The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Federal Reserve Bank of Minneapolis Annual Report 1972 Annual Report 1972 ■ II — To the N in th D istrict C om m u n ity: ■ f a 1 sflisS' 11*1 I I" St uiLi k H H H 111. J| * y*» L ' «k i \*lMS3f r n / iii ji ■ % ' ¥ P M , 1 ~ **% fW By the su m m er of 1973, the Federal R eserve B ank of M in n eap o lis w ill m ove its head office o p eratio n s to n ew qu arters. W e h o p e and b eliev e th at our n ew structu re rep resen ts a m ajor co n trib u tio n to the arch itectu ral la n d scape of M in n eap o lis. But its real sig n ifica n ce lies in the degree to w h ich its fa cilitie s w ill en ab le us to prov id e b ette r program s and serv ices for th e N in th D istrict co m m u n ity as a w hole. . IM i I .. ttHflM SEJH X lw ( .- ■£ ( ?. • ’, t? * - ':% «■ ■ ■ fill BHHHBj B H i *j§| ■ H m as. S§) 9 K M H H BH rl-. V* ■ F / ' B if ;, 1^/ / R !— V*/. ^ ^ ■ H r .......... Jf; • F ifty years ago, the co rn ersto n e w as laid for the p resen t b u ild in g —a structu re th at served the d istrict d urin g a tim e w h en the co u n try 's g ross n atio n al prod u ct grew from $74 b illio n to over $1 trillio n p er year and the n u m b er of ch ecks p ro cessed S y stem w id e from Vi b illio n p er y ear to a figu re 17 tim es that. T h e b a n k in g resou rces of the d istrict have grow n ten fold from a figu re of $2 b illio n . P op u lation sh ifts in the d istrict have b ee n d ram atic, alth ough total p o p u latio n has on ly grow n from 5 to 6.7 m illion . T he d esign ers of th e n ew b u ild in g co n sid ered th ese trend s am ong oth ers in arrivin g at the b rid g e-lik e structu re to h o u se the sp ecialized serv ices and fu n ctio n s of th is Federal R eserve Bank. T he th ree-lev el secure area u n d er a slop in g 2.5 acre plaza, is a stron gh old for the v alu ab les of the fin a n cia l co m m u n ity of the en tire d istrict. C lose to $3 b illio n , or tw o -th ird s of the total secu rities p ortfolios of our m em b er b a n k s, w ill b e held for safek eep in g in vaults b elo w the plaza; a sim ilar dollar am oun t of N ew v au lt sp ace, trip le th at p re se n tly av ailab le, w ill e n h a n ce effo rts to im p ro v e serv ices for the N in th D istric t fin a n c ia l com m u n ity . u n issu ed g ov ern m en t secu rities w ill also b e held for use in fu n d in g and refu n d in g the N in th D istrict's p o rtio n of the g ov ern m en t debt. lim ited b y an o n -site storage m axim u m of 235 to n s; the n ew vault w ill b e able to h an d le w ell over 1,000 ton s of coin. O f m ore d irect in tere st to m any of us are the cu rren cy and co in o p eratio n s th at prov id e the p u b lic, th rou gh th e com m ercial b an k in g system , w ith the "p o c k e tb o o k m o n e y " n eed ed to keep the w h eels of com m erce tu rn in g sm oothly. T he ad d itio n al space afforded b y the u n iq u e d esig n of the structu re w ill p erm it a n ew level of service and security. S h ip m en t o f m o n ey in to and out of the b u ild in g req u ires large u n o b stru cted sp aces, n ot p resen tly av ailab le, for arm ored and o th er carriers to load and unload. W e h ave already expan d ed our co in and cu rren cy arm ored car service to T w in C ities b an k s and ad d itio n al b an k s in the w estern part of N orth and So u th D akota. A n expan d ed co in w rap p in g o p eratio n , m akin g w rapped co in av ailable to all N in th D istrict b a n k s, is plan n ed for late 1973. O u r cu rren t annual p ro d u ctio n of 6 m illio n rolls is expected to in crease to 20 m illio n rolls of co in b y 1974. O n a n u m b er of fron ts, the Federal R eserve has b ee n p ressin g its efforts to develop a m ore e fficien t n atio n al pay m en ts m ech an ism . For exam ple, a ch an g e in R eg u latio n J req u ired sam e-d ay rath er th an deferred p ay m en t of cash item s p resen ted to b a n k s, region al ch eck p ro cessin g cen ters w ere set up in several Fed eral R eserv e d istricts to speed ch eck d elivery, and the first “ au tom ated cle a rin g h o u se " system w as started in C alifo rn ia in 1972. In M in n e ap olis, the first p h ase of the U p p er M id w est R eg io n al C heck P ro cessin g C en ter w as im p le m en ted in O cto b e r 1, 1972, b rin g in g in to the sam e-d ay p ay m en t zon e 106 b an k s w ith in a 15-m ile rad iu s of the T w in C ities. Shortly after w e m ove in to th e n ew b u ild in g , w e w ill b e able to expand the im m ed iate paym en t zon e to a 50-m ile rad iu s around the T w in C ities, to in clu d e 121 m ore b an ks. N ot long afterw ard, our expand ed facilities w ill p erm it us to p ro cess checks at the head office on an o v ern ig h t b a sis from sim ila r-siz ed areas