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FEDERAL RESERVE BANK OF RICHMOND






FORTY- FIRST ANNUAL REFORT

BALTIMORE
BRANCHES

IN

AND
CHARLOTTE

FIFTH FEDERAL RESERVE




DISTRICT

& I(M

TO




THE

M EM BE R
It is a pleasure to present the forty-first annual
report o f the Federal Reserve Bank o f Richm ond
review ing the year 1955.
This report, like others o f recent years, has been
written and illustrated to present in rather informal
style a few notes and comments on the econom y of
the Fifth Federal Reserve District and to discuss in
non-technical terms some o f the bank’s operations
and activities.
I also take this opportunity to introduce our direc­
tors to those o f you who may not know them. They
are pictured in these pages against the backdrops
o f their businesses.
On behalf o f our directors and staff, I wish to
express appreciation fo r the cooperation received
throughout the year from bankers and from leaders
o f agriculture, com m erce, and industry in the Fifth
Federal Reserve District.
V ery truly yours,

President




Like the proverbial circus,

1955 was

“ bigger and better than ever.”

It was a

year when new records o f econom ic activ­
ity becam e com m onplace. The total dollar
output o f goods and services produced by
near-capacity operations reached heights never before
ascended— as did also industrial production, national in­
come, per capita incom e after taxes, and profits, to men­
tion some other m a jor econom ic indicators that pointed
to all-time record highs.
In fact, in almost any direction one looked the situa­
tion was better than it had ever been before. Em ploy­
ment exceeded by five m illion the once-im probable total
o f 60 million w orkers; the construction industry put the
largest dollar volum e o f construction in place in its
history; average w eekly earnings filled the pockets of
m anufacturing w orkers to a record extent; and an un­
precedented volume o f consumer spending kept cash
registers full and inventories relatively low . It is gilding
the lily to add that all this was accom plished with but
a slight jigglin g o f prices.
It almost seems necessary to give this picture an air
o f reality by pointing out that there were some weak
spots in the 1955 econom y. The farm ing community,
fo r instance, was not a party to the boom ing prosperity
of the rest of the nation; new housing starts, seasonally
adjusted, were in a dow nw ard trend over the course of
the year (although, it should be noted, at record levels) ;
and many analysts felt that the rapid rate o f increase of
residential m ortgage indebtedness and consumer credit




1952
1 Revenue

1953

195




BUSINESS -AJNTD B-AJNTKUHNrGSoft Coal Production
Fifth District

had exceeded sustainable levels. W hile
serious, these weaknesses were not
pervasive, and by year-end the economy
was operating at near-capacity, with
demands fo r funds at high and rising
levels.
In fact, by late Fall the surging econom y was flexing its
muscles to such an extent that the Secretary o f Commerce
was led to declare, “ The econom y is in the pink of con­
dition. . . .Business never was better. W orkers never had
it so good. Old Man Prosperity ‘just keeps rolling
a lo n g / ”
By Its Own Bootstraps
Perhaps the most significant feature o f the economic
expansion in 1955 was the fa ct that it represented private
initiative and activity. Expenditures by the Federal
Government fo r goods and services show ed little change
during the year at a level well below year-earlier figures.
State and local government outlays increased moderately,
but not enough to change the sidewise trend o f total
public spending.
All m ajor types o f private expenditures, however,
contributed to the 7 % grow th in the total outlays for
goods and services. Spurred by unexpectedly large
purchases o f automobiles, consumer spending rose at a
clip that surpassed the 1954 rate. F ollow ing a rise of
more than 40% from early 1954, the seasonally adjusted
value o f residential building declined from the peak
reached in the Spring of 1955, but fo r the year as a whole
added to the advance in the gross national product.
Private business investment outlays also rose sharply
from the 1954 level.

W hereas business in general lived




off its shelves in 1954, by January 1955 a
shift to inventory accum ulation had been
effected.

This expansionary force continued

throughout the year.
New

business

construction

was

another

important fa ctor in the 1955 growth, with
gains in industrial and com m ercial building
leading the way. A fter lagging behind other
form s o f private business investment during
the first quarter o f the year, expenditures fo r new durable
equipment picked up sharply in the Spring and continued
to rise smartly the rest o f the year.
Another significant feature of the 1955 econom y was
the fa ct that most o f the approxim ately $26 billion in­
crease in total product represented grow th in physical
volume. Since average consumer prices rose relatively
little, the bulk o f the rise in consumer outlays fo r goods
and services represented increased real consumption.
In fact, the increase in per capita real incom e in 1955
was one of the largest o f the past decade.
Credit Demand High
Banking activity in the Fifth District, as in the nation
as a whole, responded to the strong upw ard momentum
of the econom y in 1955, and at the same time gave
stimulus to the surging growth.
Throughout the year the demand fo r bank credit was
unusually strong as the recovery from the mild recession
of 1953-54 stood on its own legs as a boom to be reckoned
with. By February the District’s member banks had be­
gun to convert governm ent security holdings into funds
to meet loan demands and these conversions continued

,

BUSINESS ^ N J D B^ISTKHSTG

through mid-Summer.

In recognition o f potential infla­

tionary forces being concealed beneath the strong economic
growth, Federal Reserve policy early in the year shifted
away from its previous “ ease” to one o f m oderate restraint.
In the second half o f the year demands fo r credit con­
tinued strong and Federal Reserve monetary actions con­
tinued to encourage conditions of money tightness without
permitting serious strains to develop. A m ong these m one­
tary actions were increases in the discount rate to a final
level o f 21/2 %, the highest the discount rate has been since
1933. Short-term interest rates rose sharply during the
period, the 90-day Treasury Bill rate also reaching its
highest level since 1933. The pressures on the banks con­
tinued to intensify during the Fall and their borrow ings
from Federal Reserve grew to meet them. In spite o f all
these pressures generated by the advancing econom ic
activity and the m onetary policy actions o f Federal Re­
serve, the banks were able to supply an ample volume of
credit to continue the high
through the end o f the year.

levels of business activity

Mortgage Money Plentiful
Loan demand at Fifth District member banks paralleled
that fo r the nation as a whole, remaining strong throughout
1955— strong enough to iron out the usual
seasonal patterns that generally appear. T o­
tal loans outstanding dropped m oderately
during January, but by considerably less than
is customary at that time o f year. During the
remainder o f the year, seasonality was
smoothed over by the presence o f heavy de­
mands fo r bank credit from individuals for
consumption expenditures and fo r home pur­




chases.

