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ANNUAL
ST A T E M E N T

1955

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



FOREWORD
N T H E following pages is the annual report of this Federal
Reserve Bank for the year 1955. The past year has been one
of unexcelled activity in the United States, and this tremendous
rate of business expansion has been reflected in the Ninth Federal
Reserve District, although the pace of the increase in this district
was somewhat below the advance in other parts of the United
States. Agriculture did not share in the boom which was almost
nationwide.

O

This Federal Reserve Bank performed its usual functions
throughout the year. Some activities expanded and others were
curtailed, as related in succeeding pages. Throughout the year the
staff of the bank performed with high morale, in spite of the
inconvenience of building operations at the head office. For this
high spirit, which operated to keep efficiency high and the turnover of employees low, we wish to thank the entire staff.




Chairman of the Board




P E O P L E

ON
Population in our district has had both ups
and downs . ♦ * here's the latest information

frontiers were settled
by people “ on the move,”
spreading westward to break
new soil and bring virgin resources
into production. Today those fron­
tiers are gone, but people still are “on
the move.” The patterns of economic
need, trade and income are constant­
ly being redrawn. As consumers and
as producers, people determine the
pattern of economic activity. When,
where and why people move affects
the pattern. This year we’ve chosen
to talk about population—about peo­
ple “ on the move,” with special em­
phasis on “ what’s happening here”
and “ what may happen.”

O

ur early

People are on the move. Did you
know, for example, that nearly
half of the counties in the Ninth dis­
trict had fewer people in 1954 than
they had in 1950 ? Perhaps you knew
that our population here has grown
more slowly than the national aver­
age. This was especially true during




the late ’30s and ’40s. At that time
some of our Ninth district states
counted fewer and fewer inhabitants
each year because people kept “ on
the move”—mostly out.
The years since 1950 haven’t com­
pletely reversed the trend of slower
population growth in our district, but
they have proved better. From 1950
to 1955 the Ninth district (all 264
million acres of it) counted a growth
of about 275,000 persons. But—dur­
ing the same period four times as
many new persons were tallied in the
Los Angeles area alone. For each new
person in our district since 1950,
more than eight were added to Cali­
fornia’s population.
But, as we said, we’re doing better.
During the ’40s our annual rate of
population growth for the entire dis­
trict was less than 0.4 percent per
year, about one-fourth the national
average. Since 1950 we’ve been add­
ing people at a rate that takes us up
3

to one-half the national average or
about 0.8 percent per year.
There are about 6 million of us
living in the Ninth district—as close

as can be estimated with people being
born or dying, moving in or moving
out each day. Chart i is a recent sta­
tistical “ snapshot” showing where

o j[>

Cities over 2500 ••
Metropolitan areas
P

m a

J

w c

V

m

Towns under

2500 *•




A ,

people live in our district. Of course,
like any family “ snapshot” the pic­
ture soon becomes out-of-date.
As you can see, a substantial share

2 ,5 0 0

% r
M ?Z>

of our district’s population is jammed
into just a very few large cities. One
person out of four lives in our three
largest metropolitan areas — Minneapolis-St. Paul (1,190,000), DuluthSuperior (260,000) and Sioux Falls
(74,000). About half of us live in
cities of 2,500 or more and a fourth in
towns and rural communities of less
than 2,500 inhabitants.
Three-fourths of us, then, live in
these “pinpoints” that t o w n s and
cities appear to be on the map. The
remaining fourth of us are spread
throughout the vast spaces in be­
tween.
Incidentally, those of us who live
in a city or town in this district, will
probably make a living by processing
farm products, selling, financing or
distributing merchandise b e c a u s e
those are the main businesses of the
district. Or, we may perform some
service for our community, help
manufacture some product or con­
struct the plant for it. In the Lake
Superior area, in western Montana,
or in the Black Hills some of us will
be engaged in mining or a related
activity. But if we live “ way out,” be­
tween the towns and the cities,
chances are we’re engaged in farm­
ing or ranching.
That’s our family snapshot of
Ninth district population as of 1955.
But just as people change, so does
population. The over-all increase for
our district between 1950 and 1955,
as we mentioned, was about 275,000
persons. This represents a 5 percent
increase, which stands well below the

LIVE IN THE NINTH DISTRICT




national average of 9 percent as Chart
2 shows.

CHART 2— PERCENTAGE POPULATION
CHANGE 1950-1955
Percent

The 'W hy' of Our Slower Growth

What causes our growth to be
slower than the national average?
Let’s analyze it. First of all, natural
changes in population are the result
of two basic things—people are born
and people die. If these were the only
things that affected population in an
area, we would be slightly ahead of
the national average because (1) in
recent years the birth rate in our
states has exceeded the national aver­
age by 1V2 to 2 /4 births per 1,000
people per year (the national average
was 25), while (2) our death rate
does not exceed the national rate—in
fact, in 1940, 1951 and 1952 (the
three years we checked) it was from
14 to i l/ 2 less per 1,000 persons. But
births and deaths are scarcely half
the story.
A second and much more import­
ant side is the fact that we don’t stay
“ put.” Some of us move within the
district, some to the outside. We have
seen here, as in the rest of the nation,
a steady movement of people off the
farms. Chart 3 shows the decline in
our farm numbers from 1920 to 1955.
In the last five years alone about 3
million Americans migrated from
farms. Today farm residents make
up only 13.5 percent of the total pop­
ulation. In 1950 that figure was 16.6
percent. In our district a larger pro­
portion of people lives on farms than
in any other Federal Reserve district.
But as the chart shows, in our district
picture as in the national one, the
trend is away from farms.
6



The Census bureau recently report­
ed that the number of farms in the
nation declined between 1950 and
1954 by nearly 600,000, a drop of 11
percent. This is the sharpest decline
in our history. It reduced the number
of farms to 4.8 million—the smallest
number since 1890.
For the Ninth district as a whole
the decline during these same years
measured about 6 percent. The ex­
perience of individual states looks
like this:
Num ber of Farm s
I 95°
!9 5 4
Minnesota . . . . 1 7 9 , 1 0 1
16 5 ,2 2 5
33,0 5 9
M ontana ......... 35*085
N orth D akota. . 6 5 ,4 0 1
6 1,9 3 0
South D akota. . 66,452
62,520
W isconsin
(entire state) . 16 8 ,5 6 1
15 3 ,5 5 8

Percentage
C hange
— 7.7
— 5-8
— 5.3
— 5.9
— 8.9

During the last 30 years the num­
ber of large farms (greater than 1,000
acres) has doubled nationally. In re­
cent years the number of small farms
in the nation (that is farms less than
10 acres) has also increased marked­
ly. These small farms are the result

of two trends in living patterns: to­
ward part-time farming by city-folk
who like country life; and toward
part-time or full time work by farm­
ers who want city jobs. More than
two-thirds of the decline in farm
numbers actually has come in the
size-range of 10 to 100 acres.
Improved Technology— Fewer Farms

What caused the decline ? The
great impact of technological change
on farming, especially in the past 15
years, has been the primary cause.
Since 1940 farm output has increased
35 percent while farm population has
declined 27 percent. More machines,
improved seeds and fertilizers, and
more efficient farmers—all make it
possible for fewer people to produce
more on fewer but (mostly) bigger
farms. To play on the words of a
famous speech . . . never before have
so few produced so much for so
many.
CHART 3— PROPORTION OF PEOPLE ON
FARMS, 9TH DISTRICT A ND U.S.,
1920 TO 1955
Percent

♦Estimated for 1955. Includes Minnesota, Mon­
tana, North Dakota and South Dakota.




People leaving our farms go to
cities or to small towns—some in our
district, some outside. Back in the
1940s when parts of our district were
losing population, cities in our dis­
trict were growing—not as fast as
cities in other parts of the country—
but still growing. The following fig­
ures show this:
Percentage Change
(1940 to 1950)
Four Ninth- United
District States States
People living on farms. . .— 19 .3% — 2 3.7%
People living in small
towns
.....................+ 1 6 . 3
+ 1 5 .4
People living in cities. . . . + 1 9 . 7
-\-29.6

In round numbers the percentage in­
creases shown here mean that our
cities and towns added about 540,000
people during the decade of the ’40s.
Some of these came from the farm;
some moved in from outside the dis­
trict.
But it’s obvious that many people
left the district entirely when you
consider the great number of people
who left our farms (332,000) and our
natural increase (620,000). Census
bureau estimates of the net move­
ment of people out of each of our
states are shown in Table 1. Figures
on the average annual natural in­
crease, the net loss to the Armed
Forces and the resulting change in
civilian population are also listed.
Comparing the present decade of the
’50s with the ’40s, the accelerated rate
of growth in this district is clearly
evident. We can attribute this to two
things: a larger natural increase (ex­
cess of births over deaths) and a bet­
ter balance between people moving
out and those moving in. But the
7

tronic computers, boats and outboard
motors . . . the more we have to offer
service as lawyers, teachers, ministers
or resort operators.
This continued movement from
farm to city, from farming to in­
dustry is one vehicle for bettering our
standard of living. Living standards
have been rising for the whole na­
tion. The accompanying figures on
per capita income show how we’re
faring in this district.

