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TWENTIETH ANNUAL REPORT of the FEDERAL RESERVE BANK of the NINTH FEDERAL RESERVE DISTRICT to the FEDERAL RESERVE BOARD Covering the Calendar Year 1934 Federal Reserve Bank of Minneapolis, Minneapolis, Minnesota, March 4, 1935. Federal Reserve Board, Washington, D. C. Gentlemen: I attach the Twentieth Annual Report of the Federal Reserve Agent of the Federal Reserve Bank of Minneapolis, relating to operations during the twelve months ending December 31, 1934. Very truly yours, J. N. PEYTON, Chairman of the Board. REPORT OF THE FEDERAL RESERVE AGENT AT MINNEAPOLIS 1934 A. BUSINESS, AGRICULTURAL AND BANKING CONDITIONS Business 1934 was a year of general recovery in this district. A very few lines of business reported a smaller volume than in the preceding year, but in most lines the volume was the largest since 1931. Rural conditions improved more than city conditions in spite of the severe drouth and crop failure. It appears that this handicap was more than offset by higher farm product prices, large government payments to farmers, and the refinancing of farm debt through government agencies, which released a larger proportion of the farmers' current income for purchases. The improvement in general business in the district was very uniform. All but two of the regional groups of cities reported bank debits as the largest since 1931. The exceptions were the Great Lakes Ports, which reported the smallest volume of bank debits during the depression period, and South St. Paul, where the increase in 1934 over 1933 was very small. Total bank debits at 94 cities were $7,685,000,000 in 1934 as compared with $7,035,000,000 in 1933, $6,887,000,000 in 1932, and $13,697,000,000 in 1929. Country check clearings increased to the highest level since 1929, partly as a result of changes in the routing of country checks for collection by city member banks, but principally because of the upturn in rural business. Country check clearings in this district amounted to $1,051,000,000 in 1934, as compared with $803,000,000 in 1933, $665,000,000 in 1932, and $1,213,000,000 in 1929. Retail trade in this district improved in 1934, but the dollar volume in that year was still about one-fourth below the 1929 volume, according to reports from representative department stores and country general stores. The improvement from 1933 to 1934 was greater at rural stores than at city stores, bearing out the evidence of other records for this district. The greatest improvement occurred in northeastern Minnesota, where reporting stores had a volume of trade in 1934 about as large as in 1929. Other increases of more than the average amount occurred in eastern Montana, the Red River Valley, the remainder of North Dakota, and northwestern Wisconsin and Michigan. Other 1934 increases in northwestern business volume over the volume in 1933 occurred in freight carloadings, build ing contracts, real estate activity in Hennepin and Ramsey counties, receipts of cattle, calves, and sheep, country lumber sales, securities sales, life insurance sales, and wholesale trade. Decreases from the 1933 volume occurred in building permits, flour production and shipments, linseed product shipments, copper output, butter production, grain marketings, and hog receipts. Business failures were only 309 in number during 1934, as compared with 725 in 1933, and 928 in 1932. According to reports from Dun and Bradstreet, the 1934 business failure total was the smallest since 1920. B. Agriculture Farm income from cash crops, dairy products, hogs, and wool, together with AAA payments, totalled $405,000,000 in 1934, as estimated by the Federal Reserve Agent. This income was 21 per cent larger than the income from the same sources in 1933, which in turn was 29 per cent larger than the income from the same sources in 1932. Prior to that time, there had been consecutive decreases since 1928. The increase in farm income in this district during the past year was entirely the result of AAA payments which amounted to $110,000,000. Declines in income from bread wheat, durum wheat, rye, flax, and hogs more than offset increases in income from the sale of dairy products, wool, and potatoes. More complete figures for Minnesota, prepared by the University of Minnesota, indicate that, for that state, 1934 gross farm income, including $20,000,000 of AAA payments, was 25 per cent larger in 1934 than in 1933. Cash expenses of Minnesota farmers were estimated to have risen slightly in 1934. The net result was that Minnesota farmers had an estimated net cash income of $76,000,000 in 1934, as compared with $40,000,000 in 1933, and $15,000,000 in 1932. Nevertheless, the 1934 net farm income in Minnesota was less than half as large as the income in 1926, which was the peak for the past decade. The harvested acreage of the 1934 crops in the district was 16,000,000 acres smaller than the acreage harvested in 1932, following a decrease of 11,000,000 acres between 1932 and 1933. The reductions in