View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

ANNUAL
REPORT
1957

FEDERAL RESERVE B A N K OF M I N N E A P O L I S




FOREWORD
I n this report we are presenting a review of economic develop­
ments during 1957 in the Ninth district. In retrospect, accomplish­
ments for the year as a whole look good in spite of a recessionary
trend in business activity which developed late in the year.
Borrowing by member banks at the Federal Reserve Bank
of Minneapolis was relatively important during 1957. A series of
charts dealing with borrowings and related banking trends over
a period of years is also included in this report as a matter of
current and historical interest.
Finally, to fulfill a traditional function of the annual report,
we present a resume highlighting operations carried on at the
Federal Reserve Bank during the year.




Chairman of the Board

President




Economic Conditions
In 1957, as in the previous two
years, the level of economic activity
in the United States reached a new
high. The dollar value of output as
measured by the gross national prod­
uct rose somewhat more than did
physical measures owing to con­
tinued rising prices. The index of
consumer prices and the index of
wholesale prices averaged 3.3 per­
cent and 2.9 percent higher, respec­
tively, than in 1956.
According to preliminary esti­
mates the gross national product
amounted to $434 billion in 1957;
GROSS

N A T IO N A L

P R ODUCT

AND

M A JO R CO M PO NENTS
Billions

of

Dollars

Total

Consumption




. Gross
Investment

Government

PRICE INDEXES, 1957
(1 9 4 7 - 4 9 = 100)
In d e x

this compares with $415 billion in
1956. The increase resulted from
larger purchases of newly produced
goods and services by individual
consumers, government and for­
eigners. Spending for expansion of
business inventories and for resi­
dential construction declined.
Non-agricultural employment in
the nation averaged 700,000 higher in
1957 than in 1956; this gain was less
than half that registered from 1955
to 1956. By the end of 1957 workers
in non-agricultural establishments
numbered 600,000 fewer than a year
earlier while in January 1957 they
had numbered about one million
more than a year earlier. This pat3

tern, expansion early in the year
with a decline at the year end, was
repeated by other important eco­
nomic statistics.
The Federal Reserve Board’s in­
dex of industrial production dis­
closed that factories and mines were
producing a record output in De­
cember of 1956; 12 months later in­
dustrial output had shrunk by 8
percent reflecting cutbacks in the
production of durable and non­
durable goods and minerals. The re­
duction of manufacturing output
was accomplished by reducing em­
ployment and by instituting shorter
work weeks. During 1957 the num­
ber of hours worked per week by an
‘average’ worker in manufacturing
dropped from 41.0 to 39.3. Produc­
tion workers in manufacturing num­
bered about 7 percent fewer at the
end of 1957 than a year earlier. So
pervasive was the cutback in pro­
duction that employment fell in
each of the 21 industries dis­
tinguished by the manufacturing
employment statistics.
The value of new construction in
1957 broke all previous records but,
as in the case of the GN P, rising
IN D U S T R IA L P R O D U C T IO N INDEX, 1957
(1 9 4 7 - 4 9 = 1 0 0 )

4



prices affected this yardstick. It is
likely that the physical volume of
construction work was little changed
from the previous year. Both public
and private spending for construc­
tion was up. A notable exception to
this trend occurred in the residential
construction industry. The number
of dwelling units started in 1957 was
down approximately 10 percent
from the previous year.
Equipped with record personal in­
comes, up almost 5 percent from the
year before, Americans spent more
in retail stores than ever before in
history during 1957. Retail sales were
better than 5 percent higher than in
1956. Like other economic statistics,
however, the gain from a year earlier
was narrowed as the months slipped
by. The number of new automobiles
sold in 1957 was only slightly greater
than sales in 1956.
The net income of farmers was
little changed in 1957 from 1956;
despite higher prices for animals and
despite crop production equal to the
record of 1956, higher costs and
lower prices for crops prevented in­
comes from rising in total. Owing
to the continued departure of man­
power from agriculture, however,
farmers enjoyed an increase in their
per capita incomes. Too, the value
of farm real estate continued up.
Continued expansion in the de­
mand for credit during 1957 pro­
duced the highest level of interest
rates in many years. The average of
member bank reserves during the
year was virtually unchanged from
the average in 1956. This reflected a
monetary policy which was influ-

SELECTED

M AR KET YIELDS—

A N N U A L AVERAGES
Percent

enced in part by the presence of ris­
ing prices during most of the year.
Thus, discount rates were moved up
from 3 percent to 3 54 percent at
Federal Reserve Banks shortly after
mid-year; in November the discount
rate was returned to 3 percent as
monetary policies shifted to accom­
modate changing economic condi­
tions. The principal change observed
on the national scene, a reversal of
the fairly lengthy upward trend of
economic activity, was also in evi­
dence at the district level.

THE DISTRICT ECONOMY
Various measures indicated that
I 957 was a good year in the Ninth

Federal Reserve district. On the
average, more district residents were
at work during the year than ever
before in history, and they were
earning higher wages than ever be­
fore. The resultant satisfactory level
of incomes permitted district mer­
chants to report higher sales than in
1956. At a sample of department
stores, sales in 1957 were better than
2 percent above 1956. Automobile




sales, according to the number of
new vehicles registered, exceeded
the 1956 figure by better than 4 per­
cent. And the volume of retail
sales, as measured by a Bureau of
the Census sample which excludes
sales of large retail chains, was up
in 1957 from the year before by 5.4
percent in the district while the in­
crease in the nation as a whole was
3.2 percent.
Member bank deposits also appear
in preliminary figures to have in­
creased by more in the district than
in the nation as a whole; on the last
Wednesday of 1957 total deposits of
member banks in the district and in
the nation were higher than a year
earlier by 4.3 percent and 1.6 percent,
respectively. And debits to demand
deposit accounts at a sample of
banks in the district during 1957
amounted to 6 percent more than in
1956. By states, the gains ranged
from 5 percent in Montana to 11
percent in North Dakota.
But some areas of the district
economy slowed up in 1957. Activity
in the building industry, for exam­
ple, appears to have receded some­
what. Construction c o n t r a c t s
awarded and the value of building
permits granted were down respec­
tively by 6.5 percent and 2.4 percent
in the district during 1957.
Some of the least prosperous areas
of the district were those where
lumbering and copper mining are
important. Employment in Montana
and Michigan, for example, declined
by more than it did in other district
states both absolutely and relatively.
Lumbering was the first major in­
5

dustry in the district to cut back on
production. The demand for lum­
ber declined following 1955; that
year marked the end of a residential
building boom.
When home builders cut their
starts in the fall of 1955 retail lum­
ber dealers soon had an over-supply
of lumber. In 1956 they reduced
their stocks. The number of board
feet of lumber held in retail yards
in the Ninth district in January
1956 was 16 percent higher than one
year earlier. As stocks were liqui­
dated during the year the board-foot
volume carried by retailers fell be­
low the preceding year’s stock until
in December 1956 inventories were
6 percent below the volume held in
December 1955.
When retail lumber dealers began
to liquidate their inventories in 1956
sawmill operators and wholesalers
rapidly accumulated stocks and this
led to a reduction in lumber prices.
The lower prices forced some high
cost logging and sawmill firms to
close down in 1957 and others were
forced to reduce their operations in
order to liquidate heavy stocks. The
closing down of logging and lum­
bering operations reduced both em­
ployment and income in timber re­
gions of the district.
Copper output was curtailed

Copper mining and smelting is
another basic industry in which pro­
duction was sharply reduced in 1957.
In western Montana the larger
metropolitan centers affected were
Anaconda, Butte and Great Falls.
6