conclusion is clear that our district
continues to be a net “ exporter” of
people.
The Meaning of Movement Away

It is too easy to conclude that some­
how we suffered because more peo­
ple decided to leave us than to join
us. Actually, for several reasons the
opposite would appear nearer the
truth.
In the first place, agriculture—our
chief industry—requires fewer work­
ers year after year because of tech­
nological improvements. Employing
more workers than needed is uneco­
nomic. In the long run this would
tend to reduce the income of every­
body in the industry.
Second, workers leaving the farms
make a contribution to the economy
in some other activity. During the
war, for instance, they helped make
much-wanted war goods. Today, the
fewer workers we need to produce
food and fiber, the more we have to
help make autos, television sets, elec­

1940
1950

United
States
$ 595
1,491

1954

!>77o

Four
District
States
$ 484
1,376

Four States as
Percent of U.S.
81
92

1,555

88

Some of the income increase must
be written off as the result of price
increases—that part is illusory. But
even when this is fully considered
there still is an increase in the vol­
ume of goods and services available
per person. The significant point for
us in this district is not only the
absolute or over-all increase, but also
the fact that we’re closer to the na­

TABLE I— AVERAGE A N N U A L C H A N G E S IN POPULATION
I
|

Natural
Increase

N et C ivilian
1 O ut-m iqration

N e t Loss to
A rm e d Forces

Net Civilian
Increase

19,100
3,000
— 2,300
700
20,500

Annual change during the period 1940 to 1950:
M in n e so ta................
M o n ta n a ..................
North D akota...........
South D akota............

36,100
7,200
9,800
8,900

14,300
3,500
1 1,500
7,600

2,700
700
600
600

Total.................

62,000

36,900

4,600

Annual change during the period 1950 to 1954:
M in n e so ta................
M o n ta n a ..................
North D akota...........
South D akota............

53,500
1 1,250
12,750
13,250

7,000
2,500
7,250
7,000

10,000
2,250
2,000
2,500

Total.................

90,750

23,750

16,750




36,500
6,500
3,500
3,750
50,250

tional level of per capita income than
we were in 1940.
To be sure, in large part our per
capita income d e p e n d s on farm
prices. For example, the slower rise
in per capita income in the district
since 1950 is largely the result of
lower farm prices. Nevertheless, our
relative position would have risen
more slowly in the ’40s and dropped
more rapidly in the ’50s if everyone
had insisted on staying in their lo­
calities or in the jobs they had in
1940. In short our relative position is
helped as workers move to the lo­
calities and occupations where their
productivity is the highest.
Economic con d ition s constantly
change. All of us must make adjust­
ments to those changes. Working
where we are needed most results in
more abundance for everyone. The
volume of business (hence the need
for services such as banking) de­
pends as much if not more on the
income of people as on their num­
ber. As people become better pro­
ducers their incomes rise. As their
incomes rise they can spend more.
And, as their incomes rise they can
save more, and invest more.
Prospects for the Future

In the near future we can expect
the national population to increase
by about 2 l/ 2 to 3 million persons
annually. For the year ending No­
vember 1, 1955 the growth was 2.8
million persons ( a rate of 1.7 per­
cent). Over a longer period we can
expect successive “waves” of popula­
tion growth. For example, an un­




usually large number of babies were
born in the early ’40s and again soon
after World War II. About 10 years
from now these babies of the ’40s
will be doing their share for our vital
statistics by marrying, and having
families. At that time the annual in­
crease in population will be even
larger than it is now (assuming birth
rates remain similar).
Mainly because of continued high
birth rates it has been necessary to
revise upward time after time the
population projections (estimates of
what population will be in the fu­
ture). An early postwar projection
suggested a population of 165 million
for the U.S. in 1990. This figure was
already reached in mid-1955.
In October 1955 the census bureau
released four revised projections, any
one of which is considered reason­
ably possible. The four estimates of
the future size of the national popu­
lation range from 186 to 193 million
for 1965 and from 207 to 229 million
for 1975. Prospects for the nation,
then, are that our population will
continue to grow rapidly.
Outlook for the Ninth District

How will our district share in this
population growth? We’ve already
implied that this will largely depend
on our future migration. In the re­
cent past more people moved out of
the district than into it. But these
migration patterns are constantly
changing as we Americans are be­
coming more mobile all the time.
Each year during the past eight
years, for example, about one out of
9

TABLE 2— POPULATION, 1950 AND 1955, WITH PROJECTIONS FOR I960 AND 1965
Percentage Change

Thousands of People

M in n e so ta..............
M o n ta n a ................
North D akota..........
South D akota..........

1950
C ensus

1955
Estimate

2,982
591
620
653

3,174
633
642
677

I960
Proiection
3,322
662
633
686

1965
Projection

19501955

19551960

19601965

3,479
693
642
705

6.4
7.1
3.5
3.7

4.7
4.6
— 1.4
1.3

4.7
4.7
2.8

1.4

Four Stales...........

4,846

5,126

5,303

5,519

5.8

3.5

4.1

United States..........

150,697

165,248

176,103

188,593

9.7

6.6

7.1

every five of us has moved to a
different house. And about 3 out of
every 20 persons moving have moved
to different states. Consequently, pop­
ulation projections for particular
states or geographic areas based on
some earlier migration experience
won’t necessarily fit present or future
migration experience. State projec­
tions are, therefore, subject to rather
wide margins of error.
In spite of these uncertainties, early
in 1955 the Census bureau made
seven illustrative projections for each
state to provide a working idea of the
size of population in i960 and in
1965. Table 2 shows only the highest
of the seven projections for each of
the four states entirely in the district.
For each of the four states these
projections may be compared with
the actual population as tallied by
the census in 1950 and estimated
by the Census bureau in 1955.
Notice that the 1955 population
for North Dakota (estimated as of
last July 1) exceeds the projection
for i960 and equals the one for 1965.
In contrast the mid-1955 estimates
for the other three states are smaller
than the i960 projection—only slight­
ly smaller, though, in South Dakota.
In each state the population growth
10



rates assumed in making projections
for the next two 5-year periods are
lower than the actual growth of
population during the 5-year period
ending last year. Or in other words
if growth rates in the future adhere
to our “ new” experience of the past
five years the projections will prove
too low.
But the rate of population growth
we’ve had in the past five years
could be slowed down during the
next ten years. Either lower birth
rates or migration out of the district
in large enough numbers could do
this. If so, the growth of population
in the district will be slow again—
the way it was in the 1940s when
it stayed around one-fourth of the
national rate. On the other hand, if
we keep going the way we have for
the past five years, our rate of popu­
lation growth here will stay near
one-half of the national rate. At the
higher rate, the combined popula­
tion of the four states should be
nearer 5.7 million in 1965 than the
5.5 million estimated in the table.
Summary

We might tie together the things
we have talked about in these few
summary statements:

(1) It seems probable that the
rate of population growth in the
Ninth district will continue to be
below the national average because
of continued out-migration. This is
based on the importance of agricul­
ture in our district and on the as­
sumption that there will be further
and substantial productivity gains in
this industry. A slowdown in such
developments—or a great increase
in the demand for agricultural pro­
ducts—could change the picture.
(2) Some of our counties—those
that are predominately rural — may
expect further declines in the num­
ber of inhabitants in the future as
the farm population continues to
shrink.
(3) Between now and i960 we
may expect to add at least 200,000
and perhaps as many as 300,000 per­
sons to our population, and all of
this growth will take place in our
cities and towns.
Over-all, we are more uncertain
about the population prospects for
the district than for the nation. If
industrial expansion within the dis­
trict lags behind the national average,
as it did during the ’30s and early
’40s, then we can expect substantial
migrations out of the district and a
relatively slow rate of population
growth. On the other hand, if min­
ing, manufacturing and other nonagricultural industries in the district
develop at a rate equal to or faster
than the rest of the nation, the im­
pact upon population within the dis­
trict will be more favorable.




M illio n People

In general, people will go where
they have the best opportunities for
finding a livelihood. Whether that
will be in the Ninth district or else­
where will depend on the many
factors which determine the loca­
tion of industry and comparative
rates of economic development in
different parts of the nation. Over
the span of years the greatest gains
in living standards, both here and
elsewhere, will be made if free mar­
ket forces are permitted to resolve
these factors. And one expression of
a free market will continue to be
.......... people on the move.

A

MORE DETAILED
description of population
patterns and trends in the
Ninth district may be ob­
tained upon request from
the Research Department,
Federal R e s e r v e Bank,
Minneapolis 2, Minnesota.

