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AN N UAL
STATEMENT
1954

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










L e s l ie N . P e r r in

Chairman of the Board
Federal Reserve Ban\ of Minneapoli

FOREWORD

I

T IS a pleasure to present the report of this Federal Reserve
Bank to its stockholders, covering events of the year 1954.
During the past year the bank commemorated its Fortieth An­
niversary, for on November 14, 1914, it commenced operations.
During the intervening years a tremendous amount of his­
tory was written by the United States, much of which directly
affected the operations and growth of this bank. Through it all,
the bank has developed not only in size, but in the quality and
scope of its services. Indeed, several new activities were embarked
upon during the latest year. Its efficiency has continued to im­
prove in line with the best traditions of American business.
In closing this letter of transmittal, we particularly wish to
congratulate our staff on the high morale which has been main­
tained in spite of badly cramped quarters. In spite of these handi­
caps, the bank has operated with a low turn-over of employees
and an increasing individual level of efficiency, which is most
gratifying and for which the staff, collectively and individually,
have our sincere thanks.




Chairman




The Transition Examined
has been
A PROBLEM which for many
rare in America

taken to correct the problem were
successful, or both.

years, a fairly large volume of unem­
ployment, eclipsed all others con­
fronting the national economy in
1954. The threat of excessive spend­
ing and inflation had vanished; it
was replaced by the threat of inade­
quate spending and deflation. The
economic intelligence and instru­
ments of the government and mone­
tary authorities were brought to bear
in an effort to relieve the evidences
of distress which were associated—
in a large measure—with the transi­
tion from a wartime to a more nearly
peacetime economy.

Perhaps the most remarkable fea­
ture of the reduction in output was
the absence of damage to consump­
tion of the goods and services which
constitute the “ standard of living.”
Americans removed from the mar­
kets a larger total quantity of such
goods and services than ever before
in history. With an enlarged popu­
lation, consumption per person was
maintained at the record 1953 level.
This was accomplished by allocating
a lesser share of output to govern­
ment and to private capital forma­
tion.

Workers are likely to be laid off
when business sales fall, and busi­
ness sales fall when spending is cur­
tailed. Spending was curtailed for
such items as war material, business
inventories and equipment, and
automobiles in 1954. While spend­
ing for some other things increased,
the declines exceeded the gains with
the result that total spending for out­
put was lower than in 1953.
A reduction in spending can pro­
duce either lower prices or lower
physical output and employment.
Since overall prices changed very
little in 1954, the spending cutback
was translated into fewer jobs. Un­
employment, however, did not reach
as high a level as in 1950, consid­
ered by many to be a good year. The
comparison suggests that the magni­
tude of the employment problem in
1954 was not great, or that measures




O u t p u t a n d C o n s u m p t io n
Bil li ons of

Dollars

♦Preliminary estimates.

Government Spent Less

Purchasers of the nation’s output
are classified by the Department of
Commerce into three major groups
—consumers, government, and busi­
ness—in order of their importance as
spenders. Smaller budgets in govern­
ment and in business were responsi­
ble for the reduced flow of spending
in 1954.
The federal government—as the
largest single buyer of the nation’s
5

product—exerted the most depress­
ing influence on economic activity
by paring expenditures for national
security. This action was permitted
by the end of fighting in Korea and
by the changing character of war­
fare; also, the military buildup of re­
cent years is nearing its goal in terms
of weapons, airplanes, etc., so that
purchases of such items have slowed.
A reduced need for military goods,
by permitting a smaller federal
claim on output, released men, ma­
terials and factories from production
for war and made them available to
satisfy the needs of our growing
population. The foundation was
thereby laid for an accelerated growth
of living standards by reducing the
economic waste associated with ex­
penditures for war. The benefits of
the transition from war to peace
were realized almost immediately
by many people who found the
amount of federal tax withheld from
the pay envelope had been reduced.
Government expenditures other than
those for defense were little changed.
The amount of spending by all
government did not fall as much as
did federal spending owing to larg­
er budgets at the state and local level.
Indeed, spending by non-federal
governments was higher than ever
before. Evidence of larger outlays
by state and local governments was
visible throughout the nation in the
form of schools, highways, bridges,
sewers, and other public wealth new
to the landscape.
Such expenditures have been oc­
casioned in part by the virtual ex­
6




plosion of population in America
since World War II. More and bet­
ter transportation facilities are being
built to cope with the mounting
number of automobiles on the roads.
More sanitary facilities are being
constructed to service the unparal­
leled movement of population to the
suburbs. The high postwar birth rate
—which confounded the experts—
has created a demand for school
space which is still intense despite
the large number of schools erected
since the end of the war. And more
babies were born in 1954 than in any
other year—more than 4 million—
so the tide of population growth
does not yet appear to have ebbed.
But additions to state and local
spending amounted to only a frac­
tion of the cutback in federal spend­
ing so that purchases by all govern­
ment—at an annual rate—fell from
$85 billion in the third quarter of
3:953 to $75 billion in the same
quarter of 1954.
Business Budgets W ere C ut Too

Aggravating the disturbance pro­
duced by retrenchment at the federal
level was a business policy of inven­
tory liquidation. Besides spending
much less for inventory replacement,
business also purchased less durable
equipment such as machinery, than
in 1953. To a minor degree, these cut­
backs were offset by larger business
expenditures for construction, but
the construction industry was less in
need of new orders than were the
industries from which inventory and
durable equipment originate.

G o ver n m en t and I n vestm en t
S p e n d in g
Bi ll ion s of

Dollor*

♦Preliminary estimates.

Part of the decline in business in­
ventories can be traced to shutdowns
at factories which had produced war
goods. Too, with markets for many
products weakened, sellers were
anxious to dispose of raw materials
and stocks of goods in an effort to
minimize the danger of inventory
depreciation from price declines.
Industries which produce th e
things that go into inventories then,
suffered the most from the cutback
in business spending. Producers of
the durable equipment used by busi­
ness also received fewer orders,
while contracts received by the con­
struction industry from business
amounted to somewhat more than
earlier.
Public capital, business facilities
and residential housing were all con­
structed in larger volume during 1954
than in 1953. The record spending
for public and private facilities
brought more construction activity
than ever before. Since most con­
struction is financed with borrowed
money, and since the cost of borrow­
ing fell after 1953, a changed credit
picture figured importantly in this




one notable exception to the general
down trend in the economy.
Consumption Spending Moved Up