both of the last two years were chiefly on account of the abandonment of acreage on which the crop was a failure, although the acreage reduction contracts between the farmers and the government were a factor in 1934. All important crops in the Northwest were smaller in 1934 than in any other post-war year. The crops of wheat, rye, and corn were about one-half as large as the small crops of 1933. The number of live stock on farms was drastically reduced during 1934, as a result of drouth conditions and restriction of production under government contracts. The number of hogs on January 1, 1935 was the smallest in the fifty year period for which records are available. Beef cattle also decreased by the largest amount in any year on record. There was a 10 per cent reduction in the number of milk cows on farms, and the number of dairy calves and heifers on farms at the close of the year was so small as to indicate that no increase in producing herds is intended during 1935. Cold storage holdings of farm products in the United States at the close of 1934 were higher than the five-year average, with the exception of butter and eggs. The most pronounced increase was in beef, resulting from the government's active campaign to purchase cattle as a drouth relief measure. Butter stocks were only three-fourths as large as the average stocks at the close of the year. Prices of most farm products which are important in the Northwest continued to increase in 1934. As a result, the price of barley was the highest since 1919, durum wheat was the highest since 1927, oats was the highest since 1928, bread wheat, corn and flax were the highest since 1930, and hogs and butter were the highest since 1931. Smaller increases occurred in the prices of butcher cattle, lambs, hens, and eggs. Prices of feeder cattle, wool, and potatoes decreased. Summing up the various price trends, the University of Minnesota agricultural products price index was the highest in the fall of 1934 since the winter of 1930-1931. The farm real estate situation changed for the better during the year ending March 15, 1934. Farm land prices ceased declining in Montana, South Dakota, and Wisconsin; and increased slightly in Minnesota and North Dakota. C. Banking Banks of the district continued their recovery from the bank holiday conditions during the year 1934. Deposits increased 184 million dollars to a total of $1,198,000,000. This was the largest deposit total since the close of 1931 in spite of the fact that there were about 400 less banks operating in the district than in 1931. Loans continued to decline in 1934, receding 62 million dollars to a total of $375,000,000 at the close of the year. This was the smallest total of loans held by banks in the district since our records began in 1913. Investment holdings of banks in the district increased 137 million dollars, and at the close of the year, they were at the highest level since the autumn of 1929, and within a few million dollars of the highest total ever reached. Banks reduced their indebtedness in 1934 to about J/2 million dollars, which was the smallest amount in our records. In spite of increasing their security holdings and reducing their indebtedness, banks were able to increase their holdings of cash and balances due from banks by 120 million dollars during the year. At the close of the year, these balances were at the highest level on record. Both city banks and country banks had large increases in deposits during 1934. City bank deposits increased 74 million dollars, and at the close of the year, they were at the highest level since June, 1931, and within a few million dollars of the highest total in history. Loans at city banks declined 24 million dollars, investment holdings increased 64 million dollars, and cash and balances due from banks increased 38 million dollars. City banks were almost entirely out of debt at the close of the year. Country banks experienced an increase of 110 million dollars in deposits during the year, and their total deposits at the close of the year had increased to the level of September, 1932. Country bank loans were reduced 38 million dollars during the year, and their investment holdings were increased 73 million dollars. Cash and balances due from banks increased 82 million dollars. Country bank borrowings were reduced to a negligible sum of less than 14 million dollars. Bank suspensions during 1934, together with non-licensed banks placed in liquidation or receivership, were 19 in number. The comparable figure for 1933 was 172, and bank failures in earlier years were as follows: 1932—136; 1931—271; 1930— 156 and 1929—85. Bank suspensions in 1934 were the smallest in number since 1919. The number of banks in operation in the district was 1,407 at the close of 1934, as compared with 1,386 a year earlier. OPERATIONS OF THE MINNEAPOLIS FEDERAL RESERVE BANK IN 1934 A. General Survey The earning assets of this bank changed very little during the year 1934, ranging from a high of nearly $71,000,000 in January