around D u lu th, R och ester and Eau C laire. W h en fully im p lem en ted , the U M -R C P C w ill b e p ro v id in g o v ern ig h t ch eck clearance for item s draw n on 430 b an k s in the district. C on v ersio n to th ird -g en e ra tio n com p uter sy stem s, com p leted in July, prov id ed ad d itio n al ch eck p ro cessin g cap acity as w ell as b etter in tern al con trols and expand ed flexib ility for future grow th. Part of our m o n ey fu n ctio n is to replace old, u n fit cu rren cy w ith n ew Fed eral R eserve N otes. In recen t y ears, an average of $250 m illio n a y ear has b ee n b u rn ed . In the n ew b u ild in g , u n fit cu rren cy w ill b e p u lv erized rath er than b u rn ed . N ot only w ill a sm oke p ro b lem thus b e elim in a ted , b u t the p u lverized m aterial w ill even tu ally b e recycled for use in prod ucts su ch as ro o fin g m aterials. T h e n ew vault fa cilities w ill also p erm it us to m a in ta in a larger supply of u n issu ed cu rren cy, available for com m ercial n eed s and an exp an d in g econom y. C oin o p eratio n s w ill no lon ger be Im p rov em en ts in the pay m en ts m ech an ism b e n e fit the p u b lic, b o th in d iv id u als and b u sin e s se s, b y en a b lin g them to m ake m ore efficien t use of th e ir funds. T h ese advances an ticip ate the day w h en fin an cial tran sactio n s are settled electron ically, red u cin g the cu m b e r som e p ro b lem s asso ciated w ith tran sp o rtin g tons of p ap er ch ecks across the country. M an y of th ese n ew services are in accord w ith S y stem w id e efforts to provide a sw ift and efficien t fin a n cia l system , facilitatin g b u sin ess and com m erce th rou gh o u t the n atio n and the en tire co m m u n ity of the N in th D istrict. For y ears, w e have carried on our a ctiv ities b e h in d a form id ab le, if n o t fo rb id d in g , facade. T h e n ew b u ild in g and its plaza are in ten d ed to con v ey a m ore co n g en ial stance tow ard the p u b lic, w h ile p reserv in g b o th sym b o lically and in fact a fo rtress-lik e security. T he plaza w as co n scio u sly d esign ed for use b y the p u b lic, b o th for in form al g ath erin gs and su itab le p u b lic activ ities. It w ill have seatin g places, d rin k in g fou n tain s and three large sculptures to form a natu ral g ath erin g place. b an k ers and b u sin es sm en w ill provide o p p o rtu n ities for d ialogu e ab o u t econ om ic co n cern s and ch allen ges for th e U p p er M id w est. W e in ten d to use our n ew b u ild in g for m e et in g s and d iscu ssio n s d uring 1973 to u nd erscore the eco n om ic and fin a n cia l relatio n sh ip s b etw een th is in stitu tio n and the en tire N in th Fed eral R eserve D istrict, and b etw ee n th is d istrict and the rest of the country. All in all, w e look forw ard to ex citin g tim es — an op p o rtu n ity and ch allen ge to rem ain resp o n siv e to the n eed s of the p u b lic and the b u sin ess and fin a n cia l com m u n ity. To th is end, w e en th u sia stica lly in v ite your p a rticip atio n . In terest in the Fed eral R eserve w ill b e h eig h ten ed by the o p en in g of our n ew structure. W e w elcom e the op p o rtu n ity this in terest g ives us to b rin g know led ge to a broad p u b lic abou t w h at w e are d oin g and h ow it affects them . T h e arc h ite ct e n v isio n e d th e plaza as an in fo rm a l g a th e rin g p lace, a con trast to the a b s e n c e of " p u b lic s p a c e " aro u n d the p re se n t b u ild in g . For th is reason , w e are exp an d in g our efforts to b rin g in fo rm atio n ab o u t our activ ities to the p u b lic. T h e o p p o rtu n ity to v isit, tou r and learn ab o u t the F ed eral R eserve w ill be exten d ed . Sp ecial p u b lica tio n s, d isp lays and film s are plan n ed for d istrib u tio n th rou gh o u t the d istrict. A series of lu n ch eo n s for d istrict 5 6 Statem ent of Condition A s s e ts D ec. 31,1972 Dec. 31, 1971 Total G old C ertificate A c c o u n t ........................................................................................ $ 77,902,245 $ 24,759,230 7,000,000 7,000,000 Sp ecial D raw in g R ig h ts C ertificate A c c o u n t ........................................................... Federal R eserve N otes of oth er Federal R eserve B a n k s ...................................... 27,003,900 31,038,700 O th er c a s h .................................................................................................................................. 5,053,326 8,047,404 Loans to m em b er b an k s secured by U .S. G overn m en t s e c u r itie s ................. 1,650,000 550,000 Secu rities Federal A gency o b lig a tio n s ..................................................................................... 