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EIGHTH ANNUAL REPORT OF THE FEDERAL RESERVE AGENT OF THE NINTH FEDERAL RESERVE DISTRICT TO THE FEDERAL RESERVE BOARD COVERING THE CALENDAR YEAR 1922 Federal Reserve Bank of Minneapolis, Office of Federal Reserve Agent, Minneapolis, Minn., January 30, 1923. To Acting Governor Platt, Federal Reserve Board, Washington, D. C. Shin conformity with your letter of November 8, 1922, I have the honor to submit herewith the Eighth 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, 1922. Respectfully submitted, JOHN H. RICH, Federal Reserve Agent. REPORT OF THE FEDERAL RESERVE AGENT AT MINNEAPOLIS 1922 Business Conditions in 1922 This year was characterized by good crops, improved agricultural prices, heavy marketing of all kinds of live stock except sheep, resumption of cattle feeding in volume more nearly normal, abnormally large building construction in cities, and a revival in mining, manufacturing, retail and wholesale trade. These developments combined carried the money volume of general business, as measured by bank debits, 6.5 per cent above the total for 1921. This improvement, however, did not come early enough in the year to prevent an increase in the number and liabilities of business failures as compared with 1921. Financial Conditions in 1922 Banking conditions in this territory did not change materially. Deposits rose steadily throughout the year. Loans to customers declined in the spring and increased in the fall, with a net decline about equivalent to the increase in investment holdings, of which a large part were United States Government bonds and notes. There was a reduction in the number of banks operating in this territory. Discount rates to customers at banks declined steadily until September. In October and November there was a firmer tendency manifested; and in December, a narrowing of the spread between high and low rates. The range of rates charged on various kinds of paper as reported to us by banks in the larger cities was $y2 to 8 per cent in January; 4 to 5j^ per cent in September, and 4^4 to 6 per cent in December. The December rates were somewhat lower than those which prevailed throughout the year 1919. Operations of .Minneapolis Federal Reserve Bank in 1922 A. General Survey The history of this bank's operations during 1922 falls naturally into five divisions, according to the fluctuations in demand for accommodation and the technical position of this bank's assets and liabilities. The year opened with a rapidly declining volume of loans and notes outstanding, and increasing reserves. Between January 4, 1922, and April 5, 1922, holdings of bills discounted declined more than $22,000,000, from $48,913,000 to $26,663,000. This decline was accompanied by a decrease of $4,000,000 in Federal reserve notes in circulation and an increase of $15,000,000 in cash reserves. Deposits with this bank increased $3,000,000. The second period of the year, consisting of the spring and early summer months, or from April 5 to July 19, had practically no change in discounts, note issues, or reserves. The third period, from July 19 to August 30, is normally a period of expanding discounts to enable member banks to carry their customers through the crop moving period. This year there was an increase of little more than $2,000,000 in discounts. Federal reserve notes in circulation and member banks' reserve deposits with this bank remained unchanged. In the fourth period, from August 30 to November 29, there were declining discounts and increasing totals of reserves, Federal reserve notes in circulation and member banks' reserve deposits, all of which changes are normal for this time of year, when the crops are being marketed. Discounts declined $5,200,000, deposits increased $2,500,000 and cash reserves increased $12,300,000. To handle the larger volume of business incident to the marketing of crops, Federal reserve notes in circulation increased $7,500,000. A fifth period, which is possibly but a continuation of the fourth, and lasting to the end of the year, witnessed an expansion of Federal reserve notes in circulation of more than $3,000,000, largely on account of a Christmas trade better than last year. There was also a slight decline in bills discounted, a slight increase in cash reserves, and an increase of more than $2,000,000 in deposits. The total effect of these operations on our balance sheet for the year ending December 31, 1922, was as follows: Bill holdings declined more than $29,000,000, United States securities owned increased $8,500,000, and total earning assets therefore declined only $20,840,000. Deposits increased $4,000,000, owing to increases in member bank reserve deposits and in "all other" deposits, although there was a decline in government deposits. Federal reserve notes in actual circulation increased almost $2,000,000. Total reserves increased $21,300,000. This bank did not borrow from nor lend to other Federal reserve banks at any time during 1922. Our cash reserves increased rapidly during the first part of the year and did not fall below $63,000,000 at any time during the summer months, when the demand for accommodation is the greatest, and increased to more than $80,000,000 at the end of the year. The percentage of cash reserves against total deposits and Federal reserve notes in circulation increased from 58.5 per cent at the beginning of the year to 74.7 per cent at the close of the year. The discount rate of this bank was reduced twice during 1922. On January 11, it was