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P. O. BOX 4-4-2 • ST. LOUIS 66, MO.


Business Activity at Postrecession H ig h .....................


Bank Credit E x p a n d s ....................................................


Operations of the Federal Reserve Bank of St. Louis
in 1 9 5 8


This issue released on February 25.


Business Activity at Postrecession High
E c o n o m i c A C TIV IT Y in January and early February reached a new postrecession high. Increases in
in d u s tr ia l p r o d u c tio n were accompanied by rises
in seasonally adjusted construction outlays and freight
car loadings. In some of the country, however, floods
and cold weather interfered with production. The
basis for sustained growth seems to be broad, with
virtually all sectors in the economy participating. The
rise in employment continued to lag substantially b e­
hind the rise in output, partly reflecting the sharp in­
creases in productivity occurring in the wake of the
latest recession.

Industrial Production Continues Upward
The industrial production index rose from 142 per
cent of the 1947-49 average (seasonally adjusted) to
143 per cent in January, although weather and labor
disputes held down output in some industries. At 143
the index was 2 points below the pre-recession high
of August 1957. Durable and nondurable manufac­
turing production increased between Decem ber and
January, while output of mines declined one percent­
age point.
The brightest spot in the economic picture has lately
been occupied by the steel industry. Production dur­
ing the second week of February reached 83.7 per
cent of rated capacity, the highest level since midApril, 1957. Production scheduled for the third week
of this month was 2.44 million tons, 86.1 per cent of
capacity, and about 15 per cent above the average
weekly rate of output in January.
Concern over the possibility of a steel strike later
this year may be a factor in the rise in steel production
if fabricators of steel have been attempting to build
up stocks to carry them through a strike. Most of the
increase in steel buying, however, can be attributed to
greater activity on the part of steel consumers. Auto­
mobile output in January, for example, continued to
run ahead of the 1958 pace, in spite of the forced
curtailment of production by one of the major pro­
ducers as a result of glass shortages caused by strikes.

Increased Sales Support the Growth
in Production
Seasonally adjusted sales of manufacturers, whole­
salers and retailers rose in December. Total sales in
Decem ber amounted to $57.4 billion, an increase of
2.3 per cent over November. Manufacturers’ sales rose
_Page 14

by 1.8 per cent, with most of the increase occurring
in the durable goods sector. Sales of wholesale estab­
lishments in Decem ber rose by less than 1 per cent
from November levels, and retail sales rose 3.5 per
cent. Both durable and nondurable goods figured in
the increase. Total retail sales in January, according to
preliminary estimates, were virtually unchanged from
their Decem ber rates, after seasonal adjustment, and
were 5 per cent above January 1958.
Total department store sales in January also were
5 per cent above the January 1958 level. However,
after seasonal adjustment, January sales were below
their high Decem ber rate. Sales of domestically pro­
duced automobiles in January were nearly 13 per cent
above the January 1958 volume, although seasonally
smaller than in December.

Strong Point of the Economy:
The Construction Industry
Construction, which played such an important role
in the recent economic recovery, continues to be
strong. O u tla y s for new c o n s t r u c t io n in January
amounted to $3.7 billion, a new high for that month,
and were $400 million greater than in January 1958.
The $400 million growth in construction outlays over
the year was equally divided between private con­
struction and public construction.
New private housing starts declined slightly from a
seasonally adjusted annual rate of 1.43 million in D e­
cember to 1.35 million in January, after ten successive
months of increases. Applications for FH A insurance
on mortgages for new homes and requests for VA
appraisals both rose from Decem ber to January, sug­
gesting continuing strength in the demand for Feder­
ally underwritten mortgage financing and for new

Employment Conditions Show
Some Improvement
Unemployment rose about seasonally between midDecem ber and mid-January, reaching a level of 4.7
million, or about 6 per cent of the civilian labor force,
seasonally adjusted. Nonfarm employment, after sea­
sonal adjustment, rose slightly between Decem ber and
January, to nearly 51.0 million. Seasonally adjusted
employment was thus about 900,000 higher in Janu­
ary than at the recession low of April 1958, but was
still about 1.5 million short of the pre-recession peak
reached in July 1957.

The factory workweek declined by 0.4 hours to 39.9
hours in January, somewhat less than the usual decline
for this period. Most of the decline was attributed to
a reduction in overtime work. Because of the shorter
workweek, weekly earnings of manufacturing produc­
tion workers declined slightly to $87.38, or $5.72 more
than average earnings in January 1958.

