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Operations of the Federal Reserve Bank o f St. Louis in 1958 I n 1958, as in each year since its founding in 1914, the Federal Reserve Bank of St. Louis played an active role in the economy of the middle Mississippi Valley and the United States as a whole. A review of the operations of the Federal Reserve Bank of St. Louis and its branches will, of course, reflect not only the particular nature of the functions performed by the bank, but also the particular characteristics of the financial community and of the economy of the area served. As background to this year’s Annual R e port there is included a brief glance at the nature of the economic activity which is included within the boundaries of the Eighth Federal Reserve District. The Eighth District In common with the people in the rest of the United States those in the Eighth Federal Reserve District share in the benefits of a vast free trade area. They are surrounded by no artificial barriers to trade, are served by transportation to all points of the nation, and they share a common money. Some idea of the magnitude of the tasks performed by this common money, which consists primarily of bank deposits, can be gained from a brief review of economic relationships between the district and the rest of the nation. Since their early establishment, the cities of the district located in the Mississippi and Ohio Valleys have served as wholesalers and processors of goods moving from the manufacturing East to the agricul tural W est. Automobiles, airplanes, refrigerators, electric motors, appliances, farm machinery, and many other manufactured items are produced in the district by firms with nation-wide production and sales facilities. W ithin this area, which includes about 6 per cent of the U. S. population, there are produced nearly 9 per cent of the farm products sold nationally. Forested sections supply a substantial portion of the nation’s requirements for lum ber and paper. Many of this central region’s mineral prod ucts, including coal, oil, lead, zinc, aluminum, lime stone, barite, and iron, enter the stream of national commerce. Using a particular district state as an example, it has been estimated that more than 80 per cent of the manufactured products of Missouri are shipped out of the state, flowing in substantial amounts to all but four states of the nation. About four-fifths of the farm income of the state is earned by the production of agricultural commodities which are exported to other states or nations. In turn large quantities of food, clothing, and household goods from other parts of the country flow into the district, even though many of these things are also produced locally. Similarly, the in dustries of the district draw materials, equipment, and services from many parts of the country. In order to produce, district agriculture and industry import from the rest of the nation and the world. Circulation of Checks It is easy to imagine some of the difficulties that would arise if these flows of goods were to be paralleled by tremendous amounts of currency and coin crossing and recrossing the country. In fact, it is unlikely that such a large volume of interregional trade, with its resulting benefits in productivity and living standards, could have developed had such a cumbersome method for making payments been required. In actual practice, deposits in some 14,000 commer cial banks across the nation serve as a convenient means for making payments. W hile the average per son is familiar with his bank as a place to keep an account and to borrow on occasion, he may not have thought of the bank as one link in a complex m echa nism for transferring funds. A glance at the endorse ments on the back of one of his cancelled checks, however, would show him that the check he had mailed to a firm in some distant city may have re turned to him through the bank of the company to which he had sent the check, two Federal Reserve Bank offices, and finally his own bank. The pay ment, which the drawer may have considered to have been made when he mailed the check, was made by transfers of credit on the books of all the banks Page 17 through which the check passed. According