That tremendous group of spend­
ers known as consumers buys a larger
proportion of total output than gov­
ernment and business together; ap­
proximately two thirds of everything
produced has been removed from
the marketplace by consumers in
recent years. These people stepped
up their spending moderately be­
tween 1953 and 1954 and thus helped
to overcome the depressing influence
on the economy which originated in
the business and the government
sectors.
Several developments operated in
1954 to raise the level of disposable
income made available to Ameri­
cans, despite the growing unemploy­
ment. Out of this enlarged flow of
income, stepped up consumption ex­
penditures were financed and the
previous high rate of saving was
maintained almost unchanged.
The total of wages and salaries
received by workers did not fall in
proportion to the decline of employ­
ment because rates of pay continued
to rise as they have in other postwar
years. Larger paychecks received by
those who continued to work offset
in part the loss of wages suffered by
those who became unemployed.
Federal income taxes were reduced
with the result that incomes after
taxes (disposable income) did not
fall in proportion to incomes before
taxes. The tax reduction, associated
with the reduced federal budget,
7

permitted taxpayers to substitute
their own spending for that of the
government—concrete evidence to
the contrary for those who believe
that war brings prosperity.
The unfortunate workers from
industries with a scarcity of custom­
ers—those who became unemployed
—drew larger cash unemployment
benefits than in any other year,
thereby helping to break the danger­
ous chain reaction of fewer jobs and
lower spending. The liquidation of
unemployment reserve funds thus
provided more cash to consumers
than would otherwise have been
available.
Hence, well-heeled consumers
were in a position to buy more—not
less—than in 1953. The same phe­
nomenon—rising consumption with
falling employment—occurred in the
recession of 1949. The behavior of
consumers is tremendously impor­
tant in the determination of econom­
ic activity since they absorb such a
large fraction of all production.
But the drop in outlays by gov­
ernment and by business was greater
than the gain in consumer spending
so that unemployment was larger in
1954 than in 1953. The fact that
many who lost jobs were formerly
producing instruments of w a r ,
which add nothing to living stand­
ards, did not mitigate the distress
suffered by them from being out of
work. While historical comparisons
suggest that unemployment had not
assumed extremely serious propor­
tions, the amount was regarded as
serious enough so that its reduction




became one of the most important
objectives of national economic policy.
Some Unemployment is Normal

The level of unemployment which
should be regarded as dangerous is
a matter of controversy. The resolu­
tion of this controversy has serious
implications for monetary policy.
This is because the danger that addi­
tional spending will produce infla­
tion rises as the proportion of the
labor force which is unemployed
falls. Thus, measures aimed at re­
lieving unemployment by encour­
agement to spending may produce
rising prices. The behavior of prices
is, of course, a matter of great con­
cern to the monetary authorities.
The economic history of the Unit­
ed States since 1940 demonstrates
the effectiveness of high spending in
eliminating all but transitional un­
employment; but it also demon­
strates the effectiveness of high
spending in reducing the value of
money by raising prices. A level of
spending which is neither so high as
to produce inflation nor so low as to
induce serious unemployment is one
object of monetary policy.
Some unemployment is the neces­
sary price of economic freedom. So
long as people are free to produce
and consume what they choose,
errors of judgement by producers
will occur which necessitate cut­
backs in some industries and expan­
sion in others. One of the most im­
portant functions of an economic
system is to transfer resources from
the production of things less wanted

to the production of things more
wanted. Such transfers cannot be
accomplished without layoffs and
unemployment in some industries.
Changes in consumer preference are
painful to firms confronted with re­
duced demand, but the problem of
weakness in particular markets will
always be with us if consumers are
allowed to “call the tune” as every­
one agrees they should.

the unemployment last year or in
any year can be traced to these
changes. Estimated movements in
the composition of purchases by con­
sumers are indicated by the table
which covers a number of years.
However, when unemployment
r i s e s beyond the “transitional”
amount associated with the normal
P r o p o r t io n o f N a t i o n 's W o r k e r s

Last year, for example, industries
producing durable goods suffered
not only from a scarcity of military
contracts, but also from a decision by
consumers to acquire fewer auto­
mobiles, appliances, and other hard
goods. At the same time, consumers
decided to buy more homes, soft
goods, services, and other things.
Each year brings changes in the com­
position of total demand. Some of

U n em plo yed
P ercent Unem ployed-

DISTRIBUTION OF PERSONAL CONSUMPTION EXPENDITURES
(Percent)
TOTAL

1929
............................ 100.0

1944
100.0

1948
100.0

1949
[00.0

1950
100.0

19 5 1
100.0

19 52
100.0

1953

1954

100.0

100.0

6.2

12 .5
4.1

I 3 *1
5.2

14 .7
6.4

13.0
5.2

12 .3
4.8

12.9
5.7

12.3

•7

6.0

6.7

6.1

5-7

5.6

5-4

1.8

i -7

i -7

i -7

i -7

1.6

53-6

5 1.7

5 3 -i

5 X*5

9-5

3 i -3

2.6

30.3
2.6

53*3
9-5
31-9

5 x-7

10 .3

9.2
32.0
2.7

8.6
3 1 .2
2.9

3 i -3
3 -o

1.2
2.4

1.2

1.2

2.3

2.3

1.1
2.3

1.1
2.3

1.1
2.2

Durable Goods .....................
Automobiles and parts. . . .
Furniture and household
equipment .....................

1 1 .7
4.1
6.0

3-5

6.5

Other durable goods........

1-5

2.0

1.9

59-5
13-3
3 4 -i
i -3

55.6
11 .1
32 .3
2.4

i .3
2.5

i -3
2.3

Nondurable goods ............... 47-7
Clothing and shoes........... 11.9
Food & alcoholic beverages 24.7
Gasoline and o il.................
2.3

2.7

5-3

8.4

Semidurable housefurnishings ...................
Tobacco ..............................

2.1

Other nondurable goods. .

5.8

7.0

6.3

5-9

5.8

5.8

5-7

5.6

5-6

Services .................................. 40.6
Household operation . . . .
5 -i
Housing .............................. 14 .5
Personal services ...............
2.3
Recreation ..........................
2.1
Transportation .................
3-2
Other services ................... 13-3

34-3
5-3

3 i -9
4-5

33-3
4-7

33-5

33-7

34-6

35-4

10.8
2.4
2.4

9.9
2.2
2.2

10.8
2.1
2.1

3-4

3-3

3-2

10.0

9.9

10.4

4.8
11.0
2.0
2.0
3 -o
10.6

5.0
1 1 .2
2.0
2.0
3 -i
10.5

5 -i
1 1 .7
1.9
1.9
3 -i
10.8

5.2
12.0
1.9
1.9
3 -i
1 1 .2

36.2
5.2
12.6
1.9
1.9




•9

3-1

1 1 .5

9

functioning of free markets, the
public, through i t s government,
looks to ways of correcting the dis­
order. The presence in 1954 of stable
prices and of unemployment averag­
ing twice as much as in 1953 suggest­
ed that spending could be stimulated
without the danger of inflation
which accompanies additional spend­
ing when unemployment is at a
minimum. The failure of overall
price indexes to register gains vindi­
cates this judgement.
Perhaps the most important stimu­
lus to spending was afforded by a
substantial increase in the lending
power of the nation’s commercial
banks. The increase resulted from a
reduction of reserve requirements
for member banks of the Federal
Reserve System. The effectiveness of
this device in promoting credit ex­
pansion and deposit creation was
demonstrated as the year ended with
more debt lodged at the commercial
banks of the nation than ever before.
At the same time, more debt than
ever before was lodged with the na­
tion’s insurance companies, mutual
savings banks, savings and loan asso­
ciations and pension funds. The total
of all debts in the country—public
and private—established a new rec­
ord as it has in most recent years.
Spending by borrowers was encour­
aged with a substantial decline in
the cost of credit which in turn was
produced by the large addition to its
supply.

cial bank credit grew faster than in
any year since the end of World War
II; this growth supplied America
with the largest stock of money in
history. The earning assets which
were acquired by banks through
credit expansion were mostly U. S.
government securities. In contrast,
during 1953, loans constituted the
most important addition to commer­
cial bank assets.