The district economy in 1955
H E P O P U L A T I O N article
brought out the fact that agricul­
ture is much more important to the
affairs of the Ninth district than it is
to the affairs of the nation generally.
This importance can be expressed in
a number of ways: for example, the
chart on page 7 shows that the pro­
portion of the population which lives
on farms is almost twice as high in
the district as it is for the nation as
a whole.
Another measure of the impor­
tance of farming to the district is the
percentage of total personal income
which is farm income. Table 3 indi­
cates that even in 1954—a year of
declining farm prices—the fraction
of total personal income going to
farmers in South Dakota was more
than one-fourth. In Montana and
North Dakota the fraction was about
a fifth; in Minnesota, which is much
more industrialized than other dis­
trict states, more than a tenth of per­
sonal income went to farmers. For
the nation as a whole, little more than
a twentieth of personal income was
claimed by farmers.
T a b le

3—

R a tio o f F a rm

In co m e t o

T o t a l P e r s o n a l In c o m e in

1954*

Minnesota ................................................11.4
Montana .................................................. 18.4
North Dakota .........................................21.3
South Dakota ......................................... 28.5
United States ......................................... 5.3
^Source: Survey of Current Business, Sept. 1955.

12



Having demonstrated the impor­
tance of farming, it is apparent that a
review of 1955 economic develop­
ments in the district might well be­
gin with a discussion of district farm­
ing, our most important single in­
dustry.
Good Weather Helped Output

The forces of nature, supplement­
ed by a good deal of assistance from
the hand of man, combined in 1955
to produce a bountiful harvest in
most of the Ninth Federal Reserve
district. Not only crops, but live­
stock, too, were produced on a scale
seldom equaled in the past. The pro­
duction of all major crops save corn
and potatoes was increased during
1955. The absence of adequate mois­
ture in parts of Minnesota and South
Dakota served to reduce the yield of
ground planted to corn. This in­
stance of adverse weather, however,
was the exception not the rule.
As might be expected, particularly
since farm production outside the
district was also larger than a year
earlier, the increased flow of market­
ings by farmers was accompanied by
falling prices for all major crops and
for cattle and hogs. Proportionately,
prices fell a bit more than output
rose; for this reason, the cash re­
ceipts of district farmers from mar­
ketings are estimated to have been
slightly lower in 1955 than in 1954.

T

able

4— C

a sh

M

Incom e

fro m

F

arm

a r k e t in g s *

(Dollar amounts in thousands)

1954
Michigan
( 15 co’s ) . . .$
26,430
Minnesota . . . 1,265,658
Montana . . . .
396 ,16 1
North Dakota.
4 7 1,233
South Dakota.
570,231
Wisconsin
(26 co’s ) . . .
209,416
District ......... 2,939,129

1954
$

1955 in %
of 1954

25,662
1,263,304
369,868
512,749
509,017

97
100
93
109
89

202,679
2,883,279

97
98

♦Source: U .S .D .A .— “ Farm Income Situation”

In this, district agriculture gener­
ally followed national trends. But
the district decline in farm cash re­
ceipts was slightly more moderate
than the 3-percent decline estimated
for the nation. District receipts from
marketings of farm products were
down roughly 2 percent during 1955,
compared with 1954. Farm receipts
by individual states, however, show
wider differences both above and
below a year ago. For 1955, South
Dakota farm income was down an
estimated 11 percent; Montana farm­
ers received about 7 percent less dur­
ing the year. Minnesota farmers re­
ceived practically the same income
as they had received in 1954 and in
North Dakota farmers enjoyed a 9percent increase in cash receipts com­
pared with 1954.
Large crop and livestock market­
ings helped to offset the effect of
lower prices and kept district farm
income from dropping more than 2
percent b e l o w the previous year.
Wheat production was up 39 percent
from 1954’s harvest. Total crop pro­
duction for the district was second
only to the record harvest of 1948.




Crop conditions were unusually
good in all states except South Da­
kota, where late summer dryness
hurt crop yields.
Responding to relaxed acreage re­
strictions on production of durum
wheat, Montana wheat growers in­
creased their durum output to rough­
ly 5 million bushels. (How much of
this would qualify as milling durum
is not accurately known.) Less rust
damage and improved moisture con­
ditions throughout the main durumproducing area of the Dakotas and
Minnesota resulted in a three-state
output of 14 million bushels com­
pared with only 5.6 million in 1954.
Hog prices were sharply below
1954 levels during the entire year.
Cattle prices also experienced sig­
nificant declines. Big gains in the
volume of livestock marketings
helped to offset part of the effect of
lower prices, but not all of it. Dur­
ing September-December of 1955, for
example, monthly receipts of barCHART 4— NINTH DISTRICT CROP
PRODUCTION
1955 as a percent of 1954
' DECREASE

IN C R E A S E

Wheot (all)

+39% '

Barley

+18%

Soybeans

+6%1 ,7l

Oatj

+ 3%

>±j

+

J

: ]

i

|

0%

Flax

- 3%

Com

13

rows and gilts at the
CHART 5— BARROW S A N D GILTS—
MARKETINGS. PRICES A ND GRO SS
South St. Paul public
RETURNS AT SOUTH ST. PAUL (1954 AND 1955)
market averaged 25
percent larger than in
1954. Prices, on the
other hand, r a n g e d
from 18 percent to 40
up 2 5 °/. 0
percent b e l o w 1954
— • 2-4 '
levels for these months.
1 .9 1
As a result, gross re­
turns to hog produc­
ers from the sale of
barrows and gilts to­
taled 14 percent less
for farm land by present farm op­
than during the same 1954 period.
erators who see an advantage in
For the entire year, marketings of
spreading their machinery and oper­
barrows and gilts totaled 25 percent
ating overhead on a larger-sized unit.
larger than in 1954, prices averaged
The volume of farm land transfers
30 percent less than 1954 prices, and
has been relatively small, however.
total returns to producers were 14
In wheat areas particularly, observ­
percent smaller. (Figures on barrows
and gilts do not include all hogs ers report aggressive bidding for
marketed; nor do South St. Paul fig­ available land in order to offset the
ures relate exclusively to marketings effect of wheat acreage restrictions.
from the Ninth district. However, This has also put added economic
the above figures illustrate trends in pressure on small and medium-sized
hog marketings, prices and returns farming operations, and has been an
during 1955.) Totals for the eight important factor in the shifting of
major midwest markets show a sim­ acres planted to major crops—as in­
ilar picture. Marketings of both dicated in chart 6 on page 15.
slaughter and replacement cattle
Average prices paid by farmers for
were also larger during the fall goods used in production have main­
months of 1955, and prices of both tained a very stable level, even as
kinds were lower than a year ago.
prices of farm commodities and farm
Despite lower farm prices and the incomes have declined. Prices paid
drop in farm income, land values in for most manufactured items pur­
all four district states rose during the chased by farmers have tended to in­
year ending July 1, 1955—-in three of crease recently to some extent. But
the four states to a record high level. these markups have been about off­
This trend in land values undoubt­ set by lower prices for feed, live­
edly reflects a number of complex stock, and other supplies bought and
factors, among them active bidding sold by farmers among themselves.
14



CHART 6— ACRES PLANTED TO M AJOR
CROPS
1955 as a percent of 1953

O a ts

4 0 .5 %

Com

4-1 %

Flax

4-16 %

Barley

+62 %

/

Soybeans +81 %

Oiher Aspects of the District
Economy

While the condition of the dis­
trict’s farm economy appeared some­
what less prosperous in 1955 than in
1954, the same observation cannot be
made concerning the non-agricultural enterprise of the district. The
most comprehensive measure of ac­
tivity in that sector of the economy
is the level of non-agricultural em­
ployment.
An inspection of chart 7 reveals
that every major component of em­
ployment in the district registered
an increase during 1955. In response
to the growth in demand for prod­
ucts by business and consumers, in­
dustrial firms expanded their output
sharply. For the second half of the
year manufacturing and mining
operations were at or near capacity.
This expansion led to a rise in em­
ployment, to an increase in hourly
wage rates and, in the latter part of




the summer, to overtime pay which
hit an all-time high.
The 1955 expansion in manufac­
turing established new industrial em­
ployment records in the two Ninth
district states of Montana and North
Dakota, where manufacturing firms
employed more workers than in
1953, the previous peak year for in­
dustrial activity. In the other district
states manufacturing employment
did not equal the ’53 record.
Over three-fourths of the indus­
trial employment is in the eastern
half of the district. The expansion in
industrial output there did not pro­
ceed as rapidly as in more heavily
industrialized regions of the United
States. For example, the number of
manhours worked in Minnesota’s
industrial plants from the first of the
year through July was below the
number for the c o r r e s p o n d i n g
months of ’54. The employment fig­
ures in January and February 1955
were down as much as 7 percent
from those of ’54. Following Febru­
ary, industrial employment rose
steadily but did not reach the preCHART 7— INCREASE OF NONAGRICULTURAL EMPLOYMENT—
NINTH DISTRICT
(Last half 1955 compared to last half 1954)
T housand Em p lo yees

10

6IS**-

111

4III

ill

2 111

1IIIIS1I1II fill

M fg .

M in i n g

C on st.

