter or a dry summer,” he
explained. T h e trend is for increasing numbers,
too, since “ low prices prevailing are retarding
norm al m arketings.”


You pocket another vote for stock raising, how ­
ever, after talking with E d Phillips, secretary of
Montana Livestock Grow ers association. “ A large
part of the state is fitted for nothing else but meat
production,” is his appraisal. “ I defy any m an,”
he said, “ to show where M ontana ever amounted
to anything when livestock w asn’t being produced.”
A s for the future, he says, “ I don’t think live­
stock w ill ever be replaced as M ontana’s depend­
able industry.”

Copper Production to Increase
A t Butte, where the economic outlook is heavily
weighted by m ining, things are given a roseate
hue by the “ Greater Butte Project,” which means
high copper output for many years to come. T o
E . P. Frizelle, vice president of Metals Bank and
Trust company, the revolutionary “ block caving”
method “ is the greatest development that has
taken place in Butte in years.”
Th e industry has been having its ups and downs
because of labor shortage, he explained. Also, since
market and price figure importantly, low cost
production the $27 million project gives means
happier days ahead.
Anaconda Copper M ining company— net worth
$732 million, 1951 profits $100 million, $50 million
after taxes— looks to the Greater Butte Project to
make more than 130 million tons of ore available
from low-grade deposits previously uneconomical
to mine. T h is is expected to augment normal Butte
production by approximately 90 m illion pounds
of copper annually and prolong the district’s oper­
ations “ by decades.”
For example, 15,000 tons of low-grade ore a day
will flow from the K elley shaft at Butte for many

years. In the process of block caving, the hills
surrounding Butte will be gradually dropped by
underm ining until they become holes perhaps
2,000 feet deep.
Frizelle observed that a policy of the company,
said to own a fourth of the world's copper, is to
develop one ton of ore for every one extracted,
and that reserves are greater than ever before.
Anaconda is also going into alum inum with its
backing of a new plant to be started in the spring
near Colum bia Falls. Estimated to cost $40 million,
it will use alumina derived from Dutch Guiana
bauxite. Commercial shapes will be manufactured
in the form of ingots, wire bars, etc.
W hile the folks at Butte are mainly mineral­
conscious, they can be cattle-minded, too. Ranking
second as an auction market, Butte recently saw
7,600 head change hands at one sale. Montana
cattle, prime grass-fed, go to So. St. Paul, Sioux
City, Omaha, and California points for finishing.

Mfssou/cr Region Is Diversified
At M issoula, “ the hub of five main and pros­
perous valleys” in western Montana, “ there is an
unusual diversity of industry and agriculture—
with no one enterprise large enough to control
the economy,” according to Theodore Jacobs, pres­
ident of its First National bank.
H e lists agriculture, livestock, and lumbering
as “ the mainstays well backed up by a large tourist
business and numerous small m anufacturing
plants.” Prem ium apples and cherries, sugar beets,
and potatoes come in for mention, while m anufac­
turing includes butter, cheese, and dairy products
— as well as sash and doors, canned fruits and
vegetables, and dental instruments. T he lumber
produced is from pine, fir, larch, and spruce.
Missoula occupies a leading position educational­
ly. Jacobs describes the state university as having
“ a profound effect on the cultural life of the sec­
tion” besides furnishing “ trained young people,
particularly to business and secondary education.”

Billings Takes on Boom Aspects
At Billings, processor of beet sugar, oil, meat,
and dairy products, W illiston basin oil is stimulat­






ing a new prosperity. Reports are that the city
has become headquarters for more than a hun­
dred oil companies, producing, drilling, or ex­
ploring. Chief factors in B illin gs’ grow th, however,
are “ geographic location and clim ate,” according
to O. M. Jorgenson, president of Security T ru st
and Savings bank.
Claim ing 50,000 population for Billings, he
credits it with a distribution and trade radius of
several hundred miles. “ W e ’re the hub ol the
Midland Em pire,” was his chamber-of-commerce
description. The city is served by three railroads,
ranks as an important trucking terminal, and is
a station on Northwest, W estern, and Frontier
Jorgenson also pointed to its industry— three re­
fineries, which get all their crude from W yom in g
fields as yet; Great W estern Sugar com pany, one
of the largest beet sugar plants in the w orld; and
Carter Oil company, which m anufactures greases,
fine oil, and insecticides. Billings also is the largest
livestock market—both commission and auction.
A s for the dry-land farm ing, you are told that
“ it has contributed much to the economy through
winter wheat and alfalfa, although there is an
excellent irrigated area in the Yellow stone valley.
W e have never known a crop failure.”
N oting finally that deposits have been running
close to $70 million in the four banks, Jorgenson
predicted, “ W ith plenty of room to grow , plenty
of water, and plenty of power, it w o n ’t be long
Concluded N e x t P age


before Billings w ill be 75,000 or more—maybe 111
five years.”

