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EIGHTEENTH ANNUAL REPORT of the FEDERAL RESERVE AGENT of the NINTH FEDERAL RESERVE DISTRICT to the FEDERAL RESERVE BOARD Covering the Calendar Year 1932 Federal Reserve Bank of Minneapolis, Office of the Federal Reserve Agent, Minneapolis, Minn., April 8, 1933. To Governor Eugene Meyer, Federal Reserve Board, Washington, D. C. Sir: In conformity with our custom, I have the honor to submit herewith the Eighteenth Annual Report of the Federal Reserve Agent of the Federal Reserve Bank of Minneapolis relating to operations during the twelve months which ended December 31, 1932. Respectfully submitted, CURTIS L. MOSHER, Asst. Federal Reserve Agent. REPORT OF THE FEDERAL RESERVE AGENT AT MINNEAPOLIS 1932 A. BUSINESS, AGRICULTURAL AND BANKING CONDITIONS Business The year 1932 divides naturally into two periods. The first seven months of the year were adversely affected by the disastrous crop failure of 1931, in addition to sharply declining prices and a reduced volume of business throughout the country. In the last five months of the year, business was favorably influenced by the harvesting of a normal crop and by a check to the downward movement of prices and business volume. These favorable influences made possible a moderate revival in some lines of trade and checked the shrinkage in other lines. Typical of the movements of business volume during the year were bank debits and freight carloading statistics, for which index numbers adjusted to remove seasonal fluctuations have been computed. The bank debits index declined from 67 to 55 between December 1931 and July 1932. From the latter month to the end of the year, the index declined further to 48. The miscellaneous freight carloadings index declined from 72 in December 1931 to 52 in July 1932, and then rose to 59 in December 1932. The index of 1. c. 1. carloadings declined from 80 in December 1931 to 64 in July 1932, and then after only minor fluctuations, it closed the year at the July level. The grand total of trade and industry in the district during 1932 was the smallest in a number of years. Bank debits at 94 cities totaled $6,887,000,000 in 1932, as compared with $9,300,000,000 in 1931 and $13,697,000,000 in 1929, which was the last year before the depression. Freight carloadings in the northwestern district, excluding 1. c. 1. freight, were 2,277,000 cars in 1932, as compared with 3,428,000 cars in 1931, and 5,764,000 cars in 1929. Shrinkages also occurred in electric power consumption, country check clearings, building contracts and permits, flour production and shipments, linseed products shipments, copper and iron ore output, wholesale and retail trade, life insurance sales and securities sales. A salutary feature of the trade returns was that both merchandise stocks and accounts and notes receivable were reduced during 1932 in line with the reduced volume of business and in spite of the reduced debt-paying power of the district. Business failures totaled 928 in 1932, as compared with 867 in 1931, according to reports from R. G. Dun and Company. B. Agriculture Farm income from cash crops and dairy products, hogs and wool as estimated by the Federal Reserve Agent was 34 per cent smaller in 1932 than in 1931, following a 37 per cent decrease in 1931 as compared with 1930, a 21 per cent decrease between 1930 and 1929, and a 10 per cent decrease between 1929 and 1928. Farm income in 1932 was smaller than in any other year since the records began in 1923. More complete figures for Minnesota prepared by the Agricultural Economics Department of the University of Minnesota indicate that for that state, 1932 gross farm income was the lowest since 1912. The net cash income of Minnesota farmers, after deducting fixed charges and operating expenses, was the lowest in the record, which extends back through 1910. Decreases in the farm income of the district between 1931 and 1932 occurred in all products for which we have estimates, with the exception of rye. The smallest percentage decrease occurred in bread wheat, for which the larger crop partly offset the lower price prevailing. Prices of all important farm products of the Northwest, with the exception of eggs, were lower at the close of 1932 than a year earlier. The harvested acreage of 1932 crops in the district increased by 9,000,000 acres over the acreage harvested in 1931. The large increase was entirely due to the fact that the 1931 harvested acreage was abnormally low on account of abandonment of acreage. The 1932 harvested acreage was approximately the same as that of the years 