Sources o f Lendable Funds

The reserves of the banking sys­
tem at the end of 1954 were lower
than at the beginning. The ability to
expand credit in the face of dimin­
ishing reserves arose from a reduc­
tion in the ratio of reserves to de­
posits which the banks are required
by law to maintain. This reduction
in reserve requirements was the
most important measure taken by
the monetary authorities to make
credit more plentiful.
In the summer of 1954, reserve
requirements against net demand
deposits were lowered from 22 per­
cent to 20 percent at central reserve
city member banks, from 19 percent
to 18 percent at reserve city member
banks, and from 13 percent to 12 per­
cent at country member banks. Re­
quirements against time deposits
were lowered from 6 percent to 5
percent at all member banks. Since
member banks of the Federal Re­
serve System hold approximately 85
percent of the nation’s commercial
bank deposits, the lending power of
the banking system was greatly aug­
mented.

Despite a weakened demand for
some types of loans in 1954, commer­

Also, twice in 1954, the discount
rate or cost of borrowing at Federal

10




Reserve Banks was lowered. In Feb­
ruary the discount rate was dropped
from 2 percent to i% percent, in
April from i% percent to i l 2 per­
/
cent. The reduction of discount rates
was not, however, accompanied by
more loan applications at Reserve
Banks; rather, the contrary was true,
as member banks in need of cash
had alternative sources of funds
available to them at much lower in­
terest rates than in 1953.
The yield on Treasury bills, for
example, remained below the dis­
count rate in 1954, so that banks in
need of cash found it less costly to
liquidate bills than to borrow. At
times in 1953, bill yields were higher
than the discount rate.
Y ie l d s o n L o n g a n d S h o r t T e r m
G overnm ent

S e c u r it ie s *

Percent --------------------- — ---------------------------------— -----------------------

1953-

I --------1954

*01d Series—Fully taxable, marketable 2y2
percent bonds first callable after 12 years ; New
Series—The 3% percent bonds of 1978-83, issued
May 1, 1953. Short term series represents bill
yields.

The decline of interest rates which
attended the expanding supply of
credit last year is best illustrated with
reference to the market for U. S.
government obligations, the valua­
tion of which does not reflect the
variable credit risk carried by other
securities. Government bonds of the




longest maturity declined in yield
from 2.93 percent early in the year
to 2.58 percent in the summer, as
lenders bid up the price, competing
for a limited supply. Short term gov­
ernments, characterized by 91 day
bills, fluctuated even more widely in
yield from 1.5 percent early in the
year to less than .7 percent in the
summer. The yield on other govern­
ments traced a similar path.
Besides commercial banks, finan­
cial institutions in the market look­
ing for investments included the
intermediaries which channel the
savings of individuals into the mar­
ket for loans. The life insurance
industry, for example, enjoyed such
an inflow of cash that total assets
owned grew faster than in the boom
year of 1953. The same was true for
savings and loan associations, for
mutual savings banks, and for pen­
sion funds. American savers provid­
ed these institutions with the wherewithall to finance expeditions to the
market in search of loans. The
search, of course, helped to keep the
market value of loans (securities)
high and the yields low.
More important, financial inter­
mediaries accomplished a gigantic
transfer of funds from owners of
money unwilling to spend, to spend­
ers anxious for loans. Without such
transfers, total spending would have
suffered, and the problem of unem­
ployment would have been aggra­
vated.
The most important kind of direct
lending by individuals, purchases of
11

U. S. Savings Bonds, was also con­
ducted in large volume. A larger
amount of E & H bonds was pur­
chased than in any other peacetime
year. But because of redemptions
and a large concentration of ma­
turities, the total of all savings bonds
outstanding was little changed for
the year and did not constitute an
important net source of lendable
funds.

ment agencies were operating on
funds derived from their own bor­
rowings rather than on Treasury
funds. Except for this development,
Treasury debt would be higher.

In addition to Treasury debt and
the debt of federal government agen­
cies, state and local government debt
was issued in large volume during
1954. The increase in state and local
debt outstanding was the largest in
history, amounting to $7 billion, or
Demand For Lendable Funds
The identity of the net borrowers 25 percent more than the 1953 in­
in our economy last year is fairly crease. This statistic, of course, is di­
well known. Some lending and bor­ rectly related to the record level of
rowing circumvent the principal public works, mentioned earlier.
financial institutions or are not pub­
Individuals borrowing money to
licized so that not all debt lends it­ purchase homes added more to their
self to accurate measurement. But debts than did state and local gov­
the largest components of total debt ernments. In 1954, home mortgage
in the United States can be meas­ debt went up by $8.7 billion; this
ured. Such measurements indicate compares with a gain of $7.6 billion in
that total debt last year set a new 1953. Near the end of 1954 the seas­
record, as in other recent years.
onally adjusted rate of home build­
Largest single borrower, of course, ing was higher than in 1950 when
was the U. S. Treasury. The national more homes were built than in any
debt rose by almost $4 billion in 1954. other year. The construction of these
Despite important cutbacks in fed­ new homes is one component of
eral spending, Treasury deficits con­ private capital formation which
tinued as tax collections fell in re­ partly offset the decline in business
sponse to reductions provided by the inventories, another component.
new tax law and in response to a
An immense stimulus was pro­
shrunken base of taxable income. vided to home building when Con­
Legislation was passed during the gress passed the Housing Act of
year which lifted temporarily the 1954. This law lowered the down­
$275 billion limitation previously payment and amortization rate re­
imposed by Congress on the size of quirements for government insured
Treasury debt.
mortgage loans, thereby adding to
U. S. government debt at the end the number of people who could
of 1954 was not strictly comparable qualify for such loans. Applications
with the total of other years. To a for mortgage insurance at the offices
greater extent than formerly, govern­ of the Federal Housing Administra­
12




tion subsequent to passage of the
new legislation were more numerous
than ever before.
Also, government insured and
guaranteed mortgage loans were
more attractive to lenders last year
than in 1953. While interest rates on
alternative investments were falling,
the return on F.H.A. and G.I. loans
was unchanged, making such loans
relatively more attractive to invest­
ors.
In the capacity of consumers for
other things than housing, individu­
als were less willing to incur debt
last year. The total of consumer debt
leveled off; it had been rising rapidly
since the removal of Federal Reserve
controls on such debt in May, 1952.
Late in 1954, with the advent of a
business recovery movement, con­
sumer debt once again moved up­
ward, possibly reflecting confidence
that incomes could be maintained.
Corporations, too, were competing
for lendable funds in 1954. While a
lower volume of corporate stocks
and bonds was marketed for new
money than in 1953, it is likely that
when all the figures are in, they will
show an increase in corporation
stocks and bonds outstanding ap­
proximating the addition to state
and local debts.
It is not surprising to find corpor­
ate flotations falling when sales of
the things corporations produce are
falling. Too, the accumulation of
business plant and equipment—the
chief purpose of such flotations—has
proceeded at such an uncommonly
high rate since World War II that




