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Federal Reserve Bank of St. Louis
From the Boardroom
2
A Brief History of Our Nation 1s Paper Money
4
Highlights of 1995
19
Directors
26
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Federal Reserve Bank of St. Louis
The Federal Reserve Bank of San Francisco is one of twelve
regional Reserve Banks which , together with the Board of
Governors in Washington , D.C. , comprise the nation 's
central bank.
As the nation's central bank, the Federal Reserve is responsible
for making and carrying out our nation's monetary policy. It
also is a bank regulatory agency, a provider of wholesale
priced banking services , and the fiscal agent for the United
States Treasury.
The Federal Reserve Bank of San Francisco serves the Twelfth
Federal Reserve District, which includes the nine western states
- Alaska , Arizona , California , Hawaii , Idaho, Nevada , Oregon ,
Utah and Washington - Guam , American Samoa , and the
Northern Mariana Islands.
To serve this expansive region , the San Francisco Reserve Bank
has five offices : the headquarters in San Francisco , and offices
in Los Angeles , Portland , Salt Lake City, and Seattle. Each office
provides financial services to the public and banking institutions in its locale.
From left, James A. Vohs, Deputy Chairman; Patrick K. Barron, First Vice President; Robert
T. Parry, President; and Judith M. Runstad, Chairman.
2
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Federal Reserve Bank of St. Louis
This Annual Report traces the history of U.S. currency, drawing its photos and graphics from our Bank's collection of currency, which dates from the Civil War era. Our Bank is fortunate to have such a collection, and in
1996, we will install a permanent historical exhibit in the lobby of our San Francisco headquarters to display
many extremely rare and interesting notes. ·
The history of U.S. currency is a timely topic for this Report as the Reserve Banks begin supplying financial
institutions with the newly designed Series 1996 Federal Reserve notes. This is the first major design change in
U.S. currency since 1928. Prior to that time, as this Report shows, bills were redesigned frequently, often to
commemorate historic events, scientific advances, and national figures.
With the introduction of the Series 1996 notes by the U.S. Treasury, the United States will continue to honor
the older series notes at full face value. However, as these older notes are returned to Reserve Banks during the
normal course of business, we will replace them with the new series notes.
In establishing the Federal Reserve System in 1913, Congress sought to accommodate fluctuations in the demand for cash by the public and the banking system. Distributing and replacing coin and currency is, in fact, one
of the Reserve Banks' key responsibilities, and one that has grown dramatically. For example, the value of currency in circulation rose from $3 I .2 billion in I 955 to more than $416 billion in 1995.
When commercial banks and other depository institutions need to replenish their supply of currency and coin ,
they place an order with a Reserve Bank or Branch in their area, and the face value of that cash is charged to
their accounts at the Federal Reserve. When the need for currency and coin declines, banks return excess cash
to their local Reserve Bank, which in turn credits their accounts.
The Reserve Banks and the U.S. Treasury share responsibility for maintaining the quality of paper currency. Each
day, millions of dollars deposited with Reserve Banks are carefully scrutinized. Currency in good condition is
stored for later distribution . Worn or mutilated notes are removed from circulation and destroyed, and counterfeit notes are forwarded to the U.S. Secret Service.
In addition to our role in supplying the nation's currency in circulation, the Reserve Banks play a key role in the
formulation of monetary policy. It is in this regard , in particular, that we would like to thank our Twelfth District
directors for their invaluable counsel during 1995. Their independent assessment of economic and financial
conditions throughout our nine western states is critical to the formulation of sound policy.
In addition , we send our sincere appreciation to those directors who completed their terms of service during
1995 : on the San Francisco Head Office Board, Carl J. Schmitt (Chairman , University Bank & Trust Company, Palo
Alto , CA) and E. Kay Stepp (Principal and Owner, Executive Solutions , Portland , OR); on the Los Angeles Branch
Board , Steven R. Sensenbach (President and CEO, Vineyard National Bank, Rancho Cucamonga , CA) ; on the Salt
Lake City Branch Board , Daniel R. Nelson (Chairman and CEO, West One Bancorp , Boise, ID); on the Seattle
Branch Board , Emilie A. Adams (President and CEO, Better Business Bureau Foundation , Seattle , WA) ; and, on
the Federal Advisory Council , Twelfth District Member Edward M. Carson (Chairman of the Board (Retired) , First
Interstate Bancorp , Los Angeles, CA) .
J
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Federal Reserve Bank of St. Louis
Judith M. Runstad
Robert T. Parry
Chairman
President
3
A Brief History of Our
1
Nation s Paper Money
By Karen Flamme
n our society today, money's value is measured
currency is issued in 1996. But the legacy of the
by what it can buy -
process is a rich heritage of United States currency
its purchasing power -
not by its material worth, but it hasn't always
that gives us a fascinating, colorful, and reflective
been so. American currency has spanned
glimpse into the growth of our nation.
centuries of evolution and numerous transfigurations to reach the size and shape that we carry in
The Federal Reserve Bank has a special interest in this
our wallets today. It has been an evolutionary process
subject. As part of our role as the government's
which often came about in times of crisis -
central bank we are responsible for putting currency,
Civil War or Great Depression -
like the
or to respond to
as well as coin, into circulation. Indeed, the ware-
demand as society struggled to put into place a
housing, shipping, processing, and handling of
monetary system that would function smoothly and
currency are major functions of the regional Reserve
inspire confidence. This development process is
banks.
ongoing and continues even now as redesigned
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Federal Reserve Bank of St. Louis
Extremely rare series of 1880 note with Lyons-Roberts signatures and a small red scalloped seal.