reduced from $l/2 to 5 per cent, and on August 15 from 5 to Ay2 per cent. B. Earnings and Expenses The gross earnings of this bank during 1922 were but $1,969,248, as compared with $4,966,311 in 1921. Current expenses during 1922 were $1,084,942, as compared with $1,325,867 in 1921. Current expenses in 1922 included $84,359 representing costs and taxes for Federal reserve note and Federal reserve bank note circulation, as compared with $168,116 in 1921. After setting aside a reserve for depreciation on United States bonds of $78,058, and making other minor adjustments in the profit account, the net earnings available for dividends, surplus and franchise taxes were $782,695. Dividends totaling $213,774 were declared at the rate of 6 per cent per annum on our paid up stock and paid to member banks. There was transferred to surplus account $56,892, and the remainder of $512,029 was paid to the United States Government as a franchise tax. There was also charged to surplus account and paid to the United States Government $52,423 as an adjustment of franchise tax due for 1921. C. Federal Reserve Bank Notes On December 31, 1921, there were in actual circulation $4,219,656 in Federal Reserve Bank Notes of this bank. Before December 31, 1922, the United States Treasury had redeemed all of the Pittman Act certificates of indebtedness which had been deposited by us as collateral securing these issues and also assumed our liability for redeeming these outstanding notes. D. Departmental Statistics of Volume The Discount department received in 1922 offerings or requests from 706 member banks, or 70 per cent of the total number of member banks in the district. In 1921, 765 member banks were served, representing 75 per cent of the total membership. Nearly 48,000 pieces of discounted paper were handled in 1922, as compared with more than 104,000 pieces in 1921, and the dollar amount involved in 1922 was only $193,000,000 as compared with $730,000,000 in 1921. Of the discounted bills held for member banks in the different states on December 31, 1922, and 1921, South Dakota, Montana, and Michigan borrowings represented larger proportions of the total for all banks this year than last, and Minnesota, North Dakota and Wisconsin holdings were relatively smaller. At some time during 1922, 87 per cent of the member banks in Montana received accommodation, 83 per cent in South Dakota, 77 per cent in North Dakota, 59 per cent in Minnesota, 50 per cent in Wisconsin, and 37 per cent in Michigan. The Check Collection department handled 25,034,000 items during 1922, amounting to $2,917,749,000, as compared with 23,612,000 items handled in 1921, amounting to $2,916,117,000. The Collection department received 327,486 items during 1922 and collected 313,715 items, amounting to $133,640,328. In 1921 this department received 282,189 items and collected 266,834 items, amounting to $109,689,726. The Currency department handled 61,917,537 bills in 1922, as compared with 57,775,908 bills in 1921. During 1922, 11,020 shipments of currency were made to member banks, as compared with 7,403 in 1921. The Custody department handled securities during 1922 amounting to $433,000,000 as compared with $483,000,000 in 1921. This bank purchased 16,754 wire transfers during 1922 amounting to $1,073,129,147 and sold 11,396 wire transfers amounting to $567,394,906. In 1921 12,769 wire transfers were purchased amounting to $897,398,827 and 10,066 were sold amounting to $409,722,496. Fiscal Agency Functions The fiscal agency operated by us for the United States Government redeemed 3,463,050 government coupons, war savings stamps and thrift stamps in 1922, amounting to $15,526,442.73, as compared with 4,703,381 items in 1921, amounting to $19,060,256.61. Redemptions of treasury certificates and notes amounted to $19,531,000, as compared with $33,971,500 in 1921. The number of bonds received for conversion, exchange, and redemption in 1922 was 512,789, amounting to $83,375,700, as compared with 1,212,370 bonds received in 1921 for these purposes, amounting to $161,492,100. This bank assisted in the allotment of 13 issues of United States certificates of indebtedness and treasury notes and bonds during 1922, as compared with 18 issues in 1921. In the operation of this department 4,335 individual allotments were made in 1922, amounting to $104,896,200, as compared with 1,779 allotments in 1921, amounting to $87,635,600. In addition to handling the original allotments of United States securities, this department handled 781 repurchases and 571 resales of these issues, totaling $127,186,300, as compared with 732 repurchases and 851 resales in 1921, amounting to $60,199,100. Activities of Federal Reserve Agent's Office A. Membership At the close of the year, there were 1,014 member banks in this district as compared with 1,024 at the beginning of the year. There was a net loss of nine national banks and one state bank, accounted for largely by the fact that seven national and two state banks were absorbed and consolidated during the year. The total membership at the close of 1922 was divided into 877 national banks and 137 state banks. The new members are: Name of Bank Town MINNESOTA Shares Subscribed 45 150 21 72 18 29 State Bank of Anoka Anoka Duluth National Bank Duluth Minnetonka State Bank Excelsior Transportation Brotherhoods Nat'l Bank. .. Minneapolis Richfield National Bank Richfield Security State Bank Wanamingo MONTANA Daly Bank & Trust Company Anaconda 120 NORTH DAKOTA First National Bank Donnybrook 8 First National Bank Streeter (Reopened) .. 