future needs for such capital may be
less, in proportion to total output,
than formerly. Much of the postwar
industrial capital formation repre­
sented the replacement of plant and
equipment depreciated in the war
years.
The demand for short-term busi­
ness loans weakened in 1954. Much
of this debt is incurred for inventory
financing, and since inventory liqui­
dation was the rule last year, there
was a downward pressure on short­
term business debt. Reflecting this
was the largest drop in commercial
and industrial loans of banks since
1949, when inventory liquidation
was also the rule.
Debt Formation— Spending

With the major sources of supply
and demand in the market for loans
having been examined, the role of
debt formation and monetary policy
in the determination of spending is
easier to appreciate. Without the
stimulus to credit expansion provid­
ed by the Federal Reserve in 1954,
interest rates would doubtless have
been higher with the result that
spending financed by borrowings
would have been discouraged. The
reluctance to borrow when interest
rates are high was demonstrated in
1:953 when plans for many debtfinanced projects were abandoned
owing to the high price charged by
lenders or investors for accommoda­
tion.
Many such projects, delayed ear­
lier, were undertaken in 1954 after
the level of interest rates had fallen.
l3

Thus, the influence of the Federal
Reserve System on the cost of credit
served to discourage spending in
early 1953, when the danger of infla­
tion was great, and it served to stim­
ulate spending in 1954, when the
danger of deflation and unemploy­
ment from lack of spending was
present.
The remarkable stability of prices
in America since a flexible monetary
policy was adopted in 1951 is a trib­
ute to the effectiveness of the central
bank in providing an environment
where spending is neither so great
as to depreciate the dollar nor so
small as to induce serious unemploy­
ment.
P r ic e I n d e x e s
PERCEN T

Base period 1947-49.

The principal instruments of mon­
etary control—open market opera­
tions, reserve requirements, and the
discount rate—have all been em­
ployed since the economic decline
originated to insure that inadequate
credit would not intensify the spend­
ing cutbacks. Response to the use of
these instruments has been gratify­
ing, thanks to the presence of a
strong demand for credit in almost
every sector of the economy.




The analogy between pushing on
a string and increasing the lending
power of commercial banks in time
of recession had no relevance to eco­
nomic conditions in America during
1954. The condition which gave rise
to the statement of this analogy was
the failure of easy credit to promote
recovery after the bank holiday in
1933. The experience of the Thirties
did much to undermine confidence
in the usefulness of monetary policy
in promoting economic stability. The
experience of 1954 should do much
to restore that confidence.
The year witnessed a combination
of developments which has been
absent for years, that is, the total of
debts was rising while interest rates
fell and prices were stable. The si­
multaneous occurrence of these
movements had been a rare event
since 1940.
As 1955 opened, considerable evi­
dence was present that output was
rising, in contrast to a movement in
the other direction a year earlier.
More encouraging, the increments
to output were not in the form of
weapons and such, which add noth­
ing to the standard of living, but con­
sisted of such things as autos and
homes which make life more pleas­
ant for everyone.
Interest Rates Moved Up
A t Y ear End

At the same time, signals from the
marketplace indicated that condi­
tions of supply and demand were
changing in a way which threatened
to raise prices. Too, unemployment,

after allowance for seasonal varia­
tion, showed signs of falling. These
traditional indicators of excessive
spending prompted the monetary
authorities to allow the great demand
for credit to express itself partly
through higher interest rates rather
t h a n through credit expansion.
Thus, the level of market interest
rates at the end of the year was high­
er than at mid-year but lower than
at the beginning of the year.
This effort to defend the purchas­
ing power of the dollar while at the
same time providing sufficient credit
to maintain a level of spending com­
patible with high employment illus­
trates the way in which flexible
instruments of monetary control can
contribute to economic stability.
It is doubtful that the transition
from an economy dominated by the
needs of war to a more peacelike
economy could have been accom­
plished with much less disturbance
than in fact occurred. The unhappy
feature of economic conditions in
1954 was not the lowering of arma­
ments production, it was the failure
to substitute more completely the
production of consumer goods and
capital goods.

economic conditions in the district
compared favorably with the rest of
the nation.
Sales at department stores, for ex­
ample, moved up slightly in our
area, while in the rest of the nation a
slight decline was reported. Although
the magnitude of these movements
was not large, their direction does
not suggest distress in the district.
Nor do the year-end statements of
our banks suggest distress. In com­
mon with banks throughout the na­
tion, member banks in the Minne­
apolis Federal Reserve District saw
their deposits and earning assets rise
to the highest level in history during
1954. Also, the most recently tabu­
lated profit and loss statements sub­
mitted by our members show the
highest earnings ever.
M em ber

The cutback in spending for de­
fense and for other things was not
without repercussions in the area
served by the Minneapolis Federal
Reserve Bank. But spending for the
district’s most important product—
agricultural commodities—was well
maintained with the result that




D e p o sit G r o w t h

W is c o n si n
M ichigan
Montana
N or th Dakota
Ninth D is tri ct

South Dakota
Minnesota

0

Ninth District Statistics Encouraging

Bank

November ’53 to November ’54

1

2

3

4

5

6

7

8

----------------------------------Per ce nt In c r e a s e -----------------------------------

A sample of district banks reports
that a larger dollar volume of checks
was drawn in 1954 than in 1953; the
gain was larger in the rest of the
nation suggesting that, relatively,
district bank customers practiced re­
straint in spending despite the larger
volume of checks drawn.
15

The average amount of loans held
during the year moved up propor­
tionately more—compared to the
previous year—at district banks than
at banks elsewhere. The opposite
was true for holdings of investment
securities. This development should
make for earnings’ comparisons fa­
vorable to district banks.
D
N

e p o s it s

in t h

D

and

ist r ic t

E

A

a r n in g

M

em ber

ssets

B a n k s*

kinds of work, but residential con­
struction makes up an important
part of the total.
Statistics of employment indicate
that slightly fewer people were at
work in the district during 1954 than
a year earlier. On the Iron Range
and at Duluth, employment suffered
from a weakening in demand for
products made of steel, such as weap­
ons and automobiles and farm ma­
chinery.

Billions of Dollars -

41953

r~~~l 1954

l / .V W J

I-

IN V E S TM E N TS
if lJ D A N S

m j_

*Amounts represent averages of balances re­
ported for last Wednesday of each month during
the respective years.