The head is of DeWitt Clinton , Governor of New York, Mayor of New York City, U.S. Senator.
Seated figure is Christopher Columbus .
Colonial and Continental Currency
The Massachusetts Bay Colony issued the first paper
some were printed from plates engraved by Paul
money in the colonies in I 690 . Other colonies soon
Revere to read "The United Colonies " and bore
followed suit to meet the high demand for money
pictures of colonial minutemen.
fueled by trade between the colonies and the scarcity
of coin (which was the common form of money up to
Without solid backing and with rising inflation , the
this date). Some of this early money was readily
Continentals soon became worthless , thus the ex-
accepted , but some was not redeemed in gold or silver
pression " not worth a Continental. " Or, as George
as promised and thus depreciated rapidly. These
Washington put it , "A wagon load of currency will
currencies , however, set a precedent for the first
hardly purchase a wagon load of provisions. "
national currency which was issued during the War
for Independence.
In I 777 after the Declaration of Independence was
signed , the first notes bearing the words "The United
To finance the Revolutionary War, the Continental
States " were issued and signed by well-known revolu-
Congress in I 775 authorized the limited issuance of
tionary figures to give them credibility.
paper currency. These notes, called Continentals ,
were denominated in dollars and backed by the
The remnant of this experience was a deep distrust of
"anticipation" of future tax revenues , with no backing
paper money which was not issued again by the
in silver or gold . They could be redeemed only upon
federal authorities until the Civil War when the Federal
the independence of the colonies.
government first issued paper money. The Continental was significant , however, in that it marked the first
Continentals were an interesting expression of the
time that the worth of U.S. currency lay in its pur-
new nation's sovereignty, as they did not feature
chasing power and not in its intrinsic value.
pictures of the crown or King of England . In fact ,
•
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Federal Reserve Bank of St. Louis
5
First Charter Original series note with Allison -Spinner signatures and a small red seal with rays.
This was one of the most popular Gold Bank notes issued in California in the 18 70s .
Free Banking Era
In I 791 the Bank of the United States received a
cat" referred to banks in mountainous and other
charter to operate until 181 I, followed by the Second
remote regions that were said to be more accessible to
Bank of the United States from 181 6 to 1836. These
wildcats than customers , making it difficult for people
two banks, chartered by Congress rather than a state ,
to redeem these notes. The "broken" bank notes took
performed several central bank functions. Although
their name from the frequency with which some of the
privately owned, they were authorized to issue paper
banks failed , or went broke.
bank notes and serve as the fiscal agent of the government. Both banks , however, were unpopular with
those wanting easy credit agrarian interests -
primarily the western ,
and in 1832 Andrew Jackson
Civil War
vetoed the recharter of the Second Bank.
Once again the need to finance a war provided the
Thus followed the "Free Banking Era" -
a quarter
impetus for a change in the monetary system. In
century in which American banking was a hodge-
1861, to finance the Civil War, Congress authorized
podge of state-chartered banks with no federal regula-
Demand Notes -
tion or uniformity in operating laws. State Bank notes
the government since the Continentals. These Notes
of various sizes, shapes, and designs were in circula-
were printed in $5, $ I 0, and $20 denominations,
tion. Some of them were relatively safe and exchanged
redeemable in coins on demand, and green in color -
for par value and others were relatively worthless as
hence the name "greenbacks." A total of about $IO
speculators and counterfeiters flourished. By 1860,
million was issued , a relatively small series. These
an estimated 8,000 different state banks were circu-
notes, and all paper money issued since 186 I, are still
lating "wildcat" or "broken" bank notes in denomina-
valid and redeemable in current cash at face value.
tions from I /2 cent to $20,000. The nickname "wild-
While most early money is now in the hands of
6
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Federal Reserve Bank of St. Louis
the first issue of paper money by
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This is a rare gold certificate . payable in gold coin . with the head of Abraham Lincoln .
collectors or museums , it is important to note the
even postage stamps. From 1862 to 18 76 the govern-
record of currency stability which this represents.
ment issued more than $368 million in Fractional
Currency in three- to fifty-cent denominations. These
In 1862, Congress discontinued issuing Demand
"paper coins ," which were much smaller in size than
Notes and issued Legal Tender Notes, also known as
our present currency, were nicknamed "shinplasters, "
United States Notes. These new notes -
issued in
as the hardships of war often forced troops to line
denominations from $ I to $1 ,000 (later $5,000 and
their worn-out boots with them. These fractional
$ I 0,000) -
notes are still redeemable today.
were the first national currency used as
legal tender for most public and private debts. The
design of these notes incorporated a Treasury seal ,
Between 1861 and 1865 Confederate currency was
fine-line engraving, intricate geometric lathe work
being issued to millions of Southerners, gambling that
patterns , and later incorporated various forms of
a Confederate victory would ensure the currency
distinctive cotton and linen papers with embedded red
would be redeemable . In an effort to debase this
and blue fibers . Confidence in the notes waned some-
currency, the North printed counterfeit Confederate
what when the Treasury stopped redeeming them in
money and circulated it in the south. Inflation was
coins during the Civil War to save gold and silver.
soon rampant in both the north and south, but far
However, redemption resumed in 1879 following
worse in the Confederacy. As the end of the war
the war.
neared , Confederate citizens completely lost confidence in their currency and came to rely on barter or
Coin hoarding and the need to use metals for war
black-market greenbacks. In some cases Confederate
purposes created a shortage of coin during the Civil
soldiers were even paid in Northern greenbacks. By
War and led to the circulation of small change substi-
the end of the war, Confederate notes were totally
tutes . In some cases these included tickets , bills, and
worthless .