'Looks Like Nothing but Good'
If M ontana has come a long way since the days
when its pioneer merchants traded rifles with the
Indians for the equivalent height of buffalo hides
laid flat, all indications are that beyond the horizon
lies even richer realization of the state’s potential.
“ Population and industry are starting to grow
together,” submits A . T . H ibbard, president of
U nion Bank & Trust company of Helena, who
thinks, too, that “ a national policy for decentrali­
zation is going to be a factor in industrialization
development here.” T h e state’s cheap power, you
hear, is proving of value in encouraging new in­
“ T h e great thing that is going to change the

ACKNOW LEDGEM ENTS: Anaconda Copper Mining Co.;
Greater U niversity of Montana ; American Pictorial Guide
Series ; U. S. Departm ent of A griculture; Montana Power Co. ;
U. S. Bureau of Mines ; State Board of Conservation, Great
Falls ; Helena public library ; Montana state highway commission.
PICTURE CREDITS: P. 3—Flathead Valley, Northern Pacific
railroad ; P. 4— W heat field— Great Northern railroad ; cattle on
range, Northern P acific; cattle loading, Great Northern ; P. 5
— B illings refinery, N orthwest Airlines ; “Richest Hill on E arth,”
Anaconda Copper M ining Co. ; P. 26— St. Mary Lake, Great
Northern ; P. 27— Cathedral Rocks, Northwest Airlines ; Helena
Branch photos, Les Jorud Commercial Photo shop, Helena.

Continued from Page 21

B an k in g were conducted. Several members of our
staff spent a week or more in member banks as a
part of our “ farm ing out” program.
T h e bank continued its program of having
representatives call on all banks in the district
and attend various bank meetings, clinics, and
schools. Prom otion of the bank movie, of the pic­
ture book, and of bank tours was also furthered.

'H eadache' Checks Being Reduced
A new project begun in 1952, which it is believed
m ay have far-reaching effects for the whole banking
system, is a cam paign to reduce the number of
so-called “ headache” checks—that is, checks which
because of their poor design or arrangement cause
sorting, listing, and other errors in handling.


economy,” the capital city banker declared, “ is
the W illiston basin. It is so vast that it w ill
affect the whole state.”
Another authority who is bullish on M ontana
is John E. Corette, capable president of Montana
Power company, Butte. “ It is widely recognized,”
he said, “ that there are very extensive natural re­
sources that w ill be developed in the future.”
Referring to a constant search going on for m in­
erals, he said, “ Experience has proved in the past
and it is anticipated in the future that this search
will develop additional m ining and m illing opera­
tions to those now in existence.”
H e also believes that “ constant improvement
and development in the state’s agricultural and
livestock industries and a constant development
of irrigation assure a bright future in those fields.”
N o one, of course, can accurately predict what
the Branch’s domain will be like even ten years
from now, but to borrow the words of Editor
Dye, “ It looks like nothing but good for M ontana
—nothing sensational, but a very good future.”
H avin g shared more than three decades of the
silver dollar state’s gold-flecked past, the H elena
Branch looks forward to sharing that future—
and hopes that it w ill be a truly golden one.

Representatives of our bank made approximately
400 calls on firms to ask them to redesign their
checks to meet m inim um standards of arrange­
ment and clarity; charts and slides to help in pre­
sentation of the problem were prepared; and
speakers from the bank explained the program
to a number of banking and business groups. W e
have been gratified with the cooperation received
from both business and banking so far.
W ith the new year the Federal Reserve bank
of Minneapolis renews its resolution to be of m ax­
im um service to banking, business, agriculture,
and the general public of the N in th Federal R e­
serve district. It is to be sincerely hoped that the
nation w ill in 1953 make substantial progress
toward the goals of stability and peace, and that
this bank may be able to make at least some small
contribution toward the achievement of those goals.