to a low of $66,000,000 in August. Discounts for member banks amounted to less than $2,000,000 in January, and the total was steadily reduced during the year until in December this bank held no obligations of member banks. By an act approved on June 19, 1934, Federal Reserve Banks were authorized to make industrial advances to individuals, firms, and corporations under certain circumstances. This bank made its first loan under this authorization in the week ending August 1. Thereafter the total of these advances increased until the close of the year when holdings of these assets amounted to $1,753,000. Aside from small holdings of purchased bills, the remainder of our earning assets consisted of United States Government obligations of which our holdings remained practically unchanged throughout the year. Discounts and Advances Held by Minneapolis Federal Reserve Bank (000's omitted) Dec. 31, For Banks in 1934 Minneapolis and St. Paul $ 0 Other Minnesota Towns and Cities.... 0 Montana 0 North Dakota 0 South Dakota 0 Wisconsin 0 Michigan 0 Individuals and Corporations (Sec. 13) 0 Industrial Advances (Sec. 13b) 1,753 Total $1,753 8 Dec. 31, 1933 $ 24 353 122 180 810 80 303 0 0 Dec. 31, 1932 $ 20 2,679 1,043 1,404 3,072 672 616 98 0 $1,872 $9,604 Federal Reserve notes in circulation increased rather steadily from January to December. On the other hand, our liability for Federal Reserve Bank notes in circulation was reduced from $8,000,000 in January to nothing in April, and thereafter no Federal Reserve Bank notes were issued by this bank. Member bank reserve deposits nearly doubled between the end of January and the middle of December, increasing from $55,000,000 to $109,000,000 in that period. Total deposits of the Federal Reserve Bank increased by approximately the same amount. Cash holdings were at their lowest level of the year, about $100,000,000, on January 17. Thereafter they increased sharply to $162,000,000 on December 12. The net effects of these changes upon our balance sheet for the year ending December 31, 1934 were as follows: Cash holdings increased $45,000,000; bills discounted decreased nearly $2,000,000; bills bought in the open market decreased $3,000,000; there was an increase due to industrial advances of nearly $2,000,000; government security holdings remained unchanged ; total bills and securities decreased $3,000,000; Federal Reserve notes in actual circulation increased $14,000,000; Federal Reserve Bank notes in circulation decreased $8,000,000; member bank reserve accounts increased $35,000,000; total deposits increased $41,000,000; and the ratio of total cash holdings to deposits and Federal Reserve note liability combined increased from 66.7 per cent to 71.0 per cent. The redemption fund to cover the redemption of Federal Reserve Bank notes was automatically extinguished by the retirement of the Federal Reserve Bank notes. This bank did not borrow from nor lend to any other Federal Reserve Bank during 1934. The discount rate of this bank which had remained unchanged at 3V2 Per cent since September 12, 1930 was reduced to 3 per cent on March 16, 1934. B. Earnings and Expenses The gross earnings of this bank during 1934 were $1,415,000, as compared with $1,498,000 in 1933. Increases in earnings from United States securities plus the income from industrial advances did not quite offset decreases in earnings on discounts, purchased bills and miscellaneous items, and a decrease in deficient reserve penalties. Current net earnings during 1934 were $210,000, as compared with $384,000 in 1933. Miscellaneous additions to current net earnings in 1934 amounted to $285,000; and deductions from current net earnings, including $207,000 set up for losses and market depreciation on securities, amounted to $318,000. Net earnings available for dividends and surplus amounted to $176,000 in 1934, as compared with $82,000 in 1933. In 1934, dividends totalling $181,118 were declared, at the rate of 6 per cent per annum, on all paid-in capital stock, and paid to member banks. Under Section 12b, Paragraph d, of the Federal Reserve Act as amended, this bank during 1934 transferred from surplus $3,509,467.65, which was an amount equal to one-half of its surplus as of January 1, 1933, for the purchase of Federal Deposit Insurance Corporation stock. Also, under Section 13b of the Federal Reserve Act as amended, this bank received $755,810 from the Treasury Department during 1934, for the purpose of making industrial loans. A separate surplus account was set up for these funds. A reduction in this surplus account, because of expenses over income on industrial advances, amounted to $4,833, which left a net "Surplus— Section 13b" on December 31, 1934 of $750,977. The unsegregated surplus account authorized under Section 7 of the Federal Reserve Act amounted to $3,419,984 on December 31, 1934. C. Departmental Statistics of Volume (Including Both the Head Office and the Helena Branch). The Transit, or Check Collection Department, handled 27,974,000 items