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Federal Reserve Bank of St. Louis
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Issued from 191 9 to I 92 I , only in Ohio and Louisiana. At the left is Washington crossing the
Delaware . At the right is Washington at prayer. This is one of four known specimens .
National Bank Act
Gold and Silver Certificates
President Abraham Lincoln, urged by the Secretary of
The economy was in turmoil in the late I 9th century.
the Treasury, convinced Congress to pass the National
The government, in a move to increase its reserve of
Banking Act in 1863 which established a national
precious metals , offered certificates in exchange for
banking system and a uniform national currency to be
deposits of silver and gold .
issued by the new "national banks." The banks were
required to purchase U.S. government securities as
Gold certificates, colorful and vivid, were first issued in
backing for their National Bank Notes. In 1865 a I 0-
1863 and put into general circulation in 1882. They
percent tax was levied on State Bank notes eliminating
are among the most attractive of all currency issues,
the profit in issuing them and basically taxing them
with the reverse a brilliant golden orange, symbolic of
out of existence.
the gold coin they represent. In I 933 , when the
country faced a severe depression and a banking crisis ,
Although United States Notes were still widely
the public began to demand gold.
accepted as a medium of exchange, most paper
currency circulating between the Civil War and World
Runs developed on both Federal Reserve Banks (which
War I consisted of National Bank Notes. They were
had been established under the Federal Reserve Act in
issued from 1863 through 1932. From 1863 to 1877
I 91 3) and commercial banks. In order to deal with
National Bank Notes were printed by priv_
ate bank
this crisis, only Federal Reserve Banks were permitted
note companies under contract to the Federal govern-
to hold gold. In 1934, Federal Reserve Banks were
ment. The Federal government took over printing
required to turn over all gold coin, bullion , and certifi-
them in 1877.
cates to the U.S. Treasury in return for a new type of
gold certificate. These were never put into circulation
and the last ones were printed in January I 935. In
I 964, private citizens could once again hold gold
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8
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Federal Reserve Bank of St. Louis
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Above is an extremely rare silver certificate, series of 18 78,
payable at New York. The head is of James Monroe.
Federal Reserve System
certificates issued before January 30, 1934, but they
In I 9 I 3 a major change in paper currency occurred
could no longer be redeemed in gold. This changed in
with the passage of the Federal Reserve Act aimed at
197 4, and private U.S. citizens could once again hold
resolving some long-standing money and banking
gold legally.
problems which had led to bank failures, business
bankruptcies, and general economic contractions. The
Silver certificates were first issued in exchange for
Act created the Federal Reserve System as the nation's
silver dollars in I 8 78. They offered many varieties of
central bank to regulate the flow of money and credit
design and subject matter including inventors , mili-
for economic stability and growth . In I 914, Federal
tary heroes , a Sioux Indian, and the famous Educa-
Reserve Notes, which comprise more than 99 percent
tional series of 1896. An 1886 $ I silver certificate is
of today's paper money, were issued by Federal Re-
also the only piece of U.S. paper currency to bear the
serve Banks as direct obligations of the Federal Re-
portrait of a woman -
serve System.They replaced National Bank Notes as
Martha Washington.
the dominant form of paper money.
For many years silver certificates were the major
type of currency in circulation. However, in the early
Federal Reserve Notes were issued in denominations
I 960s when the price of silver jumped to over
ranging from $ I to $ I 0,000. The $ I 00 note has been
$ I .29 an ounce it was evident that further increases
the largest denomination printed since 1946, and in
would make it profitable for holders of silver coins to
I 969 all notes greater than $ I 00 were retired because
sell them in the open market. To avert this crisis,
of declining demand.
Congress eliminated silver certificates in 1963 , and
empowered the Federal Reserve to issue $ I and $2
The design of Federal Reserve Notes has changed little
Federal Reserve Notes for the first time.
over the years. In 1929, the size of the notes was
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Federal Reserve Bank of St. Louis
reduced; in 1955, the inscription "In God We Trust"
9
This is an extremely rare note known as a 11 Grand Watermelon 11 note because of the shape of
the zeroes . It was redeemable in coin . and it has Rosecrans-Huston signatures and a large
brown seal. The head is of General George Gordon Meade, commander of the Union troops at
the battle of Gettysburg.
was added; and in 1966, the Latin wording on the
$ I 00 would have buildings or monuments on the
Treasury seal was replaced by an English translation.
back. Higher denominations had the denomination
In 1929 , it was also decided that all currency would
on the back.
have a portrait on the front , and denominations under
Did You Know?
• During much of the I 7th and 18t h centuries , the Spanish Dollar coin served as the unoffi cial national currency of the American colonies . To make change the dollar was actually cut
into eight pieces or "bits." Thus came the terms "pieces of eight " from these early times and
"two bits " from our time.
• More than half of a dollar bill is cons idered legal tender, and only the fro nt of a dolla r bill is
va luable. If you could separate the front of a bi ll from the back, on ly the front half woul d be
considered "money."
• In 1955 a law was passed that all new designs for coin and currency would bear the inscription "In God We Trust." Those words had first appeared on a U.S. coin - the two -cent piece
- in 1864.
• Until 1929 currency measured 7.42 x 3. 13 inches. Since then it has remained at its present
size of 6. 14 x 2.61 inches - an easier size to handle and store. Since that size requ ires less
paper, it is also less expensive to produce.
• By 1865 approximately one -third of all circulating currency was counterfeit, and the Depart ment of the Treasury established the United States Secret Service in an effort to control coun terfeiting.