to a study made in 1954 by the Federal Reserve System and others, the average check deposited or cashed at a bank passed through 2% banks in the process of collection and about 2V3 business days elapsed b e tween the date it was deposited and the date it was presented for payment. In 1958, the Federal R e serve Bank of St. Louis, as one link in the payments mechanism of the country, processed more than 186 million checks and money orders with a face value of more than $63 billion. Pattern of Check Movement The flows of funds manifested in the check clearing activities of the commercial banks and the Federal Reserve System fall into a rough pattern. Normally, funds move on balance, year in and year out, from rural areas to local financial centers. Funds move in turn from the local financial centers to the money mar ket centers. Completing the circle, the money mar ket banks have an "unfavorable” balance of trans actions with certain rural area banks. The result is a circular geographic pattern of movement, with the inflows of funds and the outflows of funds roughly in balance at each stage.1 A net movement of funds from banks in small Eighth District towns to banks in cities like Louis ville, Memphis, L ittle Rock, and Evansville takes place almost continually. Most city banks in the district, outside the St. Louis area, lose funds to banks in St. Louis. For instance, during 1958 there was a net flow of $285 million from banks in the Memphis area to banks in the St. Louis area. Funds generally flow from the St. Louis banks to banks in the major money market centers. Last year about $1.6 billion flowed from St. Louis area banks to banks in New York and about $850 million moved to banks in Chicago. Completing the circle, the money market banks of New York and Chicago have an "unfavorable” balance of transactions with many rural area banks within the district. The Eighth D istrict as a whole tends to gain funds persistently from banks located in the southern and western parts of the country. F or instance, the district received net about $500 million from Dallas and nearly $200 million from Kansas City in 1958. On the other hand, the district loses funds to banks loca ted in the northern and eastern states. Superimposed on the circular movements of bank money from place to place are other observable pat 1 F o r fu rth er treatm en t of this subject see, " T h e M oney M arket and D is trict B a n k in g ,” M o n th ly R eview , N ovem ber, 1 9 5 3 . Page 18 terns. Eighth D istrict banks usually lose more funds than they gain during the spring of the year but tend to get more funds than they lose in the fall. During the first half of 1958, the district as a whole had an outflow of about $150 million on balance, but in the last six months of the year a favorable balance of transactions offset most of this loss. Check Collection Activities Turning now specifically to the activities of the Federal Reserve Bank of St. Louis, it is appropriate to begin with check collection activities, the largest operation of the bank in employment. In 1958, check collections at the head office and branches of the Federal Reserve Bank of St. Louis continued the upward trend of recent years. Collections through local clearings, which receive immediate credit and are known as "city checks,” numbering 31 million items were one million above the 1957 level. Checks on out-of-town banks, which receive deferred credit and are known as "country checks,” amounting to 121 million items were up approximately 7 million from the previous year. The continued steady increase in check handling is emphasized graphically when the 1938 volume is compared with that of 1958. During 1938 the four offices collected 50 million checks on commercial banks. In 1958 this figure had mounted to 152 million checks. The 1938 volume required the services of 100 em ployees at the head and branch offices. By 1958, while the number of items had tripled, slightly more than double the number of employees (2 1 7 ) were engaged in this activity. This bank accepts for collection checks which are drawn on the 489 member banks in the Eighth D is trict, on the 686 nonmember banks in the district that remit at par ( face value without a ch