1930 and 1929. Shifts in acreage from one crop to another were relatively small in 1932. There were minor reductions in the acreage of flax and tame hay, and increases in the acreage of wheat, rye, potatoes, corn, oats and barley. Most of these increases over 1931 were due, as stated above, to the smaller abandonment of planted acreage in 1932. Good crops, but not record-breaking crops, were harvested in the district in 1932. The crop of oats was the largest since 1925, the crops of wheat, potatoes, barley and tame hay were the largest since 1928, and the crop of corn was the largest since 1929. The flax crop was the smallest since 1922, with the exception of the 1931 crop. Wheat marketings in the first seven months of 1932 were abnormally small on account of the crop failure of 1931 and the small carry-over from the preceding crop. The carry-over of wheat on farms and in country mills and elevators on July 1, 1932, was less than 10,000,000 bushels, which was an exceptionally small amount. However, the large crop which was harvested in the fall of 1932 caused a volume of marketings in the latter part of the year nearly twice as large as marketings in the same portion of 1931. In spite of the size of the wheat movement, an abnormally small percentage of the marketable wheat supply of the district had arrived at terminal markets by the end of December. The explanation for the slow rate of marketing lay chiefly in the low price of wheat and the large number of seed liens against the 1932 crop, which hindered many farmers from marketing their wheat. Also a considerable quantity of wheat which was included in the Government crop estimate, was not threshed. A very large percentage of the crop was probably used on the farms for feed. Moreover, there was reason to believe that country mills were buying a larger than usual portion of their wheat supplies from local sources in 1932 instead of purchasing out of terminal elevators. This was due to the uniformly high quality of the 1932 crop and the low wheat prices which made it possible for the country miller to compete advantageously with the city mills. Although country elevator holdings of wheat were larger at the close of 1932 than a year earlier, there was no congestion during the heavy marketing period in any part of the district. Livestock marketings at South St. Paul during 1932 were smaller than in 1931 for all kinds of livestock. On January 1, 1933, the Government estimates indicated an increase during the year in the number of dairy cows and heifers and sheep on farms and a decrease in the number of hogs on farms. Decreased pig farrowings as indicated by the December 1 pig survey, coupled with the reduced number of hogs on farms, denoted a considerable decrease in hog marketings in our territory for 1933, as compared with 1932. Cold storage holdings of farm products in the United States on January 1, 1933, were lower than a year earlier for all important products. Stocks of butter were the smallest for January 1 in the entire ten year period for which records are available. The farm real estate situation continued to grow less favorable in 1932. Involuntary sales of farm land during the year ending March 15, 1932, exceeded voluntary sales in all states of the district. Farm land prices continued to decline in all states. The real estate holdings of country banks remained nearly unchanged during 1932. C. Banking The banks of the district experienced a sharp decline of $221,000,000 in deposits during 1932. At the close of the year, their combined deposits were $1,089,000,000, which was the smallest total since 1916. The major portion of the decline in deposits during 1932 was offset by a decrease in loans of $139,000,000 to a total of $560,000,000, which was the smallest figure in the past twenty years for which records are available. Investment holdings decreased $68,000,000 during the year; cash and balances due from banks decreased $9,000,000; and borrowings from other banks and institutions increased $16,000,000. The city banks fared relatively better than the country banks during 1932. City banks lost only $46,000,000 of deposits, or 11 per cent of the total which they held at the beginning of the year. Country banks lost $175,000,000, or 20 per cent of their deposits at the beginning of the year. At the city banks, cash and balances due from banks increased by approximately the same amount as their investment holdings declined, and the entire deposit decline at the city banks was offset by a decrease in loans. Borrowings by city banks declined to practically nothing during the