10
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Federal Reserve Bank of St. Louis
This bill is a series of I 918 Blue Seal note with Burke -Glass signatures and a small blue scalloped
seal. The front shows the head of Salmon P Chase. The reverse design is the embarkation of the
Pilgrims .
A New Look for Currency
In I 990 a new series of notes was introduced to
some efficiencies in production and inventory. The
improve security and stay ahead of counterfeiters and
Federal Reserve District letter ('l," in the case of San
advances in technology which make it easier to
Francisco) is being retained, however, and will be
reproduce currency. These notes include microprinting
included in the serial number.
and an embedded security strip.
A more complete redesign is being introduced starting
The Future of Currency
with the issue of new $ I 00 bills early in 1996 and
will continue as new designs for the lower denomina-
Despite predictions of a "cashless society" relying on
tions are introduced at intervals of about a year. The
electronic payments , the public demand for currency
most noticeable changes in the $ I 00 bill are that the
continues to grow. Debit cards used for purchases
portrait of Benjamin Franklin is larger and off center
and transaction records could greatly reduce the need
and the borders are simplified . This creates more
for cash , but paper currency still has the advantage of
space to incorporate a watermark in the paper to the
privacy.
right of the portrait depicting the same historical
figure as the portrait.
Other new or modified features include the use of a
unique security thread which glows red when exposed
to ultraviolet light, color-shifting ink, microprinting,
and fine-1.ine printing. A universal Federal Reserve seal
appears on the new note, rather than an individual
seal for each Reserve Bank. This is expected to create
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Federal Reserve Bank of St. Louis
11
The lobby of the headquarters building in San Francisco will soon house one of the preeminent
exhibitions of historical United State currency in existence. This Bank's collection is outstanding in terms of the diversity of notes and rarely seen denominations and series, long forgotten
by the public. It contains more than I, 700 individual notes and is considered by numismatists to be irreplaceable.
Many pieces in the collection date from the 1880s, with the oldest being an 1862 $IO Legal
Tender note bearing the signatures of Treasury officials Chittenden and Spinner. The most
valuable item in the collection is one of only two known, remaining$ I 0,000 gold certificates
printed in 1882, signed by Treasury officials Teehee and Burke and marked with a small red
seal. It is valued at over $200,000 by numismatists. Another item, a series 1890 Treasury/
Coin $ I ,000 note, with Rosecrans and Nebeker signatures and a small red seal, is one of only
two known existing bills and is valued at $ I 50,000. Several items in the collection are the
only remaining notes of their type in existence.
This collection, interestingly enough, was rediscovered in the vaults below the Federal Reserve
Bank of San Francisco in 1992. Long forgotten in the Bank's day-to-day operations, the currency had remained sequestered in a padlocked, steel currency cart for more than 40 years. It
was when one of the nation's foremost experts on U.S. historical currency learned of the
Bank's collection and asked to view it that the rediscovery process began.
It is believed that at least parts of the collection were sent to the Bank long ago from the
Treasury department as historical currency specimens. Other pieces were acquired during the
1950s when the Bank exchanged duplicate pieces in an effort to increase the collection and
create a display - a project which never materialized at that time.
The new exhibition is an addition to the existing "World of Economics" and will be of interest
to the general public and educators as well as numismatists. It is designed to integrate both
the economic and chronological history of the United States.
12
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
13
Bank Office
14
Robert T. Parry
Douglas R. Shaw
President and Chief Executive Officer
Vice President and Counsel
Patrick K. Barron
W. Gordon Smith
First Vice President and Chief Operating Officer
Vice President and Director
Jack H. Beebe
D. Kerry Webb
Senior Vice President and Director
Vice President
Elizabeth K. Christensen
Sallie H. Weissinger
Senior Vice President
Vice President
Sara K. Garrison
Patricia A. Welch
Senior Vice President
Vice President
Michael J. Murray
James M. Barnes
Senior Vice President
Director
Terry S. Schwakopf
Kenneth R. Binning
Senior Vice President
Director
Laurence Washtien
Harold H. Blum
Senior Vice President
Director
S. Jean Hinrichs
Nancy Emerson
General Auditor
Director
Robert D. Mulford
Eliot E. Giuili
Vice President and General Counsel
Director
Elizabeth R. Masten
Donald R. Lieb
Vice President and Secretary of the Board
Director
C. Kenneth Arnold
John Y. C. Lin
Vice President
Director
Barbara J. Contini
Susan G. Porterfield
Vice President
Director
Robert L. Fienberg
Wayne L. Rickards
Vice President and Director
Director
Frederick T. Furlong
Kenneth M. Kinoshita
Vice President
Associate General Counsel
William K. Ginter
Paige Birdsall
Vice President
Assistant Vice President
Reuven Glick
Sylvia A. Cunningham
Vice President
Assistant Vice President
John P. Judd
Gail A. Garvey
Vice President and Associate Director
Assistant Vice President
Ronald E. Mitchell, Jr.
Elaine Geller
Vice President
Assistant Vice President
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Federal Reserve Bank of St. Louis
December 31, 1995)
Todd Glissman
Beatrice K. Ashburn
Assistant Vice President
Audit Officer
John S. Hsiao
Beverley-Ann Hawkins
Assistant Vice President
Automation Officer
Peter K. C. Hsieh
Michael E. Johnson
Assistant Vice President
Applications Officer
Deborah S. Jackson-Duke
Lelia M. Jones
Assistant Vice President
Assistant Vice President
Ellsworth E. Lund, Jr.