15 SOUTH DAKOTA Mellette County State Bank White River 16 WISCONSIN First National Bank Eagle River 18 Since the organization of this bank, 135 state banks have acquired membership by conversion and 137 have taken and retained membership as state banks, making a total of 272 state institutions which entered and remained in the System. On June 30, 1922, a special survey was made of the banks then operating in this district and the reports received indicate that there were 987 state banks and trust companies eligible for membership, of which at that time 138 were members of the Federal Reserve System. Comparisons made with a similar survey one year earlier, show that the percentage of state and trust company members to the total number of eligible state banks and trust companies increased from 13^2 per cent to 14 per cent. Of more significance, however, was the considerable increase in the total resources of state member banks in this district in that year. Total resources of state member banks as compared with the resources of eligible state banks increased from 21.9 per cent to 23.4 per cent. A study of our membership by states, shows considerable variation in the extent to which eligible banks have become members. The percentage of state members to the total number of eligible state banks and trust companies in the several sections was as follows: 15 Counties in the Upper Peninsula of Michigan 40.7% Montana 35.8 26 Counties in Northern and Northwestern Wisconsin. .. .11.2 Minnesota 9.3 South Dakota 9.2 North Dakota 4.0 When classified as to the total resources of the banks, the percentages are: Montana 49.6 15 Counties in Upper Michigan 46.1 Minnesota 19.8 South Dakota 18.2 26 Counties in Northern and Northwestern Wisconsin.... 13.0 North Dakota 3.6 7 National bank members 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 1922 include the following: Bank First National Bank First National Bank Martin County National Bank Security National Bank Farmers National Bank James River National Bank First National Bank Truman National Bank American Exchange Nat'l Bank.. Location Date Alexandria, Minn. ..12-9-22 Bismarck, N. D 7-26-22 Fairmont, Minn 9- 7-22 Faribault, Minn 3-29-22 Hutchinson, Minn.... 12-20-22 Jamestown, N. D . . . . 6-8-22 Red Wing, Minn 1-13-22 Truman, Minn 9-26-22 .Virginia, Minn 3-20-22 Capital 12-29-22 $60,000 100,000 75,000 200,000 50,000 100,000 100,000 50,000 100,000 B. Examination of Banks Every member state bank in this district was examined by this office at least once during 1922. In several instances, at the request of the different state banking departments, second examinations were made of the larger state bank members. All state banking departments in the Ninth District cooperate with the Federal Reserve Agent in joint examinations of their state banks which are members of the Federal Reserve System. In one state, the banking department accepts the Federal Reserve independent examinations of state banks as its own. During 1922, 152 examinations were made by the Federal Reserve Agent's examiners of which five were examinations of national banks. Of the 152 examinations made in 1922, 114 were made in conjunction with the state banking department examiners and 38 were made independently, two of the latter examinations being made of state banks applying for membership in the Federal Reserve System. Both of these banks later became members. In the examination work during 1922, five examiners were used, who traveled in the aggregate 45,521 miles and examined banks with total resources of $145,294,107. In addition to the foregoing examinations, special visits were made at 33 banks by the examiners for the purpose of obtaining credit information or in connection with rediscounts or collections, or to give general assistance to member banks, and two examiners spent two months each at closed member banks in this district. In addition to the information obtained by Federal Reserve examiners, 1,802 reports of examination of national banks were received from the Chief National Bank Examiner of this district and 28 reports of examination of state member banks were received from the various state banking departments. There were five calls for reports of condition from national banks and three calls for state member banks during 1922. Also, two semi-annual statements of earnings and dividends were required from all member banks. Four applications of state banks desiring to become members of the Federal Reserve System were received and investigated, and three of them were forwarded to the Federal Reserve Board and approved. Fully 125 applications for original or additional stock in the Federal Reserve Bank were received during the year. C. Federal Reserve Note Issues During 1922 the Federal Reserve Agent and his deputies at Minneapolis and Helena received $36,440,000 of new Federal reserve notes from the Comptroller of the Currency at Washington, and $8,420,000 of fit-for-use notes from our paying tellers. The issues of new and fit-for-use notes totaled $43,360,000 during the year. Stocks of notes on hand with the Agent were increased from $9,390,000 on December 31, 1921, to $10,890,000 at the same date in 1922. Early in January gold pledged with the Agent as collateral increased in amount to a point where it exceeded 40 per cent of the outstanding Federal reserve notes and continued to exceed this percentage during the remainder of the year. The total amount of notes outstanding on December 31, 1921, and December 31, 