arge), on all Number of City and Country Checks Handled Federal Reserve Bank of St. Louis 1948-1958 Millions Millions Federal Reserve Banks, on all par remitting banks in other Federal Reserve Districts, checks drawn on the United States Treasury, and Postal Money Orders. Checks are accepted for collection from member banks, other Federal Reserve offices sending checks accepted for collection from member banks in their collection zones, and United States Government Agen cies. Volume of payments flowing through the check collection department is related both to the total flow of funds through the economy and to the number of par remitting banks in the district from which the Federal Reserve Bank is able to effect collection. Par remitting banks in the Eighth District increased in number from 1,077 on D ecem ber 31, 1940, to 1,175 on Decem ber 31, 1958. Coin received and counted aggregated 373 million pieces, valued at $35 million, compared to 363 million pieces in 1957 and 355 million pieces in 1956. Money Department operations are concerned not only with precise counting, balancing, checking for counterfeits, and sorting of currency and coin by de nominations, but also with the physical condition of the nation’s currency and coin. Unfit currency totaling $175 million was taken out of circulation in 1958 by the St. Louis office. COMBINED VOLUME OF OPERATIONS AT THE ST. LOUIS BANK AND THE LOUISVILLE, MEMPHIS, AND LITTLE ROCK BRANCHES IN 1958 AND 1957 Number of Pieces Handled Remittances for checks collected and other trans fers of funds among Federal Reserve Banks are made daily. During 1958 this Bank transferred to other Federal Reserve Banks by telegraphic advices over $46 billion. These transfers have grown steadily in postwar years. In 1947 the dollar volume amounted to $11.2 billion; by 1951 dollar volume had practically doubled, and it doubled again by 1958. Checks (T o ta l)................................. City Checks.................................. Country Checks........................... Government Checks.................... Postal Money Orders.................. Transfer of Funds............................. Non-cash Collections...................... U.S. Gov't Interest Coupons......... Discounts and Advances2 .............. 1958 1957 186,360,000 31,141,000 121,259,000 21,019,000 12,940,000 196,441,000 373,168,000 139,000 507,000 715,000 769 185,984,000 30,185,000 114,625,000 26,791,000 14,383,000 205,884,000 362,840,000 136,000 500,000 689,000 1,181 179,000 343,000 170,000 318,000 7,224,000 396,000 7,042,000 354,000 717,000 755,000 175,000 158,000 $63,711,653,000 40,967,866,000 18,472,164,000 4,042,023,000 229,601,000 1,169,222,000 35,364,000 46,113,194,000 369,297,000 91,859,000 1,974,193,000 $62,203,350,000 39,504,868,000 17,947,521,000 4,496,416,000 254,545,000 1,196,109,000 33,751,000 40,720,435,000 346,683,000 79,281,000 3,416,365,000 39,464,000 33,609,000 691,288,000 11,161,259,000 639,526,000 10,385,248,000 S afekeeping o f Securities: Operations in Currency and Coin Securities Received and The volume of money handled in supplying the currency and coin requirements of the banks in the Eighth District did not change substantially from 1957 to 1958. A decline in currency received and counted was offset by an increase in coin handling operations. Coupons D eta ch e d .................... In 1958, a total of 196 million pieces of currency amounting to $1,169 million were received and count ed at the four district offices. Approximately 206 million pieces were handled in 1957 and 205 million in 1956. Fiscal Agency Operations: U. S. Savings Bonds Issued, Exchanged and Redeemed.. Other Government Issues Withheld Tax Depository Receipts Processed 3 ................ Treasury Tax and Loan Account Transactions............. Dollar Volume Checks Handled (Total).................. Country Checks............................. Government Checks.................... Postal Money Orders......... Pieces of Currency and Coin Handled Federal Reserve Bank of St. Louis 1948-1958 Millions Millions U. S. Gov't Interest Coupons......... Discounts and Advances................ _ _ S afekeeping o f Securities: Coupons Detached...................... Fiscal Agency O perations: U. S. Savings Bonds Issued, Exchanged and Redeemed.. Other Government Issues......... 