Craig B. Knudsen
Assistant Vice President
Financial Planning & Control Officer
Elizabeth M. O'Shea
Mark Levonian
Assistant Vice President
Research Officer
Philip M. Ryan
Bonnie Martina
Assistant Vice President
Examining Officer
W. Starr Seegmiller
Brian Motley
Assistant Vice President
Research Officer
Susan A. Sutherland
Gary P. Palmer
Assistant Vice President
Financial Analysis Officer
James J. Tenge
Glenn D. Rudebusch
Assistant Vice President
Research Officer
Thomas R. Thaanum
Virginia N. Salinas
Assistant Vice President
Audit Officer
David M. Vandre
Bharat Trehan
Assistant Vice President
Research Officer
David W. Walker
Elizabeth L. Wood
Examining Officer
Systems Officer
Kelly K. Walsh
Assistant Vice President
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Federal Reserve Bank of St. Louis
15
Branch Offi
Los Angeles Branch
Northern Region
John F. Moore
Gordon Werkema
Executive Vice President
Senior Vice President
Sean J. Rodriguez
Vice President
Nancy Olmstead
Director
Portland Branch
Raymond H. Laurence
Vice President
Darcy J. Coulter
Assistant Vice President
Mary E. Lee
Assistant Vice President
Robert C. Johnson
Assistant Vice President
Robert D. Long
Assistant Vice President
Rachel A. Romero
Assistant Vice President
Robin A. Rockwood
Assistant Vice President
Lisa Moraes
Operations Officer
Mary Rector
Salt Lake City Branch
Administrative Officer
Roger W. Replogle
Business Development and
Electronic Product Support Officer
Andrea P. Wolcott
Vice President
Jed W. Bodily
Assistant Vice President
Dale L. Vaughan
Examining Officer
Gerald R. Dalling
Assistant Vice President
Thomas P. McGrath
Assistant Vice President
Richard B. Hornsby
Business Development Officer
Seattle Branch
Gale P. Ansell
Assistant Vice President
Jimmy F. Kamada
Assistant Vice President
(temporarily assigned to San Francisco)
Kenneth L. Peterson
Assistant Vice President
Michael J. Stan
Check Product Officer
16
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Federal Reserve Bank of St. Louis
ittee
Executive Committee
From left, Elizabeth K. Christensen , Senior Vice President; Patrick K. Barron , First
Vice President and Chief Operating Officer (seated) ; Gordon R. G. Werkema ,
Senior Vice President; John F. Moore, Executive Vice President ; Jack H. Beebe,
Senior Vice President and Director of Research ; Robert T. Parry, President and
Chief Executive Officer (seated); and Terry S. Schwakopf, Senior Vice President.
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Federal Reserve Bank of St. Louis
17
18
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Federal Reserve Bank of St. Louis
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. ' )i' 5
uilding upon its growing reputation for
tion Management; Personnel; Capital Budget and
excellence in operations, outstanding
Building; and Loan. This new structure is designed to:
service to customers, and effectiveness
•
in the oversight of financial institutions,
the Federal Reserve Bank of San Francisco
ensure in-depth review of strategic
issues;
•
provide for greater involvement on
took on major new leadership responsibilities in 1995 .
the part of those with direct knowledge
In particular, the District played a key role in the
of the issues; and
Federal Reserve System· s efforts to integrate its
financial services activities on a more national basis.
•
promote increased informationsharing and team building among Bank
management.
Faced with continuing consolidation and restructuring
of the financial services industry, as well as the push
This new structure will optimize resources in fulfilling
toward interstate branch banking, the System reorga-
the District's leadership responsibilities and achieving
nized its financial services management structure
continuing gains in productivity, cost control, and
along major product lines early in the year, awarding
customer responsiveness .
the Twelfth District responsibility for System-wide
support functions , including accounting, automation,
and customer electronic access.
Check Services
The District also played a major role in shaping the
The Twelfth District's leadership was evident in a
System's response to changing customer and con-
number of initiatives in 1995. In addition to leading
stituent needs in the retail payments, wholesale
the development of a System-wide strategy for imple-
payments, and fiscal services product areas, as
mentation of digital image technology and image-
well as in the areas of banking supervision and
based check services, the District lent expertise to a
community affairs.
variety of projects aimed at enhancing the efficiency
and quality of check services nationwide.
To meet these leadership challenges and provide for a
more flexible organization, the District reorganized its
While making significant contributions to Federal
management structure early in the year, replacing the
Reserve System efforts, the District implemented a
former Management Committee with a new policy-
variety of products to appeal to new customers, and
making framework that comprises seven key commit-
operational initiatives that resulted in continued
tees: Executive; District Steering; Operations; lnforma-
improvement in productivity and unit costs. These
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Federal Reserve Bank of St. Louis
19
efforts enabled the District to end the year in a posi -
Cash Services
tive cost recovery position.
In 1995, Cash Services made significant progress
toward increasing currency processing capabilities ,
Electronic Payments and Fiscal Agency
reducing unsorted backlogs , and enhancing controls.