Such demands as these do

not have as clearcut or strongly felt
seasonal characteristics as do credit
demands from business firms and
farmers, and their volume in 1955 was
sufficient to take up the usual seasonal
slack o f other types o f borrowers.
M ember banks’ loans secured by
real estate advanced during 1955 at
a slightly faster pace than the recent
record set in 1954. Not only did individual home buyers find
bank funds more readily available, but also other m ortgage
lenders (insurance companies, savings and loan associa­
tions, m ortgage com panies) were able to secure a much
larger volum e o f short-term bank funds to support their
own record level of real estate lending activities. On a
nationwide basis, this high availability o f m ortgage funds
experienced some tightening in the final quarter o f the year,
but was sufficient fo r the year as a whole to support the
largest number o f new housing starts since 1950.
Consumer Loans Active
Perhaps the outstanding characteristic o f bank lending
in 1955, both nationally and in the District, was the un­
usually high proportion of such lending going to individuals
fo r consumer purposes. Sparked by high and rising levels
o f personal income, by bright expectations fo r the im­
mediate future, and by the sales pressures generated in a
highly com petitive econom y, consumer borrow ing expanded
at a more rapid pace than in any o f the post W orld W ar II
years.

In the District, member banks increased their loans

to consumers by a larger percentage than to any other
single class o f borrow er.




BUSINESS AND BANKING-

C r o p Y ie ld s Per A c re
Fifth District
TOBACCO

COTTON

CORN

(Pounds)

(P o u n d s )

( Bus he Is)

Agricultural Debt Up
Fifth District farm ers found
the 1955 crop one o f the most
expensive ever produced. The
prices o f things they had to buy
in many cases were at or near
1943-52 '53 '54 ‘55

1943-52 *53

record levels, and many bought

»: U S. Department of Agriculture.




larger

quantities

of

some

of

the items used in farm produc­
tion.
Diminished

incomes,

associated

in

part

with

the

drought, led many farm ers to carry forw ard into 1955
debts that would otherwise have been repaid.

Continued

high operating expenses and the frequent need to make
additional capital investment to im prove or enlarge their
farms, or to buy additional m achinery to increase produc­
tive efficiency, forced many farm ers to increase indebted­
ness in 1955.

The grow ing trend am ong those with

relatively large short-term indebtedness to refinance part
or all o f their debt in the form o f a farm -m ortgage loan,
thus spreading repayments over a longer period, also
continued.

W hile the cost-price squeeze continued to

weaken the financial position o f many farmers, the over­
all financial position o f Fifth District agriculture still
would com pare favorably with that in most past periods.
Fortunately, most District areas which suffered drought
in 1954 and other recent years had good grow ing weather
in 1955.

For example, while flue-cured tobacco acreage

was reduced 5 % in 1955, production jum ped 14% ; and
while cotton acreage was cut 1 4 % , production gained
7% .




The Federal Reserve System is generally
thought of, when it is thought o f at all, as
something pretty remote from the people.
A nd yet there’s hardly anyone living in
the United States, apart from younger per­
sons still whiling away their hours in cribs
and play-pens, who doesn’t com e into di­
rect contact with the Federal Reserve every
day. The Federal Reserve puts the na­
tion’s m oney into circulation.
The Federal Reserve Bank of Richm ond
and its Baltimore and Charlotte branches
put almost two and a half billion dollars
o f paper money and coins into circulation in
1955, $2,338,676,820 in paper currency and
$52,027,926 in coins. If that all had been
in one dollar bills, and if the one dollar

M a i n v a u lt at
R ic h m o n d h o ld s m illio ns of d o lla rs
in currency a n d bo n d s.
D o o r w e i g h s 6 3 l/ 2 tons.

N e w d o lla r bills g o i n g into
s t o r a g e in v a u lt co m p a rtm e n t.
Each p a c k a g e on truck c o ntain s
$4 ,0 0 0 in S ilver Certificates.




bills had been placed end to end . . . well,
the ribbon o f bills would have extended
226,392 miles.
The huge total o f dollars didn’t repre­
sent a net increase in the nation’s supply
of money. “ Circulation” is the key word.
Money flows out o f and into the Federal
Reserve Bank each business day, flowing
out to take care o f the demand o f com m er­
cial banks and returning as the commercial
banks’ day to day amount of cash on hand
exceeds their needs. The return flow al­
most equalled the outflow. The Richmond
Head Office and the two branches ac­
tually handled a total of $4,673,995,470
in paper money and $103,758,770 in coins
during 1955.

That was 800,017,338 pieces

o f paper currency and 1,310,829,911 indi­

need or want and to pay others fo r doing

vidual coins.

things fo r us.

On a daily average, the Head Office
handled $9,524,947 in currency and $132,446 in coins; Baltimore, $5,051,572 in cur­
rency and $209,023 in coins; and Char­
lotte, $3,189,651 in currency and $55,390
in coins.
By denominations, the three offices to­
gether over the w hole year handled more
m oney in $20 bills, $1,726,824,880, than
any other size, and less in $5,000 bills, a
mere $235,000. The biggest handle in
coins was in quarters, $39,159,730, and the
smallest in silver dollars, $1,801,295.
The Richm ond Reserve

bank and its

branches serve the Fifth Federal Reserve
District— Maryland, Virginia, North Caro­
lina, South Carolina, W est Virginia, and
the District of Columbia. Some o f the

(In the present day most

payments are made by check.

In contrast

to the total o f $4,777,754,240 in currency
and coins that the bank handled in 1955,
it handled $79,879,673,000 in check clear­
ing operations fo r com m ercial banks. But
that is another story.)
M oney in the form
o f currency and coin goes into circulation
according to the demand o f individual per­
sons and business firms fo r it.
Money on the Move
W hen a person who has m oney on de­
posit in a bank needs some cash fo r pocket
money, he may go to the bank and draw
out what he wants from his account, or he
may cash a check at a grocery store on his
bank account. Banks always keep an
ample supply o f cash on hand fo r day to
day operations.