during 1934, amounting to $4,369,678,000 as compared with 20,779,000 items during 1933, amounting to $3,293,367,000. The Collection Department received 783,000 items (including coupons other than those on Government issues) during 1934 amounting to $283,833,000 as compared with 1,128,000 items during 1933 amounting to $219,044,000. The Currency Department received and counted 42,573,000 bills, amounting to $196,397,000 in 1934 as compared with 36,997,000 bills, amounting to $197,567,000 in 1933. This department also received and counted 14,602,000 coins, amountig to $3,447,000 as compared with 21,323,000 coins, amounting to $9,943,000 in 1933. The Vault Custody Department in its service of safekeeping of securities received from or returned to member banks 253,035 bonds during 1934 as compared with 134,920 bonds during 1933. This department cut and forwarded to the owners of these securities or turned over to other departments for collection or credit 280,520 coupons during 1934 as compared with 206,956 coupons during 1933. Transfers of funds made for member banks, including those made for the 5 per cent Redemption Fund, numbered 42,300, totaling $1,640,380,000 during 1934 as compared with 52,900, totaling $1,847,658,000 during 1933. The Discount Department served 47 member banks during 1934. In 1933, 271 member banks were served. During 1934, 440 notes were discounted, amounting to $2,525,000 as compared with 12,044 notes, amounting to $50,172,000 in 1933. 10 During the year 1934, 76 industrial advances were made totaling $1,887,000. FISCAL AGENCY FUNCTIONS A. Volume of Operations Issues, redemptions, or exchanges of various United States Government securities, including Treasury Savings certificates, Federal Intermediate Credit Bank debentures and Federal Land Bank bonds redeemed at this office, which were handled by the Fiscal Agency operated by us for the United States Government, numbered 161,673 pieces and amounted to $309,979,854, as compared with 94,183 pieces amounting to $182,839,286 in 1933. This Agency also handled during 1934, 7,536 purchases and 16,263 resales of Government securities totaling $93,363,960. In addition, either delivery or payment, or both, was handled for banks and trust companies on 1,174 transactions in Government securities amounting to $180,773,400. There were also 8,959 transactions of miscellaneous general market securities aggregating $28,352,581. Altogether, of these various transactions there were 33,932 totaling $302,489,941, as compared to 24,926 totaling $203,268,137 in 1933. Delivery of 92,880 pieces totalling $137,647,495 was made on purchase and resale transactions in Government and other securities for other than our own account. In addition, on exchange transactions, such as denominational exchange, the exchange of coupon for registered securities, etc., 37,647 pieces were delivered, amounting to $152,414,100. The total number of pieces delivered was 130,527, amounting to $290,061,595, in comparison with 90,322 totalling $170,616,575 during the preceding year. Acting as Fiscal Agent of the Federal Farm Mortgage Corporation since April, 1934, this Agency made 66,985 deliveries of 263,498 Federal Farm Mortgage Corporation bonds amounting to $131,067,700 in accordance with instructions received from the Federal Land Bank of St. Paul. Issues and exchanges of bonds of the Federal Farm Mortgage Corporation, Home Owners' Loan Corporation and Consolidated Federal Farm Loan bonds of the Federal Land Banks handled by this Agency during 1934 as Fiscal Agent for these organizations numbered 60,286 pieces and amounted to $25,296,500. Included in these figures are 11,812 Home Owners' Loan Corporation 4 per cent bonds of 1933-51 aggregating $3,222,350 which were received for conversion into the 3 per cent bonds of 1944-52 of that Corporation prior to the expiration of the conversion privilege on October 27, 1934. There were also 8,621 bonds totalling $13,505,500 delivered on denominational, registered, and coupon exchanges. The total number of individual securities received and delivered by the Fiscal Agency Department (including the ll Federal Farm Mortgage Division) during 1934 was 624,605 totalling $769,911,149, as compared with 184,505 totalling $353,455,861 in 1933. The Fiscal Agency operated by us for the Government redeemed 578,056 Government and Federal Land Bank coupons amounting to $11,170,608 during the past year as compared to 533,628 coupons totalling $8,679,109 during 1933. They also redeemed 168,185 Federal Farm Mortgage Corporation and Home Owners' Loan Corporation coupons amounting to $1,189,815 during 1934. B. Fourth Liberty Loan In April, holders of the First Called Fourth Liberty Loan bonds (i. e. the Fourth Liberty Loan 41/4 per cent bonds bearing serial numbers the final digit of which was 9, 0, or 1) were offered the opportunity of exchanging these bonds for 314 per cent Treasury bonds of 1944-46. There were $7,599,350 of the First Called Fourth Liberty Loan bonds in coupon form and $2,014,600 