In Upper Michigan, the principal
cities affected were Calumet, Han­
cock and Houghton. In both regions
many smaller communities also were
affected by the reduction in output
or the closing of mines entirely.
In the post World War II years
the rapid expansion in home build­
ing and in automobile and other
consumer durable goods production
developed what appeared to be an
insatiable demand for copper. In
response to this growing demand
producers around the world ex­
panded their output sharply. As
home building and automobile and
appliance production receded from
peak levels the demand for copper
slumped materially in 1956. The ac­
cumulation of heavy inventories by
producers led to a series of price re­
ductions. The custom smelter quo­
tation of about 55 cents per pound
in March 1956 fell to 25 cents by
September 1957.
The lower price for copper and
for other metals mined with copper
ore led the Anaconda Copper Com­
pany at Butte, Montana, to sharply
reduce mining, smelting and fabri­
cating operations. In Upper Michi­
gan, Calumet and Hecla, Inc. cut
production about 10 percent. The
company completely closed down
four low-grade mines and concen­
trated operations on seven highgrade deposits. At White Pine, out­
put in the low-grade ore operations
of the highly mechanized plant
built by the Copper Range Com­
pany was not reduced in 1957.
The economic effect of the cut­
back in copper production was soon

felt by the communities serving the
workers in this industry. For exam­
ple, in Butte, Montana, July employ­
ment was reduced to a ‘mid-winter
level’ and unemployment claims
rose to five times the year ago vol­
ume. Some workers left the commu­
nity thereby raising the dwelling
unit vacancies. Partly as a result,
very few housing starts occurred in
the latter half of the year. In the
Upper Michigan peninsula unem­
ployment in the copper industry was
limited by the transfer of workers
from the high cost mines to the more
efficient operations.
Iron ore shipments were up

Great Lakes shipping season many
iron ore companies still held sub­
stantial stockpiles of ore. At under­
ground mines in Upper Michigan
operations last fall were cut from a
5 day to a 4 day week. Late in 1957
some workers were laid off entirely.
In northern Minnesota the repair of
equipment and the removal of ‘over­
burden’ from ore bodies in prepara­
tion for the 1958 season have not
been sufficient to maintain employ­
ment.
In the principal northern Minne­
sota iron mining communities em­
ployment last fall declined more
than in recent years. It is generally
not until the opening of the Great
Lakes shipping season that steel
company officials announce the esti­
mated demand for ore from the Lake
Superior region. Thus, the prospects
for employment in the coming sea­
son and the immediate outlook for
mining localities remain obscure.

Shipments of ore from the Lake
Superior region in 1957 totaled
86,614,734 long tons; this was an
increase of 6,981,707 tons from the
preceding year but was about 10
million tons under the all-time rec­
ord year of 1953. In 1956 the mining
and shipping of iron ore were in­
District activity paralleled nation
terrupted by labor disputes in the
As in the nation as a whole, the
steel industry and, later, in the Pitts­
burgh Steamship division of the U. aggregate level of activity in the dis­
S. Steel Corporation. These disputes trict stopped expanding in 1957.
drastically reduced shipments of ore
DISTRICT N O N A G R IC U L T U R A L
for two months resulting in a lower
E M P LO YM EN T
total for 1956 as compared with 1957.
Although shipments were heavy Millions
in the first half of the 1957 season a
decline in steel output in the latter
half of the year curtailed ore ship­
ments from the Lake Superior re­
gion, demonstrating once again the
close dependence of district mining
activity on the level of national eco­
nomic activity. At the close of the




7

In many lines seasonal gains were
less than normal while seasonal
declines were greater than usual. A
‘cyclical’ decline was imposed on the
normal seasonal pattern of business.
The turn-around in business is per­
haps best reflected by the level of
nonagricultural employment. In
January of 1957 district employment
was 30,000 above a year earlier. By
December employment had fallen
below the year earlier level in all
district states except the Dakotas.
That layoffs were not confined to
the lumber, copper and construction
industries is disclosed by the table be­
low. Part of the decrease in district
employment has been in manufac­
turing where the reduction was
more than enough to explain the de­
cline in total nonagricultural em­
ployment. In all district states em­
ployment in this category during the
fourth quarter of 1957 slipped below
1956 figures. The decrease occurred
in the manufacture of both durable

and nondurable products.
In this district as in the whole na­
tion, new orders received by manu­
facturers rose to a peak in the latter
half of 1956 and declined in most
months of 1957. In response to the
decline in orders manufacturers first
eliminated overtime work. In the
first quarter of 1957, the average
weekly hours of production workers
considerably exceeded 40 hours in
most district states. By the fourth
quarter the average weekly hours
had fallen somewhat below 40 in
some states. As inventories were still
accumulating in spite of a shorter
work-week, manufacturers began to
lay off workers with the result that
employment fell behind the year
earlier figure as the year ended.
Fortunately, the need for workers
expanded in government, finance
and other service industries in 1957.
The table below indicates that these
sectors of the district economy ab­
sorbed almost 9,000 more workers.

DISTRICT N O N -A G R IC U L T U R A L EM P LO Y M E N T

1956

1957

D ecem ber

Decem ber

1,399,700

1,388,700

280,300

268,700

Durable goods

147,500

138,400

N on-durable goods

132,800

130,300

M ining

47,200

44,000

C onstruction

77,700

77,700

T ransportation and p u b lic u tilitie s

137,000

135,100

Trade

379,200

376,300

N o n -agricultura l to ta l
M a nufa cturing

60,600

63,000

Service industries

181,500

184,800

G overnm ent

236,200

239,100

Finance, insurance and real estate




NINTH DISTRICT AGRICULTURE IN 1957
Cash receipts for district farmers
were approximately 3 percent higher
in 1957 than in 1956. According to
preliminary estimates the cash re­
ceipts
from
farm
marketings
amounted to slightly more than $3

marketings and thus net farm in­
come in 1957 was probably about
the same as in 1956. Adding in­
creased government payments in
1957, net income in the district may
even be slightly higher than in 1956.

CASH RECEIPTS FROM FARM MARKETINGS
States and parts of
states in district

------------- Cash receipts1956

Percent chang
over 1956

1957

(M illio n s )
M ichig an (15 counties)

$

26.7

$

27.0

+

l.l
*

418.0

+

5.5

554.7

— 1.0

489.2

549.7

+ 12.4

216.8

221.7

+

2.3

2,968.4

3,044.6

+

2.6

1,279.5

1,273.5

M ontana

396.3

N o rth Dakota

560.0

South Dakota
W isconsin (26 counties)

M innesota

N inth d is tric t to ta l
♦Less th a n .5 p e rc e n t c h a n g e .

billion. South Dakota enjoyed the
largest increase in cash receipts, over
12 percent, while receipts in North
Dakota and Minnesota — the only
district states to show a decline—
fell less than i percent.
During the same period, the pro­
portion of cash income in the dis­
trict derived from crops decreased
from 40 percent to 38 percent. Live­
stock and livestock product income
accounted for 62 percent of total
cash farm income in 1957.
While cash receipts from farm
marketings were up approximately
3 percent over 1956 in the district,
the prices paid by farmers for pro­
duction expenses increased by ap­
proximately 4 percent. Production
expense, however, amounts to ap­
proximately two-thirds of cash farm




Over the last few years there has
been a downward pressure on farm
income; during the same period the
price of farm land has been steadily
increasing. During the last two years
land values in the district rose 18
percent; 12 percent of the rise has oc­
curred since mid-1956 (see chart).
DISTRICT FARM LAND VALUE INDEX
(1947-49 =

100)

Index

Mar .

Jul y
1955

Nov.

Mar .

July
1956

Nov.

Mar.

July

Nov.