year. Interest rates charged by Minneapolis banks decreased during the first four months of 1932, increased during the sue- ceeding three months and then declined during the remainder of the year. The average rate charged on prime loans was slightly lower in January 1933 than in January 1932. The commercial paper rate on prime paper reported by a Minneapolis broker was 1%, per cent at the close of December 1932, as compared with 4Vk per cent a year earlier. Bank failures during 1932 were only 136 in number, as compared with 271 in 1931, 156 in 1930 and 84 in 1929. The decrease in the number of failures in 1932 was largely the result of the establishment of the Reconstruction Finance Corporation. The deposits involved in 1932 bank failures amounted to $27,899,000, as compared with $57,448,000 in 1931, $24,109,000 in 1930 and $15,300,000 in 1929. During 1932 numerous banks in the district declared moratoria on payments to creditors for varying lengths of time. During the moratorium period, agreements were reached for the waiver of immediate payment of deposits, the waiver of a portion of the book value of unsecured deposits, or a combination of these methods of enabling banks to continue in business. The number of banks in operation in the Ninth Federal Reserve District, according to abstracts of condition reports published by state and national authorities, decreased during 1932 from 1,816 to 1,658. A. OPERATIONS OF THE MINNEAPOLIS FEDERAL RESERVE BANK IN 1932 General Survey The earning assets of the bank rose sharply during 1932. After dropping from $43,500,000 at the end of 1931 to $38,000,000 in April 1932, they rose to $46,000,000 on May 18. In the next week, the bank's holdings of United States Government securities increased materially, raising total earning assets to $60,700,000. Earning assets reached the year's peak of $69,300,000 on August 3. In the later months, the volume fluctuated moderately and closed the year at $65,500,000. During the entire year, the greater part of the earning assets consisted of United States Government securities. Purchased bills decreased from $7,000,000 to less than $1,000,000. Discounted bills for member banks fluctuated between $9,000,000 in March and more than $14,500,000 in February. Country member banks were borrowing somewhat more from this Federal Reserve Bank at the close of 1932 than a year earlier. The funds loaned in this district by the Reconstruction Finance Corporation and the Regional Agricultural Credit Corporations of Minneapolis and Sioux City were partly responsible for the smallness of the increase in borrowings from this bank. Increases occurred in the borrowings from this bank by banking institutions in all parts of the district, the largest dollar increases being in rural Minnesota and South Dakota. City member banks were almost entirely out of debt at the Federal Reserve Bank at the close of 1932. Utilizing the new powers granted by Congress to make loans to individuals and corporations other than banks, the Minneapolis Federal Reserve Bank had $98,000 of such loans in its portfolio at the close of 1932. Discounted Bills Held by Minneapolis Federal Reserve Bank (000's omitted) Dec. 31, For Banks in 1932 Minneapolis and St. Paul $ 20 Other Minnesota 2,679 Montana 1,043 North Dakota 1,404 South Dakota 3,072 Wisconsin 672 Michigan 616 Federal Intermediate Credit Bank of St. Paul 0 Individuals and Corporations 98 Total $9,604 Dec. 31, 1931 $ 51 1,458 879 652 1,564 590 516 Dec. 31, 1930 $ 0 712 373 767 1,295 285 144 1,861 0 0 0 $7,571 $3,576 Federal reserve notes in circulation declined only slightly during January and reached the lowest point of the year at about $67,500,000 on January 27. After that date, there was a steady increase in Federal reserve note circulation until it approached $82,000,000 in October. Subsequently, it declined moderately and closed the year at $81,000,000. The net increase in currency in circulation can be attributed largely to hoarding, since the volume of business and the price level declined during the year, making currency requirements for business purposes smaller than in 1931. A portion of the increase in currency circulation was undoubtedly due to other factors, such as the Federal check tax and the greater prevalence of service charges on checking accounts, which caused many depositors to make a greater use of cash in settling their bills. Member bank reserve deposits fluctuated somewhat with the seasonal movement of the total deposits of member banks in the district and showed a net decline for the year, reflecting the lower level of deposits