Trade

S e rv ic e

O th e r

15

vious year’s total until July. Employ­
ment continued to expand sharply
during the summer, reaching a sea­
sonal peak in September. The decline
last fall was less than in the preced­
ing year, and December employment
was almost 4 percent above the 1954
total for December.
The low level of employment in
manufacturing plants in Minnesota
in the first half of 1955 was traced
largely to a smaller number of work­
ers employed in durable-goods in­
dustries. Employment in the manu­
facture of both electrical and non­
electrical machinery (other than ag­
ricultural) and lumber and wood
products was down significantly.
In northwestern Wisconsin and
Upper Michigan industrial employ­
ment followed a similar pattern. It
was down during the first half of ’55,
principally among firms manufactur­
ing machinery and rubber products.
Payrolls Hit All-time High

In addition to widespread gains in
industrial employment, a longer
work week coupled with increases
in hourly rates and more overtime
pay, boosted weekly earnings mate­
rially in ’55. Average weekly earn­
ings in every Ninth district state rose
by more than 5 percent over the ’54
averages, and in Montana and South
Dakota by as much as 7 and 8 per­
cent respectively. South Dakota aver­
age weekly earnings began to rise
sharply in the fall of ’54. They were
only slightly above $60.00 in the first
half of ’54, but they had risen to
$77.82 by November ’55. In Mon­
16



tana, where w e e k l y earnings are
larger because of the higher hourly
rates paid in metal mining, average
weekly earnings in October ’55 were
up to $90.31; they were $82.25 in
October of ’54. In Minnesota, weekly
earnings last N o v e m b e r almost
touched $82.00 ($81.99) as compared
with a high of $76.38 in ’54.
Miners Were Busy

Mining areas, as well as industrial
centers, felt the effect of the econom­
ic boom. More minerals were con­
sumed in the accelerated pace of in­
dustrial production, especially in dur­
able goods production.
The principal mineral mined in
the Ninth district is iron ore, about
80 percent of which is mined in Min­
nesota. Although an increasing
quantity of foreign ores have been
imported by U. S. steel mills, the
Lake Superior iron-ore region still
remains the chief source of supply. At
the close of the Great Lakes naviga­
tion season on December 8, 1955, 87.5
million long-tons had been shipped,
an increase of 44 percent over the
60.7 million long tons shipped in ’54.
This was only 8.5 million long-tons
less than was shipped in ’53, when an
all-time high record was set. The
1954 imports of iron ore totaled 15.8
million long tons, and in the first 10
months of ’55 imports totaled 16.9
million.
An increasing proportion of lower
grade ores is mined in the Lake
Superior region. These ores are beneficiated, that is washed or sintered to
reduce the foreign matter, before

shipping to blast furnaces. For in­
stance, one-third of the ores shipped
were so treated in ’50; the percent­
age had risen to 38 percent in ’54.
As 1955 drew to a close, a new era
began in the iron-ore industry. The
Reserve Mining Company, which
has a new plant located on the north
shore of Lake Superior, at Silver
Bay, Minnesota, began to concentrate
taconite and pelletize the iron-ore
concentrate. This marked the be­
ginning of the manufacture of tac­
onite pellets on a large commercial
scale.
Sharp Rise in Mineral Production

Price increases stimulated nonferrous mineral production. The price
of copper rose from 29.7^ per pound
in December ’54 to 44.0^ in Septem­
ber ’55. In the remaining months of
the year it declined less than 1.5$.
The price rise of other minerals was
not as high, but it was enough to en­
courage producers to expand output.
The output of copper in Montana
and Upper Michigan in ’55 totaled
about 310 million pounds, an in­
crease of 63 percent from the ’54 pro­
duction. Silver recovered from min­
erals in this district aggregated 4.8
million fine ounces last year, an in­
crease of 9 percent from ’54. Zinc
and lead produced in Montana are a
small proportion of the national to­
tal, but the output was up 13 per­
cent. More gold was recovered last
year from other minerals, but less
was extracted from direct ores. In
the first 10 months of ’55 gold pro­
duced in this district aggregated 459,-




606 fine ounces, down 2.5 percent
from 1954.
A Boom Construction Year

A large s h a r e of the economic
boom in 1955 in the Ninth district
was concentrated in the construction
industry. A l t h o u g h construction
workers have accounted for only
about 7 percent of the district’s non­
farm employment, one-third of the
total rise in employment last year
occurred in this industry. At the sea­
sonal peak o v e r 5,500 additional
workers were employed.
High employment on construction
projects continued into the fourth
quarter. The number of workers em­
ployed as of mid-October was even
further above the year-ago total than
was true in the third quarter. In No­
vember, the activity on construction
projects dropped sharply due to the
early arrival of winter, and in the last
two months of ’55, fewer workers
were employed in the construction
industry than in the same period of
the year 1954.
Home builders had another big
year in ’55. According to statistics
compiled on the number of dwelling
units authorized in this district, more
units were built in both ’54 and ’55
than in the boom year of 1950. Ap­
proximately 24,300 units were author­
ized in ’55 as compared with 22,000
in ’50. Even so, the market for houses
apparently has not been exhausted.
In a survey made by this bank last
December, two-thirds of the build­
ers, suppliers of building materials
and real-estate brokers replying to a
*7

questionnaire reported a continuing
strong housing market. A substan­
tial number of builders stated that
they were planning to build about
as many houses in 1956 as they had
completed in ’55.
Along with the high level of home
building there was also a large vol­
ume of pratically all other types of
construction in the Ninth district in
’55. There were many substantial in­
dustrial projects. For example, in the
petroleum industry, a 450-mile crudeoil pipeline was constructed at a cost
of about $18 million from Poplar
Field in eastern Montana to link
with midwest refining centers. This
is the first pipeline outlet for crude
oil from the Montana portion of the
Williston basin.
Another crude-oil pipeline costing
$12.5 million was completed to Great
Northern Oil Company’s new refin­
ery at Pine Bend, in Minnesota. Both
the pipeline and refinery were placed
in operation during ’55, and con­
struction of a new $15 million am­
monia plant was begun adjacent to
the refinery.
The list of major projects under­
taken last year extends into many
other phases of industry to include
capital formation in utilities, ferrous
and nonferrous mineral processing,
electronics and manufacturing plants.

18



The improvement of non-agricultural enterprise in the district, as re­
flected by employment gains, was
somewhat less spectacular than in the
nation generally. This is suggested
not only by employment figures but
by most other district indicators as
well. Consider new automobile regis­
trations, department store sales, fur­
niture store sales, and bank debits.
All of these magnitudes increased in
the district during 1955, but by a
lesser proportion than the national
increase.
T a b le

5—

S e le c te d

C h an ge fro m

In d ic a to r s —

1954

to

District

. . .. + 16 %
Department store sales . . ■ • + 3
Furniture store sales . . . .
7
Bank debits ..................... . . + 2
0.4
Bank deposits ........... .
New car registrations

1955
Nation
+ 37%
+
+
+
+

7
9
7
3

Because the decline of economic
activity in the district from 1953 to
1954 was less severe than for the na­
tion generally, it is not surprising
that the recovery movement was also
of lesser proportions here than in the
nation. Thus, if department store
sales in 1955 for the district and the
nation are compared with 1953 rath­
er than 1954, the district gain com­
pares more favorably with the na­
tional gain.

District member banks
H E ECONOMIC conditions de­
scribed constituted the environ­
ment in which district member banks
operated during 1955. Except for a
failure of deposits to rise, the experi­
ence of district member banks paral­
leled that of all member banks in the
nation; that is, loans increased rapidly
(up 15 percent), a large amount
of investments was liquidated, time
deposits grew much more slowly
than in 1954, and the banks bor­
rowed a great deal more than in

T

1954-

Member banks in only two of the
twelve Federal Reserve districts re­
ported lower deposits at the end of
1955 (Dec. 28) than at the end of
1954 (Dec. 29); these were member
banks in the Minneapolis and Kan­
sas City districts. It is significant that
in both districts agriculture is a dom­
inant industry.
The withdrawal of correspondent
balances at city banks accounted for
all of the deposit loss in the Ninth
district. In part, these withdrawals
resulted from the efforts of country
banks to satisfy the strong demand
for loans which confronted them in
1955. City banks too were called up­
on to finance an uncommonly large
amount of borrowings. The rate of
loan increase was approximately the
same at city and country banks. But
when the banks are grouped by
states, substantial variations in the




rate of increase are observed from a
low of + 5 .1 percent at Ninth district
member banks in Wisconsin to a
high of + 2 9 percent at member
banks in Montana.
T

a ble

L

6— P e r c e n t I n c r e a s e

oans in

M

1955

em ber

at

B

D

of

is t r ic t

anks

Michigan .....................................
Minnesota .................................. + 1 4*7
Montana .....................................-\-2g.0
North Dakota ............................+ I 5-4
South Dakota ............................+ 5-3
Wisconsin .................................. + 5*1
District ....................................... + i 5-°

The $226 million increase of total
loans at district member banks in
1955 resulted almost entirely from
additional business, mortgage and
automobile loans; balances in these
classifications increased respectively
by $117 million, $74 million and $29
million. Although the types of loans
mentioned i n c r e a s e d at member
banks in every district state, the rela­
tive importance of each type of loan
varies widely by states. While busi­
ness loans, for example, approximate
17 or 18 percent of total loans in the
Dakotas and Michigan, they are 38
percent of the total at member banks
in Minnesota. That the character of
bank lending differs widely within
the district is demonstrated by the
tabulation on page 20. The compo­
sition of total loans at the end of
1955 at Ninth district member banks
19

ts>

O

C

o m p o s it io n o f

L

oans at

Real Estate Loans
I

(A ) Secured by farm land..............................