1957

9

The favorable crop prospects in mid1957 coupled with the continuing
pressure to increase farm size were
important factors in the farm land
price rise. In some areas the conser­
vation reserve program has increased
the demand for land of below aver­
age quality and increased average
market prices.
Changes in prices and output

Crop prices averaged slightly low­
er in 1957, with the exception of
corn which was much lower in price.
Livestock prices in 1957 were sub-

Crop

the following page.
Flaxseed production in the district
in 1957 was only about half as large
as production in the previous year.
Flaxseed production suffered se­
vere damage from the virus disease,
Aster Yellows, and also from bad
harvest weather in North Dakota
and Minnesota. Minnesota and the
Dakotas accounted for 92 percent
of the flaxseed crop in 1957. The
largest producer, North Dakota,
with 15 million bushels accounted
for nearly 60 percent of U. S. output.
A large increase occurred in win-

CROP PRODUCTION IN THE NINTH DISTRICT*
1956
1957

Percent 1957
is of 1956

Corn

470,521,000 bu

495,418,000 bu.

A ll wheat

239,562,000 bu.

257,776,000 bu.

107.6

W in te r w h e a t* * * *
Spring wheat (o ther than durum )

29,937,000 bu.
171,122,000 bu.

57,430,000 bu.

191.8

160,666,000 bu.

93.9

38,503,000 bu.

39,680,000 bu.

103.1

268,991,000 bu.

346,571,000 bu.

128.8

57,417,000 bu.

61,277,000 bu.

106.7

129,680,000 bu.

153,455,000 bu.

1 10.0

Durum
Oats
Soybeans**
Barley

105.3

Rye
A ll hay

7,581,000 bu.

7,670,000 bu.

101.2

19,256,000 tons

21,631,000 tons

1 12.3

Flaxseed

46,440,000 bu.

24,015,000 bu.

Sugar beets
Potatoes, Irish
Sorghum g r a in * * *

1,988,000 short tons
26,319,000 cwt.

19,678,000 cwt.

1,768,000 bu.

6,844,000 bu.

* ln c lu d e s only th e fo u r fu ll d is tr ic t states.
* *ln c lu d e s only M in n ., So. D a k. and N o . D a k.

stantially above a year ago. Thus,
livestock-feed grain price ratios were
favorable to livestock producers.
Crop production in the district dur­
ing 1957 was above 1956 levels in
most lines. Yields in 1957 were also
generally higher. Acreage changes
and yield changes for the major
crops in the district states are shown
in percentage terms in the chart on
10



2,283,000 short tons

51.7
114.8
74.8
387.1

* **S o rg h u m g ra in re p o r te d only fo r So. D a k.
* * * * ln c lu d e s M in n ., So. D a k. and M o n t.

ter wheat production; Montana, the
largest producer, registered a 52 per­
cent increase in winter wheat acre­
age and experienced excellent yields.
South Dakota, the only sorghum
grain producing state in the district,
increased grain sorghum acres by
126 percent and realized an average
yield of 29.0 bushels an acre, exactly
double the 10-year average yield.




ACRES A N D YIELDS BY C R O P A N D S T A T E PERCENT C H A N G E FROM 1956
D E C L IN E

CORN
Minnesota

M

North dakofa

1

SouthDakota

1

Montano

,

IN C R E A S E
| i i i
1 1 M
i ! HH

I f

, Ninth

District

;

i

i $ i
Acres
Yield

,

3 4

\

1

W
T

1

'

A ll WHEAT
Minnesota
.

i

i

1

n

1

n

1

1

North Dakota
South Dakota

■

Montana

i f f

1 I

!

!

1 |

f |

1

| |

■

Ninth District'
OATS
Minnesota

■

*

i

I i

mm *

North Dakota
South Dakota
Montana

; )

1

,

5

|

1

Ninth District

I j I

Minnesota

1
i f ! ) 1

m

■
'

5

$

I

*
J * *
M
'

1
»
- i

5
'

s

\

■

l^orth Dakota
|

1 1 1

■

f

South Dakota

''
!
i
,
i

14"
: 1 1 1

Montano

1 * '

Ninth District

: 1

: ,
1
f I M
| j
i
i i

i i : j
' • ;
. !
1 | 1 § i i

!
Minnesota

i
j
• /
s i r i
! 5 i 5

North Dakota
South Dakota
Montana

* ; \ ! i ! ; !:
'
\
I i t J
, \
j <

1 ;

4

\

!

'

i

m

i

-

;

* 1 ?
Minnesota
North Dakota
'

—
f , p f T f l

Soyth Dakota

i

1

i

1 1 1 1 1

■

I z

Montana '
p iip p s ||
■

■ ■ ■
- Minnesota

M

l

* ? X ‘

1

North Dakota

; i 1 i

1 ; ; *

Soyth Dakota -

: i

■

:

Montana

"T I

1 j 1 I

1

|

“■* *

Ninth District

mmmm

i i ♦ )
* 5 : )
40 20

■
r , > » ' .

0

20

40

60

so too

11

MEMBER BANKS PROSPERED IN 1957
District member banks enjoyed a
properous year in 1957. The year
witnessed an increase in profits, divi­
dends, loans and deposits at these
institutions. Indeed, all of these items
were larger than ever before in his­
tory. A comparison of district mem­
ber bank profits in 1957 with those
of the previous year reveals a smart
$5.9 million or 23 percent increase.
Profits were affected most by an
increase of almost $ 11 million in the
amount of interest collected on
loans; this increase was produced
partly by an upward revision of in­
terest rates charged at many banks
and partly by higher average hold­
ings of loans in 1957 than in 1956.
Income from securities was likewise
increased by an increased rate of
return and by larger average hold­
ings during 1957. Earnings from
securities amounted to $4 million
more than in 1956, an increase of
approximately 10 percent.

The largest increase of expense
was recorded for interest on time
deposits. The maximum rate which
insured banks can pay on time de­
posits was raised by the regulatory
agencies with the result that many
banks announced higher interest
rates to savers beginning January 1,
1957. The increase in the amount of
interest on time deposits paid by
district member banks was $7.2 mil­
lion, making the total interest paid
41 per cent larger in 1957 than in
1956. The increase was partly the
result of higher rates paid and part­
ly the result of continued growth in
the amount of time deposits; at the
end of 1957 such balances were 14
percent larger than a year earlier.
The higher interest paid on time
deposits so enlarged the ‘expense
pie’ that the compensation of officers
and employees accounted for only
44 percent of total expense in 1957;
this was down from 48 percent of

LO A N S , INVESTMENTS A N D DEPOSITS O F DISTRICT MEMBER BANKS

12




total expense in 1956 even though
salaries and wages were 8 percent
higher in 1957 than in 1956.
Total current expense rose $16.4
million in 1957 while current reve­
nues increased by $17.4 million with
the result that net current earnings
were up a million dollars. Net profits
were up by much more than this
amount — despite higher income
taxes—owing primarily to a sub­
stantial reduction in charges made
for losses on loans and securities in
1957. Stockholders enjoyed a 6 per­
cent increase in dividend payments.
The Statements of Condition
which member banks file at the end
of the year show that loans increased
by $77 million during 1957 at dis­
trict member banks. The propor­
tionate gains ranged from a low of
2.9 percent in Minnesota to a high
of 9.4 percent in Michigan. Con­
sumer type loans increased $41 mil­
lion. Residential mortgage loans
were up by $20 million while loans
to business rose $24 million. These

credits brought loans and earnings
from loans at district member banks
to the highest level in history.
In contrast to the experience of
1955 and 1956, the 1957 loan expan­
sion was accomplished without the
liquidation of securities. Thus, hold­
ings of U. S. Treasury obligations
and of other securities were $16 mil­
lion and $23 million higher, respec­
tively, at the end of 1957 than at the
beginning. The loan expansion was
financed largely with deposit growth.
District member bank deposits
grew by $174 million in 1957. Time
deposits owned by individuals, part­
nerships and corporations rose $163
million, thereby accounting for the
bulk of the gain in total deposits.
The 14 percent growth scored by
time deposit balances in 1957 was
one of the sharpest gains on record
and reflected in part the improved
competitive position of time de­
posits which resulted from the pay­
ment of higher rates to the owners
of such balances.