The demand for commercial and
industrial loans was stronger here
than in other districts; this strength
accounted for much of the interdis­
trict difference in the behavior of
total loans. Mortgage loans on resi­
dential property were granted in
large amounts in the district, as well
as in the rest of the country. The
continued growth of mortgage loans
at our banks is due in part to the
high level of residential building ac­
tivity reported by district communi­
ties.
The dollar value of building per­
mits issued by a sample of such com­
munities was 15 percent higher in
1954 than in 1953. Gains were re­
ported in every state except North
Dakota. Permits are issued for many
l6




Adverse weather conditions stunt­
ed agricultural production in a few
district localities, but in general the
weather was favorable. In contrast,
serious damage to crops and live­
stock was produced by drought in
other parts of the nation.
N

in t h

D

is t r ic t

P ercen tag e C

C ro p P r o d u c t io n

h ange,

1953

to

1954

■ IN C R E A S E -

■DECREASE-

Durum W h e a t

O j%

W h e a t ( a ll)

- 5%

- 2%

O a ts

H ay

|

j

C orn

+ 10%

F la x

+13%

Potatoes

+ 14%

Barley

Soybeans

+43%
+57%V

Source: U. S. Department of Agriculture.

The government’s cutback in ex­
penditures for national security was
felt in the Twin Cities as a large
number of men was laid off at the
local ordnance plant. But since our
area is much less industrialized than
other parts of the nation, the unem­
ployment problem here was less
serious than in those other areas.
Food processing, an important dis­
trict activity, was aided by the large
amount of products moving off the
farms. The physical volume of grain
produced was the third largest on
record and cattle shipments may
have established a new record.

Price trends were not the same for
everything produced on district
farms. Hogs, wheat and corn aver­
aged somewhat higher in price
during 1954 than in the previous
year. Most other commodities aver­
aged somewhat lower in price. In­
comes on dairy farms in particular
were pinched as the price support
level for milk products was lowered.
Estimates by the U. S. Department
of Agriculture place cash farm in­
come for the district approximately
3 percent lower in 1954 than in
1953. A larger drop was estimated
for farmers outside the district.

Operations and Management

C

H A N G E S in banking, as in
other economic affairs, often
occur so gradually that they come
about almost unnoticed. It is only
when one pauses now and then to
add up the totals and to make com­
parisons that the full i m p a c t of
change is visible. Yearends seem to
be good places to stop and take a
backward look, for the events of
even a single year may, in retrospect,
represent significant happenings.
The year 1954 was somewhat of a
milestone in the history of the Fed­
eral Reserve Bank of Minneapolis in
that it not only marked the fortieth
anniversary of the bank’s opening on
November 14, 1914, but it also saw
the launching of plans for greatly
expanded and modernized banking
quarters. Preliminary plans for the
new construction, approved early in
1954, call for eight stories to be added




to the present four-story bank build­
ing at Fifth Street and Marquette
Avenue, plus an extensive remodel­
ing of existing facilities. Detailed
plans for the proposed expansion
have been drawn, and work is sched­
uled to begin in the spring of 1955.
An inspection of the volume statis­
tics for the bank’s operating depart­
ments reveals the need for larger
quarters. The number of checks, for
example, which flowed through the
check collection department in 1954
was three times larger than twelve
years earlier. The tempo of activity
in the currency and coin department
has understandably quickened too,
with the public now holding four
times as much paper money and coin
as was true before World War II and
with more currency services now
being provided. The scope and vol­
ume of services rendered to the U. S.
17

Treasury by the bank’s fiscal agency
department have also been greatly
enlarged. Non-cash collections, safe­
keeping, and educational services are
just a few of the other bank functions
which have been expanded.
Federal Reserve Banks are con­
stantly seeking to improve efficiency
and thereby reduce the cost of opera­
tions. The introduction of new ma­
chinery in many departments of the
bank has accomplished a great deal
in this respect. But costs have also
been reduced in other ways, a good
example being the new procedure for
paying out currency.
An amendment to the Federal Re­
serve Act in July allowed Federal
Reserve Banks to pay out the notes of
other Reserve Banks without penalty.
The purpose of this legislation was to
eliminate in large part the shipping
and handling costs which had been
unavoidable so long as Federal Re­
serve notes could be paid out only by
the bank of issue.
One result of the legislation, so far
as the Federal Reserve Bank of Min­
neapolis was concerned, was a drop
in the total amount of its Federal Re­
serve notes outstanding. From June
30, 1954, to December 31, 1954, the
bank’s note circulation fell from $622
million to $584 million or 6 percent,
although the total note circulation of
the twelve Federal Reserve Banks
combined increased approximately 3
percent for the same period. A sec­
ond result of the legislation, as it
affected the Minneapolis Reserve
Bank, was the piling up of used cur­
18




rency in the bank vaults at an un­
precedented rate. These particular
effects of the amendment on the
Minneapolis bank resulted from the
fact that the Ninth District regularly
receives a greater volume of notes of
other Federal Reserve Banks than
those banks receive in notes issued
by the Federal Reserve Bank of Min­
neapolis.
Since the currency thus accumulat­
ed was still “fit-for-use,” even though
it had been in circulation, member
banks were asked to fill their cur­
rency needs by ordering used cur­
rency rather than new bills wherever
possible. Just what will be the full
effect of the legislation on the bank’s
operations will not be known until
there has been at least a full year’s
experience with the new procedure.
July also saw another important
change in the bank’s operations when
it began for the first time to receive
direct deposits from more than three
thousand Ninth District post offices.
The Federal Reserve Bank of Minne­
apolis, along with the other Federal
Reserve Banks, had been asked to
assume this additional responsibility
for the Post Office Department in
order to effect economies in its op­
erations. More than 150 thousand
post office deposits with a total value
of over $100 million were received
at the head office in the last six
months of 1954. Of this total, almost
$18 million was in cash; the new
operation added an estimated 1,500
thousand pieces of currency and 35
thousand coins to the work volume
of the currency and coin depart­

ment. It also boosted the total items
handled by the check collection de­
partment by 350,000 checks, money
orders, stamp albums, etc., and
helped in a minor way to swell the
volume of work handled in that de­
partment to a new high. Total checks
and money orders handled at the
Minneapolis head office and Helena
branch reached almost 112 million
and topped i953*s record volume by
more than 5 percent.
August 1 saw still another altera­
tion in the bank’s operations. This
one affected the fiscal agency de­
partment. On that date the Federal
Reserve Banks, at the request of the

Treasury, discontinued the examina­
tion of paid savings bonds received
from banks and other paying agents
and began forwarding such bonds
to regional offices of the Treasury for
examination and audit. The purpose
of this move was to effect economies
of operations through consolidation
of Treasury Department machine
operations and personnel.
These and other developments
helped to increase the efficiency of
bank operations. The bank continued
in 1954 to make changes in and addi­
tions to its equipment. An interesting
addition was a new currency shred­
ding machine. This machine is used

VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS
(Dollar amounts in thousands)
---------- Amount---------1953