Banks that are members

other eleven Reserve banks in more popu­
lous and more highly industrialized areas

o f the Federal Reserve System obtain their
cash from the Federal Reserve Bank or

handle much larger amounts o f money.
The New Y ork Reserve bank, fo r instance,
rency and $600,000,000 in coins annually.

branch in their area, som ewhat in the
same way that individuals draw cash from
com m ercial banks. That is, m ember banks
have accounts at the Reserve banks, called

Where Does the Money Go?

they

handles more than $23,000,000,000 in cur­

reserve accounts, and when they need cash
Peering into one’s own pocketbook or
wallet and trying at the same time to
visualize billions o f dollars, one might
w onder where all o f the money goes, and
why. There really isn’t any simple an­
swer to either question, but an attempt at
simplification might go something like this:
To begin with, m oney is
exchange. W e get paid fo r
do, the things we make, and
grow . W e spend money to




a medium
the things
the things
get things

of
we
we
we

draw

on

these

reserve

accounts.

Banks that are not members o f the System
generally get their m oney from member
banks, with which they have accounts.
W hen a member bank, say in a Carolina
textile town, needs a bigger amount of
cash at a given time than it might norm ally
have in its vault, it asks the Federal Re­
serve Bank to ship the needed amount,
which is deducted from the m em ber bank’s
reserve

account.

Suppose it needs this

cash to supply a customer, the local tex-

H e a v i ly a r m o r e d trucks
deliver m o n e y to Federal Rese rve B a n k daily.
A r m e d g u a r d s , all expert m a r k s m e n ,
w a t c h eve ry m ove.

N e r v e center of b a n k 's m o d e rn
protection system.

Control post is in

c onstan t touch w ith g u a r d s in all parts




of R ic h m o n d H e a d Office,

C o in s b y the m illio ns are
ca refu lly co un ted a n d
w e i g h e d , a l w a y s u n d e r close scrutiny.
Skillfully o perated, m a c h i n e s count
coins at a rate of a b o u t 2,0 00
a minute, 120 ,0 0 0 a n hour.
■Ji J

tile plant, which has a payroll to meet.
The textile plant gets the money, which
is deducted from its account at the bank,
and pays its em ployees. The em ployees
soon put the money into circulation. They
pay the grocer, the doctor, the clothing
s to re ; they spend some o f their money at
the m ovies; they put some o f it into their
bank accounts. Sooner or later, and usual­
ly it doesn’t take long, much o f the money
that the bank has paid out to the textile
plant has found its way back to the bank.
And with more money on hand than it
needs fo r normal operation, the bank ships
the excess back to the Federal Reserve
Bank or branch.
Federal Reserve’s Role
This flow o f money goes on all o f the
time. Millions o f dollars are constantly
on the move. N obody, probably, ever has
enough money, or thinks he has, but be­
cause o f the Federal Reserve System there
is always enough money to carry on the
nation’s business.
One o f the objectives o f the Federal R e­




serve System, as specified by Congress
when it enacted the Federal Reserve Act
in 1913, is “ to furnish an elastic currency.”
An elastic currency is the kind that will
expand in amount to meet the needs of
business and the people and contract when
the needs are reduced. Before the F ed­
eral Reserve System came into being the
amount o f money that could be issued was
limited by the value o f certain governm ent
bonds held by com m ercial banks or by the
amount o f silver and gold in the country.
W hen the need fo r m oney in business chan­
nels increased sharply over the country, at
Fall harvest time, fo r instance, there som e­
times wasn’t enough money to go around,
and there were, now and then, “ money
panics” that raised hob with the econom y.

S t o w i n g coins in b a n k 's v a u lt is
like a s t e v e d o r in g o peration.

Each b a g of

nickels on electric lift c o n tain s $ 1 0 0
a n d w e i g h s 22 po u n d s.




W ith the passage of the Federal Reserve

lateral behind the notes over the year

Act, Federal Reserve Banks were author­
ized to issue money. At present about 85

was $712,000,000 in gold certificates and

per cent o f the total o f currency and coin
in circulation is in the form o f Federal Re­
serve Notes. These notes are “ b a ck ed ”
by the Reserve banks’ holdings o f gold
certificates,

governm ent

securities,

and

eligible com m ercial paper. At least 25
per cent o f the Reserve banks’ assets back ­
ing the money they issue must be in gold
certificates, but actually the backing of
gold certificates is generally much more
than the required 25 per cent.
On D ecem ber 21, 1955 there were
$2,049,106,655 in Federal Reserve Bank of
Richm ond notes in circulation.
the high point of the year.




That was

A verage col­

$1,300,000,000 in government securities.
The total o f Federal Reserve Notes of
all Federal Reserve Banks outstanding at
latest count was $25,936,000,000. Two
other kinds of paper money also are issued
at the present time, United States Notes
and Silver Certificates, both issued by the
Treasury and put into circulation through
the Federal Reserve Banks (except fo r a
relatively small amount that W ashington,
D. C. banks obtain directly from the Treas­
u ry). The total of United States Notes
outstanding is set by law at $347,000,000;
these notes are backed by gold bullion
owned by the Treasury. Silver Certificates
are based on silver bought by the Treasury,

G u a r d w a tc h e s
m o n e y s o r tin g from
u pp e r-le ve l " p i l l b o x . "
W it h in his reach a r e g u n s
a n d te ar-gas.

T ra in e d o p e r a t o rs count
a n d sort p a p e r m o n e y at these
m a c h i n e s a t a rate o f a b o u t
2 5 ,0 0 0 bills a day.

Stacks of m o n e y
m e a n just stacks of p a p e r
to those w h o h a n d l e
m illio n s of d o lla r s da ily.




which by law must pay not less than 90.5
cents an ounce fo r the m eta l; the Certifi­
cates are issued on the basis of a monetary
value o f $1.29 an ounce.