1922, respectively, were $56,789,000 and $62,633,000. The Agent held as security for these notes on December 31, 1921, about $17,000,000 in gold and $50,000,000 in commercial and agricultural paper; and on the same date in 1922, $46,000,000 in gold and $20,000,000 in discounted paper. A study of the dollar amounts of different denominations of Federal reserve notes outstanding in this district at the end of each of the last six years shows that the smaller denominations, which are used largely in payrolls and as pocket money, vary in quantity with the volume of retail business while the larger denominations which are used more largely for cash reserves by banks or by individuals vary in amount with the needs of bankers and their expectations with reference to the stability of business. For the purpose of this study, five and ten dollar bills have been considered "pocket money" denominations and the larger denominations have been grouped as the class commonly used for "reserves," although it is true that some of the larger denominations are used for pocket money and some of the smaller denominations are held in banks' cash reserves. Probably these two exceptions to the general rule followed will offset each other to a large extent over a period of years. The year 1918 was a period of business expansion. Pocket money apparently increased $29,000,000 and bank cash reserves apparently increased $19,000,000. During 1919 when nearly everyone expected a quick reaction to pre-war levels, and hesitated to launch new enterprises, our Federal reserve notes in circulation declined $10,000,000. This decline took place entirely in the pocket money denominations. The larger bills did not vary appreciably in volume and their failure to decline with pocket money was probably due to three facts: (1) that as prices were rising very rapidly, the larger bills came into use as pocket money; (2) that state banks were using them more largely for reserve purposes instead of gold certificates; (3) and that many bankers felt it wise to keep their cash reserves at a high level, fearing that the uncertainties of the time might lead to heavy demands for cash when customers should lose confidence in the general business situation. During 1920, pocket money in circulation in this district apparently declined $8,000,000, but cash reserves, as evidenced by the larger denominations of Federal reserve notes, increased $1,000,000, showing either that bankers needed larger cash reserves in a time of financial uncertainty or that the public held larger quantities of these notes as a store of value. In 1921 business was greatly depressed, and the fear of a financial crash was past. Pocket money apparently declined $9,000,000 and cash reserves apparently declined $11,000,000. In the fall of 1922 business commenced to revive slowly. Pocket money in circulation apparently increased $3,000,000, but cash reserves declined $1,000,000, showing that it was deemed safe to curtail the idle funds on hand, on account of the continued depression and consequent smaller probable demand for cash and revived confidence. The elasticity of Federal reserve notes is greater in the smaller denominations, both on account of the larger quantity in circulation, and on account of the fact that their use in making payroll and retail trade payments, causes their volume to fluctuate more closely with the volume of business. Further, when business starts to expand, the five-dollar bill is apparently the first to increase in volume and then as prices rise and larger payments are made the tens and then the twenties increase the more rapidly. During 1918 the bulk of the expansion in note issues, which amounted to nearly $48,000,000, was due to the three lowest denominations: $21,000,000 in ten-dollar bills, $17,000,000 in twenties, and $8,000,000 in fives. Presumably, the first stage of expansion, evidenced by a larger expansion of fives than of the other denominations, was over. In 1919 the contraction of $10,000,000 in total circulation was accounted for almost wholly by a contraction of $10,000,000 in ten-dollar bills. The increases and decreases in the other denominations offset each other. During 1920 the total notes outstanding declined $7,000,000. Ten-dollar bills declined slightly more than $4,000,000 and fives declined $4,000,000 exactly. During 1921 the decline of $21,000,000 in total circulation was accounted for principally by declines of $10,000,000 in twenties, $7,500,000 in tens and $2,000,000 in fives. In 1922 the rise of $2,250,000 in circulation was caused by a rise of $2,000,000 in fives and $1,500,000 in tens, while the other denominations declined. It is thus seen that the ten-dollar bill furnished the greater part of the elasticity in the three years, 1918, 1919, and 1920. The twenty-dollar bill was the most elastic in 1921, probably due to the fact that with prices much lower, employment less regular, and business confidence improved, the amount of this denomination used as pocket money declined materially. In 1922 expansion was just beginning and the five-dollar bill furnished the bulk of the initial increase in note issue as should be expected in this phase of the business cycle. 