DISTRICT MEMBER B A N K LO A N S — SELECTED TYPES
of D o l l a r s

1947
Excludes

1948
real

1949

estate




and

1950
C.C.C.

1 951
l oans

1952

1953

1954

1955

1956

1957

to f a r me r s

13

C O M P A R A T IV E STATEMENT O F E A R N IN G S A N D
N IN T H

DISTRICT MEMBER

BANKS

DIVIDENDS O F

DECEMBER

31

(in thousands o f dollars)
G overnm ent Securities

1956

1957

Earnings from:

% Char

$ 34,790

$ 32,282

7.8

9,859

8,466

16.5

108,475

97,834

10.9

1,732

1,705

1.5

1 1,679

10,433

1 1.9
22.1

O th e r Securities
Interest on Loans
O th e r C harges on Loans
Service C harges on Deposit A ccounts
O th e r Service Charges and Fees

7,092

5,808

Trust D epartm ent

4,697

4,265

10.1

O th e r C u rre n t Earnings

5,102

5,176

— 1.4

$183,426

$165,969

10.5

$ 21,727

$ 20,062

8.3

31,226

28,898

8.1

TOTAL Current Earnings
Expenses for:
Salaries— O ffice rs
Salaries and W ages— Employees

1,152

25,031

6.2

17,781

1,223

D irectors' and O th e r Fees
Interest on Time Deposits

40.8
17.4

Interest on Borrowings

1,852

1,578

Taxes (excluding incom e taxes)

3,832

3,604

6.3

D epreciation

3,094

2,798

10.6

31,989

27,720

15.4

$119,974

$103,593

15.8

$ 63,452

$ 62,376

1.7

$

$

O th e r C u rre n t Expenses

TOTAL Current Expenses
Net Current Earnings
Recoveries, Transfers from Valuation
Reserves, and Profits on:

1,906

— 32.2

Loans

1,470

1,476

— .4

A ll O th e r

1,634

1,178

38.7

Securities

1,293

$

4,397

$

4,560

— 3.6

$

5,608

$ 12,124

— 53.7

Loans

5,035

9,060

— 44.4

A ll O th e r

1,885

1,576

19.6

$ 12,528

$ 22,760

— 45.0

Profits before Taxes
Taxes on Net Income

$ 55,321
23,385

$ 44,176
18,125

25.2
29.0

Net Profits
Dividends on:

$ 31,936

$ 26,051

22.6

TOTAL Recoveries
Losses, Charge-offs and Transfers to
Valuation Reserves on:
Securities

TOTAL Losses

19

— 78.9

14,829

13,999

5.9

TOTAL Dividends

$ 14,833

$ 14,018

5.8

Net Profits after Dividends

$ 17,103

$ 12,033

42.1

Preferred Stock
Comm on Stock

14




$

4

$

C O N D IT IO N O F N IN T H DISTRICT MEMBER BANKS O N

DECEMBER 31

(in thousands o f dollars)

1956

Assets
Cash, Balances w ith O th e r Banks
U. S. G ove rnm ent O b lig a tio n s , D ire c t and G uaran teed
O b lig a tio n s o f States and P olitical Subdivisions
O th e r Bonds, Notes, and Debentures
C o rp o ra te Stocks
Loans and Discounts, Including O v e rd ra fts
Bank Premises O w ned
Real Estate O w ned O th e r than Bank Premises

1957

$1,055,242

$1,099,951

1,336,356

1,352,102

274,937

297,710

94,048

125,666

7,227

7,497

1,875,042

1,952,180

34,516

40,938

2,651

2,598

5,673

7,426

855

614

13,529

15,543

4,700,076

4,902,225

2,287,960

2,270,844

1,173,032

1,336,869

Investments and O th e r Assets In d ire c tly R epresenting
Bank Premises or O th e r Real Estate
C ustom ers' Lia b ilitie s
O th e r Assets

TOTAL Assets

Liabilities
Demand Deposits o f Individuals,
Partnerships, and C o rp o ra tio n s
Time Deposits o f Individuals, Partnerships, and C o rp o ra tio n s
Deposits o f U. S. G overnm ent, Inclu ding Postal Savings

101,767

90,065

Deposits o f States and P olitical Subdivisions

304,247

324,959

Deposits o f Banks

415,761

437,945

42,438

38,935

4,325,205

4,499,617

O th e r Deposits, C e rtifie d and O ffic e rs ' Checks, etc.

TOTAL Deposits

Bills Payable, Rediscounts, and O th e r L ia b ilitie s
M o rtga ges and O th e r Liens
A cceptances Executed by Bank
O th e r Lia b ilitie s

TOTAL Liabilities

3,630

40

209

253

855

614

48,841

60,973

4,378,740

4,561,497

Capital Accounts
C a p ita l

99,291

104,252

Surplus

141,033

144,881

65,479

75,976

15,533

15,619

U n divid ed

Profits

Reserves

TOTAL Capital Accounts
TOTAL Liabilities and Capital Accounts




321,336

340,728

4,700,076

4,902,225

!5

Loans to Member Banks
A major purpose of the Federal
Reserve System is to influence the na­
tion’s supply of money and credit in
a way that will promote economic
progress. This influence is ordinarily
accomplished by adding to or sub­
tracting from the supply of reserves
at member banks. Changes in the
level of borrowing by member banks
represent one way of adding to or
subtracting from member bank re­
serves.
Before the Federal Reserve System
was established in 1914 there were
frequent periods of economic dis­
tress resulting directly or indirectly
from an inflexibility in the nation’s
supply of currency and bank re­
serves. Federal Reserve Banks were
established, in part, for the purpose
of correcting this weakness in the
banking system. The law provides

that “ Any Federal Reserve Bank
may make advances . . . to its member
banks on their promissory notes . . . ”
and “ Any Federal Reserve Bank
may discount notes, drafts, and bills
of exchange . .
Thus, a member
bank can obtain additional reserves
by borrowing from its Reserve bank.
According to several yardsticks,
member bank borrowing from the
Federal Reserve Bank of Minne­
apolis has been growing in impor­
tance. For example, the chart below
indicates that the proportion of dis­
trict member banks borrowing from
the Federal Reserve has increased
in every year but one since 1950.
In 1957, better than 25 percent of the
473 member banks in the district
borrowed from the Federal Re­
serve at least once during the year.
Not since 1933 has the proportion of

PERCENT O F DISTRICT MEMBER BANKS B O R R O W IN G D U R IN G THE YEAR

60

40

20
0

1915
16



1925

1935

1945

1955

AVERAGE OF MEMBER BANK BO RROW ING

FROM THE MINNEAPOLIS

FEDERAL RESERVE BANK
M liiicns

of

Dollars

_________

___

Millions

of

Delia r

--------------------------------------------------------------r t r

1920

1925

1930

1935

borrowing banks been so high.
In none of its years of operation
prior to 1934 did the Minneapolis
Federal Reserve Bank make loans
to fewer than 25 percent of its mem­
ber banks. Since 1914 this figure has
varied from a high of 75 percent in
1921 to a low of 2 percent in 1943.
Country banks, which virtually dis­
appeared from the discount window
in World War II, have reappeared
during the postwar period in slowly
rising numbers.
Since the peak year of 1921 the
number of member banks which
borrow has declined even more
rapidly than the proportion of mem­
ber banks borrowing owing to a de­
cline in the total number of banks.
The number of member banks in
the Ninth district has fallen from
1,024
1921 to ^
ess t^
ian
^ at
currently. Most of the decline oc­
curred in the 14 years after 1921.
Another measure of the impor­
tance of borrowing by member
banks is the dollar amount of funds