in registered form received and accepted by this Agency on such exchanges. Notice was also given by the Secretary of the Treasury in April that all outstanding Fourth Liberty Loan 414 per cent bonds bearing serial numbers the final digit of which was 8 or 2 were called for redemption on October 15, 1934, on which date interest on such bonds would cease. In September, the Treasury Department offered to holders of the Second Called Fourth Liberty Loan bonds the privilege of exchanging them for a four year 21/2 per cent Treasury note or a 10-12 year 314 per cent Treasury bond, the latter being an additional issue of the Treasury bonds of 194446 which v/ere first offered in April, 1934. On such exchanges, 15,309 Fourth Liberty bonds in coupon form amounting to $18,477,300 and 6,427 in registered form aggregating $4,236,400 were received and accepted by this Agency. In October, the Secretary of the Treasury gave notice that the outstanding Fourth Liberty Loan 414 per cent bonds bearing serial numbers the final digit of which was 5, 6, or 7 were called for redemption on April 15, 1935, and interest on such bonds would cease on that date. C. Other Services With the exception of Treasury bills, there were fourteen offerings of United States Government securities during 1934. In such operations, 10,267 individual subscriptions contained in 9,045 different applications were received in this district. The amount allotted on these subscriptions was $132,089,250. During 1933, 9,451 individual subscriptions were submitted in 7,515 different applications on eleven similar offerings and $76,572,150 was allotted. During 1934, 321 tenders amounting to $20,489,000 were received by this Agency on 59 offerings of Treasury bills. Of 12 these, 48 tenders ranging from .02 per cent to 1.00 per cent and amounting to $8,480,000 were accepted. During 1933, 177 tenders amounting to $13,099,000 were received and 28 tenders totalling $5,192,000 were accepted on the 47 offerings of Treasury bills made that year. In connection with refunding the Federal Land Bank 4% per cent bonds which were called for payment July 1, 1934, this Agency redeemed $701,500 of such bonds and delivered 1,275 of the new Federal Land Bank Consolidated 4 per cent bonds of 1944-46 amounting to $1,313,000. In July, 115 tenders totalling $1,729,000 were received by this Agency on an offering of Federal Farm Mortgage 3 per cent bonds of 1944-49 by the Secretary of the Treasury on behalf of that Corporation. Of these tenders, 22 for $376,000 ranging from 101.187 to 100.500 were accepted. On behalf of the Home Owners' Loan Corporation, the Secretary of the Treasury on August 6, 1934, offered to the public three series of bonds of that Corporation and invited tenders therefor. To the three series combined, 100 tenders amounting to $3,613,500 were received by this Agency, of which 67 tenders ranging from 101. to 99.250 and totalling $3,394,000 were accepted. At the close of 1934, there were 321 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 bycredit basis for subscriptions to new offerings of Government securities. At the close of the preceding year there were 328 banks and trust companies so designated. No interest was paid on daily balances in the War Loan Deposit Accounts by the special depositaries during 1934. A. ACTIVITIES OF THE FEDERAL RESERVE AGENT'S OFFICE Federal Reserve Notes and Federal Reserve Bank Notes 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, 1934, on which date the outstanding new series Federal Reserve notes amounted to $107,657,625, as compared with only $3,781,455 of the old series. The denominational distribution of the outstanding old series Federal Reserve notes on December 31, 1933 and 1934, was as follows: 1933 $ 734,060 1,055,240 1,990,360 191,450 467,500 62,000 147,000 Total 13 1934 $ 655,665 886,070 1,571,020 143,300 347,400 52,000 126,000 $4,647,610 5's 10's 20's 50's 100's 500's 1,000's $3,781,455 On December 31, 1934, the amount of old and new series notes outstanding was $111,439,080, and the Federal Reserve Agent held $65,557,000 of new and fit-for-use notes. Of this total outstanding ($111,439,080), there was in actual circulation $106,687,235, the notes held by our paying tellers at the Head Office and at the Helena Branch, together with the amount of mutilated Federal Reserve notes in transit for redemption accounting for the remainder. During 1934, the Federal Reserve Agent and his assistants received $31,360,000 of new Federal Reserve notes from the Comptroller of the Currency at Washington, and $3,277,000 of fit-for-use notes from our receiving tellers. The issues of new and fit-for-use notes totalled $48,400,000, as compared with $81,665,000 during the preceding year and $55,905,000 in 1932. The amount of Federal Reserve notes outstanding with this Federal Reserve Bank increased from $97,784,020 to $111,439,080 between December 31, 1933, and December 31, 1934. On December 31, 1934, the Federal Reserve Agent held $2,400,000 of United States obligations as