at member banks. The cash reserves of this Federal Reserve Bank increased during the early part of the year to nearly $81,000,000 in May. Thereafter, cash reserves decreased to a low point of less than $53,500,000 in August and then increased to $59,000,000 at the close of the year. The net effect of these changes upon our balance sheet for the year ending December 31, 1932, was as follows: Cash reserves decreased $21,000,000; bills discounted increased $2,000,000; bills bought in the open market decreased $7,000,000; United States security holdings increased $27,000,000; total earning assets increased $22,000,000; Federal reserve notes in circulation increased $12,000,000; member bank reserve deposits decreased $8,000,000; and the ratio of total cash reserves to deposits and Federal reserve note liabilities combined decreased from 67.1 per cent to 49.2 per cent. This bank did not borrow from or lend to any other Federal reserve bank during 1932. The discount rate of this bank remained unchanged at 31/) per cent throughout the year. 7 B. Earnings and Expenses The gross earnings of this bank during 1932 were $1,435,000, as compared with nearly $937,000 in 1931. Increases in earnings from discounted bills, United States securities and deficient reserve penalties more than offset decreases in earnings from purchased bills and miscellaneous sources. Current expenses during 1932 were $927,000, as compared with $919,000 in 1931. Current net earnings during 1932 were more than $508,000, as compared with $18,000 in 1931. Miscellaneous additions to current net earnings in 1932 amounted to $84,000 and deductions from current net earnings amounted to $320,000, including $200,000 added to the reserve for probable losses, leaving final net earnings available for dividends, surplus and franchise tax of $272,000, as compared with $46,000 in 1931. In 1932 dividends totaling $175,495 were declared, at the rate of 6 per cent per annum, on all paid-in capital stock, and paid to member banks. The surplus account was increased by $9,684, and a franchise tax was paid to the United States Government amounting to $87,158, whereas no franchise tax was paid in the preceding year. On December 31, 1932, a transfer to the surplus account was made from the reserve for depreciation on United States securities of $653,000. This amount had been charged to surplus and credited to that reserve account on December 31, 1931. This, together with the small transfer to surplus from current net earnings, increased the surplus account from $6,356,250 to $7,018,935. C. Departmental Statistics of Volume (Including both the Head Office and the Helena Branch) The Transit, or Check Collection Department handled 18,743,000 items during 1932, amounting to $2,907,272,000, as compared with 20,940,000 items during 1931, amounting to $3,559,161,000. The Collection Department received 798,000 items (including coupons other than those on Government issues) during 1932, amounting to $155,121,000, as compared with 574,000 items during 1931, amounting to $170,818,000. The Currency Department received and counted 36,088,000 bills, amounting to $163,224,000 in 1932, as compared with 38,088,000 bills, amounting to $186,519,000 in 1931. This department also received and counted 24,788,000 coins, amounting to $3,391,000 in 1932, as compared with 22,528,000 coins, amounting to $4,321,000 in 1931. The Vault Custody Department in its service of safekeeping of securities, received from or returned to member banks 149,215 bonds during 1932, as compared with 128,743 bonds during 1931. This department cut and forwarded to the owners of the securities, or turned over to other departments for collection or credit, 214,133 coupons during 1932, as compared with 233,186 coupons during 1931. Transfers of funds made for member banks, including those made for the 5 per cent Redemption Fund, numbered 47,800, totaling $1,714,979,000 during 1932, as compared with 53,000, totaling $2,508,381,000 during 1931. The Discount Department served 333 member banks during 1932. In 1931, 266 member banks were served. During 1932, 29,124 notes were discounted, amounting to $145,522,000, as compared with 13,914 notes, amounting to $50,292,000 in 1931. FISCAL AGENCY FUNCTIONS Issues, redemptions, or exchanges of various United States Government securities, including Treasury Savings Certificates redeemed at this office, which were handled by the Fiscal Agency operated by us for the United States Government, numbered 47,664 pieces and amounted to $144,282,471, as compared with 41,808 pieces amounting to $136,451,775 in 1931. This