1940

1945

1950

1955

borrowed. Like the proportion of
banks borrowing, the dollar amount
of loans outstanding at the Federal
Reserve Bank of Minneapolis has
increased during the postwar years.
Indeed, the average daily amount of
advances to member banks, at $39
million, was higher in 1957 than in
any of the years since 1921 with the
single exception of the year 1955
when advances averaged $42.5 mil­
lion.
The average dollar amount of
member bank borrowing from the
Federal Reserve Bank of Minne­
apolis has ranged between a high of
$76 million in 1920 and a low of
$47,000 in the year 1936. The high
water mark for borrowing by all
member banks in the nation was
also registered in 1920.
That borrowing activity is cur­
rently well above the levels of the
late thirties and World War II but
well below the level of the early
twenties is indicated by still another
yardstick, namely, the proportion of
T7

CHART A— RATIO OF MEMBER BANK
BORROW ING TO MEMBER BANK
RESERVES
Percent

1920

1925

1930

their reserves which member banks
borrow.
During the past io years, Ninth
district member banks borrowed an
average of approximately 4 percent
of their reserve balances at the Fed­
eral Reserve. In its first 10 years of
operation—in the decade after 1914
—the Minneapolis Federal Reserve
Bank loaned member banks an
amount which averaged approxi­
mately 65 percent of their reserve
balances. In contrast, during none of
the years between 1933 and 1944 did
member banks borrow as much as
1 percent of their reserve balances.
See charts A and B. The former chart
indicates that prior to 1935 annual
average borrowings by district mem­
ber banks ranged as high as 160 per­
cent of their reserves; the latter chart
shows that in none of the years since
1935 have borrowings of district
member banks averaged as much as
10 percent of reserves. The propor­
tion of member bank reserves fur­
nished by Reserve Bank loans has
18



declined substantially from the levels
common during the early years of
the System.
Of particular interest is the close
correspondence between the ratio of
borrowings to reserves for Ninth dis­
trict member banks and for all mem­
ber banks in the nation in most of
the more than 40 years covered by
charts A and B.
With respect to the seasonal pat­
tern of borrowing, district member
banks have differed somewhat from
all member banks in the nation.
This is revealed by the chart on the
next page which measures the average
amount of borrowing for each of the
12 months as a percent of the annual
average amount of borrowing. The
chart is based on the borrowing ex­
perience since World War II.
Thus it is seen that district mem­
ber banks tended to borrow most
(160 percent of the annual average)
in May while all member banks in
the nation have borrowed most (127
percent of the annual average) in
CHART B RATIO OF MEMBER BANK
—
BORROWING TO MEMBER BANK
RESERVES
Percent

SEASONAL INDEX OF MEMBER BANK
BORROWING AT THE FEDERAL RESERVE
tndex

November, during the postwar pe­
riod. The month of peak borrowings
in the nation has been a month of
relatively low borrowings by district
member banks.
The seasonal low points of bor­
rowing in the district and the na­
tion are less widely separated than
the seasonal highs. Borrowings of
all member banks have averaged
lowest in September while in the
district borrowings have been low­
est in August as a rule.
Since banks borrow to correct re­
serve deficiencies and since reserve
deficiencies are often produced by
deposit withdrawals, it is not sur­
prising to find district member
banks borrowing more in the first
half of the year than in the second
half. This is because district member
bank deposits ordinarily flow out in
the early months of the year while
they rise in the second half of the
year. The chart on page 12 reveals
this pattern for each of the past 10
years.
The behavior of deposits is, of
course, not the only factor to in­




fluence member bank borrowing.
Thus, during some of the past 10
years district member banks have
borrowed more in the last half than
in the first half, contrary to the pat­
tern depicted by the chart. A heavy
demand for credit from its custom­
ers frequently prompts a bank to
borrow.
Indeed, the official statement of
guiding principles, observed by Fed­
eral Reserve Banks in making loans,
states that “Federal Reserve credit
is generally extended on a short term
basis to a member bank in order to
enable it to adjust its asset position
when necessary because of develop­
ments such as a sudden withdrawal
of deposits or seasonal requirements
for credit beyond those which can
reasonably be met by use of the
bank’s own resources.” *
Using the proportion of member
banks which borrow as well as the
dollar amount of member bank bor­
rowing and the fraction of their re­
serves which member banks borrow
as yardsticks, we have seen that
borrowing has recently been a more
important source of reserves than
was true a few years ago but that
it is less important than was true
early in the history of the Federal
Reserve System.
That member banks now borrow
less than was common during the
early years of the Federal Reserve
System is a reflection, in part, of the
operation of other forces that affect
bank reserves, and of the develop­
ment of alternatives to borrowing
^Foreword to Regulation A
19

MEMBER BANK BO RRO W ING
M i l l i o n s of Do l l a r s

50BORROWINGS FROM
FEDERAL RESERVE

40—

BORROWINGS
of
FEDERAL
FUNDS

10-

19 56

1957

The black bars represent averages of amounts
reported each Wednesday as “ borrowings
from others than the Federal Reserve” by dis­
trict banks which participate in the market
for federal funds. The lighter bars represent
the average of daily borrowings by all district
member banks at the Federal Reserve.

from the Federal Reserve. Also, dis­
count policy in recent years has em­
phasized prompt repayment.
An important alternative to bor­
rowing for a bank in need of cash is
the liquidation of government se­
curities. Years ago banks held few
government securities and thus were
more likely to borrow from the Fed­
eral Reserve when deficient in re­
serves. But a tremendous amount of
Treasury securities was lodged with
the banks in the thirties and in World
War II. In the first decade after the
Federal Reserve System was estab­

20



lished government securities held by
district member banks averaged 12
percent of their deposits. In the past
decade government securities have
averaged 39 percent of deposits. Bor­
rowing the excess reserves of other
banks is also an alternative to borrow­
ing from the Federal Reserve. Such
borrowing is accomplished in the
market for ‘federal funds.’
But the fact that borrowing is now
a quantitatively less important source
of reserves than was true early in
the history of the Federal Reserve
System does not detract from the im­
portance of the borrowing privilege
to a bank in need of reserves.
The rate of interest charged on
loans to member banks is known as
the discount rate. This rate is altered
from time to time with changing
economic conditions. A change in
RATIO OF GOVERNMENT SECURITIES
TO DEPOSITS AT DISTRICT MEMBER
BANKS

DISCOUNT

RATE AT THE FEDERAL RESERVE BANK OF MINNEAPOLIS

the rate, by itself, has no affect on the
supply of bank reserves. However,
the willingness of banks to borrow
from the Federal Reserve is influenc­
ed by the discount rate.
In 1957 ^ie discount rate at all
Federal Reserve banks was raised to
3 ! 2 percent shortly after mid-year;
/
other market rates had been rising
and the presence of inflation made
it important that growth in bank
reserves and the money supply be
limited. In November, Federal Re­
serve Banks reduced the discount
rate to 3 percent in recognition of de­
flationary forces which had appeared.
Although the 3 Vi percent discount
rate charged during part of 1957
was higher than any rate prevailing
since 1934, it was lower than the rates




common prior to that time. In the
early years of the Federal Reserve
System, when the discount rate was
considered the principal instrument
of monetary policy, interest rates in
general were relatively high.
Over the years, the techniques of
monetary policy have changed a
good deal. Open market operations
—the purchase and sale of govern­
ment securities by Federal Reserve
Banks—have become an important
tool for influencing the supply of
bank reserves. Flexible reserve re­
quirements are also a powerful and
useful device for regulating the sup­
ply of bank credit and money. The
development of these complementary
techniques has contributed much to
the effectiveness of monetary policy.