The average

dollar amount o f Silver Certificates in cir­
culation runs around $2,000,000,000.
Money in Storage
Federal Reserve Notes are issued in de­
nominations o f $5, $10, $20, $50, $100,
$500, $1,000, $5,000, and $10,000, United
States Notes in only $2 and $5, and Silver
Certificates in only $1, $5, and $10.
All paper money is printed by the
Bureau o f Engraving and Printing o f the
United States Treasury, at Washington.
Coins are made by the Treasury in its
mints at Philadelphia and Denver. The
mint at San Francisco is not operating at
present. The currency and coins are sent




to the Federal Reserve Banks fo r current
use and fo r “ cold storage.” In addition to
the paper money and coins kept by the
Reserve banks to carry on their business
with com m ercial banks, millions o f dollars
o f their own as-yet-unissued Federal Re­
serve Notes are stored at the Reserve
banks under the authority of each bank’ s
Federal Reserve Agent. W hen it becom es
necessary to issue new money, the Reserve
bank pledges the required amount o f col­
lateral and the money is issued fo r use.
The Federal Reserve Bank of Richmond
Head Office keeps a daily average o f about
$70,000,000 in ready cash in its vaults.
The Baltimore and Charlotte branches
each keep about $35,000,000 on hand.
The amount o f unissued currency in the
Head

Office

vaults

runs to

more than

$ 1,000,00 0 ,0 0 0 .

Before w o r n - o u t m o n e y is b u rn e d
it is split le n g t h w is e
into s e p a r a t e halves.

A s h e s a re all that r e m a i n of a b o u t $ 7 0 0 ,0 0 0 in p a p e r m o n e y b u r n e d in b a n k 's inc ine ra to r

Visitors to the Richmond Reserve bank
and branches often ask whether any rob ­
bery attempts have ever been made. The
answer is no. Any such attempts would
be likely to fail, for the bank’s protection
systems are strong. The Head Office and
branches have big and tough corps of

is withdrawn from circulation by the F ed ­
eral Reserve Banks and is destroyed. F ed ­
eral Reserve Banks, in specially built in­
cinerators generating nearly 3,000 degrees
of heat, burn w ithdrawn United States

guards, many o f them form er Marines and

Notes and Silver Certificates. They send
Federal Reserve Notes to the Treasury fo r
burning. Money so destroyed is replaced

Navy and Arm y men and all o f them

by new money.

marksmen (with medals to prove it) with
the pistols, riot guns, tommy guns, tear-gas
guns and grenades, and other weapons in
the banks’ several w ell-equipped arsenals.
The buildings are honeycom bed with elec­
tronic protective devices. The vaults are
strong enough to shut out anyone not
equipped with atomic weapons.
As happens to everything made by man,
m oney wears out. W hen paper money
wears out or becom es too dirty fo r use, it




In 1955 the bank and branches w ithdrew
$658,393,750 in paper m oney fo r destruc­
tion, $496,752,350 in F ederal Reserve
Notes, $14,591,150 in United States Notes,
and $147,050,250 in Silver Certificates. A
total

of

$179,804,000,

an

average

of

$711,000 each w orking day, went up in
smoke at the Federal Reserve Bank o f
Richmond in 1955.
They made a m erry blaze.

“ Do you have $163.15 in cash?
You
w ould, if all o f the currency and coin in
circulation in the United States today were
divided am ong all o f the people.” So read

lege teachers, provided speakers fo r 143
meetings, and, among other things, w el­
com ed some 3,000 visitors who toured the
Head Office and branches.

the provocative introduction to a chapter

O f particular interest in 1955 was the

in “ Readings on M oney,” a booklet pub­
lished in 1955 by the Federal Reserve Bank
o f Richm ond.

production o f a 16-mm educational motion
picture, “ You and Y our M oney.”
This
short feature, showing in cartoon story
style what makes the wheels go around

The question and assertion, used in ageneral announcement that the booklet
was available to anyone interested in the
role o f m oney in the Am erican economy,
set a lot o f people to counting their money,
and caused thousands o f them to ask fo r
copies o f the booklet. The bank was
pleased to distribute thousands of copies—
to students, teachers, bankers, business­
men, and others— because it believes that
such contributions to the understanding o f
the functions o f money and o f the Federal
Reserve System are o f worth to a public
that seeks to be better informed o f the
econom ic facts o f life.
F or the same reason the bank in 1955
published other booklets, produced a m o­
tion picture, conducted a seminar fo r col­




in the nation’s business, joined the bank’s
earlier film, “ Y our M oney’s W orth ,” among
the outstanding films on econom ics avail­
able in the country. That, at least, is the
opinion o f hundreds o f college and high
school teachers, bankers, and business
executives who have so ju dged them.
A m ong other publications released in
1955 were “ You and Y our M oney” and
“ Y our M oney’s W orth ,” each an adapta­
tion o f the script o f the films; the “ Month­
ly Review ,” which goes to a reading list of
more than 7,000; and “ O perating Ratios of
Fifth District M ember Banks,” an annual
com parative com pilation valued highly by
bankers. All o f the bank’s publications
are free to interested persons.

Requests fo r bank officers and staff mem­
bers to speak at meetings in 1955 were, as
always, fa r beyond the bank’s ability to
fulfill.
But in so fa r as was possible re­

Pu b lish e d monthly, this Re­
view

offers

reports

and

Representatives o f the

c o m m e n ts on busin ess c o n ­

Head Office and branches addressed 143
meetings and lectured at the Graduate

ditions in the Fifth District

quests were met.

School o f Banking at Rutgers University,
at schools and conferences o f bankers as­
sociations o f Virginia, Maryland, W est Vir­
ginia, North Carolina, and South Carolina,
and at many colleges.
For the third year the bank held a cen­
tral banking seminar for Fifth District
college and university professors o f money
and banking, giving the teachers an oppor­
tunity to see the operations o f the bank,
to hear discussions o f m onetary policy from

Causes and
changes
the

in

d o lla r

in " Y o u r

effects o f the
the
a re

v a lu e

of

discu ssed

M o n e y's

W orth"

authorities in the field, and to ask ques­
tions and contribute their own thoughts.
In the past three years nearly 100 teachers
have attended the seminars.