Agency also handled during 1932, 7,320 purchases and 16,248 resales of Government securities totaling $89,177,450. In addition, either delivery or payment, or both, was handled for banks and trust companies on 681 transactions in Government securities amounting to $98,923,000. There were also 463 transactions of miscellaneous general market securities aggregating $4,169,880. Altogether, there were 24,712 of these various transactions totaling $192,270,330, including those for our own account, as compared with 14,959 totaling $180,455,350 in 1931. Delivery of 61,411 pieces totaling $140,481,882 was made on purchase and resale transactions for other than our own account. In addition, on exchange transactions, such as denominational exchange, the exchange of coupon for registered securities, etc., 40,074 pieces were delivered, amounting to $52,395,700. The total number of pieces delivered was 101,485 amounting to $192,877,582, in comparison with 67,665 totaling $144,046,250 during the preceding year. With the exception of Treasury bills, there were sixteen offerings of United States Government securities during 1932. In such operations, 4,094 individual subscriptions contained in 1,645 different applications were received in this district. The amount allotted on these subscriptions was $45,718,200. During 1931 there were ten similar offerings and $49,309,850 was allotted. During 1932, 39 tenders amounting to $1,846,000 were received by this Agency on 31 offerings of Treasury bills. Of these, 5 tenders for Treasury bills, ranging from .23% to 2.65%, and amounting to $1,155,000, were accepted. During 1931, 15 tenders totaling $9,315,000 were accepted on the 29 offerings of Treasury bills made that year. Including the weekly circular giving current market quotations on the various outstanding government issues, 114 circular letters were sent to all banks and trust companies in the district during 1932 in connection with fiscal agency operations. During the preceding year there were 107 circular letters. 9 The First 3i/2%, First 4% and the First 4*4% Liberty Loan Bonds reached their earliest callable dates on June 15, 1932, and although the Treasury Department has not yet called these issues for payment they now have the privilege of doing so on any interest date by giving three months' notice. At the close of the year there were 352 banks and trust companies in this district which were designated as special depositaries of public moneys, thereby being qualified to make payment through their War Loan Deposit Accounts on a "by credit" basis for subscriptions to new offerings of Government securities, with the exception of Treasury bills. This is 67 more than the number of banks so designated at the close of the preceding year. The rate of interest to be paid on daily balances in the War Loan eDeposit Accounts by special depositaries remained at !/2% P r annum during 1932. The Fiscal Agency operated by us for the Government redeemed 489,616 Government and Federal Land Bank coupons amounting to $7,913,551 during 1932, as compared with 481,534 coupons amounting to $7,629,163 during 1931. ACTIVITIES OF THE FEDERAL RESERVE AGENT'S OFFICE A. Federal Reserve Note Issues The new series of small-size Federal reserve notes which were first issued early in July, 1929, had largely replaced the old-size notes by December 31, 1932, on which date the outstanding new series Federal reserve notes amounted to $76,332,280, compared with only $6,521,200 of the old series. The denominational distribution of the outstanding old series Federal reserve notes on December 31, 1931 and 1932 was as follows: 1931 $1,114,150 1,928,540 4,069,260 385,900 921,400 110,000 231,000 Total 1932 $ 901,050 1,454,750 2,949,800 278,200 670,900 82,500 184,000 $8,760,250 5's 10's 20's 50's 100's 500's 1,000's $6,521,200 On December 31, 1932, the amount of old and new series notes outstanding was $82,853,480, and the Federal Reserve Agent held $26,870,000 of new and fit-for-use notes. Of this total outstanding ($82,853,480), there was in actual circulation $80,966,415, the notes held by our paying tellers here at the Head Office and at the Helena Branch, together with the amount of mutilated Federal reserve notes in transit for redemption, totaling $1,887,065. During 1932, the Federal Reserve Agent and his assistants received $29,800,000 of new Federal reserve notes from the Comptroller of the Currency at Washington, and $24,445,000 of fit-for-use notes from our receiving tellers. The issues of new and fit-for-use notes totaled $55,905,000, as compared 10 with $42,180,000 during the