10 Monthly variations during 1922 indicate the same tendencies regarding the different denominations of Federal reserve notes outstanding, which were noted in the previous paragraphs regarding the years 1918-22. Five and ten-dollar bills varied closely with the volume of payments made in this district and the volume of the larger bills, from fifty to one thousand dollar denominations, varied with the needs for bank cash reserves as estimated by bank executives. The twenty dollar denomination exhibited some of the attributes of pocket money and some reserve qualities. To ascertain the probable call for currency and the vault space required to absorb used notes when they are returned by the Federal Reserve Bank, the Federal Reserve Agent maintains a chart which has been carried forward each week for several years. It cannot be foretold with any degree of accuracy, except in one instance, what the outward movement of Federal reserve notes will be in a certain week, but the approximate beginning and end of each of the movements during the year can be fixed fairly definitely by the recurrence of similar opening and closing dates in several consecutive years. The one exception is the week ending July 4, when a large volume of notes can be expected to be called for to meet the combined need of holiday buying and June 30 payments. There are three other major outward movements, the first in March and April to take care of cash requirements incident to crop planting and other spring activities, the second commencing in the first week in September and continuing until the last week in October for the purpose of furnishing cash to harvest and move the crop, and the third during the four weeks of December to furnish cash for Christmas shopping. There is also a tendency toward heavier issues at the turn of each calendar month to meet end-of-the-month payments. With regard to return of notes, the movements are much less pronounced because the notes become widely scattered and drift back more gradually than they are issued. However, it is to be noted that returns are heaviest in January, February, May, June, and November, following the periods of heavy note issue. It is impossible to predict whether notes will be returned to the Federal Reserve Agent or sent to Washington for destruction, because it is impossible to ascertain definitely the amount of use to which they will be subjected and the consequent degree of wear which they will show. With this in mind, the Federal Reserve Agent observes very closely the past history of both retirements at Washington and returns to his local office, knowing that at any time he may have a large proportion of the notes which are going out of circulation returned to him and that he must have vault space sufficient to receive the maximum amount returned. The Federal Reserve Agent at Minneapolis now maintains approximately a three-year supply of notes for issue, counting both new and used currency in his possession. This supply fluctuates somewhat, according to the season of the year, being enlarged just before an expected demand for notes and being allowed to fall off 11 somewhat before a period when notes customarily are returned. The greater part of this supply is kept at Washington, largely because of limited vault space in the local offices at Minneapolis and Helena. It is possible, of course, to secure notes from the Washington supply within not more than three days from the date of a telegraphic order if unusual demand arises. The volume of notes necessary for a three-year supply has been fixed at $101,250,000, or three times the net issues in 1920, which, until 1922, was the year of largest issue in this bank. The proportion which each denomination bears to the total has been based on the percentage which each denomination bears to the total issues from the opening of this Federal Reserve Bank to December 31, 1921. D. Reports on Agricultural and Business Conditions During the year, twelve monthly reports were prepared for the Federal Reserve Board and later published, containing a total of 72 pages of printed material. The average number printed each month during 1922 was 4,783 as compared with 1,533 in 1921. This increase in number published was secured without increase in total cost of production. In connection with this monthly report, two special supplements were issued, the first a 12-page statistical abstract of business in the Northwest during 1920 and 1921, which was mailed with the January 31 report, and the second a 12-page pamphlet, discussing the financial problems of the northwestern farmers and containing a large number of maps and graphs showing grain production, live stock holdings, seed loans, banking conditions, marketing trends of the principal northwestern farm products, and wheat prices, which was mailed with the November 28 report. In addition several special studies were published in the monthly reports during the year as follows: Variations in the Average Building Permit in this District During a Business Cycle. A Ten-Year Average of Livestock Receipts. A Ten-Year Average of Flour Production at Minneapolis. (April 28). A Survey of the Prospective Wool Clip in Montana. (May 26). Federal Seed Loans Made in 1922 by Counties. (June 28). Black Rust and the Common Barberry. (July 28). A Survey, with two Maps, of the Bank Credit Situation on June 30, 1922 and 1921 Based on Replies to Questionnaires sent to all Banks in this District; a Survey, with two Maps, of the Wheat Yield per Acre as estimated on August 10, 1922 and 1921 by 800 Member Banks; and The Importance of the National Dairy Show to the Northwest. (Aug. 28). Recent Changes in Live Stock Holdings in the Northwest, with four Maps. (Sept. 28). The Outlook for the American Sheep Grower, with two Maps. (Oct. 28). 