2

(B) Secured by residential property
insured by F H A .......................................

3

(C) Secured by residential property
insured or guaranteed— V A .................. .

N

in t h

D

is t r i c t

M

em ber

B

a n k s on

D

ecem ber

31, 1955

-------------------- Country Banks
------Reserve
Michigan Minnesota Montana No. Dak. So. Dak. Wisconsin Total City Banks
2 .1%

2 .4%

13-2

7-9

9.9

4.6

2

5.8

7-i

8.4

9.1

7-8

3

5-7

5.6

13.6

10.6

3-4

4

8.5

4.9

2.6

5

1.2 %

10.7

9-3

9.2

10.0

8.0

13.0

4.9

1 3 .1

5-7

4

(D) Secured by residential property
not insured or guaranteed....................

26.5

5

(E) Secured by other property.....................

10 .1

1

5.6 %

2 .8%

1.8 %

1.6 %

.1 %

5-1

3.5

3-i

4.0

3-5

10.7

14.6

7.2

.1

6.3

•3

6

Loans to farmers
6

(A) Guaranteed by Commodity Credit
Corporation ..............................................

7

(B) Other loans ................................................

2.8

11.9

18.2

15*3

23.8

9.8

14.6

1.0

7

8

Commercial and Industrial..............................

16.9

17.8

19 .1

17.7

18.6

22.5

18.4

50.8

8

Loans to Individuals
9

(A ) Retail Auto Paper....................................

7.9

8.8

1 1 .1

10.6

6.1

7.6

8.9

5-5

9

10

(B) Other Retail Instalment Paper..............

2.6

3-3

4.9

5-3

3.8

2-5

3-8

3-9

10

11

(C) Repair and Modernization Instalment
Loans .........................................................

1.9

3-i

4.8

3-3

1.8

1.9

3-i

6.7

11

12

(D) Instalment Cash Loans...........................

2.7

2.4

2.6

2.2

1.6

2.2

2-3

i .5

12

13

(E) Single Payment Loans..............................

4.4

3-6

2.5

2.8

3-4

5-9

3-5

4.1

13

14

All other loans including OD’s ....................

3-4

2.1

1.6

1.8

2.2

3.5

2.2

7.6

14

15

Gross Loans and Discounts.............................. . 100.0%

100.0%

100.0%

100.0%

100 .0 %

100.0%

100.0%

100.0%

15




in each state or part state is shown
by the tabulation.
The swelling of the loan totals in
1955 brought the ratio of loans to
deposits for district member banks
to 41.7 percent from 36.1 percent at
the end of 1954. This ratio has in­
creased in every year since the end
of World War II but in none of these
years was the increase as large as it
was in 1955.
Since deposits fell a bit, most of
the addition to loans was financed by
the liquidation of investments; ad­
ditional borrowings by banks (see
page 31) also supplied needed funds.
Because the average yield of loans is
substantially higher than the average
yield of investment securities, the
substitution of the former for the lat­
ter had a beneficial effect on the
current operating earnings of the

banks. Loan income for all district
member banks was up from $ 75.9
million in 1954 to $83.8 million in
1955—an increase of more than 10
percent.
Income from investments was also
higher in 1955, despite the liquida­
tion, chiefly because the interest rates
paid on short-term government se­
curities (the most important kind of
securities held by banks) rose so
much from 1954 to 1955. But the de­
pression of bond prices which result­
ed from the generally tight credit
conditions produced a large reduc­
tion in the amount of profit from
the sale of securities. The decline in
these profits from 1954 to 1955 was
more than sufficient to reduce profits
before income taxes, despite the im­
pressive growth of current earnings
from loans and investments. Also,
salaries, interest on time deposits and

CHART 8-DEPOSITS, INVESTMENTS A N D LOANS OF NINTH DISTRICT MEMBER BANKS




21

CHART 9— RATIO OF LOANS TO
DEPOSITS AT NINTH DISTRICT
MEMBER BANKS
P e rc e n t

5 0 ------------------------------------------------------------------------------------------------------------------------------------------------—

4 0 -----------------------------------------------------------------------------------------------------------------------------------------------------—

3 0 ----------------—

—

----------^

-

-------------------

—

--------------

20_______ ------------------ ----------------------------10 — --------------------------------------------------------- -------------------------------------------------------------------------------------------------------------

0____ I

I

1945

I

I_____ I--- !--- 1--- 1----1950

1955

other expenses were somewhat higher
in 1955 than in 1954.
Included in “ other current ex­
penses” is interest paid on borrow­
ings which rose from $170 thousand
in 1954 to f n o i thousand in 1955.
The Federal Reserve Bank of Min­
neapolis collected 76 percent of the
interest paid on borrowings by dis­
trict member banks in 1955. The
average daily volume of borrowing
at the Reserve Bank was higher than
in many years (see chart 11 on page
3 1 )*

“ Interest on time deposits” was
also higher in 1955 than in 1954. This
resulted not only from the continua­
tion of a persistent upward trend in
time balances at the member banks
but also from a gradual increase in
the average rate of interest paid on
time deposits.
Despite the fact that some member
banks paid more attractive interest
rates on time deposits in 1955 than
in 1954, the growth of these balances
in 1955 was only slightly more than
half the growth registered in 1954—
$32 million in contrast to $61 million.
22



Aside from lower farm incomes in
many localities, doubtless a principal
factor in the lower rate of time de­
posit growth during 1955 was the
diversion of funds into the purchase
of new homes, autos and other dur­
able goods mentioned previously.
When one considers that on oc­
casions in the past, declining farm
prices were often accompanied by
violent deposit reductions at district
banks, the experience of 1955 is par­
ticularly encouraging. Although the
liquidity of the banks was reduced
with the rising loan ratios, the pos­
session of marketable securities in
substantial amounts, at the average
district member bank, is one feature
of the current situation which was
not always present at times of large
deposit withdrawals in the past.
T a b le
E a r n in g s

7—
and

S e le c te d Ite m s o f
E xp en se

at

D is tr ic t

M em ber B anks

1955
Interest on securities............. $ 39-6
Interest on loans....................
83.8
Other current earnings.........■ 24.9

1954
$ 37-5
75-9
23-4

Total current earnings. . . . • 148.3

136.8

Salaries .................................. •
Interest on time deposits. . .
Other current expense. . . . •

44-9
15 .1

Total current expense......... .
Net current earnings. . . . •

93.0

33-o

55-3

1.4
Profits on securities.............
Other charges and
— 8.8
credits (net) ..................
Profits before income taxes • 47-9
20.0
Income taxes ..................
Profits after taxes................ •

27.9

41.8
14.2
30.0
86.0
50.8
8.4
— 10.2
49.0
20.4
28.6

Operations
E SP IT E M A N Y inconveniences
to bank personnel resulting
from a building program in 1955, the
quantity and quality of service pro­
vided to member banks, the govern­
ment and the public was undimin­
ished. The enlargement of bank
quarters, from four stories to twelve
stories is intended to accommodate
the continuation of an upward trend
in the amount of work performed at
the bank. This trend has existed since
before World War II and is expect­
ed to persist in the future.
For example, the largest depart­
ment of the bank in terms of em­
ployees is the check collection de­
partment. Each check deposited here
must be speeded to the drawer’s
bank. This requires the employment
of people to receive and dispatch

mail, to sort and list checks, and to
perform other functions required for
the smooth operation of our check
collection department. Despite intro­
duction of the latest machinery,
which has raised output per person
in the department, the flow of items
has increased each year so rapidly
that more people and more space
have been needed to facilitate this
important operation.
The number of items handled by
“ check collection” — these include
government c h e c k s , other checks
and, since 1951, postal money orders
—rose from not quite 112 million in
1954 to more than 116 million in
1955. The number of items has in­
creased in every year since 1942. Of
the 1955 total, 88 percent was han­
dled (on a 24 hour basis) by the head

CHART 10— NUMBER OF ITEMS HANDLED BY C H E C K COLLECTION DEPARTMENT
M i ll i o n Items

120 -........................................... .