T h o u s a n d s of copies o f this
new

bookle t

have

been

g iv e n to b an kers, b u s i n e s s ­
m en

and

college students

Illustration fr o m n e w m o v i e s h o w s in
outline the t r a v e ls of m o n e y a s it do es
its w o r k a s m e d i u m

of e x c h a n g e in

the n atio n 's busin ess.
and
lo an

Your M o n e y " are
fr o m

the

bank,

Prints of " Y o u
a v a ila b le
its

on

bra n che s,

a n d all other F edera l Reserve Banks.




As the Volum e o f Operations table on
another page indicates, 1955 was a busy
year fo r the Federal Reserve Bank o f
Richm ond and its Baltimore and Charlotte
branches. It was indeed one of the busiest
years on record, with the bank and its
branches keeping pace with a boom ing
econom y.
Figures in the table, of course, are con­
solidated tabulations for the entire bank.
It may be o f interest, however, to glance
at a breakdow n o f a few o f the figures as
an indication o f the scope of the branch
operations. For instance:
O f the total o f 232,132,000 checks in the
amount o f $79,879,673,000 handled during
1955, Richm ond’s share was 122,373,000
amounting to $42,742,626,000, Baltim ore’s
62,318,000 and $17,474,445,000, and Char­
lotte’s 47,441,000 and $19,662,602,000. Of
currency received and paid out, R ich­
m ond’s share was 401,876,406 pieces
amounting to $2,409,811,629, Baltim ore’s
218,518,395 and $1,288,150,754, and Char­
lotte’s 179,622,537 and $976,033,087.
Of
coins received and paid out, R ichm ond’s
share was 400,263,574 pieces amounting to
$33,508,743, Baltim ore’s 716,951,641 and
$53,300,766, and Charlotte’s 193,714,696
and $16,949,261.
Richm ond handled 191,000 noncash co l­
lection items adding up to $68,789,000,
Baltimore 596,000 amounting to $259,332,000, and Charlotte 35,000 amounting to
$57,065,000. Richm ond made 63,189 trans­
fers o f funds fo r member banks totaling
$23,718,555,000, Baltimore 26,069 totaling
$8,894,029,000, and Charlotte 40,224 total­
ing $20,925,997,000.

Except in a book of telephone directory
proportions not all o f the persons whose

In Decem ber, the Head Office board lost
a valued m ember when John A. Syden-

work contributed to the activities o f the
bank could be listed. Am ong those whose

stricker, executive vice president o f the

names made news in 1955, some might be
mentioned here.

Virginia,

First National Bank in Marlinton, W est
died.

Mr.

Sydenstricker

served on the board since 1942.

had

A special

election will be called early in 1956 to fill
Changes in Directorates
D irectors: John B. W oodw ard, Jr., re­
appointed by the Board o f Governors to a
new three-year term as Class C director
and re-designated chairman and Federal
Reserve A gent fo r 1956 . . . A lonzo G.
Decker, Jr., re-designated by the Board of
Governors deputy chairman for 1956 . . .
Joseph E. Healy, elected by m ember banks
to a three-year term as Class A director,
succeeding W arren S. Johnson, who left
the board after nine years . . . L. Vinton
Hershey, elected by member banks to a
three-year term as Class B director, suc­
ceeding H. L. Rust, Jr., who had served

Baltimore Branch directors: W m. Pur­
nell Hall, re-appointed by the Board of
Governors to a three-year term . . . John
W . Stout, appointed by the Head Office
board to a three-year term, succeeding
Lacy I. Rice . . . Stanley B. Trott, re-appointed by the Head Office board to a sec­
ond three-year term.
Charlotte Branch directors: T. Henry
Wilson, re-appointed by the Board of G ov­
ernors to a new three-year term . . . Ivey
W . Stewart, appointed by the Head Office
board to a three-year term, succeeding
George S. Crouch . . . G. G. Watts, ap­
pointed by the Head Office board to a
W oody.




term,

succeeding

Also

in D ecem ber

death

took

J.

G.

H oltzclaw, chairman o f the bank’s Indus­
trial Advisory Committee since 1934.
Mr.
H oltzclaw was president o f the Virginia
Electric and Pow er Company.
The bank’s board o f directors re-ap­
pointed Robert V. Fleming, chairman o f
the board o f Riggs National Bank,
Washington, to his fourteenth term as the
Fifth District m em ber of
Advisory Council fo r 1956.

the

Federal

New Officers Elected

on the board since 1944.

three-year

Mr. Sydenstricker’s unexpired term, which
ends D ecem ber 31, 1956.

Jonathan

Three members o f the Head Office staff
became officers o f the bank in 1955. Fiscal
A gency Department M anager John G.
Deitrick,

Transit

Departm ent

M anager

Clifford B. Beavers, and Planning D epart­
ment Manager J. G ordon Dickerson, Jr.
were elected to the position o f assistant
cashier.
The end of 1955 brought the retirement
of Assistant Cashier Edw ard W aller, Jr.,
who had been a m em ber o f the Head Office
staff since 1915.
Two banks o f the Fifth District entered
the Federal Reserve System in 1955. They
were the new ly organized First National
Bank, Greer, South Carolina, and the
Cambria Bank, Inc., o f Cambria, Virginia.

VO LU M E OF PRINCIPAL OPERATIONS
1955

1954

232,132,000
$79,879,673,000

223,784,000
$73,752,728,000

C h ecks H andled :

N um ber _______________________________________________
A m o u n t_________________________________________________
N o n c a s h C o l l e c t io n I t e m s R e c e iv e d :

N um ber _______________________________________________
Am ount _______________________________________________

$

822,000
385,186,000

$

747,000
219,807,000

T r a n s f e r s o f F u n d s for M e m b e r B a n k s :

Number _________ _____________________________________
Am ount _______________________________________________

129,482
$53,538,581,000

116,403
$47,002,429,000

$51,794,241,000
$51,844,814,000

$46,768,291,000
$46,727,150,000

399,344,743
$ 2,335,318,650

415,894,215
$ 2,545,480,530

400,672,595
$ 2,338,676,820

416,795,922
$ 2,566,072,196

I n t e r d is t r ic t S e t t l e m e n t F u n d D a il y T r a n s ­
C l e a r in g s :

it

Total received from F . R. Banks and B ran ch es____
Total paid to F . R. Banks and B ran ch es___________
C u r r e n c y a n d C o in H a n d l e d :

Currency received (including new notes) :
Num ber o f n o t e s ______________________________________
Am ount _______________________________________________
Currency paid out
(including notes returned for redemption) :
Number o f n o t e s ______________________________________
Am ount _______________________________________________
Coin received (including new coin) :
Num ber o f c o in s ______________________________________
Am ount _______________________________________________

$

651,132,388
51,730,844

$

623,707,044
49,440,621

$

659,797,523
52,027,926

$

594,074,874
48,895,610

Coin paid out
(including coin returned for redemption) :
Number o f c o in s ______________________________________
Am ount _______________________________________________
U.