1 D oes n o t in clu d e 7 2 m illio n u n v erified co in s p ro v e d in c o n n e c tio n w ith w rap p in g . 2 F ig u re s a re ro u n d e d to n e a re s t th o u s a n d e x c e p t fo r n u m b e r o f d isco u n ts an d a d v a n ce s. s In clu d e s v a lid a te d re c e ip ts r e c e iv e d fro m D ire c to rs o f In te rn a l R e v e n u e w h ich w e re p reviou sly r e c e iv e d as d ep o sits o f ta x e s. Page 19 Discount Activities Reflecting the changed economic conditions, lend ing to member banks in 1958 was down from levels of recent years. During the year, 55 Eighth District member banks borrowed almost $2 billion. Average daily outstanding amount of borrowings was $10.6 million compared with $17.5 million in 1957 and $22.3 million in 1956. Daily average borrowings on a quarterly basis in 1958 closely followed the nation’s economic activity pattern. After declining sharply from $10.7 million in the first quarter to $4.8 million in the second quar ter, average outstandings moved up with the upswing in business activity to $10.5 million in the third quar ter and $16.2 million in the final quarter. The Board of Directors of each Reserve Bank is re quired by law to establish the discount rate every two weeks, subject to review and determination by the Board of Governors of the Federal Reserve System. These rates fix the cost of funds borrowed by member banks from their respective Reserve Banks. The discount rate at the Federal Reserve Bank of St. Louis was changed several times in response to Field Service During 1958, representatives of the Federal Reserve Bank of St. Louis made official visits to 384 Eighth D istrict banks, discussing and explaining Reserve Bank services, regulations, and policy, and Federal Reserve functions in general. They attended 215 bankers’ meetings, participating in 125 of the pro grams. At 36 of these, they presented lectures on this nation’s money supply, illustrated by charts. Also, officers attended 42 formal openings of new or re modeled bank offices during the year. And, in a reciprocal of this program, 5,730 visitors, a record number, were conducted through this bank’s various offices. Over one-half of these toured the new Louis ville Branch building. New Louisville Branch During May of this past year the Louisville Branch moved into a new building two blocks away from former quarters, remembered by many as the old G er man Bank Building, where operations had been car ried on since June 16, 1919. The new building not only relieves the congested conditions that existed at the former location but also allows room for contin uing expansion. changing economic conditions over the year. W ith economic activity declining the discount rate was reduced from 3 to 2% per cent on January 24, to 2M on March 14, to 1% on April 18. Accompanying the rise in business activity during the last half of the year the rate was raised September 12 to 2 per cent and again on O ctober 24 to 2& per cent. Fiscal Agency As fiscal agents of the United States, the Federal Reserve Banks are engaged in issuing, redeeming, exchanging and reissuing Government securities, and otherwise servicing the public debt. The volume of transactions involving obligations of the United States Government increased somewhat in 1958 over 1957 levels. United States Savings Bonds issued, exchanged, or redeemed increased from 7 mil lion pieces with a dollar value of $640 million in 1957 to 7.2 million pieces with a dollar value of $691 mil lion in 1958. Number of pieces of other Government issues handled rose from 354 thousand in 1957 to 396 thousand in 1958 with a dollar value of $10.4 billion and $11.2 billion, respectively. Page 20 Employment W hen the Bank opened for business in 1914 its total complement consisted of 23 officers and employ ees. Employment rose with an increasing volume of business throughout the 1920 and 1930 decades and reached a peak during the heavy World W ar II finan cing operations in the mid-1940’s. Subsequently em ployment declined somewhat. In the seven-year period from Decem ber 1951 to D ecem ber 1958 the number of employees was reduced by 10 per cent despite a