' '

90

60

1942

1943

1944




1945

1946

1947

1948

1949

1950

1951

1952

1953

1954

1955

23

office (Minneapolis) while the rest
was processed at the Helena branch
office. The number of items passing
through the head office has more than
doubled since 1948!
Another large department of the
bank is the fiscal agency department.
One of the most important jobs per­
formed there is the issue, redemp­
tion and exchange of Treasury se­
curities, and the payment of interest
coupons from these securities. This
department also does the processing
and validating of Depositary Re­
ceipts covering deposits in certain
banks of withheld income and social
security taxes, of railroad retirement
payments by employers and excise
T

able

8— V

o lu m e of

O

taxes by retailers. Financial services
to the Commodity Credit Corpora­
tion and other government agencies
are also rendered.
Table 8 shows that the number o£
issues, redemptions and exchanges of
Treasury securities accomplished by
the department in 1955 was up just
slightly from 1954, but the number
of coupons paid was up by more
than 27 thousand or 10 percent. De­
positary Receipts validated were up
61 thousand in 1955 from the 218
thousand level of 1954. The increase
represents additional receipts vali­
dated for employers who deposited
withheld taxes in banks. A change in
government policy early in the

p e r a t io n s i n

P r in c ip a l D

epartm en ts

$ amounts in thousands

Amount
Advances to member and non-member
1954
1955
banks secured by U. S. Government
obligations ...................................................$ i 945,901 $ 4,155,36 1
Currency counted during year.....................
Coin counted during year...........................
13,609
13,824
Coin wrapped during year...........................
9*556
9*449
Currency shipped and paid o u t..................
384,409
360,548
Coin shipped and paid o u t...........................
19*432
17,43°
Unfit notes retired from circulation.........
U. S. Government checks handled.............
2,865,914
2,661,540
Postal Money Orders handled....................
166,340
*75*753
Other checks handled..................................... 26,625,232
28,602,562
Grain drafts handled.......................................
6 97,211
704*523
Other non-cash collections...........................
152,605
12 7,5 18
Securities held in custody for banks on
last day of yea r............................................ 1,674,664
1,493,201
Coupons cut from securities held for banks
Coupons paid from U. S. Government
direct obligations .......................................
31,6 9 1
4i *733
Issues, redemptions and exchanges of U. S.
Government direct obligations................ 5 ,10 3,30 3
4*587*315
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. 1,680,735
1*479*303
U. S. Savings Bonds sales (also included
in U. S. Government direct obligations)
236,600
251*397
289,761
U. S. Savings Bonds redemptions..............
233*046
20,273,960
Transfers of fu n d s............................................ 17,035*742
Number of employees at end of year. . . .

24



Number
1954

1955

480
70,753,488
140,871,465
107,398,500

1,16 2
6 7,410,167
137*523*569
117,668,500

30,624,376
16,321,998
10,485,965
85,100,579
792,967
400,857

33,868,319
17 ,2 0 1,14 7
9*835*497
89,050,754
787,924
415,492

2 9 0 ,116

327,299

264,813

292,376

4*327*137

4*332,598

4,891

5,736

1,693,829
2,457*058
57*694
676

1,720 ,815
2,437*895
61,928
694

year brought more employers under
the depositary arrangement. Pay­
ments for railroad retirement and
excise taxes are also included in the
totals, however.

clines were registered for the num­
ber of pieces of both currency and
coin counted so that the overall pace
of activity in this department of the
bank was little different from 1954.

One particularly interesting aspect
of operations in Fiscal Agency dur­
ing 1955 was the issue and redemp­
tion of savings bonds—shown sep­
arately on Table 8. These figures re­
flect in part the savings habits of the
people. From 1954 to 1955 a much
larger increase was registered for the
value of redemptions (up 24 percent)
than for the value of sales (up 6.5
percent). Although these figures re­
flect the fact that many more F and
G bonds (twelve-year maturities)
came due in 1955 than in 1954, they
also suggest a lesser rate of liquid
saving in the district last year, as did
the figures cited previously which
show a lessened rate of time deposit
growth at district banks.

The heavy liquidation of invest­
ments by district member banks in
*955 produced a reduction in the
amount of securities held in custody
for banks by our safekeeping depart­
ment. The banks liquidated securi­
ties valued at $190 million while
holdings of our safekeeping depart­
ment fell by $182 million. Despite
the lower amount of securities held
at the end of the year, personnel of
the department in 1955 detached and
presented for payment—as a service
to the banks—13 percent more cou­
pons than in 1954.

The nation’s currency and coin
gets into circulation when it is paid
out by Federal Reserve banks; it is
removed from circulation by deposit
at Reserve banks. The function of
providing the economy with the
amount of currency it demands re­
quires the employment of people to
receive, pay, sort, count, wrap and
destroy currency at the Minneapolis
Reserve bank.
Table 8 indicates that a larger
dollar amount of both currency and
coin was shipped and paid out from
the bank in 1955 than a year before.
Also, a larger amount of unfit notes
was retired from circulation. But de­




The larger number of employees
working at the end of 1955 is per­
haps the best measure of the overall
amount of work being done at the
bank. The increase occurred in re­
sponse to a need for more service
from the Federal R e s e r v e Bank.
While table 8 shows some of the
areas where more service has been
provided, not all activities of the
bank lend themselves to statistical
treatment. The F e d e r a l Reserve
gathers information concerning eco­
nomic conditions, it provides speak­
ers and educational materials, it ex­
amines banks and does other things
not measurable in the terms of
table 8.
Regional Research

During 1955, the Research Depart­
ment had as its major objectives (1)
25

special regional research into eco­
nomic developments of particular
interest and importance to this dis­
trict, (2) better statistical data with
particular emphasis on expanding
the sample of reporting stores, (3)
improvement in the quality of de­
partment publications so that they
will be more interesting, attractive
and informative, and (4) continu­
ance of bank and public relations
activities. These major objectives will
continue to guide the activities of the
department during 1956.
Major emphasis in the field of eco­
nomic analysis during 1955 has been
on problems relating to the economy
of the Ninth District. As one prod­
uct of such analyses, certain articles
are produced in the M O N T H LY
R EV IE W . These articles are normal­
ly regional in scope and include de­
velopments of broader national sig­
nificance only insofar as they relate
to and influence the economy of this
area. These special articles are sup­
plemented each month in the Review
by an analysis of current business
developments which is also regional
in nature.
From time to time, major special
studies are undertaken which may
not be completed for a year or more.
Two of these which are nearing
completion are a study on the pulp
and paper industry, and a study re­
lating to agricultural representatives
at country banks. In addition to
these, a major regional research proj­
ect now under way is a study of the
housing market in this district. This
26



study will attempt to develop the
major characteristics of the residen­
tial real estate market in various lo­
calities throughout the district.
In 1954, an inventory of material
relating to economic resources in the
district was started. This collection
was expanded during 1955. When
completed, it will be turned over to
the library to be catalogued, filed and
kept up to date. During the year, the
department continued its program of
carefully reading selected newspapers
from throughout the district and
clipping items of economic signifi­
cance. These clippings are the basis
of the regular monthly feature, Eco­
nomic Briefs, which is printed in the
Review.
During 1955, increased emphasis
was placed on improving our rela­
tions with respondents in the statis­
tical series, and expanding our re­
porting samples in the various series.
Often, when members of the depart­
ment find themselves in a town
where one of our reporting stores is
located, they will visit the store. This
personal contact is intended to im­
prove store-bank relations, to increase
our knowledge of current trade de­
velopments in the area, and to stimu­
late greater interest in the statistical
program of the bank. To supple­
ment this policy, members of the
staff are making more intensive ef­
forts to obtain new respondents.
During 1955, this effort was con­
centrated in the fields of household
appliance stores and furniture stores.
In their travels throughout the dis­

trict, members of the staff have been
instructed to contact appliance stores
and furniture stores whenever pos­
sible and ask for their cooperation in
the statistical program. Results so far
have been promising and it is hoped
that our reporting sample will be
substantially enlarged through this
new program.

Each month the library distributes
within the bank a list of recent acces­
sions. This provides an easy reference
to new material available for read­
ing. This list is supplemented by a
library bulletin which is circulated
to all banks in the d i s t r i c t each
month. The bulletin contains brief
reviews of selected books and other
material received by the library. It is
hoped that this will encourage bank­
ers to make greater use of the ma­
terials on hand.

During the year, an attempt was
made to create more interesting and
informative charts and illustrations
for the M O N T H L Y REVIEW .
Thought was given to a revised for­ Financial Statements
mat with the intention that a new
The bank granted well over twice
format will be adopted in the near
as many loans in 1955 as in 1954; the
future. Also, a publications special­
, average dollar amount of loans out­
ist, to assist in editing all publica­
standing was six times larger than in
tions, was added to the staff.
the year before—an increase from $7
Members of the department have million in 1954 to $42 million in
continued to devote a substantial 1955. The number of member banks
amount of time and effort to answer­ which borrowed in 1955 was 101; in
ing special requests for information the previous year, 70 member banks
and to fulfilling a variety of speaking availed themselves of the borrowing
engagements. Inasmuch as educators privilege. On our statement of earn­
provide an excellent medium for ings and expense, an increase of earn­
bringing about understanding of the ings from discounted bills from $144
Federal Reserve System through thousand in 1954 to $840 thousand in
their work with students, our bank 1955 was produced by the faster pace
has consistently s o u g h t to assist of rediscounting as well as by an in­
teachers, particularly, in every way crease of the discount rate from i l/ 2
possible.
percent to 2% percent (in four steps)
The bank’s library has been an im­ during the year. In 1954 the discount
portant help to those in search of rate had been reduced twice.
information concerning economic
and financial matters. To obtain the
maximum value from our library,
we have encouraged not only mem­
bers of the bank staff but also mem­
ber and non-member bankers in the
district to make use of the library.