S.

A rmed
S a v in g s
deem ed

G overnm ent

S e c u r it ie s

F orces

B onds

B onds)

L eave

I n c l u d in g

( E x c l u s iv e

I ssued, E x c h a n g e d

and

of

R e­

:

Number _______________________________________________
Am ount _______________________________________________

121,000
$ 3,772,847,000

156,000
$ 4,900,377,000

U . S . S a v in g s B o n d s— I s s u e d :

Number _______________________________________________
Issue p r ic e _____________________________________________

$

5,767,000
336,141,000

$

5,607,000
323,417,000

$

7,338,000
471,520,000

$

7,790,000
480,997,000

U . S . S a v in g s B o n d s— R e d e e m e d :

Num ber _______________________________________________
Redemption v a lu e --------------------------------------------------------




W e generally appraise financial state­

nearly the entire m onetary gold stock of

ments o f business firms in terms o f the

the nation. A ny increases in it w ork to
increase member bank reserve accounts by

profitableness o f the year’s operation.

Not

so with a Federal Reserve Bank’s state­

a similar amount.

ments. Profit making is not a determining
consideration in the operations o f a Federal

whole, however, the G old Certificate Re­
serve declined just slightly over 1955. The
increase at the Richm ond bank was caused

Reserve Bank.
W hat, then, is the basis fo r ju dgin g the
changes in the financial statements o f a
Federal Reserve Bank?
The principal
purpose o f the Federal Reserve System is
influencing the conditions o f credit in the
econom y tow ard the end of prom oting

For the System as a

by a net inflow o f paym ents from other
Federal Reserve districts, and this increase
tended to increase m em ber bank reserve
accounts at this bank proportionately.
During 1955, increased m em ber bank
borrow ing from the Federal Reserve Bank

orderly econom ic grow th while maintain­
ing stability in the purchasing pow er o f the
dollar. Most o f the actions taken to

of Richmond, and from the other Reserve
banks, was indicative o f the grow ing m one­
tary tightness which developed over the

achieve this purpose are reflected directly
or indirectly in the financial statements of
the Reserve banks. Any appraisal o f these
statements should be in the light o f credit

year. A lthough the balance sheet shows
a smaller amount o f discounts outstanding
at the end o f 1955 than at the end o f 1954,
average borrow ing during the year was

policy over a period.

substantially greater than during the
earlier year. This is reflected in the earn­
ings statement. Total earnings from dis­
counts in 1955 were over tw o and a half

M onetary policy throughout 1955 was
one o f increasing restraint. The decline
in the Federal Reserve Bank o f Richm ond’s
holdings o f government securities over the
year reflects the execution o f this policy.
The Richmond Reserve bank does not buy
and sell government securities on its own
account, but participates in the System’s

times the amount earned in 1954. Increases
in the discount rate from 1
per cent to
21/2 per cent accounted fo r some portion
of the increased earnings, but the higher
level

of

borrow ings

was

the

principal

source of the increase.

total holdings which are administered un­
der directives o f the Federal Open Market
Committee. The change in the Richm ond
bank’s holdings, therefore, reflects System
operations designed to influence national
credit conditions.
The second largest asset item in the bal­

Another fa ctor which affected m em ber
bank reserve accounts during 1955 was the
increase in the liability item F ederal Re­
serve Notes. This item represents Federal
Reserve currency issued to m em ber banks
in response to the demands made upon
them by their customers.

Increasing busi­

ance sheet o f the Richmond Reserve bank

ness activity calls fo r more “ pocketbook

is the Gold Certificate Reserve.

m oney” in the hands o f the public, and

This ac­

count fo r the System as a w hole represents




this was the pattern in 1955.

C O M P A R A T I V E S T A T E M E N T OF C O N D I T I O N
ASSETS:

— —— •*

_______ :
------

$1,275,459,867.17

$1,156,033,013.39

72,427,230.78

74,913,000.78

1,347,887,097.95

1,230,946,014.17

38,249,760.00
23,787,968.28
4,175,000.00

22,851,810.00
24,156,354.76
7,550,000.00

88,530,000.00
348,812,000.00
834,571,000.00
165,062,000.00

127,632,000.00
817,643,000.00
355,583,000.00
165,017,000.00

1,436,975,000.00

1,465,875,000.00

T o t a l l o a n s a n d s e c u r i t i e s ___________

1,441,150,000.00

1,473,425,000.00

Due from foreign banks---------------------------------------Uncollected cash item s-----------------------------------------Bank premises-------------------------------------------------------Other assets------------------------------------------------------------

1,113.13
437,744,631.04
5,218,406.37
9,160,589.14

1,140.09
333,589,980.75
4,495,308.58
7,853,762.64

T O T A L A S S E T S _____________

$3,303,199,565.91

$3,097,319,370.99

$2,024,916,515.00

$1,864,244,945.00

833,907,250.82
17,776,533.41
19,300,000.00
21,225,299.95

829,940,097.83
44,619,021.03
24,582,000.00
5,626,323.09

892,209,084.18

904,767,441.95

325,780,232.00
611,860.02

270,806,430.95
555,780.20

3,243,517,691.20

3,040,374,598.10

13,771,500.00
35,011,852.68
3,349,144.81
7,549,377.22

12,618,200.00
33,480,005.72
3,349,144.81
7,497,422.36

$3,303,199,565.91

$3,097,319,370.99

$

$

Gold certificates___________________________________
Redemption Fund for Federal Reserve notes___
T o t a l G o ld C e r t i f i c a t e R e s e r v e s ____