Advances to member and non-member
banks secured by U. S. Government
obligations ...............................................$ 2,854,009
Currency counted during year...................
Coin counted during year............................
11,347
Coin wrapped during year..........................
7,041
Currency shipped and paid out.................
43i,9 i 9
Coin shipped and paid out..........................
17,979
Unfit notes sent to Treasury for redemption
16 9 ,0 19
3,0 26 ,19 5
U. S. Government checks handled*........
Other checks handled.................................. :25 ,053,779
^Includes Postal Money Orders as follows
178,466
Grain drafts handled..................................
624,080
Country and other city collections.............
1 2 8 ,7 12
Securities held in custody for banks on
last day of year........................................
1,52 7 ,70 4
Coupons cut from securities held for banks
Coupons paid from U. S. Government
32 ,2 36
direct obligations ....................................
Issues, redemptions and exchanges of U. S.
Government direct obligations...............
3 ,992,943
Purchases and sales of Government securi­
ties, and Government securities cleared
through the Federal Reserve Bank for
the account of banks in the Ninth Dist. 1,13 6 ,2 0 8
U. S. Savings Bonds sales (also included
17 3 ,8 2 5
in U. S. Government direct obligations)
2 1 2 ,5 5 7
U. S. Savings Bonds redemptions.............
Number of employees at end of year. . ..




$

-------------- Number—
1953

1954

860
7 1 ,5 7 1 ,9 8 8
11 8 ,7 2 7 ,2 3 4
86,007,500

480
70,753,48 8
14 0 ,8 7 1,4 6 5
107,398,500

3 5 ,10 6 ,3 3 6
26 ,410 ,0 52
79,899,840
10 ,6 6 3 ,5 13
3 42,9 6 1

30 ,624,376
26 ,8 0 3,214
8 5,10 0 ,579
10 ,4 8 1,2 16
792,967
400,857

289,507

281,900

3 1 ,6 9 1

333,748

2 6 4 ,8 13

5 ,10 3 ,3 0 3

3,861,66 2

4 ,327,137

1,6 80 ,735

4,748

4,891

236,600
2 33,0 46

1,409,597
2 ,3 M ,659

1,693,829
2,457,0 58
676

1954

945,901

13,609
9,450

385,066
17,430

14 0 ,35 2
3,0 4 1,6 6 7
2 6 ,6 25,232
175,753

6 9 7 ,2 11
152 ,6 0 5

778,376

1,674,664

7 10

19

to facilitate the destruction of wornout silver certificates and United
States notes. These types of currency
have been destroyed on bank prem­
ises since July i, 1953, thereby saving
the cost of shipment to a central de­
struction point.
Volume Figures Continue Up

In general, the volume figures for
the operating departments at Minne­
apolis and Helena show a work load
for 1954 slightly above that for 1953.
The increase in check collection vol­
ume has already been mentioned.
Other departments showing substan­
tial increases in the volume of work
handled were the non-cash collec­
tion department, which had a gain
of approximately 16 percent in the
dollar volume of grain drafts and
other collections handled; the wire
transfers division with a 17 percent
rise in the dollar amount of funds
transferred; and the coin division
which counted 20 percent more and
wrapped 34 percent more coin (dol­
lar value) than in 1953.
Although the fiscal agency de­
partment lost some small part of its
duties with the change in procedure
which became effective August 1, its
work volume increased in several
areas. For example, there was a 28
percent rise in the dollar value of
issues, redemptions, and exchanges
of government obligations handled
by the bank. There was also a 48 per­
cent increase in the dollar amount of
purchases and sales of government
securities made for Ninth District
banks. Savings bond transactions also
20




increased as savings bond sales in
the district rose 20 percent in num­
ber and 36 percent in dollar value
over 1953. Redemptions of savings
bonds were also up slightly. Another
department showing increased vol­
ume was the safekeeping depart­
ment which on December 31, 1954,
held in custody for member banks,
securities totaling $1,675 million, up
10 percent from the December 31,
3:953, total.
On the other hand, some phases
of the bank’s work showed modest
declines. Currency and coin depart­
ment figures showed an 11 percent
drop in the dollar amount of curren­
cy shipped out and a 3 percent de­
cline in outgoing coin. Currency re­
ceived and counted during the year
added up to almost 71 million pieces,
but that was still 1 percent less than
the 1953 total. In the discounts and
credit department advances to mem­
ber banks were down roughly twothirds from a total of $2,854 million
in 1953 to $946 million in 1954.
While the overall work load was
probably somewhat above that of
3:953, total employees on the staffs of
the head office and Helena branch
dropped from 710 at year-end 1953
to 676 at the end of 1954. The reduc­
tion in personnel, at a time when
work volume was undiminished,
speaks well for the new methods
adopted in the never ending struggle
to boost efficiency.
New Directors and Officers

The year witnessed several changes
in the membership of the boards of

directors of both the bank and its
Helena branch. The bank suffered a
heavy loss with the death in Febru­
ary of Mr. Charles W. Burges, Class
A director from North Dakota. Mr.
Burges had been vice president and
cashier of the Security National
Bank of Edgeley. This vacancy was
filled in May through a special elec­
tion, with Mr. John W. Scott, presi­
dent, First State Bank of Gilby,
North Dakota, being named to serve
out Mr. Burges’ unexpired term end­
ing December 31, 1954.
In August, Mr. Paul E. Miller,
Chairman of the Board and Federal
Reserve Agent, resigned as Class C
director to accept appointment as a
member of the Board of Governors
of the Federal Reserve System. Mr.
Miller’s place was filled by designa­
tion of Mr. Leslie N. Perrin, Deputy
Chairman, as Chairman and Federal
Reserve Agent for the remainder of
the year. Mr. Perrin is a director of
General Mills, Inc., Minneapolis.
Later in the year he was redesignated
Chairman and Agent for 1955. In
October, only a few weeks after Mr.
Miller had begun his new assign­
ment in Washington, the bank was
saddened by his death.
Another change in the head office
board came in November with the
election of Mr. Harold C. Refling,
cashier, First National Bank, Bot­
tineau, North Dakota, as Class A di­
rector for a three-year term begin­
ning January 1, 1955, to succeed Mr.
Scott. Mr. Ray C. Lange, president,
Chippewa Canning Company, Inc.,
Chippewa Falls, Wisconsin, was re­




elected Class B director for the same
three-year term. One of the three
Class C directorships on the head
office board was vacant at year end.
Mr. Joseph F. Ringland, president of
the Northwestern National Bank of
Minneapolis, was reappointed mem­
ber of the Federal Advisory Council
for 1955.
Mr. Carl McFarland, president,
Montana State University, Missoula,
Montana, Mr. J. Willard Johnson,
financial vice president and treasurer
of the Western Life Insurance Com­
pany of Helena, Montana, and Mr.
George N. Lund, chairman of the
board and president of the First Na­
tional Bank, Reserve, Montana, were
all reappointed directors of the Hel­
ena branch for two-year terms end­
ing December 31, 1956. Mr. McFar­
land will serve as chairman of the
branch board during 1955, and Mr.
George R. Milburn, manager, N Bar
Ranch, Grass Range, Montana, will
be vice chairman.
Among the bank’s officers, March
saw the untimely death of Dr. J.
Marvin Peterson, vice president and
director of research. The vacancy
caused by his loss was filled with the
election in August of Mr. Franklin
L. Parsons as director of research.
Mr. Parsons had formerly been as­
sociate director of research. In Oc­
tober Mr. Harold C. Core, vice
president in charge of personnel,
retired from active service, and Mr.
Frederick J. Cramer was named per­
sonnel officer, effective November 1.
Also elected to the official staff, effec­
tive January 1, 1955, were Mr. Carl
21