21

Federal Reserve Bank
of Minneapolis
Nineteen hundred fifty-seven was
a year of more than ordinary changes
and a year of high activity at the
Federal Reserve Bank of Minne­
apolis. The major changes took place
in top bank management and in
banking quarters. The high level of
activity in the bank, as indicated by
the record work volume handled by
many operating departments, was, in
part, a reflection of the generally
prosperous and active business econ­
omy throughout the Ninth Federal
Reserve district.
The bank’s building program, be­

gun in 1955, was completed late in
April with the addition of eight new
floors and extensive remodeling of
the old banking quarters. This gave
the bank a 12-story home in which
to house all its numerous operations
with room to spare. The new addi­
tion was badly needed. For a number
of years an ever-increasing volume of
work had heavily taxed the bank’s
physical plant. A study of the 1957
operation figures which appear in
the table on page 23 reveals the con­
tinuance during the year of an up­
ward trend in work volume.

V O L U M E O F SELECTED O P E R A T IO N S AT THE M IN N E A P O L IS FEDERAL RESERVE BAN K
Millions

of P i e c e s




V

o lu m e

of

O

p e r a t io n s

in

P r in c ip a l D

epa rtm en ts

($. amounts in thousands)
■
--------- A m o u n t----------------- Number ----------1956
1957
1956
1957
Advances to member banks and non­
member banks secured by U. S. Gov­
ernment obligations ............................. ..

3,657,349

$ 4,875,759

1,270

Advances to member banks secured by
other collateral ...........................................

4 I ,3 I 8

4,080

20

Currency counted during year....................

481,649

470,742

70,752,050

76,564,154

Coin counted during year.............................

14,805

15,652

148,580,613

14 8 ,6 8 1,0 11

113,878,800

124,035,500

31,687,287

36,745,909

18,470,804

12,334,229

i

>356
18

Coin wrapped during year...........................

9,171

10,382

Currency shipped and paid out....................

405,500

406,930

Coin shipped and paid out...........................

20,234

20,858

U. S. Government checks handled.............

3,018,380

2,993,426

Postal money orders handled......................

16 9 ,114

1 6 1 ,1 3 3

9,948,722

9,275,375

Other checks h an d led .................................... 30,339,649

32,194,920

95,160,539

102,323,560

Unfit notes retired from circulation...........

Grain drafts handled ....................................

532,261

495,415

601,977

561,26 1

Other noncash collections ...........................

119 ,2 52

1 15 ,18 7

421,084

408,701

Securities held in custody for banks on
December 31 .............................................

1,476,737

1,48 5,213
357,M 5

368,691

Coupons cut from securities held for
banks .............................................................
Coupons paid from U. S. Government
direct obligations ......................................

45,222

44,725

291,401

274,025

Coupons paid from issues of other U. S.
Government agen cies...............................

1,6 31

1,623

14,876

14,662

3,909,159

4,955,640

4,466,872

4,502,840

Issues, redemptions, and exchanges of
other U. S. Government agencies...........

21,848

36 ,10 3

2,572

4,255

Purchases and sales of Government se­
curities and Government securities
cleared through the Federal Reserve
Bank for the account of banks in the
Ninth district ...........................................

1,573,660

1,810,003

7,095

8,597

U. S. Savings Bonds sales (also included
in U. S. Government direct obligations) .

228,446

155,259

1,945,709

1,8 3 7 ,9 11

U. S. Savings Bonds redemptions (also
included in U. S. Government direct
obligations) ..................................................

323,770

390,197
24,674,130

2 ,412,4 31

2,502,197

65,895

71,940

687

680

Issues, redemptions, and exchanges of
U. S. Government direct obligations. . . .

Transfer of fu n d s ........................................... 24,022,362
Net Federal Reserve notes outstanding. . .
Number of employees at end of year.........




498,236

494,826

23

CHECKS A N D CURRENCY

OTHER OPERATIONS

For example, in Chec\ Collections,
which is the largest operating depart­
ment of both the bank and its Helena
Branch, work volume set a new rec­
ord in 1957 for the 15th consecutive
year with a total of 123.9 million
items handled. A decrease of more
than 6 million in the number of U. S.
Government checks processed was
more than offset by an increase in the
volume of checks drawn by the pri­
vate sector of the economy. Although
the net gain in number of items was
small as compared with increases
shown in other recent years, the dol­
lar volume of all checks handled was
up a substantial 5.5 percent from 1956.
The amount of cash handled was
also up. More than 76.5 million pieces
of currency were counted by sorters
at the bank head office and Helena
Branch in 1957 as compared with
70.7 million in 1956. Dollar volume
showed a slight reduction, however.
Coin counted exceeded the preced­
ing year’s high in both number of
pieces and in value. More than 148.6
million coins went through the bank
and branch counting machines dur­
ing the year, up slightly in number
from 1956, and up 6 percent in dol­
lar volume. The amount of coin
wrapped also hit a record peak at 124
million pieces, higher by almost 9
percent than the 1956 figure. Dollar
value of currency paid out showed a
slight increase; a 16 percent rise in
the volume of unfit currency sorted
out and retired from circulation in­
dicated that currency was being kept
busy after it got into circulation.

In another large department, Fiscal
Agency, work volume was on the in­
crease in several areas. The number
of pieces of U. S. Government obli­
gations issued, redeemed and ex­
changed by the bank during 1957 was
well in excess of the preceding year’s
figures, and dollar volume was up
by more than one-fourth. Ninth dis­
trict banks also made increasing use
of the Federal Reserve Bank’s facil­
ities for purchasing and selling secu­
rities; both the number and dollar
volume of such transactions showed
substantial expansion.
In the Accounting department
transfers of funds handled by the
bank and branch reached an all-time
record of $24.6 billion. The number
of transactions was up approximately
9 percent over 1956. Borrowing in the
market for ‘federal funds’ (men­
tioned in the feature article), is ac­
complished with wire transfers.
The Safekeeping department held
in excess of $1,485 billion in securities
belonging to Ninth district banks at
year end, up slightly from the De­
cember 31, 1956 figure. The number
of coupons cut from such securities
during the year showed an increase
of approximately 3 percent. The Dis­
count function also set records in a
number of fields during the year. The
work of this department is covered
in detail elsewhere in this report.
A few areas of operation showed
reductions in work volume. In Non­
cash Collections there was a drop in
the volume of both grain drafts and
other collections handled. Total dol­

24



lar value of such collections was off
approximately 6 percent; this was
the second decline in as many years,
reflecting in large part new arrange­
ments for processing some grain
drafts.
Also down, as shown by Fiscal
Agency records, were sales of savings
bonds in the district. Savings bond
redemptions increased. There were
two important changes in the savings
bond program during the year. On
February i the Treasury raised the
investment yield on Series E bonds
from 3 to 3.25 percent. On October
1 the familiar type paper-style Series
E bond was discontinued and re­
placed with a prepunched card-style
bond.
Finally, despite the generally in­
creased work load and the necessity
of adding to the Building and Pro­
tection personnel because of the in­
creased size of the bank building,
there was a reduction of seven per­
sons in the combined staffs at Helena
and Minneapolis from year-end 1956
to year-end 1957.
FINANCIAL STATEMENTS

A quick look at the comparative
Statement of Earnings and Expenses
which accompanies this article shows
that the Federal Reserve Bank had
higher earnings in 1957 than in 1956.
Indeed, earnings set an all-time rec­
ord. Income both from government
securities and from advances to mem­
ber banks was up substantially from
1956. This was largely due to the in­
crease in earning rates, which for all
earning assets amounted to 3.14 per­
cent in 1957 as against 2.43 percent in