preceding year and $39,052,000 in 1930. The amount of Federal reserve notes outstanding with this Federal Reserve Bank increased from $71,288,310 to $82,853,480 between December 31, 1931 and December 31, 1932. Following the passage of the Glass-Steagall Act, direct obligations of the United States were eligible as collateral for Federal reserve notes. On December 31, 1932, the Federal Reserve Agent held $34,900,000 of such United States obligations as collateral security for the Federal reserve notes outstanding with the Federal Reserve Bank, together with $41,540,000 in gold coin and gold certificates in vault or on deposit with the Federal Reserve Board and $7,500,000 in discounts and rediscounts, compared with $58,470,000 in gold, $6,700,000 in discounts and rediscounts and $6,600,000 in purchased bills on December 31, 1931. B. Membership At the close of the year, there were 545 member banks operating in this district, excluding one national bank which was temporarily on a holiday basis, as compared with 579 member banks at the beginning of the year. There was a net loss of 35 national banks and a gain of 1 state bank. The total membership (banks in operation only) at the close of 1932 was divided into 504 national banks and 41 state banks. The banks which joined the Federal Reserve System in 1932 are: Name of Bank The Bessemer National Bank The Stewartville National Bank The First & Farmers National Bank of Portland Burke State Bank Farmers State Bank Farmers & Merchants Bank The Security National Bank of Viborg The American National Bank & Trust Co. of Eau Claire Location Bessemer, Mich Stewartville, Minn Portland, Burke, S. Faith, S. Huron, S. No. of Shares Subscribed 45 27 N. D D D D 18 21 18 67 Viborg, S. D 18 Eau Claire, Wis 72 The operating banks in the district were distributed among the states of the district as shown in the following table. The number is somewhat larger than that given in the abstracts of called reports, which include only banks whose statements are received before a certain date. NUMBER OF BANKS IN OPERATION IN THE NINTH FEDERAL RESERVE DISTRICT December 31, 1931, and December 31, 1932 Michigan Minnesota Montana North Dakota South Dakota Wisconsin Ninth Federal Reserve Dist National State Members Non-Members Total 1931 1932 1931 1932 1931 1932 1931 1932 38 34 8 8 29 21 75 63 239 228 6 5 642 578 887 811 55 52 16 16 85 79 156 147 86 77 0 0 164 155 250 232 79 72 7 9 178 158 264 239 42 41 : > 3 169 149 214 193 539 504 40 11 41 1,267 1,140 1,846 1,685 C. Examination of Banks During 1932, 51 credit investigations, examinations and special visits were made by the Federal Reserve Agent's Examiners. In the examination work this year, the examiners and their assistants traveled in the aggregate 26,165 miles. In addition to the information obtained from the Federal Reserve Examiners, 1,072 reports of examination of national banks were received from the Chief National Bank Examiner of this district, and 11 reports of examination of state member banks were received from the various state banking departments. There were three calls for reports of condition of national banks and three calls for state member banks during the year. Also two semi-annual statements of earnings and dividends were required from all member banks. Reports of condition and of earnings and dividends totaling approximately 3,350 were received, verified and filed. D. Applications for Fiduciary Powers National banks have continued to apply for trust powers under Section 11-K of the Federal Reserve Act. Applications received and approved by the Federal Reserve Board during 1932 include the following: Name of Bank Midland National Bank and Trust Company American National Bank and Trust Company Date Approved Location Minneapolis, Minn Eau Claire, Wis Capital Powers 8-4-32 $1,000,000 Additional 12-3-32 100,000 Full CHANGES IN PERSONNEL At the January meeting of the Board of Directors, all officers of both the Head Office and the Helena Branch were re-elected. Letters from the Federal Reserve Board were presented announcing the reappointment of Mr. J. R. Mitchell as Chairman of the Board of Directors for the year 1932 and Mr. Homer P. Clark as Deputy Chairman of the Board of Directors, redesignating Mr. Curtis L. Mosher and Mr. F. M. Bailey as Assistant Federal Reserve Agents, and authorizing Mr. O. S. Powell to act in certain matters for the Federal Reserve Agent. A communication from the Federal Reserve Board approved the redesignation of Mr. J. E. O'Connell as Acting Assistant Federal Reserve Agent and Messrs. A. T. Hibbard and Fred Heinecke as Alternate