generally increasing volume of work performed. Operations in the Bank have made use of modern labor saving equipment wherever such equipment was feasible. Modern check handling and tabulating ma chinery have been installed. These technological im provements coupled with reduced employee turn over, which permits better training and increased op erator experience, have contributed to the substantial reduction in personnel in recent years. In 1958 employment at the Federal Reserve Bank of St. Louis and the Louisville, Memphis, and Little Rock Branches continued to reflect the net effect of increased volume of work in many of the operations, offset by the trend toward increased efficiency in bank operations of recent years, some reduction in volume in certain operations, and the elimination of some functions. The monthly average number of employees at the four offices declined from 1,112 in 1957 to 1,107 in 1958. year term beginning January 1, 1959, to succeed Mr. Total number employed at the Federal Reserve Bank of St. Louis and the branches on January 1 for selected years is as follows: of the Federal Advisory Council from the Eighth F ed 11-16-1914 (beginning of bank) 23 1924 586 1934 717 1944 1,551 1954 1,292 1959 1,139 J. E. Etherton, whose term expired at the end of 1958. Mr. William A. McDonnell was selected by the Board of Directors of the Federal Reserve Bank of St. Louis to serve during the year 1959 as a member eral Reserve District. Mr. McDonnell has been repre senting the District on the Council since January 1958. Appointments to the Boards of Directors of the branches were as follows: By th e B oard o f G overn ors o f th e F e d e r a l R eserv e System: Mr. Waldo E. Tiller, reappointed as a member of Directors and Officers the Little R o ck Branch Board for a three-year Each Federal Reserve Bank has a board of directors consisting of nine members, divided into three classes, designated as Classes A, B, and C. The six Class A term beginning January 1, 1959. and B directors are elected by the member banks, and the three Class C directors are appointed by the Board of Governors of the Federal Reserve System. The terms of two of the elected directors and one of the appointed directors expire at the end of each year. Each branch of the Federal Reserve Bank of St. Louis has a board of directors of seven members, four of Mr. J. D. Monin, Jr., reappointed as a member of the Lou isville Branch Board for a three-year term beginning January 1, 1959. Mr. Frank Lee Wesson, reappointed as a member of the M em phis Branch Board for a three-year term beginning January 1, 1959. By th e B oard o f D irectors o f th e F e d e r a l R eserve B ank o f St. Louis: whom are appointed by the directors of the bank and Mr. J. V. Satterfield, Jr., reappointed as a member three by the Board of Governors. One of the three of the L ittle R o ck Branch Board for a three- Class C directors is designated Chairman of the year term beginning January 1, 1959. Board and Federal Reserve Agent by the Board of Mr. John R. Stroud, appointed as a member of Governors, and another is named Deputy Chairman. the L ou isville Branch Board for the three-year The following designations, elections, and appoint term beginning January 1, 1959, to succeed Mr. ments were made, effective this January: For the year 1959, the Board of Governors again designated Mr. Pierre B. M cBride as Chairman and Magnus J. Kreisle, whose term expired at the end of the year. Mr. J. H. Harris, reappointed as a member of the Federal Reserve Agent. Mr. M cBride has served in M em phis Branch Board for a three-year term these capacities since his appointment as a Class C beginning January 1, 1959. director in January 1957. During the six years imme diately preceding his appointment to the St. Louis Board, Mr. M cBride served as a director of the Louis ville Branch. During 1959 two new officers were appointed. Mr. Homer Jones, formerly chief of the Consumer Credit and Finance Section at the Board of Governors, on July 1 was appointed Vice President of the Bank, Mr. J. H. Longwell was reappointed by the Board responsible for its Research Department. Mr. Louis of Governors as a Class C director for the three-year term beginning January 1, 