Federal Reserve notes o f other banks___________
Other cash__________________________________________
Discounts and advances----------------------------------------

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

U . S. G O V E R N M E N T S E C U R IT I E S :
B i l l s ______________________________________________
C ertificates______________________________________
Notes ____________________________________________
Bonds -----------------------------------------------------------------T o t a l U . S. G o v e r n m e n t s e c u r it i e s

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

--------

LIABILITIES:
Federal Reserve notes—.
D E P O S IT S :
Member banlc- -reserve accounts
U . S. Treasurer— general account
F o r e ig n ______________________________
Other _______________________________
T otal

D e p o s it s

Deferred availability cash items
Other liabilities---------------------------T O T A L L IA B I L IT IE S

CAPITAL ACCOUNTS:
Capital paid in _________
Surplus (Section 7) —
Surplus (Section 1 3 b )___
Other capital accounts
T O T A L L I A B I L I T I E S A N D C A P IT A L A C C O U N T S

Contingent liability on Acceptances Purchased for Foreign Correspondents ...
Commitments to make industrial loans ------------- -------- ----------- --------- ------- -----------




1,675,000.00
11,250.00

979,200.00
39,000.00

C O M P A R A T I V E S T A T E M E N T OF EARNI NGS AND E X P E NS E S
1955

E a r n in g s :

Discounts and advances _____ ___ _____ _______________________ _______ ...... .........
$
567,773.21
Interest earned on industrial loans under Section 13b_________________
Fees received on commitments to make industrial loans ___ ________ _________________
210.11
Interest on U. S. Government securities ________________________ . .___ _____ ________
23,436,368.44
Other earnings________________________ ______________________ ...
__ _____ ____ _
8,490.13
Total Current Earnins’s_______________________________
E

_______________

1954
$

220,539.06
304.52
447.76
25,627,427.68
6,532.64

24.012.841.89

25.855.251 .fifi

7,183,650.33
213,100.00
445.423.66

6,945,073.95
212,900.00
649.fi9fi.R1

7,842,173.99

7,807,670.76

16,170,667.90

18,047,580.90

_______
482.68

31,734.87
9,213.26

....... _________________

482.68

40,948.13

____ ____________
Losses on sales o f U. S. Government securities (net)
________________
Reserves for Contingencies ________________________ ___ ____ _____ _
A ll other. .. ------------------- ---------------------- --------- ----- ---------------------------- ________ ________

55.37
51,954.86
995.23

52,508.82
637.20

........ ___________ ____

53,005.46

53,146.02

__________ ______

- 5 2 ,5 2 2 .7 8

- 1 2 ,1 9 7 .8 9

_________________ $16,118,145.12

$18,035,383.01

Paid U . S. Treasury (Interest on Federal Reserve n otes)________ ... . _ ______ ________ $13,786,647.54
799,650.62
Dividends paid
— ____ __________ ____ — ____ _________________
1,531,846.96
Transferred to surplus (Section 7)
— _______ ...............................

$15,573,732.87
731,160.00
1,730,490.14

_________________ _________________ $16,118,145.12

$18,035,383.01

xtenses:

Operating expenses (including depreciation on bank premises) after deducting
reimbursements received for certain Fiscal Agency and other expenses_______ ____ _
Assessments for expenses o f Board o f Governors_____ . . . ___________________ ________
Cost o f Federal Reserve r.urrenev
___
N et Expenses

.

Current N et Earnings

. . .

.... . . .

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

. ...

_______ ____ _____
.

..

... _____

____ __________

A d d it io n s to C u r r e n t N e t E a r n i n g s :

Profits on sales of U . S. Government securities (net)
_______________
All other _______ __ __________ ___ _____________ ________ ____ ____-_________
Total

Additions

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

D e d u c t io n s f r o m C u r r e n t N et E a r n in g s :

Total Deductions ...

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

Net Additions ( + ) or Deductions ( — ) ____________ _........ ......
N et E a r n in g s B efore P a y m e n t s

T o ta l

to

U . S. T reasur y .

SURPLUS ACCOUNT (Section 7)
Ruliinnp jit rlnsp nf nvevious vear
ArLlitinn n /o nrnfik fnr vpar

____________________________ $33,480,005.72
_________________
1.531.846.96

B a l a n c e a t C l o s e o f C u r r e n t Y e a r ........................... ............. ...... ................. ........

$35,011,852.68

$31,749,515.58
1.730.490.14
$33,480,005.72

CAPITAL STOCK ACCOUNT
(Representing amount paid in, which is 5 0 % o f amount subscribed)
Rnlsinfp sit clnsp n f nrevimis vpar
Issued during the year

_______________ ____________
.
.... ....... _...................

Cancelled during the year
B a l a n c e a t C l o s e o f C u r r e n t Y e a r ............................................ ............................ .




$12,618,200.00
1,160,800.00

$11,655,200.00
1,014,600.00

13,779,000.00
7,500.00

12,669,800.00
51,600.00

$13,771,500.00

$12,618,200.00




JOHN

B. W O O D W A R D ,

JR., C h a i r ­

m a n of the B o a r d a n d

Federal Re­

serve

Agent,

is

c h a irm a n

b o a r d o f the N e w p o r t
b u i ld i n g

and

Dry

New port

N ew s,

of

News

Dock

V i r g i n ia .

the
S h ip ­

Com pany,
He

has

been a C la s s C m e m b e r o f the b a n k 's
board

since

1949

and

C h a irm a n

since J a n u a r y 1954.

A L O N Z O G. D E CK ER , JR., is vice pre siden t
o f the Black a n d
Com pany,

T o w so n ,

Decker M a n u f a c t u r i n g
M arylan d .

He

w as

a p p o in t e d a C la s s C director in 195 4 a n d
D e p u ty C h a i r m a n in J a n u a r y

1955.

D E A N W . C O L V A R D is D e a n of A g r ic u lt u r e at
N o rth C a r o l i n a State C o lle g e of A g r ic u ltu r e a n d
E n g in e e r in g ,

Raleigh.