collateral security for the Federal Reserve notes outstanding with the Federal Reserve Bank, together with a $110,000,000 gold credit on deposit with the Federal Reserve Board. At the beginning of the year 1934, Federal Reserve Bank notes issued to the Federal Reserve Bank and outstanding amounted to $8,048,000. On March 9, 1934, this bank began to reduce its liability for outstanding Federal Reserve Bank notes by depositing funds in the United States Treasury for their retirement. On April 23, 1934, the final deposit was made in the Treasury for this purpose, and the liability of this bank for outstanding Federal Reserve Bank notes was completely extinguished. B. Membership At the close of the year, there were 524 member banks operating in this district as compared with 502 member banks at the beginning of the year. There was a net gain of 13 national banks and 9 state banks. The total membership (banks in operation only) at the close of 1934 was divided into 455 national banks and 69 state banks. The banks which joined the Federal Reserve System in 1934 are No. of Shares Name of Bank Location Subscribed First National Bank of Crystal Falls Crystal Falls, Michigan 36 First National Bank in Gladstone Gladstone, Michigan 36 The National Metals Bank of Hancock....Hancock, Michigan 510 The Iron River National Bank .Iron River, Michigan 42 The Miners First National Bank of Ishpeming Ishpeming, Michigan 72 The First National Bank at Manistique....Manistique, Michigan 36 The First National Bank in Ontonagon....Ontonagon, Michigan 36 The Security National Bank of Amboy.-.Amboy, Minnesota 36 State Bank of Aurora Aurora, Minnesota 31 State Bank of Belle Plaine Belle Plaine, Minnesota 24 14 No. of Shares Name of Bank Location Subscribed Oakley State Bank * Buffalo, Minnesota 42 The Oakley National Bank of Buffalo *....Buffalo, Minnesota 48 Sprague State Bank Caledonia, Minnesota 44 The First National Bank of Hutchinson..Hutchinson, Minnesota 36 The Lake Crystal National Bank Lake Crystal, Minnesota 36 National Bank of Commerce in Mankato..Mankato, Minnesota 72 First State Bank Rushmore, Minnesota 25 First National Bank in St. Charles St. Charles, Minnesota 33 The First National Bank at St. James St. James, Minnesota 35 Farmers and Merchants State Bank of Sacred Heart Sacred Heart, Minnesota 35 First National Bank in West Concord West Concord, Minnesota 36 First National Bank in Winthrop Winthrop, Minnesota 36 Citizens Bank & Trust Company Big Timber, Montana 84 Deer Lodge Bank & Trust Company Deer Lodge, Montana 90 The Yellowstone Bank Laurel, Montana 21 First National Bank in Mott Mott, North Dakota 36 The First and Commercial National Bank of Williston .Williston, North Dakota 34 Security State Bank Mclntosh, South Dakota 22 Citizens Bank and Trust Company Mobridge, South Dakota 36 First National Bank in Pierre Pierre, South Dakota 36 The Rapid City National Bank Rapid City, South Dakota.... 72 Bank of Toronto Toronto, South Dakota 18 The Security National Bank of Durand....Durand, Wisconsin 36 The Union National Bank of Superior Superior, Wisconsin 144 * The Oakley State Bank, Buffalo, Minnesota, became a member on March 19, 1934, and converted into the Oakley National Bank on December 15, 1934. The licensed banks in the district were distributed among the states of the district as shown in the following table: NUMBER OF LICENSED BANKS IN OPERATION IN THE NINTH FEDERAL RESERVE DISTRICT December 31, 1933, and December 31, 1934 National State Members Non-Members Total 1933 1934 1933 1934 1933 1934 1933 1934 Michigan 25 29 7 7 17 19 49 55 Minnesota 205 211 13 17 468* 458** 686 686 Montana 47 46 17 20 65 53 129 119 North Dakota.... 68 69 0 0 135f 137 203 206 South Dakota.... 63 64 20 23 127 125 210 212 Wisconsin 34 36 3 2 72 91 109 129 Ninth Federal Reserve Dist...442 455 60 69 884 883 1,386 1,407 * Excludes five trust companies which do not receive deposits. ** Excludes two trust companies which do not receive deposits and one which was in liquidation at the end of the year, but which was included in the State Banking Department abstract. f Includes one state bank which went into liquidation January 12, 1934, but which was not included in the State Banking Department abstract. C. Examination of Banks During 1934, 153 credit investigations, examinations and special visits were made by the Federal Reserve Agent's ex 15 aminers in connection with state member banks and state banks applying for membership. In the examination work this year, the examiners and their assistants traveled in the aggregate 92,921 miles. In addition to the information obtained from the Federal Reserve examiners, 945 reports of examination of national banks and 106 duplicate copies of reports of examination of Montana national banks were received from the Chief National Bank Examiner's Office; also 33 reports of examination of state member banks were received from the various state banking departments. There were four calls for reports of condition of national banks and four calls for reports of condition of state member banks during the year. Also two semi-annual statements of earnings and dividends were required from all member banks. 