E. Bergquist, assistant cashier, Mr.
Roger K. Grobel, chief examiner,
and Mr. Oscar F. Litterer, business
economist.
A full program of bank and pub­
lic relations activities was carried on
in 1954, highlighted by the second
Member Bank Directors and Officers
Assembly in May. Other meetings
held during the year included the
sixth annual Money and Banking
Workshop for college teachers of
money and banking, and the eleventh
annual Examiners’ Conference for
all Ninth District bank examiners.
Nine additional sessions of the
ever-popular, one-week Short Course
in Central Banking were held by the
bank during the year with a total
attendance of 150. This brings the
grand total of member bankers who
have completed the course since its
inception in 1948 to more than 800.
Again, this year, as part of the
bank’s training program, a number
of senior men spent one week each
in member banks to become more
familiar with commercial bank op­
erations. Representatives of the bank
also continued the practice of mak­
ing calls on all banks in the district,
attending b a n k e r s ’ conventions,
group and clearing house meetings,
clinics, and banking and credit
schools. Speakers from the bank ap­
peared before a wide variety of
groups totaling nearly 13 thousand
persons; the bank’s own movie and
other movies on the Federal Reserve
System were in good demand; two
currency displays were in almost con­
22




stant use by banks for special oc­
casions; almost 10 thousand copies
of the booklet “ Your Money and the
Federal Reserve System” were dis­
tributed; and almost 4 thousand
persons toured the head office and
witnessed its operations.
One national bank went into vol­
untary liquidation during the year;
one new national bank was organ­
ized; and one state bank converted
to a national charter, for a net gain
of one bank as far as Federal Reserve
membership in the Ninth District
was concerned.
With 40 years of central banking
now history—many years which have
seen great and constant change in the
variety and scope of the services per­
formed for the banks and people of
the Ninth District—the Federal Re­
serve Bank of Minneapolis enters
1955 dedicated to the ideal of meet­
ing the banking and credit needs of
this district to the fullest extent and
confident that that goal can be
achieved.
Financial Statements

Reflecting the continued growth
of member banks in the Ninth Dis­
trict was a gain of almost 7 percent
in the capital stock account at the
Minneapolis Federal Reserve Bank
during 1954. The stock is issued to
member banks as they enlarge the
amount of their capital and surplus.
Notable among changes in the
deposit accounts was a loss of mem­
ber bank reserves which was only
partly offset by additional balances

in other accounts. As noted earlier,
the reduction of reserve require­
ments made it possible for member
banks to hold a larger amount of
deposits with a lesser amount of re­
serves than formerly.
Outstanding notes issued by the
Minneapolis Federal Reserve Bank
declined in amount for the second
consecutive year in 1954. Fed­
eral Reserve notes constitute the most
important component of the nation’s
currency supply; the retirement of
these notes accompanied a reduced
demand for paper money by the
public last year.
Also, legislation was passed au­
thorizing Reserve Banks to pay out
fit Federal Reserve notes without re­
gard to the bank of issue. Deposits of
fit notes issued by other Reserve
Banks were thus employed to fill
some requests for currency, whereas
formerly these notes were returned
to the bank of issue. By the same
token, Minneapolis notes were paid
out by other Reserve Banks. Unfit
notes are destroyed and charged to
the bank of issue.
A lower amount of securities was
owned at the end of the year than at
the beginning. This change resulted




from a system move to reduce bank
reserves by liquidating investments.
The expansionary effect of lower
reserve requirements was thus partly
offset. A shift from bonds and notes
into certificates of indebtedness re­
flects a T r easury refunding exchange.
Earnings from government securi­
ties were lower in 1954 than in 1953,
partly because a lesser average
amount of securities was held and
partly because the average rate of re­
turn was lower. Similarly, earnings
from discounts and advances were
lo w e r b e c a u se a le s se r a v e r a g e
amount was held than in 1953 and
because the rate of interest charged
for such accommodation was reduced
twice early in 1954.
The continued high level of ac­
tivity in the operating departments
of the bank permitted only a small
decline in expenses so that net earn­
ings fell by almost as much as earn­
ings from loans and investments.
W ith a larger number of shares
outstanding, dividends on our stock
were somewhat higher in 1954 than
in 1953. Payments to the Treasury
as interest on Federal Reserve notes
and transfers to the bank’s surplus
account were both reduced.

23

STATEM EN T

O F C O N D IT IO N

A SSETS

Dec. 3 1 , 1 9 5 4

Gold Certificates ............................................................................. $
Redemption Fund for F. R. N otes...............................................

4 2 1,32 7 ,5 0 4

Dec. 3 1 , 1 9 5 3
$

24,644.008

Total Gold Certificate Reserve...................................... $

445,9 71,60 2

F. R. Notes of Other F . R. Banks............................................... #

8,848,300

25,562,203
$

8,567,000

Other Cash ........................................................................................ $

484,485,384

510 ,0 4 7,587
7.847.000

$

7.657.573

Bills Discounted ................................................................................

450,000

1.350.000

Foreign Loans on G old .....................................................................

3>333>333

375,000

Industrial Advances .........................................................................

96,071

99,089

U. S. Government Securities:
Bonds

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

68,802,000

89.868.000

Notes

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

148,257,000

327.360.000

Certificates of Indebtedness...................................................

340,909,000

1 43.558.000

53,215,0 0 0

64.080.000

Bills

...........................................................................................
Total U . S. Government Securities..............................$

6 11,18 3,0 0 0

$

624,866,000

Total Loans and Securities.......................................... $

615,062,404

$

626,690,089

Due from Foreign Banks................................................................

559

567

Other Assets ......................................................................................

105,646,706

i i 7 » 6 i ,334
5

Total Assets .....................................................................$1,18 4 ,0 9 6 ,5 71

$1,26 9 ,80 4 ,150

L IA B IL IT IE S
Federal Reserve Notes in Actual Circulation..............................$

5 8 3 ,5 11 ,3 6 5

$ 644,292,545

Member Bank— Reserve Accounts........................................

443,526,944

468,968,085

U. S. Treasurer— General Account......................................

27,338 ,9 8 9

1 7 .790,974

Foreign ......................................................................................