Seven new currency processing machines went into
The District's Automated Clearing House (ACH)
production in 1995, bringing the District total to 18,
continued a trend of outstanding cost recovery,
three-quarters of the total planned. Along with the
productivity, and unit cost management in 1995.
new equipment have come significant increases in
Several new projects were initiated to improve opera-
processing capability and the ability to support the
tions and expand the scope of the ACH. A concerted
new I 996 series $ I 00 note. Total daily processing
effort to convert Reserve Bank payments to the ACH
increased nearly one-fourth over 1994.
resulted in more than 50 percent of Twelfth District
vendor payments being made through the ACH at the
In the continuing effort to balance public policy
end of 1995, compared to 26 percent at the end of
interests with customer service, the District an-
1994. Another initiative gave customers the opportu-
nounced a revised Cash Service Structure that offers
nity to receive ACH advices by FED-Mail rather than in
depository institutions a basic level of free service,
paper form . At year-end, more than 190 customers
while providing additional service for a fee. Cash and
were enjoying this efficiency, and more are converting
Business Development staff worked in concert to
each week.
solicit customer input in the development of the new
structure, and to communicate these changes to
To bring together expertise in the business of whole-
customers. Bank staff also held seminars for over
sale electronic payments, including securities and wire
I ,500 customers to explain the 1996 series currency
transfer, the District formed a new Wholesale Pay-
release and counterfeit detection methods .
ments department, which parallels the new Systemwide Wholesale Payments Product Office. Under the
The District also assumed major national leadership
leadership of this new department, cost recovery
responsibilities in the cash area in 1995 by chairing
exceeded targets, and funds transfer staff embarked on
the System 's Advisory Group on Cash Services. The
an ambitious key customer outreach program , visiting
Advisory Group ensures regional needs and issues are
20 large customers in three states to share expertise
factored into System policy-making in cash services.
and expectations.
In the District's Fiscal Services function , steep in-
System Support Function Office
creases in interest rates during the first quarter dramatically increased the demand for Treasury securities
Beginning in January 1995, the Support Function
and resulted in a rema rkably high volume of activity in
Office (SFO) assumed a broad range of new System-
the Treasury Direct and Customer Service units at all
wide responsibilities . The office was structured into
five offices.
three major divisions dealing with accounting, auto-
20
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Federal Reserve Bank of St. Louis
mation , and customer electronic access. From this
and seminars , and held 75 meetings with visiting
base, the SFO oversees seven central business admin -
officials from the United States and abroad , principally
istration functions and 18 applications which share
from Pacific Basin countries. In March , the department
resources throughout the Federal Reserve System.
co-hosted an academic conference on monetary policy
in a changing financial environment with the Center
A key accomplishment during the year was the suc-
for Economic Policy Research at Stanford University.
cessful migration of FED-Mail from pilot to full produc tion status. FED-Mail uses electronic-mail technology
to deliver low-security data to customers.
Banking Supervision and Regulation
By year end I 995 , more than I , I 00 customers were
using the new information delivery vehicle on a
The Twelfth District continued to provide significant
daily basis .
support to the Federal Reserve System in such areas
as capital markets , emerging issues , and programs to
enhance the supervisory process. Additionally, inter-
Economic Research
national outreach efforts increased during the year
and included various initiatives with China , Japan ,
Research focused during I 995 on a wide range of
Malaysia , and the Philippines. The District also
national , regional , and regulatory policy issues ,
hosted central bankers from Asia , Africa , and Europe;
including monetary policy in the U.S. and monetary
and provided technical assistance to Russia , Moldova,
policy and exchange rates in East Asian countries .
Poland , and Slovakia.
Staff also examined longer-term issues , such as
economic growth in the U.S. and abroad , NAFTA-like
There were 59 state member banks in the District at
trade agreements , and measures of international
year end -
financial integration . Research on labor markets dealt
with assets between $ I 00 million and $ I billion . In
with seniority and the duration of unemployment, as
addition , the District supervised 2 14 holding compa-
well as health insurance and worker mobility. Regional
nies with assets totaling $46 I billion , 136 branches
analysis addressed population flows between Califor-
and agencies of foreign banks , 20 Edge and Agreement
nia and the rest of the District. Staff also studied
corporation offices , and 38 representative offices .
8 with assets exceeding $ I billion , and 2 I
various regulatory initiatives , including the implications of bank mergers on competition and structure.
Applications activity increased during the year from
270 in 1994 to 310 in 1995 , reflecting increases in
both domestic and international applications and a
The department published an increased number of
continuation of expansion and consolidation trends.
papers in academic journals , as well as in Bank publi cations. In addition , economic education and public
programs continued to expand their reach , and Eco nomic Research staff delivered 74 speeches to outside
organizations , made 48 presentations at conferences
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Federal Reserve Bank of St. Louis
~~ -?,
~-
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..
i:
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21
Credit, Compliance, and Community Affairs
recognized speakers discuss community reinvestment ,
rural community development , fair-lending issues, and
The leadership of the Twelfth District in the area of
successful public -private partnerships .
community reinvestment is well recognized. In 1995 ,
Community Affairs sponsored 12 seminars through -
As part of its continuing efforts to provide guidance
out the District, providing information to more than
on the formation of bank lending consortia , the
500 lenders on how to prepare for the new CRA
department played a key role in the development of
examination , which will focus on bank performance
the California Economic Development Lending Initia -
with the lending, service, and investment tests .
tive , a statewide consortium of 34 banks and three
corporations which pooled $50 million to provide
At two other Community Affa irs-sponsored confer-
financing to small businesses that currently do not
ences , more than 600 bankers , non-profit representa -
have access to capital.
tives , and government officials heard nationally
Summary
Volume (in thousands)
Custody Services
Cash Services
Currency notes paid into circulation
Food stamp coupons processed
Securities Services
Other Treasury original issues
Book-entry securities processed
Payments Services
Check Services
Commercial checks collected
Government checks processed
Return items processed
Electronic Payments Services
Wire transfers processed
Automated clearinghouse
transactions processed
Discounts and Advances
Total discounts and advances*
Number of financial institutions
accommodated*
* Whole number (not in thousands)
22
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Federal Reserve Bank of St. Louis
1993
1994
1995
4,069 ,935
651 ,348
4,212,494
694 ,306
4,298 ,035
753 ,589
113
702
216
805
201
894
2,994 ,572
73 ,648
32,709
2,269 ,690
69 ,567
29 ,941
2,082 ,513
67 , 148
30 ,569
19,962
19 ,925
20,135
406,220
459,032
525 ,549
483
587
482
64
56
66
'.~:
'
"
. .- :':'·';'\~\
~
:. . ·: \ ,/.Jt • ations
From left, Gordon R. G. Werkema , Senior Vice President, Northern Region; Raymond H.