1959, and as Deputy Chair A. Nelson, manager of the Money Department of the man for the year 1959. He has been a Class C director of that branch effective November 1, 1958. He suc since January 1957 and served as Deputy Chairman during 1958. ceeded Mr. Lawrence K. Arthur, who had reached retirement age. Mr. Arthur was the last active mem Mr. Arthur W erre, Jr. was elected by the member ber of the group employed by the bank upon its banks in Group 3 as a Class A director for the three- Louisville Branch was appointed an Assistant Cashier opening in St. Louis in 1914. Page 21 DIRECTORS January 31, 1959 BOARD OF DIRECTORS LITTLE ROCK BRANCH DIRECTORS Pierre B. McBride Chairman of the Board and Federal Reserve Agent Appointed by the Board of Governors J. II. Longwell Deputy Chairman of the Board CLASS A DIRECTORS Elected by Group* Term Expires Dec. 31 Kenton R. Cravens, President, Mercantile Trust Company, (721 Locust St.) Drawer 5 2 4 Main P. O., St. Louis 66, Mo. 1 1959 H. Lee Cooper, President, Ohio Valley National Bank of Henderson, (140-42 No. Main St.), P. O. Drawer 5, Henderson, Kentucky 2 1960 Arthur Werre, Jr., Executive Vice President, First National Bank of Steeleville, Steeleville, Illinois 3 1961 Elected by Member Banks (May be bankers) CLASS B DIRECTORS Elected by Member Banks Leo J. Wieck, Vice President and Treasurer, The May Department Stores Co., 6th and Olive Sts., St. Louis 1, Mo. S. J. Beauchamp, Jr., President, Terminal Ware house Co., 500 Block East Markham, Little Rock, Ark. 3 1959 1 1960 2 1961 CLASS C DIRECTORS Appointed by the Board of Governors (Must not be officers, directors, employees, or stockholders of any bank) Pierre B. McBride, President, Porcelain Metals Corporation, 1400 South Thirteenth St., Louisville 10, Ky. Jesse D. Wooten, Executive Vice President, MidSouth Chemical Corporation, (1222 River side Blvd.), P. O. Box 346, Memphis 1, Tenn. J. H. Longwell, Director, Division of Agricultural Sciences, University of Missouri, Columbia Mo. 1959 1960 1961 Appointed by the Directors of Federal Reserve Bank Donald Barger, President, Peoples Exchange Bank, (Main and Commerce Sts.), P. O. Box 231, Russell ville, Ark. J. W. Bellamy, Jr., President, National Bank of Com merce of Pine Bluff, (424 Main St.), P. O. Box 2052, Pine Bluff, Ark. E. C. Benton, President, Fordyee Bank and Trust Company, P. O. Box 352, Fordvce, Ark. J. V. Satterfield, Jr., Chairman of the Board, The First National Bank in Little Rock, (3rd and Louisiana Sts.), P. O. Box 1471, Little Rock, Ark. 1959 1960 1960 1961 Appointed by the Board of Governors David F. Cocks, Chairman. Vice President and Treas urer, Standard Oil Company (Kentucky), (1488 Starks Bldg., 4th and Walnut Sts.), P. O. Box 1446, Louisville 2, Ky. Philip Davidson, President, University of Louisville, 2301 South 3rd St., Louisville 8, Ky. J. D. Monin, Jr., Farmer, R.F.D. 1, Oakland, Ky. Appointed by the Directors of Federal Reserve Bank Merle E. Robertson, Chairman of the Board and Pres ident, Liberty National Bank and Trust Company of Louisville, (201 W. Market St.), P. O. Box 1499, Louisville 1, Ky. WT Scott McIntosh, President, State Bank of Hardins. burg, Hardinsburg, Ind. John G. Russell, President, The Peoples First National Bank & Trust Company of Paducah, 300 Broad way, Paducah, Ky. John R. Stroud, Executive Vice President, The First National Bank of Mitchell, (628 Main St.), Box 37, Mitchell, Ind. 1959 1960 1961 1959 1960 1960 1961 MEMPHIS BRANCH DIRECTORS 1960 1961 Member, Federal Advisory Council William A. McDonnell, Chairman of the Board, First National Bank in St. Louis, (510 Locust) Lock Box 267-Main P. O., St. Louis 66, Mo. r Group 1— Consists of banks with combined capital and surplus of $ 1 ,5 0 0 ,0 0 0 and over. Group 2— Consists of banks with combined capital and surplus of $3 0 0 ,0 0 0 and over, but under $1,500,000. Group 3— Consists of banks with combined capital and surplus under $30 0 ,0 0 0 . Group classifications are subject to change by the Board of Governors of the Federal Reserve System. 