1956. The rate of interest earned on
advances to member banks at 3.5 per­
cent during part of the year was
higher than at any time since 1934.
Too, the average amount of advances
outstanding was somewhat higher in
1957 than in 1956. Government se­
curities were also yielding more than
they had in many years.
Current expense showed a sub­
stantial increase but net earnings
were nevertheless $2.6 million above
those of the previous year. Also up
were additions to current earnings,
interest paid to the U. S. Treasury on
Federal Reserve notes, and dividends
paid to member banks. This latter
item reflects continued growth in the
capital accounts of district member
banks.
Examination of the December 31,
1957 Statement of Condition shows
that assets of the bank and branch
combined were down very slightly
from December 31, 1956. The prin­
cipal changes were an increase in
gold certificate reserves and a reduc­
tion in holdings of Government se­
curities. The reduction of securities
held was occasioned by System open
market operations and by the annual
reallocation of System securities
among the Reserve banks.
One figure on the statement which
deserves special comment is the
bank’s outstanding circulation of Fed­
eral Reserve notes. At the year-end
note circulation stood at $495 million,
$3 million less than at the end of
1956; this compares with a circula­
tion of $622 million on June 30, 1954.
This latter date is used for purposes
25

FED ERAL

RESERV E

BANK

O F M IN N E A P O L IS

S T A T E M E N T O F C O N D IT IO N
A SSET S

Dec. 3 1 , 1957

Gold Certificates.................................................................................... $ 390,875,779
>
Redemption Fund for F.R. N otes....................................................
2 2 ,17 1,35 3
Total Gold Certificate Reserves...................................... $
Other Cash ........................................................................................... I
Bills Discounted ....................................................................................
Foreign Loans on G o ld .........................................................................
Industrial Advances ......................................... ....................................

413,047*132
8,359,527

Dec. 3 1, 1956
$ 3 5 1>
392,666
22,952,138
% 374,344,804

$

9,319,030
3,530,000
625,000
42,350

120,000
23,774

U. S. Government Securities:
.............................................................................................

Bonds

63.283.000
206.759.000
246.937.000
38.879.000

60,462,000

Notes ................................................................................................
Certificates of Indebtedness......................................................
Bills ..................................................................................................

430,167,000
21,226,000

Total U. S. Government Securities............................... $ 511,855,000

$

Total Loans and Securities............................................... $ 511,998,774

$ 560,055,350

555,858,000

Due from Foreign B a n k s ....................................................................
F.R. Notes of Other F.R. B anks......................................................

348
23,008,000

556
14,376,750

Uncollected I t e m s ..................................................................................
Other Assets ...........................................................................................

136 ,191 ,'064
10,085,159

135,944,612
10,406,330

Total A sse ts........................................................................... $1,102,690,004

$1,104,447,432

LIA B IL IT IES
Federal Reserve Notes in Actual Circulation..................................$

494,826,280

$ 498,235,535

Deposits:
Member Bank— Reserve A ccou n ts...........................................$
U. S. Treasurer— General A c c o u n t........................................
Foreign ...........................................................................................

433,49°,539
18,515,030
8,184,000

$ 39 8 ,117 ,19 0
22,651,606
7,400,000
3 ,835,68i

Other Deposits .............................................................................

1 ,335,9 4 1

Total Deposits .................................................................... $ 461,525,510
Deferred Availability I t e m s ................................................................$
Other Liabilities .....................................................................................

113 ,2 6 3 ,14 2
628,521

Total Liabilities ..................................................................$1,070,243,453

$

432,004,477

$

142,597,491
594,681

$1,0 73,432,18 4

C A PITA L ACCOUNTS
Capital Paid I n .......................................................................................$
Other Capital Accounts .......................................................................

7,425,950
25,020,601

Total Liabilities and Capital Accounts........................... $1,102,690,004

26



$

7,182,100
23,833,148

$1,104,447,432

FED ER A L R ESER V E BANK OF M INNEAPOLIS
EARNINGS AND E X P E N SE S
1956

1957

Earnings from:

$ 1,010,077
1 3,086,844
1,6 18
..............

2,591

26,653

13,764

Total Current Earnings .................................... ......................... $ 17 ,2 16 ,5 2 9

$ 14 ,113 ,2 7 6

$

On
C
O

Expenses:

182,500

132,600

.........................

49> i
59

29,371

....

10 ,10 7

9,933

......................... $ 4,803,771

Assessment for Expenses of Board of Governors

.....................

$ 4,346,585

Federal Reserve Currency:

Cost of Redem ption................................................

$ 9,766,691

Current Net E arn in gs...........................................................
Additions to Current Net Earnings:
Profit on Sales of U. S. Govt. Sec. (net)

....................... $

4>
302

$

7 ,3 7 i
377

..............$

60,800

$

7,748

$

11,4 58

Deductions from Current Net Earnings:
0

0
0

Reserve for Contingencies...........................................

...........

260,627

438

................. $

2 71,7 35

$

11,8 96

Net Deductions from Current Net Earnings.................. ......................... $

210,935

$

4,148

Total Deductions ...............................................

Net Earnings before payments to U. S. T reasury......... ......................... $12 ,2 0 1,8 2 3
Paid to U. S. Treasury (Interest on F.R. Notes)

.........................

10,587,139

$ 9,762,543
8,406,449
422,045

Transferred to Surplus (Section 7 ) .................................... .........................

1,176,345

934,049

Balance at Close of Previous Y ear.................................... ......................... $18,520,204

$17 ,5 8 6 ,15 5

Surplus Account (Section 7)
Transferred from Profits of Y ear.......................................

.................

T J 76,345

Balance at Close of Y ear................................................................ $19,696,549




934,049
$18,520,204

27

of comparison because it was in July
of 1954 that the Federal Reserve Act
was amended to allow Federal Re­
serve banks to pay out the fit notes
of other Reserve banks. Since the
Minneapolis bank has traditionally
received more currency issued by
other Reserve banks than those banks
receive of Minneapolis Reserve notes,
this bank in recent years has fre­
quently been in the position of pay­
ing out the notes of other Reserve
banks rather than its own. This has
resulted in an increase in the volume
of the Minneapolis bank’s fit-for-use
notes on hand and a decrease in its
note circulation.

BAN K M A N A G EM EN T

The year 1957 saw changes in the
directorate of both the head office of
the Federal Reserve Bank of Minne­
apolis and in that of its Helena
Branch, plus changes in the Ninth
district’s representation on the Fed­
eral Advisory Council.
The bank was saddened in No­
vember by the death of Mr. Joseph
F. Ringland, President of the North­
western National Bank of Minne­
apolis, and Class A director of the
Federal Reserve Bank since January
1, 1956. At year-end this vacancy was
unfilled but Mr. John A. Moorhead,
new President of the Northwestern
National Bank, was elected in Jan­
uary, 1958, to serve the unexpired
portion of Mr. Ringland’s term.
At the annual election in Novem­
ber, Mr. Harold C. Refling, Cashier
of the First National Bank in Bot­
28



tineau, North Dakota, and Mr. Ray
C. Lange, President, Chippewa Can­
ning Company, Inc., Chippewa Falls,
Wisconsin, were both re-elected as
directors for three-year terms com­
mencing January 1, 1958. Mr. Refling
is a Class A director and Mr. Lange
a Class B director.
In December the Board of Gover­
nors of the Federal Reserve System
redesignated Mr. Leslie N. Perrin,
Director, General Mills, Inc., Minne­
apolis, as Chairman and Federal Re­
serve Agent for 1958. At the same
time the Board reappointed Dr. O. B.
Jesness, Agricultural Economist, St.
Paul, as Class C Director for a threeyear term beginning January 1, 1958,
and redesignated him Deputy Chair­
man for 1958.
In September Mr. Julian B. Baird,
Chairman, First National Bank of
St. Paul, resigned as Ninth district
representative on the Reserve Sys­
tem’s Federal Advisory Council as a
result of his appointment as Under­
secretary of the Treasury. The board
of directors elected Mr. Gordon Mur­
ray, President of the First National
Bank of Minneapolis, to fill out Mr.
Baird’s unexpired term. In December
Mr. Murray was re-elected to the
Advisory Council for 1958.
There were also two changes in the
Helena Branch board effective Janu­
ary 1, 1958. Mr. O. M. Jorgenson,
Chairman of the Security Trust and
Savings Bank, Billings, Montana,
was elected by the board as a Branch
director for a two-year term to suc­
ceed Mr. A. W. Heidel, President,
Powder River County Bank, Broad-