Laurence, Vice President, Portland; John F. Moore, Executive Vice President, Los Angeles;
and Andrea P. Wolcott, Vice President, Salt Lake City.
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Federal Reserve Bank of St. Louis
23
Com arative
I
(Thousands of Dollars)
December 3 I,
1995
1994
Gold certificate account .................................. .
Special Drawing Rights certificate account.. .... .
Other cash ...................................................... .
I .036,000
977,000
37,312
I, I 02,000
904,000
33,059
Loans to depository institutions .................... ..
I 02,800
33,295
Federal Agency obligations .............................. .
209,053
342,931
United States Government securities:
Bills ................................................................. .
Notes .............................................................. .
Bonds .............................................................. .
14,533,374
11,985,485
3,497,600
16,726,325
13,592,343
4,054,557
Total United States Government securities ...... .
Total loans and securities ................................ .
30,0 I 6,459
30,328,312
34,373,225
34.749,45 I
Items in process of collection ......................... ..
Bank premises ................................................. .
574,032
158,768
544,324
155,956
Other assets:
Operating equipment ...................................... .
Denominated in foreign currencies .................. .
All other. ......................................................... .
2,934,776
47,063
692,406
3,207,077
38,263
1,073,067
Interdistrict Settlement Account. .................... .
5,350,875
(3,685,226)
Total assets ..................................................... .
42, I 36,544
38,121,971
35,901,029
31,023,861
Deposits:
Total depository institutions-reserve accounts
Foreign ............................................................ .
Other deposits ................................................ .
Total deposits .................................................. .
4,187,535
19,608
55,335
4,262,478
4,938,398
20,515
80,318
5,039,23 I
Deferred credit items ...................................... ..
Other liabilities ............................................... .
532,712
357,015
639,717
394,728
Total liabilities ................................................. .
41,053,234
37,097,537
Capital paid in ................................................ ..
Surplus ............................................................ .
541,655
541,655
512,217
512,217
Total liabilities and capital accounts ................ .
42, I 36,544
38,121,971
Assets
Liabilities
Federal Reserve Notes .................................... ..
Capital Accounts
24
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Federal Reserve Bank of St. Louis
es
(Thousands of Dollars)
December 3 I,
1995
1994
Current Earnings
Discounts and advances ................................. .
United States Government securities .............. .
Foreign currencies .... ... .. .............. ........... .......... .
Income from services ... .. ............... ............ .... ... .
All other. ........................................ ................. .
947
1,979,188
I 09,345
75,887
2,897
611
1,919,419
130,257
78,131
936
Total current earnings ... .............. ..................... .
2, 168,264
2,129,354
203,454
196,427
17,577
185 ,877
21 ,070
16,058
180,369
19,536
1,961,317
1,929,449
Additions to current net earnings
Profit on prior period adjustments ................... .
Profit on sales of United States Government
securities (net) .................................... .
Profit on foreign exchange transactions (net) ... .
All other. .............. ...... .. .... .. .. ........................ ....
Total additions ................................................ .
239
508,919
2,412
511,570
392,452
2
352,494
Deductions from current net earnings
Loss on Sales of United States Government
Securities (net) .................................... .
Loss on foreign exchange transactions (net) .... .
All other. ......................................................... .
Total deductions ..... ................. .. ... ...... .. ..... .. .. ...
369,206
9,063
378 ,269
2, 177
13
2,190
Net additions ( +) or deductions (-) ................ .
133,30 I
350,304
Cost of Unreimbursed Treasury Services .......... .
(5,778)
(4,755)
(22,440)
(30, I 05)
(21,315)
(28, I 80)
2,036,294
31,794
2,225,503
30,255
1,975,063
2, I 77,906
29,438
512,217
541,655
17,342
494 ,875
512,217
Current Expenses
Total current expenses ..................................... .
Less: reimbursement for certain fiscal agency
and other expenses .............................. .
Net Expenses .................................................. .
Cost of earnings credits ................................... .
Current net earnings ....................................... .
Profit and Loss
Assessments by Board of Governors
Board expenditures .............................. .
Federal Reserve currency costs ............. .
Net earnings before payments to the
United States Treasury. ........................ .
Dividends paid ................................................ .
Payments to the United States Treasury
(interest on Federal Reserve Notes) ............... .
Transferred to surplus ...................................... .
Surplus, January I ........................................... .
Surplus, December 3 I ..................................... .
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Federal Reserve Bank of St. Louis
25
Federal Reserve B
26
Chairman of the Board and
Federal Reserve Agent
Judith M. Runstad
Partner
Foster, Pepper & Shefelman
Seattle, Washington
Gary G. Michael
Chairman and CEO
Albertson s, Inc.
Boise, Idaho
Deputy Chairman
James A. Vohs
Chairman (Retired)
Kaiser Foundation
Health Plan, Inc. and
Kaiser Foundation Hospitals
Oakland, California
Richard L. Mount
Chairman, President and CEO
Saratoga Bancorp
Saratoga, California
Gerry B. Cameron
Chairman and CEO
U.S. Bancorp
Portland, Oregon
Cynthia A. Parker
Executive Di rector
Anchorage Neighborhood
Housing Services, Inc.