12,050,000

10,230,000

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

2 ,3 15 ,7 4 4

3.848,599

4 8 5 ,2 3 1,6 7 7

$ 500,837,658

86,437,796

96,521,780

346,672

703.064

Total Liabilities .............................................................. $ 1 ,1 5 5 ,5 2 7 ,5 1 0

11,2 4 2 ,3 5 5,0 4 7

Deposits:

Total Deposits .................................................................$
Deferred Availability Item s............................................................
Other Liabilities

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

C A P IT A L A C C O U N T S
Capital Paid I n .................................................................................. $

6,360,250

5,952,400

Other Capital Accounts...................................................................

2 2,20 8 ,8 11

21,496,703

$ 1,18 4 ,0 9 6 ,5 7 1

$1,26 9 ,8 0 4,150

Total Liabilities, Capital Accounts

24




EARNINGS AND EXPENSES
Earnings from:

19 5 4

Discounted B i l l s ..................................................................................$

J953

144,803

$

United States Government Securities.............................................. 10,679,996
Industrial Advances

546,742
14 ,30 8 ,6 15

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

5 ,13 4

5,579

All Other ............................................................................................

5,482

7,9 71

Total Current Earnings.............................................................$ 10 ,8 3 5 ,4 1 5

$14,868,90 7

Operating Expenses ........................................................................... $ 3 ,2 1 8 ,1 1 0

$ 3,256,830

Expenses:

Assessment for Expenses of Board of Governors..........................

10 5,500

103,700

Original Cost ..............................................................................

147,988

2 15 ,4 3 8

Cost of Redemption...................................................................

17 ,1 4 3

28,306

Net Expenses .....................................................................$ 3,4 8 8 ,74 1

$ 3,604,274

Current Net Earnings............................................................................. . $ 7,346 ,6 74

$ 11,2 6 4 ,6 3 3

Federal Reserve Currency:

Additions to Current Net Earnings:
Profit on Sales of U. S. Government Securities ( N e t ) ...............

14,804

61,029

A ll Other ............................................................................................

3> °
45

*6 1

Total Additions ................................................................. ----- $

18 ,2 5 4

$

6 1,19 0

Deductions from Current Net Earnings:
Reserve for Contingencies........................................................

$

All Other ....................................................................................

$

Total Deductions ..............................................................
Net Addition to or Deduction from Current Net Earnings. . . . ----- $

4 > <M
4

Net Earnings before payments to U. S. Treasury........................ ----- $ 7 > 5 i >°78
3

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

19,930

77 ,2 76

4 21

. . -----

6 ,2 8 7,237
3 6 5 ,16 3

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

97,206

$

36 ,0 16

$ 1 1 ,2 2 8 ,6 1 7

9 ,791,772

34 8 .77 4
1,0 88 ,0 71

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

$ 1 5 ,1 3 1 ,2 9 7

Balance at Close of Previous Y e a r..................................................
Transferred from Profits of Y ear....................................................
Balance at Close of Year




. ...

698,678

1,088,071

$ 16 ,9 18 ,0 4 6

$ 16 ,2 19 ,3 6 8

25

DIRECTORS OF THE FEDERAL RESERVE BANK
OF MINNEAPOLIS AND HELENA BRANCH

DIRECTORS
L e s l i e N . P e r r i n , Chairman and Federal Reserve Agent

Class A

Term Expires
December 3 1

E d g a r F. Z e l l e , Chairman of the Board, First National Bank of Minneapolis,

Minneapolis, Minnesota

19 55

H a r o l d N . T h o m s o n , Vice-President, Farmers & Merchants Bank,

Presho, South Dakota

19 56

H a r o l d C . R e f l i n g , Cashier, First National Bank in Bottineau,

Bottineau, North Dakota

19 5 7

Class B
H o m e r P. C l a r k , Honorary Chairman of the Board, West Publishing Company,

Saint Paul, Minnesota

19 55

J. E . C o r e t t e , President and General Manager, Montana Power Company,
Butte, Montana

19 56

R a y C. L a n g e , President, Chippewa Canning Company, Inc.,

Chippewa Falls, Wisconsin

*957

Class C
F . A l b e e F l o d i n , President and General Manager, Lake Shore Engineering Company,

Iron Mountain, Michigan

19 55

L e s l i e N . P e r r i n , Director, General Mills, Inc., Minneapolis, Minnesota

1956

( Vacant)

19 57

FEDERAL RESERVE BRANCH BANK
HELENA, MONTANA
DIRECTORS
C a r l M c F a r l a n d , Chairman
G e o r g e R . M i l b u r n , Vice-Chairman

Term Expires
December 3 1
A. W . H

e id e l ,

President, Powder River County Bank, Broadus, Montana

G e o r g e R. M i l b u r n , Manager, N Bar Ranch, Grass Range, Montana

19 55
19 55

J . W i l l a r d J o h n s o n , Financial Vice-President and Treasurer, Western Life Insurance

Company, Helena, Montana

19 56

G e o . N . L u n d , Chairman of the Board and President, The First National Bank of

Reserve, Reserve, Montana
C a r l M c F a r l a n d , President, Montana State University, Missoula, Montana

26




19 56
19 56

OFFICERS OF THE FEDERAL RESERVE BANK
OF MINNEAPOLIS AND HELENA BRANCH

OFFICERS
O l i v e r S. P o w e l l , President
A l b e r t W . M i l l s . First Vice-President

Audit Department

Banking Department

K y l e K . P o s s u m , General Auditor

C a r l E . B e r g q u is t , Assistant Cashier
F r e d e r i c k J . C r a m e r , Personnel Officer

Bank Examination Department

J o h n J. G i l l e t t e , Assistant Cashier

H a r o l d G . M c C o n n e l l , Vice-President

A r t h u r W . J o h n s o n , Assistant Vice-President

R o g e r K . G r o b e l , Chief Examiner

A r t h u r R . L a r s o n , Assistant Vice-President
M i l 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 i s R . P r e s t o n , Vice-President

Fiscal Agency—Government Securities
E a r l B . L a r s o n , Vice-President
M e l v i n B . H o l m g r e n , Assistant Cashier

Legal Department

C h r i s t i a n R i e s , Assistant Vice-President
G e o 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

S ig u r d U e l a n d , Vice-President, Counsel

and Secretary

Research Department

M a u r i c e H . S t r o t h m a n , J r ., Vice-President

F r a n k l i n L . P a r s o n s , Director of Research

C l e m e n t V a n N i c e , Assistant Vice-President

O s c a r F . L i t t e r e r , Business Economist

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

assigned to Helena Branch

H a r o l d A . B e r g l u n d , Assistant Cashier

assigned to Helena Branch

MEMBER OF FEDERAL ADVISORY COUNCIL
J o s e p h F . R i n g l a n d , President, Northwestern National Bank o£ Minneapolis,

Minneapolis, Minnesota

INDUSTRIAL ADVISORY COMMITTEE
S h e l d o n V . W ood , Minneapolis, Minnesota, Chairman
J o h n M. B u s h , Ishpeming, Michigan

A . H . D a g g e t t , Saint Paul, Minnesota
A. B . H e i a n , Chippewa Falls, Wisconsin
W a l t e r M. R i n g e r , S r ., Minneapolis, Minnesota




27