Acting Assistant Federal Reserve Agents at the Helena Branch. A telegram from the Board announced the appointment of Mr. Geo. W. McCormick of Menominee, Michigan, as Class C director for a term of three years beginning January 1, 1932, and of Mr. Henry Sieben as director at the Helena Branch for a two year term beginning on the same date. The Board re-elected Mr. Andreas Ueland as Counsel for the Head Office and Mr. Sigurd Ueland as Assistant Counsel, and re-elected Mr. T. B. Weir as Counsel for the Helena Branch. Mr. Harry Yaeger was re-elected Secretary of the bank 12 for the current year and Mr. Curtis L. Mosher was re-elected Secretary of the Board of Directors. In March, Mr. J. E. O'Connell retired as Acting Assistant Federal Reserve Agent at the Helena Branch and was succeeded by Mr. A. T. Hibbard. Mr. L. S. Hazard was appointed Alternate Acting Assistant Federal Reserve Agent to succeed Mr. Hibbard. In May, the Directors were advised of the untimely death of Mr. Robert F. Homstrom, Assistant Cashier of the Head Office, and of the death by drowning of Cashier H. L. Zimmerman of the Helena Branch. On the recommendation of Governor W. B. Geery, the Directors elected Mr. Wm. E. Peterson and Mr. Otis R. Preston as Assistant Cashiers of the Head Office and Mr. A. A. Hoerr, Cashier, and Mr. C. J. Larson, Assistant Cashier of the Branch. On September 7, Mr. R. E. Towle, Managing Director of the Helena Branch, was given leave of absence to assist in the organization of the Regional Agricultural Credit Corporation of the Reconstruction Finance Corporation at Spokane, Washington. In December, his leave of absence was extended by the Directors for a period of three months. At the same meeting there was presented a telegram from the Federal Reserve Board announcing the reappointment of Mr. J. R. Mitchell as Class C director for a term of three years beginning January 1, 1933, and his redesignation by the Board as Chairman and Federal Reserve Agent for the year 1933. There was also presented a telegram announcing the reappointment of Mr. Homer P. Clark as Deputy Chairman of the Board of Directors at the Head Office for 1933. A telegram also announced the appointment of Mr. Wm. P. Sullivan of Square Butte, Montana, as a director of the Helena Branch for a term of two years beginning January 1, 1933. The Directors elected Mr. Theodore Wold as a member of the Federal Advisory Council for 1933 to succeed himself, and re-elected Mr. Samuel McKennan, President of the Union Bank & Trust Company of Helena, as director for the Helena Branch, succeeding himself for a term of two years beginning January 1, 1933. The Chairman of the Board announced that as a result of the regular fall elections, Mr. H. R. Kibbee was re-elected Class A director for a three year term beginning January 1, 1933, and Mr. J. E. O'Connell of Helena, Montana, a Class B director for a three year term beginning on the same date. The complete staff of the Federal Reserve Bank of Minneapolis and its Helena Branch, including officers, employees and building employees, but excluding temporary help, numbered 330 persons on December 31, 1932, as compared with 279 at the close of the previous year. 13 Resources and Liabilities of the Federal Reserve Bank of Minneapolis (In Thousands of Dollars) RESOURCES Gold with Federal Reserve Agent Gold redemption fund with United States Treasury Dec. 31 1932 $ 41,540 2,214 Dec. 31 1931 $ 58,470 704 Dec. 31 1930 $ 48,325 802 Gold held exclusively against Federal reserve notes Gold settlement fund with Federal Reserve Board Gold and gold certificates held by bank $ 43,754 7,797 2,340 $ 59,174 $ 49,127 9,367 10,076 5,735 5,208 $ 53,891 $ 74,276 $ 64,411 5,104 5,632 4,258 $ 58,995 2,146 $ 79,908 $ 68,669 1,732 2,432 352 9,252 1,074 6,497 403 3,173 Total gold reserves Reserves other than gold Total reserves Non-reserve cash Bills Discounted: Secured by United States Government obligations Other bills discounted Total bills discounted $ 9,604 Bills bought in open market United States Government Securities: Bonds Treasury notes Certificates and bills $ 7,571 $ 3,576 612 7,329 17,398 8,110 29,343 15,832 5,936 589 10,185 11,247 11,181 $ 54,851 410 $ 27,668 $ 27,302 903 233 Total bills and securities Uncollected items Bank premises All other resources $ 65,477 11,533 1,746 1,734 $ 43,471 $ 39,522 9,254 11,171 1,834 1,926 1,387 544 Total resources $141,631 $137,586 $124,264 $ 80,966 $ 69,129 $ 53,559 Total United States Government securities Other securities 8,411 LIABILITIES Federal reserve notes in actual circulation Deposits : Member bank reserve account