The bank’s principal source of rev­
enue, earnings from United States
government securities, fell in 1955
because average holdings were re­
duced (from $605 million to $580
million) and because the average
earning rate fell (from 1.668 percent
27

EARNINGS AND EXPENSES
Earnings from:
Discounted Bills

1955
....................................................................................$

United States Government Securities...............................................

840,861

*954
$

144,803

9,669,412

10,679,996

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

3,997

5>I 34

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

12,007

5,482

Total Current Earnings............................................................... $10 ,526 ,277

$10 ,8 35,4 15

Industrial Advances

Expenses:
Operating Expenses

.............................................................................$ 3,337,558

$ 3 ,2 18 ,110

105,000

105,500

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

65,895

147,988

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

10,309

I 7, i 43

Net Expenses ..................................................................................$ 3,518,762

$ 3,488,741

Assessment for Expenses of Board of Governors...........................
Federal Reserve Currency:

Current Net Earnings......................................................................................$

7,007,515

$ 7,346,674

Profit on Sales of U. S. Government Securities (n et)...............

— 38

14,804

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

86,520

3,450

Additions to Current Net Earnings:

..$

86,482

$

18,254

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

11,5
11,53366

$$

13,429

Deductions from Current Net Earnings:
All Other ..................................................................................................

2,022

421

Total Deductions ...........................................................................$
..$

13,558
13,558

$$

13,850

Net Addition to Current Net Earnings.................................................... .$$

72,924
72,924

$$

4,404

Net Earnings before payments to U. S. Treasury..................................$ 7,080,439

$ 7,351,078

Paid to U. S. Treasury (Interest on F. R. N otes)..................................

6,013,073

6,287,237

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

399,^57

365,163

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

668,109

698,678

Surplus Account ( Section 7 )
Balance at Close of Previous Y e a r............................................................. $16,918,046
Transferred from Profits of Y e a r...............................................................

$16,219,368

668,109

698,678

Balance at Close of Y e a r.............................................................$17 ,58 6 ,15 5

$16,918,046

28



STATEMENT OF CONDITION
A SSETS

Dec. 3 1 , 1955

Gold Certificates ..................................................................................$
Redemption Fund for F. R. Notes..................................................

339,278,776

Dec. 3 1 , 1954
$

421,327,504
24,644,098

23,728,983
363,007,759

$

445,971,602

Other C a s h .......................

7,907,872

$

8,848,300

...........

i ,355,oo°

450,000

Foreign Loans on Gold.

25,000

3.333,333

Industrial Advances . . .

595630

96,071

Total Gold Certificate Reserves.......................................$

Bills Discounted

U. S. Government Securities:
Bonds

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

67,895,000

68.802.000

Notes

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

343,283,000

148.257.000

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

143,476,000

340.909.000

36,414,000

53.215.000

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

591,068,000

6 11.18 3.0 0 0

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

592,507,630

615,062,404

Bills

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

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

557

559

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

9*587,500

8,567,000

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

14 3 ,6 6 2 ,7 11

105,646,706

Total Assets

.......................................................................$ 1,116 ,6 7 4 ,0 2 9

$1,18 4 ,0 9 6 ,571

LIA BILIT IES
531.709,075

5 8 3 ,5 11,3 6 5

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

405,586,297

443,526,944

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

25,107,737

27.338,989

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

9,650,000

12,050,000

Other D ep osits.............................................................................

5,693,589

2,315.744

Federal Reserve Notes in Actual Circulation................................ $
Deposits:

Foreign

Total Deposits

.$

446,037,623

$

485,231,677

108,767,705

86,437.796

4 11,34 0

346,672

Total Liabilities .................................................................. $1,086,925,743

11,15 5 ,5 2 7 ,5 10

Deferred Availability Items................................................................
Other Liabilities

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

C A PITA L ACCOUNTS
Capital Paid I n ................

6,860,650

Other Capital Accounts.

22,887,636

Total Liabilities, Capital Accounts................................ $1,116 ,6 7 4 ,0 2 9




$

6,360,250
22,208,811

$ 1,18 4 ,0 9 6 ,57 1

29

to 1.571 percent). Holdings of se­
curities were reduced because of Sys­
tem open market sales and redemp­
tions and because our proportionate
share in the total system holdings
was lowered.
Total current earnings fell by only
a fraction of the loss of revenue from
government securities owing to the
sizable increase of revenue from
loans to member banks. The decline
in current earnings which did occur,
however, together with a slight in­
crease in the amount of current ex­
pense, brought net current earnings
from $7,347 million in 1954 to $7,007
million in 1955.
With more shares of Federal Re­
serve Bank stock in the hands of
district member banks the amount
of dividends paid in 1955 was larger
than in the previous year. Owing to
the lesser rate of earnings and the
larger dividend payments in 1955, a
smaller a m o u n t of earnings was
available for payment to the Treas­
ury and for transfer to surplus than
in 1954.
The condition statement indicates
an increase of almost 10 percent in
the amount of capital stock out­
standing. Member b a n k s are re­
quired by law to hold such shares.
While their maximum subscription
is an amount equal to 6 percent of
their capital and surplus, only half
of this amount must be paid in, the
other half is subject to call. The is­
sue of new shares in 1955 reflects the
fact that the capital and surplus of




district m e m b e r banks has been
growing.
In the year ended December 31,
1955, district member bank reserve
balances declined by $38 million or
8.5 percent. In the last two weeks of
the year the daily averages of re­
serve balances, required reserves and
excess reserves were down respective­
ly by $19.8 million, $10.1 million and
$9.7 million from a year earlier. The
averages are more representative of
member bank reserve positions be­
cause of rather large daily fluctua­
tions.
Required reserves of district mem­
ber banks were reduced partly be­
cause their deposit liabilities fell,
partly because the proportion of time
deposits (against which reserve re­
quirements are lowest) increased,
and partly because the proportion of
district member bank deposits lodged
at country banks (where reserve re­
quirements against demand deposits
are lowest) increased.
The bank’s largest liability item,
Federal Reserve N o t e s in Actual
Circulation, declined by $52 million
in 1955. This decline does not accu­
rately measure changes in the dis­
trict’s need for currency since cur­
rency requests are satisfied by the
shipment of notes issued by other
Reserve banks—which have been de­
posited here—as well as by the ship­
ment of our own notes. Thus “ ex­
ports” and “imports” of currency
between districts also affect our note
liability.
Since it is customary for many

commercial banks to liquidate bills
payable (borrowings) before the
year-end statement date, the amount
of Bills Discounted on this bank’s
December 31 Condition Statement
is not a representative figure. Rather,
the average daily amount of borrow­
ings shown on chart 11 provides a
better picture of this aspect of the
bank’s condition in 1955.
The bank’s gold certificate hold­
ings and its reserve ratio are shown
by the Comparative Condition State­
ment to have declined in 1955. Our
reserve ratio of 37.1 percent was the
lowest of any Federal Reserve Bank
at the end of the year and compared
with a System average of 44.4 per­
cent.
However, the bank’s ratio of “in­
vestments in government securities”
to “ total assets” was 53 percent in
contrast to a System average of less
than 48 percent. It is evident that an
exchange of securities for gold cer­
tificates with other Reserve banks
would increase our reserve ratio. But

C H ART 11— AVERAGE DAILY BO RR O W ­
IN G S BY MEMBER BANKS FROM
M IN N EA PO LIS FEDERAL RESERVE BANK
M i l l i o n D o lla r s

5(S B S B ^ ^ 9 S S B S ^ H B S S

40!®iISIi!!lS81!:S!8IIIII88liffliiBi8l8iffil>lil

III

30S!!l8IISI!lllll!l8III81!8BMWSBSilll8BMM

111

20 l l i l l l i l i S H I i l l i l

ill

I llliS i

ill
1950

1951

1952

IIIS llS lll 111
1953

1954

1955

the proportionate share of each Re­
serve bank in System investments is
set once a year according to the
average daily amount of assets at
each bank—as a proportion of the
System total — during the previous
twelve months.
An outflow of funds from the dis­
trict, indicated by the loss of deposits
at our member banks during 1955,
contributed to the reduction of total
resources at the Minneapolis Federal
Reserve Bank as shown by the con­
dition statement.