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 1934 include the following: Name of Bank The National Metals Bank of Hancock Marquette National Bank Location Hancock, Mich .Minneapolis, Minn Date Approved Capital Powers 10-10-34 3-21-34 $700,000 400,000 Full Full The Commercial Trust & Savings Bank, Mitchell, South Dakota, completed arrangements with state authorities for exercising trust powers, and the Federal Reserve Board on September 12, 1934, gave its approval with reference to the exercise of such powers. 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. The Board also re-elected Mr. Sigurd Ueland as Counsel for the Head Office and Mr. Rolf Ueland as Assistant Counsel, and re-elected Mr. T. B. Weir as Counsel for the Helena Branch. A telegram was presented announcing that the Federal Reserve Board had reappointed Mr. John N. Peyton as Federal Reserve Agent, Mr. F. M. Bailey as Assistant Federal Reserve Agent, and Mr. Oliver S. Powell to act as alternate in certain matters for the Federal Reserve Agent and the Assistant Federal Reserve Agents. The telegram also announced the appointment of Mr. E. W. Swanson as Assistant Federal Reserve Agent. On January 11 occurred the death of Mr. Paul J. Leeman, Class A director of this bank. At a special election, Mr. M. O. Grangaard, Vice President of the First National Bank & Trust Company of Minneapolis, was elected as a Class A di 16 rector to serve during the unexpired portion of Mr. Leeman's term. Mr. Grangaard was elected a member of the Executive Committee of the Bank at the March meeting of the Board. At the March meeting, Governor Geery was elected Trustee of the Employees' Retirement Fund to serve for one year. At the July meeting of the Board of Directors an Industrial Advisory Committee was chosen consisting of the following men: Chairman, Sheldon V. Wood, John M. Bush, C. 0. Follett, H. C. Jewett, Sr., and Albert Miller. In November, Mr. M. 0. Grangaard was re-elected a Class A director for a three-year term ending December 31, 1937, and Mr. W. O. Washburn was re-elected a Class B director for the same term. At the December meeting of the Board of Directors, Mr. A. R. McDermott was re-elected a member of the Board of Directors of the Helena Branch for a two-year term ending December 31, 1936. Governor Geery was re-elected to represent this bank on the Open Market Committee for the calendar year 1935. Mr. Theo. Wold was re-elected a member of the Federal Advisory Council for the year 1935. 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 482 persons on December 31, 1934, as compared with 425 at the close of the previous year. 17 Resources and Liabilities of the Federal Reserve Bank of Minneapolis (In thousands of dollars) RESOURCES Dec. 31, 1934 Gold certificates on hand and due from United S'tates Treasury ?139,798 Gold 0 Redemption Fund, Federal Reserve notes 330 Other cash 11,341 Dec. 31, 1932 $ 18,452 77,870 1,612 8,322 $ $151,469 $106,256 $ 61,141 0 Total reserves Dec. 31, 1933 593 0 Redemption Fund, Federal Reserve Bank notes Bills Discounted: Secured by United States Government obligations 9,343 41,834 2,214 7,250 0 Total bills discounted $ 49 352 0 Other bills discounted 1,823 9,252 0 $ 1,872 81 1,753 3,189 0 612 0 15,350 37,058 13,181 16,315 26,293 23,061 17,398 8,110 29,343 $ 65,589 $ 65,669 $ 54,851 0 80 410 $ 67,423 $ 70,810 $ 65,477 Bills bought in open market Industrial advances United States Government Securities : Bonds Treasury notes Certificates and bills Total United States Government securities Other securities Total bills and securities 6 8 9,604 Due from foreign banks . 9 11 Federal reserve notes of other Federal reserve banks Uncollected items Bank premises All other resources Total resources 1,128 11,989 1,580 771 $234,366 658 10,641 1,657 1,474 $192,098 716 10,818 1,745 1,723 $141,631 $106,687 0 $ 92,896 7,718 $ 80,966 0 97,421 2,590 441 6,269 $106,721 62,013* 91 96 4,095 $ 66,295 37,760 468 461 348 $ 39,037 LIABILITIES Federal reserve notes in actual circulation Federal reserve bank notes in actual circulation Deposits: Member bank reserve account Government Foreign bank Other deposits Total deposits Deferred availability items Capital paid in Surplus—Section 7 Surplus—Section 13 " B " All other liabilities 12,136 3,134 3,420 751 1,517 Total liabilities 11,128 2,876 6,930 0 4,255 10,738 2,885 7,019 0 986 $234,366 $192,098 $141,631 Ratio of total reserves to deposit and Federal Reserve note liabilities combined (per cent) 71.0 66.7 50.9 Contingent liability on bills purchased for foreign correspondents $ 15 $ 88 $ 856 * Reserve deposits of licensed member banks and member banks in hands of conservator. 