Prices Continue To Be Stable
Average wholesale prices remained at about their
Decem ber levels during January as small declines in
prices of farm products and foods offset a slight in­
crease in average prices of industrial commodities.
The consumer price index declined slightly between
November and December, largely because of reduc­
tions in food prices, and stood at 123.7 per cent of the
1947-49 average. In December 1957 the index was at

121 . 6 .

Farm Incomes and Prices Are Being Depressed
by Large Supplies of Farm Products
The nation’s farm income picture is darkened by
the 1958 build-up of livestock inventories, the bumper
crops harvested in 1958, and the large grain and cot­
ton surpluses which had been carried over into the
1958 harvesting season from the crops of earlier years.

Despite foreign and domestic programs designed to
increase the consumption of American farm products,
most crops moved into the Government support pro­
gram in larger quantities in November and December
of 1958 than in the same months a year earlier.
Meat production is expected to be substantially
higher in 1959 than in 1958. Approximately 6.5 mil­
lion cattle were on feed in the nation’s feed lots on
January 1, or 11 per cent more than a year ago. The
number of pigs farrowed in the fall of 1958, which
will be ready for marketing in the spring of 1959, was
about 17 per cent greater than the number farrowed
in the fall of 1957. Farrowings in the spring of this
year are expected to be 13 per cent larger than 1958
spring farrowings.
Prices of farm products are reflecting production
growth despite the large quantities of grain, soybeans,
and cotton removed from the market through storage
programs. The index of prices received by farmers
reached a peak of 257 per cent of the 1910-1914 aver­
age in April 1958; declined somewhat in the early
summer; rose to 254 in September, and had declined
to 244 by January 1959. Recent price data on major
Eighth District farm commodities show further de­
clines from January levels.

Bank Credit Expands
O v e r R E C E N T MONTHS there has been a
growth in the volume of loans and investments at
commercial banks. Partly because of the credit ex­
pansion, interest rates in early February were at vir­
tually the same levels as in the first week of October
despite better business conditions, an improved out­
look, and large demands for funds. Much of the
heavy demand for funds has resulted from the Treas­
ury’s seeking money to finance the Federal deficit.

Treasury Financing
During most of the first six weeks of 1959, attention
in the money markets has been focused on three
Treasury financing operations. The first, announced
after the close of the market on January 8, was an
offering of some $3/4 billion of securities for cash.
Roughly $750 million of 21-year bonds were offered.
The bonds carried a 4 per cent coupon but were
priced at 99 per cent of face value to yield 4.07 per
cent. Subscription books were opened January 12,
and the bonds were dated January 23. About $2/2
billion of 16-month Treasury notes were also offered.

These obligations had a 3/ per cent coupon but were
priced at 99% to yield 3.45 per cent. Subscription
books for the notes were open on January 12 and 13,
and they were dated January 21.
Although the bonds were greatly oversubscribed,
allotments to some groups apparently were larger
than the market expected. A major portion of the
bonds was allotted to savings-type investors. In sub­
sequent trading, the bonds fell below the offering
price; but by February 10, they had recovered most
of the loss. The bulk of the 16-month notes was pur­
chased by commercial banks.
The second major Treasury financing operation in
1959 involved a refunding of $14.9 billion of obliga­
tions coming due February 14 and 15. Terms of the
refunding were announced on January 29. Holders
of maturing securities were offered a choice of 3%
per cent, one-year Treasury certificates or 4 per cent,
3-year Treasury notes. Subscription books were open
February 2 through February 4. Investors accepted
$11.4 billion of the certificates and $1.4 billion of the
notes, and holders of $2.1 billion, or 23 per cent of
Page 15

the publicly held securities, requested cash for the
securities they turned in.
A third Treasury debt-management operation was
an offering of $1.5 billion of 217-day tax-anticipation
Treasury bills. The need for the Treasury to raise
money at this time resulted from the attrition on the
February refunding. The announcement of the bill
offering was made February 6, with payment date
February 16. The average rate on accepted bids was
3.29 per cent.