1959 LOUISVILLE BRANCH DIRECTORS (Must be actively engaged in the district in business, agriculture, or some other commercial pursuit, and must not be officers, directors, or employees of any bank) Harold O. McCutchan, Executive Vice Presi dent, Mead Johnson & Company, Evans ville 21, Ind. T. Winfred Bell, Chairman. President, Bush-Caldwell Company and Arkansas Electric Company, 123 Main St., Little Rock, Ark. Robert H. Alexander, Owner-Operator, Land’s End Plantation, Route 1, Scott, Ark. Waldo E. Tiller, President, Tiller Tie and Lumber Company, Inc. (901 Union Life Bldg.), P. O. Box 586, Little Rock, Ark. Term Expires Dec. 31 Appointed by the Board of Governors John D. Williams, Chairman„Chancellor, The University of Mississippi, University, Miss. S. L. Kopald, Jr., Executive Vice President, Humko Division, National Dairy Products Corporation, (1702 Thomas St.), P. O. Box 4607, North Station, Memphis 7, Tenn. Frank Lee Wesson, President, Wesson Farms, Inc., Victoria, Ark. Appointed by the Directors of Federal Reserve Bank John K. Wilson, President, The First National Bank of West Point, 5 Commerce St., West Point, Miss. John E. Brown, President, Union Planters National Bank of Memphis (Madison Ave. at Front St.), P. O. Box 387, Memphis 1, Tenn. Simpson Russell, President, The National Bank of Com merce of Jackson, Jackson, Tenn. J. H. Harris, President, The First National Bank of Wynne, P. O. Box 111, Wynne, Ark. 1959 1960 1961 1959 1960 1960 1961 OFFICERS January 31, 1959 Delos C. Johns, President Guy S. Freutel, First Vice President Howard H. Weigel, Vice P resident and Secretary Dale M. Lewis, Vice P resident C r e d it -D is c o u n t D e p a r t m e n t B u il d in g s a n d P u r c h a s in g StePhen KoPtis’ Assistant Vice President J. M. Geiger, Assistant Vice P resident F ie l d S e r v ic e D e p a r t m e n t P e r s o n n e l D e p a rtm e n t, P r o t e c t i o n D e p a rtm e n t \y. Willis L . Johns, Assistant Vice P resident E . Walker, Assistant Vice President _ _ M o n ey D e p a r t m e n t , S a f e k e e p in g D e pa r t m e n t John J. Hofer, Assistant Vice President George E . Kroner, Vice P resident Joseph C. Wotawa, Vice P resident E x a m in a t io n Paul Salzman, Assistant Vice President C e n t r a l T a b u l a t in g D e p a r t m e n t Homer Jones, Vice President R esea rc h C o l l e c t io n D epartm en t Orville O. Wyrick, C hief Exam iner Wilbur H. Isbell. Assistant C hief Exam iner A c c o u n t in g D e p a r t m e n t D epartm en t William J. Abbott, Adviser D epartm en t Earl R. Billen, Assistant Vice P resident ---------- •----------- F is c a l A g e n c y D e p a r t m e n t L eg a l D e p a r t m e n t Marvin L . Bennett, Assistant Vice President Gerald T. Dunne, Counsel and Ass9 Sec. t A u d it D e p a r t m e n t P l a n n in g D e p a r t m e n t George W . Hirshman, G eneral Auditor Woodrow W . Gilmore, Assistant Vice President LITTLE ROCK BRANCH Fred Burton, Vice President and M anager S. C. Davis, Cashier Clifford Wood, Assistant C ashier W . J. Bryan, Assistant C ashier LOUISVILLE BRANCH Donald L . Henry, Vice President and M anager John W . Menges, Cashier Clarence J. Woertz, Assistant C ashier Louis A. Nelson, Assistant C ashier MEMPHIS BRANCH Darryl R. Francis, Vice President and M anager E . Francis De Vos, Cashier H. C. Anderson, Assistant C ashier Benjamin B. Monaghan, Assistant C ashier Earnings and Expenses the Treasurer of the United States, under provisions In 1958, the Federal Reserve Bank of St. Louis realized $30,016 thousand of earnings on Government securities and $253,000 from other sources, including interest on discounts and advances. Total current earn ings were $665,000 less than in 1957. The smaller cur rent earnings reflected a decline in the average rate of interest received on Government securities, fewer ad of this Act, was to be repaid the full amount of $548,000 originally advanced to this bank, and some losses in the past had reduced the surplus in the account to $521,000, this bank’s general surplus was charged $27,000 in order to make full repayment. No loans have been made at the Federal Reserve Bank of St. Louis under Section 13b in recent years. vances to member banks, and a lower average discount rate. W hile there was an increase in the Bank’s par ticipation in the System’s holdings of U. S. Govern ment securities, the amount of interest received de clined because of lower yields