Anchorage, Alaska
Krestine Corbin
President and CEO
Sierra Machinery, Inc.
Sparks, Nevada
Stanley T. Skinner
Chairman and CEO
Pacific Gas and Electric Co.
San Francisco, California
Warren K. K. Luke
Vice Chairman, President & CEO
Hawaii National Bank
Honolulu, Hawaii
Federal Advisory Council Member
William E.B. Siart
Chairman of the Board and CEO
First Interstate Bancorp
Los Angeles, California
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Federal Reserve Bank of St. Louis
1
Chairman of the Board
Anita E. Landecker
Western Regional
Vice President
Local Initiatives
Support Corporation
Los Angeles, California
David Lewis Moore
President
Western Growers Assn.
Irvine, California
Stephen G. Carpenter
Chairman of the Board and CEO
California United Bank, N.A.
Encino, California
William S. Randall
President
First Interstate Bancorp
Los Angeles , California
Anne L. Evans
Chairman
Evans Hotels
San Diego, California
Thomas L. Stevens, Jr.
President
Los Angeles TradeTechnical College
Los Angeles, California
Antonia Hernandez
President
and General Counsel
Mexican American Legal
Defense and
Educational Fund (MALDEF)
Los Angeles, California
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Federal Reserve Bank of St. Louis
27
Chairman of the Board
Ross R. Runkel
Professor of Law
Willamette University
Salem , Oregon
Marvin R. O'Quinn
Chief Operating Officer
Providence Portland
Medical Center
Portland , Oregon
Cecil W. Drinkward
President and CEO
Hoffman Corporation
Portland , Oregon
Carol A. Whipple
Proprietor
Rocking C Ranch
Elkton , Oregon
John D. Eskildsen
President and CEO
U.S. Bank of Oregon
Portland , Oregon
Thomas Cook Young
Chairman , President and CEO
Northwest National Bank
Vancouver, Washington
Elizabeth (Betsy) Johnson
President
TransWestern Aviation , Inc.
Scappoose , Oregon
28
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Federal Reserve Bank of St. Louis
ranch
ors
Chairman of the Board
Gerald R. Sherratt
President
Southern Utah University
Cedar City, Utah
J.
R. D. Cash
Chairman, President and CEO
Questar Corporation
Salt Lake City, Utah
Nancy Mortensen
Vice President-Marketing
Zions Cooperative
Mercantile Institution
Salt Lake City, Utah
Richard E. Davis
President and CEO
Salt Lake Convention
& Visitors Bureau
Salt Lake City, Utah
Roy C. Nelson
President
Bank of Utah
Ogden, Utah
Patrick McMurray
Chairman, President and CEO
First Security Bank of Idaho, N .A.
Boise, Idaho
Constance G. Hogland
Executive Di rector
Boise Neighborhood
Housing Services, Inc.
Boise, Idaho
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Federal Reserve Bank of St. Louis
29
Chairman of the Board
George F. Russell, Jr.
Chairman
Frank Russell Company
Tacoma, Washington
John V Rindlaub
Chairman and CEO
Seafirst Bank
Seattle, Washington
Thomas E. Cleveland
President
Enterprise Bank
Bellevue, Washington
Helen M. Rockey
President
Brooks Sports, Inc.
Bothell, Washington
Tomio Moriguchi
Chairman and CEO
Uwajimaya, Inc.
Seattle, Washington
William R. Wiley
Senior Vice President ,
Science and Technology Policy
Battelle Memorial Institute
Richland , Washington
Constance Leigh Proctor
Partner
Alston , Courtnage , MacAulay
& Proctor
Seattle, Washington
30
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Federal Reserve Bank of St. Louis
ouncil
ss and Agriculture
Chairman
Bailey S. Barnard
Former President
Heller First Capital Corp.
San Francisco , California
Vice Chairman
Karla S. Chambers
Vice President
Stahlbush Island Farms, Inc.
Corvallis , Oregon
Members
Barry Baszi le
President
Baszile Metals Service
Los Angeles, California
Jerry D. Caulder
Chairman, President and CEO
Mycogen Corp.
San Diego , California
Nancy G. Learned
President
Learned-Mahn , Inc.
Boise , Idaho
Lawrence S. Okinaga
Partner
Carlsmith , Ball, Wichman
Case & lchiki
Honolulu, Hawaii
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Federal Reserve Bank of St. Louis
Peter H. Parra
Executive Director
Employers Training Resource
Bakersfield, California
1
Walter F. Payne, Jr.
President and Chief Executive Officer
Blue Diamond Growers
Sacramento, California
Leslie Tang Schilling
President
L.T.D.D., Inc.
San Francisco, California
Peter H. van Oppen
President and Chief Executive Officer
lnterpoint
Redmond, Washington
Bob L. Vice
President
California Farm Bureau Federation
Sacramento , California
Richard S. Walden
President
Farmers Investment Company
Sahuarita, Arizona
31
San Fran
P.O. Box
San Francis
Los Angele
P.O. Box 20
Los Angele
Portland
P.O. Box 3
Portland,
Salt Lake Ci
P.O. Box 30
Salt Lake Ci
Seattle Br
P.O. Box 3
Seattle,
This Report was written and produced by
Karen Flamme. Highlights was written by
Karen Flamme and Barbara Bennett. Design
and illustrations were created by William
Rosenthal. Color photography by Paul
Schulz.
~ printed on recycled paper
32
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Federal Reserve Bank of St. Louis
@FedFRASER