Interest Kates
In early February interest rates on marketable se­
curities were at about the same level as four months
earlier, although there have been some fluctuations
of rates within the period. During the first three weeks
of January market rates generally worked up in re­
sponse to a heavy demand for funds, primarily from
the sizable Treasury cash offering. In addition there
was an expectation that the continued improvement
in business activity would lead to a tightening of
credit. In late January and early February, yields on
many marketable issues declined.
Government Securities

Corporate Securities

Three-Month Long-term
Treasury Bills




Feb. *










3.20 p

* Through February 17
p Preliminary

Yields of U. S. Governm ent Securities


Page 16



Banking Developments
Stability of interest rates over the four months
from early October to early February has resulted
from the expansion of bank credit supplementing the
flow of saving in order to match the vigorous demands
for funds. Total loans and investments of all com­
mercial banks rose an estimated $5 billion (3 per
cent) in the four months ending with January 1959.
In the corresponding four months a year ago loans
and investments rose $1.3 billion (0.8 per cen t), and
the average rate of increase for the like periods end­
ing in 1955 through 1958 was 1.6 per cent.
Both loan and investment holdings of commercial
banks increased more in the four months through
January 1959 than they normally do at this season
of the year. Strongest demand for loans came from
those seeking to borrow against real estate. Bank
holdings of investments rose on balance as large
purchases of new short-term Treasury issues were
only partially offset by sales of these and other issues.
As bank credit has expanded since last September,
excess reserves of member banks have declined and
borrowings have risen. Member bank excess reserves
decreased from an average of $570 million last Sep­
tember to $490 million during January. Over the
same period member bank borrowings from the Fed ­
eral Reserve Banks rose from an average of $475 mil­
lion to $555 million. However, member bank borrow­
ings are substantially below the levels maintained
from late 1955 through 1957.

Money Supply
Reflecting the rise in bank credit, the money supply
of the nation rose sharply last October and November.
However, in Decem ber and January there has been
little change in the demand deposits adjusted and
currency outside banks after adjustment for seasonal
influences, according to preliminary data. The active
money supply seasonally adjusted totaled $128 billion
at the end of January 1959, up at an annual rate of
3 per cent since last September and 4/2 per cent above
the level at the end of January last year. By compari­
son the postwar average annual rate of growth has
been about 2 per cent.
Not only has the volume of money expanded but
its rate of turnover has probably accelerated some­
what. Hence, the total dollar amount of spending
rose considerably during the last half of 1958. Debits
to deposit accounts, except interbank and Govern­
ment, at reporting centers outside New York city
totaled $398 billion in the fourth quarter of 1958, or
6 per cent more than in the comparable quarter a
year earlier.

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

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
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
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


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
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.


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



















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

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


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

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)

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
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.


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

January 31, 1959



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

Dec. 31

Kenton R. Cravens, President, Mercantile Trust
Company, (721 Locust St.) Drawer 5 2 4 Main P. O., St. Louis 66, Mo.



H. Lee Cooper, President, Ohio Valley National
Bank of Henderson, (140-42 No. Main St.),
P. O. Drawer 5, Henderson, Kentucky



Arthur Werre, Jr., Executive Vice President,
First National Bank of Steeleville, Steeleville, Illinois



Elected by Member Banks
(May be bankers)

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.







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,
J. H. Longwell, Director, Division of Agricultural
Sciences, University of Missouri, Columbia



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.


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.





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.



(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.

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.




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


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.
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


Fred Burton, Vice President and M anager
S. C. Davis, Cashier
Clifford Wood, Assistant C ashier

W . J. Bryan, Assistant C ashier


Donald L . Henry, Vice President and M anager
John W . Menges, Cashier
Clarence J. Woertz, Assistant C ashier

Louis A. Nelson, Assistant C ashier


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


on Decem ber 31, 1957, to 41.2 per cent on December

Earnings from:
Discounted Bills .....................................
U. S. Government Securities...............
Industrial Advances ..............................
All O th e r ....................................................


3 0,016,564
- 09,131

31, 1958, at the Federal Reserve Bank of St. Louis.


- 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





St. Louis was the result of a $153.9 million decline in



the Gold Certificate Reserves and an $11.7 million


. 22,450,644

Operating Expenses ..............................
Assessment for Expenses of Board of
G o vern ors...............................................
Federal Reserve Currency:
Original C o s t ........................................
Cost of Redemption .........................



Total Current Earnings ............

23,6 1 4 ,2 8 8

The minimum legal requirement is 25 per cent.


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






Deductions from Current Net Earnings:
Reserve for Contingencies .........................
All Other ......................................................


4 58,5 3 0


4 72,789


-3 8 0 ,8 4 6

. 22,578,070

2 3 ,2 3 3 ,4 4 2

7 15,956

20,2 9 6 ,2 3 4
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 ..............................

(In thousands of dollars)

December 31,

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,

2 3 ,286

$ 952,089
9 80,896

$2,1 6 6 ,2 9 7



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) ......................
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



4 9,843

Total Liabilities and Capital Accounts.

$ 2 ,166,297