12 Beginning in November, a monthly summary was furnished of national business conditions prepared by the Federal Reserve Board and telegraphed to the Federal Reserve Agent at Minneapolis for distribution. E. General Service There is a continuous and insistent demand that this Federal Reserve Bank furnish speakers for various public meetings and that they describe the operations of the Federal Reserve System and its relation to business activity and agricultural conditions. In response to this demand during the year 1922, representatives of the Federal Reserve Agent and officials of the bank addressed 83 different ^groups with a total attendance of 11,579 persons. In addition, many requests were received through personal calls or letters for specific information regarding the banking system, all of which have been met with such information as could be obtained from our library and office files. With reference to certain questions or phases of banking activity, there have been so many requests as to make it advisable and more economical to print a formal memorandum containing all the information on the particular subject for general distribution. During 1922, 89,600 copies were distributed of a pamphlet entitled, "Better Banking," describing the operation of the Federal Reserve System; and about 1,000 copies of a pamphlet "The Economic Position of Agriculture in the Northwestern Grain-raising Areas." During the year 1922 the number of volumes in our library increased from 624 to 742 volumes; and the number of newspapers and periodicals received was reduced so as to include only those which were found by actual test to be used by our staff or known to be of permanent value for reference purposes. Changes in Personnel In the annual fall election, member banks re-elected Mr. Theodore Wold of Minneapolis, as a Class A Director, and Mr. F. R. Bigelow of St. Paul, as a Class B Director. Mr. George W. McCormick of Menominee, Michigan, was appointed a Class C Director, succeeding Mr. C. H. Benedict, resigned, to serve with the above directors for a three-year term beginning January 1, 1923. The Federal Reserve Board announced the reappointment of Mr. Thomas A. Mariow and Mr. Lee M. Ford as members of the Board of Directors of the Helena Branch. Reappointment of Mr. C. J. Kelly, Mr. R. O. Kaufman, and Mr. H. W. Rowley as directors of the Helena Branch, was announced by this bank. Mr. George H. Prince was reappointed by our Board of Directors as a member of the Advisory Council to serve for the year 1923. During the latter part of December the Federal Reserve Board announced the reappointment of Mr. John H. Rich as Chairman and Federal Reserve Agent, and the redesignation of Mr. Curtis L. Mosher and Mr. J. F. Ebersole as Assistant Federal Reserve Agents 13 at the Minneapolis office, and Mr. H. L. Zimmermann as Assistant Federal Reserve Agent at the Helena Branch. In February Mr. O. A. Carlson resigned as Manager of the Helena Branch, and Mr. R. E. Towle, formerly Cashier, was appointed Manager, Mr. H. F. Brown was appointed Cashier, and Mr. Oliver Geiss Assistant Cashier. Mr. L. E. Rast, formerly Assistant Cashier of the Helena Branch, was transferred to the head office and appointed Assistant Cashier. In April Mr. R. E. Schumacher was appointed Assistant Cashier at Helena, succeeding Mr. Oliver Geiss. The complete staff of the Federal Reserve Bank of Minneapolis on December 31, 1922, numbered 515 persons as compared with 467 persons a year previous, or an increase of 10 per cent. The number in the Fiscal Agency Department was increased by 67 or nearly 112 per cent., and in the Auditing Department by 4 or 31 per cent., while there was a decrease in the number in the Banking Department of 24 or more than 6 per cent. 14 Resources and Liabilities of the Minneapolis Federal Reserve Bank at Close of Business, December 31, 1920-1922 (In thousands of dollars) RESOURCES Dec. 30, 1922 $7,535 23,499 Dec. 31, 1921 $9,140 31,115 Dec. 31, 1920 $9,130 8,456 89 Total gold held by bank $31,034 $40,255 $17,675 Gold with Federal Reserve Agent. Gold redemption fund 46,372 3,423 16,856 2,765 25,905 3,098 $80,829 $59,876 $46,678 1,190 811 250 $82,019 $60,687 $46,928 $2,539 19,377 $7,289 43,923 $17,093 64,561 1,313 $21,916 $51,212 $82,967 12,572 115 116 $4,450 $8,480 Gold and gold certificates Gold settlement fund—Federal Reserve Board. Gold with foreign agencies Total gold reserves Legal tender notes, silver, etc. Total reserves Bills Discounted: Secured by U. S. Government obligations. All other Bills bought in open market Total bills on hand. United States bonds and notes United States certificates of indebtedness: One-year certificates (Pittman A c t ) . . All other Municipal Warrants 499 39 Total earning assets. Bank premises 5 per cent redemption fund against F. R. bank notes.. Uncollected items All other resources Total resources ' ' 89 $35,026 $55,866 $91,563 942 196 18,166 1,809 763 201 14,505 1,033 590 480 21,606 249 $138,138 $133,055 $161,416 $3,535 7,473 $3,569 7,468 $3,461 6,980 800 49,310 2,964 43,524 477 1,555 43,520 532 $46,965 $45,607 58,735 16,588 801 56,789 4,220 12,919 1,125 79,498 7,655 17,492 723 $138,158 $133,055 $161,416 74.7 58.5 *38.8 LIABILITIES Capital paid in. Surplus Deposits: Government Member bank—reserve All other Total account 916 deposits Federal Reserve notes in actual circulation Federal Reserve Bank notes in circulation—net liability Deferred availability items All other liabilities Total liabilities Ratio of total reserves to deposit* and Federal reserve note liabilities combined $51,026 'Net deposits prior to March 18, 1921, and total