18 Earnings and Expenses of Federal Reserve Bank of Minneapolis Discounted bills Purchased bills Industrial advances U. S. securities Deficient reserve penalties Miscellaneous $ 1934 15,628 3,224 15,928 1,346,610 1,213 32,494 1933 $ 221,740 37,596 0 3,179,975 8,017 50,341 1932 $ 418,531 65,335 0 921,077 17,219 12,931 Total earnings Current expenses $1,415,097 1,205,330 $1,497,669 1,114,094 $1,435,093 926,669 Current net earnings Additions to current net earnings Deductions from Current Net Earnings: Bank premises—depreciation Furniture and equipment All other $ 209,767 284,584 $ 383,575 46,261 $ 508,424 84,253 84,997 15,701 217,368 90,371 19,547 237,833 90,371 11,985 217,984 Total deductions $ 318,066 $ 347,751 Net earnings available for dividends, surplus and franchise tax 176,285 82,085 Distribution of Net Earnings : Dividends paid 181,118 171,569 Transferred to surplus account—Section 7 0 0 Withdrawn from surplus account—Section 7 0 89,484 Withdrawn from surplus account—Section 13 " B " 4,833 0 Franchise tax paid U. S. Government 0 0 DETAILS OF CURRENT EXPENSES Contributions—Retirement Fund $ 50,260 $ 0 Salaries: Bank officers 115,322 105,369 Clerical staff 427,566 367,666 All other 119,534 119,742 Governors' conferences 720 806 Federal Reserve Agents' conferences 416 194 Federal Advisory Council 1,308 1,299 Directors' meetings 7,994 9,533 Industrial Advisory Committee 1,371 0 Traveling expenses* 23,412 31,307 Assessment for Federal Reserve Board expenses 31,535 18,473 Legal fees 12,504 14,455 Insurance (other than on currency and security shipments) 23,311 32,340 Taxes on banking house 83,699 68,319 Repairs and alterations, banking house 11,758 1,940 Light, heat and power 20,321 18,795 Telephone 7,812 9,786 Telegraph 13,736 17,063 Postage 115,608 109,670 Expressage 7,327 11,773 Insurance on currency and security shipments 10,112 11,200 Printing and stationery 22,601 18,993 Office and other supplies 20,215 17,017 All other expenses 38,725 37,956 Total exclusive of cost of currency $1,167,167 $1,023,696 Federal Reserve Currency (including shipping charges) : Original cost $ 24,137 77,960 Cost of redemption 4,842 4,245 Tax on Federal reserve bank note circulation 9,184 8,193 $ 320,340 Total current expenses Salaries All other expenses $1,205,330 REIMBURSABLE EXPENSES $ 151,477 70,284 272,337 175,495 9,684 0 0 87,158 $ 0 110,300 328,047 114,101 995 188 1,540 9,750 0 21,810 16,243 14,104 32,057 66,412 1,731 17,568 5,960 15,870 72,820 8,055 9,233 16,898 13,028 30,488 $ 907,198 16,979 2,491 0 $1,114,094 $ 926,668 $ $ 83,824 20,790 38,566 14,898 Total $ 221,761 $ 104,614 $ 53,464 * Other than those connected with governors' and agents' conferences and meetings of the directors and of the Advisory Council. 19 DIRECTORS AND OFFICERS FEDERAL RESERVE BANK OF MINNEAPOLIS DIRECTORS Class A H. R. Kibbee Expiration of Term Dec. 31, 1935 H. C. Hansen Dec. 31, 1936 M. O. Grangaard _, _ Class B J. E. O'Connell. Dec. 31, 1937 Dec. 31, 1935 Albert P. Funk Dec. 31, 1936 W. O. Washburn _ _ Class C John N. Peyton Chairman Homer P. Clark Deputy Chairman Geo. W. McCormick Dec. 31, 1937 Dec. 31, 1935 Dec. 31,1936 Dec. 31, 1937 - _ . , _.,. Business Affiliation President, Commercial Trust & Savings Bank, Mitchell, South Dakota. President, First National Bank, Churchs Ferry, North Dakota. Vice President, First National Bank & Trust Co., Minneapolis, Minnesota. President, Eddy Bakery Company, Helena, Montana. President, La Crosse Rubber Mills Co., La Crosse, Wisconsin. President, A. J. Krank Company, St. Paul, Minnesota. Chairman of the Board and Federal Reserve Agent, Minneapolis, Minn. Chairman of the Board, West Publishing Company, S*t. Paul, Minnesota. Vice President and General Manager, Superior Sugar Refining Company, Menominee, Michigan. OFFICERS FEDERAL RESERVE AGENT'S OFFICE John N. Peyton, Federal Reserve Agent F. M. Bailey, Assistant Federal Reserve Agent E. W. Swanson, Assistant Federal Reserve Agent BANKING DEPARTMENT W. B. Geery, Governor Harry Yaeger, Secretary and Deputy Governor H. I. Ziemer, Deputy Governor and Cashier L. E. Rast, Assistant Cashier H. C. Core, Assistant Cashier A. R. Larson, Assistant Cashier W. E. Peterson, Assistant Cashier Otis R. Preston, Assistant Cashier CONTROLLER F. C. Dunlop, Controller STATISTICIAN O. S. Powell, Statistician and Secretary of the Board of Directors Member of Federal Advisory Council Theodore Wold, President, Northwestern National Bank & Trust Co., Minneapolis, Minnesota Legral Counsel Sigurd Ueland, Counsel Rolf Ueland, Assistant Counsel HELENA BRANCH—(MONTANA) Henry S'ieben, Chairman T. A. Marlow J. E. O'Connell R. E. Towle A. R. McDermott A. A. Hoerr, Cashier DIRECTORS Expiration of Term Business Affiliation Dec. 31, 1935 President, Sieben Live Stock Co., Helena, Montana. Dec. 31, 1935 ...President, First National Bank & Trust Co., Helena, Montana. Dec. 31, 1935 President, Eddy Bakery Company, Helena, Montana. Dec. 31, 1935 Managing Director, Federal Reserve Branch Bank, Helena, Montana. Dec. 31, 1936 Vice President, Montana National Bank, Billings, Montana. OFFICERS R. E. Towle, Managing Director C. J. Larson, Assistant Cashier Legal Counsel T. B. Weir, Counsel
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