Government Foreign bank Other deposits 37,760 468 461 348 Ratio of total reserves to deposit and Federal reserve note liabilities combined (per cent) Contingent liability on bills purchased for foreign correspondents 14 48,447 1,280 1,768 132 .Hoi; 139 $ 49,912 7,792 2,951 6,356 1,446 $ 49,998 9,776 3,063 7,144 $141,631 Total liabilities 1,961 $ 39,037 10,738 2,885 7,019 986 Total deposits Deferred availability items Capital paid in Surplus All other liabilities 45,827 $137,586 $124,264 49.2 $ 856 724 66.3 tw.l $ 5,716 $ 9,994 Earnings and Expenses of Federal Reserve Bank of Minneapolis FINANCIAL RESULTS OF OPERATION Discounted bills Purchased bills U. S. Securities Deficient reserve penalties Miscellaneous 1932 $ 418,531 65,335 921,077 17,219 12,931 1931 $ 168,589 132,999 597,518 7,726 29,772 1930 $ 172,441 228,551 747,484 7,644 78,962 Total earnings Current expenses $1,435,093 926,669 $ 936,604 918,942 $1,235,082 976,867 Current net earnings Additions to current net earnings Deductions from current net earnings : Bank premises—depreciation Furniture and equipment All other $ 508,424 84,253 $ 17,662 142,751 $ 258,215 293,206 90,371 11,985 217,984 92,051 10,947 11,610 91,982 14,548 251,302 Total deductions Net earnings available for dividends, surplus and franchise tax Distribution of net earnings: Dividends paid Transferred to surplus account Franchise tax paid U. S. Government $ 320,340 $ 114,608 $ 357,832 272,337 45,805 193,589 175,495 9,684 87,158 180,455 134,650** None 184,445 914 8,230 CURRENT EXPENSES Salaries : Bank officers $ 110,300 Clerical staff 328,047 All other 114,101 Governors' conferences 995 Federal Reserve Agents' conferences 188 Federal Advisory Council 1,540 Directors' meetings 9,750 Traveling Expenses* 21,810 Assessment for Federal Reserve Board expenses 16,243 Legal fees 14,104 Insurance (other than on currency and security shipments) 32,057 Taxes on banking house 66,412 Repairs and alterations, banking house 1,731 Light, heat and power 17,568 Telephone 5,960 Telegraph 15,870 Postage 72,820 Expressage 8,055 Insurance on currency and security shipments 9,233 Printing and stationery 16,898 Office and other supplies 13,028 All other expenses 30,488 Total exclusive of cost of currency $ 907,198 Federal Reserve Currency (including shipping charges) : Original cost $ 16,979 Cost of redemption 2,491 Total current expenses $ 926,668 REIMBURSABLE Salaries All other expenses $ 118,135 330,399 102,521 611 0 1,316 7,062 17,565 16,482 14,865 $ 122,067 338,939 96,241 609 317 1,298 6,529 12,921 18,504 18,431 31,671 69,505 5,438 16,208 5,584 17,664 52,523 11,779 12,410 14,784 13,280 32,686 30,721 69,399 6,155 17,202 5,166 18,032 64,934 12,230 13,916 19,447 17,537 29,342 $ 892,488 $ 919,937 $ $ 23,386 3,068 52,685 4,245 $ 918,942 $ 976,867 EXPENSES $ $ 14,767 5,065 $ 14,572 3,482 $ Total 38,566 14,898 53,464 $ 19,832 $ 18,054 * Other than those connected with governors' and agents' conferences and meetings of the directors and of the Advisory Council. ** Withdrawn from surplus account. 15 DIRECTORS AND OFFICERS FEDERAL RESERVE BANK OF MINNEAPOLIS JANUARY 1, 1933 DIRECTORS Class A H. C. HANSEN PAUL J. LEEMAN H. R. KIBBEE - 1933 1934 1935 Class B J O H N S. O W E N . . W. O. W A S H B U R N J. E. O'CONNELL - . Class C HOMER P. CLARK, Deputy Chairman GEO. W. McCORMICK J. R. MITCHELL, Chairman Churchs Ferry, N. D. Minneapolis, Minn. Mitchell, S. D. 1933 1934 1935 - - Eau Claire, Wia. - St. Paul, Minn. Helena, Mont. 1933 1934 1935 - St. Paul, Minn. - Menominee, Mich. Minneapolis, Minn. OFFICERS J. R. MITCHELL, Federal Reserve Agent CURTIS L. MOSHER, Secretary, Board of Directors and Asst. Federal Reserve Agent FRED M. BAILEY, Assistant Federal Reserve Agent W. B. GEERY Governor HARRY YAEGER, Secretary and Deputy Governor HARRY I. ZIEMER, Deputy Governor and Cashier - Controller FRANK C. DUNLOP Asst. Cashier L. E. RAST - - Asst. Cashier H. C. CORE - - Asst. Cashier A. R. LARSON - Asst. Cashier W. E. PETERSON Asst. Cashier OTIS R. PRESTON - Statistician and Counsel OLIVER S. POWELL ANDREAS UELAND - - - Statistician Legal Counsel H. C. TIMBERLAKE - Asst. Statistician SIGURD UELAND - - Asst. Counsel MEMBER OF FEDERAL ADVISORY COUNCIL THEODORE WOLD, Vice-President, Northwestern National Bank, Minneapolis, Minnesota HELENA BRANCH—(MONTANA) DIRECTORS R. E. TOWLE T. A. MARLOW HENRY SIEBEN S. McKENNAN WILLIAM P. SULLIVAN - 1933 1933 1933 1934 1934 Helena, Helena, Helena, Helena, Square Butte, Mont. Mont. Mont. Mont. Mont. OFFICERS R. E. TOWLE A. A. HOERR C. J. LARSON T. B. WEIR - - Managing Director Cashier Assistant Cashier Legal Counsel