on new issues held during the year. Statement of Condition A condensed Comparative Statement of Condition of the Federal Reserve Bank of St. Louis is shown on the following page. The ratio between gold certifi cate reserves to total deposit and Federal Reserve Note liabilities combined declined from 48.4 per cent FEDERAL RESERVE BANK OF ST. LOUIS on Decem ber 31, 1957, to 41.2 per cent on December COMPARATIVE STATEMENT OF EARNINGS AND EXPENSES 1958 Earnings from: Discounted Bills ..................................... U. S. Government Securities............... Industrial Advances .............................. All O th e r .................................................... $ 243,498 3 0,016,564 - 09,131 31, 1958, at the Federal Reserve Bank of St. Louis. 1957 $ 570,185 30,352,291 - 011,151 However, nationally the decline was only 4.2 points from 46.3 per cent to 42.1 per cent in comparison to the 7.2 points in St. Louis, where the loss of gold re serves was proportionately heavier than nationally. Additions to Current Net Earnings: Profit on Sales of U. S. Govt. Sec. (net) All Other ........................................................... 3 0 ,933,627 7,296,141 6,817,090 218,800 279,300 St. Louis was the result of a $153.9 million decline in 267,254 36,354 187,988 34,961 the Gold Certificate Reserves and an $11.7 million 7,319,339 . 22,450,644 Expenses: Operating Expenses .............................. Assessment for Expenses of Board of G o vern ors............................................... Federal Reserve Currency: Original C o s t ........................................ Cost of Redemption ......................... 30,269,193 7,818,549 Total Current Earnings ............ 23,6 1 4 ,2 8 8 The minimum legal requirement is 25 per cent. The decline in the ratio compared with a year earlier at increase in Federal Reserve Notes outstanding which more than offset a $40.4 million reduction in total deposits. 6,933 139,600 7,489 84,454 .................................. 146,533 91,943 Deductions from Current Net Earnings: Reserve for Contingencies ......................... All Other ...................................................... 18,436 671 14,259 4 58,5 3 0 19,107 4 72,789 127,426 -3 8 0 ,8 4 6 . 22,578,070 2 3 ,2 3 3 ,4 4 2 19,675,908 7 15,956 2,186,206 20,2 9 6 ,2 3 4 682,073 2,25 5 ,1 3 5 . 2 2,578,070 2 3 ,2 3 3 ,4 4 2 Total Additions Total Deductions ................................ Net Additions to Current Net Earnings. . . Net Earnings before payments to Distribution of Net Earnings: Paid to U. S. Treasury (Interest — F.R. Notes) ................................... Dividends Paid .............................. FEDERAL RESERVE BANK OF ST. LOUIS STATEMENT OF CONDITION Assets (In thousands of dollars) December 31, 1958 Gold Certificate Reserves................................ Federal Reserve Notes of Other Banks. . Other Cash ......................................................... Discounts and Advances ................................ U. S. Government Securities ...................... Uncollected items ............................................ Other Assets ...................................................... Total Assets .................................................... December 31, 1957 798,151 2 3 ,286 26,514 2,262 1,070,904 232,400 12,779 $ 952,089 17,588 25,649 435 9 80,896 188,650 15,180 $2,1 6 6 ,2 9 7 $2,180,487 $ Liabilities and Capital Accounts On September 2, the surplus held in connection with provisions of Section 13b of the Federal Reserve Act, which gave Federal Reserve Banks certain busi ness loan authority, was eliminated under provisions of the Small Business Investment Act of 1958. Since Federal Reserve Notes (Net) ...................... Deposits: Member banks— reserve accounts.......... U. S. Treasurer— general account . . . . Other ................................................................ Deferred availability items ......................... Other Liabilities .................................. Total Capital Accounts ................................ $1,2 3 8 ,2 7 0 $1,226,564 669,057 19,283 11,835 174,787 793 52,272 699,440 25,982 15,176 163,043 439 4 9,843 Total Liabilities and Capital Accounts. $ 2 ,166,297 $2,180,487