deposits beginning with that date. 15 Earnings and Expenses of the Minneapolis Federal Reserve Bank, 1922, 1921 and ip20 EARNINGS Discounted bills Purchased bills United States securities Transfers—net earnings Deficient reserve penalties Miscellaneous Total earnings 1922 $1,451,659 1921 $4,649,554 383,531 3,195 128,087 2,776 142,001 12,581 157,158 5,004 191,862 181,990 77,245 92,744 29,281 $1,969,248 $4,966,311 $5,307,381 $115,499 517,448 23,618 18,807 $77,637 363,724 10,766 23,686 770 403 908 452 27 893 11,902 35,505 25,554 11,628 6,705 15,227 22,520 3,100 29,553 22,253 CURRENT EXPENSES Salaries: Bank officers $107,977 Clerical staff 463,390 Special officers and watchmen 22,281 All other 16,446 Governors' conferences 467 Federal Reserve Agents' conferences 267 Federal Advisory Council 1,140 Directors' meetings 11.407 Traveling expensest 21,470 Assessments for Federal Reserve Board expenses 24,945 Legal fees 11,592 Insurance (life, fidelity, casualty, workmen's compensation, and general liability) 25,311 Banking House: Taxes and fire insurance 1,578 Light, heat, and power 902 Repairs and alterations 1,667 All other 11 Rent, including light, heat and power, and minor alterations 44,038 Fire insurance—Furniture and equipment 481 Furniture and equipment* Printing and stationery (including office and other supplies) 64,469 Telephone 7,090 Telegraph 21,697 Security shipments 4,018 Currency and coin shipments 22,992 Postage and expressage (other than on money and security shipments) Federal Reserve currency: Original cost, including shipping charges Cost of redemption including shipping charges Taxes on Federal Reserve Bank note circulation. . All other expenses Total current expenses Current net earnings 80,071 53,334 16,765 14,260 44,876 $1,084,942 $884,306 13 3,119 1,556 1,015 44,128 I 112 J 53,368 97,072 7,248 23,494 2,101" 20,420 1920 $4,734,259 45,469 100,817 62,488 2,832 13,780 102,156 83,139 . 124,584 16,552 26,980 29,384 $1,325,867 $3,640,444 62,627 15,959 36,792 25,288 $1,015,198 $4,292,183 tOther than those connected with governors' and agents' conferences and meetings of directors and of the advisory council. •Charged to Profit and Loss in 1922 and to current expenses prior to that year. 16 Earnings and Expenses of the Minneapolis Federal Reserve Bank—Continued PROFIT AND LOSS ACCOUNT 1922 Earnings $1,969,248 Current expenses 1,084,942 Current net earnings. 884,306 Additions to current net earnings: Assessment account expenses Federal Reserve Board previously charged to profit and loss All other 41,231 41,231 Total additions Deductions from current net earnings: Depreciation allowances on bank premises... Furniture and Equipment Reserve for probable losses Reserve for depreciation on U. S. bonds All other 9,713 24,640 78,058 30,431 1921 $4,966,311 1,325,867 1920 $5,307,381 1,015,198 3,640,444 4,292,183 16,607 17,264 17,264 16,607 5,275 177,737 '500,666 V.279 Total deductions Net deductions from current net earnings Net earnings available for dividends, franchise tax, and surplus 142,842 506,554 101,611 489,290 161,130 782,695 3,151,154 4,131,053 Dividends paid Franchise tax paid United States Government... Transferred to surplus account 213,774 *512.029 *56,892 211,657 2,450,967 488,530 195,871 524,234 3.410.948 177,737 Member Banks Severing Connection With This Federal Reserve Bank During 1922. Location Reason Name of Bank Big Sandy, Mont.. Liquidation Farmers Nat'l Bk Citizens Nat'l Bank... Tyndall, S. D Consolidation Stockmens Nat'l Bank. Poplar, Mont Liquidation First Nat'l Bank Absorbed by a Menno, S. D Stillwater Val. Nat'l Bk .Absarokee, Mont.. Liquidation Stockmens Nat'l Bank. Hardin, Mont Absorbed by a First Nat'l Bank Antelope, Mont.... Absorbed by a Silver Bow Nat'l Bk.. . Butte, Mont Absorbed by a Nat'l Bank of Com Absorbed by a Yankton, S. D First Nat'l Bank Ingomar, Mont.. .. Liquidation First Nat'l Bank Reed Point, Mont.. Liquidation Lincoln Nat'l Bank.... Minneapolis, Minn. Absorbed by a Merchants Nat'l Bank. Wimbledon, N. D.. Liquidation American Nat'l Bank.. Billings, Mont Liquidation Fresno, Mont First Nat'l Bank Liquidation St. Paul, Minn Peoples Bank Consolidation Stockmens State Bank. Browning, Mont... Liquidation Farmers State Bank... Waconia, Minn.. .. Withdrawal St. Anthony Falls Bk.. Minneapolis, Minn. Absorbed by a First Am. State Bank. . Golden Valley.N.D. Withdrawal Little Horn State Bk. . Wyola, Mont Withdrawal State State State State Nat'l Nat'l Nat'l Shares Surrendered 18 17 18 Bk. 17 20 Bk. 27 Bk. 17 Bk. 132 Bk. 33 23 17 Bk. 360 18 98 IS 360 30 21 Bk. 300 17 21 •Bank also charged its surplus account and paid the U. S. Government $52,423 as an additional franchise tax for 1921. See page 5. 17 Movement of the Earning Assets of the Federal Reserve Bank of Minneapolis During the Calendar Year 1922 (Amounts in Thousands of Dollars) Date January 4. January 11. January 18. January 25. February 1 February 8 F'ebruary 15 February 21 March 1. March 8. March 15. March 22. March 29. April 5 April 12 April 19 April 26 May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 July 5 July 12 July 19 July 26 August 2. August 9. August 16. August 23. August 30. September 6 September 13 September 20 September 27 October 4. . . October 1 1 . . . October 18... October 2 5 . . . 