Management and public relations
N E N E W director was appoint­
ed and two new directors were
elected to the bank’s Board in 1955.
The new appointee was Dr. O. B.
Jesness, Head of the Department of
Agricultural Economics at the Uni­
versity of Minnesota, who in April
was named by the Board of Govern­
ors as a Class C director. Dr. Jesness’
appointment filled a vacancy which

O




had existed on the Board since the
resignation of Dr. Paul E. Miller in
August, 1954. The new director’s
term will expire December 31, 1957.
He was also designated as Deputy
Chairman of the Board for the re­
mainder of 1955.
The two new directors elected by
the member banks in November to
take office January 1, 1956 were Mr.
31

Joseph F. Ringland, President, North­
western National Bank of Minne­
apolis as Class A director, and Mr.
Thomas G. Harrison, President,
Super Valu Stores, Inc., Hopkins,
Minnesota as Class B director. Mr.
Ringland replaces Mr. Edgar F.
Zelle, who was not a candidate for
re-election, and Mr. Harrison re­
places Mr. Homer P. Clark, who re­
tired after serving on the Board for
30 years.

The First National Bank of Saint
Paul, Minnesota, was named by our
Board of Directors as a member of
the Federal Advisory Council for
1956 replacing Mr. Ringland.
Among the bank’s official staff,
1956 saw the retirement of one offi­
cer, the election of three new officers,
and the advancement of four officers
to more responsible positions. The
retirement came in June when Mr.
A. R. Larson, Assistant Vice Presi­
Mr. F. Albee Flodin, President and dent, left the bank after 35 years of
General Manager, Lake Shore, Inc., service.
New officers include Mr. Arthur
Iron Mountain, Michigan, was re­
J.
McNulty, who was made General
appointed by the Board of Govern­
ors as Class C director for a three- Auditor in August, Mr. William C.
year term ending December 31, 1958. Bronner, who was elected Assistant
The Board of Governors also redes­ Cashier in September, and Mr. John
ignated Mr. Leslie N . Perrin, Di­ L. Heath, who was elected Assist­
rector, General Mills, Inc. of Minne­ ant Cashier effective January 1, 1956.
apolis as Chairman and Federal Re­ Mr. Heath is assigned to the Helena
serve Agent, and Dr. Jesness as branch. Advancements were made
on September 1 to Mr. Kyle K. FosDeputy Chairman for 1956.
sum, General Auditor, who was pro­
Mr. A. W. Heidel, President, Pow­ moted to Vice President and trans­
der River County Bank, Broadus, ferred to the Helena branch as Man­
Montana, was reappointed to the aging Officer, Mr. E. B. Larson, Vice
Helena Branch Board by our Board President, who was elected Vice
of Directors for a two-year term President and Cashier, and Mr. M.
ending December 31, 1957. Mr. B. Holmgren, Assistant Cashier who
George R. Milburn, Manager, N Bar was advanced to Assistant Vice Pres­
Ranch, Grass Range, Montana, was ident. On January 1, 1956, Mr. Har­
reappointed by the Board of Govern­ old A. Berglund, Assistant Cashier,
ors to the Branch Board for a similar was promoted to Assistant Vice Pres­
two-year term and was designated ident. Mr. Berglund is also assigned
Chairman of the Branch Board for to our Helena branch. Mr. Clarence
1956. Mr. Carl McFarland, Presi­ W. Groth who has been Vice Presi­
dent, Montana State University, dent in charge of our Helena branch
Missoula, Montana, was named Vice was transferred to the head office
Chairman.
with increased responsibilities on
Mr. Julian B. Baird, Chairman, September 1.
32




The bank’s programs of bank and
public relations and personnel devel­
opment continued through 1955 in
much the same form as they have
for the past several years.
The program of meetings spon­
sored by the bank was topped by the
Member Bank Directors and Officers
Assembly in April. This was the
third annual Assembly meeting and
it was attended by 558 representatives
of member banks. The seventh an­
nual Money and Banking Work­
shop for college teachers of money
and banking and the twelfth annual
Examiners Conference for all Ninth
District bank examiners both set at­
tendance records for those meetings.
Seven sessions of the Short Course
in Central Banking, first begun in
1948, brought in more than 100 addi­
tional member bankers and boosted
the total of those who have taken the
course since its inception to 933.
The program of bank calls was
continued with each of the nearly
1300 banks in the district being vis­




ited at least once. Several of our se­
nior employees and officers also each
spent a week in a member bank to
learn more about commercial bank
operations as a part of our training
program. Speakers from the bank
appeared before nearly 10,000 per­
sons during the year. The bank’s
movie, The Federal Reserve Ban\
and You, was shown to an addition­
al 23,000 persons, and other movies,
books on the Federal Reserve Sys­
tem, and our currency displays were
all in good demand by schools,
banks and others. Tours of the bank
continued to bring many visitors,
particularly students into the bank
to witness our operations.
One new national bank opened
for business in the Ninth district
during the year and one national
bank was absorbed by another bank.
The net result was, therefore, no
change in the number of member
banks during the year, although to­
tal banks in the district increased
from 1,289 to 1 >296.

33

DIRECTORS OF THE FEDERAL RESERVE BANK
OF MINNEAPOLIS AND HELENA BRANCH

DIRECTORS
Class A

Term Expires
December 31

N . T h o m s o n , Vice-President, Farmers & Merchants Bank,
Presho, South Dakota

1956

C. R e f l i n g , Cashier, First National Bank in Bottineau,
Bottineau, North Dakota

1957

F. R i n g l a n d , President, Northwestern National Bank of Minneapolis,
Minneapolis, Minnesota

1958

H

aro ld

H

aro ld

J o seph

Class B
J. E.
R

President and General Manager, Montana Power Company,
Butte, Montana

1956

C. L a n g e , President, Chippewa Canning Co., Inc.,
Chippewa Falls, Wisconsin

1957

C

ay

o rette

,

T . G. H a r r i s o n , President, Super Valu Stores, Inc.,
Minneapolis, Minnesota

1958

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

L e s lie

1956

O. B. J e s n e s s ,2 Head, Department of Agricultural Economics,
University of Minnesota Institute of Agriculture, St. Paul, Minnesota

1957

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

1958

F. A

lb ee

F

l o d in

,

H ELENA BRANCH
Appointed by Federal Reserve Bank
J. W

G

eo

A.

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

1956

N. L u n d , Chairman of the Board and President,
The First National Bank of Reserve, Reserve, Montana

1956

President, Powder River County Bank,
Broadus, Montana

1957

il l a r d

.

W . H

J o h n so n ,

e id e l

,

Appointed by Board of Governors
C arl

President, Montana State University,
Missoula, Montana
M c F a r l a n d ,3

G eo rg e

R.

M i l b u r n ,1

1 Chairman
2 Deputy Chairman
3 Vice-Chairman

34



Manager, N Bar Ranch, Grass Range, Montana

1956

1957

OFFICERS OF THE FEDERAL RESERVE BANK
OF MINNEAPOLIS AND HELENA BRANCH
OFFICERS
O liv e r S. P o w e ll,
A lb e r t W . M ills ,

Banking Department

F r e d e r ic k

W.

Vice-President and Cashier

E a r l B. L arso n ,

W.

H a r o ld

Assistant Vice-President

Jo h n s o n ,

Assistant Vice-President

C la r e n c e
M e lv in

C h ris tia n

R ie s ,

W . G ro th ,

B . H o lm g re n ,

W illia m
O tis R . P r e s to n ,

C. B ro n n e r,

Legal Department

Assistant Vice-President

M . R o c k w e ll,

M arcu s O. S a th e r,

Assistant Cashier

N ic e ,

Vice-President, Counsel

and Secretary

Assistant Cashier

M a u r ic e H . S t r o t h m a n , Jr .,
C le m e n t V a n

Vice-President
Assistant Vice-President
Assistant Cashier

Vice-President
S ig u r d U e la n d ,

G e o rg e

Vice-President
Chief Examiner

G . M c C o n n e ll,

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

Fiscal Agency— Government Securities

Operating Research Officer

O h n sta d ,

General Auditor

Bank Examination Department

Assistant Cashier

M ilfo r d E . L ysen ,
O rth e n

A r t h u r J. M c N u lt y ,

Personnel Officer

J. C r a m e r ,

Jo h n J. G i l l e t t e ,
A rth u r

Audit Department

Assistant Cashier

C a r l E . B e r g q u is t,

President

First Vice-President

Research Department

Vice-President

F r a n k lin

Assistant Vice-President

Director of Research
Business Economist

L . P a rso n s,

O scar F. L itte r e r ,

Helena Branch
Vice-President
assigned to Helena Branch

K y le

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

K . F o ssu m ,

H a r o ld

L . H e a t h , Assistant Cashier
assigned to Helena Branch

Jo h n

MEMBER OF FEDERAL AD VISO RY COUNCIL
Chairman, The First National Bank of Saint Paul,
St. Paul, Minnesota

J u l ia n B . B a ird ,

INDUSTRIAL ADVISORY COMMITTEE
S h eld o n V . W
J ohn

M.

B u sh ,

ood,

Minneapolis, Minnesota, Chairman

Ishpeming, Michigan

A.

H. D

aggett,

A.

B. H

e ia n

,

Chippewa Falls, Wisconsin

W

alter

M.

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in g e r




Saint Paul, Minnesota

, S r .,

Minneapolis, Minnesota