He

w as

a pp o in te d

a

C la s s C director o f the b a n k in J a n u a r y 1955.

D A N I E L W . BELL is p re siden t a n d b o a r d c h a i r m a n o f the
A m e r i c a n Security a n d Trust C o m p a n y , W a s h i n g t o n , D. C.
He is a fo rm e r U n d e r S e c re ta ry o f the T reasury.
His term
a s a C la s s A director b e g a n in J a n u a r y 1955.

ROBERT

O.

HUFFMAN

is

pre siden t

of

the

Drexel Furniture C o m p a n y , Drexel, N o rt h C a r ­
o lin a a n d of t w o textile concerns in th at state.
He b e c a m e a C la s s B director in J a n u a r y 1955.

W M . A. L. S IB LEY is vice p re siden t a n d tr e a s ­
urer of M o n a r c h M ills, Unio n, So uth C a r o lin a .
His term o f office a s a C l a s s B director b e g a n
in J a n u a r y 1954.




L. V I N T O N H E R S H E Y is p re sid e n t o f the H a g e r s t o w n S h o e
C o m p a n y , H agerstow n, M a r y la n d .
F orm e rly a m e m b e r
a n d c h a ir m a n of the B a ltim o r e B r a n c h b o a r d , he b e c a m e
a C la s s B director o f the b a n k in J a n u a r y 1956.

J O S E P H E. H E A L Y is pre siden t of the Citizens N a t i o n a l B a n k
of H a m p t o n a n d the F arm e rs B a n k of M a t h e w s , both in
V i r g i n ia .
He took office a s a C l a s s A director in J a n u a r y
1956.

OFFICERS

H u g h Leach

President

E d w a r d A. W a y n e

First Vice President

N. L. A r m i s t e a d

Vice President

Robert G. H o w a r d

A ssistan t Vice President

Robert L. C h e r r y

Vice President

Jo h n L. N o s k e r

A ssista n t Vice President

D o n a l d F. H a g n e r

Vice President

T h o m a s I. Storrs

A ssista n t Vice President

A u b r e y N. Heflin

Vice President and G eneral
Counsel

G. H a r o l d S n e a d

C hief Exam iner

U p to n S. M a r t i n

Vice President

Victor E. Pre g e an t, III

A ssistan t G eneral Counsel

Jam es M. Sla y

Vice President

C liffo rd B. B e a v e rs

C. B. S tr a t h y

A ssistan t Cashier

Vice President and Secretary

C h a r le s W . W i l l i a m s

E. B. C o l e m a n

A ssistan t Cashier

Vice President

Joseph M . N o w la n

Cashier

J o hn G. Deitrick

A ssistan t Cashier

R. S. Brock, Jr.

General Auditor

J. G o r d o n Dickerson, Jr.

A ssistan t Cashier

H. Ernest Ford

A ssistan t Cashier

W y t h e B. W a k e h a m

A ssista n t C ashier

J. D e w e y D a a n e

Assistan t Vice President

J a m e s W . D o d d , Jr.

Assistan t Vice President

USTIDTJSTI^XAL ADVISORY COMMITTEE
O v e r t o n D. D e n n is

W a l k e r D. S tu art

Dom inion Oil C om p an y

Ross Puette

President, Richmond H a rd w a re C o m p a n y
Richmond, V irgin ia

Richmond, V irgin ia

President, C aro lin a Paper Board Corporation

J o h n L. W hit e h u r st

President and Treasurer, Burt M achin e C o m p a n y, Inc.
Baltim ore, M a ry la n d

Charlotte, North C aro lin a

IMIElvflBEIFl FEDERAL A D V IS O R Y




Robert V. Fle m ing

C h airm a n o f the Board, R iggs N a tio n a l Bank
W a sh in g to n , D. C.

COXJISrOIH,

DIRECTORS
T h e o d o re E. Fletcher

Agriculturist
Easton, M a ry la n d

W m . Purnell Hall

Executive Vice President, M a ry la n d Ship b u ild in g & D ryd ock C o m p a n y, Inc.
Baltimore, M a ry la n d

C h a r le s W . H off

President, Union Trust C o m p an y of M a ry la n d
Baltimore, M a ry la n d

C h a r le s A. Piper

President, The Liberty Trust C o m p an y
Cu m b erlan d, M a r y la n d

J o hn W . Stout

President, The Parkersburg N a tio n a l Bank
Parkersburg, W e st V irgin ia

S t a n le y B. Trott

President, M a r y la n d Trust C o m p an y
Baltimore, M a ry la n d

C la r e n c e R. Z a r fo s s

Vice President, W estern M a ry la n d R a ilw a y C o m p a n y
Baltimore, M a ry la n d

OFFICERS
D o n a l d F. H a g n e r

vice President

A. C. W ie n e rt

A ssista n t Cashie r

A. A. Stew art, jr.

Cashier

B. F. A r m s t r o n g

A ssista n t Cashie r




E. R i g g s Jones, jr.

A ssistant Cashier

DIRECTORS

A r c h ie K. D a v i s

C hairm an of the Board, W a c h o v ia Bank & Trust C o m p a n y
W inston-Salem , N orth C a ro lin a

W i l l i a m H. G rier

Executive Vice President, Rock Hill Printing and Finishing C o m p a n y
Rock Hill, South C a ro lin a

Ernest Patton

Ch airm an of the Board, Peoples N a tio n a l Bank
Greenville, South C a ro lin a

Iv e y W . S te w a rt

President, The Com m ercial N a tio n a l Bank
Charlotte, N orth C a ro lin a

Pa u l T. T a y lo r

President, Taylor W a re h o u se C o m p a n y
W inston-Salem , N orth C a ro lin a

G. G . W a t t s

President, M erchants and Planters N a tio n a l Bank
G affn ey, South C a ro lin a

T. H e n r y W il s o n

President an d Treasurer, Henredon Furniture Industries, Inc.
M o rgan ton , N orth C a ro lin a

OFFICERS
R obert L. C h e r r y

Vice President

R. L. H oneycutt

A ssistan t Cashie r

S. A. Ligon

Cashier

E. C. M o n d y

A ssistan t Cashier