1 November 8 November November 15 November 22 November 29 December 6 December 13 December 20 December 27 Total Earning Assets £53,669 49,498 48,215 46,879 45,525 44,151 43,306 42,565 39,782 39,302 40,467 39,575 38,510 37,869 39,206 40,258 40,230 41,356 40,238 42,632 41,674 40,837 39,665 40,957 39,624 39,966 39,457 38,220 36,872 37,775 38,589 37,498 36,602 36,861 37,518 36,116 35,926 44,729 45,147 43,556 36,395 36,003 35,915 35,801 35,041 34,069 33,471 33,665 33,064 33,709 34,564 35,227 Bills Discounted for Member Banks in this District* Secured by Total U. S. Govt. Percent Obligations (2-4-1) (1) (2) $48,913 44,857 43,619 42,298 40,460 39,212 37,881 37,173 34,078 31,804 30,680 29,546 27,700 26,663 26,712 26,484 26,913 27,147 25,754 27,960 27,037 25,978 24,504 24,682 26,729 26,691 25,972 25,139 24,834 25,934 27,127 26,400 26,930 27,213 27,119 26,317 25,706 26,216 26,191 24,531 23,861 23,275 23,958 23,175 22,420 21,456 21,340 21,883 21,445 21,299 21,431 21,079 $7,225 6,776 6,545 6,525 6,073 5,799 5,486 5,170 4,490 3,711 3,653 3,795 2,585 2,543 2,521 2,331 2,605 2,743 2,086 3,693 2,409 1,977 1,744 1,704 3,879 2,746 1,978 1,625 1,666 1,544 2,007 2,069 2,229 2,019 2,172 1,828 1,631 2,262 2,049 1,961 1.671 1,766 1,876 2,722 2,360 2,031 2,187 1,911 1,985 2,091 2,156 2,177 14.8 15.1 15.0 15.4 15.0 14.8 14.5 13.9 13.1 11.7 11.9 12.8 9.3 9.5 9.4 8.8 9.7 10.1 8.1 13.2 8.9 7.6 7.1 6.9 14.5 10.3 7.6 6.5 6.7 6.0 7.4 7.8 8.3 7.4 8.0 6.9 6.3 8.6 7.8 8.0 7.0 7.6 7.8 11.7 10.5 9.5 10.2 8.7 9.3 9.8 10.0 10.3 Municipal Warrants Held 44 25 15 15 4 9 9 3 4 9 21 21 21 18 16 15 15 15 27 27 24 27 27 27 24 26 26 26 40 u. s. Securities Owned $4,667 4,597 4,571 4,566 5,050 4,937 5,423 5,392 5,704 7,498 9,787 10,029 10,810 11,206 12,494 13,774 13,317 14,209 14,484 14,672 14,637 14,859 15,161 16,275 12,895 13,275 13,485 13,077 12,029 11,832 11,459 11,094 9,663 9,627 10,378 9,778 10,202 18,497 18,941 19,010 12,519 12,701 11,930 12,602 12,594 12,586 12,104 11,758 11,593 12,384 13,107 14,108 *There were no rediscount transactions between this bank and other Federal reserve banks during the year. IS Movement of Demand Liabilities and Cash Reserves of the Federal Reserve Bank of Minneapolis During the Calendar Year 1922 (Amounts in Thousands of Dollars) Date January 4 . . . January 1 1 . . . January 18... January 2 5 . . . February 1. . February 8.. February 15.. February 21.. March 1 March 8 March 15 March 22 March 29 April 5 April 12 April 19 April 26 May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 July 5 July 12 July 19 July 26 August 2. .. . August 9. .. . August 16.. .. August 23.. .. August 30.. .. September 6. September 13. September 20. September 27. October 4. .. October 1 1 . . . October 18... October 25. .. November 1. November 8. November 15. November 22. November 29. December 6. December 13. December 20. December 27. Cash Reserves (4) Total Deposits (5) $59,523 60,793 63,463 62,479 64,306 70,519 67,786 69,890 69,842 69,818 72,359 72,509 70,688 74,522 71,300 70,441 68,169 70.515 68,351 66,297 63,098 66,334 65,770 68,569 67,161 63,577 67,725 68,153 68,742 67,154 65,343 67,579 68,267 66,510 66,713 72,931 70,946 68,258 65,512 71,533 75,246 74,033 77,049 79,300 78,273 81,295 81,052 79,000 85,567 77,865 82,424 80,842 $44,283 42,826 44,458 43,716 46,112 48,649 45,738 47,932 46,225 44,016 47,722 47,124 44,496 47,379 45,877 46,120 44,490 47,453 45,514 46,175 42,952 47,176 44,427 49,509 46,324 43,511 47,550 45,677 44,648 44,621 44,260 45,325 46,006 43,803 44,611 47,293 45,291 49,960 46,660 48,643 45,837 43,441 48,769 50,081 49,422 49,109 49,696 47,149 52,860 46,300 51,737 49,576 19 F. R. Notes in circulation (6) Reserve Percentage 4-^5 & 6 $56,674 55,577 54,377 53,254 5^,639 52,526 52,162 52,027 52,134 52,590 52,477 52,297 51,691 52,315 52,244 51,968 51,170 51,381 50,937 50,557 49,836 49,515 49,554 48,933 49,254 48,628 50,547 49,927 49,482 49,051 48,874 48,959 48,749 48,986 49,163 51,328 51,588 52,415 52,762 55,204 56,403 56,911 56,753 56,778 57,623 56,975 57,090 56,691 58,005 57,894 59,183 60,027 59.0 61.8 64.2 64.4 65.1 69.7 69.2 69.9 71.0 72.3 72.2 72.9 73.5 74.8 72.7 71.8 71.3 71.3 70.9 68.5 68.0 68.6 70.0 69.7 70.3 69.0 69.0 71.3 73.0 71.7 70.2 71.7 72.0 71.7 71.1 74.0 73.2 66.7 65.9 68.9 73.6 73.8 73.0 74.2 73.1 76.6 75.9 76.1 77.2 74.7 74.3 73.8 DIRECTORS AND OFFICERS of the FEDERAL RESERVE BANK OF MINNEAPOLIS January 1, 1923 DIRECTORS Class B Class A N. B. Holter (1923) J. C. Bassett (1923) Helena, Mont. Aberdeen, S. D. W. C. McDowell (1924) F. P. Hixon (1924) LaCrosse, Wis. Marion, N. D. F. R. Bigelow (1925) Theo. Wold (1925) St. Paul, Minn. Minneapolis, Minn. Class C John H. Rich (1923) Minneapolis, Minn. Homer P. Clark (1924) St. Paul, Minn. George W. McCormick (1925) Menominee, Mich. OFFICERS John H. Rich, Chairman and Fed- R. A. Young, Governor. eral Reserve Agent. W. B. Geery, Deputy Governor. Homer P. Clark, Deputy Chairman. S. S. Cook, Deputy Governor. Curtis L. Mosher, Secretary Board Frank C. Dunlop, Controller. of Directors and Assistant Fed- B. V. Moore, Cashier. eral Reserve Agent. J. F. Ebersole, Assistant Federal Gray Warren, Assistant Cashier. L. E. Rast, Assistant Cashier. Reserve Agent. Harry Yaeger, Field Representative. H. C. Core, Assistant Cashier. Fred M. Bailey, Manager Bank Ex- Andreas Ueland, Legal Counsel. amination Department. Member of Federal Advisory Council George H. Prince, Chairman Board of Directors, Merchants National Bank, St. Paul, Minn. HELENA BRANCH (HELENA, MONTANA) Directors T. A. Marlow, Helena, Chairman Lee M. Ford, Great Falls C. J. Kelly, Butte R. O. Kaufman, Helena H. W. Rowley, Billings R. E. Towle, Manager H. L. Zimmerman, Assistant Federal Reserve Agent H. F. Brown, Cashier Officers R. E. Schumacher, Assistant Cashier T. B. Weir, Legal Counsel
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