25,684,000 8,799,000 U .S. G overn m ent s e c u r itie s ..................................................................................... 1,367,269,000 1,251,650,000 Total loans and s e c u r itie s .......................................................................................... 1,394,603,000 1,260,999,000 F oreign c u r r e n c ie s .................................................................................................................. 4,416,000 — C ash item s in process of co llectio n ................................................................................ 456,606,526 709,111,725 Bank p re m ise s........................................................................................................................... 29,789,128 18,732,132 O th er a s s e ts ................................................................................................................................ 18,398,966 16,785,103 T o ta l A s s e ts ............................................................................................................. 2,020,773,091 2,076,473,294 L ia b ilitie s Federal R eserve N otes in c ir c u la tio n ............................................................................ D ep osits: M em ber b a n k s-reserv e acco u n ts............................................................................ D ue to oth er Federal R eserve Banks —C ollected f u n d s ............................ U n ited States T reasu rer-g en eral a c c o u n t ......................................................... F o r e ig n ................................................................................................................................ O th er d e p o s i t s ............................................................................................................... Total d e p o s it s .................................................................................................................. D eferred av ailab ility cash i t e m s ..................................................................................... O th er l i a b i l i t i e s ...................................................................................................................... T o tal L i a b i l i t i e s ................................................................................................... 1,040,587,839 914,426,971 548,820,418 — 52,473,719 6,670,000 6,157,653 614,121,790 315,389,136 14,409,126 1,984,507,891 681,598,332 442,884 66,461,106 6,440,000 4,567,821 759,510,143 355,796,580 12,949,300 2,042,682,994 C a p ita l A c c o u n ts C ap ital paid i n ......................................................................................................................... S u r p lu s ......................................................................................................................................... T o tal L ia b ilitie s and C ap ital A c c o u n ts .................................................... 18,132,600 18,132,600 2,020,773,091 16,895,150 16,895,150 2,076,473,294 R atio of gold certificate reserves to Federal R eserve N ote l i a b i l i t i e s ................................................................................. 7.5% 2.7% Earnings and Expenses Current Earnings In terest on loans to m em b er b a n k s ........................................................... In terest on U .S. G o v ern m en t s e c u ritie s.................................................... All o th er e a r n i n g s ............................................................................................... Total Current Earnings..................................................... $ 1972 168,386 73,638,392 241,724 74,048,502 $ 1971 87,784 72,376,648 131,202 72,595,634 Current Expenses O p eratin g E xp enses ..................... .................................................................... A ssessm en t for expenses of Board of G o v ern o rs................................. F ed eral R eserve C u rre n cy ................................................................................ Total Current Expenses.................................................... Less: reim b u rsem en t for certain fiscal agency and oth er expense Net Expenses ..................................................................... Current Net Earnings N et A d d itio n s to C urrent N et Earnings P rofits on sales of U .S. G overn m en t secu rities ( n e t ) .............. All o t h e r .......................................................................................................... N ET E A R N IN G S B EFO R E PA YM EN TS TO U N ITED STA TES T R E A S U R Y .................................................................. PA YM EN TS TO U .S. T R E A S U R Y ................................................................ D IV ID E N D S P A ID .............................................................................................. TR A N SFER R ED TO S U R P L U S .................................................................... SU R P LU S January 1 ............................................................................................ SU R PLU S D ecem ber 31 ................................................................................... 16,737,646 801,600 555,884 18,095,130 832,820 17,262,310 14,501,960 737,700 688,852 15,928,512 848,144 15,080,368 56, 786,192 57,515,266 57,268 -1 ,1 5 3 ,6 8 1 2,032,385 -1 8 5 ,5 2 3 55,689,779 53,401,066 1,051,263 1,237,450 16,895,150 18,132,600 59,362,128 57,273,629 991,349 1,097,150 15,798,000 16,895,150 V o lu m e of O p e r a tio n s * Loans to m em b er banks C urrency received and cou nted C oin received and counted C hecks hand led, total C ollection item s hand led Issu es, red em p tio n s, exchanges of U .S. G overnm ent secu rities Secu rities held in safekeep in g Transfers of funds 98 311 471 .8 N u m ber 1972 168 89 m illion m illion 257 m illion 419 m illion .9 6.3 m illion 366,235 358,310 D ollar A m ou nt 1971 180 m illion m illion m illion m illion 5.4 m illion 355,880 300,717 $ 303 706 37 117 1.8 1972 m illion m illion m illion b illio n b illio n 19.0 b illio n 3.2 b illio n 336 b illio n $ 165 652 29 101 1.4 1971 m illion m illion m illion billio n b illio n 20.5 b illio n 3.0 b illio n 274 b illio n *A11 figures are for Minneapolis and Helena combined. 7 Federal Reserve Bank of Minneapolis Head Office Directors David M. Lilly, Chairm an and Federal Reserve A gent Bruce B. Dayton, Deputy Chairm an Class A —Elected by M em ber Banks Philip H. N ason, Chairm an, First N ational Bank, Saint Paul, M innesota Roy H. Johnson, President, First N ational Bank, N egaunee, M ichigan D avid M. Sm ith, President, First N ational Bank, River Falls, W isconsin Term Expires D ecem ber 31 1973 1974 1975 Class B —Elected by M em ber Banks Dale V. A ndersen, President, M itchell Packing Com pany, M itchell, South Dakota John H. Bailey, President, The Cretex Com panies, Inc., Elk River, M innesota David M. H eskett, President, M ontana-D akota U tilities Com pany, Bism arck, North Dakota 1973 1974 1975 Class C —Appointed by Board of Governors Russ B. Hart, President, H art-A lbin Com pany, Billings, M ontana Bruce B. Dayton, Chairm an of the Board, Dayton H udson Corporation, M inneapolis, M innesota D avid M. Lilly, Chairm an of the Board, The Toro Com pany, M inneapolis, M innesota 1973 1974 1975 Officers Bruce K. MacLaury, President; M aurice H. Strothm an, Jr., First Vice President; Sheldon L. A zine, A ssistant Counsel and A ssistant Secretary; Earl O. Beeth, A ssistant Vice President; M elvin L. Burstein, General Counsel; Frederick J. Cramer, Vice President; Ralph J. Dreitzler, Vice President; Leonard W. Fernelius, Vice President; Lester G. Gable, Vice President; Thom as E. G ainor, V ice President; Roland D. Graham , Senior Vice President; A lbert R. H am ilton, General Auditor; Richard C. H eiber, A ssistant General Auditor; Douglas R. Hellweg, Vice President; Richard J. H erder, A ssistant Research Director; Ronald O. Hostad, A ssistant Vice President; LeRoy G. H ughes, Building O fficer; A rthur I. Lee, A ssistant Vice President; John A. M acDonald, Senior Vice President; David R. M cDonald, Vice President; Clarence W. N elson, Vice President and D irector of Research; John P. O lin, Vice President and Secretary; Ruth A. Reister, A ssistant Vice President and A ssistant Counsel; H erm an M. Slind, A ccounting O fficer; Richard B. Thom as, A ssistant Vice President; Clem ent A. Van N ice, Senior Vice President; Joseph R. Vogel, C hief Exam iner; Robert W. W orcester, Vice President. Helena Branch Directors W illiam A. Cordingley, Chairm an W arren B. Jones, Vice Chairm an Term Expires Appointed by Board of Governors D ecem ber 31 W illiam A. Cordingley, Publisher, Great Falls T ribune, Great Falls, M ontana 1973 W arren B. Jones, Secretary-Treasurer, Two Dot Land & Livestock Com pany, Harlowton, M ontana 1974 Appointed by Board of Directors, Federal Reserve Bank M inneapolis Richard D. R u bie, Chairm an, Bancorporation of M ontana, Great Falls, M ontana Robert I. Penner, President, C itizens First N ational Bank, Wolf Point, M ontana John Reichel, President, First N ational Bank, Bozem an, M ontana Officers Howard L. Knous, Vice President; Bruce J. H edblom , A ssistant Vice President; John D. Johnson, A ssistant Vice President M em ber of Federal Advisory Council C hester C. Lind, President, First A m erican N ational Bank, D uluth, M innesota January 1, 1973 1973 1974 1974