us, Montana. The Board of Gover­
nors appointed Mr. John M. Otten,
farmer and rancher of Lewistown,
Montana, to a two-year term as Vice
Chairman to succeed Mr. George R.
Milburn, Manager, N-Bar Ranch,
Grass Range, Montana. Dr. Carl
McFarland, President, Montana
State University, Missoula, Montana,
served as Chairman of the Branch
board during 1957 and will also
serve in that capacity in 1958.
There were also several changes in
the official staff of the bank during
the year. The most notable was the
retirement on March 31 of Mr. Oliver
S. Powell as President of the bank,
and the election as his successor of
Mr. Frederick L. Deming who had
previously been First Vice President
of the Federal Reserve Bank of St.
Louis. Mr. Powell had served as
bank President since 1952 following
two years as a member of the Board
of Governors of the Federal Reserve
System and 14 years as First Vice
President of the Minneapolis Federal
Reserve Bank from 1936 to 1950.
Other changes were the retirement
on February 1 of Mr. Earl B. Larson,
Vice President and Cashier, and of
Mr. George M. Rockwell, Assistant
Cashier. In December Mr. Frederick
J. Cramer was advanced from Per­
sonnel Officer to Assistant Vice Pres­
ident, effective January 1, 1958.
MISCELLANEOUS ACTIVITIES

Some of the bank’s activities, such
as many of those carried on by the
Research, Examinations, Personnel,
Public Services and Planning de­




partments are difficult to measure
statistically but are nonetheless high­
ly important to the performance of
the bank’s functions and responsi­
bilities. The activity of these depart­
ments tends to rise or fall with an
increase or decrease in the work of
other departments of the bank where
activity volume can be more easily
measured. The Research department
was particularly busy during 1957
with numerous studies and surveys
which it was called upon to make; it
was necessary to add several persons
to the departmental staff.
Most important of the bank’s pro­
gram of meetings and conferences
was the two-day Open House and
Conference for Ninth district bank­
ers held in May to observe the com­
pletion of our new building. Other
meetings included the 9th annual
Workshop for college teachers of
money and banking and economics
held in May, and the 14th annual
Examiners’ Conference in Novem­
ber for representatives of all federal
and state bank supervisory agencies
in the district.
During the year one new national
bank opened for business, two na­
tional banks consolidated, two state
member banks converted to national
charters, and one state bank became
a Federal Reserve member. The net
result was a membership gain of one
bank during the year; 474 members
at the end of 1957 as compared with
473 on December 31, 1956. There
were 1,295 banks in the Ninth dis­
trict at the end of 1957 compared
with 1,296 a year earlier.
29

DIRECTORS OF THE FED ER A L R ESER V E BANK
OF M INNEAPOLIS AND H ELEN A BRANCH
DIRECTORS
Class A
A.

Jo h n

M

President, Northwestern National Bank of Minneapolis,

o o rh ead,

1958

Minneapolis, Minnesota
H

aro ld

N.

T

h o m so n ,

Vice-President, Farmers & Merchants Bank,
1959

Presho, South Dakota
H

a ro ld

C.

R

e f l in g

Term expires
December 31

,

Cashier, First National Bank in Bottineau,
1960

Bottineau, North Dakota

Class B
T . G. H a r r i s o n , President, Super Valu Stores, Inc.,
Hopkins, Minnesota
J. E . C

o rette

,

President and General Manager, Montana Power Company,

1959

Butte, Montana
R

C.

ay

L

ange

,

1958

President, Chippewa Canning Company, Inc.,
1960

Chippewa Falls, Wisconsin

Class C
President and General Manager, Lake Shore, Inc.,
Iron Mountain, Michigan

1958

N . P e r r i n ,1 Director, General Mills, Inc.,
Minneapolis, Minnesota

F. A

1959

lb ee

F

l o d in

,

L e s lie

O. B. J e s n e s s , 2 Agricultural Economist,
St. Paul, Minnesota

1960

H ELEN A BRANCH
Appointed by Federal Reserve Bank
J. W

Financial Vice President and Treasurer, Western
Life Insurance Company, Helena, Montana

il l a r d

J o h n so n ,

1958

G eo . N . L u n d , Chairman of the Board and President, The First

National Bank of Reserve, Reserve, Montana
O. M. J o r g e n s o n , Chairman, Security Trust and Savings Bank,
Billings, Montana

1958

1959

Appointed by Board of Governors
President, Montana State University,
Missoula, Montana

1958

M. O t t e n , 3 Farmer and Rancher,
Lewistown, Montana

1959

C a r l M c F a r l a n d ,1

Jo h n

1 Chairman
2Deputy Chairman
3Vice Chairman




OFFICERS OF THE FE D E R A L R E S E R V E BANK
OF MINNEAPOLIS AND H ELEN A BRANCH

OFFICERS
F r e d e r ic k
A lbert

W.

L.

D e m in g ,

M il l s ,

Banking Department
E.

C

arl

B

F

r e d e r ic k

J o h n J. G

J. C

il l e t t e

,

A

Assistant Vice-President

,

ram er

First Vice-President

Audit Department

Assistant Cashier

e r g q u ist ,

laren ce

A

rthur

M

C

W.

en

W.

h r is t ia n

M

arcus

M

a u r ic e

C

lem en t

G

Vice-President

h n stad

O. Sath

er

,

N

ic e

,

an

, J r .,

K. G

General Auditor

,

c

C

, Vice-President
Chief Exam iner

o n n ell

ro bel,

Fiscal Agency— Government Securities
e l v in

W

il l ia m

B. H

o lm gren

C. Bro

nn er

,

Vice-President
Assistant Cashier

,

Legal Department
S ig u r d

U

elan d

,

Vice-President, Counsel and

Secretary

Assistant Cashier

H . Stro th m
an

Assistant Vice-President

,

Assistant Vice-President

ie s ,

G. M

aro ld
o g er

M

Operating Research Officer

ys e n t ,

O

R

V

Vice-President & Cashier

ko th ,

J o h n so n ,

E. L

il f o r d

Orth

W.

cN u lt y

Bank Examination Department
H

Assistant Cashier

J. M

rthur

R
C

President

Research Department

Vice-President

Assistant Vice-President

F

r a n k l in

O

scar

F. L

Director of Research
Business Economist

L . P ar so n s,
it t e r e r

,

H ELEN A BRANCH
K

K. F o s s u m , Vice-President
assigned to Helena Branch

H

yle

A . B e r g l u n d , Assistant Vice-President
assigned to Helena Branch

aro ld

e a t h , Assistant Cashier
assigned to Helena Branch

John L . H

MEMBER OF FED ER A L ADVISORY COUNCIL
u r r a y , President, First National Bank of Minneapolis,
Minneapolis, Minnesota

G ordon M

INDUSTRIAL ADVISORY COMMITTEE
S h eldo n V . W
John

A.

M.

ood,

B u sh ,

H. D

aggett,

A.

B. H

e ia n

W

alter




M.

,
R

Minneapolis, Minnesota, Chairman

Ishpeming, Michigan
St. Paul, Minnesota

Chippewa Falls, Wisconsin
in g e r

,

Sr., Minneapolis, Minnesota

31